<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 6, 1996
REGISTRATION NO. 333-10541
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
MEMBERWORKS INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
---------------------
<TABLE>
<S> <C> <C>
DELAWARE 7389 06-1276882
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
---------------------
680 WASHINGTON BLVD.; SUITE 1100; STAMFORD, CONNECTICUT 06901
(203) 324-7635
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------------
GARY A. JOHNSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MEMBERWORKS INCORPORATED
680 WASHINGTON BLVD., SUITE 1100
STAMFORD, CONNECTICUT 06901
(203) 324-7635
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE
NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
---------------------
COPIES TO:
<TABLE>
<S> <C>
MARK G. BORDEN, ESQ. ALAN K. AUSTIN, ESQ.
THOMAS L. BARRETTE, JR., ESQ. STEVEN V. BERNARD, ESQ.
HALE AND DORR DAVID S. KIM, ESQ.
60 STATE STREET WILSON SONSINI GOODRICH & ROSATI
BOSTON, MASSACHUSETTS 02109 PROFESSIONAL CORPORATION
(617) 526-6000 650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
(415) 493-9300
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date hereof.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / __________
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / __________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
This Amendment No. 1 to Registration Statement of Form S-1 (File No.
333-10541) of MemberWorks Incorporated is filed solely to file copies of the
exhibits listed in Item 16 hereto.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses, all of which will be
borne by the Registrant, in connection with the sale and distribution of the
securities being registered, other than the underwriting discounts and
commissions. All amounts shown are estimates except for the Securities and
Exchange Commission registration fee and the NASD filing fee.
<TABLE>
<S> <C>
SEC Registration Fee................................................... $ 20,690
NASD Filing Fee........................................................ 6,500
Nasdaq National Market Listing Fee..................................... 6,500
Blue Sky Fees and Expenses............................................. 20,000
Transfer Agent and Registrar Fees...................................... 10,000
Accounting Fees and Expenses........................................... 275,000
Legal Fees and Expenses................................................ 275,000
Printing and Mailing Expenses.......................................... 150,000
Miscellaneous.......................................................... 136,310
----------
Total........................................................ $ 900,000
=========
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Eighth of the Registrant's Amended and Restated Certificate of
Incorporation (the "Restated Certificate of Incorporation") provides that no
director of the Registrant shall be personally liable for any monetary damages
for any breach of fiduciary duty as a director, except to the extent that the
Delaware General Corporation Law prohibits the elimination or limitation of
liability of directors for breach of fiduciary duty.
Article Ninth of the Registrant's Restated Certificate of Incorporation
provides that a director or officer of the Registrant (a) shall be indemnified
by the Registrant against all expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement incurred in connection with any litigation
or other legal proceeding (other than an action by or in the right of the
Registrant) brought against him by virtue of his position as a director or
officer of the Registrant if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
Registrant, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful and (b) shall be
indemnified by the Registrant against all expenses (including attorneys' fees)
and amounts paid in settlement incurred in connection with any action by or in
the right of the Registrant brought against him by virtue of his position as a
director or officer of the Registrant if he acted in good faith and in a manner
he reasonably believed to be in, or not opposed to, the best interests of the
Registrant, except that no indemnification shall be made with respect to any
matter as to which such person shall have been adjudged to be liable to the
Registrant, unless a court determines that, despite such adjudication but in
view of all of the circumstances, he is entitled to indemnification of such
expenses. Notwithstanding the foregoing, to the extent that a director or
officer has been successful, on the merits or otherwise, including, without
limitation, the dismissal of an action without prejudice, he is required to be
indemnified by the Registrant against all expenses (including attorneys' fees)
incurred in connection therewith. Expenses shall be advanced to a Director or
officer at his request, provided that he undertakes to repay the amount advanced
if it is ultimately determined that he is not entitled to indemnification for
such expenses.
Indemnification is required to be made unless the Registrant determines
that the applicable standard of conduct required for indemnification has not
been met. In the event of a determination by the Registrant that the director or
officer did not meet the applicable standard of conduct required for
II-1
<PAGE> 4
indemnification, or if the Registrant fails to make an indemnification payment
within 60 days after such payment is claimed by such person, such person is
permitted to petition the court to make an independent determination as to
whether such person is entitled to indemnification. As a condition precedent to
the right of indemnification, the director or officer must give the Registrant
notice of the action for which indemnity is sought and the Registrant has the
right to participate in such action or assume the defense thereof.
Article Ninth of the Registrant's Restated Certificate of Incorporation
further provides that the indemnification provided therein is not exclusive, and
provides that in the event that the Delaware General Corporation Law is amended
to expand the indemnification permitted to directors or officers the Registrant
must indemnify those persons to the fullest extent permitted by such law as so
amended.
Section 145 of the Delaware General Corporation Law provides that a
corporation has the power to indemnify a director, officer, employee or agent of
the corporation and certain other persons serving at the request of the
corporation in related capacities against amounts paid and expenses incurred in
connection with an action or proceeding to which he is or is threatened to be
made a party by reason of such position, if such person shall have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, in any criminal proceeding, if such person
had no reasonable cause to believe his conduct was unlawful; provided that, in
the case of actions brought by or in the right of the corporation, no
indemnification shall be made with respect to any matter as to which such person
shall have been adjudged to be liable to the corporation unless and only to the
extent that the adjudicating court determines that such indemnification is
proper under the circumstances.
Under the Underwriting Agreement, the Underwriters are obligated, under
certain circumstances, to indemnify directors and officers of the Registrant
against certain liabilities, including liabilities under the Securities Act.
Reference is made to the form of Underwriting Agreement filed as Exhibit 1
hereto.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
On March 30, 1994, the Registrant sold an aggregate of 38,358 shares of
Class A Common Stock and 38,358 shares of Series F Preferred Stock to accredited
investors for an aggregate purchase price of $1 million pursuant to Regulation D
of the Commission promulgated under the Securities Act ("Regulation D"). On
September 28, 1994, the Registrant sold an aggregate of 40,000 shares of Series
G Preferred Stock and warrants to acquire the same number of shares of Class A
Common Stock to accredited investors for an aggregate purchase price of $4
million pursuant to Regulation D. Effective August 3, 1995, all 40,000 shares of
Series G Preferred Stock and warrants acquired were redeemed by the Registrant
for an aggregate redemption amount of $4,000,400, plus a preferred dividend of
$401,611. Additionally, the Registrant substituted 15,726 warrants to acquire
Class A Common Stock, exercisable at $0.01 per share, for the warrants redeemed
by the Registrant. On August 3, August 15 and August 21, 1995, the Registrant
sold an aggregate of 317,150 shares of Series H Convertible Preferred Stock to
accredited investors for an aggregate purchase price of $12,999,979 pursuant to
Regulation D.
On March 30, 1994, the Registrant issued a warrant to acquire 7,672 shares
of Class A Common Stock at an exercise of $26.07 per share, subject to
adjustment for dilution. On September 9, 1994, the Company issued a warrant in
conjunction with the Bank Credit Agreement to acquire 20,000 shares of Class A
Common Stock at an exercise price of $15.00 per share, subject to adjustment for
dilution when issued. The warrant is exercisable at any time prior to December
31, 1999. In connection with the redemption of 40,000 shares of Series G
Preferred Stock and attached warrants to acquire 40,000 shares of Series A
Preferred Stock, the Registrant issued warrants to acquire 15,726 shares of
Class A Common Stock, exercisable at $0.01 per share.
II-2
<PAGE> 5
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
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<C> <S>
**1 Form of Underwriting Agreement.
2.1 Agreement and Plan of Corporate Separation, dated August 9, 1995, between the
Registrant, Impaq Marketing Corporation, Impaq Publishing Corp. and Daniel
Klabunde.
3.1 Restated Certificate of Incorporation of the Registrant.
**3.2 Restated Certificate of Incorporation of the Registrant, to be filed upon closing
of this offering.
*3.3 Restated By-laws of the Registrant.
**4 Specimen Certificate for shares of Common Stock, $0.01 par value, of the
Registrant.
4.2 Amended and Restated Stockholders' Agreement, dated as of December 28, 1990, by and
among the Registrant and each of the signatories thereto, as amended.
4.3 Amended and Restated Registration Rights Agreement, dated as of September 9, 1994
between the Registrant and Brown Brothers Harriman & Co.
4.4 Registration Rights Agreement, dated September 20, 1995 among the Registrant and
the Stockholders set forth on Schedule I thereto.
**5 Opinion of Hale and Dorr with respect to the validity of the securities being
offered.
10.1 Amended Employee Incentive Stock Option Plan.
*10.2 1995 Executive Officers' Stock Option Plan.
*10.3 1995 Non-Employee Directors' Stock Option Plan.
**10.4 1996 Stock Option Plan.
**10.5 1996 Employee Stock Purchase Plan.
*10.6 401(k) Profit Sharing Plan of the Registrant, dated April 1, 1996.
*10.7 Term Lease Master Agreement between IBM Credit Corporation and the Registrant,
dated as of November 26, 1991.
10.8 Master Lease Agreement between Bankers Leasing Association, Inc. and the
Registrant, dated as of May 7, 1996.
10.9 Promissory Note between Thomas St. Denis and the Registrant, dated September 9,
1994.
10.10 Promissory Note between Gary Johnson and the Registrant, dated September 9, 1994.
10.11 Amended and Restated Credit Agreement, dated as of April 8, 1996 among the
Registrant, the lender parties thereto and Brown Brothers Harriman & Co.
10.12 Warrant Agreement dated as of September 9, 1994, between the Registrant and Brown
Brothers Harriman & Co.
10.13 Form of Warrant for the Purchase of Class A Common Stock, dated March 30, 1994.
10.14 Form of Stock Subscription Warrant, dated as of July 31, 1995.
10.15 Form of Stock Subscription Warrant with Voting Rights, dated August 3, 1995
10.16 Form of Stock Subscription Warrant, dated August 15, 1995.
10.17 Shareholder Guarantee made as of September 9, 1994 by Gary Johnson, Thomas St.
Denis and Dennis Walker in favor of the lenders named in the Credit Agreement and
Brown Brothers Harriman & Co.
10.18 Shareholder Pledge Agreement, dated as of September 9, 1994, among Gary Johnson,
Thomas St. Denis and Dennis Walker and Brown Brothers Harriman & Co.
10.19 Consulting Agreement, dated as of January 1, 1996, by and between the Registrant,
Giga Information Group, Inc. and Neill Brownstein.
+10.20 Agreement dated as of October 7, 1994 by and between Sears, Roebuck and Co. and the
Registrant.
</TABLE>
II-3
<PAGE> 6
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- -------- -----------------------------------------------------------------------------------
<C> <S>
+10.21 License Agreement, dated August 1, 1990, by and between the Registrant and Sears
Roebuck and Co.
10.22 Lease Agreement between Stamford Towers Limited Partnership and the Registrant,
dated January 15, 1996.
10.23 Business Property Lease between V and R Joint Venture and the Registrant, dated
October 4, 1995.
10.24 Arena Tower II Lease Agreement by and between Arena Tower II Corporation and the
Registrant, dated February 12, 1996, as amended.
**11 Computation of unaudited pro forma net loss per share.
**21 Subsidiaries of the Registrant.
**23.1 Consent of Hale and Dorr (included in Exhibit 5).
*23.2 Consent of Price Waterhouse LLP.
*24 Power of Attorney (included on page II-5).
*27 Financial Data Schedule.
</TABLE>
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* Previously filed.
** To be filed by amendment.
+Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.
(B) FINANCIAL STATEMENT SCHEDULES
Schedule II -- Valuation and Qualifying Accounts
All other schedules have been omitted because they are not required or
because the required information is given in the Consolidated Financial
Statements or Notes thereto.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions contained in the Restated Certificate of
Incorporation and Amended and Restated By-laws of the Registrant and the laws of
the State of Delaware, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to
II-4
<PAGE> 7
Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the Securities
Act, each post effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-5
<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Stamford, State of Connecticut, on this 6th day of September, 1996.
MemberWorks Incorporated
By: /s/ GARY A. JOHNSON
--------------------------------------
Gary A. Johnson
President, Chief Executive
Officer and Director
SIGNATURES
Pursuant to the requirements of the Securities act of 1933, as amended,
this Amendment No. 1 to Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------- --------------------------------- ------------------
<C> <S> <C>
/s/ GARY A. JOHNSON President, Chief Executive September 6, 1996
- ------------------------------------- Officer and Director (Principal
Gary A. Johnson Executive Officer)
* Executive Vice President and September 6, 1996
- ------------------------------------- Director
Dennis P. Walker
* Chief Financial Officer September 6, 1996
- ------------------------------------- (Principal Financial and
James B. Duffy Accounting Officer)
* Director September 6, 1996
- -------------------------------------
Stephen J. Clearman
* Director September 6, 1996
- -------------------------------------
Alec L. Ellison
* Director September 6, 1996
- -------------------------------------
Michael R. O'Brien
* Director September 6, 1996
- -------------------------------------
Marc S. Tesler
By: /s/ GARY A. JOHNSON
- -------------------------------------
Gary A. Johnson
Attorney-in-Fact
</TABLE>
II-6
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NUMBER
- ------- --------------------------------------------------------------------- -----------
<C> <S> <C>
**1 Form of Underwriting Agreement. .....................................
2.1 Agreement and Plan of Corporate Separation, dated August 9, 1995,
between the Registrant, Impaq Marketing Corporation, Impaq Publishing
Corp. and Daniel Klabunde.
3.1 Restated Certificate of Incorporation of the Registrant. ............
**3.2 Restated Certificate of Incorporation of the Registrant, to be filed
upon closing of this offering. ......................................
*3.3 Restated By-laws of the Registrant. .................................
**4 Specimen Certificate for shares of Common Stock, $0.01 par value, of
the Registrant. .....................................................
4.2 Amended and Restated Stockholders' Agreement, dated as of December
28, 1990, by and among the Registrant and each of the signatories
thereto, as amended.
4.3 Amended and Restated Registration Rights Agreement, dated as of
September 20, 1995 between the Registrant and Brown Brothers Harriman
& Co. ...............................................................
4.4 Registration Rights Agreement, dated September 28, 1994 among the
Registrant and the Stockholders set forth on Schedule I thereto. ....
**5 Opinion of Hale and Dorr with respect to the validity of the
securities being offered. ...........................................
10.1 Amended Employee Incentive Stock Option Plan. .......................
*10.2 1995 Executive Officers' Stock Option Plan. .........................
*10.3 1995 Non-Employee Directors' Stock Option Plan. .....................
**10.4 1996 Stock Option Plan. .............................................
**10.5 1996 Employee Stock Purchase Plan. ..................................
*10.6 401(k) Profit Sharing Plan of the Registrant, dated April 1,
1996. ...............................................................
*10.7 Term Lease Master Agreement between IBM Credit Corporation and the
Registrant, dated as of November 26, 1991. ..........................
10.8 Master Lease Agreement between Bankers Leasing Association, Inc. and
the Registrant, dated as of May 7, 1996. ............................
10.9 Promissory Note between Thomas St. Denis and the Registrant, dated
September 9, 1994. ..................................................
10.10 Promissory Note between Gary Johnson and the Registrant, dated
September 9, 1994. ..................................................
10.11 Amended and Restated Credit Agreement, dated as of April 8, 1996
among the Registrant, the lender parties thereto and Brown Brothers
Harriman & Co. ......................................................
10.12 Warrant Agreement dated as of September 9, 1994, between the
Registrant and Brown Brothers Harriman & Co. ........................
10.13 Form of Warrant for the Purchase of Class A Common Stock, dated March
30, 1994. ...........................................................
10.14 Form of Stock Subscription Warrant, dated as of July 31, 1995. ......
10.15 Form of Stock Subscription Warrant with Voting Rights, dated August
3, 1995. ............................................................
10.16 Form of Stock Subscription Warrant, dated August 15, 1995. ..........
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION PAGE NUMBER
- ------- --------------------------------------------------------------------- -----------
<C> <S> <C>
10.17 Shareholder Guarantee made as of September 9, 1994 by Gary Johnson,
Thomas St. Denis and Dennis Walker in favor of the lenders named in
the Credit Agreement and Brown Brothers Harriman & Co. ..............
10.18 Shareholder Pledge Agreement, dated as of September 9, 1994, among
Gary Johnson, Thomas St. Denis and Dennis Walker and Brown Brothers
Harriman & Co. ......................................................
10.19 Consulting Agreement, dated as of January 1, 1996, by and between the
Registrant, Giga Information Group, Inc. and Neill Brownstein. ......
+10.20 Agreement dated as of October 7, 1994 by and between Sears, Roebuck
and Co. and the Registrant. .........................................
+10.21 License Agreement, dated August 1, 1990, by and between the
Registrant and Sears Roebuck and Co. ................................
10.22 Lease Agreement between Stamford Towers Limited Partnership and the
Registrant, dated January 15, 1996. .................................
10.23 Business Property Lease between V and R Joint Venture and the
Registrant, dated October 4, 1995. ..................................
10.24 Arena Tower II Lease Agreement by and between Arena Tower II
Corporation and the Registrant, dated February 12, 1996, as
amended. ............................................................
**11 Computation of unaudited pro forma net loss per share. ..............
**21 Subsidiaries of the Registrant. .....................................
**23.1 Consent of Hale and Dorr (included in Exhibit 5). ...................
*23.2 Consent of Price Waterhouse LLP. ....................................
*24 Power of Attorney. ..................................................
*27 Financial Data Schedule. ............................................
</TABLE>
- ---------------
* Previously filed.
** To be filed by amendment.
+ Confidential treatment requested as to certain portions, which portions are
omitted and filed separately with the Commission.
<PAGE> 1
Exhibit 2.1
AGREEMENT AND PLAN OF CORPORATE SEPARATION
Agreement dated the 9th day of August, 1995 between CardMember
Publishing Corporation, a Delaware corporation with a principal office located
at Stamford, Connecticut ("CardMember"), Impaq Marketing Corporation, a Delaware
corporation with a principal office located at Stamford, Connecticut
("Marketing"), Impaq Publishing Corp., a Nebraska corporation with a principal
office located at Omaha, Nebraska ("Newco") and Daniel Klabunde of Omaha,
Nebraska ("Klabunde").
WHEREAS, on May 18, 1992 CardMember entered into an Agreement (the
"1992 Agreement") with Impaq Publishing Corporation ("Publishing"), Marketing
and Klabunde providing for the acquisition of substantially all of the assets
used in the discount coupon book business which was operated in Omaha, Nebraska
(the "Coupon Book Business"). The 1992 Agreement provided for the issuance of
24,143 shares of Class B Common Stock of CardMember to Publishing.
WHEREAS, the 1992 Agreement was closed in accordance with its terms as
of May 18, 1992.
WHEREAS, Publishing was dissolved shortly after the closing and 24,143
shares of Class B Common Stock of CardMember were distributed to Klabunde, its
sole shareholder.
WHEREAS, Marketing has owned and operated the Coupon Book Business
continuously since May 18, 1992 in conjunction with other businesses.
WHEREAS, Marketing has transferred substantially all of the operating
assets used in the Coupon Book Business to Newco.
<PAGE> 2
WHEREAS, Newco is a wholly owned subsidiary of CardMember and Newco has
title to certain of the operating assets which are used to operate the Coupon
Book Business.
WHEREAS, since May 18, 1992 Klabunde has been President and Chief
Executive Officer of Marketing and has been primarily responsible for the
operation of the Coupon Book Business.
WHEREAS, CardMember now desires to exchange all the issued and
outstanding stock of Newco for all of the Class B Common Stock of CardMember
issued to Klabunde pursuant to the 1992 Agreement.
NOW THEREFORE, in consideration of the foregoing recitals which are
incorporated with and are made a part of this Agreement, and in further
consideration of the mutual covenants and agreements hereinafter contained, the
parties hereto agree as follows:
1. Transfer of CardMember and Newco shares.
On the closing date, CardMember shall transfer and assign 100
shares of Newco common stock to Klabunde and Klabunde shall transfer and assign
to CardMember 24,143 shares of Class B Common Stock to CardMember. On the
closing date, Klabunde will deliver certificates for shares of CardMember duly
endorsed with signatures guaranteed with documentary stamps affixed at
Klabunde's expense so as to make CardMember the sole owner thereof free and
clear of all claims and encumbrances. On such closing date, delivery of the
Newco shares will be made to Klabunde. The closing will take place on August 9,
1995 and shall be effective as of the close of business on June 30, 1995.
2. Release of Liens.
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<PAGE> 3
Attached hereto as Exhibit 2 is a list of all pledges,
equities, licenses, security interests, claims, liens, or encumbrances (the
"Liens") to which any of the assets of Newco were subject. CardMember shall have
obtained releases of all such Liens covering any of the assets of Newco prior to
the closing. Copies of the releases shall be provided to Newco prior to the
closing.
3. Representations and Warranties of CardMember.
CardMember and Marketing represent and warrant that:
(a) Cardmember has full power and authority to enter into this
Agreement.
(b) The 100 shares of Newco common stock to be transferred by
CardMember to Klabunde under Section 1 hereof are, and on the closing date will
be, all of the issued and outstanding stock of Newco, duly authorized, validly
issued, fully paid and non-accessible. CardMember is the lawful and equitable
owner of all the Newco common stock, free and clear of all security interests,
liens, claims, options, charges and encumbrances. Good title, free and clear of
all security interests, liens, claims, rights, charges or other encumbrances
whatsoever to all of the Newco common stock will pass to Klabunde at the
closing.
(c) Drafts of the audited consolidated financial statements of
CardMember restated as of June 30, 1994 and June 30, 1993, and the unaudited
consolidated balance sheet, consolidated income statement, and consolidated
statement of cash flows for the nine months ended March 31, 1995 (the "Financial
Statements") have been delivered to Klabunde. The Financial Statements are true
and complete statements of the financial condition of CardMember as of the dates
therein specified. Final versions of the Financial Statements will be delivered
to Klabunde within 60 days of the closing. The final version of the Financial
Statements to be
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<PAGE> 4
delivered to Klabunde will not differ in any material way from
the drafts of the Financial Statements which have been delivered to Klabunde.
(d) Except as listed on Exhibit 3(d), since June 30, 1994: (i)
the business and affairs of CardMember and Marketing have been conducted and
carried on in the ordinary course consistent with their past practices; (ii)
except for personal property (including inventory and supplies) purchased, sold
or leased in the ordinary course of business consistent with their past
practices, CardMember and Marketing have not purchased, sold, leased, mortgaged,
pledged or otherwise acquired or disposed of any material properties or assets;
(iii) there has been no adverse change in or with respect to the financial
condition, operations, prospects, rights, results of operations, assets,
management, liabilities or business of CardMember or Marketing and no state of
facts exists which may reasonably be expected to give rise to any such adverse
change; and (iv) there has been no change by CardMember and Marketing in any
method of financial or tax accounting method or practice.
(e) CardMember has delivered to Klabunde the amended and
restated Articles of Incorporation of CardMember filed in the offices of the
Delaware Secretary of State on September 29, 1994, certified by the Secretary
of State of the State of Delaware. This amendment defines the rights of
Class B Common Shares of CardMember. Such Articles of Incorporation have not
been further amended and are in full force and effect.
(f) Exhibit 3(f) contains a true, complete and correct list
and description of each pending lawsuit, administrative proceeding, arbitration,
labor dispute, or governmental inspection or investigation which affect the
operations or assets of Newco. To the knowledge of CardMember and Marketing,
there are no material (individually or in the aggregate) legal
-4-
<PAGE> 5
actions or administrative or governmental investigations or proceedings
threatened against CardMember or Marketing that would affect the operations or
assets of Newco. To the knowledge of CardMember and Marketing, there is no
existing state of facts, circumstance or contemplated event that is likely to
give rise to a material action, proceeding or investigation which would affect
the operations or assets of Newco.
(g) Exhibit 3(g) is a balance sheet of Newco which is a true
and complete statement of the financial condition of Newco as of June 30, 1995.
Except as disclosed on Exhibit 3(g), there are no liabilities, either fixed or
contingent, other than normally recurring contracts or obligations in the
ordinary course of business; and no such contracts or obligations are liens or
other liabilities which, if disclosed, would adversely affect the financial
condition of Newco as reflected in Exhibit 3(g).
(h) Newco has good and marketable title to all of its assets
and properties reflected in its books and records as being owned, including the
assets and properties reflected as being owned in the financial statements
listed on Exhibit 3(g), free and clear of all pledges, leases, equities,
licenses, security interests, claims, liens, encumbrances or defects, except
such as described on Exhibit 3(h).
(i) Following the transactions contemplated herein, with
respect to CardMember and Impaq, both individually and in the aggregate; (i) the
fair value of CardMember's and Impaq's assets will exceed their respective
liabilities (including identified contingent liabilities); (ii) the present fair
market value of CardMember's and Impaq's assets will be greater than their
respective liability on debts as such debts become absolute and matured;
-5-
<PAGE> 6
and (iii) CardMember and Impaq will be able to pay their debts as they mature
following the consummation of the transactions contemplated herein.
(j) None of the information, documents, certificates or
instruments furnished or to be furnished by CardMember, Marketing or any of
their representatives in connection with this Agreement or otherwise in
connection with the transactions contemplated hereby are false or misleading in
any respect or contain any misstatement of fact or omit to state any facts
required to be stated to make the statement therein not misleading. The
representations and warranties made herein are made by CardMember and Marketing
with the knowledge and expectation that Klabunde and Newco are placing reliance
thereon. To the extent that any portion of the representations and warranties
made herein were made to the knowledge of CardMember or Marketing, CardMember
and Marketing represent that they have made due and reasonable inquiry with
respect thereto. The representations under this Paragraph 3(j) are subject to
the representations contained in Paragraph 11 of this Agreement.
4. Conditions of Closing.
At the closing, and as a condition thereof, the following
documents shall be executed and delivered:
(a) Klabunde' s resignation as an officer and director of
Marketing.
(b) A General Release by Klabunde in favor of CardMember and
Marketing excepting obligations arising under this Agreement, and a General
Release by CardMember and Marketing in favor of Klabunde excepting obligations
arising under this Agreement.
(c) Legal opinion of CardMember's counsel in the form attached
hereto as Exhibit 4(d).
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<PAGE> 7
(d) The cancelled Promissory Note between Marketing as the
debtor and CardMember as the lender, executed by Klabunde in his capacity as
President of Marketing and in his individual capacity, in the amount of
$50,006.00, dated September 20, 1994.
(e) A check payable to the law firm of McGrath, North, Mullin
& Kratz in the amount of $3,000.00 plus any amount for services rendered by
McGrath, North, Mullin & Kratz for the formation of Newco.
(f) Officer's Certificate of CardMember and Marketing executed
by Gary Johnson as President of CardMember and Marketing.
(g) Officer's Certificate of Newco executed by Klabunde as
President of Newco.
(h) Consent of the holders of the Preferred Stock of
CardMember to the transactions contemplated by the Agreement.
(i) Release on Form UCC-3 from Brown, Brothers & Harriman.
5. Delivery of Records.
CardMember agrees that on or before the closing date that it
will cause to be delivered to Newco copies of such corporate records or other
documents which are necessary for the continued operation of the Coupon Book
Business as Klabunde may reasonably request.
6. Notices.
Any notice which any of the parties hereto may desire to serve
upon any of the other parties hereto shall be in writing and shall be
conclusively deemed to have been received by the party to whom addressed, if
mailed, postage prepaid, U.S. registered mail, to the following addresses:
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<PAGE> 8
CardMember Publishing Company
655 Washington Boulevard
Stamford, CT 06901
Attn: Gary Johnson, President
Impaq Marketing Corporation
655 Washington Boulevard
Stamford, CT 06901
Attn: Gary Johnson, President
Impaq Publishing Corp.
11225 Davenport, Suite 102
Omaha, NE 68154-2627
Daniel Klabunde
11225 Davenport, Suite 102
Omaha, Nebraska 68154-2627
7. Successors.
This Agreement shall be binding upon and inure to the benefit
of the successors and assigns of the parties hereto.
8. Tax Attributes.
The parties hereto agree that for tax purposes the parties
will each report the transactions contemplated by this Agreement as a tax-free
reorganization pursuant to Internal Revenue Code 368(a)(1)(D) and 355. The
parties hereto agree that the only gain on the transaction that will be reported
will be the gain recognized by Marketing pursuant to Internal Revenue Code
311(b) caused by Marketing's distribution of the Newco assets to CardMember,
such gain to be in an amount equal to no more than $273,299 less Marketing's
basis in such assets. Klabunde agrees that he will not permit Newco to report a
basis for its assets existing on the closing date, including intangibles, which
exceeds $273,299.00. Klabunde agrees that he will not cause Newco to make any
claim for the net operating loss which has been incurred
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<PAGE> 9
through June 30, 1995 by Marketing, unless the Internal Revenue Service has
disallowed the use of the net operating loss by CardMember or Marketing.
9. Indemnification.
(a) Indemnity.
CardMember and Marketing shall indemnify and hold Klabunde and
Newco harmless against and in respect of:
(i) All debts, liabilities and obligations of CardMember or
Marketing (whether accrued, absolute, contingent, or known or unknown) existing
or arising on or resulting from events which occurred or failed to occur on or
before the closing, to the extent not reflected as a liability in the Newco
balance sheet provided pursuant to Paragraph 3(g) of this Agreement unless such
debt, liability or obligation is one that should have been disclosed by Klabunde
in accordance with the provisions of Paragraph 11 but was not disclosed as
required by Paragraph 11.
(ii) Any liability, loss, claim, damage or deficiency
resulting directly or indirectly from any misrepresentation, breach of warranty
or nonfulfillment of any agreement on the part of CardMember or Marketing under
this Agreement, or from any misrepresentation in or omission from any
certificate or other instrument furnished or to be furnished to Klabunde or
Newco hereunder.
(iii) Except to the extent of non-income taxes that are
reserved as a current tax liability on the Newco balance sheet set forth at
Exhibit 3(g), all taxes of Cardmember, Marketing and Newco, and any of their
affiliates, relating to transactions,
-9-
<PAGE> 10
business, operations, or matters that occurred or failed to occur on or before
the closing or with respect to any period of such entities through the closing.
(iv) All other actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses incident to the foregoing,
including, without limitation, actual attorneys' fees and other out-of-pocket
expenses except as otherwise provided in Paragraph 13 of this Agreement.
(b) Notice of Claims.
Newco and Klabunde agree to give CardMember notice of any and
all claims asserted against Newco or Klabunde for which indemnification is or
may be sought under this Paragraph 9. Such notice shall be given within a
reasonable time after receipt of written notice of such claim by Newco or
Klabunde. Failure to give such notice shall not abrogate or diminish
CardMember's or Marketing's obligation under this Paragraph 9 if CardMember or
Marketing have or receive knowledge of the existence of any such claim by any
other means or if such failure does not prejudice CardMember's or Marketing's
ability to defend such claim.
(c) Defense of Claim.
In any litigation, administrative proceeding, negotiation or
arbitration pertaining to any claim for which indemnification is sought under
this Paragraph 9, CardMember and Marketing shall have the right to select legal
counsel to represent Klabunde and Newco, and to otherwise control such
litigation, proceedings, negotiations and arbitration. If CardMember and
Marketing elect to control such litigation, proceeding, negotiation or
arbitration, Klabunde and Newco shall at all times have the right to fully
participate in the defense at their own expense. If CardMember and Marketing
shall, within a reasonable time after notice, fail to
-10-
<PAGE> 11
defend, Klabunde and Newco shall have the right, but not the obligation, to
undertake the defense of and to compromise or settle the claim or other matter
on behalf, for the account, and at the risk of CardMember and Marketing. If the
claim is one that cannot by its nature be defended solely by CardMember and
Marketing then Klabunde and Newco shall make available all information and
assistance as CardMember and Marketing may reasonably request. Notwithstanding
the foregoing provisions of this Paragraph 9, should the subject matter of the
litigation, proceeding, negotiation or arbitration include a claim against
Klabunde and Newco seeking permanent injunctive relief, Klabunde and Newco shall
have the right to take exclusive control of the defense of the entire
proceeding.
(d) Costs Included.
The amounts for which Klabunde and Newco may seek
indemnification under this Paragraph 9 shall extend to and include the actual
attorney's fees, accountant's fees, costs of litigation and other reasonable
expenses incurred in the defense of any claim and any amounts paid in settlement
or compromise of any claims asserted against them to the extent that the claim
asserted would have been subject to the indemnification provisions of this
Paragraph 9.
10. CardMember and Newco Undertakings After the Closing.
After the closing, CardMember or Newco, whichever is applicable, hereby
agrees to the following:
(a) CardMember, and any entity in which CardMember has an
interest, shall not, for a period of two (2) years following the closing, sell
coupon books with a thickness of more than one half inch each to charitable
organizations located within the following markets: Los Angeles San Gabriel
Valley, Denver, Phoenix, San Francisco, San Francisco South Bay,
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<PAGE> 12
Seattle, San Diego, Los Angeles South Bay, Los Angeles West, Omaha, Lincoln,
Kansas City, St. Louis, Fort Lauderdale, Dallas, and Houston.
(b) CardMember will sell to Newco an amount of CardMember's
Travel Club Membership Books as Newco shall request, not to exceed 10,000
copies, at a price not to exceed $2.00 per book. Any request by Newco for an
amount of CardMember's Travel Club Membership Books shall be for a minimum of
2,000 books and shall be in 2,000 book increments thereafter. CardMember shall
provide any requested books within 30 days of CardMember's receipt of Newco's
order.
(c) CardMember agrees to sell to Newco movie theater tickets
for American Multi- Cinema, Pacific Theaters, Sony/Loews Theaters, National
Amusements, General Cinema and Cineplex Odeon movie theaters in an amount equal
to the purchase price paid by CardMember for such tickets, for the duration of
CardMember's agreement with the theaters and/or ticket availability.
(d) Newco agrees to sell to CardMember movie theater tickets
for United Artists Theaters and Edward Theater in an amount equal to the
purchase price paid by Newco for such tickets, for the duration of Newco's
agreement with the theaters and/or ticket availability.
11. Representation of Klabunde.
Klabunde represents that he has disclosed all material facts,
liabilities, or obligations, contingent or otherwise, relating to Newco and its
business operations to CardMember and Impaq of which Klabunde has actual
knowledge or, through the exercise of reasonable due diligence should have had
knowledge of, and Klabunde further represents that
-12-
<PAGE> 13
<PAGE> 14
all material assets and liabilities of Newco of which Klabunde has knowledge
have been disclosed on the balance sheet listed as Exhibit 3(g).
12. Survival of Representations. Warranties. Covenants and
Indemnifications.
All representations, warranties, covenants and
indemnifications made in or pursuant to this Agreement shall survive the closing
hereunder until such time as the applicable statutory period of limitations,
plus any possible extensions, if an extension has been granted or agreed to, for
any federal, state or local tax liabilities has expired with respect to the
periods in which the transactions contemplated by this Agreement occur, except
for any indemnification under Paragraph 9(a)(i), 9(a)(iii), 9(a)(iv), 9(b), 9(c)
and 9(d), which shall survive indefinitely.
13. Burger King Litigation.
The parties hereto agree that any liability resulting from
that certain lawsuit filed against Marketing by Simmonds Restaurant Management,
Inc. in the District Court of Douglas County, Nebraska, Docket 938, No. 943 (the
"Burger King Litigation"), which lawsuit is listed as a liability on the Newco
balance sheet provided in accordance with Paragraph 3(f), shall be the
responsibility of Newco, subject to the following provisions and exception.
Newco shall be responsible for resolving this litigation as soon as practical,
including the payment of a reasonable settlement amount; provided, however, that
the parties hereto also agree that CardMember and Marketing shall reimburse
Newco in an amount equal to one-half (1/2) the amount of any liability incurred
by Newco in resolving the matter (including attorney's fees, accountant's fees,
costs of litigation and other reasonable expenses incurred in the defense of
the claim) whether such amount is the result of final litigation or settlement
of the matter. CardMember and Marketing reserve the right to settle the
litigation for an amount which
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<PAGE> 15
CardMember and Marketing, in their discretion, find reasonable if Newco has not
resolved the matter by September 30, 1995. Any settlement by CardMember or
Marketing of the Burger King Litigation shall in no way relieve CardMember or
Marketing of their responsibility to reimburse Newco for one-half (1/2) the
amount of any liability incurred by Newco and resulting from the Burger King
Litigation, as provided in this Paragraph 13. The authority given to CardMember
and Marketing to settle the Burger King Litigation after September 30, 1995 does
not diminish in any way Newco's authority over any litigation in connection with
the Burger King Litigation, whether occurring before or after September 30,
1995, which litigation, if any, shall be under the complete control of Newco.
14. Confidentiality.
Klabunde and Newco shall hold in strict confidence and shall
not disclose to any third party, unless ordered to do so by a court of competent
jurisdiction, any of the financial information concerning CardMember and
Marketing which is not generally available to the public which has been provided
by CardMember and Marketing to Klabunde and/or Newco in conjunction with the
transactions contemplated by this Agreement.
-14-
<PAGE> 16
In witness whereof the parties have set their hands as of the year and
date first above written.
CARDMEMBER PUBLISHING CORPORATION
By: /s/ Gary Johnson
------------------------
Gary Johnson
Its: President
IMPAQ MARKETING CORPORATION
By: /s/ Gary Johnson
------------------------
Gary Johnson
Its: President
IMPAQ PUBLISHING CORP.
By: /s/ Daniel Klabunde
------------------------
Daniel Klabunde
Its: President
DANIEL KLABUNDE
/s/ Daniel Klabunde
---------------------------------
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<PAGE> 17
EXHIBIT 2
LIENS
All of the assets of Impaq Marketing Corporation are subject to a lien
in favor of Brown, Brothers & Harriman. A UCC financing statement has been filed
with the Secretary of State of Nebraska. A Release of this Lien will be
delivered at the closing.
The transactions contemplated by the Agreement require the consent of
holders of the Preferred Stock of CardMember Publishing Corporation. CardMember
will obtain a written consent of the Preferred Stockholders of the Corporation
to the Agreement and Plan of Corporate Separation.
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<PAGE> 18
EXHIBIT 3(d)
CONDUCT OF BUSINESS SINCE JUNE 30. 1994
Since June 30, 1994:
(i) The business and affairs of CardMember and Marketing have been
conducted and carried on in the ordinary course consistent
with their past practices;
(ii) Except for personal property (including inventory and
supplies) purchased, sold or leased in the ordinary course of
business consistent with their past practices, CardMember and
Marketing have not purchased, sold, leased, mortgaged, pledged
or otherwise acquired or disposed of any material properties
or assets;
(iii) There has been no adverse change in or with respect to the
financial condition, operations, prospects, rights, results of
operations, assets, management liabilities or business of
CardMember or Marketing and no state of facts exist which may
reasonably be expected to give rise to any such adverse
change; and
(iv) There has been no change by CardMember and Marketing in any
method of financial or tax accounting method or practice.
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<PAGE> 19
EXHIBIT 3(f)
LITIGATION
The only litigation for which Newco is responsible is a lawsuit pending
in the District Court of Douglas County, Nebraska, brought by Simmonds
Restaurant Management, Inc. bearing Docket Number 938, No. 943. Newco has
assumed responsibility for this lawsuit pursuant to Paragraph 13 of the
Agreement.
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<PAGE> 20
EXHIBIT 3(g)
IMPAQ PUBLISHING CORP.
BALANCE SHEET AT JUNE 30, 1995
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
Cash On-Hand $ 175,000
Bill of Sale dated August ___, 1995 -0-
Total Assets$175.000
LIABILITIES(1)
Trade Payables -0-
----------
Total Liabilities $ -0-
STOCKHOLDERS EQUITY
Common Stockholders Equity, Common Stock,
$1 Par Value, Authorized 10,000 Shares,
Issue 100 Shares $ 100
Additional Paid-In Capital 174,900
Total Stockholder's Equity $ 175,000
----------
TOTAL LIABILITIES AND EQUITY $ 175,000
==========
</TABLE>
- ---------------------
(1) There is a pending litigation matter against the company by
Simmonds Restaurant Management Service, Inc. in the District Court of Douglas
County, Nebraska, Docket Number 938, No. 943. The amount of damages which may be
assessed against the company is unknown.
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<PAGE> 21
EXHIBIT 3(h)
TITLE TO ASSETS
Newco has good and marketable title to all of its assets and properties
reflected in its books and records as being owned, including the assets and
properties reflected as being owned in the financial statements listed on
Exhibit 3(g), free and clear of all pledges, leases, equities, licenses,
security interests, claims, liens, encumbrances or defects.
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<PAGE> 22
EXHIBIT 4(d)
LEGAL OPINION
July ___, 1995
Mr. Dan Klabunde
11225 Davenport, Suite 108
Omaha, Nebraska 68154-2627
Impaq Publishing Corp.
11225 Davenport, Suite 108
Omaha, Nebraska 68154-2627
Gentlemen:
We have acted as counsel for CardMember Publishing Corporation, a
Delaware corporation, and Impaq Marketing Corporation, a Delaware corporation
(hereinafter collectively referred to as the "Companies"), in connection with
the preparation, execution, delivery and performance of a certain Agreement and
Plan of Corporate Separation dated of even date herewith (the "Agreement") by
and between the Companies and you. This opinion is delivered to you pursuant to
Paragraph 4(d) of the Agreement. Unless otherwise defined herein, or as the
context hereof otherwise requires, each term used herein with its initial letter
capitalized has the meaning given to such term in the Agreement.
As such counsel, we have participated in the preparation of, or have
otherwise examined, the Agreement and have reviewed the Articles of
Incorporation, By-Laws and certain other corporate records of the Companies, and
such other agreements, certificates, instruments and documents and matters of
law as we have deemed necessary to reach the conclusions hereinafter set forth.
Based on the foregoing, it is our opinion that:
1. The Companies are corporations duly organized, validly existing and
in good standing under the laws of the State of Delaware and have all requisite
corporate power and authority to own, operate and lease their properties and to
carry on their business as now being conducted. The Companies have all requisite
corporate power and authority to execute and deliver the Agreement and the
various other agreements required to be entered into by them pursuant to the
terms of the Agreement (the "Ancillary Agreements"), and to carry out the
respective terms thereof.
2. The execution, delivery and performance by the Companies of the
Agreement and the Ancillary Agreements, and the consummation by them of the
transactions contemplated
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<PAGE> 23
therein, have been duly authorized by the Companies' Boards of Directors and by
all other necessary corporate action on the part of the Companies. The Agreement
and the Ancillary Agreements constitute the legal, valid and binding obligation
of the Companies and the Shareholders enforceable in accordance with their
respective terms.
3. The execution, delivery and performance by the Companies of the
Agreement and the Ancillary Agreements, and the consummation by them of the
transactions contemplated therein, will not (a) violate or conflict with any
provision of the Companies' Articles of Incorporation or By-Laws; (b) violate
any provision of any applicable law, statute, rule or regulation to which the
assets of Newco or the Companies are subject or any judgment, order, writ or
decree of any court applicable to the assets of Newco or the Companies or any
governmental permit, license, order or approval held or utilized by the
Companies in the operation of their businesses; or (c) result in the breach of,
conflict with, or constitute a default or event of default under (whether by
notice or the lapse of time or both), or result in the modification or
termination of, or result in the creation or imposition of any lien, security
interest, charge or encumbrance upon any of the assets of Newco, pursuant to any
commitment, contract or other agreement or instrument to which the Companies or
any of their shareholders are a party or by which the Companies or any of their
shareholders or any of their respective assets or property is or may be bound or
affected or from which the Companies or any of their shareholders derives
substantial benefits.
4. To the best of our knowledge, Newco has good and marketable title to
all its assets, free and clear of all liens, claims, encumbrances, pledges,
leases, security interests, or defects, except such as described on Exhibit 3(h)
to the Agreement.
5. To the best of our knowledge, no consent, approval, authorization or
order of, or qualification with, any court, regulatory authority or other
governmental body is required in connection with the consummation by the
Companies of the transactions contemplated by the Agreement or the Ancillary
Agreements.
We are members of the Bar of the State of Connecticut and do not
purport to be experts on any laws other than the laws of the State of
Connecticut, the business corporation laws of the State of Connecticut and
Delaware and the federal laws of the United States. Consequently, we do not
render any opinions on any laws other than the laws of the State of
Connecticut, the business corporation laws of the State of Connecticut and
Delaware and the federal laws of the United States.
Very truly yours
DISERIO MARTIN O'CONNOR &
CASTIGLIONI
By: /s/ Brian O'Connor
------------------------
Brian O'Connor
-22-
<PAGE> 1
Exhibit 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
MEMBERWORKS INCORPORATED
(FORMERLY CARDMEMBER PUBLISHING CORPORATION)
(INCORPORATED JULY 12, 1989)
PURSUANT TO SECTION 242 AND 245
OF THE GENERAL CORPORATION LAW
OF THE STATE OF DELAWARE
MEMBERWORKS INCORPORATED (the "Corporation"), a corporation organized
and existing under and by virtue of the General Corporation Law of the State of
Delaware (the "General Corporation Law"), hereby certifies as follows:
FIRST: The name of the Corporation is Memberworks Incorporated. A
Certificate of Incorporation of the Corporation was originally filed by the
Corporation with the Secretary of the State of Delaware on July 12, 1989.
SECOND: The Restated Certificate of Incorporation which restates and
integrates the Certificate of Incorporation of the Corporation, as amended, was
duly adopted in accordance with the provisions of Section 242 and 245 of the
General Corporation Law, and was approved by unanimous consent of the Board of
Directors of the Corporation.
THIRD: The text of the Certificate of Incorporation, as amended, is
hereby restated to read in its entirety as follows:
ARTICLE I
The name of the Corporation is MemberWorks Incorporated.
ARTICLE II
The address, including street, number, city and county, of the
registered office of the corporation in the State of Delaware is 1013 Centre
Road, County of New Castle, and the name of the registered agent of the
corporation in the State of Delaware at such address is The Prentice-Hall
Corporation System, Inc.
ARTICLE III
The purpose of the corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
<PAGE> 2
ARTICLE IV
The total number of shares of all classes of stock which the
Corporation has authority to issue is Forty-One Million (41,000,000) shares,
consisting of Forty Million (40,000,000) shares of Common Stock, par value of
One Cent ($0.01) per share (the "Common Stock"), and One Million (1,000,000)
shares of Preferred Stock, par value of One Cent ($0.01) per share (the
"Preferred Stock").
(a) COMMON STOCK
Section 1. Designation. The Common Stock shall be divided into Common
Stock, of which the corporation has the authority to issue Thirty-Two Million
(32,000,000) shares, and Class A Common Stock, of which the corporation has
authority to issue Eight Million (8,000,000) shares.
The Common Stock and the Class A Common Stock are hereafter
collectively referred to as the "Common Stock". Except as otherwise provided
herein, all shares of Common Stock and Class A Common Stock will be identical
and will entitle the holders thereof to the same rights, privileges, benefits
and notices.
Section 2. Voting Rights. The holders of shares of Common Stock shall
be entitled to one vote for each share so held with respect to all matters voted
on by the stockholders of the corporation, subject in all cases to Section
(b)(II)(4) and (b)(III)(1)(b)(iii) of this Article IV.
Section 3. Liquidation Rights. Subject to the prior and superior rights
of the Preferred Stock and the special right of the Class A Common Stock as set
forth in Section (b)(II)(2) of this Article IV, upon any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
corporation, the holders of Common Stock and the holders of Convertible
Preferred Stock shall be entitled to receive all remaining assets of the
corporation ratably on a share for share basis as if the Convertible Preferred
Stock had been converted to Common Stock.
Section 4. Dividends. Subject to the prior and superior rights of the
Preferred Stock, dividends may be paid on the Common Stock as and when declared
by the Board of Directors, and the holders of Common Stock shall be entitled to
participate in such dividends ratably on a per share basis; provided that if
dividends are declared which are payable in shares of Common Stock or Class A
Common Stock, dividends shall be declared which are payable at the same rate on
both classes of stock and the dividends payable in shares of Common Stock shall
be payable to holders of that class of stock and the dividends payable in shares
of Class A Common Stock shall be payable to holders of that class of stock;
provided further that no dividend may be declared or paid on the Common Stock
(other than a dividend payable in the form of shares of Common Stock)
-2-
<PAGE> 3
unless an equivalent dividend is declared and paid on the Convertible Preferred
Stock in accordance with Section (b)(II)(1) of this Article IV.
Section 5. Conversion. The holders of Class A Common Stock shall have
conversion rights as follows:
(a) Right to Convert. Each share of Class A Common Stock shall be
convertible, without the payment of any additional consideration by the holder
thereof and at the option of the holder thereof, at any time after the date of
issuance of such share, at the office of the corporation or any transfer agent
for the Common Stock, into one fully paid and nonassessable share of Common
Stock.
(b) Automatic Conversion. Each share of Class A Common Stock shall,
without any action on the part of the holder thereof, automatically be converted
into one share of Common Stock upon the closing of a Qualifying Public Offering
(as defined in Section (b)(I)(1)(b) of this Article IV) (in the event of which
offering, the person(s) entitled to receive the Common Stock issuable upon such
conversion of the Class A Common Stock shall not be deemed to have converted
that Class A Common Stock until immediately prior to the closing of such
offering). Thereafter, all certificates representing shares of Class A Common
Stock shall be deemed to represent shares of Common Stock. Each person who holds
of record Class A Common Stock immediately prior to such automatic conversion
shall be entitled to all dividends which have accrued or been declared to the
time of the automatic conversion, but not paid on the Class A Common Stock,
pursuant to Section 4 hereof. Such dividends shall be paid to all such holders
within thirty (30) days of the automatic conversion.
(c) Mechanics of Conversion. (i) Before any holder of Class A Common
Stock shall be entitled to convert the same into shares of Common Stock pursuant
to Section 5(a) above, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the corporation or of any
transfer agent for the Common Stock, and shall give written notice to the
corporation at such office that such holder elects to convert the same and shall
state therein such holder's name or the name or names of such holder's nominees
in which such holder wishes the certificate or certificates for shares of Common
Stock to be issued. The corporation shall, as soon as practicable thereafter
(but in any event within five business days), issue and deliver at such office
to such holder of Class A Common Stock, or to such holder's nominee or nominees,
a certificate or certificates for the number of shares of Common Stock to which
such holder shall be entitled as set forth above. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of Class A Common Stock to be converted, and the
person or persons entitled to receive the shares of Common Stock issuable upon
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.
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(ii) Any holder of Class A Common Stock whose shares have been
converted into shares of Common Stock pursuant to Section 5(b) above shall be
entitled to surrender the certificate or certificates therefor, duly endorsed,
at the office of the corporation or any transfer agent for the Common Stock, and
the corporation shall, as soon as practicable thereafter (but in any event
within five business days), issue and deliver at such office to such holder, or
to such holder's nominee or nominees, a certificate or certificates for the
number of shares of Common Stock to which such holder shall be entitled as set
forth above.
(d) Subdivisions. If the corporation in any manner subdivides or
combines the outstanding shares of one class of Common Stock, the outstanding
shares of the other class of Common Stock will be proportionately subdivided or
combined."
(b) PREFERRED STOCK
Section 1. Designation. The Preferred Stock shall be divided into seven
series, Series A Preferred Stock, of which the corporation has authority to
issue TWO HUNDRED TWENTY FIVE THOUSAND (225,000) shares, Series B Preferred
Stock, of which the corporation has authority to issue TWO HUNDRED EIGHTEEN
THOUSAND EIGHT HUNDRED EIGHTEEN (218,818) shares, Series C Preferred Stock, of
which the corporation has authority to issue EIGHTY EIGHT THOUSAND THREE HUNDRED
THIRTY-NINE (88,339) shares, Series D Preferred Stock, of which the corporation
has authority to issue FORTY-EIGHT THOUSAND THREE HUNDRED EIGHTY-THREE (48,383)
shares, Series E Preferred Stock, of which the corporation has authority to
issue FORTY-TWO THOUSAND ONE HUNDRED SEVENTY-EIGHT (42,178) shares, Series F
Preferred Stock, of which the corporation has authority to issue THIRTY-EIGHT
THOUSAND THREE HUNDRED FIFTY-EIGHT (38,358) shares, and Series H Preferred
Stock, of which the corporation has authority to issue THREE HUNDRED SEVENTEEN
THOUSAND ONE HUNDRED FIFTY (317,150) shares. There are no authorized shares of
Series G Preferred Stock.
The Series A Preferred Stock, the Series B Preferred Stock, the Series
C Preferred Stock, the Series D Preferred Stock, the Series E Preferred Stock,
the Series F Preferred Stock, and the Series H Preferred Stock are hereafter
collectively referred to as the "Preferred Stock." The Series A Preferred Stock,
the Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and Series H Preferred Stock are collectively referred to as the
"Convertible Preferred Stock." The Series E Preferred Stock and the Series F
Preferred Stock are collectively referred to as the "Mezzanine Preferred Stock."
Except as otherwise provided herein, all shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock, Series F Preferred Stock and Series H Preferred
Stock will be identical
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and will entitle the holders thereof to the same rights, privileges, benefits
and notices.
I. Term Applicable Only to Convertible Preferred Stock.
Section 1. Conversion into Common Stock. The holders of the Convertible
Preferred Stock shall have conversion rights as follows (the "Conversion
Rights"):
(a) Right to Convert. Each share of Convertible Preferred Stock shall
be convertible, without the payment of any additional consideration by the
holder thereof and at the option of the holder thereof, at any time after the
date of issuance of such share, at the office of the corporation or any transfer
agent for the Preferred Stock, into such number of fully paid and nonassessable
shares of Class A Common Stock as is determined by dividing (i) in the case of
the Series A Preferred Stock, three dollars and thirty-three and one third cents
($3.3333) by the Series A Conversion Price, determined as hereinafter provided,
in effect at the time of conversion, (ii) in the case of the Series B Preferred
Stock, Nine Dollars and Fourteen Cents ($9.14) by the Series B Conversion Price,
determined as hereinafter provided, in effect at the time of the conversion,
(iii) in the case of the Series C Preferred Stock, Eleven Dollars and Thirty Two
Cents ($11.32) by the Series C Conversion Price, determined as hereinafter
provided, in effect at the time of the conversion, (iv) in the case of the
Series D Preferred Stock, Fifteen Dollars and Fifty Cents ($15.50) by the Series
D Conversion Price, determined as hereinafter provided, in effect at the time of
such conversion and (v) in the case of the Series H Preferred Stock, forty
dollars and ninety nine cents ($40.99) by the Series H Conversion Price,
determined as hereinafter provided, in effect at the time of the conversion. The
Conversion Price at which shares of Class A Common Stock shall be deliverable
upon conversion without the payment of any additional consideration by the
holder thereof shall initially be three dollars and thirty-three and one third
cents ($3.3333) per share of Class A Common Stock for the Series A Preferred
Stock (the "Series A Conversion Price"), nine dollars and fourteen cents ($9.14)
per share of Class A Common Stock for the Series B Preferred Stock (the "Series
B Conversion Price"), eleven dollars and thirty-two cents ($11.32) per share of
Class A Common Stock for the Series C Preferred Stock (the "Series C Conversion
Price"), fifteen dollars and fifty cents ($15.50) per share of Class A Common
Stock for the Series D Preferred Stock (the "Series D Conversion Price") and
forty dollars and ninety nine cents ($40.99) per share of Class A Common Stock
for the Series H Preferred Stock (the "Series H Conversion Price"). Such initial
Series A Conversion Price, Series B Conversion Price, Series C Conversion Price,
Series D Conversion Price and Series H Conversion Price shall be subject to
adjustment, in order to adjust the number of shares of Class A Common Stock into
which the Convertible Preferred Stock is convertible, as hereinafter provided.
(b) Automatic Conversion. Each share of Convertible Preferred Stock
shall, without any action on the part of the holder thereof, automatically be
converted into such number of fully paid and nonassessable shares of Class B
Common Stock as is
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determined by dividing (i) in the case of the Series A Preferred Stock, three
dollars and thirty-three and one third cents ($3.3333) by the Series A
Conversion Price in effect at the time of conversion, (ii) in the case of the
Series B Preferred Stock, nine dollars and fourteen cents ($9.14) by the Series
B Conversion Price in effect at the time of the conversion, (iii) in the case of
the Series C Preferred Stock, eleven dollars and thirty-two cents ($11.32) by
the Series C Conversion Price in effect at the time of the conversion, (iv) in
the case of the Series D Preferred Stock, fifteen dollars and fifty cents
($15.50) by the Series D Conversion Price in effect at the time of the
conversion, and (v) in the case of the Series H Preferred Stock, forty dollars
and ninety-nine cents ($40.99) by the Series H Conversion Price in effect at the
time of the conversion, upon the closing of a firm commitment underwritten
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale of Common Stock
for the account of the corporation to the public at a public offering price of
at least one and one-half times the then effective Series H Conversion Price in
which the aggregate net proceeds (after underwriters discounts and commissions)
to the Company are at least $10,000,000 ("Qualifying Public Offering") (in the
event of which offering, the person(s) entitled to receive the Class B Common
Stock issuable upon such conversion of the Convertible Preferred Stock shall not
be deemed to have converted that Convertible Preferred Stock until immediately
prior to the closing of such offering). Thereafter, all certificates
representing shares of Convertible Preferred Stock so converted shall be deemed
to represent shares of Class B Common Stock. Each person who holds of record
Convertible Preferred Stock immediately prior to such automatic conversion shall
be entitled to all dividends which have accrued or been declared to the time of
the automatic conversion, but not paid on the Convertible Preferred Stock,
pursuant to Section (b) (11) (1) hereof. Such dividends shall be paid to all
such holders within thirty (30) days of the automatic conversion.
(c) Mechanics of Conversion. (i) No fractional shares of Common Stock
shall be issued upon conversion of the Convertible Preferred Stock. In lieu of
any fractional shares to which the holder would otherwise be entitled, the
corporation shall pay cash equal to such fraction multiplied by the then
effective Series A Conversion Price, in the case of the Series A Preferred
Stock, the then effective Series B Conversion Price, in the case of the Series B
Preferred Stock, the then effective Series C Conversion Price, in the case of
the Series C Preferred Stock, the then effective Series D Conversion Price, in
the case of the Series D Preferred Stock, and the then effective Series H
Conversion Price, in the case of the Series H Preferred Stock.
(ii) Before any holder of Convertible Preferred Stock shall be
entitled to convert the same into full shares of Common Stock pursuant to
Section 1(a) above, such holder shall surrender the certificate or certificates
therefor, duly endorsed, at the office of the corporation or of any transfer
agent for the Convertible Preferred Stock, and shall give written notice to the
corporation at such office that such holder elects to convert the same and shall
state therein such holder's name or the name or names of such holder's nominees
in which such holder wishes the certificate or
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certificates for shares of Class A Common Stock to be issued. The corporation
shall, as soon as practicable thereafter (but in any event within five business
days), issue and deliver at such office to such holder of Convertible Preferred
Stock, or to such holder's nominee or nominees, a certificate or certificates
for the number of shares of Common Stock to which such holder shall be entitled
as set forth above, together with cash in lieu of any fraction of a share. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Convertible Preferred
Stock to be converted, and the person or persons entitled to receive the shares
of Common Stock issuable upon conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on such date.
(iii) Any holder of Convertible Preferred Stock whose shares
have been converted into shares of Class B Common Stock pursuant to Section 1(b)
above shall be entitled to surrender the certificate or certificates therefor,
duly endorsed, at the office of the corporation or any transfer agent for the
Convertible Preferred Stock, and the corporation shall as soon as practicable
(but in any event within five business days), issue and deliver at such office
to such holder, or to such holder's nominee or nominees, a certificate or
certificates for the number of shares of Class B Common Stock to which such
holder shall be entitled as set forth above, together with cash in lieu of any
fraction of a share.
(d) Adjustments to Conversion Price for Diluting Issues:
(i) Special Definitions. For purposes of this Section 1(d),
the following definitions shall apply:
(1) "Option" shall mean rights, options or warrants
to subscribe for, purchase or otherwise acquire either Common Stock or
Convertible Securities.
(2) "Original Issue Date" shall mean the date on
which a share of Convertible Preferred Stock was first issued.
(3) "Convertible Securities" shall mean any evidences
of indebtedness, shares (other than Common Stock and Convertible Preferred
Stock) or other securities directly or indirectly convertible into or
exchangeable for Common Stock.
(4) "Conversion Price" shall mean the Series A
Conversion Price, in the case of the Series A Preferred Stock, the Series B
Conversion Price, in the case of the Series B Preferred Stock, the Series C
Conversion Price, in the case of the Series C Preferred Stock, the Series D
Conversion Price, in the case of the Series D Preferred Stock and the Series H
Conversion Price in the case of the Series H Preferred Stock. All adjustments to
the Conversion Price pursuant to this Section 1(d) shall be computed separately
for the Series A Preferred Stock (based on the Series A Conversion
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Price), for the Series B Preferred Stock (based on the Series B Conversion
Price), for the Series C Preferred Stock (based on the Series C Conversion
Price), for the Series D Preferred Stock (based on the Series D Conversion
Price) and for the Series H Preferred Stock (based on the Series H Conversion
Price).
(5) "Additional Shares of Common Stock" shall mean
all shares of Common Stock issued (or, pursuant to Section 1 (d) (iii), deemed
to be issued) by the corporation after the Original Issue Date, other than
shares of Common Stock issued or issuable:
(A) upon conversion of shares of Convertible
Preferred Stock;
(B) to officers, directors or employees of, or
consultants to, the corporation pursuant to a stock purchase or option plan or
other employee stock incentive program (collectively, the "Plans") approved by
the Board of Directors in an amount not to exceed two hundred fifty-five
thousand (225,000) shares of Class B Common Stock (including all outstanding
options to purchase Class B Common Stock issued pursuant to the Plans);
(C) upon conversion of shares of Class A Common
Stock;
(D) to certain stockholders of the corporation
pursuant to a Purchase Agreement dated as of May 4, 1993 and March 30, 1994
between the corporation and such stockholders;
(E) in connection with the purchase by a wholly-
owned subsidiary of the corporation of all the assets of Impaq Publishing
Corporation pursuant to that certain Agreement and Plan of Reorganization, dated
as of May 18, 1992, in an amount not to exceed Twenty Four Thousand One Hundred
Forty-Three (24,143) shares of Class B Common Stock;
(F) upon issuance or exercise of the Warrants;
(G) upon issuance or exercise of the Voting Warrants;
or
(H) by way of dividend or other distribution on
shares of Common Stock excluded from the definition of Additional Shares of
Common Stock by the foregoing clauses (A), (B), (C), (D), (E), (F), (G), or this
clause (H) or on shares of Common Stock so excluded.
(ii) No Adjustment of Conversion Price. No adjustment in the
number of shares of Common Stock into which the Convertible Preferred Stock is
convertible shall be made, by adjustment in the Conversion Price of Convertible
Preferred Stock in
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respect of the issuance of Additional Shares of Common Stock or otherwise,
unless the consideration per share for an Additional Share of Common Stock
issued or deemed to be issued by the corporation is less than the Conversion
Price in effect on the date of, and immediately prior to, the issue of such
Additional Share of Common Stock.
(iii) Issue of Securities Deemed Issue of Additional Shares of
Common Stock.
(1) Options and Convertible Securities. In the event
the corporation at any time or from time to time after the Original Issue Date
shall issue any Options or Convertible Securities or shall fix a record date for
the determination of holders of any class of securities entitled to receive any
such Options or Convertible Securities, then the maximum number of shares (as
set forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record date shall have been fixed, as
of the close of business on such record date, provided that Additional Shares of
Common Stock shall not be deemed to have been issued unless the consideration
per share (determined pursuant to Section 1(d)(v) hereof), of such Additional
Shares of Common Stock would be less than the Conversion Price in effect on the
date of and immediately prior to such issue, or such record date, as the case
may be, and provided further that in any such case in which Additional Shares of
Common Stock are deemed to be issued:
(A) no further adjustment in the Conversion Price
shall be made upon the subsequent issue of Convertible Securities or shares of
Common Stock upon the exercise of such Options or conversion or exchange of such
Convertible Securities;
(B) if such Options or Convertible Securities by
their terms provide, with the passage of time or otherwise, for any increase or
decrease in the consideration payable to the corporation, or increase or
decrease in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Conversion Price computed upon the original
issue thereof (or upon the occurrence of a record date with respect thereto),
and any subsequent adjustments based thereon, shall, upon any such increase or
decrease becoming effective, be recomputed to reflect such increase or decrease
insofar as it affects such Options or the rights of conversion or exchange under
such Convertible Securities;
(C) upon the expiration of any such Options or any
rights of conversion or exchange under such Convertible Securities which shall
not have been exercised, the Conversion Price computed upon the original issue
thereof (or upon the occurrence of a record date with respect thereto), and any
subsequent adjustments based thereon, shall, upon such expiration, be recomputed
as if:
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(I) in the case of Convertible Securities or
Options for Common Stock the only Additional Shares of Common Stock issued were
the shares of Common Stock, if any, actually issued upon the exercise, of such
Options or the conversion or exchange of such Convertible Securities and the
consideration received therefor was the consideration actually received by the
corporation for the issue of all such Options, whether or not exercised, plus
the consideration actually received by the corporation upon such exercise, or
for the issue of all such Convertible Securities which were actually converted
or exchanged, plus the additional consideration, if any, actually received by
the corporation upon such conversion or exchange, and
(II) in the case of Options for Convertible
Securities only the Convertible Securities, if any, actually issued upon the
exercise thereof were issued at the time of issue of such Options, and the
consideration received by the corporation for the Additional Shares of Common
Stock deemed to have been then issued was the consideration actually received by
the corporation for the issue of all such Options, whether or not exercised,
plus the consideration deemed to have been received by the corporation
(determined pursuant to Section 1(d)(v)) upon the issue of the Convertible
Securities with respect to which such Options were actually exercised;
(D) no readjustment pursuant to clause (B) or (C)
above shall have the effect of increasing the Conversion Price to an amount
which exceeds the lower of (i) the Conversion Price on the original adjustment
date, or (ii) the Conversion Price that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date;
(E) in the case of any Options which expire by their
terms not more than 30 days after the date of issue thereof, no adjustment of
the Conversion Price shall be made until the expiration or exercise of all such
Options, whereupon such adjustment shall be made in the same manner provided in
clause (C) above; and
(F) if such record date shall have been fixed and
such Options or Convertible Securities are not issued on the date fixed
therefor, the adjustment previously made in the Conversion Price which became
effective on such record date shall be cancelled as of the close of business on
such record date, and thereafter the Conversion Price shall be adjusted pursuant
to this Section 1(d) (iii) as of the actual date of their issuance.
(2) Stock Dividends, Stock Distributions and Subdivisions. In
the event the corporation at any time or from time to time after the Original
Issue Date shall declare or pay any dividend or make any other distribution on
the Common Stock payable in Common Stock, or effect a subdivision of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in Common Stock), then and in any such event, Additional
Shares of Common Stock shall be deemed to have been issued:
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(A) in the case of any such dividend or distribution,
immediately after the close of business on the record date for the determination
of holders of any class of securities entitled to receive such dividend or
distribution, or
(B) in the case of any such subdivision, at the close
of business on the date immediately prior to the date upon which such corporate
action becomes effective.
If such record date shall have been fixed and such dividend shall not
have been fully paid on the date fixed therefor, the adjustment previously made
in the Conversion Price which became effective on such record date shall be
cancelled as of the close of business on such record date, and thereafter the
Conversion Price shall be adjusted pursuant to this Section 1(d)(iii) as of the
time of actual payment of such dividend.
(iv) Adjustment of Conversion Price Upon Issuance of
Additional Shares of Common Stock.
In the event the corporation shall issue or shall be deemed to issue
Additional Shares of Common Stock (including Additional Shares of Common Stock
deemed to be issued pursuant to Section 1(d)(iii), but excluding Additional
Shares of Common Stock issued pursuant to Section 1(d)(iii)(2), which event is
dealt with in Section 1(d)(vi) hereof) without consideration or for a
consideration per share less than the Conversion Price in effect on the date of
and immediately prior to such issue, then and in such issue, such Conversion
Price shall be reduced, concurrently with such issue in order to increase the
number of shares of Common Stock into which the Convertible Preferred Stock is
convertible, to a price determined by multiplying such Conversion Price by a
fraction (x) the numerator of which shall be (1) the number of shares of Common
Stock outstanding immediately prior to such issue (including shares of Common
Stock issuable upon conversion of any outstanding Convertible Preferred Stock or
Convertible Securities or upon exercise of any outstanding Options), plus (2)
the number of shares of Common Stock which the aggregate consideration received
by the corporation for the total number of Additional Shares of Common Stock so
issued would purchase at such Conversion Price, and (y) the denominator of which
shall be (1) the number of shares of Common Stock outstanding immediately prior
to such issue (including shares of Common Stock issuable upon conversion of any
outstanding Preferred Stock or Convertible Securities or upon exercise of any
outstanding Options), plus (2) the number of such Additional Shares of Common
Stock so issued.
(v) Determination of Consideration. For purposes of this
Section 1(d), the consideration received by the corporation for the issue of any
Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property: Such consideration shall:
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(A) insofar as it consists of cash, be
computed at the aggregate amount of cash received by the corporation excluding
amounts paid or payable for accrued interest or accrued dividends;
(B) insofar as it consists of property other
than cash, be computed at the fair value thereof at the time of such issue, as
determined in good faith by the Board of Directors; and
(C) in the event Additional Shares of Common
Stock are issued together with other shares or securities or other assets of the
corporation for consideration which covers both, be the proportion of such
consideration so received, computed as provided in clauses (A) and (B) above, as
determined in good faith by the Board of Directors.
(2) Options and Convertible Securities. The
consideration per share received by the corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Section 1(d)(iii)(1),
relating to Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or
receivable by the corporation as consideration for the issue of such Options or
Convertible Securities, plus the minimum aggregate amount of additional
consideration (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such
consideration) payable to the corporation upon the exercise of such Options or
the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options or the
conversion or exchange of such Convertible Securities, or in the case of Options
for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, by
(y) the maximum number of shares of Common
Stock (as set forth in the instruments relating thereto, without regard to any
provision contained therein for a subsequent adjustment of such number) issuable
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.
(vi) Adjustment for Dividends, Distributions,
Subdivisions, Combinations or Consolidation of Common
Stock.
(1) Stock Dividends, Distributions or Subdivisions.
In the event the corporation shall issue Additional Shares of Common Stock
pursuant to Section 1(d)(iii)(2) in a stock dividend, stock distribution or
subdivision, the Conversion Price in effect immediately prior to such stock
dividend, stock distribution or subdivision shall, concurrently with the
effectiveness of such stock dividend, stock distribution or subdivision, be
proportionately decreased.
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(2) Combinations or Consolidations. In the event the
outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of Common Stock,
the Conversion Price in effect immediately prior to such combination or
consolidation shall, concurrently with the effectiveness of such combination or
consolidation, be proportionately increased.
(vii) Adjustment for Merger or Reorganization, etc.
In case of any recapitalization, reorganization, reclassification,
consolidation, merger or the conveyance of all or substantially all of the
assets of the corporation pursuant to which the holders of Common Stock are
entitled to receive (either directly or on subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock (an
"Organic Change"), each of the holders of Convertible Preferred Stock shall
thereafter have the right to acquire and receive, in lieu of or in addition to
(as the case may be) the shares of Common Stock acquirable and receivable upon
conversion of such holder's Convertible Preferred Stock, such shares of stock,
securities or assets as such holder would have received if such holder had
converted its Convertible Preferred Stock immediately prior to such Organic
Change. In each such case, the corporation shall also make appropriate
provisions to insure that each share of Convertible Preferred Stock shall
thereafter be convertible into the number of shares of stock or other securities
or property to which a holder of the number of shares of Common Stock of the
corporation deliverable upon conversion of such Convertible Preferred Stock
would have been entitled upon such consolidation, merger or conveyance and that
appropriate adjustment (as determined by the Board of Directors) shall be made
in the application of the provisions herein set forth with respect to the rights
and interest thereafter of the holders of the Convertible Preferred Stock, to
the end that the provisions set forth herein (including provisions with respect
to changes in and other adjustments of the Series A Conversion Price, the Series
B Conversion Price, the Series C Conversion Price, the Series D Conversion Price
and the Series H Conversion Price) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other property
thereafter deliverable upon the conversion of the Convertible Preferred Stock.
The corporation shall not effect any such Organic Change unless prior to the
consummation thereof, the successor entity (if other than the corporation)
assumes by written instrument the obligations set forth herein.
(e) No Impairment. The corporation will not, by amendment of
its Certificate of Incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any
other voluntary action, avoid or seek to avoid the observance or performance of
any of the terms to be observed or performed hereunder by the corporation but
will at all times in good faith assist in the carrying out of all the provisions
of this Section 1 and in the taking of all such action as may be necessary or
appropriate in order to protect the conversion rights of the holders of the
Preferred Stock against impairment.
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(f) Certificate as to Adjustments. Upon the occurrence of each
adjustment or readjustment of the Conversion Price pursuant to this Section 1,
the corporation at its expense shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and furnish to each holder of
Convertible Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The corporation shall, upon the written request at any
time of any holder of Convertible Preferred Stock, furnish or cause to be
furnished to such holder a like certificate setting forth (i) such adjustments
and readjustments, (ii) the Conversion Price at the time in effect, and (iii)
the number of shares of Common Stock and the amount, if any, of other property
which at the time would be received upon the conversion of Convertible Preferred
Stock.
(g) Notices of Record Date. In the event of any taking by the
corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the corporation shall mail to each
holder of Convertible Preferred Stock at least ten (10) days prior to the date
specified herein, a notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution.
(h) Common Stock Reserved. The corporation shall reserve and
keep available out of its authorized but unissued Common Stock such number of
shares of Common Stock as shall from time to time be sufficient to effect
conversion of the Convertible Preferred Stock.
II. Terms Applicable to All Preferred Stock.
Section 1. Dividend Rights.
(a) Priorities. So long as any Mezzanine Preferred Stock remains
outstanding, neither the corporation nor any Subsidiary shall directly or
indirectly pay or declare any dividend or make any distribution upon any
Convertible Preferred Stock, if at the time of or immediately after such
dividend or distribution the corporation has failed to pay the full amount of
dividends accrued on the Mezzanine Preferred Stock, or directly or indirectly
pay or declare any dividend or make any distribution upon any Common Stock.
(b) Mezzanine Preferred Stock. (i) Dividend Rate. When and as declared
by the corporation's board of directors, to the extent permitted under the
General Corporation Law of Delaware, the corporation shall pay preferential
dividends to the holders of the Mezzanine Preferred Stock as provided in this
Section 1. Except as otherwise provided herein, dividends on each share of the
Mezzanine Preferred Stock shall accrue on a daily basis at the rate of 8% per
annum of the sum of the applicable Liquidation Value thereof, plus all
accumulated and unpaid dividends thereon, from and
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including the date of issuance of such share to and including the date on which
the applicable Liquidation Value of such share (plus all accrued and unpaid
dividends thereon) is paid. Such dividends shall accrue whether or not they have
been declared and whether or not there are profits, surplus or other funds of
the corporation legally available for the payment of dividends. The date on
which the corporation initially issues any share of Mezzanine Preferred Stock
shall be deemed to be its "date of issuance" regardless of the number of times
transfer of such share is made on the stock records maintained by or for the
corporation and regardless of the number of certificates which may be issued to
evidence such share.
(ii) Dividend Reference Dates. All accrued dividends on the
Mezzanine Preferred Stock shall be payable on May 1 of each year beginning May
1, 1994, in the case of the Series E Preferred Stock, and May 1, 1995, in the
case of the Series F Preferred Stock (the "Dividend Reference Dates"). To the
extent not paid on any Dividend Reference Date, all dividends which have accrued
on each share of Mezzanine Preferred Stock outstanding during the twelve-month
period (or other period in the case of the initial Dividend Reference Date)
ending upon each such Dividend Reference Date shall be accumulated and shall
remain accumulated dividends with respect to such share until paid.
(iii) Distribution of Partial Dividend Payments. Except as
otherwise provided herein, if at any time the corporation pays less than the
total amount of dividends then accrued with respect to the Mezzanine Preferred
Stock, such payment shall be distributed ratably among the holders of Mezzanine
Preferred Stock based upon the aggregate accrued and unpaid dividends held by
each such holder.
(c) Convertible Preferred Stock. (i) Subject to the prior and superior
rights of the Mezzanine Preferred Stock, the holders of outstanding Convertible
Preferred Stock shall be entitled to receive, when, if and as declared by the
Board of Directors, dividends at such rate as may be declared by the Board of
Directors from time to time. Such dividends shall be non-cumulative and shall be
payable only when, if and as declared by the Board of Directors and only to the
extent funds are legally available therefor.
(ii) Notwithstanding the provisions of this Section 1(d) but
subject to Section 1(a) hereof, dividends which have been declared on the
Convertible Preferred Stock but have not been paid prior to an automatic
conversion pursuant to Section (b) (I) (1) (b) hereof shall be payable, to the
extent funds are legally available therefor, within thirty (30) days after the
date of the automatic conversion, to each person who holds of record Convertible
Preferred Stock immediately prior to the automatic conversion. Subject to
Section 1(a) hereof, in the event adequate funds are not legally available for
such payment, payment shall be made when the Board of Directors declares such
funds to be legally available; provided that in no event shall any other
dividend payments be made until this payment obligation is satisfied in full
(except for dividends on the Mezzanine Preferred Stock in accordance with this
Section 1).
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<PAGE> 16
(iii) Subject to Section 1(a) hereof, the Board of Directors
may not declare or pay a dividend payable upon shares of Common Stock (other
than a dividend payable in the form of shares of Common Stock) unless,
simultaneously therewith, the Board declares a dividend payable upon the
Convertible Preferred Stock at the same rate (on an as-converted basis) as the
rate declared upon the Common Stock.
Section 2. Liquidation Rights.
(a) Mezzanine Preferred Stock. Upon any liquidation, dissolution or
winding up of the corporation, each holder of Mezzanine Preferred Stock shall be
entitled to be paid, before any distribution or payment is made upon any Junior
Securities, an amount in cash equal to the aggregate applicable Liquidation
Value (plus all accrued and unpaid dividends) of all shares of Mezzanine
Preferred Stock held by such holder, and the holders of Mezzanine Preferred
Stock shall not be entitled to any further payment. If upon any such
liquidation, dissolution or winding up of the corporation, the corporation's
assets to be distributed among the holders of the Mezzanine Preferred Stock are
insufficient to permit payment to such holders of the aggregate amount which
they are entitled to be paid, then the entire assets to be distributed shall be
distributed ratably among such holders based upon the aggregate applicable
Liquidation Value (plus all accrued and unpaid dividends) of Mezzanine Preferred
Stock held by each such holder.
(b) Convertible Preferred Stock and Class A Common Stock.
(i) Subject to the prior and superior rights of the Mezzanine
Preferred Stock, in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the affairs of the corporation, the holders of each
share of Series A Preferred Stock shall be entitled to receive an amount equal
to THREE DOLLARS AND THIRTY THREE AND ONE THIRD CENTS ($3.3333) per share (the
"Series A Liquidation Preference"), the holders of each share of Series B
Preferred Stock shall be entitled to receive an amount equal to NINE DOLLARS AND
FOURTEEN CENTS ($9.14) per share (the "Series B Liquidation Preference"), the
holders of each share of Series C Preferred Stock shall be entitled to receive
an amount equal to ELEVEN DOLLARS AND THIRTY~TWO CENTS ($11.32) per share (the
"Series C Liquidation Preference"), the holders of each share of Series D
Preferred Stock shall be entitled to receive an amount equal to FIFTEEN DOLLARS
AND FIFTY CENTS ($15.50) per share (the "Series D Liquidation Preference") and
the holders of each share of Series H Preferred Stock shall be entitled to
receive an amount equal to FORTY DOLLARS AND NINETY-NINE CENTS ($40.99) per
share (the "Series H Liquidation Preference"), in each case plus accrued,
declared and unpaid dividends to the date thereof, if any, prior and in
preference to any distribution of any of the assets or surplus funds of the
corporation to the holders of the Common Stock by reason of their ownership
thereof. If upon any such liquidation, dissolution or winding up of the
corporation, the Corporation's assets to be distributed among the holders of the
Convertible Preferred Stock are insufficient to permit payment to such
-16-
<PAGE> 17
holders of the aggregate amount which they are entitled to be paid, then the
entire assets to be distributed shall be distributed ratably among such holders
based upon the aggregate applicable amounts that they are owed. After the
payment or the setting apart of the full payment to the holders of the
Convertible Preferred Stock, then the holders of Class A Common Stock shall be
entitled to receive a special liquidation preference equal to ONE CENT ($0.01)
per share plus all capital contributed by such holder in the purchase of such
holder's shares of Class A Common Stock as reflected on the books of the Company
(including the purchase price paid for shares of Convertible Preferred Stock
which have been converted into shares of Class A Common Stock). The preferences
set forth in this Section 2(b)(i) shall be proportionately adjusted for stock
dividends, stock distributions or subdivisions, combinations, reclassification
or the like. After the payment or the setting apart of payment to the holders of
Class A Common Stock, then the holders of Convertible Preferred Stock and the
holders of Common Stock shall be entitled to receive all remaining assets of the
corporation ratably on a share for share basis as if the Convertible Preferred
Stock had been converted to Common Stock immediately prior thereto.
(ii) All of the preferential amounts to be paid to the holders
of the Convertible Preferred Stock under this Section (b) (11) (2) (b) shall be
paid or set apart for payment before the payment or setting apart for payment of
any amount for, or the distribution of any assets of the corporation to, the
holders of the Class A Common Stock in connection with such liquidation,
dissolution or winding up and all of the preferential amount to be paid to the
holders of the Class A Common Stock under this Section (b)(II)(2)(b) shall be
paid or set apart for payment before the payment or setting apart for payment of
any amount for, or the distribution of, any remaining assets of the corporation.
(iii) If the assets or surplus funds to be distributed to the
holders of the Convertible Preferred Stock are insufficient to permit the
payment to such holders of their full preferential amount, the assets and
surplus funds legally available for distribution shall be distributed ratably
among the holders of the Convertible Preferred Stock in proportion to the full
preferential amount each such holder is otherwise entitled to receive. If the
assets or surplus funds to be distributed to the holders of Class A Common Stock
are insufficient to permit the payment to such holders of their full
preferential amount, the assets and surplus funds legally available for
distribution shall be distributed ratably among the holders of the Class A
Common Stock in proportion to the full preferential amount each such holder is
otherwise entitled to receive.
(c) Deemed Liquidation. For the purposes of this Section 2, the merger
or consolidation of the corporation into or with another entity or entities in
which the corporation shall not survive, or the sale or transfer of all or
substantially all the assets of the corporation, or a merger in which the
corporation is the survivor but its Common Stock is exchanged for stock,
securities or property of another entity, or a merger in which the corporation
is the survivor but the holders of the corporation's outstanding
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<PAGE> 18
capital stock possessing the voting power (under ordinary circumstances) to
elect a majority of the corporation's board of directors immediately prior to
the merger do not continue to own the corporation's outstanding capital stock
possessing the voting power (under ordinary circumstances) to elect a majority
of the corporation's board of directors immediately after the merger, shall be
deemed to be a liquidation, dissolution, and winding up of the corporation, and
the holders of the Preferred Stock shall be entitled to receive payment of the
amounts payable with respect to the Preferred Stock upon a liquidation,
dissolution or winding up in cancellation of their shares upon the consummation
of any such transaction. Each holder of Convertible Preferred Stock shall have
the right to elect the benefits of either this Section 2 or Section (b) (I) (1)
(d) (vii) in connection with any such transaction. Each holder of Mezzanine
Preferred Stock shall have the right to elect the benefits of either this
Section 2 or Section (b) (II) (3) (c) (iii) in connection with any such
transaction.
(d) The corporation shall mail written notice of such liquidation,
dissolution or winding up, not less than 60 days prior to the payment date
stated therein, to each record holder of Preferred Stock.
Section 3. Redemption.
(a) Priorities. So long as any Mezzanine Preferred Stock remains
outstanding and subject to Section (b) (II) (5) (b), neither the corporation nor
any Subsidiary shall directly or indirectly redeem, purchase or otherwise
acquire any Convertible Preferred Stock, if immediately after such redemption,
purchase or acquisition, any Event of Noncompliance would exist with respect to
the Mezzanine Preferred Stock.
(b) Redemption of Convertible Preferred Stock. Subject to Section 3(a)
above and Section (b)(II)(5)(b), at any time on or after July 31, 2001, each
holder of the Convertible Preferred Stock shall have the right to compel the
corporation to purchase (the "Redemption Right") any or all of such holder's
shares of Convertible Preferred Stock at a price equal to (a) in the case of the
Series A Preferred, the greater of the then Fair Market Value (as defined below
in this Section 3) of the Series A Preferred Stock, or the Series A Liquidation
Preference (the "Series A Redemption Price"), (b) in the case of the Series B
Preferred Stock, the greater of the then Fair Market Value of the Series B
Preferred Stock, or the Series B Liquidation Preference (the "Series B
Redemption Price"), (c) in the case of the Series C Preferred Stock, the greater
of the then Fair Market Value of the Series C Preferred Stock, or the Series C
Liquidation Preference (the "Series C Redemption Price"), (d) in the case of the
Series D Preferred Stock, the greater of the then Fair Market Value of the
Series D Preferred Stock, or the Series D Liquidation Preference (the "Series D
Redemption Price") and (e) in the case of the Series H Preferred Stock, the
greater of the then Fair Market Value of the Series H Preferred Stock or the
Series H Liquidation Preference (the "Series H Redemption Price").
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<PAGE> 19
For purposes of this Section 3, "Fair Market Value" of the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock, the
Series D Preferred Stock or the Series H Preferred Stock means the fair market
value of the Series A Preferred Stock, the Series B Preferred Stock, the Series
C Preferred Stock, the Series D Preferred Stock or the Series H Preferred Stock,
respectively, taking into account the value of the Company's entire common
equity on a going concern basis as between a willing buyer and a willing seller
in an arm's-length transaction and taking into account all other relevant
factors determinative of value. The corporation shall select an independent
appraiser and the holder(s) of a majority of the Convertible Preferred Stock
(based on the number of shares of Common Stock into which such Convertible
Preferred Stock is convertible) for which redemption is requested, shall select
an independent appraiser. Each appraiser shall render his opinion as to the Fair
Market Value of the Convertible Preferred Stock for which redemption is
requested. The two appraisers shall be given thirty (30) days from the date both
appraisers are engaged within which to render their opinions as to the Fair
Market Value of such Convertible Preferred Stock. In the event that the lower
appraisal is at least 90% of the higher appraisal, then the average of the two
appraisals shall constitute and be deemed the Fair Market Value of such
Convertible Preferred Stock. If the lower appraisal is not greater than or equal
to 90% of the higher appraisal, then the two appraisers shall select a third
appraiser to render his opinion as to the Fair Market Value of such Convertible
Preferred Stock. The third appraiser shall be given thirty (30) days from the
date he is engaged within which to render his opinion as to the Fair Market
Value of such Convertible Preferred Stock. In such case, the third appraisal
shall constitute and be deemed the Fair Market Value of such Convertible
Preferred Stock. The corporation shall bear the costs of the appraisals. After
the determination of Fair Market Value following the exercise of the Redemption
Right, each holder of Convertible Preferred Stock may rescind its exercise of
such Redemption Right.
Any holder requesting redemption shall give written notice thereof (the
"Redemption Notice") to the corporation at least ninety (90) days prior to the
requested date of the redemption (the "Redemption Date"). Such Redemption Notice
shall state the series and the number of shares of Convertible Preferred Stock
to be redeemed. Notwithstanding the foregoing, the holders of 51% of each series
of Convertible Preferred Stock shall have the right to postpone for a specified
period of time or waive such rights of all holders of each respective series of
Convertible Preferred Stock by written notice to the corporation given at least
fifteen (15) days prior to the Redemption Date.
Within ten days after receipt of the Redemption Notice, the corporation
shall give notice of any requested redemption by mail, postage prepaid, to all
holders of record of the Convertible Preferred Stock, such notice to be
addressed to each holder at the address as it appears on the stock transfer
books of the corporation and to specify the date of the redemption and the
number of shares of the holder requested to be redeemed. Each of the other
holders of Convertible Preferred Stock shall have the right to exercise the
Redemption Right and compel the corporation to purchase any or all of
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<PAGE> 20
such holder's shares of Convertible Preferred Stock at the Series A Redemption
Price, the Series B Redemption Price, the Series C Redemption Price, the Series
D Redemption Price or the Series H Redemption Price, as the case may be, on the
Redemption Date by delivery of a Redemption Notice to the corporation within ten
days after receipt of notice of the requested redemption from the corporation.
On or after the Redemption Date (unless postponed or waived as provided in the
preceding paragraph), the holder or holders requesting the redemption shall
surrender his certificate for the number of shares to be redeemed as stated in
the Redemption Notice. If less than all of the shares represented by such
certificates are redeemed, a new certificate shall forthwith be issued for the
shares that are not redeemed.
If the funds of the corporation legally available for redemption on any
Redemption Date are insufficient to redeem the total number of shares requested
to be redeemed on such date, those funds which are legally available shall be
used to redeem to maximum possible number of shares requested to be redeemed
ratably among the holders of shares of Convertible Preferred Stock requested to
be redeemed based upon the aggregate Series A Redemption Price, Series B
Redemption Price, Series C Redemption Price, Series D Redemption Price and/or
Series H Redemption Price, as the case may be, of such shares held by each such
holder. At any time thereafter when additional funds of the corporation are
legally available for redemption of Convertible Preferred Stock, such funds
shall immediately be used to redeem the balance of any Convertible Preferred
Stock which the corporation has become obligated to redeem on any Redemption
Date but which it has not redeemed.
(c) Redemption of Mezzanine Preferred Stock.
(i) Scheduled Redemptions. The corporation shall redeem all
outstanding shares of Series E Preferred Stock on April 30, 1998, at a price per
share equal to the Series E Liquidation Value thereof (plus all accrued and
unpaid dividends thereon), and the corporation shall redeem all outstanding
shares of Series F Preferred Stock on April 30, 1999, at a price per share equal
to the Series F Liquidation Value thereof (plus all accrued and unpaid dividends
thereon). The date on which any shares of Mezzanine Preferred Stock are required
to be redeemed is referred to herein as the "Scheduled Redemption Date").
(ii) Redemption Payment. For each share of Mezzanine Preferred
Stock which is to be redeemed, the corporation shall be obligated on the
Redemption Date to pay to the holder thereof (upon surrender by such holder at
the corporation's principal office of the certificate representing such Share)
an amount in immediately available funds equal to the applicable Liquidation
Value of such share (plus all accrued and unpaid dividends thereon). If the
funds of the corporation legally available for redemption of shares on any
Redemption Date are insufficient to redeem the total number of shares to be
redeemed on such date, those funds which are legally available shall be used to
redeem the maximum possible number of shares ratably among the
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<PAGE> 21
holders of the shares to be redeemed based upon the aggregate applicable
Liquidation Value of such shares (plus all accrued and unpaid dividends thereon)
held by each such holder. At any time thereafter when additional funds of the
corporation are legally available for the redemption of shares, such funds shall
immediately be used to redeem the balance of the shares which the corporation
has become obligated to redeem on any Redemption Date but which it has not
redeemed.
(iii) Special Redemptions.
(A) If a Change in Ownership has occurred or the
corporation obtains knowledge that a Change in Ownership is to occur, the
corporation shall give prompt written notice of such Change in Ownership
describing in reasonable detail the definitive terms and date of consummation
thereof to each holder of Mezzanine Preferred Stock, but in any event such
notice shall not be given later than five days after the occurrence of such
Change in Ownership. The holder or holders of a majority of the Series E
Preferred Stock then outstanding may require the corporation to redeem all or
any portion of the Series E Preferred Stock owned by such holder or holders, and
the holder or holders of a majority of the Series F Preferred Stock then
outstanding may require the corporation to redeem all or any portion of the
Series F Preferred Stock owned by such holder or holders, in each case at a
price per Share equal to the applicable Liquidation Value thereof (plus all
accrued and unpaid dividends thereon) by giving written notice to the
corporation of such election prior to the later of (a) 21 days after receipt of
the corporation's notice and (b) five days prior to the consummation of the
Change in Ownership (the "Expiration Date"). The corporation shall give prompt
written notice of any such election to all other holders of Mezzanine Preferred
Stock within five days after the receipt thereof, and each such holder shall
have until the later of (a) the Expiration Date or (b) ten days after receipt of
such second notice to request redemption (by giving written notice to the
corporation) of all or any portion of the Series E Preferred Stock or Series F
Preferred Stock owned by such holder. Upon receipt of such election(s), the
corporation shall be obligated to redeem the aggregate number of shares
specified therein on the later of (a) the occurrence of the Change in Ownership
or (b) five days after the corporation's receipt of such election(s). If in any
case a proposed Change in Ownership does not occur, all requests for redemption
in connection therewith shall be automatically rescinded. The term "Change in
Ownership" means any sale or issuance or series of sales and/or issuances of
shares of the corporation's capital stock by the corporation or any holders
thereof immediately after which the holders of the corporation's capital stock
possessing the voting power (under ordinary circumstances) to elect a majority
of the corporation's board of directors immediately prior to such sale or
issuance or series of sales or issuances do not continue to own the
corporation's outstanding capital stock possessing the voting power (under
ordinary circumstances) to elect a majority of the corporation's board of
directors.
(B) If a Fundamental Change is proposed to occur, the
corporation shall give written notice of such Fundamental Change describing in
reasonable detail the
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<PAGE> 22
definitive terms and date of consummation thereof to each holder of Mezzanine
Preferred Stock not more than 45 days nor less than 20 days prior to the
consummation thereof. The holder or holders of a majority of the Mezzanine
Preferred Stock then outstanding may require the corporation to redeem all or
any portion of the Mezzanine Preferred Stock owned by such holder or holders at
a price per Share equal to the applicable Liquidation Value thereof (plus all
accrued and unpaid dividends thereon) by giving written notice to the
corporation of such election prior to the later of (a) ten days prior to the
consummation of the Fundamental Change or (b) ten days after receipt of notice
from the corporation. The corporation shall give prompt written notice of such
election to all other holders of Mezzanine Preferred Stock (but in any event
within five days prior to the consummation of the Fundamental Change), and each
such holder shall have until two days after the receipt of such notice to
request redemption (by written notice given to the corporation) of all or any
portion of the Mezzanine Preferred Stock owned by such holder. Upon receipt of
such election(s), the corporation shall be obligated to redeem the aggregate
number of shares specified therein upon the consummation of such Fundamental
Change. If any proposed Fundamental Change does not occur, all requests for
redemption in connection therewith shall be automatically rescinded. The term
"Fundamental Change" means (a) a sale or transfer of more than 30% of the assets
of the corporation and its Subsidiaries on a consolidated basis (measured by
either book value in accordance with generally accepted accounting principles
consistently applied or fair market value determined in the reasonable good
faith judgment of the corporation's board of directors) in any transaction or
series of transactions (other than sales of inventory in the ordinary course of
business) and (b) any merger or consolidation to which the corporation is a
party, except for a merger in which the corporation is the surviving corporation
and, after giving effect to such merger, the holders of the corporation's
outstanding capital stock possessing a majority of the voting power (under
ordinary circumstances) to elect a majority of the corporation's board of
directors immediately prior to the merger shall own the corporation's
outstanding capital stock possessing the voting power (under ordinary
circumstances) to elect a majority of the corporation's board of directors.
(C) Redemptions made pursuant to this paragraph (iii) shall
not relieve the corporation of its obligation to redeem Mezzanine Preferred
Stock on the Scheduled Redemption Date pursuant Section (b) (II) (3) (c) (i)
hereof.
(D) The corporation may redeem shares of Mezzanine Preferred
Stock pursuant to this paragraph (iii) only after all shares of Mezzanine
Preferred Stock for which requests for redemption have been made hereunder have
been redeemed in full.
(iv) Redemption After Public Offering. The corporation shall, at the
request (by written notice given to the corporation) of the holders of a
majority of the Mezzanine Preferred Stock, apply all of the net cash proceeds
from any Public Offering remaining after deduction of all discounts,
underwriters' commissions and other reasonable expenses to redeem shares of
Mezzanine Preferred Stock at a price per share equal to the
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<PAGE> 23
applicable Liquidation Value thereof (plus all accrued and unpaid dividends
thereon). Such redemption shall take place on a date fixed by the corporation,
which date shall be not more than five days after the corporation's receipt of
such proceeds. Redemptions of shares pursuant to this paragraph shall not
relieve the corporation of its obligation to redeem shares on the Scheduled
Redemption Date.
(v) Optional Redemptions. The corporation may at any time repurchase
all or any portion of the Mezzanine Preferred Stock then outstanding. On any
such redemption, the corporation shall pay a price per share of Mezzanine
Preferred Stock equal to the applicable Liquidation Value thereof plus all
accrued and unpaid dividends thereon and a premium equal to the following
percentage of the applicable Liquidation Value:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
Redemption Occurs Series E Series F
On or After But Prior to % Premium % Premium
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
May 1, 1993 April 30, 1994 10 N/A
- ---------------------------------------------------------------------------------
May 1, 1994 April 30, 1995 8 10
- ---------------------------------------------------------------------------------
May 1, 1995 April 30, 1996 6 8
- ---------------------------------------------------------------------------------
May 1, 1996 April 30, 1997 4 6
- ---------------------------------------------------------------------------------
May 1, 1997 April 30, 1998 2 4
- ---------------------------------------------------------------------------------
May 1, 1998 April 30, 1999 0 2
- ---------------------------------------------------------------------------------
</TABLE>
Redemptions made pursuant to this paragraph shall not relieve the corporation of
its obligation to redeem shares of Mezzanine Preferred Stock on the Scheduled
Redemption Date.
(vi) Notice of Redemption. The corporation shall mail written notice of
each redemption of any Mezzanine Preferred Stock (other than a redemption at the
request of a holder or holders of Mezzanine Preferred Stock) to each record
holder thereof not more than 30 nor less than 10 days prior to the date of which
such redemption is to be made. Upon mailing any notice of redemption which
relates to a redemption at the corporation's option, the corporation shall
become obligated to redeem the total number of shares of Mezzanine Preferred
Stock specified in such notice. If not all the Mezzanine Preferred Stock
represented by any certificate is redeemed, a new certificate representing the
number of unredeemed shares Mezzanine Preferred Stock shall be issued to the
holder thereof without cost to such holder within three business days after
surrender of the certificate representing the redeemed shares.
(vii) Determination of the Number of Each Holder's Shares to be
Redeemed. The number of shares of Mezzanine Preferred Stock to be redeemed from
each holder
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<PAGE> 24
thereof in redemptions hereunder shall be the number of Shares determined by
multiplying the total number of shares of Mezzanine Preferred Stock to be
redeemed times a fraction, the numerator of which shall be the total number of
shares of Mezzanine Preferred Stock then held by such holder and the denominator
of which shall be the total number of shares of Mezzanine Preferred Stock then
outstanding.
(d) Dividends After Redemption Date. No share of Preferred Stock is
entitled to any dividends accruing after the date on which the Series A
Liquidation Preference, Series B Liquidation Preference, Series C Liquidation
Preference, Series D Liquidation Preference, Series E Liquidation Value, Series
F Liquidation Value, or the Series H Preference Amount, as the case may be, of
such share (plus all accrued and unpaid dividends thereon) is paid to the holder
thereof. On such date all rights of the holder of such share shall cease, and
such share shall not be deemed to be outstanding.
(e) Redeemed or Otherwise Acquired Shares. Any shares of Preferred
Stock which are redeemed or otherwise acquired by the corporation shall be
cancelled and shall not be reissued, sold or transferred.
(f) Other Redemptions or Acquisitions.
(i) Neither the corporation nor any Subsidiary shall redeem or
otherwise acquire any Mezzanine Preferred Stock, except as expressly authorized
herein or pursuant to a purchase offer made pro-rata to all holders of the
Mezzanine Preferred Stock on the basis of the applicable Liquidation Value of
Mezzanine Preferred Stock owned by each such holder.
(ii) Neither the corporation nor any Subsidiary shall redeem
or otherwise acquire any Convertible Preferred Stock, except as expressly
authorized herein or pursuant to a purchase offer made pro-rata to all holders
of Convertible Preferred Stock on the basis of the Series A Liquidation
Preference, the Series B Liquidation Preference, the Series C Liquidation
Preference, the Series D Liquidation Preference or the Series H Liquidation
Preference, as applicable, of such Convertible Preferred Stock.
Section 4. Voting Rights.
(a) Mezzanine Preferred Stock. Except as otherwise provided in Section
(b) (III) (1) (b) or Section 5 below or otherwise required by law, the holders
of Mezzanine Preferred Stock shall have no voting rights (provided that each
holder of Mezzanine Preferred Stock shall be entitled to notice of all
stockholders meetings at the same time and in the same manner as notice is given
to the stockholders entitled to vote at such meeting).
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<PAGE> 25
(b) Convertible Preferred Stock. Except as otherwise required by law,
the holders of Convertible Preferred Stock, the holders of Common Stock and the
holders of Voting Warrants shall be entitled to notice of all stockholders
meetings and to vote upon any matter submitted to stockholders for a vote, on
the following basis, except as otherwise provided in Section 4(c) and Section
(b) (III) (1) (b) (iii) below for the election of directors:
(i) Holders of Common Stock shall have one vote per share;
(ii) Except as otherwise expressly provided in Section 4(b)
(iii) below, holders of each share of Convertible Preferred Stock shall have the
number of votes equal to the number of shares of Common Stock into which the
Convertible Preferred Stock is convertible, as adjusted from time to time
pursuant to Section (b) (I) (1);
(iii) (A) In the event that (w) the corporation shall fail to
pay dividends or redeem the Convertible Preferred Stock when required pursuant
to Sections (b) (II) (1) and (b) (II) (3) hereof when funds are legally
available therefor and such failure to pay or redeem continues for thirty (30)
days from the date when such payment or redemption is required, (x) the
corporation shall be in default of any material covenant contained in this
Certificate of Incorporation, or in the Amended and Restated Stockholders
Agreement dated as of December 28, 1990, as amended from time to time, by and
among the corporation and the signatories thereto (the "Stockholders Agreement")
and such default is not cured by the corporation or waived within thirty (30)
days of notice thereof unless, upon application of the corporation's best
efforts, such default cannot be cured by the corporation within (30) days, then
if such default is not cured by the corporation within sixty (60) days of notice
thereof, (y) there shall occur a default under the terms of any agreement
pursuant to which the corporation has incurred any material indebtedness, which
default is not cured by the corporation or waived within thirty (30) days of
notice thereof or of acceleration of the indebtedness related thereto, or (z)
the corporation commences a voluntary case or other proceeding, or consents to
the commencement of an involuntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to it or its debts under the Federal
bankruptcy laws, as now constituted or hereafter amended, or under any other
bankruptcy, insolvency or similar law now or hereafter in effect or fails to
have any such involuntary case or other proceeding dismissed within ninety (90)
days or makes a general assignment for the benefit of creditors or materially
compromises debt with creditors or suffers acceleration of any material
obligation to a third party, then, in any such event, the holders of outstanding
Convertible Preferred Stock shall, subject to the special voting rights of the
Mezzanine Preferred Stock set forth in Section (b) (III) (1) (b) (iii) be
entitled to (a) that number of votes per share on all matters to be voted on by
stockholders as is equal to five times the number of shares of Common Stock into
which each such share of Convertible Preferred Stock held by such holder is
convertible, and, (b) voting together as a single class, elect the number of
directors constituting a majority of the directors of the corporation, and the
holders of the Convertible Preferred Stock
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<PAGE> 26
and the holders of the Common Stock, voting together, and on an as converted to
common basis, shall be entitled to elect the remaining directors of the
corporation.
(B) If and when none of the conditions set forth in
clause (A) above continue to exist, then each holder of outstanding Convertible
Preferred Stock shall have that number of votes per share as is equal to the
number of shares of Common Stock into which each such share of Convertible
Preferred Stock held by such holder is convertible; but always subject to the
same provisions vesting the number of votes per share specified in clause (A)
above in the holders of the shares of Convertible Preferred Stock in case of
further defaults as provided in clause (A) above; and
(iv) Holders of any Voting Warrant shall have the number of
votes equal to the number of shares of Common Stock into which such Voting
Warrant is exercisable, as adjusted from time to time pursuant to the terms of
such Voting Warrant;
(c) Whenever under the provisions of Section 4(b) (iii) (A) hereof the
holders of Convertible Preferred Stock shall have the right to elect the number
of directors constituting a majority of the directors of the corporation, the
Board of the Directors shall, within ten (10) days after delivery to the
corporation at its principal office of a request to such effect by the holders
of shares of Convertible Preferred Stock representing at least ten percent (10%)
of the votes entitled to be cast by the holders of the Convertible Preferred
Stock, call a special meeting of the stockholders for the election of directors,
to be held upon not less than ten (10) nor more than twenty (20) days' notice to
such holders. If such notice of meeting is not given within the ten days
required above, the holders of Convertible Preferred Stock requesting the
calling of such meeting may also call such meeting and shall have access to the
stock books and records of the corporation. The terms of office of all persons
who are then directors shall terminate at such meeting upon the election of
their successors. The Board of Directors elected pursuant to this Section 4(c)
shall use their best efforts to cause the corporation to cure or remedy the
event or events giving rise to the voting rights provided in Section 4(b) (iii)
(A).
(d) Upon the termination of the voting rights provided by Section 4(b)
(iii) (A) above, the Board of Directors shall call a special meeting of
stockholders at which all directors will be elected as provided in Section 4(b)
(i) and Section 4(b) (ii) above, and the terms of office of all persons who are
then directors of the corporation shall terminate immediately upon the election
of their successors.
Section 5. Covenants.
(a) Preferred Stock Covenants I. So long as any shares of Preferred
Stock shall be outstanding (as adjusted for all subdivisions and combinations),
the corporation shall not, without first obtaining the affirmative vote or
written consent of 80% of the outstanding shares of the Convertible Preferred
Stock voting as a class (with each share
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of Preferred Stock having one vote), a majority of the outstanding shares of
Series E Preferred Stock and a majority of the outstanding shares of Series F
Preferred Stock:
(i) reclassify any Common Stock into shares having any
preference or priority as to dividends or assets superior to or on a parity with
any such preference or priority of the Preferred Stock;
(ii) pay or declare any dividend or distribution on any shares
of Common Stock or apply any of its assets to the redemption, retirement,
purchase or other acquisition directly or indirectly, through subsidiaries or
otherwise, of any shares of Common Stock except repurchases from employees of
the corporation upon termination of employment and except purchases pursuant to
any rights of first refusal the corporation may have under the Stockholders
Agreement;
(iii) increase the authorized number of directors constituting
the Board of Directors of the corporation;
(iv) use the proceeds of the issuance of the Series B
Preferred Stock to repay any loans to the corporation's stockholders or repay or
prepay any loans to the corporation's stockholders in violation of any of its
loan or credit agreements or other financing arrangements.
(v) (i) amend or repeal any provision of, or add any provision
to, Sections (b) (II) (1) (a) or (b), (b) (II) (2) (a) or (c), (b) (II) (3) (a)
, (c) or (f) (i) , (b) (II) (4) (a), (b) (II) (5) or (b) (III) or (b)(IV)(1) to
the extent any definitions are used in the foregoing Sections, or (b)(IV)(2)(a)
of the Corporation's Certificate of Incorporation, or (ii) or adopt, amend or
repeal any other provisions of, or add any provision to, the corporation's
Certificate of Incorporation or Bylaws if (in the case of this clause (ii) only)
such action would alter or change or otherwise adversely affect the preferences,
rights, privileges or powers of, or the restrictions provided for the benefit
of, the Mezzanine Preferred Stock;
(vi) create or issue any other class or classes of stock or
series of Preferred Stock or any securities superior to or on parity with the
Mezzanine Preferred Stock;
(vii) increase the authorized number of shares of Mezzanine
Preferred Stock;
(b) Preferred Stock Covenants II. So long as any shares of Preferred
Stock shall be outstanding (as adjusted for all subdivisions and Combinations),
the corporation shall not without first obtaining the affirmative vote or
written consent of a majority of the outstanding shares of Preferred Stock,
voting as a single class (with each share of Preferred Stock having one vote):
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(i) amend or repeal any provision of, or add any provision to,
the corporation's Certificate of Incorporation or Bylaws if such action would
alter or change the preferences, rights, privileges or powers of, or the
restrictions provided for the benefit of, the Convertible Preferred Stock;
(ii) create or issue any other class or classes of stock or
series of Preferred Stock or any securities superior to or on a parity with the
Convertible Preferred Stock;
(iii) increase the authorized number of shares of Convertible
Preferred Stock;
(vi) merge or consolidate or sell, lease, exchange or
otherwise dispose of all or any material portion of its property and assets;
(vi) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction (including, without limitation, any
reorganization into partnership form);
(vii) transfer, by sale, license or otherwise, any
intellectual property rights of the corporation;
(viii) issue or sell any shares of its capital stock, or any
rights or options to acquire any shares of its capital stock, other than (i)
issuances of Class A Common Stock upon conversion of the Preferred Stock, (ii)
issuances of Class B Common Stock upon conversion of Class A Common Stock, (iii)
issuances of Common Stock or Preferred Stock in the form of dividends payable on
shares of outstanding Common Stock or Preferred Stock, respectively, (iv)
issuances of up to 112,000 Employee Shares (as defined in Section 5.17 of the
Stockholders Agreement) (including all outstanding options to purchase Employee
Shares), (v) issuances of Class A Common Stock upon exercise of the Warrants,
and (vi) issuances of Class A Common Stock upon exercise of the Voting Warrants.
(c) Mezzanine Preferred Stock Covenant. So long as any shares of
Mezzanine Preferred Stock shall be outstanding, the corporation shall not,
without first obtaining the affirmative vote or written consent of 80% of the
outstanding shares of Series E Preferred Stock and 80% of the outstanding shares
of Series F Preferred Stock, directly or indirectly, through Subsidiaries or
otherwise, pay or declare any dividend or distribution on any Junior Security,
apply any of its assets to redeem, retire, purchase or otherwise acquire any
Junior Security, other than repurchases pursuant to Section 2.5 of the
Stockholders Agreement.
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(d) Series H Preferred Stock Covenant. The holders of the Series H
Preferred Stock shall be entitled to elect one (1) member of the corporation's
Board of Directors in accordance with the terms of the Third Securities Purchase
Agreement.
III. Terms Applicable to Mezzanine Preferred Stock Only.
Section 1. Events of Noncompliance.
(a) Definition. An Event of Noncompliance shall be deemed to
have occurred if:
(i) the corporation fails to pay on any Dividend Reference
Date after the Scheduled Redemption Date the full amount of dividends then
accrued on the Mezzanine Preferred Stock whether or not such payment is
otherwise legally permissible or is prohibited by any other agreement to which
the corporation is subject;
(ii) the corporation fails to make any redemption payment with
respect to the Mezzanine Preferred Stock which it is obligated to make
hereunder, whether or not such payment is then legally Permissible or is
prohibited by any agreement to which the corporation is subject;
(iii) the corporation breaches or otherwise fails to perform
or observe in any material respect any other covenant or agreement set forth
herein, in the Series E Purchase Agreement, the Securities Purchase Agreement or
the Stockholders Agreement; provided that in the event the corporation
inadvertently breaches any covenant or agreement set forth in the Series E
Purchase Agreement, the Securities Purchase Agreement or the Stockholders
Agreement, no Event of Noncompliance shall be deemed to have occurred unless
such breach is not cured within 30 days after the corporation has notice or
knowledge of such breach;
(iv) the corporation breaches any representation or warranty
contained in the Series E Purchase Agreement or Securities Purchase Agreement in
any material respect;
(v) the corporation or any Subsidiary makes an assignment for
the benefit of creditors or admits in writing its inability to pay its debts
generally as they become due; or an order, judgment or decree is entered
adjudicating the corporation or any Subsidiary bankrupt or insolvent; or any
order for relief with respect to the corporation or any Subsidiary is entered
under the Federal Bankruptcy Code; or the corporation or any Subsidiary
petitions or applies to any tribunal for the appointment of a custodian,
trustee, receiver or liquidator of the corporation or any Subsidiary or of any
substantial part of the assets of the corporation or any Subsidiary, or
commences any proceeding (other than a proceeding for the voluntary liquidation
and dissolution of a Subsidiary) relating to the corporation or any Subsidiary
under any bankruptcy,
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reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction; or any such petition or application is
filed, or any such proceeding is commenced, against the corporation or any
Subsidiary and either (a) the corporation or any such Subsidiary by any act
indicates its approval thereof, consent thereto or acquiescence therein or (b)
such petition, application or proceeding is not dismissed within 60 days;
(vi) a judgment in excess of $100,000 is rendered against the
corporation or any Subsidiary and, within 60 days after entry thereof, such
judgment is not discharged in accordance with the terms thereof or execution
thereof stayed pending appeal, or within 60 days after the expiration of any
such stay, such judgment is not discharged in accordance with the terms thereof;
(vii) any of the events set forth in Section 4(b) (iii) above
shall occur entitling the holders of Convertible Preferred Stock to the special
voting rights described in Section 4(b) above; or
(viii) the corporation or any Subsidiary defaults in the
performance of any obligation or agreement pursuant to which the corporation has
incurred any material indebtedness, which default is not cured by the
Corporation within thirty (30) days after such default or if the effect of such
default is to cause such indebtedness to become due prior to its stated maturity
or to permit the holder or holders of any obligation to cause such indebtedness
to become due prior to its stated maturity.
(b) Consequences of Certain Events of Noncompliance.
(i) If an Event of Noncompliance has occurred, the dividend
rate on the Mezzanine Preferred Stock shall increase immediately by an increment
of 4 percentage point(s). Thereafter, until such time as no Event of
Noncompliance exists, the dividend rate shall increase automatically at the end
of each succeeding 365-day period by an additional increment of 2 percentage
point(s). Any increase of the dividend rate resulting from the operation of this
Paragraph shall terminate as of the close of business on the date on which no
Event of Noncompliance exists, subject to subsequent increases Pursuant to this
paragraph.
(ii) If an Event of Noncompliance has occurred, the holder or
holders of a majority of the Series E Preferred Stock then outstanding may
demand (by written notice delivered to the corporation) immediate redemption of
all or any portion of the Series E Preferred Stock owned by such holder or
holders, and the holder or holders of a majority of the Series F Preferred Stock
then outstanding may demand (by written notice delivered to the corporation)
immediate redemption of all or any portion of the Series F Preferred Stock owned
by such holder or holders, in each case at a price per Share equal to the
applicable Liquidation Value thereof (plus all accrued and unpaid dividends
thereon). The corporation shall give prompt written notice of such election to
the other
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holders of Mezzanine Preferred Stock (but in any event within five days after
receipt of the initial demand for redemption), and each such other holder may
demand immediate redemption of all or any portion of such holder's Mezzanine
Preferred Stock by giving written notice thereof to the corporation within seven
days after receipt of the corporation's notice. The corporation shall redeem all
Mezzanine Preferred Stock as to which rights under this paragraph have been
exercised within 15 days after the receipt of the initial demand for redemption.
(iii) If an Event of Noncompliance of the type described in
Section (1) (a) (i) or (1) (a) (ii) has occurred and has continued for 60 days
or any other Event of Noncompliance has occurred, the number of directors
constituting the corporation's board of directors shall, at the request of the
holders of a majority of the Mezzanine Preferred Stock then outstanding, be
increased by one member, and the holders of Mezzanine Preferred Stock will have
the special right, voting separately as a single class (with each share being
entitled to one vote) and to the exclusion of all other classes of the
corporation's stock, to elect an individual to fill such newly created
directorship, to fill any vacancy of such directorship and to remove any
individual elected to such directorship. The special voting rights contained in
Section (1) (b) (ii) shall be prior to any voting rights of the Convertible
Preferred Stock pursuant to Section (b) (II) (4) (b) (iii) above. The newly
created directorship will constitute a separate class of directors, and the
director elected by the holders of the Mezzanine Preferred Stock will be
entitled to cast a number of votes on each matter considered by the board of
directors (including for purposes of determining the existence of a quorum)
equal to the sum of the number of votes entitled to be cast by all of the other
directors plus one, and the corporation shall amend its Bylaws so that there can
be no quorum of the board of directors if the director elected by the Mezzanine
Preferred Stock is not present. The special right of the holders of Mezzanine
Preferred Stock to elect members of the board of directors may be exercised at
the special meeting called pursuant to this subparagraph (iii), at any annual or
other special meeting of Stockholders and, to the extent and in the manner
permitted by applicable law, pursuant to a written consent in lieu of a
stockholders meeting. Such special right shall continue until such time as there
is no longer any Event of Noncompliance in existence, at which time such special
right shall terminate subject to revesting upon the occurrence and continuation
of any Event of Noncompliance which gives rise to such special right hereunder.
At any time when such special right has vested in the holders of
Mezzanine Preferred Stock, a proper officer of the corporation shall, upon the
written request of the holder of at least 10% of the Series E Preferred Stock or
Series F Preferred Stock then outstanding, addressed to the secretary of the
corporation, call a special meeting of the holders of Mezzanine Preferred Stock
for the purpose of electing a director pursuant to this subparagraph. Such
meeting shall be held at the earliest legally permissible date at the principal
office of the corporation, or at such other place designated by the holders of
at least 10% of the Series E Preferred Stock or Series F Preferred Stock then
outstanding. If such meeting has not been called by a proper officer of the
corporation
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within 10 days after personal service of such written request upon the secretary
of the corporation or within 20 days after mailing the same to the secretary of
the corporation at its principal office, then the holders of at least 10% of the
Series E Preferred Stock or Series F Preferred Stock then outstanding may
designate in writing one of their number to call such meeting at the expense of
the corporation, and such meeting may be called by such person so designated
upon the notice required for annual meetings of Stockholders and shall be held
at the corporation's principal office, or at such other place designated by the
holders of at least 10% of the Series E Preferred Stock or Series F Preferred
Stock then outstanding. Any holder of Mezzanine Preferred Stock so designated
shall be given access to the stock record books of the corporation for the
purpose of causing a meeting of stockholders to be called pursuant to this
paragraph.
At any meeting or at any adjournment thereof at which the holders of
Mezzanine Preferred Stock have the special right to elect directors, the
presence, in person or by proxy, of the holders of a majority of the Mezzanine
Preferred Stock then outstanding shall be required to constitute a quorum for
the election or removal of any director by the holders of the Mezzanine
Preferred Stock exercising such special right. The vote of a majority of such
quorum shall be required to elect or remove any such director.
Any director so elected by the holders of Mezzanine Preferred Stock
shall continue to serve as a director until the date on which there is no longer
any Event of Noncompliance in existence. After the special right to elect
directors has terminated, the number of directors constituting the board of
directors of the corporation shall decrease to such number as constituted the
whole board of directors of the corporation immediately prior to this occurrence
of the Event or Events of Noncompliance giving rise to the special right to
elect directors.
(iv) If any Event of Noncompliance exists, each holder of
Mezzanine Preferred Stock shall also have any other rights which such holder is
entitled to under any contract or agreement at any time and any other rights
which such holder may have pursuant to applicable law.
IV. Miscellaneous.
Section 1. Definitions.
"Fourth Securities Purchase Agreement" means the Securities Purchase
Agreement, dated August 15, 1995, among the corporation and certain investors,
as such agreement may from time to time be amended in accordance with its terms.
"Junior Securities" means any of the corporation's capital stock or
other equity securities other than the Mezzanine Preferred Stock.
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"Liquidation Value" means the Series E Liquidation Value, in the case
of the Series E Preferred Stock, and the Series F Liquidation Value, in the case
of the Series F Preferred Stock.
"Public Offering" means any offering by the corporation of its equity
securities to the public pursuant to an effective registration statement under
the Securities Act of 1933, as then in effect, or any comparable statement under
any similar federal statute then in force.
"Redemption Date" as to any share of Preferred Stock means the date
specified in the notice of any redemption at the corporation's option or the
applicable date specified herein in the case of any other redemption; provided
that no such date shall be a Redemption Date unless the aggregate amount
required to be paid upon such redemption is actually paid in full on such date,
and if not so paid in full, the Redemption Date shall be the date on which such
amount is fully paid.
"Securities Purchase Agreement" means the Securities Purchase Agreement
dated March 30, 1994 by and among the corporation and certain investors, as such
agreement may from time to time be amended in accordance with its terms.
"Securities E Liquidation Value" of any share of Series E Preferred
Stock as of any particular date shall be equal to $23.7091.
"Series E Purchase Agreement" means the Purchase Agreement, dated as of
May 4, 1993, by and among the corporation and certain investors, as such
agreement may from time to time be amended in accordance with its terms.
"Series F Liquidation Value" of any share of Series F Preferred Stock
as of any particular date shall be equal to $26.07.
"Subsidiary" means any corporation of which the shares of outstanding
capital stock possessing the voting power (under ordinary circumstances) in
electing the board of directors are, at the time as of which any determination
is being made, owned by the corporation either directly or indirectly through
Subsidiaries.
"Third Securities Purchase Agreement" means the Securities Purchase
Agreement dated as of July 31, 1995, among the corporation and certain
investors, as such agreement may from time to time be amended in accordance with
its terms.
"Voting Warrants" means those stock subscription warrants with voting
rights for the purchase of Class A Common Stock of the corporation dated August
3, 1995, and issued to Sprout Growth II, L.P. and DLJ Capital Corporation as
such warrants may from time to time be amended in accordance with their terms.
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"Warrants" means (i) those certain warrants for the purchase of Class A
Common Stock dated March 30, 1994 and issued pursuant to the Securities Purchase
Agreement, (ii) those certain warrants for the purchase of Class A Common Stock
dated September 9, 1994, and issued to Brown Brothers Hariman & Co. and (iii)
those certain warrants for the purchase of 10,000 shares of Class A Common Stock
in the aggregate as contemplated by the Third Securities Purchase Agreement and
the Fourth Securities Purchase Agreement, in each case as such warrants may from
time to time be amended in accordance with their terms.
Section 2. Amendment and Waiver.
(a) Subject to the provisions of Sections (b)(II)(5) hereof,
no amendment, modification or waiver of this Certificate of Incorporation shall
be binding or effective without the prior written consent of a majority of the
issued and outstanding shares of Common Stock, voting as a single class, and a
majority of the issued and outstanding Preferred Stock voting as a single class
(with each share of Preferred Stock having one vote) provided that no change in
the terms hereof may be accomplished by merger or consolidation of the
corporation with another corporation or entity unless the corporation has
obtained the prior written consent provided for herein. Any amendment,
modification or waiver of this Certificate of Incorporation in violation of
Section (b)(II)(5) hereof shall be null and void.
(b) Notwithstanding anything to the contrary herein, the
preferential rights granted herein to the Series H Preferred Stock in Section
(b)(II)(5)(d) shall not be modified without the affirmative vote of the holders
of a majority of the issued and outstanding shares of Series H Preferred Stock.
(c) Notwithstanding the foregoing, no amendment to the rights
of any of the Series A, B, C, D or H Preferred Stock, which by their terms
affect such Series adversely or differently from the rights of any of the other
Series of Convertible Preferred Stock, shall be effective without the
affirmative vote of the holders of a majority of the issued and outstanding
shares of the Series of Preferred Stock so affected.
Section 3. Residual Rights. All rights accruing to the outstanding
shares of the corporation not expressly provided for to the contrary herein
shall be vested in the Common Stock.
ARTICLE V
INCORPORATOR
The name and mailing address of the incorporator are as follows:
Frances A. Wrigley 1 Gulf & Western Plaza
New York, NY 10023-7773
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ARTICLE VI
The corporation is to have perpetual existence.
ARTICLE VII
Whenever a compromise or arrangement is proposed between this
corporation and its creditors or any class of them and/or between this
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this corporation under
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of the any receiver or receivers appointed for this corporation
under Section 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of the creditors, and/or of the stockholders or class of
stockholders of this corporation, as the case may be, to be summoned in such
manner as the said court directs. If a majority in number representing three
fourths in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the case may be,
agree to any compromise or arrangement and to any reorganization of this
corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or all the stockholders or class of
stockholders, of this corporation, as the case may be, and also on this
corporation.
ARTICLE VIII
For the management of the business and for the conduct of the affairs
of the corporation, and in further definition, limitation, and regulation of the
powers of the corporation and of its directors and of its stockholders or any
class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs
of the corporation shall be vested in its Board of Directors.
The number of directors which shall constitute the whole Board
of Directors shall be fixed by, or in the manner provided in,
the Bylaws. The phrase "whole Board" and the phrase "total
number of directors" shall be deemed to have the same meaning,
to wit, the total number of directors which the
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corporation would have if there were no vacancies. No election
of directors need be by written ballot.
2. After the original or other Bylaws of the corporation have
been adopted, amended, or repealed, as the case may be, in
accordance with the provisions of Section 109 of the General
Corporation Law of the State of Delaware, and, after the
corporation has received any payment for any of its stock, the
power to adopt, amend, or repeal the Bylaws of the corporation
may be exercised by the Board of Directors of the corporation;
provided, however, that any provision for the classification
of directors of the corporation for staggered terms pursuant
to the provisions of subsection (d) of Section 141 of the
General Corporation Law of the State of Delaware shall be set
forth in an initial Bylaw or in a Bylaw adopted by the
stockholders entitled to vote of the corporation unless
provisions for such classification shall be set forth in this
certificate of incorporation.
3. Whenever the corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the
holder thereof to notice of, and the right to vote at, any
meeting of the stockholders. Whenever the corporation shall be
authorized to issue more than one class of stock, no
outstanding share of any class of stock which is denied voting
power under the provisions of the certificate of incorporation
shall entitle the holder thereof to the right to vote at any
meeting of stockholders except as the provisions of paragraph
(2) of subsection (b) of Section 242 of the General
Corporation Law of the State of Delaware shall otherwise
require; provided, that no share of any such class which is
otherwise denied voting power shall entitle the holder thereof
to vote upon the increase or decrease in the number of
authorized shares of said class.
ARTICLE IX
The personal liability of the directors of the corporation is hereby
eliminated to the fullest extent permitted by paragraph (7) of subsection (b) of
Section 102 of the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented. Any repeal or modification of this Article
Ninth shall not adversely affect any right or protection of a director of the
corporation existing at the time of such repeal or modification.
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ARTICLE X
The corporation shall, to the fullest extent permitted by Section 145
of the General Corporation Law of the State of Delaware, as the same may be
amended and supplemented, indemnify any and all persons whom it shall have power
to indemnify under said section from and against any and all of the expenses,
liabilities, or other matters referred to in or covered by said section, and the
indemnification provided for herein shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any Bylaw, agreement,
vote of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding such
office, and shall continue as to a person who has ceased to be a director,
officer, employee, or agent and shall inure to the benefit of the heirs,
executors, and administrators of such a person.
ARTICLE XI
From time to time any of the provisions of this certificate of
incorporation may be amended, altered or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
certificate of incorporation are granted subject to the provisions of this
Article ELEVENTH.
ARTICLE XII
The corporation expressly elects not to be governed by Section 203 of
the general corporation Law of the State of Delaware.
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IN WITNESS WHEREOF, the undersigned has caused this Restated
Certificate of Incorporation to be duly executed on its behalf as of August 30,
1996.
MEMBERWORKS INCORPORATED
By: /s/ Gary Johnson
--------------------------
Gary Johnson, President
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<PAGE> 1
Exhibit 4.2
CARDMEMBER PUBLISHING CORPORATION
AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
AGREEMENT, dated as of this 28th day of December, 1990, by and among
Cardmember Publishing Corporation, a Delaware corporation (the "Company"), and
each of the signatories hereto.
RECITALS
WHEREAS, pursuant to an Agreement dated as of July 12, 1989 among
the Founders (as defined below), each of the Founders purchased Restricted
Securities (as defined below) of the Company;
WHEREAS, pursuant to a Stockholders' Agreement (the "Stockholders
Agreement") dated as of July 31, 1989 by and among the Company, GeoCapital (as
defined below) and the Founders, GeoCapital purchased Restricted Securities of
the Company and the Founders, GeoCapital and the Company agreed to impose
certain obligations and restrictions on the Restricted Securities owned by
GeoCapital and the Founders and on the conduct of the Company's Stockholders;
WHEREAS, on December 15, 1989, GeoCapital transferred 10,500 shares
of Restricted Securities to Bernard Goldstein and, on the date hereof, Bernard
Goldstein purchased an additional 4,923 shares of Restricted Securities at a
price of $9.14 per share;
WHEREAS, pursuant to a Purchase Agreement (as defined below), each
of the Investors (as defined below), other than Bernard Goldstein, are
purchasing Restricted Securities of the Company; and
WHEREAS, such parties desire to promote their mutual interests and
the interests of the Company by amending and restating the Stockholders
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 As used herein, the following terms, unless the context clearly
indicates otherwise, shall have the following meanings:
"Affiliate" of any particular Person shall mean any other Person
controlling, controlled by or under common control with such particular Person,
or a member of a
<PAGE> 2
Person's Immediate Family, or in the case of a Founder, a Person closely
associated with such Founder, or, in the case of an Investor, a general partner
of such Investor.
"Chancellor" shall mean Chancellor Capital Management, Inc., a New
York corporation.
"Commitment Letter" shall mean the commitment letter dated December
17, 1990 from Mid City Bank to the Company.
"Common Stock" shall mean the Class A Common Stock of the Company,
$.01 par value per share and/or the Class B Common Stock of the Company, $.01
par value per share.
"Founders" shall mean Gary Johnson, Thomas St. Denis and Dennis
Walker.
"Founders Shares" shall mean (a) the shares of Class A Common Stock
of the Company, par value $0.01 per share, issued to the Founders on July 28,
1989, (b) the shares of Class B Common Stock of the Company, par value $0.01 per
share, issued or issuable upon conversion of the Class A Common Stock and (c)
any securities issued with respect to the securities referred to in clauses (a)
and (b) by way of a stock dividend or stock split or in connection with a stock
combination, recapitalization, merger, consolidation or other reorganization. As
to any particular Founders Shares, such shares shall cease to be Founders Shares
when they have been distributed to the public pursuant to an offering registered
under the Securities Act or sold to the public through a broker, dealer or
market maker in compliance with Rule 144 under the Securities Act (or any
similar rule then in force).
"Guaranty" shall mean the Founders' personal guarantee of the
$2,000,000 loan to be made by Mid City Bank to the Company pursuant to the
Commitment Letter.
"GeoCapital" shall mean GeoCapital II, L.P., a Delaware limited
partnership.
"Holder" shall mean any holder (including, without limitation, a
Permitted Transferee) of outstanding Common Stock or Preferred Stock which has
not been sold pursuant to a public offering or public sale.
"Holder of Common Stock" shall mean any holder (including without
limitation, a Permitted Transferee) of outstanding Common Stock which has not
been sold pursuant to a public offering or Public sale.
"Immediate Family" shall mean any ancestor, descendant (adopted or
natural) or spouse of any Person, or of the spouse of such Person, or any
custodian or trustee for the account or benefit of such Person.
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"Investors" shall mean GeoCapital, Goldstein, each of the Persons
listed on the attached Schedule of Stockholders under the heading "Chancellor
Entities" and any of their Permitted Transferees.
"Mid City Bank" shall mean Mid City Bank of Omaha, Nebraska.
"Permitted Transferee" shall mean (a) in the case of an individual,
the Immediate Family of such person, a trust solely for the benefit of such
person or his Immediate Family, the estate or legal representatives of such
person and any partnership, corporation or other entity wholly-owned by such
person, (b) in the case of a partnership, any of its partners (general and/or
limited), the estates of such partners and any partnership, corporation or other
entity wholly-owned by such partnership or such partners, and (c) in the case of
a corporation, any corporation controlled by, controlling, or under common
control with such transferor corporation, provided that during the term of this
Agreement such transferee corporation shall remain a corporation controlled by,
controlling or under common control with such transferor corporation. For
purposes of this definition, "control" shall mean (x) direct or indirect
beneficial ownership of more than fifty percent (50%) of each class of voting
securities of the controlled corporation and (y) the power to elect a majority
of the Board of Directors (or similar management committee) of the controlled
corporation.
"Person" shall mean an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.
"Preferred Stock" shall mean the Series A Preferred Stock and/or the
Series B Preferred Stock.
"Purchase Agreement" shall mean the Purchase Agreement dated as of
the date hereof by and among the Company, the Investors (other than Bernard
Goldstein) and the Founders.
"Qualifying Public Offering" shall mean a public offering pursuant
to a registration statement filed with and declared effective by the Securities
and Exchange Commission covering the offer and sale of Common Stock for the
account of the Company to the public at a price to the public of not less than
300% of the Series B Conversion Price (as defined in the Amendment to the
Certificate of Incorporation attached hereto as Exhibit A) then in effect, in
which the aggregate net proceeds (after underwriting discounts and commissions)
to the Company are at least $10,000,000.
"Register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act
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and applicable rules and regulations thereunder, and the declaration or ordering
of the effectiveness of such registration statement.
"Registrable Securities" shall mean (a) the shares of Class B Common
Stock issued or issuable upon conversion of the Preferred Stock, (b) the shares
of Class B Common Stock issued or issuable upon conversion of the Class A Common
Stock into which shares of Preferred Stock have been converted, (c) any Common
Stock issued in respect of securities referred to in clauses (a) and (b) by way
of a stock split or stock dividend, or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization and (d)
any other shares of Common Stock owned by Holders of the securities described in
clauses (a), (b) and (c) above. As to any particular Registrable Securities,
such securities will cease to be Registrable Securities when they have been
distributed to the public pursuant to an offering registered under the
Securities Act or sold to the public through a broker, dealer or market maker in
compliance with Rule 144 under the Securities Act (or any similar rule then in
force). For purposes of this Agreement, a person or entity will be deemed to be
a Holder of Registrable Securities whenever such person or entity has the right
to acquire directly or indirectly such Registrable Securities (upon conversion
or exercise in connection with a transfer of securities or otherwise, but
disregarding any restrictions or limitations upon the exercise of such right),
whether or not such acquisition has actually been effected.
"Restricted Securities" shall mean (a) the shares of Preferred Stock
purchased by GeoCapital on July 31, 1989, (b) the shares of Preferred Stock
purchased by Bernard Goldstein from GeoCapital on December 15, 1989 and from the
Company on December 28, 1990, (c) the shares of Preferred Stock purchased by the
Investors pursuant to the Purchase Agreement, (d) the shares of Common Stock
issued or issuable upon conversion of the Preferred Stock, (e) the shares of
Class B Common Stock issued or issuable upon conversion of the Class A Common
Stock into which shares of Preferred Stock purchased by the Investors have been
converted, (f) the shares of Class A Common Stock purchased by the Founders on
July 28, 1989, (g) the shares of Class B Common Stock issued or issuable upon
the conversion of the Class A Common Stock purchased by the Founders, (h) the
shares of Class B Common Stock to be issued pursuant to Section 5.17 hereunder,
and (i) any securities issued with respect to the securities referred to in
clauses (a), (b), (c), (d), (e), (f) (g) or (h) by way of a stock dividend,
Stock split or in connection with a stock combination, recapitalization, merger,
consolidation or other reorganization. As to any particular Restricted
Securities, such securities will cease to be Restricted Securities when they
have (a) been effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them, (b) become eligible
for sale pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act or (c) subject to the provisions of Article 4 of this Agreement,
been otherwise legally transferred and new certificates for them not bearing the
Securities Act legend set forth in Section 4.6 have been issued. Whenever any
particular securities cease to be Restricted Securities, the holder thereof
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shall be entitled to receive from the Company, without expense, new securities
of like tenor not bearing a Securities Act legend of the character set forth in
Section 4.6.
"Securities Act" means the Securities Act of 1933, as amended, or
any similar federal law then in force.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar federal law then in force.
"Securities and Exchange Commission" includes any governmental body
or agency succeeding to the functions thereof.
"Series A Preferred Stock" shall mean the Series A Preferred Stock
of the Company, par value $0.01 per share, having the rights, restrictions,
privileges and preferences set forth in the Amendment to the Certificate of
Incorporation attached hereto as Exhibit A.
"Series B Preferred Stock" shall mean the Series B Preferred Stock
of the Company, par value $0.01 per share, having the rights, restrictions,
privileges and preferences set forth in the Amendment to the Certificate of
Incorporation attached hereto as Exhibit A.
"Transfer" shall mean any transfer, sale, assignment, pledge,
hypothecation or other disposition.
"Underlying Common Stock" shall mean (a) the Common Stock issued or
issuable upon conversion of the Preferred Stock, (b) the Class B Common Stock
issued or issuable upon conversion of the Class A Common Stock into which shares
of Preferred Stock have been converted and (c) any Common Stock issued or
issuable with respect to the Securities referred to in clauses (a) and (b) above
by way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization. For
purposes of this Agreement, any person or entity who holds Preferred Stock shall
be deemed to be the holder of the Underlying Common Stock obtainable upon
conversion of the Preferred Stock in connection with the transfer thereof or
otherwise, regardless of any restriction or limitation on the conversion of the
Preferred Stock. As to any particular shares of Underlying Common Stock, such
shares shall cease to be Underlying Common Stock when they have been (a)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering them or (b) distributed to the public
through a broker, dealer or market maker pursuant to Rule 144 under the
Securities Act (or any similar provision then in force).
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ARTICLE 2
SUBSCRIPTION FOR SHARES
2.1 Subscription for Shares of Common Stock. Each of the Founders
has purchased 225,000 Founders Shares. In consideration of the issuance of such
shares, each of the Founders paid on July 12, 1989 (the "Transfer Date") the
purchase price set forth on the Schedule of Stockholders attached hereto and
agrees that his purchase is subject to the provisions of this Agreement. Dennis
Walker represents and warrants to the Company and the Investors that, as of the
Transfer Date, he had good and marketable title to all of the assets transferred
to the Company and listed on the Schedule of Stockholders as payment for the
225,000 shares of Class A Common Stock purchased by Walker on the Transfer Date,
free and clear of any pledges, liens, leases, encumbrances, security interests,
charges or similar restrictions of any nature other than those which have arisen
in the ordinary course of business and which do not detract materially from the
value of or interfere with the use of any of the assets.
2.2 Subscription for Shares of Series A Preferred Stock.
(a) GeoCapital subscribed for the number of shares of Series A
Preferred Stock set forth opposite its name on the Schedule of Stockholders
attached hereto under the column labelled "Number of Shares of Series A
Preferred". In consideration of the issuance of, such Series A Preferred Stock,
GeoCapital paid the purchase price of ($3.3333) per share of Series A Preferred
Stock to the Company for the full purchase price. The Company, upon receipt of
GeoCapital's payment, delivered to GeoCapital a certificate representing the
shares of Series A Preferred Stock, which shares are fully paid and
non-assessable.
(b) The closing of the purchase and sale of the shares of Series A
Preferred Stock took place on July 31, 1989 (the "Closing").
2.3 Purchase of Shares of Series B Preferred Stock. Pursuant to the
Purchase Agreement, each of the Investors purchased the number of shares of
Series B Preferred Stock set forth opposite its name on the Schedule of
Stockholders attached hereto under the column labelled "Number of Shares of
Series B Preferred" for the purchase price set forth opposite its name on the
Schedule of Stockholders under the column labelled "Total Price for Series B
Preferred."
2.4 Investment Representation. At and as of the Closing, GeoCapital
made the following representations and warranties to the Company, which
representations and warranties are hereby confirmed:
(a) It has such knowledge and experience in financial and business
matters and such experience in evaluating and investing in newly organized
companies
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such as the Company as to be capable of evaluating the merits and risks of an
investment in the shares of Preferred Stock. It recognizes that the purchase of
the shares of Preferred Stock involves a substantial degree of risk and it has
the financial ability to bear the economic risk of its investment, has adequate
means for providing for its current needs and contingencies and has no need for
liquidity with respect to its investment in the Company.
(b) It is acquiring the shares of Preferred Stock for investment for
its own account, for investment purposes only, and not with the view to, for
resale in connection with, any public distribution thereof. It understands that
the shares of Preferred Stock have not been registered under the Securities Act
by reason of a specified exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
its investment intent as expressed herein.
(c) It acknowledges that the shares of Preferred Stock and
Underlying Common Stock must be held indefinitely unless they are subsequently
registered under the Securities Act or any exemption from such registration is
available. It has been advised or is aware of the provisions of Rule 144
promulgated under the Securities Act, which permits limited resale of shares
purchased in a private placement subject to the satisfaction of certain
conditions, and that such rule may not become available for resale of the shares
of Preferred Stock or Underlying Common Stock.
(d) It has relied upon independent investigations made by it or its
representatives, and that it or its representatives have had an opportunity to
discuss the Company's business, management and financial affairs with its
management, to review the Company's facilities, and to obtain such additional
information concerning its investment in the shares in order for it to evaluate
the merits and risks of an investment in the shares of Preferred Stock, and has
determined that the shares are a suitable investment for it and that at this
time it could bear a complete loss of its investment.
(e) It is an "accredited investor," as that term is defined in
Regulation D under the Securities Act.
(f) It is a limited partnership with its principal places of
business in New Jersey.
2.5 Vesting.
(a) All of the Founder Shares shall be subject to repurchase in
accordance with this Section 2.5 (the "Purchase Option") and shall be "Unvested
Stock" until they become fully vested in accordance with subsection 2.5(h)
hereof. In the event any of the Founders shall cease to be employed by or act as
a consultant to the Company (including a parent or subsidiary of the Company) on
account of such
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Founder voluntarily terminating his employment with the Company or on account of
the Company terminating such Founder for any reason, or no reason, with or
without cause, and if Mid City Bank shall have released such Founder from its
obligations under the guarantee within 120 days after the date of such
termination, then (i) prior to December 31, 1992, the Company shall have the
right to purchase from that Founder or his personal representative, as the case
may be, all (but not less than all) of the Founders Shares purchased by such
Founder for an aggregate purchase price of $275,000, or (ii) on or after
December 31, 1992 but prior to December 31, 1994, the Company shall have the
right to purchase from the Founder, or his personal representative, as the case
may be, all (or any part) of the Founders Shares purchased by such Founder at
the then current fair market value of such shares. In addition, in the event any
of the Founders shall cease to be employed by or act as a consultant to the
Company (including a parent or subsidiary of the Company) on account of
termination by the Company and if Mid City Bank shall not have released such
Founder from its obligations under the Guarantee within 120 days after the date
of such termination, then (i) if such termination was without cause, then the
Company shall be obligated to purchase from such Founder, and (ii) if such
termination was for cause, then the Company shall have the right (but not the
obligation) to Purchase from such Founder, (x) prior to December 31, 1992, all
(but not less than all) of such Founder's Shares purchased by such Founder for
an aggregate purchase price of $667,000 or (y) on or after December 31, 1992 but
prior to December 31, 1994, the number of Founder's Shares purchased by such
Founder having a fair market value equal to $667,000 for a purchase price of
$667,000. For purposes of this Section 2.5, "cause" shall mean (a) conviction or
entry of a plea of nolo contendere for a felony, a crime of moral turpitude or
other crime involving dishonesty, disloyalty or fraud, (b) willful misconduct or
fraud with respect to the Company as determined by a court or other governmental
body of competent jurisdiction or (c) any significant violation of any statutory
or common law duty of loyalty to the Company as determined by a court or other
governmental body of competent jurisdiction. In the event that the parties are
unable to agree upon the fair market value of the Founder Shares, the Founders
shall select an independent appraiser and the Company shall select an
independent appraiser. Each appraiser shall render his opinion as to the fair
market value. The two appraisers shall be given thirty (30) days from the date
both appraisers are engaged within which to render their opinions as to the fair
market value. In the event that the lower appraisal is at least 90% of the
higher appraisal, then the average of the two appraisals shall constitute and be
deemed the fair market value of the Founder Shares. If the lower appraisal is
not greater than or equal to 90% of the higher appraisal, then the two
appraisers shall select a third appraiser to render his opinion as to the fair
market value. The third appraiser shall be given thirty (30) days from the date
he is engaged within which to render his opinion as to the fair market value. In
such case, the third appraisal shall constitute and be deemed the fair market
value of the Founder Shares. Each party shall bear the costs of the appraisal
made at its request and the cost of the third appraisal, if any, will be shared
equally, one-half by the Founders and one-half by the Company.
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(b) The Purchase Option shall be exercised by written notice (the
"Repurchase Notice") to the Founder no later than 60 days after the effective
date of termination of his employment or consulting arrangement. The Repurchase
Notice shall set forth the number of Founder Shares subject to the Purchase
Option to be acquired from the Founder (the "Repurchased Stock"). The closing of
the purchase transactions shall take place on the date designated by the Company
in the Repurchase Notice which date shall not be more than 90 days after the
delivery of the Repurchase Notice. On such date, the Company will deliver to the
Founder the full purchase price of the Repurchased Stock in cash (by certified
or cashiers' check) or by the cancellation of all or a portion of any
outstanding indebtedness of the Founder to the Company that has been
acknowledged by the Company's accounting firm as being due and owing, or both,
such choice to be at the option of the Company. In exchange for payment of the
full purchase price the Founder will deliver the certificates representing the
Repurchased Stock, duly endorsed in blank or accompanied by duly executed stock
powers, to the Company. The Company, as purchaser of the Repurchased Stock
hereunder, will be entitled to receive customary representations and warranties
from the Founder regarding the sale of the Repurchased Stock, it being
understood, however, that the Founder shall not be required to make any
representations or warranties with respect to the business activities of the
Company.
(c) In the event of any stock split, stock dividend, reverse stock
split, combination of shares, merger, consolidation, reorganization or
recapitalization of or with respect to any Founder Shares, the purchase price,
the number and the type of shares or property subject to the Purchase Option by
the Company hereunder shall be equitably adjusted as determined by the Board in
good faith, taking into consideration any shares or property distributed (other
than cash dividends) with respect to the Founder Shares.
(d) Except as set forth in Section 2.6 below, the Founders each
agree that he will not Transfer any Unvested Stock. The Founders each agree that
certificates representing the Founder Shares will bear a legend to the effect
that such shares are subject to the Purchase Option pursuant to the terms of
this Section 2.5.
(e) Except as set forth in Section 2.5(d) of this Agreement, each of
the Founders shall have full rights as a stockholder with respect to the
Unvested Stock.
(f) In the event the Company is prohibited by law from exercising
any or all of the Purchase Option or does not elect to exercise all or any part
of the Purchase Option, the Investors shall have the right (but not the
obligation) to exercise the Purchase Option to the extent the Company is unable
or elects not to do so based on the same procedures as set forth in subsections
2.5(a), 2.5(b) and 2.5(c) above, except that the time periods specified in such
subsections shall not begin to run until the Investors have received written
notice from the Company that it is unable or elects not to exercise the Purchase
Option.
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(g) Subject to Section 2.6 below, as security for his faithful
performance of the terms of this Agreement and to insure that the Unvested Stock
will be available for delivery upon exercise of the Purchase Option as herein
provided, each of the Founders agrees to deliver to and deposit with the
Secretary of the Corporation, as Escrow Agent in this transaction, two stock
assignments duly endorsed (with date and number of shares blank), together with
the certificate or certificates evidencing the Unvested Stock; said documents
are to be held by the Escrow Agent and delivered by the Escrow Agent to the
Founders when the Unvested Stock becomes fully vested in accordance with
subsection 2.5(h) hereof, or, if the Company or the Investors exercise the
Purchase Option prior to December 31, 1994, then to the Company or the Investors
in accordance with this Section 2.5.
(h) Notwithstanding anything to the contrary contained in this
Section 2.5, any Unvested Stock will become fully vested, and no longer subject
to the Purchase Option, on December 31, 1994 if the Purchase Option has not been
exercised by the Company or the Investors within the periods set forth above or,
if earlier, upon (i) the liquidation of the Company, (ii) the sale of all or
substantially all the assets of the Company, (iii) a merger, consolidation or
reorganization whereby the holders of the Company's voting securities (on a
fully diluted basis and assuming conversion of all the Preferred Stock)
immediately prior to the merger, consolidation or reorganization own less than
fifty percent (50%) of the new or surviving Company or (iv) the Company's and
the Investors' failure to exercise the Purchase Option with respect to such
shares of Unvested Stock within the time periods specified in subsections
2.5(a), 2.5(b) and 2.5(f).
(i) Section 2.5 (i) has been intentionally Omitted.
2.6 Pledge of Founders Shares. Each of the Investors hereby consents
to the pledge by the Founders of the Founders Shares to Mid City Bank to secure
the Guarantee provided that, upon termination or release of such pledge, Mid
City Bank agrees to return the stock certificates representing Founders Shares
to the Secretary of the Company to be held or delivered in accordance with
Section 2.5(g) hereof.
ARTICLE 3
ELECTION OF DIRECTORS
3.1 Election; Removal. Pursuant to the By-laws of the Company, the
number of Directors comprising the Company's Board of Directors (the "Board")
has
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been initially fixed by resolution of the Board at seven. The Holders will vote
their respective shares and take all other actions reasonably necessary to
maintain the number of members of the Board at seven (subject to subsection (b)
below). During the term of this Agreement, all the shares of Preferred Stock and
Common Stock held by any Holder, whether owned now or hereafter acquired, shall
be voted in accordance with the provisions hereof on all of the following
matters on which the stockholders of the Company vote:
(a) Immediately upon receiving notice of any stockholders' meeting
at which members of the Board are to be elected, (i) GeoCapital shall designate
a minimum of one of two candidates (the "GeoCapital Representatives"), (ii)
Chancellor shall designate one candidate (the "Chancellor Representative"),
(iii) Gary Johnson, Thomas St. Denis and Dennis Walker shall each be candidates
for the Board (subject to subsection (b) below), and (iv) the GeoCapital
Representatives, the Chancellor Representative and the Founders then on the
Board shall designate one candidate (the "Independent Representative") who,
without the consent of the Founders, shall not be an Affiliate of the Investors
and, without the consent of the Investors, shall not be an Affiliate of the
Founders. Each Holder hereby binds itself to vote its shares, or give its
written consent to, the election of the candidates designated, as set forth in
this Section 3.1(a). Pursuant to the By-Laws of the Company, the GeoCapital
Representative may appoint the second GeoCapital Representative (for a total of
two GeoCapital Representatives) and the Investors and the Founders may appoint
the Independent Director (subject to subsection (b) below) without stockholder
action. Directors designated pursuant to this Section 3.1(a) may be removed only
by the Person entitled to designate such Director Pursuant to this Section
3.1(a).
(b) In the event that the employment by the Company of one of the
Founders (as described in Section 5.19 herein) is terminated for any reason, or
no reason, with or without cause, (i) the terminating Founder shall immediately
resign from the Board and (ii) GeoCapital shall cause one of its designees on
the Board to resign. In the event that the employment by the Company of two of
the Founders is terminated for any reason, or no reason, with or without cause,
(i) the terminating Founder shall immediately resign from the Board and the
remaining Founder shall be entitled to designate one additional candidate for
the Board (the "Additional Founder Director"), (ii) each of the Investors shall
maintain one Board seat and (iii) the Independent Representative shall maintain
one Board seat. In the event that the employment by the Company of three of the
Founders is terminated for any reason, or no reason, with or without cause, (i)
the last Founder to leave the employ of the Company shall immediately resign
from the Board and cause the Additional Founder Director to resign immediately,
(ii) the last Founder to leave the employ of the Company and the Investors shall
cause the Independent Representative to resign immediately and (iii) each of the
Investors shall maintain one Board seat and the Investors shall designate a
third Board member. The Holders will vote their shares and take all other
actions reasonably
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necessary to cause the By-Laws to be amended to decrease the size of the Board
to two and to accomplish the foregoing.
(c) Except as set forth in subsection (b) above and except with
respect to the Founders, in the event any Director elected to the Board after
being designated as a candidate for membership pursuant to this Agreement dies,
resigns, is removed or otherwise ceases to serve as a member of the Board, the
Company shall give notice thereof to the party or parties having designated such
Director, and such party or parties agree(s) to designate a successor and notify
the Company of its selection. If a vacancy on the Board is filled by the
remaining Directors with a Director who is not the successor designated by the
party entitled to designate such successor, each Holder agrees to cast its votes
for, or give its written consent to, the removal of such Director at any time
upon receipt of instructions in writing to such effect, signed by the party or
parties entitled to designate the Directors;
(d) Meetings of the Board of Directors may be called by any Director
on five days' notice to each Director, either personally or by mail and shall be
held within a 40 mile radius of New York City unless consented to otherwise by
all Board members.
(e) Any designation pursuant to this Article 3 shall be made in
writing and shall be signed by such designating party;
(f) Each Holder agrees to cast its votes for, or give its written
consent to, the removal of a designee on the Board at any time upon receipt of
instructions in writing to such effect, signed by the designating party.
3.2 Initial Designees. The initial designees pursuant to Section 3.1
are Stephen J. Clearman as a designee of GeoCapital, and Gary Johnson, Thomas
St. Denis and Dennis Walker as the designees of the Founders.
3.3 Certificate of Incorporation. The Provisions of Sections 3.1 and
3.2 shall not apply whenever the holders of Preferred Stock are entitled to and
exercise their rights under the provisions of subsections (b)(5)(a)(iii) and
(b)(5)(b) of Article IV of the Company's Certificate of Incorporation; provided,
however, that whenever the holders of Preferred Stock exercise such rights, all
shares of Preferred Stock held by any Holder, whether now owned or hereafter
acquired, shall be voted such that Chancellor shall designate one member of the
Board.
3.4 Termination. This Article 3 shall terminate upon the first to
occur of (a) a Qualifying Public Offering and (b) the tenth anniversary of the
date hereof unless extended by the parties in accordance with Section 218 of the
Delaware General Corporation Law.
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ARTICLE 4
TRANSFER OF STOCK; RIGHT OF FIRST OFFER
4.1 Transfer of Restricted Securities.
(a) Restricted Securities are transferable only pursuant to (i)
public offerings registered under the Securities Act, (ii) Rule 144 or Rule 144A
promulgated by the Securities and Exchange Commission (or any similar rule or
rules then in force) if such rule is available, and (iii) subject to the
conditions specified in paragraph (b) below and in Sections 4.2, 4.3 and 4.4,
any other legally available means of transfer.
(b) In connection with the Transfer of any Restricted Securities
(other than a Transfer described in subparagraph (a) (i) or (ii) above), the
Holder thereof will deliver written notice to the Company describing in
reasonable detail the Transfer or proposed Transfer, together with an opinion of
counsel which (to the Company's reasonable satisfaction) is knowledgeable in
securities law matters to the effect that such Transfer of Restricted Securities
may be effected without registration under the Securities Act or any applicable
state securities laws. In addition, if the Holder of the Restricted Securities
delivers to the Company an opinion of such counsel that no subsequent Transfer
of such Restricted Securities will require registration under the Securities Act
or any applicable state securities laws, the Company will promptly upon such
contemplated Transfer deliver new certificates for such Restricted Securities
which do not bear the Securities Act legend set forth in Section 4.6. If the
Company is required to deliver new certificates for such Restricted Securities
bearing such legend, the Holder thereof will not Transfer the same until the
prospective transferee has confirmed to the Company in writing its agreement to
be bound by the conditions contained in this Agreement and the other
restrictions on Transfer imposed by the Securities Act or any applicable state
securities laws.
(c) It shall be a condition to the Transfer of any Restricted
Securities that the transferee thereof (including without limitation a Permitted
Transferee) agrees to be bound by the provisions of this Agreement as if
originally a party hereto.
(d) Upon the request of any Holder, the Company shall promptly
supply to such Holder its prospective transferee(s) all information regarding
the Company required to be delivered in connection with a Transfer pursuant to
Rule 144A promulgated by the Securities and Exchange Commission.
4.2 Transfer Procedure.
(a) A Holder may not Transfer any of its interest in any Common
Stock except (i) pursuant to a public offering registered under the Securities
Act, (ii) pursuant to a public sale under Rule 144 (except those transactions
described in Rule 144(k) if the
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Company's shares have not become publicly traded), or any similar provision then
in effect, (iii) to a Permitted Transferee or (iv) pursuant to the provisions of
Section 2.5 (collectively, "Excused Transfers"), without first offering to sell
the Restricted Securities pursuant to the provisions of Sections 4.2.
(b) Any Holder of Common Stock (other than the Investors) wishing to
Transfer all or any of Common Stock (the "Offering Stockholder"), other than
pursuant to an Excused Transfer, shall deliver a written notice (an "Offer
Notice") to the Secretary of the Company. The Offer Notice will describe in
reasonable detail the number of shares being offered, the purchase price
requested (all of which shall be payable in cash and/or promissory notes, or any
combination thereof), and all other material terms and conditions of the
proposed transfer. The Company shall then promptly deliver a copy of the Offer
Notice to the Investors.
(c) Within 30 days after receipt of the Offer Notice, if any of the
Investors desires to acquire all or any portion of the Common Stock proposed to
be transferred, it shall notify the Company in writing (the "Purchase Notice")
of the number of the shares of Common Stock it wishes to purchase. If the total
number of shares of Common Stock specified in the Purchase Notice exceeds the
number of shares to be transferred, each Investor electing to purchase shares (a
"Purchasing Investor") shall have priority, up to the number of shares specified
in its Purchase Notice, to purchase such proportion of the shares to be
transferred as the number of shares of Underlying Common Stock it owns bears to
the total number of shares of Underlying Common Stock owned by each Purchasing
Investor. If any Common Stock remain unpurchased after this allocation, the
Company shall notify each Purchasing Investor of the number of shares remaining
unpurchased, and such shares shall be available for purchase by each Purchasing
Investor, upon notice to the Company within fifteen days of receipt of the
Company's notice of available shares, of its percentage of ownership interest
unless that factor is required to apportion all of the remaining shares among
electing members of the Purchasing Investors.
(d) If for any reason the Investors do not elect to purchase all of
the Common Stock offered pursuant to the Offer Notice, the Founders shall be
offered the second option to purchase the Common Stock being offered and not
purchased by the Investors based on the same procedure as is set forth in
Section 4.2(c) above. Within 30 days after receipt of the Purchase Notice, each
of the Founders shall notify the Offering Stockholder, the Investors and the
Company in writing (the "Founder Notice") whether he wishes to purchase any of
the Common Stock being offered.
(e) Subject to the provisions of Section 4.4, if for any reason the
Investors and the Founders do not elect to purchase all of the Common Stock
offered pursuant to the Offer Notice, the Company shall be offered the third
option to purchase the Common Stock being offered and not purchased by the
Investors or the Founders. Within 5 (five) days after receipt of the Founder
Notice, the Company shall notify the
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Offering Stockholder and the Investors in writing whether it wishes to purchase
the Common Stock being offered; provided that if the Company determines that it
is prohibited from purchasing all such Common Stock under applicable state law
or pursuant to any agreement by which it is bound, the 5 day period shall be
reduced to one day.
(f) Subject to the provisions of Section 4.4, the purchase of the
Common Stock pursuant to this Section 4.2 shall be closed at the Company's
executive offices within not less than 30 days but not more than 60 days after
the last notice hereunder is received by the parties. At the closing, the
purchasers will pay the Offering Stockholder the purchase price for the Common
Stock as set forth in the Offer Notice, and the Offering Stockholder will
execute and deliver the certificate or certificates evidencing such Common Stock
to the purchaser or purchasers or their nominees. The purchases of the Common
Stock hereunder will be entitled to receive customary representations and
warranties from the Offering Stockholder regarding the sale of the Common Stock.
(g) In the event that neither the Investors, the Founders nor the
Company have elected to purchase all of the Common Stock offered pursuant to the
Offer Notice, the Offering Stockholder may, subject to the provisions of
Sections 4.1 and 4.4 hereof, transfer the Common Stock specified in the Offer
Notice and on other terms no more favorable to the transferee(s) thereof than
specified in the Offer Notice during the 60-day period immediately following the
last date on which the last of the Investors, Founder, and/or the Company could
elect to purchase the Common Stock. Any Common Stock not transferred within such
day period will be subject to the provisions of this Section 4.2 upon subsequent
transfer.
4.3 Transfer Procedure - Sale By Investor to a Competitor
(a) An Investor may not Transfer any of its interest in any
Preferred Stock or Underlying Common Stock (collectively, the "Investor
Securities") to a Competitor of the Company (as defined below) without first
offering to sell the Investor Securities pursuant to the provisions of this
Section 4.3. For purposes of this Section 4.3 a "Competitor" shall mean: (i) any
entity primarily engaged in the business of selling services or merchandise to
credit card customers via direct marketing, (ii) any entity primarily engaged in
the business of publishing magazines of the type then marketed by the Company
and/or (iii) any officer, director or owner of 10% or more of the voting
securities of an entity of the type described in (i) and (ii) above.
Notwithstanding the foregoing, a Transfer to a financial institution, including
without limitation a bank, pension fund, or investment fund, which is purchasing
Investor Securities for investment purposes only, shall not be deemed a Transfer
to a Competitor.
(b) Any Investor wishing to Transfer all or any of its Investor
Securities to a Competitor (the "Offering Investor") shall deliver a written
notice (the "Investor's
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Offer Notice") to the Secretary of the Company. The Investor's Offer Notice will
describe in reasonable detail the number of shares being offered, the purchase
price requested (all of which shall be payable in cash and/or promissory notes,
or any combination thereof), and all other material terms and conditions of the
proposed transfer. The Company shall then promptly deliver a copy of the
Investor's Offer Notice to the Founders.
(c) Within 10 days after receipt of the Investor's Offer Notice, the
Founders may elect to acquire all (but not less than all) of the Investor
Securities Proposed to be transferred, by notifying the Company in writing (the
"Founders' Purchase Notice") of the number of the Investor Securities they wish
to purchase. If the total number of Investor Securities specified in the
Founders Purchase Notice exceeds the number of shares to be transferred, each
Founder electing to purchase shares (a "Purchasing Founder") shall have
priority, up to the number of shares specified in its Founders' Purchase Notice,
to purchase such proportion of the shares to be transferred as the number of
shares of Common Stock owned by each Purchasing Founder bears to the total
number of shares of Common Stock owned by each Purchasing Founder. If any
Investor Securities remain unpurchased after this allocation, the Company shall
notify each Purchasing Founder of the number of shares remaining unpurchased,
and such shares shall be available for purchase by each Purchasing Founder, upon
notice to the Company within fifteen days of receipt of the Company's notice of
available shares, irrespective of its percentage of ownership interest unless
that factor is required to apportion all of the remaining shares among electing
members of the Purchasing Founders.
(d) If for any reason the Founders do not elect to purchase all of
the Investor Securities offered pursuant to the Investor's Offer Notice, the
Company shall be offered the second option to purchase the Investor Securities
being offered and not purchased by the Founders. Within 5 days after receipt of
the Founders Purchase Notice, the Company shall notify the Offering Investor in
writing whether it wishes to purchase the Investor Securities being offered;
provided that if the Company determines that it is prohibited from purchasing
all such Investor Securities under applicable state law or pursuant to any
agreement by which it is bound, the 5-day period shall be reduced to one day.
(e) The purchase of the Investor Securities pursuant to this
Section 4.3 shall be closed at the Company's executive offices within not less
than 5 days but not more than 30 days after the last notice hereunder is
received by the parties. At the closing, the purchasers will pay the Offering
Investor the purchase price for the Restricted Securities as set forth in the
Investor's Offer Notice, and the Offering Investor will execute and deliver the
certificate or certificates evidencing such Investor Securities to the purchase
or purchasers or their nominees. The purchasers of the Investor Securities
hereunder will be entitled to receive customary representations and warranties
from the Offering Investor regarding the sale of the Investor Securities, it
being
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understood that the Investors shall not be required to make any representations
or warranties with respect to the business activities of the Company.
(f) In the event that neither the Founders nor the Company have
elected to purchase all of the Investor Securities offered pursuant to the
Investor's Offer Notice, the Offering Investor may, subject to the provisions of
Section 4.1 hereof, transfer the Investor Securities specified in the Investor's
Offer Notice and on other terms no more favorable to the transferee (s) thereof
than specified in the Investor's Offer Notice during the 60-day period
immediately following the last date on which the last of the Founders and/or the
Company could elect to purchase the Investor Securities. Any Investor Securities
not transferred within such 60-day period will be subject to the provisions of
this Section 4.3 upon subsequent transfer.
4.4 Participation Rights.
(a) Any Holder of Common Stock (other than the Investors) wishing to
Transfer all or any of its Common Stock (the "Selling Stockholder"), other than
pursuant to an Excused Transfer, shall deliver written notice (a "Sale Notice")
to the Secretary of the Company. The Sale Notice shall describe in reasonable
detail the identity of the prospective transferee(s) and the terms and
conditions of the contemplated Transfer. The Company shall then promptly deliver
a copy of the Sale Notice to the Investors.
(b) The Investors may elect to participate in the contemplated
Transfer by delivering written notice to the Selling Stockholder and the Company
within 30 days after receipt by the Investor of the Sale Notice. If any
Investors (a "Participating Investor") has elected to participate in such sale
(including a sale under Sections 4.2 (e) and (f) hereof) the Selling Stockholder
and the participating Investors will be entitled to sell in the contemplated
Transfer, at the same price and on the same terms, the number of Common Stock
and/or Preferred Stock equal to the product of (i) the quotient determined by
dividing the number of shares desired to be sold by such person by the aggregate
number of shares desired to be sold by the Selling Stockholder and the
Participating Investors and (ii) the number of shares to be sold in the
contemplated Transfer. Each Selling Stockholder agrees to use best efforts to
obtain the agreement of the prospective transferee(s) to the participation of
the Participating Investors in the contemplated Transfer and to the inclusion of
Preferred Stock in the contemplated Transfer, and each Selling Stockholder
agrees not to transfer any Restricted Securities to the prospective
transferee(s) if any such transferee declines to allow the participation of the
Participating Investors in accordance with the terms of this Section 4.4. If any
portion of the Preferred Stock is included in any Transfer under this Section
4.4, the purchase price for the Preferred Stock shall be equal to the purchase
price which the holders of Preferred Stock would have received if they converted
the Preferred Stock to Common Stock immediately prior to the contemplated
Transfer.
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<PAGE> 19
4.5 First Refusal Rights.
(a) Except for the issuance of shares (i) pursuant to a public
offering registered under the Securities Act, (ii) shares of Common Stock issued
upon conversion of the Preferred Stock or the Class A Common Stock, (iii) in
connection with the acquisition of another business (whether by a purchase of
assets, purchase of stock, merger or otherwise) whereby the Company owns more
than fifty percent (50%) of the voting power of the surviving entity, or (iv) to
the Company's directors, officers, employees or consultants not in excess of the
number of shares permitted under Section (b) (7) (k) (iv) of the Company's
Certificate of Incorporation (as amended as of the date hereof), if the Company
authorizes the issuance and sale of any shares of equity or any securities
containing options or rights to acquire any shares of equity, other than as a
dividend on the outstanding shares, the Company will first offer to sell to the
Investors a portion of such securities equal to the percentage determined by
dividing (A) the number of shares of Underlying Common Stock then held by such
Investor, by (B) the total number of shares of Underlying Common Stock then held
by all Investors. The Investors will be entitled to purchase such stock or
securities at the same price and on the same terms as such stock or securities
are to be offered to any other persons.
(b) Each Investor must exercise its purchase rights hereunder within
30 days after receipt of written notice from the Company describing in
reasonable detail the stock or securities being offered, the purchase price
thereof, the payment terms and such Investor's percentage allotment by
delivering written notice to the Company describing its election hereunder. If
all of the stock and securities offered to the Investors is not fully subscribed
by such Investors, the remaining stock and securities will be reoffered to the
Investors purchasing their full allotment upon the terms set forth in this
Section 4.5, except that such Investors must exercise their purchase rights
within ten days after receipt of such reoffer.
(c) Upon the expiration of the offering periods described above, the
Company will be free to sell such Stock or securities which such Investors have
not elected to purchase during the 120 days following such expiration on terms
and conditions no more favorable to the purchasers thereof than those offered to
such Investors. Any stock or securities offered or sold by the Company after
such 120-day period must be reoffered to the Investors pursuant to the terms of
this Section 4.5
4.6 Legends. Each certificate for the Restricted Securities will be
imprinted with a legend substantially in the following form (the "Securities Act
Legend") until such securities have ceased to be Restricted Securities:
The securities represented by this certificate have not been
register under the Securities Act of 1933, as amended, or under any
state securities laws. The transfer of the securities represented by
this certificate is subject to
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certain rights of first offer, restrictions on transfer, voting
agreements and other conditions specified in an Amended and Restated
Stockholder's Agreement, dated as of December 28, 1990, among the
issuer (the "Company") and certain investors of the Company, and the
Company reserve the right to refuse the transfer of such securities
until such conditions have been fulfilled with respect to such
transfer. A copy of such conditions will be furnished by the Company
to the holder hereof upon written request and without charge.
4.7 Violations of this Agreement. For purposes of this Article 4,
any party who has failed to give notice of the election of an option hereunder
within the specified time period will be deemed to have waived his rights in
such option on the day after the last day of such period. Any Transfer made in
violation of Article 4 of this Agreement shall be null and void. The Company
shall not be require (a) to transfer on its books any securities of the Company
Transferred in violation of any provisions of this Agreement or (b) to treat as
owner of such securities, or to accord the right to vote as such owner, or to
pay dividends to, any transferee to whom such securities are Transferred in
violation of this Agreement.
4.8 Termination of Rights. The rights and obligations set forth in
this Article 4 shall terminate and be of no further force and effect following
the closing of the Company's first Qualifying Public Offering. Notwithstanding
the foregoing, the rights and obligation set forth in Section 4.2 and Section
4.3 shall terminate and be of no further force and effect as of July 31, 1993.
ARTICLE 5
COVENANTS
5.1 Basic Financial Information. The Company will furnish the
following reports to each Investor (so long as such Investor (or its
representative) holds any Preferred Stock or Underlying Common Stock) and to
each holder of at least 5% of the outstanding Preferred Stock and to each holder
of at least 5% of the Underlying Common Stock.
(a) As soon as practicable after the end of each fiscal year of the
Company, and in any event within ninety (90) days thereafter, a consolidated
balance sheet of the Company and its subsidiaries, if any, as at the end of such
fiscal year, and consolidated statements of income and sources and applications
of funds of the Company and its subsidiaries, if any, for such year, prepared in
accordance with generally accepted accounting principles consistently applied
and setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and accompanied by a report and an
unqualified opinion, prepared in accordance with
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generally accepted auditing standards, of independent public accountants of
recognized national standing selected by the Company, and including a Company
prepared comparison to the Company's current business plan delivered to each
Investor pursuant to Section 5.1(c) hereof for that fiscal year.
(b) As soon as practicable after the end of each month and in any
event within thirty (30) days thereafter a consolidated balance sheet of the
Company and its subsidiaries, if any, as at the end of such month, and
consolidated statements of income and sources and applications of funds of the
Company and its subsidiaries, if any, for each month and for the current fiscal
year of the Company to date, prepared in accordance with generally accepted
accounting principles consistently applied, together with a comparison of such
statements to the corresponding periods of the prior fiscal year and to the
Company's current business plan then in effect as approved by its Board of
Directors and delivered to the Investor pursuant to Section 5.1(c) hereof, and
certified, subject to changes resulting from year-end audit adjustments, by the
principal financial or accounting officer of the Company.
(c) Annually (but in any event at least fifteen (15) days prior to
the commencement of each fiscal year of the Company) the business plan of the
Company, in such manner and form as approved by the Board of Directors of the
Company, which business plan shall include a projection of income and a
projected cash flow statement for such fiscal year and a projected balance sheet
as of the end of such fiscal year. Any material changes in such business plan
shall be delivered to the Investors as promptly as practicable after such
changes have been approved by the Board of Directors of the Company.
(d) As soon as practicable after the end of each fiscal year and in
any event within ninety (90) days thereafter, (A) a report from the Company's
independent public accountants reporting on compliance with any agreement
pursuant to which the Company has borrowed money or sold its securities and (B)
a copy of the annual management review letter of such independent public
accountants to the Company.
(e) As soon as practicable after transmission or occurrence, and in
any event within ten (10) days thereof, (A) copies of any reports or
communications delivered to any class of the Company's security holders or to
the financial community, including any filings by the Company, or by any of its
officers or directors relating to the Company, with any securities exchange, the
Securities and Exchange Commission or the National Association of Securities
Dealers, Inc., (B) notice of any event which might have a material effect on the
Company's business, prospects or condition, financial or otherwise, or on the
Investor's investment in the Preferred Stock or in the Common Stock issuable
upon conversion of the Preferred Stock, and (C) notice of breach or failure to
comply with any representation, warranty, covenant or agreement of the Company
contained herein, including the exhibits hereto.
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(f) With reasonable promptness, such other information and data with
respect to the Company and its subsidiaries as any such person may from time to
time reasonably request.
(g) From the date the Company becomes subject to the reporting
requirement of the Securities Exchange Act, and in lieu of the financial
information required pursuant to Sections 5.1(a) and (b) hereof, copies of its
annual reports on Form 10-K and its quarterly reports on Form 10-Q,
respectively, and all reports on Form 8-K.
(h) For purposes of this Agreement, Chancellor shall be deemed to be
the holder of all Preferred Stock and Underlying Common Stock owned of record or
beneficially by any Person for which Chancellor acts as trustee, investment
advisor, investment manager or in any other similar fiduciary capacity or/by any
employee or former employee of Chancellor, and all of Chancellor's holdings of
Preferred Stock and Underlying Common Stock shall be aggregated for purposes of
meeting any threshold tests under this Agreement Notwithstanding anything
contained herein to the contrary, with respect to any holder of Preferred Stock
or Underlying Common Stock for which Chancellor acts as trustee, investment
advisor, investment manager or in any other similar fiduciary capacity or who is
an employee or former employee of Chancellor, the Company shall be required to
deliver the information and materials referred to in Sections 5.1 and 5.3 only
to Chancellor, and Chancellor shall exercise all rights and remedies on behalf
of such holders under this Agreement.
5.2 Inspection of Property. The Company will permit any
representatives designated by any Investor (so long as such Investor holds any
Preferred Stock or any Underlying Common Stock) or any holder of at least 5% of
the outstanding Preferred Stock or at least 5% of the Underlying Common Stock,
upon reasonable notice and during normal business hours and such other times as
any such Investor may reasonably request, to (i) visit and inspect any of the
properties of the Company and its Subsidiaries, (ii) examine the corporate and
financial records of the Company and its Subsidiaries (unless such examination
is not permitted by federal, state or local law) and make copies thereof or
extracts therefrom and (iii) discuss the affairs, finances and accounts of any
such corporations with the directors, officers, key employees and independent
accountants of the Company and its subsidiaries. The presentation of an executed
copy of this Agreement by any Investor or any such holder of Preferred Stock or
Underlying Common Stock to the Company's independent accountants shall
constitute the Company's permission to its independent accountants to
participate in discussions with such Persons.
5.3 Attendance at Board Meetings. The Company shall give each
Investor (so long as such Investor holds any Preferred Stock or Underlying
Common Stock) and each holder of at least 10% of the outstanding Preferred Stock
or at least 10% of Underlying Common Stock written notice of each meeting of its
Board of Directors and each committee thereof at least five days prior to the
date of each such meeting, and
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the Company shall permit a representative of each such person or entity to
attend as an observer all meetings of its Board of Directors and all committees
thereof. Each representative shall be entitled to receive all written materials
and other information (including, without limitation, copies of meeting minutes)
given to Directors in connection with such meetings at the same time such
materials and information are given to the directors. If the Company proposes to
take any action by written consent in lieu of a meeting of its board of
directors or of any committee thereof, the Company shall give written notice
thereof to each such Person or entity prior to the effective date of such
consent describing in reasonable detail the nature and substance of such action.
The Company shall pay the reasonable out-of-pocket expenses of each
representative incurred in connection with attending such board and committee
meetings.
5.4 Current Public Information. At all times after the Company has
filed a registration statement with the Securities and Exchange Commission
Pursuant to the requirements of either of the Securities Act or the Securities
Exchange Act, the Company will file all reports required to be filed by it under
the Securities Act and the Securities Exchange Act and the rules and regulations
adopted by the Securities and Exchange Commission thereunder, and will take such
further action as any holder of Restricted Securities may reasonably request,
all to the extent required to enable such holder to sell Restricted Securities
pursuant to (i) Rule 144 adopted by the Securities and Exchange Commission under
the Securities Act (as such rule may be amended from time to time) or any
similar rule or regulation hereafter adopted by the Securities and Exchange
Commission or (ii) a registration statement on Form S-2 or S-3 or any similar
registration form hereafter adopted by the Securities and Exchange Commission.
Upon request, the Company shall deliver to any holder of Restricted Securities a
written statement as to whether it has complied with such requirements.
5.5 Prompt Payment of Taxes. etc. The Company and its Subsidiaries
will promptly pay and discharge, or cause to be paid and discharged, when due
and payable, all lawful taxes, assessments and governmental charges or levies
imposed upon the income, profits, property or business of the Company or any
subsidiary and all claims for labor, materials or supplies which if unpaid would
by law become a lien upon any of its properties, in each case to the extent the
failure to pay or discharge such obligations might have a material adverse
effect upon the financial condition, operating results, assets, operations or
business prospects of the Company and its subsidiaries; provided, however, that
any such tax, assessment, charge or levy need not be paid if the validity
thereof shall currently be contested in good faith by appropriate proceedings
and if the Company and its subsidiaries shall have set aside on its books
adequate reserves with respect thereto, and provided, further, that the Company
and its subsidiaries will pay all such taxes, assessments, charges or levies
forthwith upon the commencement of proceedings to foreclose any lien which may
have attached as security therefor. The Company and its subsidiaries will
promptly pay or cause to be paid when due, or in conformance with customary
trade terms, all other material indebtedness Incident to the operations of the
Company or its subsidiaries.
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5.6 Maintenance of Properties and Compliance with Contracts and
Leases. The Company and its subsidiaries will keep its properties and those of
its subsidiaries in good repair, working order and condition, reasonable wear
and tear excepted, and from time to time make all needful and proper repairs,
renewals, replacements, additions and improvements thereto; and the Company and
its subsidiaries will at all times comply with each provision of all obligations
pursuant to any contract or agreement, whether oral or written, as such
obligations become due, including, without limitation, all leases to which any
of them is a party or under which any of them occupies property, in each case to
the extent the breach of such provision might have a material adverse effect on
the condition, financial or otherwise, or operations of the Company or its
subsidiaries.
5.7 Insurance. The Company and its subsidiaries will maintain, with
responsible and reputable insurance companies or associations, insurance
covering its properties, buildings, machinery, equipment, tools, furniture,
fixtures and operations (including, without limitation, comprehensive general
liability and hazard insurance and medical malpractice and professional
liability insurance), in such amounts and covering such risks as is required by
any governmental authority or other regulatory body having jurisdiction with
respect thereto or as is carried generally in accordance with sound business
practice by companies in similar businesses similarly situated.
5.8 Accounts and Records. Company and its subsidiaries will keep
true records and books of account in which full, true and correct entries will
be made of all dealings or transactions in relation to its business and affairs
in accordance With generally accepted accounting principles applied on a
consistent basis.
5.9 Independent Accountants. The Company and its subsidiaries will
retain independent public accountants of recognized national standing who shall
audit the Company's financial statements at the end of each fiscal year. In the
event the services of the independent public accountants so selected, or any
firm of independent public accountants hereafter employed by the Company or any
of its subsidiaries, are terminated, the Company or such subsidiaries will
promptly thereafter notify the Investors, and will request the firm of
independent public accountants whose services are terminated to deliver to the
Investors a letter of such firm setting forth the reasons for the termination of
their services. In the event of such termination, the Company or such
subsidiaries will promptly thereafter engage another firm of independent public
accountants of recognized national standing. In its notice to the Investors, the
Company shall state whether the change of accountants was recommended or
approved by the Board of Directors of the Company or such subsidiary or any
committee thereof.
5.10 Compliance with Requirements of Governmental Authorities. The
Company and each of its subsidiaries shall duly observe and conform to all
applicable laws, rules and regulations of all governmental authorities relating
to the conduct of their businesses, the violation of which might have a material
adverse effect upon the
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condition, financial or otherwise, operating results, assets, operations or
business prospects of the Company and its subsidiaries.
5.11 Maintenance of Corporate Existence, etc. The Company and its
subsidiaries shall maintain in full force and effect their respective corporate
existence, rights and all material licenses, permits, approvals, qualifications,
consents and other authorizations necessary for the lawful conduct of their
respective businesses and operations wherever conducted, and other rights in or
to use patents, processes, licenses, trademarks, trade names or copyrights owned
or possessed by any of them and deemed by the Company or any subsidiary to be
necessary to the conduct of their respective businesses without, to the
Company's best knowledge, any conflict with any business in or rights of others
to use such patents, processes, licenses, trademarks, trade names or copyrights.
5.12 Availability of Common Stock for Conversion. The Company will,
from time to time, in accordance with the laws of the State of Delaware,
increase the authorized amount of Common Stock if at any time the number of
shares of Common Stock remaining unissued and available for issuance shall be
insufficient to permit conversion of all the then outstanding shares of
Preferred Stock.
5.13 Proprietary Information and Non-Competition Agreements. The
Company will cause (i) each person now or hereafter employed by it or any
subsidiary with access to confidential information and (ii) each person now or
hereafter employed by it or any subsidiary and designate as a "key person" by
the Board of Directors to enter into a proprietary information agreement and
agreement not to compete in the form to be approved by the Board of Directors of
the Company as a condition precedent to the employment of such individual.
5.14 Key Man Life Insurance. The Company shall maintain with
financially sound and reputable insurers term life insurance on the lives of
Gary Johnson, Thomas St. Denis and Dennis Walker in the amounts of $500,000 each
and on such other key personnel as may be specified from time to time by the
holders of 51% of the Underlying Common Stock, and shall maintain the Company as
the sole beneficiary of the Proceeds thereof. Such policy shall not be
cancelable by the Company without prior approval of the holders of 51%
Underlying Common Stock. The Company will inform the Investors annually as to
the effectiveness of such policy. The amount and periods of such coverage shall
be as determined from time to time by 51% in interest of the Investors (based on
share ownership assuming conversion of the Preferred Stock).
5.15 Transactions with Affiliates. The Company and its subsidiaries
shall not, without the prior approval of the majority of the disinterested
members of the Board of Directors, engage in any loans, leases, contracts,
agreement to sell, transfer or otherwise dispose of any of the assets of the
Company or its subsidiaries, whether now
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owned or hereafter acquire, or other transactions with any director, officer or
key employee of the Company or any of its subsidiaries, any affiliate of such
director, officer or key employee, or any member of any such person's Immediate
Family, including the parents, spouse, children and other relatives of any such
person, except for travel allowances in the ordinary course of business, or the
furnishing or sale of services or products to or the acquisition or purchase of
services or products front any corporation, partnership, proprietorship,
association, joint venture or other person or entity in which any such director,
officer or key employee or member of such person's family has a material
interest.
5.16 Certain Restrictions on Corporate Action.
The consent of the Board of Directors shall be required in order for
the Company to:
(a) make or commit to make any loans or guaranty any obligations; or
(b) make or commit to make any single expenditure or series of
related expenditures in excess of $50,000.
5.17 Stock Plan. The Company will reserve 30,000 shares (including
shares reserved for options outstanding on the date hereof) of the Company's
Class B Common Stock for issuance to directors, officers, employees and
consultants of the Company for the purpose of attracting and retaining such
personnel (the "Employee Shares"). The persons to whom such shares are sold and
the terms and conditions of such sale shall be determined by the Board of
Directors, provided that such issuance shall be conditioned upon the purchaser
entering into a stock purchase agreement in the form approved by the Board of
Directors.
5.18 Compensation Committee. The Board of Directors shall choose a
compensation Committee consisting of three members, two of whom shall be chosen
by the GeoCapital Representatives and one of whom shall be chosen by a majority
of the Board of Directors and agree to by each of the Founders so long as each
such Founder is a member of the Board of Directors. Procedures for removal and
filling vacancies shall be substantially as set forth in Section 3.1 herein. The
Compensation Committee shall adjust the compensation of key employees (as
determined by the Board of Directors and the GeoCapital Representatives),
consultants and other agents of the Company.
5.19 Employment of Messrs. Johnson, St. Denis and Walker. The
Company will employ Gary Johnson, Thomas St. Denis and Dennis Walker to manage
the Company for such period as the Board of Directors may determine. For the
year ended July 31, 1990, the Company will pay each of Messrs. Johnson, St.
Denis and Walker at an initial annual rate of $100,000. Thereafter, compensation
shall be determined by the Compensation Committee. During the term of employment
each of
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Messrs. Johnson, Walker and St. Denis agrees to devote his entire working time,
attention and energies to the performance of the business of the Company. In
connection with the foregoing, the Company and each of Messrs. Johnson, Walker
and St. Denis have executed the agreement attached hereto as Exhibit B.
5.20 Indemnification.
(a) The Company and each of the Founders agree, jointly and
severally, to indemnify each of the Investors, its partners and the Immediate
Family of such partners, against all losses, claims, damages, liabilities,
expenses (including reasonable attorney's fees) and other costs, resulting from
or arising out of a breach of the representations contained in Section 7.17(a)
and 7.17(b) herein and the agreement between the Company and each of Messrs.
Johnson and St. Denis set forth as Exhibit B hereto subject to the following
limitations:
(i) The Founders' personal indemnification with respect to the
representations, under Section 7.17(a), shall expire on the 27st day following
July 31, 1989, provided, however, that such personal indemnification shall not
extend to any losses, claims, etc. resulting from the Company's marketing and
sale of the Travel Arrangements product which is defined on Schedule 5.20(a).
(ii) The Founders' personal indemnification with respect to
the representations under Section 7.17 (b) shall extend only to such losses,
claims, etc. arising from business engaged in by the Company without approval by
the Investor delivered at a properly held meeting of the Board of Directors.
(iii) The Investors shall not be entitled to indemnification
by the Founders or the Company under Section 7.17 (b) for losses, claims, etc.
arising from business engaged in by the Company without the approval of a
majority of the Founders, delivered at a properly held meeting of the Board of
Directors, or, in the event that less than three Founders remain on the Board of
Directors, the approval of at least one Founder.
(iv) In the interests of avoiding duplication of legal
services and, accordingly, legal fees, in the event of any claims advanced
against the Company and/or the Investors giving rise to indemnification under
this Section 5.20(a), the Investor agrees to employ the attorneys representing
the Company in connection with such claims, the cost of which shall be borne by
the Company, unless said attorneys are prevented from representing both the
interests of the Company and the Investor by the Code Of Professional
Responsibility. In the latter instance, the cost of Investor's reasonable
attorney's fees shall be borne by the Company.
(b) The Company and Dennis P. Walker agree to indemnify each of the
Investors, its partners and the Immediate Family of such partners, and Messrs.
Johnson
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and St. Denis against all losses, claims, damages, liabilities, expenses
(including reasonable attorneys fees) and other costs, resulting from or arising
out of a breach of the representations contained in Section 7.17(c) and Section
7.17(d) herein or the representations contained in the agreement between the
Company and Walker set forth as Exhibit B hereto subject to the following
limitations:
(i) Walker's personal indemnification with respect to any
losses, claims, etc. arising from business engaged in by the Company which is
set forth in the Business Plan of DRW dated May 1989 or the Product Plan (as
defined in Section 7.2) shall survive the termination of this Agreement.
(ii) Walker's personal indemnification shall extend only to
losses, claims, etc. arising from business engaged in by the Company not set
forth in the Business Plan or Product Plan without the approval by the Investors
and Messrs. Johnson and St. Denis delivered at a properly held meeting of the
Board of Directors.
(iii) The Investors and the Messrs. Johnson and St. Denis
shall not be entitled to indemnification by Walker or the Company for losses,
claims, etc. arising from business engaged. In by the Company without the
approval of Walker delivered at a properly held meeting of the Board of
Directors; provided that Walker's failure to approve such business is expressly
due to the potential for the Company's engagement in such business to cause
Walker to breach the aforementioned representations, all as stated in writing by
Walker.
(iv) In the interests of avoiding duplication of legal
services and accordingly, legal fees, in the event of any claim advanced against
the Investor and/or the Founders giving rise to indemnification under this
Section 5.20(b), the Investors and the Founders agree to employ one legal
counsel in connection with such claims, the cost of which shall be borne by the
Company, unless said legal counsel is Prevented from representing both the
interests of the Investors and the Founders by the Code of Professional
Responsibility. In the latter instance, the cost of Investors' and Founders'
separate reasonable attorneys fees shall be borne by the Company.
5.21 Public Disclosures. The Company shall not, nor shall it permit
any subsidiary of the Company to, disclose any Investor's name or identity as an
investor in the Company in any press release or other public announcement or in
any document or material filed with any government entity, without the prior
written consent of such Investor, unless such disclosure is required by
applicable law or Government regulations or by order of a court of competent
jurisdiction, in which case prior to making such disclosure the Company shall
give written notice to such Investor describing in reasonable detail the
proposed content of such disclosure and shall permit the Investor to review and
comment upon the form and substance or such disclosure; provided that in the
case of any Person for which Chancellor acts as a trustee, investment manager,
investment adviser or in any other similar capacity or any
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employee or former employee of Chancellor, the form and Substance of such
disclosure shall be subject to Chancellor's prior written approval.
5.22 Use of Proceeds. Neither the Company nor any subsidiary of the
Company shall use any of the proceeds from the sale of the Preferred Stock to an
Investor for which Chancellor acts as a trustee, investment advisor, investment
manager or in any other similar fiduciary capacity to repay any indebtedness of
the Company or any subsidiary of the Company owed to Chancellor or any of its
Affiliates.
5.23 Termination of Covenants. The covenants set forth in Sections
5.2, 5.3 and 5.5 through 5.19 hereof shall terminate and be of no further force
and effect following the closing of the Company's first Qualifying Public
Offering.
ARTICLE 6
REGISTRATION RIGHTS
6.1 Registration on Request.
(a) At any time after the date hereof, upon the written request of
either (i) prior to such time as the Company has completed a public offering of
its equity securities under the Securities Act, the Holders of a majority of the
Registrable Securities or (ii) after such time as the Company has completed a
public offering of its equity securities under the Securities Act, the Holders
of at least 20% of the Registrable Securities, requesting that the Company
effect the registration under the Securities Act of all or part of such
Investor's Registrable Securities and specifying the intended method of
disposition thereof and whether or not such requested registration is to be an
underwritten offering, the Company will promptly give written notice of such
requested registration to all other Investors holding Registrable Securities and
thereupon the Company will use its best efforts to effect the registration under
the Securities Act of:
(i) the Registrable Securities which the Company has been so requested
to register by such holders, and
(ii) all other Registration Securities which the Company has been
requested to register by the holders thereof by written request given to the
Company within 30 days after the giving of such written notice by the Company
(which request shall specify the intended method of disposition of such
Registrable Securities), all to the extent requisite to permit the disposition
(in accordance with the intended methods thereof as aforesaid) of the
Registration Securities so to be registered.
(b) Whenever the Company Shall effect a registration pursuant to
this Section 6.1 in connection with an underwritten offering of Registrable
Securities, no
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securities other than each Investor's Registrable Securities shall be included
among the Securities covered by such registration unless (i) the managing
underwriter of such offering shall have advised each Investor holding
Registrable Securities to be covered by such registration in writing that the
inclusion of such other securities would not adversely affect such offering, in
which case securities to be issued by the Company may be included or (ii) all
Investors holding Registrable Securities to be covered by such registration
shall have consented in writing to the inclusion of securities to be issued by
the Company or securities held by other stockholders of the Company. Whenever
the Company shall effect a registration pursuant to this Section 6.1 other than
in connection with an underwritten offering of Registrable Securities, no
securities held by stockholders of the Company other than the Investors shall be
covered by such registration unless all Investors holding Registrable Securities
to be covered by such registration shall have consented in writing thereto.
(c) Registration under this Section 6.1 shall be on such appropriate
registration form of the Commission (i) as shall be selected by the Company and
as shall be reasonably acceptable to the holders of more than 80% (by number of
shares) of the Investors' Registrable Securities so to be register and (ii) as
shall permit the disposition of such Registrable Securities in accordance with
the intended method or methods of disposition specified in their request for
such registration. The Company agrees to include in any such registration
statement all information which holders of Registrable Securities being register
shall reasonably request.
(d) If a requested registration pursuant to this Section 6.1
involves an underwritten offering, the underwriter or underwriters thereof shall
be selected by the holders of more than 80% (by number of shares) of the
Investors' Registrable Securities to be so registered, subject to the Company's
approval which will not be reasonably withheld.
(e) If a requested registration pursuant to this Section 6.1
involves an underwritten offering, and the managing underwriter shall advise the
Company in writing (with a copy to each holder of Registrable Securities
requesting registration) that, in its Opinion, the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering within a price range acceptable to the holders of 80% (by
number of shares) of the Investor's Registrable Securities requested to be
included in such registration, the Company will (i) not include in such
registration securities held by it or any person other than an Investor and (ii)
include in such registration, to the extent of the number which the Company is
so advised can be sold in such offering, Registrable Securities requested to be
included in such registration, pro rata among the Investors requesting such
registration on the basis of the percentage of the Registrable Securities of the
Company held by the Investors which have requested that such Registrable
Securities be included.
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(f) Notwithstanding the foregoing, the Company shall not be
obligated to effect, or to take any action to effect, any such registration
pursuant to this Section 6.1 after the Company has effected two such
registrations pursuant to this Section 6.1; provided, that a registration will
not count as a registration pursuant to this Section 6.1 until it shall have
been declared or ordered effective and the sales of such Registrable Securities
shall have closed; provided further, that the second such registration will not
count as one of the registrations pursuant to this Section 6.1 unless the
holders of Registrable Securities are able to register and sell at least 75% of
the Registrable Securities requested to be included in such registration;
provided further, that any registration effected pursuant to this Section 6.1
which includes any Registrable Securities of the Company or any other person who
is not an Investor shall not be included as one of the two aforementioned
registrations.
6.2 Incidental Registration.
(a) If at any time the Company proposes to register any of its
securities under the Securities Act, whether of its own accord or at the request
or demand of any holder of such securities, and if the registration form
proposed to be used may be used for the registration of Registrable Securities
or Founder Shares, the Company will thereupon give prompt written notice to the
holders of Registrable Securities and holders of Founder Shares of its intention
to proceed with the registration (hereinafter the "Incidental Registration"),
and, upon the written request of any such holder made within 15 days after the
receipt of any such notice (which request will specify the Registrable
Securities intended to be disposed of by such holder and state the intended
method of disposition thereof). The Company will use its best efforts to cause
all such Registrable Securities, the holders of which have so requested the
registration thereof, to be included in such Incidental Registration.
(b) If an Incidental Registration is in connection with an
underwritten public offering, and if the managing underwriters advise the
Company in writing that in their opinion the amount of Securities requested to
be included in such registration (whether by the Company or holders of the
Company's securities pursuant to any rights granted by the Company to demand
inclusion of any such Securities in such registration) exceeds the amount of
such securities which can be sold in such offering, the Company will include in
such offering the amount of securities requested to be included which in the
opinion of such underwriters can be sold as follows: (a) first, all the shares
shall be included which are proposed to be sold by the Company; (b) to the
extent possible, all the shares which are proposed to be sold by a holder
exercising demand registration rights shall be included; (c) if shares can still
be included, the number of shares of capital stock that may be included shall be
allocated among all Investors holding Registrable Securities and Founders
holding Founder Shares seeking to exercise registration rights in proportion, as
nearly as practicable, to the respective amounts of shares of stock which they
had requested to be included in such registration at the time of filing the
registration statement; provided, however, that if the managing
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underwriters advise the Company in writing that in their opinion the amount of
securities requested to be included in such registration by the Investors and
the Founders exceeds the amount of such securities which can be sold in such
Offering pursuant to this subsection (c), then of the total shares to be
included in such registration pursuant to this subsection (c), up to 66 2/3% of
them shall be Registrable Securities and up to 33 1/3% of them shall be Founder
Shares; and (d) if shares can still be included, securities which are proposed
to be sold by a holder seeking to exercise registration rights.
(c) No holder of Registrable Securities or Founder Shares may
participate in any underwritten Incidental Registration unless such holder (a)
agrees to sell such Registrable Securities or Founder Shares on the basis
provided in any underwriting arrangement approved by the Company and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting arrangements and other documents required under the terms of such
underwriting arrangements.
6.3 Registration Procedures. In connection with any registration of
any Registrable Securities or Founder Shares under the Securities Act as
provided in this Article 6, the Company will:
(i) prepare and file with the Securities and Exchange Commission a
registration statement, and use its best efforts to cause such registration
statement to become effective and to keep such registration statement effective
for a period of not less than six months or such shorter period in which the
disposition of all securities in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement shall be completed and to comply with the provisions of the Securities
Act (to the extent applicable to the Company) with respect to such disposition;
(ii) prepare and file with the Securities and Exchange Commission
such amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may be
necessary to comply with the Provisions of the Securities Act with respect to
the disposition of all securities covered by such registration statement;
(iii) furnish to each seller of such Registrable Securities or
Founder Shares, and any underwriter such number of copies of such registration
statement and of each such amendment and supplement thereto (in each case
including all exhibits), such number of copies of the prospectus included in
such registration statement (including each preliminary prospectus), in
conformity with the requirements of the Securities Act and such other documents
as such seller or any underwriter may reasonably request tn order to facilitate
the disposition of the Registrable Securities or Founder Shares owned by such
seller;
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(iv) provide a transfer agent and registrar for all such Registrable
Securities and Founder Shares covered by such registration statement not later
than the effective date of such registration statement;
(v) notify each seller of such Registrable Securities or Founder
Shares, and any underwriter at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement
contains an untrue statement of a material fact or omits any fact necessary to
make the statements therein not misleading; each seller will immediately upon
receipt of such notice of the occurrence of such event discontinue its
disposition of the Registrable Securities or Founder Shares pursuant to the
registration statement until its receipt of a supplement or amendment to such
prospectus which shall cause such prospectus not to contain an untrue statement
of a material fact or not to state any fact necessary to make the statements
therein not misleading, and if so directed by the Company will then deliver to
the Company all copies other than permanent file copies of the prospectus
covering such Registrable Securities or Founder Shares which was current at the
time of receipt of such notice;
(vi) cause all such Registrable Securities and Founder Shares to be
listed on each securities exchange on which the same class of securities issued
by the Company is then listed;
(vii) if the Incidental Registration is in connection with an
underwritten distribution, enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other actions as
reasonably required in order to expedite or facilitate the disposition of such
Registrable Securities or Founder Shares;
(viii) make available for inspection by any seller of Registrable
Securities or Founder Shares, any underwriter participating in any disposition
pursuant to such registration Statement, and any attorney, accountant or other
agent retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company' officers, directors and employees to supply all information
reasonably requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration
(ix) use its best efforts to register or qualify all Registrable
Securities and Founder Shares and other securities Covered by such registration
statement under such other securities or blue sky laws of such jurisdictions as
each seller thereof shall reasonably request, to keep such registration or
qualification in effect for so long as such registration statement remains in
effect, and take any other action which may be reasonably necessary or advisable
to enable such seller to consummate the disposition in such jurisdictions of the
securities owned by such seller, except that the Company shall not for any such
purpose be required to qualify generally to do business as a
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foreign corporation in any jurisdiction wherein it would not, but for the
requirements of this subdivision (ix), be obligated to be so qualified or to
consent to general service of process in any such jurisdiction;
(x) furnish to each seller of Registrable Securities or Founder
Shares a signed counterpart, addressed to such seller, except as provided in (2)
below (and the underwriters, if any), of,
(1) an opinion of counsel for the Company, dated the effective date
of such registration statement (and, if such registration includes an
underwritten public offering, dated the date of the closing under the
underwriting agreement), reasonably satisfactory in form and substance to
such seller, covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) as are
customarily covered in opinions of issuer's counsel delivered to the
underwriters in underwritten public offerings, and such other legal
matters as such seller (or the underwriters, if any) may reasonably
request; and
(2) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an underwritten
public offering, dated the date of the closing under the underwriting
agreement), signed by the independent public accountants who have
certified the Company's financial statements included in such registration
statement, addressed to each seller, to the extent the same can be
reasonably obtained, and addressed to the underwriters, if any, covering
substantially the same matters with respect to such registration statement
(and the prospectus included therein) and with respect to events
subsequent to the date of such financial statements, as are customarily
covered in accountants' letters delivered to the underwriters in
underwritten public offerings of securities and such other financial
matters as such seller (or the underwriters, if any) may reasonably
request;
(xi) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission, and make
available to its security Holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act; and
(xii) take all such other actions as the holders of a majority of
the Registrable Securities or Founder Shares being sold and the underwriters, if
any, reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities (including without limitation effecting a stock
split or combination of shares).
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6.4 Registration on Form S-2 or Form S-3. The Company shall use its
best efforts to qualify for registration on Form S-2 and Form S-3 or any
comparable or successor form or forms and to that end, the Company shall
register (whether or not required to do so by law) the Registrable Securities
under the Exchange Act in accordance with the provisions of the Exchange Act
following the. effective date of the first registration of any securities of the
Company on Form S-l or Form S-18 or any comparable or successor form or forms.
After the Company has qualified for the use of either Form S-2 or S-3, or both,
in addition to the rights contained in the foregoing provisions of this Section
6, the holders of Registrable Securities shall have the right to request
registrations on Form S-2 or S-3 (such requests shall be in writing and shall
state the number of shares of Registrable Securities to be disposed of and the
intended methods of disposition of such shares). The provisions of Section 6.1
(to the extent applicable) and Section 6.3 shall apply to any registration on
Form S-2 or S-3 pursuant to this Section 6.4.
6.5 Registration Expenses. All expenses incurred by the Company in
complying with this Article 6, including without limitation (i) all registration
and filing fees (including all expenses incident to filing with the National
Association of Securities Dealers, Inc.), (ii) all printing expenses, (iii) all
fees and disbursements of counsel and accountants for the Company and one
counsel for the holders of the Registrable Securities being sold, (iv) all blue
sky fees and expenses and (v) the expense of any audits, review or due diligence
incident to or required by any such registration, shall be paid by the Company.
Notwithstanding the foregoing, all underwriting discounts and selling
commissions applicable to sales of Registrable Securities and Founder Shares in
connection with any registration shall be borne by such persons who are selling
Registrable Securities or Founder Shares pursuant to such registration statement
pro rata in proportion to the dollar value of the shares of Registrable
Securities or Founder Shares being sold by each such seller.
6.6 Holdback Agreements.
(a) Each holder of Registrable Securities and Founder Shares agrees
that, if requested by the Company and any underwriter of Common Stock (or other
securities) of the Company, it will not effect any public sale or distribution
of any Common Stock of the Company, including any sale pursuant to Rule 144
under the Securities Act, held by it during the seven-day period prior to and
during the 90-day period following the effective date of the Company's initial
registered public offering of Common Stock, except for shares which are part of
such registration statement and as permitted under Rule 144(k), provided that
all holders of more than five percent (5%) of the Common Stock and officers and
directors of the Company enter into similar agreements. Such agreement shall be
in writing in a form reasonably satisfactory to the Company and such
underwriter. The Company may impose stop transfer instructions with respect to
the shares (or securities) subject to the foregoing restriction until the end of
such 90-day period.
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(b) The Company agrees not to effect any public sale or distribution
of its equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven day period prior to and during
the 90-day period following the effective date of a registration statement
under Sections 6.1, 6.2 or 6.4 hereof, except for shares which are part of such
registration statement or pursuant to registrations on Form S-8 or any successor
form), unless the underwriters managing the registered public offering otherwise
agree.
6.7 Indemnification.
(i) The Company hereby agrees to indemnify, to the extent permitted by
law, each holder of Registrable Securities, or Founder Shares, their officers
and directors, if any, and each Person, if any, who controls such holder within
the meaning of the Securities Act, against all losses, claims, damages,
liabilities and expenses (under the Securities Act or common law or otherwise)
caused by any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus or other document
(including any related registration statement, notification or the like)
incident to registration or qualification or compliance in connection therewith
(and as amended or supplemented if the Company has furnished any amendments or
supplements thereto) or any preliminary prospectus or amendment thereof or
supplement thereto or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by the Company of the
Securities Act or any rule or regulation thereof applicable to the Company and
relating to action or inaction required of the Company in connection with any
qualification or except insofar as such untrue statement or alleged untrue
statement contained in any information furnished in writing to the Company by
such holder expressly for use therein, Provided the Company will not be liable
pursuant to this subparagraph (i) if such losses, claims, damages, liabilities
or expenses have been caused by any selling holder's failure to deliver a copy
of the registration statement or prospectus, or any amendments or supplements
thereof, after the Company has furnished such holder with a sufficient number of
copies of the same. If the offering pursuant to any registration is made through
underwriters, the Company agrees to indemnify such underwriters, their officers
and directors, if any, and each person who controls such underwriters within the
meaning of the Securities Act to the same extent as provided above with respect
to indemnification by the Company of each holder of Registrable Securities or
Founder Shares.
(ii) In connection with any registration statement in which a holder
of Registrable Securities or Founder Shares is participating, each such holder
shall furnish to the Company in writing such information as is reasonably
requested by the Company for use in any such registration statement or
prospectus and shall indemnify, to the extent permitted by law, the Company, its
directors and officers and each person, if any, who controls the Company within
the meaning of the Securities Act, against any losses, claims, damages,
liabilities and expenses resulting from any untrue statement or
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alleged untrue statement of a material fact or any omission or alleged omission
of a material fact required to be stated in the registration statement or
prospectus or any amendment thereof or supplement thereto or necessary to make
the statements therein not misleading, but only to the extent such losses,
claims, damages, liabilities or expenses are caused by an untrue statement or
alleged untrue statement contained in or by an omission or alleged omission from
information so furnished in writing by such holder in connection with the
registration; provided that the obligation to indemnify will be individual to
each holder and will be limited to the net amount of proceeds received by such
holder from the sale of Registrable Securities or Founders Shares pursuant to
such registration statement. If the Offering pursuant to any such registration
is made through underwriters, each such holder agrees to enter into an
underwriting agreement in customary form with such underwriters and to agree
therein to indemnify such underwriters, their officers and directors,. if any,
and each person who controls such underwriters within the meaning of the
Securities Act to the same extent as provided above with respect to
indemnification by such holder of the Company.
(iii) Each party entitled to indemnification under this Section 6.7
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense. Omission so to notify the Indemnifying Party
will release the Indemnifying Party from any liability which it may have to any
Indemnified Party under this paragraph (but only if it was prejudicial to the
ability of the indemnifying Party to defend), but not otherwise. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect of such claim or litigation. Each Indemnified Party
shall furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom.
(iv) If in connection with an underwritten distribution, the parties
enter into an underwriting agreement containing indemnification provisions, such
provisions of such underwriting agreement shall control instead of the
provisions hereof; provided that no holder of Registrable Securities included in
any underwritten registration shall be required to make any representations or
warranties to or to agree to indemnify the Company or the underwriters other
than representations and warranties and indemnification obligations regarding
such holder and such holder's intended method
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of distribution.
6.8 Limitation on Future Grants of Registration Rights. From and
after the date of this Agreement, the Company shall not enter into any agreement
with any holder or prospective holder of any securities of the Company providing
for the granting to such holder of registration rights (whether demand or
incidental) unless the provisions of such agreement are consistent with the
provisions of this Article 6.
6.9 Transfer or Assignment of Registration Rights. The rights to
cause the Company to register the Registrable Securities granted to the
Investors by the Company under Sections 6.1, 6.2 and 6.4 may be transferred or
assigned by an Investor to a transferee or assignee of any of such Investor's
Registrable Securities, provided that the Company is given written notice by
such Investor, at the time of or within a reasonable time after said transfer or
assignment, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such registration rights are
being transferred or assigned, and provided further that the transferee or
assignee of such rights is not deemed by the board of directors of the Company,
in its reasonable judgment, to be a competitor of the company, and provided
further that the transferee or assignee of such rights assumes the obligations
of such Investor under this Agreement.
6.10 Adjustments Affecting Registrable Securities. The Company will
not take any action, or permit any change to occur, with respect to the
Registrable Securities or Founder Shares which would adversely affect the
ability of the holders of Registrable Securities or Founder Shares to include
such Registrable Securities or Founder Shares in a registration undertaken
pursuant to this Agreement or which would adversely affect the marketability of
such Registrable Securities or Founder Shares in any such registration.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As of the Closing, the Company and the Founders, jointly and
severally, made the following representations and warranties to GeoCapital,
except as set forth on the "Schedule of Exceptions" attached hereto. As used in
Sections 7.7 through 7.18, the term "Company" shall mean the Company and Direct
Response Wholesalers, the sole proprietorship owned by Dennis P. Walker through
July 12, 1989 ("DRW").
7.1 Organization and Standing: Certificate and By-Laws. The Company
is a corporation duly organized and existing under the laws of the State of
Delaware and is in good standing under such laws. The Company does not own or
lease property or engage in any activity in any jurisdiction which might require
its qualification to do
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business as a foreign corporation in any jurisdiction. The Company has furnished
the Investors with true, correct and complete copies of its Certificate of
Incorporation, By-Laws and all amendments to each to date. Prior to the Closing,
the Company shall have properly filed the Amendment to the Certificate of
Incorporation with the Secretary of State of the State of Delaware.
7.2 Corporate Power. The Company has all requisite Corporate power
to enter into this Agreement and will have at the Closing Date all requisite
corporate power to sell the shares of Preferred Stock and the Founder Shares and
to carry out and perform its obligations under the terms of this Agreement. The
Company has all requisite corporate power to own its properties and to conduct
Its business as now conducted and as contemplated by its Product Plan dated July
20, 1989 (the "Product Plan") in the form distributed to GeoCapital.
7.3 Subsidiaries. The Company has no subsidiaries and does not own
of record or beneficially any capital stock or equity interest or investment in
any corporation, association or business equity.
7.4 Capitalization. Immediately prior to the Closing, the Company's
authorized capital stock will consist of (a) 1,900,000 shares of Common Stock,
$.01 par value, consisting of 900,000 shares of Class A Common Stock and
1,000,000 shares of Class B Common Stock; and (b) 225,000 shares of Preferred
Stock. Prior to the Closing, 675,000 shares of Class A Common Stock will be
issued and outstanding, which shares shall be fully paid and non-assessable.
After the Closing, 675,000 shares of Class A Common Stock will be issued and
outstanding, 100,000 shares of Class B Common Stock will be reserved for
issuance to employees, consultants, directors or officers pursuant to a stock
option plan or similar plan approved by the Board of Directors, 675,000 shares
of Class B Common Stock will be reserved for issuance upon conversion of the
Class A Common Stock, 225,000 shares of Class B Common Stock will be reserved
for issuance upon the automatic conversion of the Preferred Stock and 225,000
shares of Class A Common Stock will be reserved for issuance upon the optional
conversion of the Preferred Stock, all as set forth in the Amendment to the
Certificate of Incorporation of the Company. In addition, 225,000 shares of
Preferred Stock will be issued and outstanding. At the time of the Closing,
there will be no outstanding preemptive, conversion or other rights, options,
warrants or agreements granted or issued by or binding upon the Company for the
purchase or acquisition of any shares of its capital stock, except in accordance
with the provisions of this Agreement and the Certificate of Incorporation, as
amended. To the best of the Company's knowledge and belief, no stockholder has
granted options or other rights to purchase any shares of Common Stock from such
stockholder other than as set forth in the Schedule of Exceptions hereto. There
are no voting trusts or any other agreements or understandings with respect to
the voting of any shares of Common Stock other than those so created by this
Agreement and the Certificate of Incorporation, as amended. The Company holds no
shares of its capital stock in its treasury.
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7.5 Authorization. All corporate action on the part of the Company,
its directors and stockholders necessary for the authorization, execution,
delivery and performance by the Company of this Agreement and the consummation
of the transactions contemplated herein, and for the authorization, issuance and
the delivery of the shares of Preferred Stock and the Founders Shares and the
Common Stock issuable upon conversion of the Preferred Stock has been taken or
will be taken prior to the Closing. This Agree is a valid binding obligation of
the company, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization and moratorium and other laws of general
application affecting enforcement of creditors' generally. To the best of the
Company's knowledge and belief, the execution, delivery and performance by the
Company of this Agreement and in accordance therewith and the issuance and sale
of the Preferred Stock, the Founders Shares and the Common Stock issuable upon
conversion of the Preferred Stock will not result in any violation of and will
not conflict with, or result in any violation of the terms of, or constitute a
conflict under, any provision of state or Federal law to which the Company is
subject. The execution, delivery and performance by the Company of this
Agreement will not conflict with, or result in any violation of the Company's
Certificate of Incorporation, or By-Laws, as amended, or any mortgage,
indenture, agreement, instrument, judgment, decree, order, rule or regulation or
other restriction to which the Company is a party or by which it is bound or
result in the creation of any mortgage, pledge, lien, encumbrance or upon any of
the properties or assets of the Company pursuant to any such term or result in
the suspension, revocation, impairment, forfeiture or nonrenewal of any permit,
license, qualification, authorization or approval applicable to the Company's
operations of any of its assets or prospects or adversely affect the ability of
the Company to obtain any additional permit, license, qualification,
authorization or approval applicable to the Company's operations as proposed in
the Product Plan. No stockholder has any prior preemptive rights or rights of
first refusal by reason of the Preferred Stock or Founders Shares to be issued
pursuant to the Agreement. The Preferred Stock or Founders Shares, when issued
in compliance with the provisions of this Agreement, will be validly issued,
fully paid and nonassessable, and will be free of any liens or encumbrances. The
shares of Common Stock issuable upon conversion of the Preferred Stock have been
duly and validly reserved and not subject to any prior preemptive rights or
rights of first refusal and, upon issuance, will be validly and fully paid and
nonassessable.
7.6 Consents. Except for certain filings associated with various
state and/or federal Securities laws, consents, qualifications, orders,
approvals, or authorizations of, or filings with, any governmental authority
required in connection with the Company's valid execution, delivery or
performance of this Agreement, or the offer, sale or issuance of the shares of
Preferred Stock, the Founders Shares, the conversion of the Preferred Stock, the
issuance of Common Stock upon conversion of the Preferred Stock, or the
consummation of any other transaction contemplated on the part of the Company
hereby shall have been duly obtained and shall be effective on and as of the
Closing to the extent required by law.
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7.7 Financial Statements. The Company has previously delivered to
GeoCapital the unaudited balance sheet of DRW as of June 30, 1989 and an income
statement of DRW for the year ended June 30, 1989 (the "Financial Statements").
The Financial Statements, together with all the notes thereto, are complete and
correct in all material respects, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis except as
disclosed therein, and present fairly the financial condition and position of
DRW at the date shown; -provided, however, that the Financial Statements do not
contain all footnotes required under generally accepted accounting principles.
7.8 Outstanding Debt. The Company has no outstanding indebtedness
for borrowed money except as reflected on the Financial Statements and the notes
thereto and is not a guarantor or otherwise contingently liable for any such
indebtedness (including, without limitation, liability by way of agreement,
contingent or otherwise, to purchase, provide funds for payment, supply funds or
otherwise invest in any debtor or otherwise to insure any creditor against
loss). There exists no material default under the provisions of any instrument
evidencing any indebtedness or otherwise or of any agreement relating thereto.
7.9 Absence of Undisclosed Liabilities. The Company has no material
liabilities (fixed or contingent, including, without limitation any tax
liabilities due or to become due) which are not fully reflected or provided for
on the Financial Statements and the notes thereto. The Company does not know of
any material liability of any nature, direct or indirect, contingent or
otherwise, or in any amount not adequately reflected or reserved against in the
Financial Statements.
7.10 Absence of Certain Changes. Except as set forth in the Schedule
of Exceptions, since the date of the Financial Statements and as of the date
hereof, there has not been any event or condition of any character which has
adversely affected the Company's business or prospects, including but not
limited to:
(a) any material adverse change in the condition, operating results,
assets, liabilities or business of the Company from that shown in the Financial
Statements;
(b) any damage, destruction or loss of any of the properties or
assets of the Company (whether or not covered by insurance) materially adversely
affecting the assets, properties, financial condition, operating results,
prospects, business or Plans of the Company;
(c) any waiver by the Company of a valuable right or of a material
debt owed to it; or
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(d) any material change or amendments to a contract or arrangement
by which the Company or any of its assets or properties is bound or subject;
7.11 Taxes. The Company has filed or will file within the time
prescribed by law (including extensions of time approved by the appropriate
taxing authority) all tax returns and reports required to be filed with the
United States Internal Revenue Service, with the States of Connecticut and
Nebraska and (except to the extent that the failure to file would not have a
material adverse effect on the condition or operations of the Company) with all
other jurisdictions where such filing is required by law; and the Company has
paid, or made adequate provision in the Financial Statements for the payment of,
all taxes, interest, penalties, assessments or deficiencies shown to be due
or claimed to be due on or in respect of such tax returns and reports. There are
(i) no other tax returns or reports which are required to be filed which have
not been so filed and (ii) no unpaid assessment for additional taxes for any
fiscal period or any basis therefor. The Company's federal income tax returns
have not been audited by the Internal Revenue Service and the Company has had no
notice of any such audit.
7.12 Contracts: Insurance. Except as set forth in the Schedule of
Exceptions, the Company does not have any currently existing contract,
obligation, agreement, plan, arrangement, commitment or the like (written or
oral), including without limitation the following:
(a) Employment, bonus or consulting agreements, pension, profit
sharing, deferred compensation, stock bonus, retirement, stock option, stock
purchase, phantom stock or similar plans, including agreements evidencing rights
to purchase securities of the Company and agreements among stockholders and the
Company;
(b) Loan or other agreements, notes, indentures, or instruments
relating to or evidencing indebtedness for borrowed money, or mortgaging,
pledging or granting or creating a lien or security interest or other
encumbrance on any of the Company's Property or any agreement or instrument
evidencing any guaranty by the Company of payment or performance by any other
person;
(c) Agreements with dealers, sales representatives, brokers or other
distributors, jobbers, advertisers or sales agencies;
(d) Agreements with any labor union or collective bargaining
organization or other labor agreements;
(e) Any contract or series of contracts with the same person for the
furnishing or purchase of machinery, equipment, goods or services, including
without limitation agreements with processors and subcontractors;
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(f) Any indenture, agreement or other document (including private
placement brochures) relating to the sale or repurchase of shares;
(g) Any joint venture contract or arrangement or other agreement
involving a sharing of profits or expenses to which the Company is a party;
(h) Agreements limiting the freedom of the Company to compete in any
line of business or in any geographic area or with any person;
(i) Agreements providing for disposition of the business, assets or
shares of the Company, agreements of merger or consolidation to which the
Company is a party or letters of intent with respect to the foregoing;
(j) Letters of intent or agreements with respect to the acquisition
of the business, assets or shares of any other business; and
(k) Insurance policies.
The Company has complied with all the material provisions of all
said contracts, obligations, agreements, plans, arrangements and commitments and
there does not exist any event of default under any such agreement or any event
which, after notice or lapse of time or both, would constitute an event of
default under such agreement. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge and belief, threatened
against the Company before any court or before any governmental or
administrative agency for the renegotiation of or any other adjustment of any
such agreement.
The Company maintains adequate insurance to protect the Company and
its financial condition against the risks involved in the business conducted by
the Company.
7.13 Litigation and Bankruptcy Proceedings.
(a) There is neither pending nor, to the Company's knowledge and
belief, threatened, any action, suit, proceeding or claim, or any basis therefor
or threat thereof, whether or not purportedly on behalf of the Company, to which
the Company is or lay be named as a party or its property is or may be subject,
or to the Company's knowledge, after due inquiry, to which any officer, key
employee or principal stockholder of the Company is Subject, and in which an
unfavorable outcome, ruling or finding in any such matter or for all such
matters taken as a whole might have a material adverse effect on the condition,
financial or otherwise, prospects, or operations of the Company; and the Company
has no knowledge of any unasserted claim, the assertion of which is likely and
which, if asserted, will seek damages, an injunction or other legal, equitable,
monetary or nonmonetary relief which claim individually or
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collectively with other such unasserted claims if granted would have a material
adverse effect on the condition, financial or otherwise, prospects or operations
of the Company.
(b) The Company has not admitted in writing its inability to pay its
debts generally as they become due, has not filed or consented to the filing
against it of a petition in bankruptcy or a petition to take advantage of any
insolvency act, has not made an assignment for the benefit of creditors, has not
consented to the appointment of a receiver for itself or for the whole or any
substantial part of its property, has not had a petition in bankruptcy filed
against it, has not been adjudicated a bankrupt, or filed a petition or answer
seeking reorganization or arrangement under the Federal bankruptcy laws or any
other law or statute of the United States of America or any other jurisdiction.
7.14 Leases. Set forth on the Schedule of Exceptions is a correct
and complete list (including the amount of rents called for and a description of
the leased property) of all material leases under which the Company is a lessee.
The Company enjoys peaceful and undisturbed possession under all such leases,
all of such leases are valid and subsisting and none of them are in default in
any material respect.
7.15 Warrants. Licenses. Trademarks. Patents and Other Rights. The
Company has all franchises, permits, licenses and other similar authority
necessary for the conduct of its business as now being conducted by it and as
planned to be conducted, the lack of which could materially and adversely affect
the prospects, operations or condition, financial or otherwise, of the Company,
and it is not in default in any material respect under any of such franchises,
permits, licenses or other similar authority. The Company possesses all patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
copyrights, trade secrets, proprietary rights and processes necessary to conduct
its business as now being conducted and as planned to be conducted, without, to
the best of the Company's knowledge, conflict with or infringement upon any
valid rights of others, and the lack of which could materially and adversely
affect the operations or condition, financial or otherwise, of the Company, and
has not received any notice of infringement upon or conflict with the asserted
rights of others.
Except as set forth in the Schedule of Exceptions, there are no
outstanding options, licenses or agreements of any kind relating to the
foregoing, nor is the Company bound by or a party to any options, licenses or
agreements of any kind with respect to the patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, copyrights, trade secrets,
proprietary rights and processes of any other person or entity. No stockholder,
director, officer or employee of the Company or any predecessor thereof has any
interest in any such patents, patent rights, trademarks, trademark rights, trade
names, trade name rights, copyrights, trade secrets, proprietary rights and
processes.
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7.16 Employees. To the best of the Company's knowledge and belief
after due inquiry, no employee of the Company is, or is now expected to be, in
violation of any term of any employment contract, patent disclosure agreement,
non-competition agreement, or any other contract or agreement or any restrictive
covenant or any other common law obligation to a former employer relating to the
right of any such employee to be employed by the Company because of the nature
of the business conducted or to be conducted by the Company or to the use of
trade secrets or proprietary information of others, and to the best of the
Company's knowledge and belief, after due inquiry the employment of the
Company's employees does not subject the Company or the Investor to any
liability. There is neither pending nor, to the Company's knowledge and belief
after due inquiry, threatened any actions, suits, proceedings or claims, or to
its knowledge any basis therefor or threat thereof with respect to any contract,
agreement, covenant or obligation referred to in the preceding sentence. The
Company does not have any collective bargaining agreement covering any of its
employees.
7.17 Representations Relating to Restrictive Covenants of Founders.
(a) The Company does not presently engage in, directly or
indirectly, the business of telemarketing any health or fitness or related
product or any health or fitness magazine. Schedule 7.17 (a) sets forth the
business products of the Company and its predecessor Direct Response
Wholesalers.
(b) The Company does not propose to engage in, prior to April 28,
1990, the business of telemarketing any health or fitness or related product or,
prior to April 28, 1994, any health or fitness magazines. The Company will not
otherwise do any act or cause Messrs. Johnson and St. Denis to violate any
provision of the Assignment and Purchase Agreement, dated April 28, 1989, by and
among J&S Direct Marketing Inc., Gary Johnson, Thomas St. Denis, American Target
Group Marketing, American Health Partners, TMS Venture Partners, L.P. and Owen
J. Lipstein. Schedule 7.17 (b) sets forth the products that the Company intends
to market pursuant to its Product Plan delivered to the Investor.
(c) The Company does not presently engage in, nor does it propose to
engage in prior to January 1, 1993 any business of the type engaged in by Walker
Enterprises, Inc. or its affiliates (defined as the sale of merchandise and
services, through solo mailings or insert solicitation or bang-tail envelopes in
monthly credit card or account statements). The Company will not do any act or
cause Mr. Walker to violate any provision of the Non- Competition Agreement
dated January 1, 1988 between Walker Enterprises, Inc. and Mr. Walker.
(d) The Company does not presently engage in, nor does it propose to
engage in, prior to the later of such time as, (i) Dennis Walker is no longer a
partner of W.A.L. Limited Partnership ("WAL") or associated with WAL, or (ii) is
18 months after the later of the termination of any relationship between WAL and
Walker or the sale or
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alienation of any interest that Walker has in WAL, the rendering of services
relating to, the direct marketing of membership discount shopping services as
described in the confidential memorandum of WAL Limited partnership dated March
1987. The Company will not do any act or cause Mr. Walker to violate any
provision of the Non-Competition Agreement dated June 9, 1987 by and among L.F.
Aims, Dennis P. Walker, James F. Lynch, Matthew Gates and WAL Limited
Partnership.
7.18 Business of the Company. The Founders and the Company have no
knowledge or belief that (i) there is pending or threatened any claim or
litigation against or affecting the Company contesting its rights to produce,
manufacture, sell or use any product, process, method, substance, part or other
material presently produced, manufactured, sold or used by the Company in
connection with the operations of the Company; or (ii) there exists, or there is
pending or planned, any patent, invention, device, application or principle, or
any statute, rule, law, regulation, standard or code which would materially
adversely affect the condition, financial or otherwise, or the operations of the
Company.
7.19 Compliance with Other Instruments. The Company is not in
violation of any term of its Certificate of Incorporation or By-Laws to the best
of the Founders' and the Company's knowledge and belief, it is not in violation
of any term of any mortgage, indenture, contract, agreement, judgment, decree,
order, statute, rule or regulation to which the Company is subject and a
violation of which would have a material adverse effect on the condition,
financial or otherwise, in the operations of the Company.
7.20 Issuance Taxes. All taxes imposed by law in connection with the
issuance, sale and delivery of the Preferred Stock shall have been fully paid,
and all laws imposing such taxes shall have been fully complied with prior to
the closing.
7.21 Offering. Subject in part to the truth and accuracy of the
representations of GeoCapital set forth in this Agreement, to the best of the
Founders' and Company's knowledge and belief, the offer, sale and issuance of
the Preferred Stock and the Founders Stock and the conversion of the Preferred
Stock as contemplated by this Agreement are exempt from the registration
requirements of the Securities Act. Neither the Company nor anyone acting with
the Company's authorization on its behalf will knowingly take any action
hereafter that would cause the loss of such exemption.
7.22 Disclosure. To the best of the Founders' and the Company's
knowledge and belief, this Agreement, the Schedule of Exceptions, the Financial
Statements and the Product Plan do not contain any untrue statement of a
material fact and do not omit to state a material fact necessary in order to
make the statements contained therein or herein not misleading in the light of
the circumstances under which they were made. Except as disclosed herein, to the
knowledge of the Founders and the Company, there is no fact or circumstance
which materially adversely affects or in the
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future may (so far as the Company and the Founders can now reasonably foresee)
materially adversely affect the condition, financial or otherwise, assets,
business, operations or prospects of the Company which has not been disclosed in
writing to the Investor. To the best knowledge of the Company and the Founders,
the assumptions used in the preparation of the Product Plan, the Business Plan
of DRW dated May, 1989 and the 1989 Revised Cash Flow and Budget are materially
correct and unchanged as of the date hereof.
ARTICLE 8
EFFECTIVE DATE AND TERM OF AGREEMENT
8.1 Effective Date. The effective date of this Agreement shall be
the date set forth in the first sentence of this Agreement.
ARTICLE 9
MISCELLANEOUS
9.1 Specific Performance. The parties hereby declare that it is
impossible to measure in money the damages which will accrue to a party hereto
by reason of a failure to perform any of the Obligations under this Agreement.
Therefore, all parties hereto shall have the right to specific performance of
the obligations of the other parties under this Agreement, and if any party
hereto shall institute any action or proceeding to enforce the provisions
hereof, any person (including the Company) against whom such action or
proceeding is brought hereby waives the claim or defense therein that such party
has or have an adequate remedy at law, and such person shall not urge in any
such action or proceeding the claim or defense that such remedy at law exists.
9.2 Other Parties. If the Company issues any shares of capital stock
to any other person other than pursuant to a Qualifying Public Offering, the
Company shall cause the recipient of such shares to agree in writing to be bound
by this Agreement; and whereupon such recipient shall be deemed a "Holder" for
all purposes under this Agreement.
9.3 Notices. Any notice given pursuant to this Agreement shall be
deemed given when received by the Investor to whom it is directed, or when
deposited with the United States Postal Service, certified mail and return
receipt requested, with postage thereon prepaid addressed to: (a) each of the
Investors and the Founders and Bernard Goldstein at the address specified beside
its name on the Schedule of Stockholders, or (b) the Company, 655 Washington
Boulevard, Stamford, Conn. 06902, Suite 806. The address of any party for the
receiving of notice under this Section may
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be changed by five days' prior written notice to all of the other parties to
this Agreement in accordance with the provisions of this Section.
9.4 Effective Agreement. This Agreement shall be binding on and
enforceable against each Holder and his or its respective successors and
assigns.
9.5 Severability. If a court of competent jurisdiction shall
determine that any portion of this Agreement is invalid or unenforceable under
the law or public policy of any jurisdiction, the remainder of this Agreement
shall remain in full force and effect.
9.6 Successors and Assigns. Except as otherwise expressly provided
herein, all covenants and agreements contained in this Agreement by or on behalf
of any of the parties hereto shall bind and inure to the benefit of the
respective successors and assigns of the parties hereto whether or not so
expressed. In addition, whether or not any express assignment has been made, the
Provisions of this Agreement which are for any Investor's benefit as a holder of
Preferred Stock or Underlying Common Stock are also for the benefit of, and
enforceable by, any subsequent holder of such Preferred Stock or such Underlying
Common Stock.
9.7 Amendment and Waiver. Neither this Agreement nor any term hereof
may be amended, waived, discharged or terminated, except by written instruments
signed by the Company, the holders of a majority of the Founders Shares and the
holders of at least eighty percent (80%) of the Underlying Common Stock, except
those amendments contemplated by Section 9.2 hereof. No waiver of any right or
remedy granted in one instance shall be deemed to be a continuing waiver under
the same or similar circumstances thereafter arising.
9.8 Agreements with Messrs. Johnson, St. Denis and Walker. In order
to induce GeoCapital to enter into this Agreement, the Company and each of the
Founders executed and delivered at the Closing the agreements attached hereto as
Exhibit B.
9.9 Opinion of Counsel. Simultaneously with the Closing, Diserio
Martin O'Connor and Castiglioni, counsel to the Company, delivered an opinion to
GeoCapital in the form of Exhibit C hereto and Hauptman O'Brien Wolf Hadley &
Lathrop, P.C., counsel to Walker delivered an opinion to GeoCapital and the
Founders in the form of Exhibit D hereto.
9.10 Compliance Certificate. Simultaneously with the Closing, the
Company delivered to GeoCapital a certificate of the President and Chief
Financial Officer of the Company, dated as of the date of July 31, 1989,
certifying to the truth of the representations contained in Article 7 of this
Agreement.
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9.11 Further Documentation. Each Holder shall execute and deliver
such other agreements and instruments as from time to time may be deemed
advisable or appropriate to effect the intent and purpose of this Agreement.
9.12 Expenses. The Company shall bear its own expenses and legal
fees incurred on its behalf with respect to this Agreement and the transactions
contemplated hereby. In connection with the Closing of the purchase and sale of
Series A Preferred, the Company agreed to pay the legal fees, and all
disbursements and office expenses, including secretarial charges (not to exceed
$25,000), of Fulbright Jaworski & Reavis McGrath, and legal fees of Diserio
Martin O'Connor & Castiglioni and the legal fees, and all disbursements and
office expenses, including secretarial charges of (one) charged to the Founders.
In addition, the Company shall pay the out-of-pocket legal fees and expenses
incurred by any Investor in connection with (a) any amendment or Waiver
requested by the Company and (b) the enforcement by such investor of any rights
or remedies under this Agreement, including the Exhibits hereto.
9.13 Section Headings. The captions to the Sections in this
Agreement are for reference only and shall not affect the meaning or
interpretation hereof.
9.14 Choice of Law. All questions concerning the construction,
validity and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware. All questions concerning the
construction, validity and interpretation of this Agreement and the performance
of the obligations imposed by this Agreement with respect to the relative rights
of the Company and its stockholders will be governed by the corporate law of
Delaware.
9.15 Multiple Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which will constitute one and the sane instrument.
9.16 Complete Agreement. Except as set forth herein, this Agreement
contains the complete agreement between the parties and controls and supersedes
any prior understandings, agreements or representations by or between the
parties, written or oral, which conflicts with, or may have related to, the
subject matter hereof in any way.
* * *
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<PAGE> 50
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day, month and year first written above.
CARDMEMBER PUBLISHING CORPORATION
By: /s/ Gary Johnson
-------------------------------
Its: President
------------------------------
GEOCAPITAL II, L.P.
By: /s/ Stephen J. Clearman
-------------------------------
Its: General Partner
------------------------------
/s/ Gary Johnson
----------------------------------
Gary Johnson
/s/ Thomas St. Denis
----------------------------------
Thomas St. Denis
/s/ Dennis Walker
----------------------------------
Dennis Walker
/s/ Bernard Goldstein
----------------------------------
Bernard Goldstein
MELLON BANK, N.A., MASTER TRUSTEE
FOR BELL ATLANTIC, MASTER PENSION
TRUST (AS DIRECTED BY CHANCELLOR
TRUST COMPANY, INVESTMENT MANAGER)
By: /s/ [ILLEGIBLE]
-------------------------------
Its: [ILLEGIBLE]
------------------------------
-49-
<PAGE> 51
HANK & CO FOR THE ACCOUNT OF
CITIVENTURE II
By: /s/ Craig Roly
-------------------------------
Its: Managing Director
------------------------------
PITT & CO FOR GTE SERVICE CORP.
By: /s/ George J. Cervenak
-------------------------------
Its: Assistant Vice President
------------------------------
-50-
<PAGE> 52
HANK & CO FOR THE ACCOUNT OF FIDELITY
& GUARANTY LIFE INSURANCE CO
By: /s/ Craig Roly
----------------------------------
Its: Managing Director
----------------------------------
HARRIS TRUST & SAVINGS BANK AS TRUSTEE
FOR BAXTER TRAVENOL LABORATORIES, INC.
RETIREMENT PLAN POOLED INVESTMENT TRUST,
CHANCELLOR CAPITAL MANAGEMENT INC.,
INVESTMENT MANAGER
By: /s/ Craig Roly
-----------------------------------
Its: Managing Director
-----------------------------------
EMP & CO.
By: /s/ Craig Roly
-----------------------------------
Its: Managing Director
-----------------------------------
-51-
<PAGE> 53
<TABLE>
<CAPTION>
Number of
Number of Number shares of Total
Shares of Total Price of Shares Total Price Class A Price for
Series A for Series A of Series B for Series B Common Class A
Preferred Preferred Preferred Preferred Stock Common
--------- --------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Investor
- --------
GeoCapital II, L.P. 225,000 $750,000 104,486 $995,002.04
2115 Linwood Avenue
Fort Lee, NJ 07024
Chancellor Entities 43,982 401,995.48
MELLON BANK, N.A., MASTER
TRUSTEE FOR BELL ATLANTIC,
MASTER PENSION TRUST (AS
DIRECTED BY CHANCELLOR TRUST
COMPANY, INVESTMENT MANAGER)
HANK & CO FOR THE ACCOUNT OF 43,982 401,995.48
CITIVENTURE II
PITT & CO FOR GTE SERVICE CORP. 11,707 107,001.98
HANK & CO FOR THE ACCOUNT OF 4,486 41,002.04
FIDELITY & GUARANTY LIFE
INSURANCE CO
HARRIS TRUST & SAVINGS BANK AS 2,954 26,999.56
TRUSTEE FOR BAXTER TRAVENOL
LABORATORIES, INC. RETIREMENT
PLAN POOLED INVESTMENT TRUST,
CHANCELLOR CAPITAL
MANAGEMENT INC., INVESTMENT
MANAGER
EMP & CO 2,298 21,003.76
</TABLE>
All notices and other information sent to
the Chancellor Entities should be
addressed such entity as follows:
c/o Chancellor Capital Management, Inc.
153 E. 53rd Street, 23rd Floor
New York, New York 10022
Attention: Marc Tesler (For Financials)
Robert Bensky (For Notices)
* GeoCapital transferred 10,500 shares of Series A Preferred Stock to Bernard
Goldstein.
<PAGE> 54
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Founder
- -------
Gary Johnson 225,000 $25,000
65 High Ridge Road
Suite 241
Stamford, Connecticut 06905
Thomas St. Denis 225,000 25,000
1755 York Avenue
New York, New York 10128
Dennis Walker 225,000 25,000**
1223 North 126th Street
Omaha, Nebraska 68154
Bernard Goldstein 10,500 4,923 $ 44,996.22
------- ------- ------------- ------- -------
Total 225,000 $750,000 218,818 $1,999,996.52 675,000 $75,000
======= ======== ======= ============= ======= =======
</TABLE>
** Has contributed the business and properties of DRW which the Founders
have agreed to have a fair market value of $25,000.
<PAGE> 55
AMENDMENT NO. 1
TO AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
AMENDMENT NO. 1 TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this
"Amendment"), dated as of August 30, 1991 by and among Cardmember Publishing
Corporation, a Delaware corporation (the "Company"), and each of the signatories
hereto.
RECITALS
WHEREAS, the parties hereto are parties to that certain Amended and
Restated Stockholders' Agreement dated as of December 28, 1990 (the "Original
Stockholders' Agreement" and as amended hereby the "Agreement");
WHEREAS, pursuant to a unanimous written consent, the stockholders of
the Company resolved that Section 5.16 of the Original Stockholders' Agreement
be amended;
WHEREAS, the parties hereto desire that such amendment be affirmed by
incorporating the provisions thereof into this Amendment;
WHEREAS, pursuant to the Second Purchase Agreement and the Note and
Warrant Purchase Agreement (each as defined below), each of the Investors (as
defined in the Original Stockholders Agreement) is purchasing Restricted
Securities of the Company; and
WHEREAS, the parties hereto desire to promote their mutual interests and
the interests of the Company by amending the Original Stockholders' Agreement as
set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
Section 1. Amendments to Original Stockholders' Agreement.
1A. The following definitions in Article I of the Original Stockholders'
Agreement are hereby amended and restated in their entirety to read as follows:
"Preferred Stock" shall mean the Series A Preferred Stock, the Series B
Preferred Stock and/or the Series C Preferred Stock.
"Qualifying Public Offering" shall mean a completed firm commitment
underwritten public offering pursuant to an effective registration statement
filed under the Securities Act covering the offer and sale of Common Stock for
the account of the Company to the public at a price to the public of not less
-1-
<PAGE> 56
than 300% of the Series B Conversion Price (as defined in the Amendment to the
Certificate of Incorporation attached hereto as Exhibit A) then in effect, in
which the aggregate net proceeds (after underwriting discounts and commissions)
to the Company are at least $10,000,000.
"Registrable Securities" shall mean (a) the shares of Class B Common
Stock issued or issuable upon conversion of the Preferred Stock (including
Preferred Stock into which Convertible Promissory Notes have been converted),
(b) the shares of Class B Common Stock issued or issuable upon conversion of the
Class A Common Stock into which shares of Preferred Stock (including Preferred
Stock into which Convertible Promissory Notes have been converted) have been
converted, (c) the shares of Class B Common Stock issued or issuable upon
conversion of the Class A Common Stock issued upon exercise of the Warrants, (d)
any Common Stock issued in respect of securities referred to in clauses (a), (b)
and (c) by way of a stock split or stock dividend, or in connection with a
combination of shares, capitalization, merger, consolidation or other
reorganization and (e) any other shares of Common Stock owned by Holders of the
securities described in clauses (a), (b), (c) and (d) above. As to any
particular Registrable Securities, such securities will cease to be Registrable
Securities when they have been distributed to the public pursuant to an offering
registered under the Securities Act or sold to the public through a broker,
dealer or marker maker in compliance with Rule 144 under the Securities Act (or
any similar rule then in force). For purposes of this Agreement, a person or
entity will be deemed to be a Holder of Registrable Securities whenever such
person or entity has the right to acquire directly or indirectly such
Registrable Securities (upon conversion or exercise in connection with a
transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected.
"Restricted Securities" shall mean (a) the shares of Preferred Stock
purchased by GeoCapital on July 31, 1989, (b) the shares of Preferred Stock
purchased by Bernard Goldstein from GeoCapital on December 15, 1989 and from the
Company on December 28, 1990, (c) the shares of Preferred Stock purchased by the
Investors pursuant to the Purchase Agreement and the Second Purchase Agreement,
(d) the shares of Common Stock issued or issuable upon conversion of the
Preferred Stock (including Preferred Stock into which Convertible Promissory
Notes have been converted), (e) the shares of Class B Common Stock issued or
issuable upon conversion of the Class A Common Stock into which shares of
Preferred Stock (including Preferred Stock into which Convertible Promissory
Notes have been converted) acquired by the Investors have been converted, (f)
the shares of Class B Common Stock issued or issuable upon conversion of the
Class A Common Stock issued upon exercise of the Warrants, (g) the shares of
Class A Common Stock issued or issuable upon exercise of the Warrants, (h) the
shares of Class A Common Stock purchased by the Founders on July 28, 1989, (i)
the shares of Class B
-2-
<PAGE> 57
Common Stock issued or issuable upon the conversion of the Class A Common Stock
purchased by the Founders, (j) the shares of Class B Common Stock to be issued
pursuant to Section 5.17 hereunder, (k) the Convertible Promissory Notes, (1)
the Warrants, and (m) any securities issued with respect to the securities
referred to in clauses (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k) or
(1) by way of a stock dividend, stock split or in connection with a stock
combination, recapitalization, merger, consolidation or other reorganization. As
to any particular Restricted Securities, such securities will cease to be
Restricted' Securities when they have (a) been effectively registered under the
Securities Act and disposed of in accordance with the registration statement
covering them, (b) become eligible for sale pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act or (c) subject to the
provisions of Article 4 of this Agreement, been otherwise legally transferred
and new certificates for them not bearing the Securities Act legend set forth in
Section 4.6 have been issued. Whenever any particular securities cease to be
Restricted Securities, the holder thereof shall be entitled to receive from the
Company, without expense, new securities of like tenor not bearing a Securities
Act legend of the character set forth in Section 4.6.
"Underlying Common Stock" shall mean (a) the Common Stock issued or
issuable upon conversion of the Preferred Stock (including Preferred Stock into
which the Convertible Promissory Notes have been converted), (b) the Class B
Common Stock issued or issuable upon conversion of the Class A Common Stock into
which shares of Preferred Stock (including Preferred Stock into which the
Convertible Promissory Notes have been converted) have been converted, (c) the
shares of Class B Common Stock issued or issuable upon conversion of the Class A
Common Stock issued upon exercise of the Warrants, (d) the Class A Common Stock
issued or issuable upon exercise of the Warrants, and (e) any Common Stock
issued or issuable with respect to the securities referred to in clauses (a),
(b), (c) and (d) above by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization. For purposes of this Agreement, any person or entity
who holds Preferred Stock or Warrants shall be deemed to be the holder of the
Underlying Common Stock obtainable upon conversion of such Preferred Stock
(including Preferred Stock into which the Convertible Promissory Notes have been
converted) or Warrants in connection with the transfer thereof or otherwise,
regardless of any restriction or limitation on the conversion of such Preferred
Stock (including Preferred Stock into which the Convertible Promissory Notes
have been converted) or Warrants. As to any particular shares of Underlying
Common Stock, such shares shall cease to be Underlying Common Stock when they
have been (a) effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them or (b) distributed to
the public through a broker, dealer or market maker pursuant to Rule 144 under
the Securities Act (or any similar provision then in force).
-3-
<PAGE> 58
1B. Article I of the Original Stockholders' Agreement is hereby amended
by adding the following definitions in the appropriate alphabetical order:
"Convertible Promissory Notes" shall mean those certain convertible
promissory notes of the Company dated of even date herewith and issued pursuant
to the Note and Warrant Purchase Agreement.
"Convertible Securities" shall mean any evidences of indebtedness,
shares (other than Common Stock and Preferred Stock) or other securities
directly or indirectly convertible into or exchangeable for Common Stock.
"Note and Warrant Purchase Agreement" shall mean that certain Note
and Warrant Purchase Agreement dated as of August 30, 1991 by and among the
Company and the other parties listed on the signature page thereto.
"Option" shall mean any right, option or warrants to subscribe for,
purchase or otherwise acquire either Common Stock or Convertible Securities.
"Second Purchase Agreement" shall mean the Purchase Agreement dated
as of August 30, 1991 by and among the Company and the Investors.
"Series C Preferred Stock" shall mean the Series C Preferred Stock
of the Company, par value $0.01 per share, having the rights, restrictions,
privileges and preferences set forth in the Amendment to the Certificate of
Incorporation attached hereto as Exhibit A.
"Warrants" shall mean those certain Warrants to purchase Class A
Common Stock of the Company dated as of even date herewith and issued pursuant
to the Note and Warrant Purchase Agreement.
1C. Section 4.5(a) of the Original Stockholders' Agreement is hereby
amended and restated in its entirety to read as follows:
(a) Except for the issuance of shares (i) pursuant to a public
offering registered under the Securities Act, (ii) shares of Common
Stock issued upon conversion of the Preferred Stock or the Class A
Common Stock, (iii) shares of Common Stock issued upon conversion or
exercise, as the case may be, of Convertible Securities or Options, (iv)
in connection with the acquisition of another business (whether by a
purchase of assets, purchase of stock, merger or otherwise) whereby the
Company owns more than fifty percent (50%) of the voting power of the
surviving entity, or (v) to the Company's directors, officers, employees
or consultants not in excess of the number of shares permitted under
Section (b)(7)(k)(iv) of the Company's Certificate of Incorporation (as
amended as of the date hereof), if the Company authorizes the issuance
and sale of any shares of equity or any securities containing options or
rights to acquire any shares of equity, other than as a dividend on
-4-
<PAGE> 59
the outstanding shares, the Company will first offer to sell to the
Investors a portion of such securities equal to the percentage
determined by dividing (A) the number of shares of Underlying Common
Stock then held by such Investor, by (B) the total number of shares of
Underlying Common Stock then held by all Investors. The Investors will
be entitled to purchase such stock or securities at the same price and
on the same terms as such stock or securities are to be offered to any
other persons.
1D. Section 4.6 of the Original Stockholders' Agreement is hereby
amended and restated in its entirety to read as follows:
4.6 Legends. Each certificate for the Restricted Securities will be
imprinted with a legend substantially in the following form (the
"Securities Act Legend") until such securities have ceased to be
Restricted Securities:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, or under
any state securities laws. The transfer of the securities
represented by this certificate is subject to certain rights of
first offer, restrictions on transfer, voting agreements and other
conditions specified in an Amended and Restated Stockholders'
Agreement, dated as of December 28, 1990, as amended from time to
time, among the issuer (the "Company") and certain investors of the
Company, and the Company reserves the right to refuse the transfer
of such securities until such conditions have been fulfilled with
respect to such transfer. A copy of such conditions will be
furnished by the Company to the holder hereof upon written request
and without charge.
1E. Section 5.12 of the Original Stockholders' Agreement is hereby
amended and restated in its entirety to read as follows:
5.12 Availability of Common Stock for Conversion. The Company will,
from time to time, in accordance with the laws of the State of Delaware,
increase the authorized amount of Common Stock if at any time the number
of shares of Common Stock remaining unissued and available for issuance
shall be insufficient to permit conversion or exercise, as the case may
be, of all the then outstanding shares of Preferred Stock, Convertible
Securities and Options.
1F. Section 5.16 of the Original Stockholders' Agreement is hereby
amended and restated in its entirety to read as follows:
5.16. Certain Restrictions on Corporate Action. The consent of the
Board of Directors shall be required in order for the Company to:
(a) make or commit to make any loans or guaranty any obligations; or
-5-
<PAGE> 60
(b) make or commit to make any single capital expenditure or series
of related capital expenditures in excess of $50,000.00 unless such
capital expenditure(s) relate to day-to-day operating expenses of the
Company.
1G. Exhibit A of the Original Stockholders' Agreement is amended and
restated in its entirety to read as provided on Annex A hereto.
Section 2. Miscellaneous.
2A. Effect of Amendment. Except as otherwise expressly set forth in this
Amendment, the terms and provisions of the original Stockholders' Agreement
shall remain in full force and effect.
2B. Section Headings. The captions to the Sections in this Amendment are
for reference only and shall not affect the meaning or interpretation hereof.
2C. Choice of Law. All questions concerning the construction, validity
and interpretation of this Amendment and the performance of the obligations
imposed by this Amendment shall be governed by and construed in accordance with
the laws of the State of Delaware.
2D. Multiple Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which will
constitute one and the same instrument.
2E. Complete Agreement. Except as set forth herein, this Amendment
contains the complete agreement between the parties and controls and supersedes
any prior understandings, agreements or representations by or between the
parties, written or oral, which conflicts with, or may have related to, the
subject matter hereof in any way.
2F. Severability. If a court of competent jurisdiction shall determine
that any portion of this Amendment is invalid or unenforceable under the law of
public policy of any jurisdiction, the remainder of this Amendment shall remain
in full force and effect.
* * *
-6-
<PAGE> 61
MELLON BANK, N.A. MASTER TRUSTEE
FOR BELL ATLANTIC, MASTER PENSION
TRUST (AS DIRECTED BY CHANCELLOR
TRUST COMPANY, INVESTMENT
MANAGER)
By: /s/ Susan M. Hellingsworth
-----------------------------------
Its: Associate Counsel
----------------------------------
HANK & CO FOR THE ACCOUNT OF
CITIVENTURE II
By: /s/ Craig Roly
-----------------------------------
Its: Managing Director
----------------------------------
PITT & CO
By: /s/ Dorothy Miller
-----------------------------------
Its: A.V.P.
---------------------------------
HARRIS TRUST & SAVINGS BANK AS
TRUSTEE FOR BAXTER TRAVENOL
LABORATORIES, INC. RETIREMENT PLAN
POOLED INVESTMENT TRUST
(CHANCELLOR CAPITAL MANAGEMENT
INC., INVESTMENT MANAGER)
By: /s/ Craig Roly
----------------------------------
Its: Managing Director
---------------------------------
Emp & Co.
By: /s/ Craig Roly
-----------------------------------
Its: Managing Director
---------------------------------
-8-
<PAGE> 62
AMENDMENT NO. 2
TO AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
AMENDMENT NO. 2 TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this
"Amendment"), dated as of June 30, 1992 by and among Cardmember Publishing
Corporation, a Delaware corporation (the "Company"), and each of the signatories
hereto. Capitalized terms used but not otherwise defined herein shall have the
meaning set forth in the Original Stockholders Agreement (as such term is
defined below).
RECITALS
WHEREAS, the parties hereto are parties to that certain Amended and
Restated Stockholders' Agreement dated as of December 28, 1990, as amended by
Amendment No. 1 to Amended and Restated Stockholders Agreement dated as of
August 30, 1991 (as so amended, the "Original Stockholders' Agreement" and as
amended hereby the "Agreement");
WHEREAS, pursuant to the Third Purchase Agreement (as defined below),
each of the Investors is purchasing Restricted Securities of the Company; and
WHEREAS, the parties hereto desire to promote their mutual interests and
the interests of the Company by amending the Original Stockholders' Agreement as
set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
Section 1. Amendments to Original Stockholders' Agreement.
1A. The following definitions in Article I of the Original Stockholders'
Agreement are hereby amended and restated in their entirety to read as follows:
"Preferred Stock" shall mean the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock and/or Series D
Preferred Stock.
"Registrable Securities" shall mean (a) the shares of Class B Common
Stock issued or issuable upon conversion of the Preferred Stock, (b) the
shares of Class B Common Stock issued or issuable upon conversion of the
Class A Common Stock into which shares of Preferred Stock have been
converted, (c) any Common Stock issued in respect of securities referred
to in clauses (a) and (b) by way of a stock split or stock dividend, or
in connection with a
<PAGE> 63
combination of shares, recapitalization, merger, consolidation or other
reorganization and (d) any other shares of Common Stock owned by Holders
of the securities described in clauses (a), (b) and (c) above. As to any
particular Registrable Securities, such securities will cease to be
Registrable Securities when they have been distributed to the public
pursuant to an offering registered under the Securities Act or sold to
the public through a broker, dealer or market maker in compliance with
Rule 144 under the Securities Act (or any similar rule then in force).
For purposes of this Agreement, a person or entity will be deemed to be
a Holder of Registrable Securities whenever such person or entity has
the right to acquire directly or indirectly such Registrable Securities
(upon conversion or exercise in connection with a transfer of securities
or otherwise, but disregarding any restrictions or limitations upon the
exercise of such right), whether or not such acquisition has actually
been effected.
"Restricted Securities" shall mean (a) the shares of Preferred Stock
purchased by GeoCapital on July 31, 1989, (b) the shares of Preferred
Stock purchased by Bernard Goldstein from GeoCapital on December 15,
1989 and from the Company on December 28, 1990, (c) the shares of
Preferred Stock purchased by the Investors pursuant to the Purchase
Agreement, the Second Purchase Agreement and the Third Purchase
Agreement, (d) the shares of Common Stock issued or issuable upon
conversion of the Preferred Stock, (e) the shares of Class B Common
Stock issued or issuable upon conversion of the Class A Common Stock
into which shares of Preferred Stock acquired by the Investors have been
converted, (f) the shares of Class A Common Stock purchased by the
Founders on July 28, 1989, (g) the shares of Class B Common Stock issued
or issuable upon the conversion of the Class A Common Stock purchased by
the Founders, (h) the shares of Class B Common Stock issued to Daniel
Klabunde on May 18, 1992, (i) the shares of Class B Common Stock to be
issued pursuant to Section 5.17 hereunder, and (j) any securities issued
with respect to the securities referred to in clauses (a), (b), (c),
(d), (e), (f), (g), (h) or (i) by way of a stock dividend, stock split
or in connection with a stock combination, recapitalization, merger,
consolidation or other reorganization. As to any particular Restricted
Securities, such securities will cease to be Restricted Securities when
they have (a) been effectively registered under the Securities Act and
disposed of in accordance with the registration statement covering them,
(b) become eligible for sale pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act or (c) subject to the
provisions of Article 4 of this Agreement, been otherwise legally
transferred and new certificates for them not bearing the Securities Act
legend set forth in Section 4.6 have been issued. Whenever any
particular securities cease to be Restricted Securities, the holder
thereof shall be entitled to receive from the Company, without expense,
new securities of like tenor not bearing a Securities Act legend of the
character set forth in Section 4.6.
-2-
<PAGE> 64
"Underlying Common Stock" shall mean (a) the Common Stock issued or
issuable upon conversion of the Preferred Stock, (b) the Class B Common
Stock issued or issuable upon conversion of the Class A Common Stock
into which shares of Preferred Stock have been converted, (c) any Common
Stock issued or issuable with respect to the securities referred to in
clauses (a) and (b) above by way of a stock dividend or stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. For purposes of this Agreement,
any person or entity who holds Preferred Stock shall be deemed to be the
holder of the Underlying Common Stock obtainable upon conversion of such
Preferred Stock in connection with the transfer thereof or otherwise,
regardless of any restriction or limitation on the conversion of such
Preferred Stock. As to any particular shares of Underlying Common Stock,
such shares shall cease to be Underlying Common Stock when they have
been (a) effectively registered under the Securities Act and disposed of
in accordance with the registration statement covering them or (b)
distributed to the public through a broker, dealer or market maker
pursuant to Rule 144 under the Securities Act (or any similar provision
then in force).
1B. Article I of the Original Stockholders' Agreement is hereby amended
by deleting the following definitions:
"Convertible Promissory Notes" shall mean those certain convertible
promissory notes of the Company dated of even date herewith and issued
pursuant to the Note and Warrant Purchase Agreement.
"Note and Warrant Purchase Agreement" shall mean that certain Note
and Warrant Purchase Agreement dated as of August 30, 1991 by and among
the Company and the other parties listed on the signature page thereto.
"Warrants" shall mean those certain Warrants to purchase Class A
Common Stock of the Company dated as of even date herewith and issued
pursuant to the Note and Warrant Purchase Agreement.
1C. Article I of the Original Stockholders' Agreement hereby amended by
adding the following definitions in the appropriate alphabetical order:
"Third Purchase Agreement" shall mean the Purchase Agreement dated
as of June 30, 1992 by and among the Company and the Investors.
"Series D Preferred Stock" shall mean the Series D Preferred Stock
of the Company, par value $0.01 per share, having the rights,
restrictions, privileges and preferences set forth in the Amendment to
the Certificate of Incorporation attached hereto as Exhibit A.
-3-
<PAGE> 65
1D. Section 4.5(a) of the Original Stockholders' Agreement is hereby
amended and restated in its entirety to read as follows:
(a) Except for the issuance of shares (i) pursuant to a public
offering registered under the Securities Act, (ii) shares of Common
Stock issued upon conversion of the Preferred Stock or the Class A
Common Stock, (iii) in connection with the acquisition of another
business (whether by a purchase of assets, purchase of stock, merger or
otherwise) whereby the Company owns more than fifty percent (50%) of the
voting power of the surviving entity, or (iv) to the Company's
directors, officers, employees or consultants not in excess of the
number of shares permitted under Section (b) (7) (k) (iv) of the
Company's Certificate of Incorporation (as amended as of the date
hereof), if the Company authorizes the issuance and sale of any shares
of equity or any securities containing options or rights to acquire any
shares of equity, other than as a dividend on the outstanding shares,
the Company will first offer to sell to the Investors a portion of such
securities equal to the percentage determined by dividing (A) the number
of shares of Underlying Common Stock then held by such Investor, by (B)
the total number of shares of Underlying Common Stock then held by all
Investors. The Investors will be entitled to purchase such stock or
securities at the same price and on the same terms as such stock or
securities are to be offered to any other persons.
1E. Exhibit A of the Original Stockholders' Agreement is amended and
restated in its entirety to read as provided on Annex hereto.
Section 2. Miscellaneous.
2A. Effect of Amendment. Except as otherwise expressly set forth in this
Amendment, the terms and provisions of the original Stockholders' Agreement
shall remain in full force and effect.
2B. Section Headings. The captions to the Sections in this Amendment are
for reference only and shall not affect the meaning or interpretation hereof.
2C. Choice of Law. All questions concerning the construction, validity
and interpretation of this Amendment and the performance of the obligations
imposed by this Amendment shall be governed by and construed in accordance with
the laws of the State of Delaware.
2D. Multiple Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which will
constitute one and the same instrument.
-4-
<PAGE> 66
2E. Complete Agreement. Except as set forth herein, this Amendment
contains the complete agreement between the parties and controls and supersedes
any prior understandings, agreements or representations by or between the
parties, written or oral, which conflicts with, or may have related to, the
subject matter hereof in any way.
2F. Severability. If a court of competent jurisdiction shall determine
that any portion of this Amendment is invalid or unenforceable under the law of
public policy of any jurisdiction, the remainder of this Amendment shall remain
in full force and effect.
* * *
-5-
<PAGE> 67
SIGNATURE PAGE TO AMENDMENT NO. 2 TO
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month and year first written above.
CARDMEMBER PUBLISHING
CORPORATION
By: /s/ Gary Johnson
--------------------------------
Its: President
-------------------------------
GEOCAPITAL II, L.P.
By: /s/ Stephen J. Clearman
--------------------------------
Its: General Partner
-------------------------------
/s/ Gary Johnson
___________________________________
Gary Johnson
/s/ Thomas St. Denis
___________________________________
Thomas St. Denis
/s/ Dennis Walker
___________________________________
Dennis Walker
/s/ Bernard Goldstein
___________________________________
Bernard Goldstein
/s/ Parag Saxena
___________________________________
Parag Saxena
-6-
<PAGE> 68
MELLON BANK, N.A. MASTER TRUSTEE
FOR BELL ATLANTIC, MASTER PENSION
TRUST (AS DIRECTED BY CHANCELLOR
TRUST COMPANY, INVESTMENT
MANAGER)
By: /s/ Susan M. Hollingsworth
_______________________________
Its: Associate Counsel
______________________________
HANK & CO FOR THE ACCOUNT OF
CITIVENTURE II
By: /s/ Craig Roly
________________________________
Its: Managing Director
_______________________________
PITT & CO
By: /s/ George Cervenak
______________________________
Its:______________________________
FOCUS & CO.
By: /s/ Craig Roly
________________________________
Its: Managing Director
_______________________________
EMP & CO (FOR BURNETT PROFIT
SHARING TRUST)
By: /s/ Craig Roly
________________________________
Its: Managing Director
_______________________________
EMP & CO (FOR BURNETT PENSION
TRUST)
By: /s/ Craig Roly
________________________________
Its: Managing Director
_______________________________
/s/ Daniel Klabunde
__________________________________
Daniel Klabunde
-7-
<PAGE> 69
AMENDMENT NO. 3
TO AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
AMENDMENT NO. 3 TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this
"Amendment"), dated as of May 4, 1993 by and among Cardmember Publishing
Corporation, a Delaware corporation (the "Company"), and each of the signatories
hereto. Capitalized terms used but not otherwise defined herein shall have the
meaning set forth in the Original Stockholders Agreement (as such term is
defined below).
RECITALS
WHEREAS, the parties hereto are parties to that certain Amended and
Restated Stockholders' Agreement dated as of December 28, 1990, as amended by
Amendment No. 1 to Amended and Restated Stockholders' Agreement dated as of
August 30, 1991 and Amendment No. 2 to Amended and Restated Stockholders'
Agreement dated as of June 30, 1992 (as so amended, the "Original Stockholders'
Agreement" and as amended hereby, the "Agreement");
WHEREAS, pursuant to the Fourth Purchase Agreement (as defined below),
certain of the Investors is purchasing Restricted Securities of the Company; and
WHEREAS, the parties hereto desire to promote their mutual interests and
the interests of the Company by amending the Original Stockholders' Agreement as
set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
Section 1. Amendments to Original Stockholders' Agreement.
1A. The following definitions in Article I of the Original Stockholders'
Agreement are hereby amended and restated in their entirety to read as follows:
"Preferred Stock" shall mean the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and/or Series E Preferred Stock.
"Restricted Securities" shall mean (a) the shares of Preferred Stock
purchased by GeoCapital on July 31, 1989, (b) the shares of Preferred
Stock purchased by Bernard Goldstein from GeoCapital on December 15,
1989 and from the Company on December 28, 1990, (c) the
-1-
<PAGE> 70
shares of Preferred Stock purchased by the Investors pursuant to the
Purchase Agreement, the Second Purchase Agreement and the Third Purchase
Agreement, (d) the shares of Preferred Stock and Common Stock purchased
by certain of the Investors pursuant to the Fourth Purchase Agreement,
(e) the shares of Common Stock issued or issuable upon conversion of the
Preferred Stock, (f) the shares of Class B Common Stock into which
shares of Preferred Stock acquired by the Investors have been converted,
(g) the shares of Class A Common Stock purchased by the Founders on July
28, 1989, (h) the shares of Class B Common Stock issued or issuable upon
the conversion of the Class A Common Stock purchased by the Founders,
(i) the shares of Class B Common Stock issued to Daniel Klabunde on May
18, 1992, (j) the shares of Class B Common Stock to be issued pursuant
to Section 5.17 hereunder, and (k) any securities issued with respect to
the securities referred to in clauses (a), (b), (c), (d), (e), (f), (g),
(h), (i) or (j) by way of a stock dividend, stock split or in connection
with a stock combination, recapitalization, merger, consolidation or
other reorganization. As to any particular Restricted Securities, such
securities will cease to be Restricted Securities when they have (a)
been effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them, (b) become
eligible for sale pursuant to Rule 144 (or any similar provision then in
force) under the Securities Act or (c) subject to the provisions of
Article 4 of this Agreement, been otherwise legally transferred and new
certificates for them not bearing the Securities Act legend set forth in
Section 4.6 have been issued. Whenever any particular securities cease
to be Restricted Securities, the holder thereof shall be entitled to
receive from the Company, without expense, new securities of like tenor
not bearing a Securities Act legend of the character set forth in
Section 4.6.
1B. Article I of the Original Stockholders' Agreement hereby amended by
adding the following definitions in the appropriate alphabetical order:
"Fourth Purchase Agreement" shall mean the Purchase Agreement dated
as of May 4, 1993 by and among the Company and certain of the Investors.
"Series E Preferred Stock" shall mean the Series E Preferred Stock
of the Company, par value $0.01 per share, having the rights,
restrictions, privileges and preferences set forth in the Amendment to
the Certificate of Incorporation attached hereto as Exhibit A.
1C. Section 5.17 of the Original Stockholders' Agreement is amended to
delete "30,000" and insert "62,000" in its place.
-2-
<PAGE> 71
1D. Exhibit A of the Original Stockholders' Agreement is amended and
restated in its entirety to read as provided on Annex A hereto.
Section 2. Miscellaneous.
2A. Effect of Amendment. Except as otherwise expressly set forth in this
Amendment, the terms and provisions of the Original Stockholders' Agreement
shall remain in full force and effect.
2B. Section Headings. The captions to the Sections in this Amendment are
for reference only and shall not affect the meaning or interpretation hereof.
2C. Choice of Law. All questions concerning the construction, validity
and interpretation of this Amendment and the performance of the obligations
imposed by this Amendment shall be governed by and construed in accordance with
the laws of the State of Delaware.
2D. Multiple Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which will
constitute one and the same instrument.
2E. Complete Agreement. Except as set forth herein, this Amendment
contains the complete agreement between the parties and controls and supersedes
any prior understandings, agreements or representations by or between the
parties, written or oral, which conflicts with, or may have related to, the
subject matter hereof in any way.
2F. Severability. If a court of competent jurisdiction shall determine
that any portion of this Amendment is invalid or unenforceable under the law of
public policy of any jurisdiction, the remainder of this Amendment shall remain
in full force and effect.
* * *
-3-
<PAGE> 72
SIGNATURE PAGE TO AMENDMENT NO. 3 TO
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month and year first written above.
CARDMEMBER PUBLISHING
CORPORATION
By: /s/ Gary Johnson
________________________________
Its: President
________________________________
GEOCAPITAL II, L.P.
By: /s/ Stephen J. Clearman
_________________________________
Its: General Partner
---------------------------------
/s/ Gary Johnson
_____________________________________
Gary Johnson
/s/ Thomas St. Denis
_____________________________________
Thomas St. Denis
/s/ Dennis Walker
_____________________________________
Dennis Walker
/s/ Bernard Goldstein
_____________________________________
Bernard Goldstein
/s/ Parag Saxena
_____________________________________
Parag Saxena
-4-
<PAGE> 73
MELLON BANK, N.A., MASTER TRUSTEE
FOR BELL ATLANTIC, MASTER PENSION
TRUST (AS DIRECTED BY CHANCELLOR
TRUST COMPANY, INVESTMENT
MANAGER)
By:_______________________________
Its: Vice President
_____________________________
HANK & CO. FOR THE ACCOUNT OF
CITIVENTURE II
By: /s/ Craig Roly
______________________________
Its: Managing Director
______________________________
-5-
<PAGE> 74
SIGNATURE PAGE TO AMENDMENT NO. 3 TO
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
PITT & CO.
By: /s/ Jean Baumquist
____________________________
Its: Vice President
____________________________
FOCUS & CO.
By: /s/ Craig Roly
____________________________
Its: Managing Director
____________________________
EMP & CO. (FOR BURNETT PROFIT
SHARING TRUST)
By: /s/ Craig Roly
_____________________________
Its: Managing Director
_____________________________
EMP & CO. (FOR BURNETT PENSION
TRUST)
By: /s/ Craig Roly
____________________________
Its: Managing Director
____________________________
/s/ Daniel Klabunde
____________________________
Daniel Klabunde
-6-
<PAGE> 75
AMENDMENT NO. 4
TO AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
AMENDMENT NO. 4 TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this
"Amendment"), dated as of March 30, 1994 by and among Cardmember Publishing
Corporation, a Delaware corporation (the "Company"), and each of the signatories
hereto. Capitalized terms used but not otherwise defined herein shall have the
meaning set forth in the Original Stockholders Agreement (as such term is
defined below).
RECITALS
WHEREAS, the parties hereto are parties to that certain Amended and
Restated Stockholders' Agreement dated as of December 28, 1990, as amended by
Amendment No. 1 to Amended and Restated Stockholders' Agreement dated as of
August 30, 1991, Amendment No. 2 to Amended and Restated Stockholders' Agreement
dated as of June 30, 1992 and Amendment No. 3 to Amended and Restated
Stockholders' Agreement dated as of May 4, 1993 (as so amended, the "Original
Stockholders' Agreement" and as amended hereby, the "Amendment");
WHEREAS, pursuant to the Fifth Purchase Agreement (as defined below),
certain of the Investors are purchasing Restricted Securities of the Company;
and
WHEREAS, the parties hereto desire to promote their mutual interest and
the interests of the Company by amending the Original Stockholders' Agreement as
set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
Section 1. Amendments to Original Stockholders' Agreement.
1A. The following definitions in Article I of the Original Stockholders'
Agreement are hereby amended and restated in their entirety to read as follows:
"Preferred Stock" shall mean the Series A Preferred stock, the
Series B Preferred Stock, the Series C. Preferred Stock, the Series D
Preferred Stock, the Series E Preferred Stock and/or Series F Preferred
Stock.
"Registrable Securities" shall mean (a) the shares of Class B Common
Stock issued or issuable upon conversion of the Preferred Stock
(including Preferred Stock into which Convertible Notes have been
converted),
<PAGE> 76
(b) the shares of Class B Common Stock issued or issuable
upon conversion of the Class A Common Stock (including Class A Common
Stock into which shares of Preferred Stock have been converted, into
which Warrants have been exercised or into which Convertible Notes have
been converted), (c) any Common Stock issued in respect of securities
referred to in clauses (a) and (b) by way of a stock split or stock
dividend, or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization and (d)
any other shares of Common Stock owned by Holders of the securities
described in clauses (a), (b) and (c) above. As to any particular
Registrable Securities, such securities will cease to be Registrable
Securities when they have been distributed to the public pursuant to an
offering registered under the Securities Act or sold to the public
through a broker, dealer or market maker in compliance with Rule 144
under the Securities Act (or any similar rule then in force). For
purposes of this Agreement, a person or entity will be deemed to be a
Holder of Registrable Securities whenever such person or entity has the
right to acquire directly or indirectly such Registrable Securities
(upon conversion or exercise in connection with a transfer of securities
or otherwise, but disregarding any restrictions or limitations upon the
exercise of such right), whether or not such acquisition has actually
been effected.
"Restricted Securities" shall mean (a) the shares of Preferred Stock
purchased by GeoCapital on July 31, 1989, (b) the shares of Preferred
Stock purchased by Bernard Goldstein from GeoCapital on December 15,
1989 and from the Company on December 28 1990, (c) the shares of
Preferred Stock purchased by the Investors pursuant to the Purchase
Agreement, the Second Purchase Agreement and the Third Purchase
Agreement, (d) the shares of Preferred Stock and Common Stock purchased
by certain of the Investors pursuant to the Fourth Purchase Agreement
and the Fifth Purchase Agreement, (e) the shares of Common Stock issued
or issuable upon conversion of the Preferred Stock, (f) the shares of
Preferred Stock and Common Stock issued or issuable upon conversion of
the Convertible Notes, (g) the shares of Common Stock issued or issuable
upon exercise of the Warrants, (h) the shares of Class B Common Stock
issued or issuable upon conversion of the Class A Common Stock
(including Class A Common Stock issued upon conversion of Preferred
Stock acquired by the Investors, upon conversion of the Convertible
Notes and upon exercise of the Warrants) (i) the shares of Class A
Common Stock purchased by the Founders on July 28, 1989, (j) the shares
of Class B Common Stock issued or issuable upon the conversion of the
Class A Common Stock purchased by the Founders, (k) the shares of Class
B Common Stock issued to Daniel Klabunde on May 18, 1992, (l) the shares
of Class B Common Stock to be issued pursuant to Section 5.17 hereunder,
(m) the Convertible Notes, (n) the Warrants and (o) any securities
issued with respect to the securities referred to in clauses (a) through
(n), by way of a stock dividend, stock split or in connection with a
stock combination,
-2-
<PAGE> 77
recapitalization, merger, consolidation or other reorganization. As to
any particular Restricted Securities, such securities will cease to be
Restricted Securities when they have (a) been effectively registered
under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) become eligible for sale
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act or (c) subject to the provisions of Article 4 of this
Agreement, been otherwise legally transferred and new certificates for
them not bearing the Securities Act legend set forth in Section 4.6 have
been issued. Whenever any particular securities cease to be Restricted
Securities, the holder thereof shall be entitled to receive from the
Company, without expense, new securities of the like tenor not bearing a
Securities Act legend of the character set forth in Section 4.6.
"Underlying Common Stock" shall mean (a) the Common Stock issued or
issuable upon conversion of the Preferred Stock, (b) the Class B Common
Stock issued or issuable upon conversion of the Class A Common Stock
(including Class A Common Stock into which shares of Preferred Stock
have been converted, into which Warrants have been exercised and into
which Convertible Notes have been converted), (c) the Class A Common
Stock issued or issuable upon exercise of the Warrants or conversion of
the Convertible Notes, (d) the Preferred Stock issuable upon conversion
of the convertible Notes, and (e) any Common Stock issued or issuable
with respect to the securities referred to in clauses (a) through (d)
above by way of a stock dividend or stock split or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization. For purposes of this Agreement, any person or entity who
holds Preferred Stock, Convertible Notes or Warrants shall be deemed to
be holder of the Underlying Common Stock obtainable upon conversion of
such Preferred Stock or Convertible Notes or upon exercise of such
Warrants in connection with the transfer thereof or otherwise,
regardless of any restriction or limitation on the conversion of such
Preferred Stock or Convertible Notes or on the exercise of such
Warrants. As to any particular shares of Underlying Common Stock, such
shares shall cease to be Underlying Common Stock when they have been (a)
effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering them or (b)
distributed to the public through a broker, dealer or market maker
pursuant to Rule 144 under the Securities Act (or any similar provision
then in force).
1B. Article I of the Original Stockholders' Agreement hereby amended by
adding the following definitions in the appropriate alphabetical order:
"Convertible Notes" shall mean those certain convertible promissory
notes of the Company dated the date hereof and issued pursuant to the
Fifth Purchase Agreement.
-3-
<PAGE> 78
"Fifth Purchase Agreement" shall mean the Securities Purchase
Agreement dated as of March 30, 1994 by and among the Company and
certain of the Investors.
"Lender Warrant" shall mean the warrant to purchase an aggregate of
no more than 20,000 shares of Common Stock proposed to be issued to
Brown Brothers Harriman for an exercise price of not less than $15 per
share but only to the extent such warrant is issued on or before
September 30, 1994 in connection with a new credit facility of not less
than $6 million by Brown Brothers Harriman.
"Series F Preferred Stock" shall mean the Series F Preferred Stock
of the Company, par value $0.01 per share, having the rights,
restrictions, privileges and preferences set forth in the Amendment to
the Certificate of Incorporation attached hereto as Exhibit A.
"Warrants" shall mean those certain warrants for the purchase of
Class A Common Stock of the Company dated the date hereof and issued
pursuant to the Fifth Purchase Agreement.
1C. Exhibit A of the Original Stockholders' Agreement is amended and
restated in its entirety to read as provided on Exhibit A hereto.
1D. Section 4.5(a) of the Original Stockholders' Agreement is hereby
amended and restated in its entirety to read as follows:
(a) Except for the issuance of shares (i) pursuant to a public
offering registered under the Securities Act, (ii) shares of Common
Stock issued upon conversion of the Preferred Stock, the Class A Common
Stock or the Convertible Notes or upon exercise of the Warrants or the
Lender Warrant, (iii) shares of Preferred Stock issued upon conversion
of the Convertible Notes, (iv) in connection with the acquisition of
another business (whether by a purchase of assets, purchase of stock,
merger or otherwise) whereby the Company owns more than fifty percent
(50%) of the voting power of the surviving entity, or (v) to the
Company's directors, officers, employees or consultants not in excess of
the number of shares permitted under Section (b)(7)(k)(iv) of the
Company's Certificates of Incorporation (as amended as of the date
hereof), if the Company authorizes the issuance and sale of any shares
of equity or any securities containing options or rights to acquire any
shares of equity, other than as a dividend on the outstanding shares,
the Company will first offer to sell to the Investors a portion of such
securities equal to the percentage determined by dividing (A) the number
of shares of Underlying Common Stock then held by such Investor, by (B)
the total number of shares of Underlying Common Stock then held by all
Investors. The Investors will be
-4-
<PAGE> 79
entitled to purchase such stock or securities at the same price and on
the same terms as such stock or securities are to be offered to any
other persons.
Section 2. Miscellaneous.
2A. Effect of Amendment. Except as otherwise expressly set forth in this
Amendment, the terms and provisions of the Original Stockholders' Agreement
shall remain in full force and effect.
2B. Section Headings. The captions to the Sections in this Amendment are
for reference only and shall not affect the meaning or interpretation hereof.
2C. Choice of Law. All questions concerning the construction, validity
and interpretation of this Amendment and the performance of the obligations
imposed by this Amendment shall be governed by and construed in accordance with
the laws of the State of Delaware.
2D. Multiple Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which will
constitute one and the same instrument.
2E. Complete Agreement. Except as set forth herein, this Amendment
contains the complete agreement between the parties and controls and supersedes
any prior understandings, agreements or representations by or between the
parties, written or oral, which conflicts with, or may have related to, the
subject matter hereof in any way.
2F. Severability. If a court of competent jurisdiction shall determine
that any portion of this Amendment is invalid or unenforceable under the law of
public policy of any jurisdiction, the remainder of this Amendment shall remain
in full force and effect.
* * *
-5-
<PAGE> 80
SIGNATURE PAGE TO AMENDMENT NO. 4 TO
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day, month and year first written above.
CARDMEMBER PUBLISHING CORPORATION
By: /s/ Gary Johnson
_______________________________
Its: President
_______________________________
GEOCAPITAL II, L.P.
By: /s/ Stephen J. Clearman
-------------------------------
Its: General Partner
------------------------------
/s/ Gary Johnson
__________________________________
Gary Johnson
/s/ Thomas St. Denis
__________________________________
Thomas St. Denis
/s/ Dennis Walker
__________________________________
Dennis Walker
/s/ Bernard Goldstein
__________________________________
Bernard Goldstein
/s/ Parag Saxena
----------------------------------
Parag Saxena
MELLON BANK, N.A., MASTER TRUSTEE FOR
BELL ATLANTIC, MASTER PENSION TRUST (AS
DIRECTED BY CHANCELLOR TRUST COMPANY,
INVESTMENT MANAGER)
By: /s/ Judith A. Manion
_______________________________
Its: Judith A. Manion, Assistant Officer
_______________________________
HANK & CO FOR THE ACCOUNT OF
CITIVENTURE II
By: /s/ John L. Gross
_______________________________
Its: John L. Gross as Partner
_______________________________
-6-
<PAGE> 81
SIGNATURE PAGE TO AMENDMENT NO. 4 TO
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
PITT & CO
By: /s/ George J. Cervenak
__________________________________________
Its: George J. Cervenak, Assistant Vice President
__________________________________________
FOCUS & CO
By: /s/ T. Pimental
__________________________________________
Its: Assistant Secretary
__________________________________________
EMP & CO as nominee for Harris Trust and Savings
Bank as trustee for the Burnett Pension Trust
By: /s/
__________________________________________
Its:
__________________________________________
EMP & CO as nominee for Harris Trust and Savings
Bank as trustee for the Burnett Profit Sharing Trust
By: /s/
__________________________________________
Its:
__________________________________________
/s/ Daniel Klabunde
__________________________________________
Daniel Klabunde
-7-
<PAGE> 82
AMENDMENT NO. 5
TO AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
AMENDMENT NO. 5 TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this
"Amendment"), dated as of September 28, 1994 by and among Cardmember Publishing
Corporation, a Delaware corporation (the "Company"), and each of the signatories
hereto. Capitalized terms used but not otherwise defined herein shall have the
meaning set forth in the Original Stockholders' Agreement (as such term is
defined below).
RECITALS
WHEREAS, the parties hereto are parties to that certain Amended and
Restated Stockholders' Agreement dated as of December 28, 1990, as amended by
Amendment No. 1 to Amended and Restated Stockholders' Agreement dated as of
August 30, 1991, Amendment No. 2 to Amended and Restated Stockholders' Agreement
dated as of June 30, 1993, Amendment No. 3 to Amended and Restated Stockholders'
Agreement dated as of May 4, 1993 and Amendment No. 4 to Amended and Restated
Stockholders' Agreement dated as of March 30, 1994 (as so amended, the "Original
Stockholders' Agreement" and as amended hereby, the "Agreement");
WHEREAS, pursuant to the Sixth Purchase Agreement (as defined below),
certain of the Investors are purchasing Restricted Securities of the Company;
and
WHEREAS, the parties hereto desire to promote their mutual interests
and the interests of the Company by amending the Original Stockholders'
Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
Section 1. Amendments to Original Stockholders' Agreement.
1A. Section 3.3 of Article 3 of the Original Stockholders' Agreement is
hereby amended and restated in its entirety to read as follows:
"3.3 Certificate of Incorporation. The provisions of Sections 3.1 and
3.2 shall not apply whenever the holders of Preferred Stock are entitled to and
exercise their rights under the provisions of subsections (b)(II)(4)(c)(iii),
(b) (II)(4)(d), (b)(III)(1)(b)(iii) and (b)(IV)(1)(b)(ii) of Article IV of the
Company's Certificate of Incorporation; provided, however, that whenever the
holders of Convertible Preferred Stock or Mezzanine Preferred Stock exercise
such rights,
<PAGE> 83
all shares of Convertible Preferred Stock or Mezzanine Preferred
Stock held by any Holder, whether now owned or hereafter acquired, shall be
voted such that Chancellor shall designate one member of the Board."
1B. Section 4.5(a) of Article 4 of the Original Stockholders' Agreement
is hereby amended and restated in its entirety to read as follows:
"4.5 First Refusal Rights. (a) Except for the issuance of
shares (i) pursuant to a public offering registered under the
Securities Act, (ii) shares of Common Stock issued upon conversion of
the Preferred Stock, the Class A Common Stock or the Convertible Notes
or upon exercise of the Warrants or the Lender Warrant, (iii) shares of
Preferred Stock issued upon conversion of the Convertible Notes, (iv)
in connection with the acquisition of another business (whether by a
purchase of assets, purchase of stock, merger or otherwise) whereby the
Company owns more than fifty percent (50%) of the voting power of the
surviving entity, or (v) to the Company's directors, officers,
employees or consultants not in excess of the number of shares
permitted under Section (b)(7)(k)(iv) of the Company's Certificate of
Incorporation (as amended as of the date hereof), if the Company
authorizes the issuance and sale of any shares of equity or any
securities containing options or rights to acquire any shares of
equity, other than as a dividend on the outstanding shares, the Company
will first offer to sell to the Investors a portion of such securities
equal to the percentage determined by multiplying two-thirds of such
securities by the quotient obtained by dividing (A) the number of
shares of Underlying Common Stock then held by such Investor, by (B)
the total number of shares of Underlying Common Stock then held by all
Investors. The Investors will be entitled to purchase such stock or
securities at the same price and on the same terms as such stock or
securities are to be offered to any other persons."
Section 2. Miscellaneous.
2A. Effect of Amendment. Except as otherwise expressly set forth in
this Amendment, the terms and provisions of the Original Stockholders' Agreement
shall remain in full force and effect. In the event of a conflict in the terms
of this Agreement and the Certificate of Incorporation, the Certificate of
Incorporation shall govern. In the event of a conflict in the terms of this
Agreement and the By-laws, this Agreement shall govern.
2B. Section Headings. The captions to the Sections in this Amendment
are for reference only and shall not affect the meaning or interpretation
hereof.
2C. Choice of Law. All questions concerning the construction, validity
and interpretation of this Amendment and the performance of the obligations
imposed by
-2-
<PAGE> 84
this Amendment shall be governed by and construed in accordance with
the laws of the State of Delaware.
2D. Multiple Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which will
constitute one and the same instrument.
2E. Complete Agreement. Except as set forth herein, this Amendment
contains the complete agreement between the parties and controls and supersedes
any prior understandings, agreements or representations by or between the
parties, written or oral, which conflicts with, or may have related to, the
subject matter hereof in any way.
2F. Severability. If a court of competent jurisdiction shall determine
that any portion of this Amendment is invalid or unenforceable under the law of
public policy of any jurisdiction, the remainder of this Amendment shall remain
in full force and effect.
* * *
-3-
<PAGE> 85
SIGNATURE PAGE TO AMENDMENT NO. 5 TO AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month and year first written above.
CARDMEMBER PUBLISHING CORPORATION
By: /s/ Gary Johnson
-------------------------------
Its: President
-------------------------------
GEOCAPITAL II, L.P.
By: /s/ Stephen J. Clearman
-------------------------------
Stephen J. Clearman
Its: General Partner
-------------------------------
/s/ Gary Johnson
-------------------------------
Gary Johnson
/s/ Thomas St. Denis
-------------------------------
Thomas St. Denis
/s/ Dennis Walker
-------------------------------
Dennis Walker
/s/ Bernard Goldstein
-------------------------------
Bernard Goldstein
/s/ Parag Saxena
-------------------------------
Parag Saxena
-4-
<PAGE> 86
SIGNATURE PAGE TO AMENDMENT NO. 5 TO AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month and year first written above.
MELLON BANK, N.A., as Trustee for the
Bell Atlantic Master Pension Trust as
Directed by Abbott Capital Management,
L.P., Investment Manager
By: Allan Seaman
-------------------------------
Its: Associate Counsel
-------------------------------
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<PAGE> 87
SIGNATURE PAGE TO AMENDMENT NO. 5 TO AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month and year first written above.
HANK & CO. FOR THE ACCOUNT OF
CITIVENTURE II
By: /s/ William E. Durham
-------------------------------
Its:
-------------------------------
HANK & CO. FOR THE ACCOUNT OF
CITIVENTURE II
By: /s/ William E. Durham
-------------------------------
Its:
-------------------------------
PITT & CO. AS NOMINEE FOR BANKERS
TRUST COMPANY FOR GTE OF THE GTE
MASTER PENSION TRUST
By: /s/ George Cervenak
-------------------------------
Its: Assistant Vice President
-------------------------------
FOCUS & CO.
By: /s/ Mark Curran
-------------------------------
Its: Asst. Secretary
-------------------------------
State Street Bank & Trust Co.
-8-
<PAGE> 88
SIGNATURE PAGE TO AMENDMENT NO. 5 TO AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month and year first written above.
FOCUS & CO., STATE STREET BANK & TRUST
AS TRUSTEE FOR BAXTER TRAVENOL
LABORATORIES, INC. RETIREMENT PLAN
POOLED INVESTMENT TRUST,
CHANCELLOR CAPITAL MANAGEMENT,
INC., INVESTMENT MANAGER
By: /s/ Mark Curran, Asst. Secretary
--------------------------------
Its: State Street Bank & Trust
-------------------------------
-9-
<PAGE> 89
SIGNATURE PAGE TO AMENDMENT NO. 5 TO AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month and year first written above.
EMP & CO. (AS NOMINEE FOR HARRIS
TRUST AND SAVINGS BANK AS TRUSTEE
FOR THE BURNETT PROFIT SHARING
TRUST)
By: /s/
-------------------------------
Its: Vice President
EMP & CO. (AS NOMINEE FOR HARRIS
TRUST AND SAVINGS BANK AS TRUSTEE
FOR THE BURNETT PENSION TRUST)
By: /s/
-------------------------------
Its: Vice President
By:/s/Daniel Klabunde
-------------------------------
SPROUT GROWTH II, L.P.
By: DLJ Capital Corporation
By: /s/ Janet Hickey
-------------------------------
Its: Attorney-in-Fact
-------------------------------
-10-
<PAGE> 90
DLJ CAPITAL CORPORATION
By: /s/ Janet Hickey
-------------------------------
Its: Attorney-in-Fact
-------------------------------
-11-
<PAGE> 91
AMENDMENT NO. 6
TO AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
AMENDMENT NO. 6 TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this
"Amendment"), dated as of July 31, 1995 by and among Cardmember Publishing
Corporation, a Delaware corporation (the "Company"), and each of the signatories
hereto. Capitalized terms used but not otherwise defined herein shall have the
meaning set forth in the Original Stockholders Agreement (as such term is
defined below).
RECITALS
WHEREAS, the parties hereto are parties to that certain Amended and
Restated Stockholders' Agreement dated as of December 28, 1990, as amended by
Amendment No. 1 to Amended and Restated Stockholders' Agreement dated as of
August 30, 1991, Amendment No. 2 to Amended and Restated Stockholders' Agreement
dated as of June 30, 1993, Amendment No. 3 to Amended and Restated Stockholders'
Agreement dated as of May 4, 1993, Amendment No. 4 to Amended and Restated
Stockholders' Agreement dated as of March 30, 1994, and Amendment No. 5 to
Amended and Restated Stockholders' Agreement dated as of September 28, 1994, (as
so amended, the "Original Stockholders' Agreement" and as amended hereby, the
"Agreement");
WHEREAS, pursuant to the Seventh Purchase Agreement (as defined below),
each of the Investors is purchasing Restricted Securities of the Company; and
WHEREAS, the parties hereto desire to promote their mutual interest and
the interests of the Company by amending the Original Stockholders' Agreement as
set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
Section 1. Amendments to Original Stockholders' Agreement.
1A. The following definitions in Article I of the Original
Stockholders' Agreement are hereby amended and restated in their entirety to
read as follows;
"Investors" shall mean those persons and entities set forth on
Exhibit A hereto.
"Preferred Stock" shall mean the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, the Series D
Preferred Stock and/or the Series H Preferred Stock.
<PAGE> 92
"Restricted Securities" shall mean (a) the shares of Preferred
Stock purchased by GeoCapital II, L.P. on July 31, 1989, (b) the shares
of Preferred Stock purchased by Bernard Goldstein from GeoCapital II,
L.P. on December 15, 1989 and from the Company on December 28, 1990, (c)
the shares of Preferred Stock purchased by the Investors pursuant to the
Purchase Agreement, the Second Purchase Agreement, the Third Purchase
Agreement and the Seventh Purchase Agreement, (d) the shares of Common
Stock issued or issuable upon conversion of the Preferred Stock, (e) the
shares of Class B Common Stock issued or issuable upon conversion of the
Class A Common Stock into which shares of Preferred Stock acquired by
the Investors have been converted, (f) the shares of Class A Common
Stock purchased by the Founders on July 28, 1989, (g) the shares of
Class B Common Stock issued or issuable upon the conversion of the Class
A Common Stock purchased by the Founders, (h) the shares of Class B
Common Stock issued to Daniel Klabunde on May 18, 1992, (i) the shares
of Class B Common Stock to be issued pursuant to Section 5.17 hereunder,
and (j) any securities issued with respect to the securities referred to
in clauses (a), (b), (c), (d), (e), (f), (g), (h) or (i) by way of a
stock dividend, stock split or in connection with a stock combination,
recapitalization, merger, consolidation or other reorganization. As to
any particular Restricted Securities, such securities will cease to be
Restricted Securities when they have (a) been effectively registered
under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) become eligible for sale
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act or (c) subject to the provisions of Article 4 of this
Agreement, been otherwise legally transferred and new certificates for
them not bearing the Securities Act legend set forth in Section 4.6 have
been issued. Whenever any particular securities cease to be Restricted
Securities, the holder thereof shall be entitled to receive from the
Company, without expense, new securities of like tenor not bearing a
Securities Act legend of the character set forth in Section 4.6.
1B. Article I of the Original Stockholders' Agreement is hereby amended
by adding the following definitions in the appropriate alphabetical order:
"Seventh Purchase Agreement" shall mean the Purchase Agreement dated as
of July 31, 1995 by and among the Company and the Investors.
"Series H Preferred Stock" shall mean the Series H Preferred Stock of
the Company, par value $0.01 per share, having the rights, restrictions,
privileges and preferences set forth in the Amendment to the Certificate of
Incorporation attached hereto as Exhibit B.
1C. Exhibit A of the Original Stockholders' Agreement is amended and
restated in its entirety to read as provided on Exhibit A hereto.
-2-
<PAGE> 93
Section 2. Miscellaneous.
2A. Effect of Amendment. Except as otherwise expressly set forth in this
Amendment, the terms and provisions of the Original Stockholders' Agreement are
hereby ratified and shall remain in full force and effect and the parties hereto
are hereby bound thereunder.
2B. Section Headings. The captions to the Sections in this Amendment are
for reference only and shall not affect the meaning or interpretation hereof.
2C. Choice of Law. All questions concerning the construction, validity
and interpretation of this Amendment and the performance of the obligations
imposed by this Amendment shall be governed by and construed in accordance with
the laws of the State of Delaware.
2D. Multiple Counterparts. This Amendment may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which will
constitute one and the same instrument.
2E. Complete Agreement. Except as set forth herein, this Amendment
contains the complete agreement between the parties and controls and supersedes
any prior understandings, agreements or representations by or between the
parties, written or oral, which conflict with, or may have related to, the
subject matter hereof in any way.
2F. Severability. If a court of competent jurisdiction shall determine
that any portion of this Amendment is invalid or unenforceable under the law or
public policy of any jurisdiction, the remainder of this Amendment shall remain
in full force and effect.
* * *
-3-
<PAGE> 94
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month and year first written above.
CARDMEMBER PUBLISHING
CORPORATION
By: /s/ Gary Johnson
-------------------------------------
Its: President
GEOCAPITAL II, L.P.
By: /s/ Stephen J. Clearman
-------------------------------------
Its: General Partner
/s/ Gary Johnson
----------------------------------------
Gary Johnson
/s/ Dennis P. Walker
----------------------------------------
Dennis P. Walker
MELLON BANK, N.A., MASTER TRUSTEE
FOR BELL ATLANTIC, MASTER PENSION
TRUST, (AS DIRECTED BY ABBOTT
CAPITAL, INVESTMENT MANAGER)
By:
-------------------------------------
Its:
------------------------------
-4-
<PAGE> 95
SIGNATURE PAGE TO AMENDMENT NO. 6 TO
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
HANK & CO. FOR THE ACCOUNT OF
CITIVENTURE II
By:
-----------------------------------
Its: Partner
---------------------------
HANK & CO. FOR THE ACCOUNT OF
FIDELITY & GUARANTY LIFE INSURANCE
CO.
By:
-----------------------------------
Its: Partner
---------------------------
PITT & CO. AS NOMINEE OF BANKERS
TRUST COMPANY AS TRUSTEE FOR GTE
SERVICE CORPORATION
By: /s/ George Cervenak
-----------------------------------
Its:
---------------------------
FOCUS & CO.
By: /s/ T. Pimentel
-----------------------------------
Its: Assistant Vice President
---------------------------
HARRIS TRUST & SAVINGS BANK AS
TRUSTEE FOR BAXTER TRAVENOL
LABORATORIES, INC. RETIREMENT PLAN
POOLED INVESTMENT TRUST,
CHANCELLOR CAPITAL MANAGEMENT,
INC., INVESTMENT MANAGER
By:
-----------------------------------
Its:
---------------------------
-5-
<PAGE> 96
SIGNATURE PAGE TO AMENDMENT NO. 6 TO
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
EMP & CO. (AS NOMINEE FOR HARRIS
TRUST AND SAVINGS BANK AS TRUSTEE
FOR THE BURNETT PROFIT SHARING
TRUST)
By:
----------------------------------------
Its: Vice President
-------------------------------
EMP & CO. (AS NOMINEE FOR HARRIS
TRUST AND SAVINGS BANK AS TRUSTEE
FOR THE BURNETT PENSION TRUST)
By:
----------------------------------------
Its: Vice President
-------------------------------
TECHNOLOGY CROSSOVER VENTURES,
L.P.
By: /s/ Robert Bensky
----------------------------------------
Its: Chief Financial Officer
-------------------------------
TECHNOLOGY CROSSOVER VENTURES,
C.V.
By: /s/ Robert Bensky
----------------------------------------
Its: Chief Financial Officer
-------------------------------
-6-
<PAGE> 97
SIGNATURE PAGE TO AMENDMENT NO. 6 TO
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
GIBRALTAR TRUST
By: /s/ William F. Irdoe, Trustee
-----------------------------------------
Its: Attorney-in-Fact
---------------------------------
IRONWOOD CAPITAL, L.L.C.
By:
-----------------------------------------
Its: General Partner
---------------------------------
BAYVIEW III
By:
-----------------------------------------
Its:
---------------------------------
CHEASAPEAKE BAY CAPITAL
By:
-----------------------------------------
Its: Managing Partner
---------------------------------
SARATOGA SPRINGS COMPANY LTD.
By: per pro COMMERCE CORPORATE
SERVICES LIMITED
-----------------------------------------
Its: Director
---------------------------------
-7-
<PAGE> 98
SIGNATURE PAGE TO AMENDMENT NO. 6 TO
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
/s/ Craig J. Foley
---------------------------------------
CRAIG J. FOLEY
/s/ Jeffrey Brotman
---------------------------------------
JEFFREY BROTMAN
/s/ Howard Schultz
---------------------------------------
HOWARD SCHULTZ
/s/ Parag Saxena
---------------------------------------
PARAG SAXENA
/s/ Bernard Goldstein
---------------------------------------
BERNARD GOLDSTEIN
-8-
<PAGE> 99
Exhibit A
INVESTORS
Technology Crossover Ventures, L.P.
Technology Crossover Ventures, C.V.
Gibraltar Trust
Ironwood Capital, L.L.C.
Bayview III
Chesapeake Bay Capital
Saratoga Springs Company Ltd.
Craig J. Foley
Jeffrey Brotman
Howard Schultz
Mellon Bank, N.A., Master
Trustee for Bell Atlantic
Master Pension Trust
(As Directed by Abbott Capital Manager)
Hank & Co. for the Account of Citiventure II
Hank & Co. for the account of
Fidelity & Guaranty Life Insurance Company
Pitt & Co.
Focus & Co.
EMP & Co. (For Burnett Profit Sharing Trust)
EMP & Co. (For Burnett Pension Trust)
-9-
<PAGE> 100
Harris Trust & Savings Bank
As Trustee for Baxter Travenol Laboratories, Inc.
Retirement Plan Pooled Investment Trust
Chancellor Capital Management, Inc. Investment Manager
Parag Saxena
GEOCapital II, L.P.
Bernard Goldstein
-10-
<PAGE> 101
AMENDMENT NO. 7
TO AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
AMENDMENT NO. 7 TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this
"Amendment"), dated August 15, 1995 by and among Cardmember Publishing
Corporation, a Delaware corporation (the "Company"), and each of the signatories
hereto. Capitalized terms used but not otherwise defined herein shall have the
meaning set forth in the Original Stockholders Agreement (as such term is
defined below).
RECITALS
WHEREAS, the parties hereto are parties to that certain Amended and
Restated Stockholders' Agreement dated as of December 28, 1990, as amended by
Amendment No. 1 to Amended and Restated Stockholders' Agreement dated as of
August 30, 1991, Amendment No. 2 to Amended and Restated Stockholders' Agreement
dated as of June 30, 1993, Amendment No. 3 to Amended and Restated Stockholders'
Agreement dated as of May 4, 1993, Amendment No. 4 to Amended and Restated
Stockholders' Agreement dated as of March 30, 1994, and Amendment No. 5 to
Amended and Restated Stockholders' Agreement dated as of September 28, 1994 and
Amendment No. 6 to Amended and Restated Stockholders' Agreement, dated as of
July 31, 1995 (as so amended, the "Original Stockholders' Agreement" and as
amended hereby, the "Agreement").
WHEREAS, pursuant to the Eighth Purchase Agreement (as defined below),
each of the Investors is purchasing Restricted Securities of the Company; and
WHEREAS, the parties hereto desire to promote their mutual interest and
the interests of the Company by amending the Original Stockholders' Agreement as
set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO ORIGINAL STOCKHOLDERS' AGREEMENT.
1A. The following definitions in Article I of the Original
Stockholders' Agreement are hereby amended and restated in their entirety to
read as follows;
"Investors" shall mean those persons and entities set forth on
Exhibit A hereto.
"Restricted Securities" shall mean (a) the shares of Preferred
Stock purchased by GeoCapital II, L.P. on July 31, 1989, (b) the shares
of Preferred Stock purchased by Bernard Goldstein from GeoCapital II,
L.P. on
<PAGE> 102
December 15, 1989 and from the Company on December 28, 1990, (c) the
shares of Preferred Stock purchased by the Investors pursuant to the
Purchase Agreement, the Second Purchase Agreement, the Third Purchase
Agreement, the Seventh Purchase Agreement and the Eighth Purchase
Agreement, (d) the shares of Common Stock issued or issuable upon
conversion of the Preferred Stock, (e) the shares of Class B Common
Stock issued or issuable upon conversion of the Class A Common Stock
into which shares of Preferred Stock acquired by the Investors have been
converted, (f) the shares of Class A Common Stock purchased by the
Founders on July 28, 1989, (g) the shares of Class B Common Stock issued
or issuable upon the conversion of the Class A Common Stock purchased by
the Founders, (h) the shares of Class B Common Stock issued to Daniel
Klabunde on May 18, 1992, (i) the shares of Class B Common Stock to be
issued pursuant to Section 5.17 hereunder, and (j) any securities issued
with respect to the securities referred to in clauses (a), (b), (c),
(d), (e), (f), (g), (h) or (i) by way of a stock dividend, stock split
or in connection with a stock combination, recapitalization, merger,
consolidation or other reorganization. As to any particular Restricted
Securities, such securities will cease to be Restricted Securities when
they have (a) been effectively registered under the Securities Act and
disposed of in accordance with the registration statement covering them,
(b) become eligible for sale pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act or (c) subject to the
provisions of Article 4 of this Agreement, been otherwise legally
transferred and new certificates for them not bearing the Securities Act
legend set forth in Section 4.6 have been issued. Whenever any
particular securities cease to be Restricted Securities, the holder
thereof shall be entitled to receive from the Company, without expense,
new securities of like tenor not bearing a Securities Act legend of the
character set forth in Section 4.6.
1B. Article I of the Original Stockholders' Agreement is hereby
amended by adding the following definitions in the appropriate alphabetical
order:
"Eighth Purchase Agreement" shall mean the Purchase Agreement dated
August 15, 1995 by and among the Company and the Investors.
1C. Exhibit A of the Original Stockholders' Agreement is amended and
restated in its entirety to read as provided on Exhibit A hereto.
Section 2. Miscellaneous.
2A. Effect of Amendment. Except as otherwise expressly set forth in
this Amendment, the terms and provisions of the Original Stockholders' Agreement
are hereby ratified and shall remain in full force and effect and the parties
hereto are hereby bound thereunder.
-2-
<PAGE> 103
2B. Section Headings. The captions to the Sections in this
Amendment are for reference only and shall not affect the meaning or
interpretation hereof.
2C. Choice of Law. All questions concerning the construction,
validity and interpretation of this Amendment and the performance of the
obligations imposed by this Amendment shall be governed by and construed in
accordance with the laws of the State of Delaware.
2D. Multiple Counterparts. This Amendment may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which will constitute one and the same instrument.
2E. Complete Agreement. Except as set forth herein, this Amendment
contains the complete agreement between the parties and controls and supersedes
any prior understandings, agreements or representations by or between the
parties, written or oral, which conflict with, or may have related to, the
subject matter hereof in any way.
2F. Severability. If a court of competent jurisdiction shall
determine that any portion of this Amendment is invalid or unenforceable under
the law or public policy of any jurisdiction, the remainder of this Amendment
shall remain in full force and effect.
* * *
-3-
<PAGE> 104
SIGNATURE PAGE TO AMENDMENT NO. 7 TO AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month and year first written above.
CARDMEMBER PUBLISHING CORPORATION
By: /s/ Gary Johnson
-------------------------------------
Its: President
------------------------------
GEOCAPITAL II, L.P.
By: /s/ Stephen J. Clearman
-------------------------------------
Its: General Partner
------------------------------
/s/ Gary Johnson
----------------------------------------
Gary Johnson
/s/ Dennis P. Walker
----------------------------------------
Dennis P. Walker
MELLON BANK, N.A., MASTER TRUSTEE
FOR BELL ATLANTIC, MASTER PENSION
TRUST, (AS DIRECTED BY ABBOTT
CAPITAL, INVESTMENT MANAGER)
By:
-------------------------------------
Its:
------------------------------
-4-
<PAGE> 105
AMENDMENT NO. 8
TO AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
AMENDMENT NO. 8 TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this
"Amendment"), dated as of September 20, 1995 by and among Cardmember Publishing
Corporation, a Delaware corporation (the "Company"), and each of the signatories
hereto. Capitalized terms used but not otherwise defined herein shall have the
meaning set forth in the Original Stockholders Agreement (as such term is
defined below).
RECITALS
WHEREAS, the parties hereto are parties to that certain Amended and
Restated Stockholders' Agreement dated as of December 28, 1990, as amended by
Amendment No. 1 to Amended and Restated Stockholders' Agreement dated as of
August 30, 1991, Amendment No. 2 to Amended and Restated Stockholders' Agreement
dated as of June 30, 1993, Amendment No. 3 to Amended and Restated Stockholders'
Agreement dated as of May 4, 1993, Amendment No. 4 to Amended and Restated
Stockholders' Agreement dated as of March 30, 1994, and Amendment No. 5 to
Amended and Restated Stockholders' Agreement dated as of September 28, 1994, and
Amendment No. 6 to Amended and Restated Stockholders' Agreement, dated as of
July 31, 1995 and Amendment No.7 to Amended and Restated Stockholders'
Agreement, dated August 15, 1995 (as so amended, the "Original Stockholders'
Agreement" and as amended hereby, the "Agreement");
WHEREAS, pursuant to the Ninth Purchase Agreement (as defined below),
the purchasers of the securities thereunder are purchasing Restricted Securities
of the Company; and
WHEREAS, the parties hereto desire to promote their mutual interest and
the interests of the Company by amending the Original Stockholders' Agreement as
set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO ORIGINAL STOCKHOLDERS' AGREEMENT.
1A. The following definitions in Article I of the Original
Stockholders' Agreement are hereby amended and restated in their entirety to
read as follows;
"Investors" shall mean those persons and entities set forth on
Exhibit A hereto.
-1-
<PAGE> 106
"Restricted Securities" shall mean (a) the shares of Preferred
Stock purchased by GeoCapital II, L.P. on July 31, 1989, (b) the shares
of Preferred Stock purchased by Bernard Goldstein from GeoCapital II,
L.P. on December 15, 1989 and from the Company on December 28, 1990, (c)
the shares of Preferred Stock purchased by the Investors pursuant to the
Purchase Agreement, the Second Purchase Agreement, the Third Purchase
Agreement, the Seventh Purchase Agreement, the Eighth Purchase Agreement
and the Ninth Purchase Agreement, (d) the shares of Preferred Stock and
Common Stock purchased by the Investors pursuant to the Fourth Purchase
Agreement and the Fifth Purchase Agreement, (e) the shares of Common
Stock issued or issuable upon conversion of the Preferred Stock, (f) the
shares of Class B Common Stock issued or issuable upon conversion of the
Class A Common Stock into which shares of Preferred Stock acquired by
the Investors have been converted, (g) the shares of Class A Common
Stock purchased by the Founders on July 28, 1989, (h) the shares of
Class B Common Stock issued or issuable upon the conversion of the Class
A Common Stock purchased by the Founders, (i) the shares of Class B
Common Stock issued to Daniel Klabunde on May 18, 1992, (j) the shares
of Class B Common Stock to be issued pursuant to Section 5.17 hereunder,
and (k) any securities issued with respect to the securities referred to
in clauses (a), (b), (c), (d), (e), (f), (g), (h), (i) or (j) by way of
a stock dividend, stock split or in connection with a stock combination,
recapitalization, merger, consolidation or other reorganization. As to
any particular Restricted Securities, such securities will cease to be
Restricted Securities when they have (a) been effectively registered
under the Securities Act and disposed of in accordance with the
registration statement covering them, (b) become eligible for sale
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act or (c) subject to the provisions of Article 4 of this
Agreement, been otherwise legally transferred and new certificates for
them not bearing the Securities Act legend set forth in Section 4.6 have
been issued. Whenever any particular securities cease to be Restricted
Securities, the holder thereof shall be entitled to receive from the
Company, without expense, new securities of like tenor not bearing a
Securities Act legend of the character set forth in Section 4.6.
1B. Article I of the Original Stockholders' Agreement is hereby
amended by adding the following definitions in the appropriate alphabetical
order:
"Ninth Purchase Agreement" shall mean the Purchase Agreement dated as of
September 20, 1995 by and among the Company and the Investors.
1C. Article 6 of the Original Stockholders' Agreement is amended by
adding the following:
-2-
<PAGE> 107
6.11. For purposes of this Article 6 only, (a) the term
"Investor's Registrable Securities", as well as any other reference to
Registrable Securities held by Investors, shall include the Registrable
Securities issuable upon exercise of the warrants held by Brown Brothers
Harriman & Co., dated September 9, 1994, and DLJ Capital Corporation and Sprout
Growth II, L.P., dated August 3, 1995, and (b) the term "Investors" shall
include Brown Brothers Harriman & Co., DLJ Capital Corporation and Sprout Growth
II, L.P.
1D. Exhibit A of the Original Stockholders' Agreement is amended and
restated in its entirety to read as provided on Exhibit A hereto.
Section 2. Miscellaneous.
2A. Effect of Amendment. Except as otherwise expressly set forth in
this Amendment, the terms and provisions of the Original Stockholders' Agreement
are hereby ratified and shall remain in full force and effect and the parties
hereto are hereby bound thereunder.
2B. Section Headings. The captions to the Sections in this
Amendment are for reference only and shall not affect the meaning or
interpretation hereof.
2C. Choice of Law. All questions concerning the construction,
validity and interpretation of this Amendment and the performance of the
obligations imposed by this Amendment shall be governed by and construed in
accordance with the laws of the State of Delaware.
2D. Multiple Counterparts. This Amendment may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which will constitute one and the same instrument.
2E. Complete Agreement. Except as set forth herein, this Amendment
contains the complete agreement between the parties and controls and supersedes
any prior understandings, agreements or representations by or between the
parties, written or oral, which conflict with, or may have related to, the
subject matter hereof in any way.
2F. Severability. If a court of competent jurisdiction shall
determine that any portion of this Amendment is invalid or unenforceable under
the law or public policy of any jurisdiction, the remainder of this Amendment
shall remain in full force and effect.
* * *
-3-
<PAGE> 108
SIGNATURE PAGE TO AMENDMENT NO. 8 TO AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month and year first written above.
CARDMEMBER PUBLISHING CORPORATION
By: /s/ Gary Johnson
------------------------------------
Its: President
--------------------------------
GEOCAPITAL II, L.P.
By: /s/
------------------------------------
Its:
--------------------------------
/s/ Gary Johnson
-----------------------------------------
Gary Johnson
/s/ Dennis P. Walker
-----------------------------------------
Dennis P. Walker
MELLON BANK, N.A., MASTER TRUSTEE
FOR BELL ATLANTIC, MASTER PENSION
TRUST, (AS DIRECTED BY ABBOTT
CAPITAL, INVESTMENT MANAGER)
By:
------------------------------------
Its:
--------------------------------
-4-
<PAGE> 109
AMENDMENT NO. 9
TO AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT
AMENDMENT NO. 9 TO AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this
"Amendment"), dated as of May 15, 1996 by and among Cardmember Publishing
Corporation, a Delaware corporation (the "Company"), and each of the signatories
hereto. Capitalized terms used but not otherwise defined herein shall have the
meanings set forth in the Original Stockholders Agreement (as such term is
defined below).
RECITALS
WHEREAS, the parties hereto are parties to that certain Amended and
Restated Stockholders' Agreement dated as of December 28, 1990, as amended by
Amendment No. 1 to Amended and Restated Stockholders' Agreement dated as of
August 30, 1991, Amendment No. 2 to Amended and Restated Stockholders' Agreement
dated as of June 30, 1993, Amendment No. 3 to Amended and Restated Stockholders'
Agreement dated as of May 4, 1993, Amendment No. 4 to Amended and Restated
Stockholders' Agreement dated as of March 30, 1994, and Amendment No. 5 to
Amended and Restated Stockholders' Agreement dated as of September 28, 1994, and
Amendment No. 6 to Amended and Restated Stockholders' Agreement, dated as of
July 31, 1995, Amendment No. 7 to Amended and Restated Stockholders' Agreement,
dated August 15, 1995 and Amendment No. 8 to Amended and Restated Stockholders'
Agreement dated as of September 20, 1995 (as so amended, the "Original
Stockholders' Agreement" and as amended hereby, the "Agreement");
WHEREAS, the parties hereto desire to promote their mutual interest and
the interests of the Company by amending the original Stockholders' Agreement as
set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
SECTION 1. AMENDMENTS TO ORIGINAL STOCKHOLDERS' AGREEMENT.
LA. The following definition in Article I of the Original
Stockholders' Agreement is hereby amended and restated in its entirety to read
as follows:
"Qualifying Public Offering" shall mean a public offering pursuant to a
registration statement filed with and declared effective by the Securities and
Exchange Commission covering the offer and sale of Common Stock for the account
of the Company to the public at a public offering price of at least one and
one-half times the then effective Series H Conversion Price (as defined in the
Certificate of Amendment of the Certificate of Incorporation of Cardmember
Publishing Corporation, attached hereto as (Exhibit A") in which the aggregate
net proceeds
<PAGE> 110
(after underwriting discounts and commissions) to the Company are at least
$10,000,000."
1B. Section 4.8 of the Original Stockholders' Agreement is hereby
amended to read in its entirety as follows:
"4.8 Termination of Rights. The rights and obligations set forth
in this Article 4 shall terminate and be of no further force and effect
following the closing of the Company's first Qualifying Public Offering.
Notwithstanding the foregoing, the rights and obligations set forth in Section
4.3 shall terminate and be of no further force and effect as of July 31, 1993
and the rights and obligations set forth in Section 4.2 shall terminate and be
of no further force and effect as of July 31, 2001."
1C. Section 5.17 of the Original Stockholders' Agreement is hereby
amended to read in its entirety as follows:
"5.17 Stock Plan. The Company will reserve 255,000 shares
(including shares reserved for options outstanding on the date hereof) of the
Company's Class B Common Stock for issuance to directors, officers, employees
and consultants of the Company for the purpose of attracting and retaining such
personnel (the "Employee Shares"). The persons to whom such shares are sold and
the terms and conditions of such sale shall be determined by the Board of
Directors provided that such issuance shall be conditioned upon the purchaser
entering into a stock purchase agreement in the form approved by the Board of
Directors."
1D. Section 9.2 of the Original Stockholders' Agreement is hereby
amended to read in its entirety as follows:
"9.2 Other Parties. If the Company issues any shares of capital
stock to any other person other than pursuant to a Qualifying Public Offering
the Company shall cause the recipient of such shares to agree in writing to be
bound by this Agreement; and whereupon such recipient shall be deemed a "Holder"
for all purposes under this Agreement. For purposes of this Section 9.2 only,
"capital stock" shall not include "Employee Shares" (as defined in Section 5.17)
which are issued to persons other than the Founders."
SECTION 2. MISCELLANEOUS.
2A. Effect of Amendment. Except as otherwise expressly set forth in
this Amendment, the terms and provisions of the Original Stockholders' Agreement
are hereby ratified and shall remain in full force and effect and the parties
hereto are hereby bound thereunder.
2B. Section Headings. The captions to the Sections in this Amendment
are for reference only and shall not affect the meaning or interpretation
hereof.
<PAGE> 111
2C. Choice of Law. All questions concerning the construction,
validity and interpretation of this Amendment and the performance of the
obligations imposed by this Amendment shall be governed by and construed in
accordance with the laws of the State of Delaware.
2D. Multiple Counterparts. This Amendment may be executed in
multiple counterparts, each of which shall be deemed an original, but all of
which will constitute one and the same instrument.
2E. Complete Agreement. Except as set forth herein, this Amendment
contains the complete agreement between the parties and controls and supersedes
any prior understandings, agreements or representations by or between the
parties, written or oral, which conflict with, or may have related to, the
subject matter hereof in any way.
2F. Severability. If a court of competent jurisdiction shall
determine that any portion of this Amendment is invalid or unenforceable under
the law or public policy of any jurisdiction, the remainder of this Amendment
shall remain in full force and effect.
<PAGE> 112
SIGNATURE PAGE TO AMENDMENT NO. 9 TO AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month and year first written above.
CARDMEMBER PUBLISHING CORPORATION
By: /s/ Gary Johnson
-------------------------------------
Gary Johnson
Its President
/s/ Gary Johnson
----------------------------------------
Gary Johnson
/s/ Dennis P. Walker
----------------------------------------
Dennis P. Walker
GEOCAPITAL II, L.P.
By: /s/ Gary Johnson
-------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
MELLON BANK, N.A., MASTER TRUSTEE
FOR BELL ATLANTIC, MASTER PENSION
TRUST, (AS DIRECTED BY ABBOTT
CAPITAL, INVESTMENT MANAGER)
By: /s/ Gary Johnson
-----------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
<PAGE> 113
SIGNATURE PAGE TO AMENDMENT NO. 9 TO AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT
HANK & CO. FOR THE ACCOUNT OF
CITIVENTURE II
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
HANK & CO. FOR THE ACCOUNT OF
FIDELITY & GUARANTY LIFE
INSURANCE CO.
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
PITT & CO.
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
FOCUS & CO.
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
<PAGE> 114
SIGNATURE PAGE TO AMENDMENT NO. 9 TO AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT
BOOTH & CO. (AS NOMINEE FOR NORTHERN
TRUST COMPANY AS TRUSTEE FOR THE
BURNETT PROFIT SHARING TRUST)
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
BOOTH & CO. (AS NOMINEE FOR NORTHERN
TRUST COMPANY AS TRUSTEE FOR THE
BURNETT PENSION TRUST)
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
TECHNOLOGY CROSSOVER VENTURES, L.P.
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
<PAGE> 115
SIGNATURE PAGE TO AMENDMENT NO. 9 TO AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT
TECHNOLOGY CROSSOVER VENTURES, C.V.
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
GIBRALTAR TRUST
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
IRONWOOD CAPITAL, L.L.C.
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
<PAGE> 116
SIGNATURE PAGE TO AMENDMENT NO. 9 TO AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT
BAYVIEW III
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
CHESAPEAKE BAY CAPITAL
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
SARATOGA SPRINGS COMPANY LTD.
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
CRAIG FOLEY
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
<PAGE> 117
SIGNATURE PAGE TO AMENDMENT NO. 9 TO AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT
JEFFREY BROTMAN
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
HOWARD SCHULTZ
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
PARAG SAXENA
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
BERNARD GOLDSTEIN
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
<PAGE> 118
SIGNATURE PAGE TO AMENDMENT NO. 9 TO AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT
OMEGA VENTURES II, L.P.
BY: OMEGA VENTURES II MANAGEMENT,
L.L.C., Its General Partner
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
OMEGA VENTURES II CAYMAN, L.P.
BY: OMEGA VENTURES II MANAGEMENT,
L.L.C., Its General Partner
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
BAYVIEW INVESTORS, LTD.
BY: ROBERTSON, STEPHENS & COMPANY
L.P., Its General Partner
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
<PAGE> 119
SIGNATURE PAGE TO AMENDMENT NO. 9 TO AMENDED
AND RESTATED STOCKHOLDERS' AGREEMENT
CROSSOVER FUND II, L.P.
By: CROSSOVER INVESTMENT
MANAGEMENT, L.L.C.,
Its General Partner
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
PRIVATE EQUITY HOLDINGS, L.P.
By: WORMS MANAGEMENT CORPORATION
Its Investment Manager
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
PERMAL PRIVATE EQUITY
HOLDINGS, L.P.
By: WORMS MANAGEMENT CORPORATION
Its Investment Manager
By: /s/ Gary Johnson
------------------------------------------
Gary Johnson
President, Cardmember Publishing
Corporation,
Attorney In Fact, pursuant to a
Special Limited Power of Attorney
<PAGE> 1
Exhibit 4.3
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT dated as of September
20, 1995 between CARDMEMBER PUBLISHING CORPORATION, a Delaware corporation (the
"Company") and BROWN BROTHERS HARRIMAN & CO. (the "Holder").
W I T N E S S E T H:
WHEREAS, the Company and the Holder have entered into a Registration
Rights Agreement dated as of September 9, 1994 (the "Original Agreement")
providing the Holder certain registration rights with respect to the warrants
(which, together with any warrants issued in exchange or substitution therefor,
are hereinafter referred to as the "Warrants") issued to the Holder pursuant to
the terms of a Warrant Agreement dated as of September 9, 1994 (the "Warrant
Agreement") between the Company and the Holder and the shares of common stock,
par value $.01 per share (the "Common Stock"), of the Company issuable upon
exercise of such Warrants; and
WHEREAS, the Company and the Holder desire to amend and restate the
Original Agreement in its entirety as hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree that the Original Agreement is hereby
amended and restated in its entirety as follows:
SECTION 1. Definitions.
(a) As used in this Agreement, the following terms will have the
following meanings:
"Affiliate": shall mean, with respect to any Person, any other Person,
directly or indirectly, controlling, controlled by or under common control with
such Person.
"Agreement": shall mean this Amended and Restated Registration Rights
Agreement, as the same may hereafter from time to time be further amended,
supplemented, restated or modified.
"Business Day": shall mean a day other than Saturday, Sunday or any
other day on which banks located in the State of New York are authorized or
obligated to close.
"Commission": shall mean the United States Securities and Exchange
Commission, or any successor governmental agency or authority.
<PAGE> 2
"Exchange Act": shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Existing Investors": shall mean the Investors as defined in Section 1.1
of the Stockholders' Agreement.
"Founder": shall have the meaning provided in the Stockholders'
Agreement.
"Founder Shares": shall have the meaning provided in the Stockholders'
Agreement.
"Indemnified Party": shall mean a party entitled to indemnity in
accordance with Section 7.
"Indemnifying Party": shall mean a party obligated to provide indemnity
in accordance with Section 7.
"Majority Holders": shall mean Persons holding a majority of the
Registrable Securities.
"Managing Underwriter": shall mean, with respect to any Public Offering,
the underwriter or underwriters managing such Public Offering.
"NASD": shall mean the National Association of Securities Dealers, Inc.
"Person": shall mean any natural person, corporation, general
partnership, limited partnership, proprietorship, other business organization,
trust, union or association.
"Piggyback Registration": shall mean any registration of securities of
the Company under the Securities Act, whether for sale for the account of the
Company or for the account of any holder of securities of the Company (other
than Registrable Securities).
"Public Offering": shall mean any offering of Common Stock to the
public, either on behalf of the Company or any of its securityholders, pursuant
to an effective registration statement under the Securities Act.
"Registrable Securities": shall mean (i) the Shares issued on exercise
of the Warrants, (ii) any additional shares of Common Stock issued or
distributed to the Holder by way of a dividend, stock split or other
distribution in respect of the Shares issued on exercise of the Warrants, (iii)
any additional shares of Common Stock acquired by way of any rights offering or
similar offering made in respect of the Warrants or the Shares issued on
exercise thereof and (iv) any additional shares of Common Stock issued or
-2-
<PAGE> 3
issuable upon conversion, exercise or exchange of any capital stock, right,
option, warrant, evidence of indebtedness or other security of any type
whatsoever that shall have been issued pursuant to or with respect to the
Warrant Agreement, the Warrants, or the Shares issued on exercise of the
Warrants. As to any particular Registrable Securities, once issued such
securities shall cease to be Registrable Securities when (i) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (ii) they shall have been
distributed to the public pursuant to Rule 144, or (iii) they shall have ceased
to be outstanding.
"Registration Expenses": shall mean all expenses incident to the
Company's performance of or compliance with its obligations under this Agreement
to effect the registration of Registrable Securities in a Requested Registration
or a Piggyback Registration, including, without limitation, all registration,
filing, securities exchange listing and NASD fees, all registration, filing,
qualification and other fees and expenses of complying with securities or blue
sky laws, all word processing, duplicating and printing expenses, messenger and
delivery expenses, the fees and disbursements of counsel for the Company and of
its independent public accountants, including the expenses of any special audits
or "cold comfort" letters required by or incident to such performance and
compliance, the reasonable fees and disbursements of a single counsel retained
by the holders of a majority of the Registrable Securities being registered,
premiums and other costs of policies of insurance against liabilities arising
out of the Public Offering of the Registrable Securities being registered and
any fees and disbursements of underwriters customarily paid by issuers or
sellers of securities, but excluding underwriting discounts and commissions and
transfer taxes, if any, in respect of Registrable Securities, which shall be
payable by each holder thereof, pro rata on the basis of the number of
Registrable Securities of each such holder that are included in a registration
under this Agreement.
"Required Registration": shall mean any registration of Registrable
Securities under the Securities Act effected in accordance with Section 2.
"Rule 144": shall mean Rule 144 promulgated by the Commission under the
Securities Act, and any successor provision thereto.
"Securities Act": shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Senior Executive Officer": shall mean, as to the Company, its
President, Chief Financial Officer, Treasurer or Controller or any person
performing any of such functions, whether or not holding such title.
-3-
<PAGE> 4
"Shares": shall mean shares of Class B Common Stock of the Company and
any other securities which by their terms are exercisable or exchangeable for or
convertible into shares of Class B Common Stock.
"Stockholders' Agreement": shall mean the Amended and Restated
Stockholders' Agreement dated as of December 28, 1990, as amended through the
date hereof, among the Company and the other parties thereto.
(b) Unless the context of this Agreement otherwise requires, (i) words
of any gender include each other gender; (ii) words using the singular or plural
number also include the plural or singular number, respectively; (iii) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to this
entire Agreement; and (iv) the term "Section " refers to the specified Section
of this Agreement. Whenever this Agreement refers to a number of days, such
number shall refer to calendar days unless Business Days are specified.
SECTION 2. Required Registration.
(a) If the Company shall be requested by Existing Investors to effect
the registration under the Securities Act of Registrable Securities in
accordance with Section 6.1 of the Stockholders' Agreement, then the Company
shall promptly give written notice of such proposed registration to all holders
of Registrable Securities and shall offer to include in such proposed
registration any Registrable Securities requested to be included in such
proposed registration by such holders who respond in writing to the Company's
notice within 30 days after delivery of such notice. Any such response (a
"Participation Notice") shall specify the number of Registrable Securities
proposed to be included in such registration.
"(b) Upon delivery of any Participation Notice:
(i) The Company shall use its best efforts to effect the
registration under the Securities Act of the Registrable Securities
which the Company has been requested to register in such
Participation Notice; and
(ii) the holders of the Registrable Securities who
delivered a Participation Notice shall be entitled to all rights to
which Existing Investors are entitled to under the Stockholders'
Agreement with respect to such registration, including, without
limitation, (A) the right to participate on a proportionate basis
in all determinations to be made by the holders of 80% of the
securities to be registered, and (B) the right to participate in
such registration on a proportionate basis pari passu with the
Existing Investors and the holders of securities entitled to be
registered pursuant to the terms of that certain registration
rights agreement dated September 28, 1994 among the Company and the
stockholders named in
-4-
<PAGE> 5
Schedule I thereto (the "Sprout Group"), as such agreement may be
amended from time to time, and senior to securities held by the
Company or any person other than Existing Investors and the Sprout
Group.
(c) The Company will pay all Registration Expenses incurred in
connection with any Required Registration.
SECTION 3. Piggyback Registrations.
(a) If the Company at any time proposes after the date hereof to effect
a Piggyback Registration, it will each such time give prompt written notice (a
"Notice of Piggyback Registration") to all holders of Registrable Securities of
its intention to do so and of such holders' rights under this Section 3, which
Notice of Piggyback Registration shall include a description of the intended
method of disposition of such securities. Upon the written request of any such
holder made within 15 days after receipt of any Notice of Piggyback Registration
(which request shall specify the Registrable Securities intended to be disposed
of by such holder and state the intended method of disposition thereof), the
Company will use its best efforts to include in the registration statement
relating to such Piggyback Registration all Registrable Securities which the
Company has been so requested to register.
(b) The Company will pay all Registration Expenses incurred in
connection with each Piggyback Registration.
(c) If a Piggyback Registration is an underwritten offering and the
Managing Underwriter advises the Company that the inclusion of all the
securities proposed to be included in such offering would interfere with its
successful marketing (including pricing), the Company will only include in such
registration to the extent of the amount of the securities which the Managing
Underwriter advises the Company can be sold in such offering
(i) first, all shares proposed to be sold by the
Company,
(ii) second, to the extent possible, all shares propose
to be sold by a holder exercising demand registration rights,
(iii) third, if shares can still be included, the number
of shares of capital stock that may be included shall be allocated
among all Existing Investors, the Sprout Group, holders of
Registrable Securities and Founders holding Founder Shares in
proportion, as nearly as practicable, to the respective amounts of
shares of stock which they had requested to be included in such
registration, provided, however, that if the Managing Underwriters
advise the Company in writing that in their opinion the amount of
securities requested to be included in such registration by the
-5-
<PAGE> 6
Existing Investors, the Sprout Group, holders of Registrable
Securities and the Founders exceeds the amount of such securities
which can be sold in such offering pursuant to this clause (iii),
then of the total shares to be included in such registration
pursuant to this clause (iii), up to 66 2/3% of the total shall be
apportioned among the Existing Investors, the Sprout Group and
holders of Registrable Securities pro rata in accordance with the
number of Registrable Securities held by them, and up to 33 1/3% of
them shall be Founder Shares, and
(iv) fourth, any other securities.
SECTION 4. Registration on Form S-3. Anything contained in this
Agreement to the contrary notwithstanding, at such time as the Company shall
have qualified for the use of Form S-3 promulgated under the Securities Act or
any successor form thereto, each holder of Registrable Securities shall have the
right to request in writing an unlimited number of registrations on Form S-3, or
such successor form, of Registrable Securities. The Company shall use its best
efforts to effect the registration of the Registrable Securities which the
Company has been requested to register under this Section .
SECTION 5. Registration Procedures. If and whenever the Company is
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act pursuant to the terms of this Agreement, the
Company will use its best efforts to effect the registration and sale of such
Registrable Securities in accordance with the intended methods of disposition
thereof. Without limiting the foregoing, the Company in each such case will, as
expeditiously as possible:
(a) prepare and file with the Commission the requisite registration
statement to effect such registration and use its best efforts to cause such
registration statement to become and remain effective for a period of six
months, or until all Registrable Securities have been disposed of (if earlier),
provided that at least five Business Days before filing such registration
statement or any amendment thereto, the Company will furnish to the holders of
Registrable Securities covered by such registration statement copies of
reasonably complete drafts of all such documents proposed to be filed (including
exhibits), and any such holder shall have the opportunity to object to any
information pertaining solely to such holder that is contained therein and the
Company will make the corrections reasonably requested by such holder with
respect to such information prior to filing any such registration statement or
amendment;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and any prospectus used in connection
therewith as may be necessary to maintain the effectiveness of such registration
-6-
<PAGE> 7
statement and to comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities covered by such registration
statement;
(c) promptly notify each holder of Registrable Securities
covered by such Registration Statement and the underwriter or underwriters, if
any:
(i) when such registration statement or any prospectus
used in connection therewith, or any amendment or supplement
thereto, has been filed and, with respect to such registration
statement or any post effective amendment thereto, when the same
has become effective;
(ii) of any written request by the Commission for
amendments or supplements to such registration statement or
prospectus;
(iii) of the notification to the Company by the
Commission of its initiation of any proceeding with respect to the
issuance by the Commission of, or of the issuance by the Commission
of, any stop order suspending the effectiveness of such
registration statement; and
(iv) of the receipt by the Company of any notification
with respect to the suspension of the qualification of any
Registrable Securities for sale under the applicable securities or
blue sky laws of any jurisdiction;
(d) furnish to each seller of Registrable Securities covered by
such registration statement such number of conformed copies of such registration
statement and of each amendment and supplement thereto (in each case including
all exhibits and documents incorporated by reference), such number of copies of
the prospectus contained in such registration statement (including each
preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 promulgated under the Securities Act relating to such
holder's Registrable Securities, and such other documents, as such seller may
reasonably request to facilitate the disposition of its Registrable Securities;
(e) use its best efforts to register or qualify all Registrable
Securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as each holder thereof shall reasonably
request, to keep such registration or qualification in effect for so long as
such registration statement remains in effect, and take any other action which
may be reasonably necessary or advisable to enable such holder to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
holder, except that the Company shall not for any such purpose be required (i)
to qualify generally to do business as a foreign corporation in any jurisdiction
wherein it would not but for the requirements of this paragraph (e) be obligated
to be so qualified, or (ii) to consent to general service of process in any
jurisdiction;
-7-
<PAGE> 8
(f) use its best efforts to cause all Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable each
holder thereof to consummate the disposition of such Registrable Securities;
(g) furnish to the holder of Registrable Securities covered
by such registration statement a signed counterpart, addressed to such
holder (unless, in the case of clause (ii) below, a letter addressed to
the holder may not reasonably be obtained) and the underwriters, if
any, of
(i) an opinion of counsel for the Company, dated the
effective date of such registration statement (or, if such
registration includes an underwritten Public Offering, dated the
date of any closing under the underwriting agreement),
reasonably satisfactory in form and substance to such holder,
and
(ii) a "comfort" letter, dated the effective date of
such registration statement (and, if such registration includes
an underwritten Public Offering, dated the date of any closing
under the underwriting agreement), signed by the independent
public accountants who have certified the Company's financial
statements included in such registration statement,
in each case covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the case of
the accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to the underwriters in underwritten Public
Offerings of securities and, in the case of the accountants' letter, such other
financial matters, as such holder (or the underwriters, if any) may reasonably
request;
(h) notify each holder of Registrable Securities covered by such
registration statement and any underwriter, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which any prospectus included in such
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and promptly prepare and furnish to
such holder a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
-8-
<PAGE> 9
(i) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering the
period of at least twelve (12) months, but not more than eighteen (18) months,
beginning with the first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy the provisions of
Section 11 (a) of the Securities Act and Rule 158 promulgated thereunder;
(j) make available for inspection by any holder of Registrable
Securities covered by such registration statement, any underwriter participating
in any disposition pursuant to such registration statement and any attorney,
accountant or other agent retained by any such seller or underwriter
(collectively, the "Inspectors") , all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such Inspector in connection
with such registration statement;
(k) provide a transfer agent and registrar for all Registrable
Securities covered by such registration statement not later than the effective
date of such registration statement;
(l) if the Company proposes to register any of its securities in
a Piggyback Registration and such securities are to be distributed through one
or more underwriters, enter into such customary agreements (including an
underwriting agreement in customary form) and take all such other actions as
reasonably required in order to expedite or facilitate the disposition of the
Registrable Securities being sold (including, without limitation, upon the
request of any holders of such Registrable Securities, using its best efforts to
arrange for such holder's Registrable Securities to be distributed by such
underwriters, provided that, in connection with any such underwritten
distribution, no such holder shall be required to make any representations or
warranties to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such holder and its
ownership of the securities being registered on its behalf and such holder's
intended method of distribution);
(m) use its best efforts to cause all Registrable Securities
covered by such registration statement to be listed, upon official notice of
issuance, on any securities exchange on which any of the securities of the same
class as the Registrable Securities are then listed or, if the Common Stock is
not listed on a national securities exchange, use its best efforts to qualify
such Registrable Shares for inclusion on the automated quotation system of the
National Association of Securities Dealers, Inc. or such national securities
exchange as the Company shall reasonably determine; and
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<PAGE> 10
(n) take all such other actions as reasonably necessary in order
to expedite or facilitate the disposition of the Registrable Securities being
sold (including, without limitation, effecting a stock split or combination of
the shares).
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that upon receipt of any notice from the Company of the
happening of any event of the kind described in paragraph (h), such holder will
forthwith discontinue such holder's disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable Securities
until such holder's receipt of the copies of the supplemented or amended
prospectus contemplated by paragraph (h) and, if so directed by the Company,
will deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such holder's possession of the prospectus
relating to such Registrable Securities current at the time of receipt of such
notice.
SECTION 6. Holdback Agreements.
(a) Unless the Managing Underwriter (or, in the case of a
non-underwritten Public Offering, the Company) otherwise agrees, each holder of
Registrable Securities, by acquisition of such Registrable Securities, agrees,
to the extent permitted by law, not to effect any public sale or distribution of
such securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and the 90 days
after the effective date of any registration statement filed by the Company in
connection with a Public Offering (or for such shorter period of time as is
sufficient and appropriate, in the opinion of the Managing Underwriter (or, in
the case of a non-underwritten Public Offering, the Company), in order to
complete the sale and distribution of the securities included in such
registration), except as part of such registration statement and as permitted
under Rule 144(k); provided that all holders of more than five percent of the
Company's Class A and Class B Common Stock and the officers and directors of the
Company enter into similar agreements.
(b) Unless the Managing Underwriter otherwise agrees, the Company agrees
(x) not to effect any public sale or distribution of its equity securities, or
any securities convertible into or exchangeable or exercisable for such
securities, during the seven days prior to and the 90 days after the effective
date of the registration statement filed in connection with an underwritten
offering made pursuant to the terms hereof (or for such shorter period of time
as is sufficient and appropriate, in the opinion of the Managing Underwriter, in
order to complete the sale and distribution of the securities included in such
registration), except for shares which are part of such registration statement
or pursuant to registrations on Form S-8 under the Securities Act or any
successor form.
SECTION 7. Indemnification and Contribution.
(a) The Company shall, to the full extent permitted by law, indemnify
and hold harmless each holder of Registrable Securities included in any
registration
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<PAGE> 11
statement filed pursuant hereto, its partners, directors, officers and agents
and each other Person, if any, who controls any such holder within the meaning
of the Securities Act, against any losses, claims, damages, expenses or
liabilities, joint or several (together, "Losses"), to which such holder or any
such partner, director, officer or agent or controlling Person may become
subject under the Securities Act or otherwise, insofar as such Losses (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such registration statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, or any
violation by the Company of any federal or state securities laws or any rule or
regulation thereof, and the Company will reimburse such holder and each such
partner, director, officer, agent and controlling Person for any legal or any
other expenses reasonably incurred by them in connection with investigating or
defending any such Loss (or action or proceeding in respect thereof); provided
that the Company shall not be liable in any such case to the extent that any
such Loss (or action or proceeding in respect thereof) arises out of or is based
upon (x) an untrue statement or alleged untrue statement or omission or alleged
omission made in any such registration statement, preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by such holder specifically stating that it is for use
in the preparation thereof or (y) such holder's failure to send or give a copy
of the final prospectus to the Persons asserting an untrue statement or alleged
untrue statement or omission or alleged omission at or prior to the written
confirmation of the sale of Registrable Securities to such Person if such
statement or omission was corrected in such final prospectus. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such holder or any such partner, director, officer, agent or
controlling Person, and shall survive the transfer of such securities by such
holder. The Company shall also indemnify each other Person who participates
(including as an underwriter) in the offering or sale of Registrable Securities,
their partners, officers, directors and agents and each other Person, if any,
who controls any such participating Person within the meaning of the Securities
Act to the same extent as provided above with respect to holders of Registrable
Securities.
(b) Each holder of Registrable Securities which are included or are to
be included in any registration statement filed pursuant hereto, as a condition
to including Registrable Securities in such registration statement, shall, to
the full extent permitted by law, indemnify and hold harmless the Company, its
directors and officers, and each other Person, if any, who controls the Company
within the meaning of the Securities Act, against any Losses to which the
Company or any such director or officer or controlling Person may become subject
under the Securities Act or otherwise, insofar as
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<PAGE> 12
such Losses (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any such registration
statement, any preliminary prospectus, final prospectus or summary prospectus
contained therein, or any amendment or supplement thereto, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, if such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company through an instrument duly executed by such holder specifically
stating that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement; provided that the aggregate amount which may be recovered from any
holder of Registrable Securities pursuant to the indemnification provided for in
this Section 7(b) in connection with any registration and sale of Registrable
Securities shall be limited to the total proceeds received by such holder from
the sale of such Registrable Securities. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Company or any such director, officer or participating or controlling Person and
shall survive the transfer of such securities by such holder. Such holders shall
also indemnify each other Person who participates (including as an underwriter)
in the offering or sale of Registrable Securities, their officers and directors
and each other Person, if any, who controls any such participating Person within
the meaning of the Securities Act to the same extent as provided above with
respect to the Company.
(c) Promptly after receipt by an Indemnified Party of notice of the
commencement of any action or proceeding involving a claim referred to in the
preceding paragraph (a) or (b) of this Section 7, such Indemnified Party will,
if a claim in respect thereof is to be made against an Indemnifying Party
pursuant to such paragraphs, give written notice to the latter of the
commencement of such action, provided that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
obligations under the preceding paragraphs of this Section 7, except to the
extent that the Indemnifying Party is actually prejudiced by such failure to
give notice. In case any such action is brought against an Indemnified Party,
the Indemnifying Party shall be entitled to participate in and to assume the
defense thereof, jointly with any other Indemnifying Party similarly notified to
the extent that it may wish, with counsel reasonably satisfactory to such
Indemnified Party, and after notice from the Indemnifying Party to such
Indemnified Party of its election so to assume the defense thereof, the
Indemnifying Party shall not be liable to such Indemnified Party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation; provided that the
Indemnified Party may participate in such defense at the Indemnified Party's
expense; and provided, further that the Indemnified Party or Indemnified Parties
shall have the right to employ one counsel to represent it or them if, in the
reasonable
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<PAGE> 13
judgment of the Indemnified Party or Indemnified Parties, it is advisable for it
or them to be represented by separate counsel by reason of having legal defenses
which are different from or in addition to those available to the Indemnifying
Party, and in that event the reasonable fees and expenses of such one counsel
shall be paid by the Indemnifying Party. If the Indemnifying Party is not
entitled to, or elects not to, assume the defense of a claim, it will not be
obligated to pay the fees and expenses of more than one counsel for the
Indemnified Parties with respect to such claim, unless in the reasonable
judgment of any Indemnified Party a conflict of interest may exist between such
Indemnified Party and any other Indemnified Parties with respect to such claim,
in which event the Indemnifying Party shall be obligated to pay the fees and
expenses of such additional counsel for the Indemnified Parties or counsels. No
Indemnifying Party shall consent to entry of any judgment or enter into any
settlement without the consent of the Indemnified Party which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No Indemnifying Party shall be subject to any liability for any
settlement made without its consent, which consent shall not be unreasonably
withheld.
(d) If the indemnity and reimbursement obligation provided for in any
paragraph of this Section 7 is unavailable or insufficient to hold harmless an
Indemnified Party in respect of any Losses (or actions or proceedings in respect
thereof) referred to therein, then (unless, and except to the extent that, such
unavailability or insufficiency results from defenses or limitations provided by
this Section 7) the Indemnifying Party shall contribute to the amount paid or
payable by the Indemnified Party as a result of such Losses (or actions or
proceedings in respect thereof) in such proportion as is appropriate to reflect
the relative fault of the Indemnifying Party on the one hand and the Indemnified
Party on the other hand in connection with statements or omissions which
resulted in such Losses, as well as any other relevant equitable considerations.
The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Indemnifying Party or the Indemnified Party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The parties hereto agree that it
would not be just and equitable if contributions pursuant to this paragraph were
to be determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
first sentence of this paragraph. The amount paid by an Indemnified Party as a
result of the Losses referred to in the first sentence of this paragraph shall
be deemed to include any legal and other expenses reasonably incurred by such
Indemnified Party in connection with investigating or defending any Loss which
is the subject of this paragraph.
(e) No Indemnified Party guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
indemnification
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<PAGE> 14
or contribution from the Indemnifying Party if the Indemnifying Party was not
guilty of such fraudulent misrepresentation.
(f) The provisions of this Section 7 shall be in addition to any other
rights to indemnification or contribution which an Indemnified Party may have
pursuant to law, equity, contract or otherwise.
(g) The indemnification required by this Section 7 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Losses are incurred.
SECTION 8. Covenants Relating to Rule 144. If at any time the Company is
required to file reports in compliance with either Section 13 or Section 15(d)
of the Exchange Act, the Company shall comply with all of the reporting
requirements of the Exchange Act and with all other public information reporting
requirements of the Commission which are conditions to the availability of Rule
144 for the sale of Common Stock. The Company shall cooperate with each holder
of Registrable Securities in supplying such information as may be necessary for
such holder to complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the availability of Rule
144.
SECTION 9. Other Registration Rights. The Company represents and
warrants to each holder of Registrable Securities that the registration rights
granted hereby do not conflict with any other registration rights granted by the
Company, including, without limitation, the rights granted under the
Stockholders' Agreement. From and after the date of this Agreement, the Company
shall not enter into any agreement with any holder or prospective holder of any
securities of the Company providing for the granting to such holder of
registration rights (whether demand or incidental) unless the provisions of such
agreement are consistent with the provisions of this Agreement and the
Stockholders' Agreement.
SECTION 10. Miscellaneous.
(a) All written communications provided for hereunder shall be sent by
registered or certified mail or nationwide overnight delivery service (with
charges prepaid) or delivered by hand to the following addresses or such other
address as the appropriate party may specify to each other party hereto in
writing:
If to Holder, to:
Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
Att'n: Senior Credit Officer
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<PAGE> 15
If to the Company, to:
CardMember Publishing Corporation
655 Washington Blvd. - Suite 1000
Stamford, Connecticut 06901-3724
Att'n: Chief Financial Officer
provided, however, that any such communication to the Company shall be in
writing and may also, at the option of the Holder, be delivered by any other
means to the Company at the address specified above in this Section or to any
Senior Executive Officer of the Company. Any notice or other communication given
under this Section will be deemed effective two days after deposit in the United
States Mail if mailed as aforesaid and otherwise upon receipt. With respect to
any other holder of Registrable Securities, such notices, requests and other
communications shall be sent to the addresses set forth in the stock transfer
records regularly maintained by the Company.
(b) This Agreement may be amended, supplemented or modified only by a
written instrument (which may be executed in any number of counterparts) duly
executed by or on behalf of each of the Company and Persons owning sixty-six and
two-thirds percent (66-2/3%) or more of the Registrable Securities.
(c) Subject to paragraph (d) of this Section , any term or condition of
this Agreement may be waived at any time by the party that is entitled to the
benefit thereof, but no such waiver shall be effective unless set forth in a
written instrument duly executed by or on behalf of the party waiving such term
or condition. No waiver by any party of any term or condition of this Agreement,
in any one or more instances, shall be deemed to be or construed as a waiver of
the same term or condition of this Agreement on any future occasion.
(d) Any consent of the holders of Registrable Securities pursuant to
this Agreement, and any waiver by such holders of any provision of this
Agreement, shall be in writing (which may be executed in any number of
counterparts) and may be given or taken by Persons owning sixty-six and
two-thirds percent (66 2/3%) or more of the Registrable Securities, and any such
consent or waiver so given or taken will be binding on all the holders of
Registrable Securities.
(e) The terms and provisions of this Agreement are intended solely for
the benefit of each party hereto, their respective successors or permitted
assigns and any other holder of Registrable Securities, and it is not the
intention of the parties to confer third-party beneficiary rights upon any other
Person other than any Person entitled to indemnity under Section 7.
(f) This Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns.
The registration rights
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<PAGE> 16
of the Holder as set forth herein are assignable, in whole or in part, by the
Holder to one or more transferees of Registrable Securities, provided that
written notice of such assignment is furnished to the Company.
(g) The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
(h) If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future law, and if the rights or obligations
of any party hereto under this Agreement will not be materially and adversely
affected thereby, (i) such provision will be fully severable, (ii) this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (iii) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
(i) Except as otherwise expressly provided for herein, no remedy
conferred by any of the specific provisions of this Agreement is intended to be
exclusive of any other remedy, and each and every remedy shall be cumulative and
shall be in addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute or otherwise. The election of any one
or more remedies by any party hereto shall not constitute a waiver by any such
party of the right to pursue any other available remedies.
Damages in the event of breach of this Agreement by a party hereto or
any other holder of Registrable Securities would be difficult, if not
impossible, to ascertain, and it is therefore agreed that each such Person, in
addition to and without limiting any other remedy or right it may have, will
have the right to an injunction or other equitable relief in any court of
competent jurisdiction, enjoining any such breach, and enforcing specifically
the terms and provisions hereof and the Company and each holder of Registrable
Securities, by its acquisition of such Registrable Securities, hereby waives any
and all defenses it may have on the ground of lack of jurisdiction or competence
of the court to grant such an injunction or other equitable relief. The
existence of this right will not preclude any such Person from pursuing any
other rights and remedies at law or in equity which such Person may have.
(j) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to a contract executed and
performed in such State, without giving effect to the conflict of laws
principles thereof.
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<PAGE> 17
(k) This Agreement may be executed in any number of counterparts, each
of which will be deemed an original, but all of which together will constitute
one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officer of each party hereto as of the date first above
written.
per pro BROWN BROTHERS HARRIMAN & CO.
/s/ W. Carter Sullivan III
-----------------------------------------
Name: W. Carter Sullivan III
Title: Manager
CARDMEMBER PUBLISHING CORPORATION
By: /s/ Gary A. Johnson
-------------------------------------
Name: Gary A. Johnson
Title: President & CEO
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<PAGE> 1
Exhibit 4.4
REGISTRATION RIGHTS AGREEMENT
dated September 28, 1994, among
CARDMEMBER PUBLISHING
CORPORATION, a Delaware
corporation (the "Company"), and
the stockholders of the Company
set forth on Schedule I (the
"Stockholders").
Each Stockholder owns a stock subscription warrant representing the
right to purchase the number of shares of Common Stock, $.01 par value (the
"Class A Common Stock"), of the Company set forth opposite the name of such
Stockholder on Schedule I. Each share of Class A Common Stock is convertible
into one share of Class B Common Stock, $.01 par value (the "Class B Common
Stock"), of the Company. The parties deem it to be in their best interests to
set forth their rights and obligations in connection with public offerings and
sales of shares of Class B Common Stock. Accordingly, the parties agree as
follows:
SECTION 1. DEFINITIONS. As used in this Agreement, the following
terms shall have the following meanings:
"COMMISSION" means the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and the rules
and regulations of the Commission promulgated thereunder, all as the same shall
be in effect from time to time.
"EXISTING INVESTORS" means the Investors, as defined in the
Stockholders' Agreement.
"FOUNDER" is defined in the Stockholders' Agreement.
"FOUNDER SHARES" is defined in the Stockholders' Agreement.
"REGISTRABLE SHARES" means at any time those shares of Class B Common
Stock which constitute Restricted Shares.
"REGISTRATION DATE " means the date upon which the registration
statement pursuant to which the Company shall have initially registered shares
of Class B Common Stock under the Securities Act for sale to the public shall
have been declared effective.
"RESTRICTED SHARES" means at any time the shares of Class B Common
Stock, any other securities which by their terms are exercisable or exchangeable
for or convertible into Class B Common Stock and any securities received in
respect thereof,
<PAGE> 2
which are held by any Existing Investor or any Stockholder and have not
previously been sold to the public pursuant to a registration statement under
the Securities Act.
"RULE 144" means Rule 144 promulgated under the Securities Act or any
successor rule thereto or any complementary rule thereto.
"SECURITIES ACT" means the Securities Act of 1933, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect
from time to time.
"STOCKHOLDERS' AGREEMENT" means the Amended and Restated Stockholders'
Agreement dated as of December 28, 1990, as amended through the date hereof,
among the Company and the other parties thereto.
SECTION 2. REQUIRED REGISTRATION. (a) If the Company shall be requested
by Existing Investors to effect the registration under the Securities Act of
Registrable Shares in accordance with Section 6.1 of the Stockholders'
Agreement, then the Company shall promptly give written notice of such proposed
registration to all Stockholders and shall offer to include in such proposed
registration any Registrable Shares requested to be included in such proposed
registration by such holders who respond in writing to the Company's notice
within 30 days after delivery of such notice. Any such response (a
"Participation Notice") shall specify the number of Registrable Shares proposed
to be included in such registration.
(b) Upon delivery of any Participation Notice:
(i) the Company shall use its best efforts to effect the registration
under the Securities Act of the Registrable Shares which the Company has been
requested to register in such Participation Notice; and
(ii) the Stockholders who delivered a Participation Notice shall be
entitled to all rights to which Existing Investors are entitled to under the
Stockholders' Agreement with respect to such registration, including, without
limitation, (A) the right to participate on a proportionate basis in all
determinations to be made by the holders of 80% of the Registrable Shares to be
registered, and (B) the right to participate in such registration on a
proportionate basis pari passu with the Existing Investors and senior to
securities held by the Company or any person other than Existing Investors and
Stockholders.
SECTION 3. PIGGYBACK REGISTRATION. If the Company at any time proposes
for any reason to register any of its securities under the Securities Act,
whether of its own accord or at the request or demand of any holder of such
securities, it shall promptly give written notice to each Stockholder of its
intention so to register its
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<PAGE> 3
securities and, upon the written request, given within 15 days after delivery of
any such notice by the Company, of any Stockholder to include in such
registration Registrable Shares (which request shall specify the number of
Registrable Shares Proposed to be included in such registration), the Company
shall use its best efforts to cause all such Registrable Shares to be included
in such registration on the same terms and conditions as the securities
otherwise being sold in such registration; provided, however, that if the
managing underwriter advises the Company that the inclusion of all securities
proposed to be included in such registration would interfere with the successful
marketing (including pricing) of the securities proposed to be registered by the
Company, then the number of securities proposed to be included in such
registration shall be included in the following order:
(a) first, all shares proposed to be sold by the Company:
(b) second, to the extent possible, all shares proposed to be sold by a
holder exercising demand registration rights;
(c) third, if shares can still be included, the number of shares of
capital stock that may be included shall be allocated among all Existing
Investors and Stockholders holding Registrable Shares and Founders holding
Founder Shares seeking to exercise registration rights in proportion, as nearly
as practicable, to the respective amounts of shares of stock which they had
requested to be included in such registration statement; provided, however, that
if the managing underwriters advise the Company in writing that in their opinion
the amount of securities requested to be included in such registration by the
Existing Investors, the Stockholders, and the Founders exceeds the amount of
such securities which can be sold in such offering pursuant to this paragraph
(c), then of the total shares to be included in such registration pursuant to
this paragraph (c), up to 66 2/3% of them shall be Registrable Shares, to be
apportioned among the Existing Investors and the Stockholders pro rata in
accordance with the number of Registrable Shares held by them, and up to 33 1/3%
of them shall be Founder Shares; and
(d) fourth, any other securities.
SECTION 4. REGISTRATIONS ON FORM S-3. Anything contained in Section 2
to the contrary notwithstanding, at such time as the Company shall have
qualified for the use of Form S-3 promulgated under the Securities Act or any
successor form thereto, each Stockholder shall have the right to request in
writing an unlimited number of registrations on Form S-3 or such successor form
of Registrable Shares. The Company shall use its best efforts to effect the
registration of the Registrable Shares which the Company has been requested to
register under this Section.
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<PAGE> 4
SECTION 5. HOLDBACK AGREEMENT. If the Company at any time shall
register shares of Common Stock under the Securities Act (including any
registration pursuant to Section 2, 3 or 4) for sale to the public, the
Stockholders shall not sell, make any short sale of, grant any option for the
purchase of, or otherwise dispose of any Restricted Shares (other than those
shares of Common Stock included in such registration) without the prior written
consent of the Company for a period designated by the Company in writing to the
Stockholders, which period shall not begin more than seven days prior to the
effectiveness of the registration statement pursuant to which such public
offering shall be made and shall not last more than 90 days after the effective
date of such registration statement.
SECTION 6. PREPARATION AND FILING. If and whenever the Company is under
an obligation pursuant to the provisions of this Agreement to use its best
efforts to effect the registration of any Registrable Shares, the Company shall,
as expeditiously as practicable:
(a) use its best efforts to cause a registration statement
that registers such Registrable Shares to become and remain effective
for a period of 90 days or until all of such Registrable Shares have
been disposed of (if earlier);
(b) furnish, at least five business days before filing a
registration statement that registers such Registrable Shares, a
prospectus relating thereto or any amendments or supplements relating
to such a registration statement or prospectus, to one counsel selected
by the holders of a majority of such Registrable Shares (the "Selling
Stockholders' Counsel"), copies of all such documents proposed to be
filed (it being understood that such five-business- day period need not
apply to successive drafts of the same document proposed to be filed so
long as such successive drafts are supplied to such counsel in advance
of the proposed filing by a period of time that is customary and
reasonable under the Circumstances);
(c) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for at least a period of 90 days or until all of
such Registrable Shares have been disposed of (if earlier) and to
comply with the provisions of the Securities Act with respect to the
sale or other disposition of such Registrable Shares;
(d) notify in writing the Selling Stockholders' Counsel
promptly (i) of the receipt by the Company of any notification with
respect to any comments by the Commission with respect to such
registration statement or prospectus or any amendment or supplement
thereto or any request by the Commission for the amending or
supplementing thereof or for additional information with
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<PAGE> 5
respect thereto, (ii) of the receipt by the Company of any notification
with respect to the issuance by the Commission of any stop order
suspending the effectiveness of such registration statement or
prospectus or any amendment or supplement thereto or the initiation or
threatening of any proceeding for that purpose and (iii) of the receipt
by the Company of any notification with respect to the suspension of
the qualification of such Registrable Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purposes;
(e) use its best efforts to register or qualify such
Registrable Shares under such other securities or blue sky laws of such
jurisdictions as any seller of Registrable Shares reasonably requests
and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller of Registrable Shares to
consummate the disposition in such jurisdiction of the Registrable
Shares owned by such seller; provided, however, that the Company will
not be required to qualify generally to do business, subject itself to
general taxation or consent to general service of process in any
jurisdiction where it would not otherwise be required so to do but for
this paragraph (e);
(f) furnish to each seller of such Registrable Shares such
number of copies of a summary prospectus or other prospectus, including
a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as such seller of Registrable
Shares may reasonably request in order to facilitate the public sale or
other disposition of such Registrable Shares;
(g) use its best efforts to cause such Registrable Shares to
be registered with or approved by such other Governmental agencies or
authorities as may be necessary by virtue of the business and
operations of the Company to enable the seller or sellers thereof to
consummate the disposition of such Registrable Shares;
(h) notify on a timely basis each seller of such Registrable
Shares at any time when a prospectus relating to such Registrable
Shares is required to be delivered under the Securities Act within the
appropriate period mentioned in paragraph (a) of this Section, of the
happening of any event as a result of which the prospectus included in
such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing and, at the
request of such seller, prepare and furnish to such seller a reasonable
number of copies of a supplement to or an amendment of such prospectus
as may be necessary so that, as thereafter delivered to the offerees of
such shares, such prospectus shall not include an untrue statement of a
material fact or omit to state a
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<PAGE> 6
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then
existing;
(i) make available for inspection by any seller of such
Registrable Shares, any underwriter participating in any disposition
pursuant to such registration statement and any attorney, accountant or
other agent retained by any such seller or underwriter (collectively,
the "Inspectors"), all pertinent financial and other records, pertinent
corporate documents and properties of the Company (collectively, the
"Records"), as shall be reasonably necessary to enable them to exercise
their due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information (together with the
Records, the "Information") reasonably requested by any such Inspector
in connection with such registration statement. Any of the Information
which the Company determines in good faith to be confidential, and of
which determination the Inspectors are so notified, shall not be
disclosed by the Inspectors unless (i) the disclosure of such
Information is necessary to avoid or correct a misstatement or omission
in the registration statement, (ii) the release of such Information is
ordered pursuant to a subpoena or other order from a court of competent
jurisdiction or (iii) such Information has been made generally
available to the public. The seller of Registrable Shares agrees that
it will, upon learning that disclosure of such Information is sought in
a court of competent jurisdiction, give notice to the Company and allow
the Company, at the Company's expense, to undertake appropriate action
to prevent disclosure of the Information deemed confidential;
(j) use its best efforts to obtain from its independent
certified public accountants "cold comfort" letters in customary form
and at customary times and covering matters of the type customarily
covered by cold comfort letters;
(k) use its best efforts to obtain from its counsel an opinion
or opinions in customary form;
(1) provide a transfer agent and registrar (which may be the
same entity and which may be the Company) for such Registrable Shares;
(m) issue to any underwriter to which any seller of
Registrable Shares may sell shares in such offering certificates
evidencing such Registrable Shares;
(n) list such Registrable Shares on any national securities
exchange on which any shares of the Common Stock are listed or, if the
Common Stock is not listed on a national securities exchange, use its
best efforts to qualify such Registrable Shares for inclusion on the
automated quotation system of the
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<PAGE> 7
National Association of Securities Dealers, Inc. (the "NASD") or such
national securities exchange as the Company shall reasonably determine;
(o) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make available
to its securityholders, as soon as reasonably practicable, earnings
statements (which need not be audited) covering a period of 12 months
beginning within three months after the effective date of the
registration statement, which earnings statements shall satisfy the
provisions of Section 11(a) of the Securities Act; and
(p) use its best efforts to take all other steps necessary to
effect the registration of such Registrable Shares contemplated hereby.
SECTION 7. EXPENSES. All expenses incurred by the Company in complying
with Section 6, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the NASD), fees and expenses of
complying with securities and blue sky laws, printing expenses, fees and
expenses of the Company's counsel and accountants and fees and expenses of the
Selling Stockholders' Counsel, shall be paid by the Company; provided, however,
that all underwriting discounts and selling commissions applicable to the
Registrable Shares shall be borne by the seller or sellers thereof, in
proportion to the number of Registrable Shares sold by such seller or sellers.
SECTION 8. INDEMNIFICATION. In connection with any registration of any
Registrable Shares under the Securities Act pursuant to this Agreement, the
Company shall indemnify and hold harmless the seller of such Registrable Shares,
each underwriter, broker or any other person acting on behalf of such seller and
each other person, if any, who controls any of the foregoing persons within the
meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several, (or actions in respect thereof) to which any of
the foregoing persons may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the registration statement under which
such Registrable Shares were registered under the Securities Act, any
Preliminary prospectus or final prospectus contained therein or otherwise filed
with the Commission, any amendment or supplement thereto or any document
incident to registration or qualification of any Registrable Shares, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or, with respect to any prospectus, necessary to make the
statements therein in light of the circumstances under which they were made not
misleading, or any violation by the Company of the Securities Act or state
securities or blue sky laws applicable to the Company and relating to action or
inaction required of the Company in connection with such registration or
qualification under such state
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<PAGE> 8
securities or blue sky laws; and shall reimburse such seller, such underwriter,
such broker or such other person acting on behalf of such seller and each such
controlling person for any legal or other expenses reasonably incurred by any of
them in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable in
any such case to the extent that any such loss, claim, damage, liability or
action arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in said registration statement,
preliminary prospectus, final prospectus, amendment, supplement or document
incident to registration or qualification of any Registrable Shares in reliance
upon and in conformity with written information furnished to the Company through
an instrument duly executed by such seller, its counsel, or such underwriter
specifically for use in the preparation thereof.
In connection with any registration of Registrable Shares under the
Securities Act pursuant to this Agreement, each seller of Registrable Shares
shall indemnify and hold harmless (in the same manner and to the same extent as
set forth in the preceding paragraph of this Section) the Company, each director
of the Company, each officer of the Company who shall sign such registration
statement, each underwriter, broker or other person acting on behalf of such
seller, each person who controls any of the foregoing persons within the meaning
of the Securities Act and each other seller of Registrable Shares under such
registration statement, and each underwriter, broker or other person acting on
behalf of such other seller, with respect to any statement or omission from such
registration statement, any preliminary prospectus or final prospectus contained
therein or otherwise filed with the Commission, any amendment or supplement
thereto or any document incident to registration or qualification of any
Registrable Shares, if such statement or omission was made in reliance upon and
in conformity with written information furnished to the Company or such
underwriter through an instrument duly executed by such seller, its counsel, or
Such underwriter, broker or other person acting on behalf of Such seller
Specifically for use in connection with the preparation of such registration
statement, preliminary prospectus, final prospectus, amendment, supplement or
document.
Promptly after receipt by an indemnified party of notice of the
commencement of any action involving a claim referred to in the preceding
paragraphs of this Section, such indemnified party will, if a claim in respect
thereof is made against an indemnifying party, give written notice to the latter
of the commencement of such action. In case any such action is brought against
an indemnified party, the indemnifying party will be entitled to participate in
and to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be responsible for any
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<PAGE> 9
legal or other expenses subsequently incurred by the latter in connection with
the. defense thereof; provided, however, that if any indemnified party shall
have reasonably concluded that there may be one or more legal or equitable
defenses available to such indemnified party which are additional to or conflict
with those available to the indemnifying party, or that such claim or litigation
involves or could have an effect upon matters beyond the scope of the indemnity
agreement provided in this Section, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party
and such indemnifying party shall reimburse such indemnified party and any
person controlling such indemnified party for that portion of the reasonable
fees and expenses of one counsel retained by all such indemnified parties which
is reasonably related to the matters covered by the indemnity agreement provided
in this Section.
If the indemnification provided for in this Section is held by a court
of competent jurisdiction to be unavailable to an indemnified party with respect
to any loss, claim, damage, liability or action referred to herein, then the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amounts paid or payable by such indemnified party as a
result of such loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions which resulted in such loss, claim, damage or liability as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
SECTION 9. UNDERWRITING AGREEMENT. Notwithstanding the provisions of
Sections 5, 6, 7 and 8:
(i) to the extent that the Company and the Stockholders
selling Registrable Shares in a proposed registration shall enter into
an underwriting or similar agreement, which agreement contains
provisions covering one or more issues addressed in such Sections 5, 6,
7 or 8, the provisions contained in such Sections addressing such issue
or issues shall be superseded with respect to such registration by such
other agreement; and
(ii) if the Stockholders participate in any registration
pursuant to Article VI of the Stockholders' Agreement, the provisions
of the Stockholders' Agreement covering one or more of the issues
addressed in such Sections 5, 6, 7 or 8 shall supersede such Sections
with respect to such registration.
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<PAGE> 10
SECTION 10. INFORMATION BY HOLDER. Each holder of Registrable Shares to
be included in any registration shall furnish to the Company such written
information regarding such holder and the distribution proposed by such holder
as the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification or compliance
referred to in this Agreement.
SECTION 11. EXCHANGE ACT COMPLIANCE. From and after the Registration
Date or such earlier date as a registration statement filed by the Company
pursuant to the Exchange Act relating to any class of the Company's securities
shall have become effective, the Company shall comply with all of the reporting
requirements of the Exchange Act and with all other public information reporting
requirements of the Commission which are conditions to the availability of Rule
144 for the sale of Class A Common Stock. The Company shall cooperate with each
Stockholder in supplying such information as may be necessary for such
Stockholder to complete and file any information reporting forms presently or
hereafter required by the Commission as a condition to the availability of Rule
144.
SECTION 12. NO CONFLICT OF RIGHTS. The Company represents and warrants
to the Stockholders that the registration rights granted to the Stockholders
hereby do not conflict with any other registration rights granted by the
Company, including, without limitation, the rights granted under the
Stockholders' Agreement. From and after the date of this Agreement, the Company
shall not enter into any agreement with any holder or prospective holder of any
securities of the Company providing for the granting to such holder of
registration rights (whether demand or incidental) unless the provisions of such
agreement are consistent with the provisions of this Agreement and the
Stockholders' Agreement.
SECTION 13. TERMINATION. This Agreement shall terminate and be of no
further force or effect when the Stockholders cease to hold any Restricted
Shares.
SECTION 14. SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure
to the benefit of the Company and the Stockholders and, subject to Section 15,
their respective successors and assigns.
SECTION 15. ASSIGNMENT. Each Stockholder may assign its rights
hereunder to any purchaser from such Stockholder of Restricted Shares; provided,
however, that such purchaser shall, as a condition to the effectiveness of such
assignment, be required to execute a counterpart to this Agreement agreeing to
be treated as a Stockholder, whereupon such purchaser shall have the benefits
of, and shall be subject to the restrictions contained in, this Agreement.
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<PAGE> 11
SECTION 16. ENTIRE AGREEMENT. This Agreement contains the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior arrangements or understandings with respect hereto.
SECTION 17. NOTICES. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument and shall be deemed to have been duly given
when delivered in person, by telecopy, by nationally-recognized overnight
courier, or by first class registered or certified mail, postage prepaid,
addressed to such party at the address set forth below or such other address as
may hereafter be designated in writing by the addressee to the addressor:
(i) if to the Company, to:
Cardmember Publishing Corporation
655 Washington Boulevard
Stamford, Connecticut 06901
Telephone: (203) 969-0812
Telecopier: (203) 324-7635
Attention: Chief Financial Officer;
with a copy to:
Rosenman & Colin
575 Madison Avenue
New York, New York 10022
Telephone: (212) 940-8800
Telecopier: (212) 940-8776
Attention: Stephen T. Kelton, Esq.; and
(ii) if to any Stockholder, at its address set forth on
Schedule I or in the books of the Company.
All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery or delivery by
telecopy, on the date of such delivery, (b) in the case of nationally-recognized
overnight courier, on the next business day and (c) in the case of mailing, on
the third business day following such mailing.
SECTION 18. MODIFICATIONS; AMENDMENTS; WAIVERS. The terms and
provisions of this Agreement may not be modified or amended, except pursuant to
a writing signed by the Company and the Stockholders holding a majority of the
Restricted Shares (based upon Common Stock equivalents) held by all
Stockholders; provided, however, that no modification or amendment shall
discriminate against any
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<PAGE> 12
Stockholder without the consent of such Stockholder. This Section may only be
amended with the consent of all parties to this Agreement.
SECTION 19. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.
SECTION 20. HEADINGS. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
SECTION 21. SEVERABILITY. It is the desire and intent of the parties
that the provisions of this Agreement be enforced to the fullest extent
permissible under the law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, if any provision of this Agreement
would be held in any jurisdiction to be invalid, prohibited or unenforceable for
any reason, such provision, as to such jurisdiction, shall be ineffective,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
SECTION 22. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to principles governing conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement on the date first written above.
CARDMEMBER PUBLISHING CORPORATION
By: /s/ Gary A. Johnson
------------------------------
Name: Gary A. Johnson
Title: President
INVESTOR STOCKHOLDERS:
SPROUT GROWTH II, L.P.
By: DLJ Capital Corporation, its
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<PAGE> 13
Managing General Partner
By: /s/ Janet A. Hickey
---------------------------
Name: Janet A. Hickey
Title: Attorney-in-Fact
DLJ CAPITAL CORPORATION
By: /s/ Janet A. Hickey
---------------------------
Name: Janet A. Hickey
Title: Attorney-in-Fact
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<PAGE> 14
SCHEDULE I
STOCKHOLDERS
NAME/ADDRESS WARRANT SHARES
- ------------ --------------
Sprout Growth II, L.P. 36,268
c/o DLJ Capital Corporation
140 Broadway
42nd Floor
New York, New York 10005
Telecopier: (212) 504-3444
Telephone: (212) 504-3600
Attention: Janet A. Hickey
DLJ Capital Corporation 3,732
140 Broadway
42nd Floor
New York, New York 10005
Telecopier: (212) 504-3444
Telephone: (212) 504-3600
Attention: Janet A. Hickey ---------------
Total 40,000
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<PAGE> 1
Exhibit 10.1
CARDMEMBER PUBLISHING CORPORATION
AMENDED EMPLOYEE INCENTIVE STOCK OPTION PLAN
ARTICLE I
PURPOSE
The purpose of the CardMember publishing Corporation 1990 Stock Option
Plan is to provide favorable opportunities for certain selected employees of
CardMember publishing Corporation and its subsidiaries to purchase or receive
shares of Common Stock of CardMember Publishing Corporation or to benefit from
the appreciation thereof. Such opportunities should provide an increased
incentive for these employees to contribute to the future success and prosperity
of CardMember Publishing Corporation thus enhancing the value of the stock for
the benefit of the shareholders, increase the ability of CardMember Publishing
Corporation to attract and retain individuals of exceptional skill upon whom, in
large measure, its sustained progress, growth and profitability depend. This
Plan amends the 1990 Employee Incentive Stock Option Plan originally adopted on
August 1, 1990.
ARTICLE II
DEFINITIONS
The following capitalized terms used in the Plan shall have the respective
meanings set forth, in this Article:
2.01. Board: The Board of Directors of CardMember Publishing Corporation.
2.02. Code: The Internal Revenue Code of 1986, as amended.
2.03. Common Stock: Thirty thousand (30,000) shares of the Class B Common
Stock of CardMember Publishing Corporation.
<PAGE> 2
2.04. Company: CardMember Publishing Corporation.
2.05. Employer: The corporation that employs the employee or Optionee.
2.06. Fair Market Value: The fair market value of the Common Stock subject
to the Plan, on the date of the grant of the Option, within the meaning of
Section 422A of the Code.
2.07. ISO: An incentive stock option within the meaning of Section 422A of
the Code and which is designated as an incentive stock option by the Board.
2.08. Non-ISO: A stock option which is not an ISO.
2.09. Option: A stock option granted under the Plan. Options include both
ISOs and Non-ISOs.
2.10. Option Price: The purchase price of a share of Common Stock under an
Option.
2.11. Optionee: An employee of the Company who has been granted one or
more Options.
2.12. Parent Corporation: A parent corporation, as defined in Section
425(e) of the Code.
2.13. Plan: CardMember Publishing Corporation 1990 Stock Option Plan.
2.14. Retirement: Retirement on or after age sixty-five or, with the
advance consent of the Board, at an earlier age.
2.15. Termination Date: A date fixed by the Board but not later than the
day preceding the tenth anniversary of the date on which the Option is granted.
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<PAGE> 3
2.16. Vesting Date: A date fixed by the Board, at the time the Board
grants an Option to an Optionee, after which the Optionee may exercise the
Option in accordance with the Plan.
ARTICLE III
ADMINISTRATION
3.01. Except as otherwise provided in the Plan, the Board shall administer
the Plan and shall have full power to grant Options, construe and interpret the
Plan, establish and amend rules and regulations for its administration, and
perform all other acts relating to the Plan, including the delegation of
administrative responsibilities, which it believes reasonable and proper.
3.02. Subject to the provisions of the Plan, the Board shall establish the
policies and criteria pursuant to which it shall grant Options and administer
the Plan. Subject to the provisions of the Plan, and pursuant to the policies
and criteria established by the Board, the Board shall, in its discretion
determine which employees of the Company shall be granted Options, the number of
shares subject to option under any such Options, the dates after which Options
may be exercised, in whole or in part, whether the Option shall be ISOs, and the
terms and conditions of the Options.
3.03. The Board may at any time with the consent of the Optionee, in its
sole discretion, cancel any Option and issue to the Optionee a new Option for an
equivalent or lesser number of Common Stock shares, and at a lesser Option
Price.
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<PAGE> 4
3.04. Any decision made, or action taken, by the Board arising out of or
in connection with the interpretation and administration of the Plan shall be
final and conclusive.
ARTICLE IV
SHARES SUBJECT TO THE PLAN
4.01. The total number of shares of Common Stock available for grants of
Options under the Plan shall be 30,000 shares, subject to adjustment in
accordance with Article VIII of the Plan. These shares may be either authorized
but unissued or reacquired shares of Common Stock. If an Option or portion
thereof shall expire or terminate for any reason without having been exercised
in full, the unpurchased shares covered by such Option shall be available for
future grants of Options.
ARTICLE V
ELIGIBILITY
5.01. Options may be granted to key employees of the Company or to persons
who have been engaged to become key employees of the Company. Key employees will
comprise, in general, those who contribute to the management, direction and
overall success of the Company, including those who are members of the Board.
Members of the Board who are not employees of the Company shall not be eligible
for Option grants.
ARTICLE VI
TERMS OF OPTIONS
6.01. Option Agreements: All Options shall be evidenced by written
agreements executed by the Company and the Optionee. Such Options shall be
subject to the
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<PAGE> 5
applicable provisions of the Plan, and shall contain such provisions as are
required by the Plan and any other provisions that the Board may prescribe. All
agreements evidencing Options shall specify the total number of shares subject
to each grant, the Option Price and the Termination Date. Those Options that
comply with the requirements for an ISO set forth in Section 422A of the Code
shall be designated ISOs and all other Options shall be designated Non-ISOs.
6.02. Option Price: The Option Price shall be set by the Board provided,
however, that the price per share shall not be less than the Fair Market Value
of a share of Common Stock on the date the Option is granted.
6.03. Period of Exercise: The Option shall not be exercisable after the
Termination Date. Unless the Board elects otherwise and provides so in its
notice to the Optionee, the Optionee shall be entitled to exercise the Option as
follows:
a. On or after the Vesting Date, the Optionee may exercise the
Option as to not more than 25 percent of the shares of the
Common Stock available under the Option;
b. After 12 months from the Vesting Date, the Optionee may
exercise the Option as to not more than 25 percent of the
shares of the Common Stock available under the Option;
c. After 24 months from the Vesting Date, the Optionee may
exercise the Option as to not more than 25 percent of the
shares of the Common Stock available under the Option;
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<PAGE> 6
d. After 36 months from the Vesting Date the Option is granted,
the Optionee may exercise the Option as to not more than 25
percent of the shares of the Common Stock available under the
Option.
6.04. Special Rules Regarding ISOs Granted to Certain Employees:
Notwithstanding any contrary provisions of Sections 6.02 and 6.03 of the Plan,
no ISO shall be granted to any employee who, at the time the Option is granted,
owns (directly or indirectly, within the meaning of Section 425(d) of the Code)
more than ten percent of the total combined voting power of all classes of stock
of the Employer or of any Subsidiary or Parent Corporation thereof, unless (a)
the Option Price under such Option is at least 110 percent of the Fair Market
Value of a share of the Common Stock on the date the Option is granted and (b)
the Termination Date of such Option is a date not later than the day preceding
the fifth anniversary of the date on which the Option is granted.
6.05. Manner of Exercise and Payment: An Option, or portion thereof, shall
be exercised by delivery of a written notice of exercise to the Company and
payment of the full price of the shares being purchased pursuant to the Option.
An Optionee may exercise an Option with respect to less than the full number of
shares for which the Option may then be exercised, but an Optionee must exercise
the Option in full shares of Common Stock. The price of Common Stock purchased
pursuant to an Option, or portion thereof, shall be paid in United States
dollars in cash or by check, bank draft or money order payable to the order of
the Company.
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<PAGE> 7
6.06. Withholding Taxes: Where the exercise of an Option gives rise to an
obligation to withhold Federal income taxes on the date of exercise, the Company
may, in its discretion, require an Optionee to pay to the Company at the time of
exercise the amount that the Company deems necessary to satisfy its obligation
to withhold Federal, state or local income or other taxes incurred by reason of
the exercise. Where the exercise of an Option does not give rise to an
obligation to withhold Federal income taxes on the date of exercise, the Company
may, in its discretion, require an Optionee to place shares of Common Stock
purchased under the Option in escrow for the benefit of the Company until such
time as Federal income tax withholding is required on amounts included in the
gross income of the Optionee as a result of the exercise of an Option. At such
time, the Company, in its direction, may require an Optionee to pay to the
Company the amount that the Company deems necessary to satisfy its obligation to
withhold Federal, state or local income or other taxes incurred by reason of the
exercise of the Option, in which case the shares of Common Stock will be
released from escrow to the Optionee.
6.07. Nontransferability of Options: Each Option shall, during the
Optionee's lifetime, be exercisable only by the Optionee, and neither it nor any
right hereunder shall be transferable otherwise than by will or the laws of
descent and distribution or be subject to attachment, execution or other similar
process. In the event of any attempt by the Optionee to alienate, assign,
pledge, hypothecate or otherwise dispose of an Option or of any right hereunder,
except as provided for herein, or in the event of any levy or any attachment,
execution or similar process upon the rights or interest hereby
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<PAGE> 8
conferred, the Company may terminate the Option by notice to the Optionee and
the Option shall thereupon become null and void.
6.08. Cessation of Employment of Optionee: If an Optionee shall cease to
be employed by the Company each Option held by the Optionee, together with all
rights hereunder, shall terminate on the date of cessation of employment, to the
extent not previously exercised.
6.09. Notification of Sales of Common Stock: Any Optionee who disposes of
shares of Common Stock acquired upon the exercise of an ISO either (a) within
two years after the date of the grant of the ISO under which the stock was
acquired or (b) within one year after the transfer of such shares to the
Optionee, shall notify the Company of such disposition and of the amount
realized upon such disposition.
6.10. Stock Purchase Agreement: All shares of Common Stock transferred
under the Plan shall be subject to the provisions of a certain Stock Purchase
Agreement, to be approved by the Board of Directors of the Corporation, which
the Optionee shall execute as a condition precedent to the Optionee's receipt of
the Common Stock.
ARTICLE VII
LIMITATIONS AND ACCELERATIONS ON EXERCISABILITY
7.01. Notwithstanding any other provision of this Plan, in order to
qualify as an ISO, the aggregate Fair Market Value (determined at the time the
ISO is granted) of the shares of Common Stock with respect to which all
"incentive stock option plans" (within the meaning of Section 422A of the Code)
are first exercisable by the Optionee
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<PAGE> 9
during any calendar year (under this Plan and under all other incentive stock
option plans of the Employer, any Subsidiary and any Parent Corporation) shall
not exceed $100,000.
ARTICLE VIII
ADJUSTMENTS
8.01. If (a) the Company shall at any time be involved in a transaction to
which Section 425(a) of the Code is applicable; (b) the Company shall declare a
dividend payable in, or shall subdivide or combine, its Common Stock; or (c) any
other event shall occur which in the judgment of the Board necessitates action
by way of adjusting the terms of the outstanding Options, the Board shall
forthwith take any such action as in its judgment shall be necessary to preserve
the Optionee's rights substantially proportionate to the rights existing prior
to such event and to the extent that such action shall include an increase or
decrease in the number of shares of Common Stock subject to outstanding Options,
the number of shares available under Article IV above shall be increased or
decreased, as the case may be, proportionately; provided, however, that each
such adjustment, in the case of ISOs, shall be made in such manner as not to
constitute a "modification" within the meaning of Section 425(h)(3) of the Code.
The judgment of the Board with respect to any matter referred to in this Article
shall be conclusive and binding upon each Optionee.
-9-
<PAGE> 10
ARTICLE IX
AMENDMENT AND TERMINATION OF PLAN
9.01. The Board may at any time, or from time to time, suspend or
terminate the Plan in whole or in part or amend it in such respects as the Board
may deem appropriate, provided, however, that no such amendment shall be made,
which would, without approval of the shareholders:
a. materially modify the eligibility requirements for receiving
options;
b. increase the total number of shares of Common Stock which may
be issued pursuant to Options, except as is provided for in
accordance with Article VIII of the Plan;
c. reduce the minimum Option Price;
d. extend the period of granting Options; or
e. materially increase in any other way the benefits accruing to
Optionees.
9.02. No amendment, suspension or termination of this Plan shall, without
the Optionee's consent, alter or impair any of the rights or obligations under
any Option theretofore granted to an Optionee under the Plan.
9.03. The Board may amend this Plan, subject to the limitations cited
above, in such manner as it deems necessary to permit the granting of Options
meeting the requirements of future amendments or issued regulations, if any, to
the Code.
-10-
<PAGE> 11
ARTICLE X
GOVERNMENT AND OTHER REGULATIONS
10.01. The obligation of the Company to issue, or transfer and deliver
shares for Options exercised under the Plan shall be subject to all applicable
laws, regulations, rules, orders and approvals which shall then be in effect
governing the sale of securities.
ARTICLE XI
MISCELLANEOUS PROVISIONS
11.01. Plan Does Not Confer Employment or Stockholder Rights: The right of
the Company to terminate (whether by dismissal, discharge, retirement or
otherwise) the Optionee's employment with it at any time at will, or as
otherwise provided by any agreement between the Company and the Optionee, is
specifically reserved. Neither the optionee nor any person entitled to exercise
the Optionee's rights in the event of the Optionee's death shall have any rights
of the stockholder with respect to the shares subject to each Option, except to
the extent that, and until, such shares shall have been issued upon the exercise
of each Option.
11.02. Plan Expenses: Any expenses of administering this Plan shall be
borne by the Company.
11.03. Indemnification: In addition to such other rights of
indemnification as they may have as members of the Board, the members of the
Board shall be indemnified by the Company against all costs and expenses
reasonably incurred by them in connection with any action, suit or proceeding to
which they or any of them may be
-11-
<PAGE> 12
party by reason of any action taken or failure to act under or in connection
with the Plan or any Option granted thereunder, and against all amounts paid by
them in settlement thereof (provided such settlement is approved by independent
legal counsel selected by the Company) or paid by them in satisfaction of a
judgment in any such action, suit or proceeding, except a judgment based upon a
finding of bad faith; provided that upon the institution of any such action,
suit or proceeding a Board member shall, in writing, give the Company notice
thereof and an opportunity, at its own expense, to handle and defend the same
before such Board member undertakes to handle and defend it on such member's own
behalf.
11.04. Restrictive Legend: Any shares issued upon the exercise of the
Option shall bear the following legend:
The shares represented by this Certificate may not be sold,
transferred, pledged, hypothecated or otherwise disposed of (1) unless
they have first been registered under the Securities Act of 1933, as
amended, or unless, in the opinion of counsel for the Company, such
registration is not required; and (2) the shares represented by this
Certificate are subject to the terms and conditions of a Stock Purchase
Agreement, dated as of ___________, 199_, by and among the Company and the
original holder of this Certificate. Copies of such Agreement may be
obtained at no cost by written request made by the Holder of record of
this Certificate to the secretary of the Company.
ARTICLE XII
SHAREHOLDER APPROVAL AND EFFECTIVE DATES
12.01. Effective Date: The Plan shall become effective when it is adopted
by the Board. However, the Plan and all Options shall terminate after the
passage of one year from the date the Plan was adopted by the Board unless:
-12-
<PAGE> 13
a. within such one year period, the Plan is approved by the vote
at a meeting of the shareholders of the Company of the holders
of a majority of the outstanding shares of the Company
entitled to vote; provided that if at a meeting of such
shareholders held within such one year period, the Plan is not
so approved, the Plan and all Options shall terminate at the
time of that meeting of shareholders; or
b. within such one year period, the Plan is approved by the
written consent of the holders of a majority of the
outstanding shares of the Company entitled to vote.
12.02. Termination of Grant: The Options may not be granted under the Plan
after August 1, 2000.
-13-
<PAGE> 14
AMENDMENT NUMBER 1 TO
CARDMEMBER PUBLISHING CORPORATION
AMENDED EMPLOYEE INCENTIVE STOCK OPTION PLAN
This Amendment Number 1 to CardMember Publishing Corporation Amended
Employee Incentive Stock Option Plan (the "Plan"), dated as of May 7, 1992, as
adopted by the Board of Directors of CardMember Publishing Corporation (the
"Company") pursuant to Article IX, Section 9.01 of the Plan.
WHEREAS, the Board of Directors of the Company has determined that, in
order to clarify and effect the purpose of the Plan as set forth in Article I of
the Plan, with respect to the intention by the Company to provide opportunities
for employees of subsidiaries of the Company to participate in the Company's
Plan, the following amendments to the Plan shall be, and hereby are, adopted by
the Board of Directors of the Company, pursuant to Section 9.01 of the Plan, and
in the determination of the Board of Directors, such amendments do not
materially modify the eligibility requirements for receiving Options (as defined
in the Plan):
1. ARTICLE II of the Plan is hereby amended to add a new Section 2.15 as
follows:
2.15. SUBSIDIARY OR SUBSIDIARIES: Any corporation or corporations
one hundred percent (100%) of whose shares of capital stock are owned
solely by the Company.
Section 2.15 and Section 2.16 are renumbered as Section 2.16 and Section 2.17,
respectively.
<PAGE> 15
2. Section 3.02 of Article III is hereby deleted in its entirety and a
new section 3.02 is substituted in its place and stead as follows:
3.02. Subject to the provisions of the Plan, the Board shall
establish the policies and criteria pursuant to which it shall grant
Options and administer the Plan. Subject to the provisions of the Plan,
and pursuant to the policies and criteria established by the Board, the
Board shall, in its discretion determine which employees of the Company
or the Subsidiaries shall be granted Options, the number of shares
subject to option under any such Options, the dates after which Options
may be exercised, in whole or in part, whether the Option shall be ISOs,
and the terms and conditions of the Options.
3. Section 5.01 of Article V is hereby deleted in its entirety and a new
Section 5.01 is substituted in its place and stead as follows:
5.01. Options may be granted to key employees of the Company or the
Subsidiaries or to persons who have been engaged to become key employees
of the Company or the Subsidiaries. Key employees will comprise, in
general, those who contribute to the management, direction and overall
success of the Company or the Subsidiaries, including those who are
members of the Board. Members of the Board who are not employees of the
Company or any Subsidiary shall not be eligible for Option grants.
4. Section 6.06 of Article VI is hereby deleted in its entirety and a
new Section 6.06 is substituted in its place and stead as follows:
-2-
<PAGE> 16
6.06. WITHHOLDING TAXES: Where the exercise of an Option gives rise
to an obligation to withhold Federal income taxes on the date of
exercise, the Company may, in its discretion, require an Optionee to pay
to the Company at the time of exercise the amount that the Company deems
necessary to satisfy its obligation to withhold Federal, state or local
income or other taxes incurred by reason of the exercise. Where the
exercise of an Option does not give rise to an obligation to withhold
Federal income taxes on the date of exercise, the Company may, in its
discretion, require an Optionee to place shares of Common Stock
purchased under the Option in escrow for the benefit of the Company
until such time as Federal income tax withholding is required on amounts
included in the gross income of the Optionee as a result of the exercise
of an Option. At such time, the Company, in its direction, may require
an Optionee to pay to the Company the amount that the Company deems
necessary to satisfy its obligation to withhold Federal, state or local
income or other taxes incurred by reason of the exercise of the Option,
in which case the shares of Common Stock will be released from escrow to
the Optionee. This Section 6.06 shall apply where any Subsidiary is or
may be so required to withhold Federal income taxes.
5. Section 6.08 of Article VI is hereby deleted in its entirety and a
new Section 6.08 is substituted in its place and stead as follows:
6.08. CESSATION OF EMPLOYMENT OF OPTIONEE: If an Optionee shall
cease to be employed by the Company or any Subsidiary each Option held
by the
-3-
<PAGE> 17
Optionee, together with all rights hereunder, shall terminate on the
date of cessation of employment, to the extent not previously exercised.
6. Section 11.01 of Article XI is hereby deleted in its entirety and a
new Section 11.01 is substituted in its place and stead as follows:
11.01. PLAN DOES NOT CONFER EMPLOYMENT OR STOCKHOLDER RIGHTS: The
right of the Company or any Subsidiary to terminate (whether by
dismissal, discharge, retirement or otherwise) the Optionee's employment
with it at any time at will, or as otherwise provided by any agreement
between the Company or any Subsidiary and the Optionee, is specifically
reserved. Neither the Optionee nor any person entitled to exercise the
Optionee's rights in the event of the Optionee's death shall have any
rights of the stockholder with respect to the shares subject to each
Option, except to the extent that, and until, such shares shall have
been issued upon the exercise of each Option.
****************
IN WITNESS WHEREOF, this Amendment Number 1 to CardMember Publishing
Corporation Amended Employee Incentive Stock Option Plan is hereby adopted by
the order of the Board of Directors of the Company the 7th day of May, 1992.
/s/ Gary A. Johnson
-------------------------------------
Gary Johnson
/s/ Thomas St. Denis
-------------------------------------
Thomas St. Denis
/s/ Dennis P. Walker
-------------------------------------
Dennis P. Walker
-4-
<PAGE> 18
/s/ Stephen J. Clearman
-------------------------------------
Stephen J. Clearman
/s/ Alec L. Ellison
-------------------------------------
Alec L. Ellison
-5-
<PAGE> 19
AMENDMENT NUMBER 2 TO
CARDMEMBER PUBLISHING CORPORATION
AMENDED EMPLOYEE INCENTIVE STOCK OPTION PLAN
This Amendment Number 2 to the CardMember Publishing Corporation Amended
Employee Incentive Stock Option Plan (the "Plan"), dated as of May 4, 1993, as
adopted by the Board of Directors of CardMember Publishing Corporation (the
"Company") pursuant to ARTICLE IX, Section 9.01 of the Plan.
WHEREAS, the Board of Directors of the Company has determined that, in
order to accommodate the Company's interest in issuing additional options to
valued employees of the Company, the number of shares of the Class B Common
Stock of the Company available under the Plan be increased from 30,000 shares to
62,000 shares. The following amendment to the plan shall be, and hereby is,
adopted by the Board of Directors of the Company, pursuant to Section 9.01 of
the Plan, and in the determination of the Board of Directors, such amendment
does not materially modify the eligibility requirements for receiving Options
(as defined in the Plan).
NOW, THEREFORE, ARTICLE II of the Plan is hereby amended by deleting
Section 2.03 in its entirety and adding new Section 2.03 in its place and stead:
"2.03. COMMON STOCK: Sixty two thousand (62,000) shares of the Class
B Common Stock of CardMember Publishing Corporation."
<PAGE> 20
IN WITNESS WHEREOF, this Amendment Number 2 to the CardMember Publishing
Corporation Amended Employee Incentive Stock Option Plan is hereby adopted by
the order of the Board of Directors of the Company, as of the 4th day of May,
1993.
/s/ Gary A. Johnson
------------------------------------------
Gary Johnson
/s/ Thomas St. Denis
------------------------------------------
Thomas St. Denis
/s/ Dennis P. Walker
------------------------------------------
Dennis P. Walker
/s/ Stephen J. Clearman
------------------------------------------
Stephen Clearman
/s/ Alec L. Ellison
------------------------------------------
Alec Ellison
-2-
<PAGE> 21
AMENDMENT NUMBER 3 TO
CARDMEMBER PUBLISHING CORPORATION
AMENDED EMPLOYEE INCENTIVE STOCK OPTION PLAN
This Amendment Number 3 to the CardMember Publishing Corporation Amended
Employee Incentive Stock Option Plan (the "Plan"), dated as of August 1, 1993,
as adopted by the Board of Directors of CardMember Publishing Corporation (the
"Company") pursuant to Article IX, Section 9.01 of the Plan.
WHEREAS, the Board of Directors of the Company has determined that, in
order to accommodate the Company's interest in issuing additional options to
valued employees of the Company, the number of shares of the Class B Common
Stock of the Company available under the Plan be increased from 62,000 shares to
112,000 shares. The following amendment to the Plan shall be, and hereby is,
adopted by the Board of Directors of the Company, pursuant to Section 9.01 of
the Plan, and in the determination of the Board of Directors, such amendment
does not materially modify the eligibility requirements for receiving Options
(as defined in the Plan).
NOW, THEREFORE, ARTICLE II of the Plan is hereby amended by deleting
Section 2.03 in its entirety and adding new Section 2.03 in its place and stead:
"2.03. COMMON STOCK: One hundred twelve thousand (112,000) shares of
the Class B Common Stock of CardMember Publishing Corporation."
<PAGE> 22
IN WITNESS WHEREOF, this Amendment Number 3 to the CardMember Publishing
Corporation Amended Employee Incentive Stock Option Plan is hereby adopted by
the order of the Board of Directors of the Company, as of the 1st day of August,
1993.
/s/ Gary Johnson
_______________________________
Gary Johnson
/s/ Thomas St. Denis
_______________________________
Thomas St. Denis
/s/ Dennis P. Walker
_______________________________
Dennis P. Walker
/s/ Stephen J. Clearman
_______________________________
Stephen Clearman
/s/ Alec L. Ellison
_______________________________
Alec Ellison
-2-
<PAGE> 23
AMENDMENT NUMBER 4 TO
CARDMEMBER PUBLISHING CORPORATION
AMENDED EMPLOYEE INCENTIVE STOCK OPTION PLAN
This Amendment Number 4 to the Cardmember Publishing Corporation Amended
Employee Incentive Stock Option Plan, (the "Plan"), dated as of May 1, 1996, as
adopted by the Board of Directors and Stockholders of Cardmember Publishing
Corporation (the "Company") pursuant to Article IX, Section 9.01 of the Plan.
WHEREAS, the Board of Directors and Stockholders of the Company have
determined that (1) in order to accommodate the Company's interest in issuing
additional options to valued employees of the Company, the number of shares of
the Class B Common Stock of the Company available under the Plan be increased
from 112,000 shares to 180,000 shares; and (ii) it is in the best interests of
such valued employees to extend the exercise period of the Options heretofore
granted under the Plan. The following amendments to the Plan shall be, and
hereby are adopted by the Board of Directors and Stockholders of the Company,
pursuant to Article IX, Section 9.01 of the Plan.
NOW, THEREFORE, the Plan is hereby amended as follows:
1. ARTICLE II of the Plan is hereby amended by deleting Section 2.03 in its
entirety and adding new Section 2.03 in its place and stead:
"2.03. COMMON STOCK. One hundred eighty thousand (180,000) shares of
the Class B Common Stock of Cardmember Publishing Corporation."
2. ARTICLE II of the Plan is hereby amended by deleting Section 2.15 in its
entirety and adding new Section 2.15 in its place and stead:
<PAGE> 24
"2.15. TERMINATION DATE. A date fixed by the Board of Directors but
not later than the day preceding the tenth anniversary of the date
on which the Option is granted. Notwithstanding the foregoing, the
Termination Date, heretofore fixed by the Board of Directors on all
Options granted on or before December 31, 1995, shall be the eighth
anniversary of the date on which each of such Options were granted."
IN WITNESS WHEREOF, this Amendment Number 4 to the Cardmember Publishing
Corporation Amended Employee Incentive Stock Option Plan is hereby adopted by
the order of the Board of Directors of the Company as of May 1, 1996.
/s/ Gary A. Johnson
---------------------------------
Gary A. Johnson
/s/ Dennis P. Walker
---------------------------------
Dennis P. Walker
/s/ Stephen J. Clearman
---------------------------------
Stephen J. Clearman
/s/ Alec L. Ellison
---------------------------------
Alec L. Ellison
/s/ Marc S. Tesler
---------------------------------
Marc S. Tesler
-2-
<PAGE> 1
Exhibit 10.8
BANKERS
MASTER LEASE AGREEMENT
Dated as of May 7, 1996
LESSOR: Bankers Leasing Association, Inc. (herein called "LESSOR")
ADDRESS: 4201 Lake Cook Road, Northbrook, IL 60062
LESSEE: CARDMEMBER PUBLISHING CORPORATION (herein called "LESSEE")
ADDRESS: 655 WASHINGTON BLVD., SUITE 1000, STAMFORD, CT 06901
1. LEASE. LESSOR hereby leases and/or grants to, LESSEE the right to use, and
LESSEE hereby leases from and/or agrees to accept the right to use, subject to
the terms and conditions herein set forth, the item(s) of personal property
including but not limited to hardware and/or software and herein referred to as
"Equipment" described in each Equipment Schedule entered into from time to time
pursuant to this Master Lease Agreement. Each Equipment Schedule entered into by
the parties shall constitute a separate non-cancelable lease agreement and shall
incorporate therein all of the terms and conditions of this Master Lease
Agreement and contain such additional terms and conditions as agreed upon. The
term "LEASE" as used hereinafter shall refer to an individual Equipment Schedule
which incorporates this Master Lease Agreement. Until an Equipment Schedule is
signed by LESSOR, an Equipment Schedule signed by LESSEE constitutes an
irrevocable offer by LESSEE to lease from LESSOR.
2. TERM. This Master Lease Agreement shall be effective when signed by both
parties and shall continue in effect until all obligations of LESSEE under each
Equipment Schedule are fully satisfied.
The Lease Term for each Equipment Schedule shall become effective on the
first day of the month following the Installation Date ("Commencement Date').
The Installation Date is the (i) date on which the Equipment is installed at the
location set forth in the Equipment Schedule ("Equipment Location") and declared
acceptable for maintenance by the Maintenance Provider (as defined in paragraph
9) or, if LESSEE causes a delay in installation or acceptance for maintenance,
then even (7) days after the date on which the Equipment is delivered; or (ii)
if the Equipment is already installed, being used and leased from another party
and is being purchased by LESSOR for lease to LESSEE hereunder, then the date on
which LESSOR pays for the Equipment. LESSEE shall promptly sign and deliver to
LESSOR a Certificate of Acceptance dated as of the Installation Date. Unless
LESSEE, not more than two-hundred ten (210) days or less than one-hundred eighty
(180) days prior to the initial or extended expiration of the LEASE, notifies
LESSOR in writing by certified mail of its intention not to extend the LEASE,
the LEASE shall automatically and continuously be extended on the same terms and
conditions for a period of twelve (12) months. In the event LESSEE notifies
LESSOR of its intention not to extend the LEASE, then LESSEE must do one of the
following: (A) Purchase all of the Equipment at a Mutually Agreeable Purchase
Price; (B) Extend the LEASE for a period of twelve (12) months at the periodic
rent identified on the Equipment Schedule; (C) Enter into a new LEASE with
LESSOR to lease equipment which replaces the Equipment on the Equipment Schedule
and which has a cost that is greater than or equal to the original cost of the
Equipment. LESSOR and LESSEE shall each have absolute discretion regarding their
agreement or lock of agreement to the terms of options (A) and (C). If LESSOR
and LESSEE have not reached agreeable terms to either option (A) or option (C)
by the expiration of the Initial Lease Term, then option (B) shall prevail. At
the end of the extension provided by option (B), the LEASE shall continue
subject to termination at the end of any calendar month upon no less than 120
days written notice by either LESSOR or LESSEE.
3. RENT. LESSEE shall pay to LESSOR at its address set forth above, or at such
other address LESSOR may hereinafter designate in writing, the rent specified
for the Equipment, payable in advance, effective on the Commencement Date.
Charges from the Installation Date to the Commencement Date shall be computed by
converting the monthly or other calendar period rental to a daily rate based on
a 30-day month. Subsequent monthly or other calendar period rental payments
shall be due on the same day of subsequent months or other calendar periods as
the Commencement Date of the LEASE.
4. DISCLAIMER OF WARRANTIES. (a) LESSEE ACKNOWLEDGES THAT LESSEE MADE THE
SELECTION OF THE EQUIPMENT BASED ON ITS OWN JUDGMENT AND IS NOT RELYING ON
LESSOR'S SKILL OR JUDGMENT TO SELECT OR FURNISH GOODS SUITABLE FOR ANY
PARTICULAR PURPOSE. LESSEE ACKNOWLEDGES THAT LESSOR HAS NOT MADE AND DOES NOT
MAKE ANY WARRANTIES, EXPRESS OR IMPLIED, DIRECTLY OR INDIRECTLY, INCLUDING,
WITHOUT LIMITATION, THE WARRANTY OF
<PAGE> 2
MERCHANTABILITY AND OF FITNESS, CAPACITY OR DURABILITY FOR ANY PARTICULAR
PURPOSE, AND WARRANTIES AS TO THE DESIGN OR CONDITION OF THE EQUIPMENT AND THE
QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE EQUIPMENT LESSOR SHALL HAVE NO
LIABILITY TO LESSEE FOR ANY CLAIM, LOSS, OR DAMAGE OF ANY KIND OR NATURE
WHATSOEVER, INCLUDING ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, TO ANY
EXTENT WHATSOEVER, RELATING TO OR ARISING OUT OF THE SELECTION, QUALITY,
CONDITION, MERCHANTABILITY, SUITABILITY, FITNESS, OPERATION OR PERFORMANCE OF
THE EQUIPMENT. NO DEFECT IN OR UNFITNESS OF THE EQUIPMENT SHALL RELIEVE LESSEE
OF ITS OBLIGATIONS UNDER THE LEASE. LESSEE agrees that LESSOR assumes no
liability for and makes no representation as to the treatment by LESSEE of the
LEASE, the Equipment or the rent payments or other sums due thereunder for
financial statement or tax purposes.
(b) For the term of the LEASE, or any extension thereof, LESSOR hereby assigns
to LESSEE and LESSEE may have the benefit of any and all Vendor's warranties,
service agreements and patent indemnities, if any, with respect to the Equipment
to the extent assignable by LESSOR, provided, however, that LESSEE'S sole remedy
for the breach of any such warranty or indemnification shall be against the
Vendor and not against LESSOR, nor shall any such breach have any effect
whatsoever on the rights and obligations of either party with respect to the
LEASE.
5. STATUTORY FINANCE LEASE. LESSEE agrees and acknowledges that it is the intent
of both parties to the LEASE that it qualify as a statutory finance lease under
Article 2A of the Uniform Commercial Code. LESSEE acknowledges and agrees the
LESSEE has selected both: (1) the Equipment and (2) the Vendor from whom the
Equipment is to be acquired. LESSEE acknowledges the LESSOR has not participated
in any way in LESSEE'S selection of the Equipment or of the Vendor, and LESSOR
has not selected, manufactured, or supplied the Equipment.
LESSEE IS ADVISED THAT IT MAY HAVE RIGHTS UNDER THE CONTRACT EVIDENCING THE
ACQUISITION OF THE EQUIPMENT FROM THE VENDOR CHOSEN BY LESSEE AND THAT LESSEE
SHOULD CONTACT THE VENDOR OF THE EQUIPMENT FOR A DESCRIPTION OF ANY SUCH RIGHTS.
6. EQUIPMENT AND LIABILITY. LESSOR, at the request of LESSEE, has ordered or
shall order the Equipment described in each Equipment Schedule attached hereto
from a Vendor selected by LESSEE. LESSOR shall not be liable for specific
performance of the LEASE or for damages if, for any reason, the Vendor fails to
accept such order or delays or fails to fill the order. LESSEE agrees to accept
such Equipment and authorizes LESSOR to add the serial number of the Equipment
to the LEASE.
7. VENDOR NOT AN AGENT. LESSEE understands and agrees that neither the Vendor,
nor any salesman or other agent of the Vendor, is an agent of LESSOR, no
salesman or agent of the Vendor is authorized to waive or alter any term or
condition of the LEASE, and no representation as to Equipment or any other
matter by the Vendor shall in any way affect LESSEE'S duly to pay the rent and
perform its other obligations as set forth in the LEASE.
8. PLACE OF USE. LESSEE shall keep the Equipment at its place of business as
specified in the LEASE, or at such other place as LESSOR may consent to in
writing. LESSEE covenants and agrees not to allow the use of the Equipment by
other than the employees of the LESSEE and covenants and agrees not to rent or
sublet the Equipment or any part thereof AND WILL NOT WITHOUT LESSOR'S PRIOR
WRITTEN CONSENT ASSIGN THE LEASE OR ITS INTEREST THEREUNDER.
9. USE AND RETURN OF EQUIPMENT. The LESSEE leases and shall use the Equipment
only for its intended purposes and shall exercise due and proper care in the
use, repair and servicing of the Equipment and at all times and at its expense
shall keep and maintain the Equipment in good working condition, order, and
repair. The LESSEE shall make no alteration to the Equipment without the prior
written consent of the LESSOR. LESSEE represents and warrants that the Equipment
will be covered and maintained under the best standard full service maintenance
agreement offered by the Vendor, provided the Vendor is either the original
equipment manufacturer/licensor or an authorized original equipment
manufacturer/licensor maintenance organization, or such other maintenance
organization authorized by the original equipment manufacture/licensor
(hereinafter called "Maintenance Provider"), during the full term of the LEASE
or any extension thereof. Upon the expiration or termination of the LEASE,
LESSEE at its sole expense shall forthwith have the Equipment de-installed and
properly prepared for shipment by the Maintenance Provider, insure, warrant
eligibility for continued maintenance provider's best standard and most current
- 2 -
<PAGE> 3
version full service and maintenance agreement and return the Equipment
unencumbered to LESSOR, at such place designated by LESSOR, in the same
condition as when received by LESSEE. LESSOR reserves the right to approve or
designate the carrier and the means of shipment. However, if requested by
LESSOR, LESSEE will, prior to shipment, at its sole expense, store the Equipment
after deinstallation and packing on its premises for ninety (90) days. All
replacement parts, additions and accessories incorporated in or affixed to the
Equipment, including but not limited to wiring, software and operating systems,
at or after the commencement of the LEASE shall become the property of LESSOR.
All related documentation, manuals and service logs are the property of LESSOR
and are to be returned with the Equipment.
10. RISK OF LOSS AND DAMAGE. (a) LESSEE hereby assumes and shall bear the entire
risk of loss for theft, loss, damage, destruction or governmental taking, and
from any and every cause whatsoever to the Equipment, whether partial or
complete and whether or not through any default or neglect of LESSEE. Except as
provided herein, no such event shall relieve LESSEE of its obligation to pay
rent hereunder, nor shall any such event impair any other obligation of LESSEE
under the LEASE which shall continue in full force and effect.
(b) If any Equipment is damaged, LESSEE must promptly notify LESSOR and within
sixty (60) days of such damage shall, at its expense, cause such repairs to be
made as are necessary to return the Equipment to its previous condition. LESSEE
shall then be entitled to receive from LESSOR any insurance proceeds received in
connection with such damage.
(c) In the event that any Equipment is destroyed, damaged beyond repair, lost,
stolen or taken by governmental action for a period extending beyond the term of
the LEASE, or any extension thereof (an "Event of Loss"), LESSEE must promptly
notify LESSOR and pay to LESSOR on the next rental payment date following the
Event of Loss, an amount equal to the Stipulated Loss Value set forth in the
applicable table (the form of which is attached to each Equipment Schedule as
Exhibit A) of the greater of (a) the fair market value of such Equipment prior
to such loss, or (b) twenty (20) percent of the Equipment Cost, all discounted
to present value at an annual rate of 6%. Upon payment of such amounts, LESSEE'S
obligation to pay further rent will cease with respect to such Equipment and
LESSEE will be entitled to receive any insurance proceeds or other recovery
received by LESSOR in connection with such Event of Loss.
(d) In the event of a governmental taking of the Equipment for an indefinite
period which does not extend beyond the term of the LEASE, all obligations of
the LESSEE with respect to such Equipment (including payment of rent) will
continue. So long as LESSEE is not in default hereunder, LESSOR will pay to
LESSEE all sums received by LESSOR by reason of such governmental taking up to
the amount paid by LESSEE during such period.
11. INSURANCE. LESSEE, at its expense, shall insure the Equipment against all
risks and shall maintain a loss payable endorsement in favor of LESSOR. The all
risks insurance shall be in such amounts as LESSOR reasonably requires but in no
event less than the full replacement value of the Equipment or if the Equipment
is not repaired or replaced the Stipulated Loss Value as set forth in the
applicable table (the form of which is attached to each Equipment Schedule as
Exhibit A), if applicable, or an amount equal to all unpaid and remaining
rentals due during the term of the LEASE plus an amount equal to twenty (20)
percent of the original Equipment Cost, all discounted to present value at an
annual rate of 6%. LESSEE may act as a self-insurer in amounts acceptable to
LESSOR only upon written consent of the LESSOR. LESSEE shall insure the LESSOR
and LESSEE with respect to liability for personal injuries, death; damage to or
loss of use of property resulting from the ownership, use and operation of the
Equipment, in the amount of at least one million dollars combined single limit,
or such greater amount as LESSOR shall reasonably require. All such insurance
policies shall name both the LESSOR and LESSEE as insured, and must provide that
they may not be cancelled or altered without at least 30 days prior written
notice to LESSOR. Such property insurance and liability insurance (and written
evidence therefor delivered to LESSOR upon request) shall be satisfactory to
LESSOR. If LESSEE fails to provide such evidence, then LESSOR shall have the
right, but not the obligation to halve either property insurance or liability
insurance or both protecting the LESSOR placed at LESSEE'S expense. LESSEE'S
expense may include the full premium paid by LESSOR (not reduced by any credit
or refund due or paid to LESSOR) and any customary charges or fees of LESSOR and
of its designee(s) associated with such insurance. LESSEE shall pay such amounts
in equal installments allocated to each rent payment plus interest on such
amounts at the lesser of the highest rate permitted by law or 1.5% per month.
- 3 -
<PAGE> 4
12. TAXES. The LESSEE shall pay all taxes and assessments (and interest and
penalties, if any thereon) which may be levied, directly or indirectly, against
the Equipment or any interest therein or with respect to the ownership,
possession or use thereof, whether such taxes are levied against the LESSOR or
the LESSEE. Such taxes to be paid by the LESSEE shall include, without
limitation, property, sale, rent, lease, ad valorem and use taxes and any other
tax measured by the gross rent payable hereunder, but shall not include net
income or franchise taxes payable by the LESSOR. If such taxes are levied
against the LESSOR, it shall notify the LESSEE of such fact. The LESSOR shall
have the right, but not the obligation, to pay any such taxes, whether levied
against the LESSOR or LESSEE. In such event the LESSEE shall reimburse the
LESSOR therefor within five days after the receipt of an invoice based on the
full amount of such taxes without regard to any discounts LESSOR may obtain due
to early payment or otherwise. In the event of failure to make such
reimbursement when due the LESSOR shall have all remedies provided herein with
respect to the nonpayment of the rental hereunder. LESSEE agrees to reimburse
LESSOR for reasonable costs incurred by LESSOR in collecting taxes and
assessments hereunder.
LESSOR reserves the right to invoice and collect an estimated amount for
personal property taxes each year, such estimate to be based on the most recent
ascertainable assessment. Upon receipt of an invoice for the actual amount due,
LESSOR will invoice and LESSEE will pay to LESSOR or LESSOR will rebate to
LESSEE any difference between the actual invoice and the estimated amount.
13. ADDITIONAL SECURITY. In any jurisdiction where the Uniform Commercial Code
is in effect, LESSEE grants to LESSOR a security interest in any and all goods,
chattels, fixtures, furniture, equipment, assets, accounts receivable, contract
rights, general intangibles, and property of every kind wherever located now
and/or hereafter belonging to LESSEE and in which LESSEE has any interest and
proceeds thereof, and agrees that any security interest created by this
agreement secures any and all obligations of LESSEE and those of any affiliate
of LESSEE to LESSOR whether hereunder or otherwise and whether now in existence
and/or to come into existence and whether initially owing to LESSOR or acquired
by LESSOR through one or more assignments.
14. TITLE. All Equipment shall remain personal property and the title thereto
shall remain in the LESSOR exclusively unless the Equipment is, or includes
software in which event and only to the extent required by the applicable
license, title to said software shall remain in the Licensor. To the extent that
the License allows title to software to pass to the Licensee, such title shall
vest and remain in LESSOR. To the extent that such vesting requires a specific
written conveyance, LESSEE hereby conveys to LESSOR any title it has or may
hereafter acquire in the software and relinquishes any subsequent claim or title
in the software, including any rights to purchase the software and/or retain
rights to use the same beyond the Lease Term. If any provision of this paragraph
requires for its effectiveness Licensor's prior written consent because the
License limits transfers, encumbrance, or assignment of the software, then
LESSEE shall assist LESSOR, if so requested, in obtaining such consent. LESSEE
shall keep the LESSOR'S title rights in the Equipment free from any and all
liens, claims, and legal processes. LESSEE shall give LESSOR immediate notice of
any attachment or other judicial process, liens, or claims affecting the
Equipment and shall indemnify and save LESSOR harmless from any loss or damage
caused thereby. To further secure payment to LESSOR, LESSEE agrees that each
LEASE is cross-collateralized with all others and in the event of default by
LESSEE of any LEASE, LESSOR may exercise its rights and remedies as if LESSEE
defaulted on all LEASES.
In the event the Maintenance Provider deems it necessary to replace any
Equipment with like equipment LESSEE shall immediately notify LESSOR of the
same. However, no exchange or replacement shall occur without LESSOR'S prior
written approval and consent. LESSEE further agrees (a) to take all necessary
and reasonable steps to insure title to the replacement Equipment is, subject to
LESSOR'S satisfaction, transferred to the LESSOR, (b) agrees to insure the
replacement Equipment as provided in paragraph 11, and (c) to pay any and all
costs in connection with or related to such Equipment exchange.
15. FILING. LESSEE, on behalf of LESSEE and LESSOR, hereby authorizes LESSOR and
appoints LESSOR its attorney-in-fact to execute and file the LEASE, any
financing statements or security agreements with respect to the Equipment or any
collateral provided by LESSEE to LESSOR prior to or following LESSOR'S
acceptance of the LEASE, in any state of the United States. LESSEE shall execute
such supplemental instruments and financing statements if LESSOR deems such to
be necessary or advisable and shall otherwise cooperate to defend the title of
the LESSOR by filing or otherwise.
- 4 -
<PAGE> 5
16. RIGHT OF INSPECTION. The LESSOR, its agents, dealers, and representatives
shall have the right at any time during usual business hours to inspect the
Equipment and for this purpose to have access to the location of the Equipment.
17. NON-WAIVER. LESSOR'S failure at any time to require strict performance by
LESSEE of any of the provisions of the LEASE shall not waive or diminish
LESSOR'S right thereafter to demand strict compliance therewith or with any
other provision. Waiver of any default shall not waive any other default.
LESSOR'S rights under the LEASE are cumulative and not alternative.
18. DEFAULT. Time is of the essence of the LEASE, and no waiver by LESSOR of any
breach or default shall constitute a waiver of any other breach or default by
LESSEE or waiver of any of LESSOR'S rights. If LESSEE fails to pay any rent or
other amounts required within ten (10) days after the same is due and payable,
or if LESSEE fails to observe, keep or perform any other provision of the LEASE
required to be observed, kept or performed by LESSEE, or if LESSEE ceases doing
business as a going concern, or if a petition if filed by or against LESSEE
under the Bankruptcy Act or any amendment thereto (including a petition for
re-organization or an arrangement), or if a receiver is appointed for LESSEE or
its property, or if LESSEE commits an act of bankruptcy, becomes insolvent,
makes an assignment for the benefit of creditors, offers a composition or
extension of any of its indebtedness, or if LESSEE without LESSOR'S prior
written consent, attempts to remove or sell or transfer or encumber or sublet or
part with the possession of the Equipment, or if LESSOR deems itself insecure,
LESSOR or its agents shall have the right to exercise any one or more of the
following remedies; (a) to declare the entire amount of rent hereunder
immediately due and payable without notice or demand to LESSEE, (b) to sue for
and recover from the LESSEE the amount stated in the Stipulated Loss Value as
set forth in the applicable table (the form of which is attached to the
Equipment Schedule as Exhibit A), if any, or an amount equal to the unpaid
balance of the rent due and to become due during the term of the LEASE plus an
amount equal to the greater of (i) the fair market value of the Equipment prior
to the event of default, or (ii) twenty (20) percent of the Equipment Cost, all
discounted to present value at an annual rate of 6% , (c) to take possession of
any Equipment without demand or notice wherever same may be located without any
court order or other process of law. Upon retaking possession of any Equipment,
the LESSOR at its option may (i) lease repossessed Equipment or any part thereof
to any third party on such terms and conditions as the LESSOR may determine or
(ii) sell the Equipment or any part thereof to the highest bidder at public
auction or at private sale, and will credit the new amount so realized less
expenses incurred in connection with such disposition to the amount due pursuant
to (b) above. LESSEE hereby waives any and all damages occasioned by such taking
of possession. Any said taking of possession shall not constitute termination of
the LEASE and shall not relived LESSEE of its original obligations unless LESSOR
expressly so notifies LESSEE in writing.
To the extent permitted by applicable law, the LESSEE waives any and all
rights and remedies conferred upon a LESSEE by UCC Sections 2A-508 through
2A-522, including (without limitation) the LESSEE'S right to (a) cancel or
repudiate the LEASE, (b) reject or revoke acceptance of the leased Equipment,
(c) recover damages from the LESSOR for breach of warranty or for any other
reason, (d) claim a security interest in any rejected Equipment in the LESSEE'S
possession or control, (e) deduct from rental payment all or any part of any
claimed damages resulting from the LESSOR'S default under the LEASE, (f) accept
partial delivery of the leased Equipment, (g) "cover" by making any purchase or
lease of other equipment in substitution for Equipment due from the LESSOR, (h)
recover from the LESSOR any general, special, incidental or consequential
damages, for any reason whatsoever, and (i) specific performance, replevin or
the like for any of the leased Equipment.
To the extent permitted by applicable law, the LESSEE waives any rights now
or hereafter conferred by statute or otherwise that may require the LESSOR to
sell, release or otherwise use or dispose of any of the leased Equipment in
mitigation of the LESSOR'S damages as set forth in the LEASE or that may
otherwise limit or modify any of LESSOR's rights or remedies under the LEASE.
The remedies provided for in the LEASE shall not be deemed exclusive but shall
be cumulative, and shall be in addition to all other remedies existing at law or
in equity.
Should any legal proceedings be instituted by LESSOR to recover any monies
due or to become due under the LEASE and/or for the possession of the Equipment,
LESSEE shall pay LESSOR'S reasonable attorney's fees, court costs, and other
related expenses as well as fees and costs incurred in connection with a
bankruptcy proceeding including, but not limited to, any objections of disputes.
The LESSEE and all endorsers and guarantors hereby consent to the
- 5 -
<PAGE> 6
LESSOR granting, at its own option, one or more extensions of the time of
payment or performance of any of the obligations of the LESSEE or of any
security agreement securing the LEASE, hereby waiving all notice thereof.
19. ASSIGNMENT. NEITHER THE LEASE NOR THE RIGHTS THEREUNDER SHALL BE ASSIGNED,
NOR SHALL ANY OF THE EQUIPMENT BE SUBLEASED BY LESSEE WITHOUT PRIOR WRITTEN
CONSENT OF LESSOR. LESSOR, WITHOUT NOTICE TO LESSEE, MAY AT ANY TIME ASSIGN ALL
OR PART OF ITS RIGHT, TITLE AND INTEREST IN AND TO THE LEASE IN AND TO EACH ITEM
OF EQUIPMENT AND MONIES TO BECOME DUE TO THE LESSOR THEREUNDER; and, LESSOR may
grant a security interest in the Equipment, subject
to the LESSEE'S rights therein as set forth in the Lease. Any assignee of LESSOR
shall have all of the rights, but none of the obligations, of LESSOR under the
LEASE and LESSEE agrees that it will not assert against any assignee of LESSOR
any defense, counterclaim or offset that LESSEE may have against LESSOR. LESSEE
acknowledges that any assignment or transfer by LESSOR would neither materially
change LESSEE'S duties or obligations under the LEASE nor materially increase
the burdens or risks imposed on LESSEE.
20. POSSESSION AND QUIET ENJOYMENT. LESSOR covenants to and with LESSEE that,
provided LESSEE performs the conditions of the LEASE and so long as LESSEE shall
not be in default thereunder, LESSEE shall peaceably and quietly hold and use
the Equipment during the LEASE term without hindrance or interruption by LESSOR.
21. LIABILITY AND INDEMNITY. Except for the gross negligence or willful
misconduct of LESSOR, LESSEE agrees to indemnify LESSOR against and hold LESSOR
harmless from any and all claims, (INCLUDING WITHOUT LIMITATION, CLAIMS
INVOLVING STRICT OR ABSOLUTE LIABILITY), actions, suits, proceedings, costs,
expenses, damages and liabilities at law or in equity, including costs and
reasonable attorney's fees, arising out of, connected with or resulting from the
LEASE or the Equipment, including, without limitation the manufacture,
selection, purchase, ownership, delivery, possession, use, operation, condition,
sales, return, storage or disposition thereof, any latent or other defects,
whether or not discoverable, and any claim for patent, trademark or trade name
infringement.
LESSOR shall not be liable to LESSEE for any loss, damage, injury, or
expense of any kind or nature, caused directly or indirectly by any Equipment or
the use or maintenance thereof; the repair, servicing or adjustment thereto, or
for any delay or failure to provide any thereof, any interruption of service or
loss of use of the Equipment, or for any loss of business or damage whatsoever
and howsoever caused.
For purposes of this Paragraph, the term "LESSOR" shall include LESSOR, its
successors and assigns, shareholders, directors, officers, representatives,
employees, and agents, and the provisions of this Paragraph shall survive
expiration of the LEASE with respect to events occurring prior thereto.
22. NET LEASE. The LEASE is a net lease and LESSEE agrees that its obligation to
pay all rent and other sums payable thereunder are absolute and unconditional
and shall not be subject to any abatement, reduction, setoff, defense,
counterclaim or recoupment for any reason whatsoever.
23. REPRESENTATIONS AND WARRANTIES OF LESSEE. LESSEE hereby represents, warrants
and covenants that, with respect to the LEASE, any amendment, addendum, rider,
or other attachment executed thereunder:
(a) The execution, delivery and performance thereof by LESSEE has been duly
authorized by all necessary corporate or business action.
(b) The individual executing such was duly authorized to do so.
(c) they constitute legal, valid and binding agreements of LESSEE
enforceable in accordance with their respective terms.
(d) Any and all financial statements or other information with respect to
LESSEE supplied to LESSOR at the time of execution hereof and any amendments,
addendums, or riders hereto are true and complete.
- 6 -
<PAGE> 7
The foregoing representations and warranties shall survive the signing and
delivery of the LEASE and any amendments, addendums, riders or other attachments
thereto.
24. MISCELLANEOUS. (a) All notices relating hereto shall be in writing and
mailed to LESSOR or LESSEE by certified mail, return receipt requested at its
respective address above shown or at any later address last known to the sender.
The LEASE is irrevocable for the full term thereof and for the aggregate rental
therein reserved, and the rent shall not abate by reason of termination of
LESSEE'S right of possession and/or the taking of possession by LESSOR or for
any other reason. If more than one LESSEE is named in the LEASE, the liability
of each shall be joint and several.
(b) Delinquent installments of rent, or other amounts due under the LEASE,
of more than ten (10) days shall be subject to a penalty equal to ten (10)
percent of such payment, plus interest at the rate of one and one-half (1 1/2)
percent per month, but in no event greater than the highest lawful rate. If
LESSOR supplies LESSEE with labels stating that Equipment is owned by LESSOR,
LESSEE shall label the Equipment and shall keep the same affixed in a prominent
place.
(c) LESSEE agrees to furnish to LESSOR upon request:
(1) Such additional information as LESSOR may reasonably request
concerning LESSEE and LESSEE'S use of the Equipment in order to enable
LESSOR to determine whether the covenants, terms, and provisions of the
LEASE have been complied with by LESSEE.
(2) copies of annual or quarterly financial statements, including a
copy of the Balance Sheet and Profit and Loss Statement of LESSEE.
(3) Financial Statements of any corporation that owns a controlling
interest in LESSEE.
(4) Copies of all Maintenance Provider's reports covering the
Equipment.
(5) A duly executed written warranty verifying the serial number(s) of
the Equipment and any attachments or appurtenances thereto, specifying the
shipment date for the return of the Equipment, its general condition, that
the Equipment has been and continues to be in use for its intended purpose
and within the limitations set forth and at the location specified in the
LEASE and that insurance is in full force and effect.
(d) LESSEE shall furnish to LESSOR such information and data as LESSOR may
from time to time reasonably request as to existence of and status of any claims
for damages (whether against the Equipment or against LESSOR or LESSEE) arising
out of the use, operation, or condition of the Equipment; the taxes of the
nature provided to be paid by LESSEE under the provisions of Paragraph 12 which
have been assessed and the amount of such taxes paid, and such other data
pertinent to the Equipment and the condition, use, and operation thereof as
LESSOR may from time to time reasonably request.
(e) If LESSEE shall fail to comply with its covenants and obligations under
the LEASE, the payment of taxes, assessments, and other charges of keeping the
Equipment in repair and free of liens, charges, and encumbrances, LESSOR may,
after reasonable notice to LESSEE of LESSOR'S intent, pay such charges, taxes,
assessments or cause compliance with such covenants, however, LESSOR shall not
be obligated to make advances to perform the same, and all sums so advanced
shall be payable to LESSOR upon demand as additional rent. No such advance shall
be deemed to relieve LESSEE from any default under the LEASE or be considered a
waiver by LESSOR of any of its rights or remedies.
(f) In the event a major change in the ownership or financial condition of
LESSEE occurs prior to delivery and acceptance of any Equipment, and LESSOR, in
its sole discretion deems itself insecure as a result of such change, LESSOR
reserves the right to cancel the LEASE and LESSEE hereby agrees to hold LESSOR
harmless and to indemnify LESSOR from any and all obligations liabilities, costs
and expenses incurred as a result of such cancellation, including but not
limited to LESSOR'S issuance of its purchase order to the Equipment Vendor.
- 7 -
<PAGE> 8
(g) The LEASE, any amendments, addendums, riders, or other attachments made
thereto shall be deemed to have been made and executed in Cook county, Illinois,
regardless of the order in which the signatures of the parties shall be affixed
thereto, and shall be interpreted and the rights and liabilities of the parties
thereto determined in accordance with the laws of the State of Illinois. All
claims and other matters relating to the LEASE, any amendments, addendums,
riders, or other attachments made thereto and the Equipment SHALL BE HEARD IN
ANY STATE OR FEDERAL COURT LOCATED IN COOK COUNTY, ILLINOIS, AND THE PARTIES
CONSENT TO THE EXCLUSIVE PERSONAL JURISDICTION OF SUCH COURTS, AND WAIVE TRIAL
BY JURY.
(h) Notwithstanding anything to the contrary contained in the LEASE,
including but not limited to paragraph 18, in addition to all other remedies
provided therein, in the event LESSEE fails to ship the Equipment to the
destination designated by LESSOR on or before the warranted date as specified in
paragraph 24(c)(5), LESSEE agrees to pay to LESSOR upon demand an amount equal
to the daily rate, based on a 30 day month, of the monthly or other calendar
period rental for each day after such date until such time as the Equipment
leaves the LESSEE'S location.
(i) LESSEE and any guarantor agree that any process served for any action
or proceeding shall be valid if mailed by certified mail, return receipt
requested, with delivery directed to the LESSEE, its registered agent, or any
agent appointed in writing to accept such process. LESSEE and any guarantor
accordingly hereby expressly appoint "COOK COUNTY PROCESS SERVERS," or its
successor, in Illinois as THEIR AGENT TO ACCEPT SERVICE of such process in
connection with the LEASE.
(j) AT LESSOR'S SOLE ELECTION, LESSOR MAY SUBMIT ANY MATTER ARISING OUT OF
THIS TRANSACTION, INCLUDING ANY CLAIM, COUNTER-CLAIM, SETOFF, OR DEFENSE, TO
BINDING ARBITRATION BY THE AMERICAN ARBITRATION ASSOCIATION IN COOK COUNTY,
ILLINOIS OR ANY OTHER SITE OF LESSOR'S CHOICE. THE DECISION AND AWARD OF THE
ARBITRATOR(S) SHALL BE FINAL AND BINDING AND MAY BE ENTERED AS RENDERED IN ANY
COURT HAVING JURISDICTION THEREOF.
25. SEVERABILITY. If any provisions of the LEASE or any remedy thereunder
provided for is deemed invalid under any applicable law, such provision shall be
inapplicable and deemed omitted, but the remaining provisions thereof including
remaining default remedies, shall be given effect in accordance with the
manifest intent thereof.
26. CONFLICTS. If any of the provisions of the LEASE conflict with any
provisions of any other documentation relating to the transaction, the terms of
the LEASE shall prevail and control, unless otherwise agreed to in writing by
LESSOR.
27. ENTIRE AGREEMENT, WAIVER. This instrument constitutes the entire agreement
between the parties. No waiver by LESSOR of any provision hereof shall
constitute a waiver of any other matter. This Master Lease Agreement may be
executed simultaneously in any number of counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument. This Master Lease Agreement including any amendments, additions,
riders or other attachments is not valid and binding until execution thereof by
an authorized officer of LESSOR in Northbrook, Illinois.
LESSEE'S INITIAL [ ]
IN WITNESS WHEREOF, LESSOR and LESSEE have signed this Master Lease Agreement as
of the date set forth above.
LESSOR: LESSEE:
BANKERS LEASING ASSOCIATION, INC. CARDMEMBER PUBLISHING CORPORATION
By:________________________________ By:________________________________
___________________________________ ___________________________________
(Print or Type Name) (Print or Type Name)
Title:_____________________________ Title: SENIOR VICE PRESIDENT/CFO
- 8 -
<PAGE> 9
AMENDMENT NO. 1
TO
MASTER LEASE AGREEMENT DATED AS OF MAY 7, 1996
BETWEEN
BANKERS LEASING ASSOCIATION, INC.. (AS "LESSOR")
AND
CARDMEMBER PUBLISHING CORPORATION (AS "LESSEE")
This Amendment is entered into in accordance with the Master Lease Agreement
identified above. All the terms and conditions of the Master Lease Agreement are
hereby incorporated herein and made a part hereof. In the event of a conflict
between the terms of the Master Lease Agreement and this Amendment, the terms of
this Amendment shall prevail.
Amend Lessee's address to read: 680 Washington Blvd., Suite 1100
Stamford, Connecticut 06901-3709
In all other respects, the terms and conditions of the Master Lease Agreement
shall remain in full force and effect as originally written.
IN WITNESS WHEREOF, the parties hereto, by their authorized signatories, have
executed this Amendment at the date set forth below their respective signatures.
Lessor: Lessee:
BANKERS LEASING ASSOCIATION, INC. CARDMEMBER PUBLISHING CORPORATION
By: By: /s/ Steven Levenherz
----------------------------- ------------------------------
Steven Levenherz
Title: Title: Senior Vice President/CFO
-------------------------- ---------------------------
Dated as of: Dated as of: 6-24-96
-------------------- --------------------
- --------------------------------------------------------------------------------
BANKERS LEASING ASSOCIATION, INC. 4201 Lake Cook Road, Northbrook, IL 60062
TEL: (708) 564-5353 FAX: (708) 564-5412
OFFICES IN PRINCIPAL CITIES
(800) 477-2000 Except in Illinois
<PAGE> 10
EQUIPMENT SCHEDULE NO. 1
TO
MASTER LEASE AGREEMENT DATED AS OF MAY 7, 1996
BETWEEN
BANKERS LEASING ASSOCIATION, INC., AS LESSOR,
AND
CARDMEMBER PUBLISHING CORPORATION, AS LESSEE
This Equipment Schedule is entered into in accordance with the Master Lease
Agreement identified above. All the terms and conditions of the Master Lease
Agreement are hereby incorporated herein and made a part hereof as if such terms
and conditions were set forth in this Equipment Schedule. In the event of a
conflict between the terms of the Master Lease Agreement and this Equipment
Schedule, the terms of this Equipment Schedule shall prevail.
VENDOR(S): INTECOM, INC.
EQUIPMENT DESCRIPTION:
See Exhibit "A" attached.
EQUIPMENT LOCATION: Lessee agrees that the Equipment will only be located and
used at the following address(es): See Exhibit "A" attached and at no other
location unless authorized in writing by LESSOR for the full term hereof and any
extensions thereof.
INITIAL LEASE TERM: Sixty (60) months
MONTHLY EQUIVALENT RENT: $13,540.00
RENTAL PAYMENT: Billed quarterly, plus applicable taxes,
payable in advance
ADVANCE RENTALS: Lessee agrees to an initial payment in the sum
of $13,540.00 which is payment of the last
initial term monthly equivalent rent, which
amount has been paid.
COMMENCEMENT DATE:
The Commencement Date shall be the first day of the calendar quarter following
the Installation Date (as defined herein). A calendar quarter means a
three-month period commencing on January 1, April 1, July 1, and October 1 of
any calendar year. Charges from the Installation Date to the Commencement Date
shall be computed by converting the monthly or other calendar period rental to a
daily rate based on a 30-day month. Lessor assumes no responsibility for costs
associated with returning non-acceptable Equipment, and LESSEE agrees to pay, on
demand, any and all such costs.
If the Installation Date for this Equipment Schedule occurs on or after March
26, 1996 and if, on said Installation Date, there is a greater than twenty five
(25) basis point difference between the yield of United States Treasury
Obligations for a comparable term of the Lease as published in the Wall Street
Journal and this Equipment Schedule's assigned base rate, Lessor shall adjust
the monthly equivalent rent by applying an adjusted monthly lease rate factor to
the Equipment cost. Therefore, in the event of such an adjustment, the Equipment
Schedule's base monthly lease rate factor of .01867 shall be adjusted by .033
percent for each twenty-five (25) basis point difference between the
aforementioned Treasury Obligation rate and the Equipment Schedule's assigned
base rate. Pro-rata adjustments will be made for fractional changes thereof.
This Equipment schedule's assigned base rate is 6.11 percent.
IN WITNESS WHEREOF, LESSOR and LESSEE have hereunto signed as of the date set
forth below:
BANKERS LEASING ASSOCIATION, INC. CARDMEMBER PUBLISHING CORPORATION
By: By:
------------------------------ ------------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
--------------------------- ---------------------------
Date: Date:
---------------------------- ----------------------------
<PAGE> 11
EXHIBIT "A"
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
QUANTITY EQUIPMENT DESCRIPTION (Include Make, Model, Serial No. and All Attachments)
- ------------------------------------------------------------------------------------------
VENDOR: INTECOM, INC.
LOCATION: 11165 Mill Valley Road, Omaha, NE
Host Hardware
-------------
<S> <C>
1 100-0587-001 POWER FAILURE TRANSFER GRP
1 100-0727-002 RECORDER/ANNOUNCER 4 CHANNEL
1 100-0727-003 RECORDER/ANNOUNCER 6 CHANNEL
6 520-1000-004 PDI 1000 (PC ATTEND = 4)
1 993-0050-120 9600 BAUD SMX MODEM W/CABLE
1 993-0079-113 BLANK CRT TAPE 4Gb HOST QTY 10
2 993-0050-128 SYS CONSOLE
1 993-0009-046 SYS PRINTER 200CPS
1 993-0050-124 ADMINISTRATIVE CONSOLE
1 993-0079-109 4 Gb BOOT/DATA TAPE
19 400-1533-001 INTERFACE SHELF BLANK PANEL
32 400-1533-002 INTERFACE SHELF 50 TELCO PANEL
2 500-1376-001 CABLE SET ASSY, 36 PORT ITE W/ PAN
0 300-0404-203 FXL LAS 20 MM-50SM K FT
0 500-1414-001 SC BACK PLANE ADAPTER KIT
3 300-0282-101 MULTI SERVICE FUNCTION
1 300-0283-002 DIAGNOSTIC TEST INTERFACE CARD
1 300-0291-001 2 WIRE TRUNK
1 300-0325-001 STE/OPX LINE CARD
8 300-0400-101 INTF & LINK SHELF BXI
2 300-0430-101 STE LINE CARD
5 993-0055-309 IXL TRUNK W/CABLE
2 993-0055-309 T1 DIGITAL TRUNK W/CABLE
15 993-0055-310 ISDN PRIMARY RATE INTF. W/CABLE
10 993-0055-316 CARD ITE 36 PORT W/CABLE
3 500-1472-001 MODULE FILLE - PANEL
2 993-0070-001 30" RACK
4 993-0075-001 INTERFACE MODULE W/PWR
1 993-0075-300 RINGER OPTION CARD
3 500-1435-001 TALK BATTERY FILTER
0 993-0076-001 LINK Module w/PWR
1 993-0079-040 E-14 CU/SU Module w/PWR/32 Mb MEM/
4 100-0633-001 HIB TERM (BCT)
4 500-1344-002 HIB CABLE 3 FT
2 500-1344-005 HIB CABLE 12 FT
2 500-1344-006 HIB CABLE 15 FT
1 500-1347-001 20 FT TEST BUS CABLE
2 500-1347-051 28 INCH TEST BUS CABLE W/RING
32 993-0067-010 LINE FILTER
18 500-1272-002 MDF CABLE ITE PVC 100 FT
3 500-1274-002 MDF CABLE PVC 100 FT
2 500-1244-001 TRUNK FUSE BLOCK
4 993-0079-100 OAI/PDI TO AP CABLE GRP
1 993-0075-370 EBC w/o FDDI
2 100-0679-001 PC, SERVER
- ------------------------------------------------------------------------------------------
</TABLE>
BANKERS LEASING ASSOCIATION, INC. CARDMEMBER PUBLISHING CORPORATION
By: By:
------------------------------ ------------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
--------------------------- ---------------------------
Date: Date:
---------------------------- ----------------------------
<PAGE> 12
EXHIBIT "A"
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
QUANTITY EQUIPMENT DESCRIPTION (Include Make, Model, Serial No. and All Attachments)
- ------------------------------------------------------------------------------------------
VENDOR: INTECOM, INC.
LOCATION: 11165 Mill Valley Road, Omaha, NE
Host Hardware
-------------
<S> <C>
0 993-0012-325 PC ATTEND SW
2 993-0240-001 OPERATING SYS/TCP/IP LICENSE
1 993-0240-000 BASIC SOFTWARE PACKAGE 1
1 993-0012-301 DELUXE CDR
1 993-0012-310 VMP INTERFACE
1 993-0012-311 IXLS/W
1 993-0012-312 T1 SOFTWARE
1 993-0240-040 ISDNNET PRI LEVEL 1
2 993-0011-019 SERVER SOFTWARE
1 993-0012-188 IQ MANAGER, WINDOWS OPENVIEW
1 993-0240-033 INTELAN SYSTEM SOFTWARE
1 993-0240-070 EMAP SOFTWARE
Host Software Equipment
Less Pre-Cut Discount
Host Software Equipment Total
<CAPTION>
Station Equipment
-----------------
<S> <C>
200 512-1221-004 ITE 12 SD
35 512-3025-004 ITE 30 SD
210 512-3105-004 ITE AGENT PHONE
0 100-0019-007 ATT CON HEADSET
Station Equipment
Less Pre-Cut Discount
Station Equipment Total
<CAPTION>
ACD SOFTWARE
------------
<S> <C>
1 993-0012-700 CALLWISE MONITOR V1.1 (1-3 SUP)
1 993-0012-701 CALLWISE MONITOR V1.1 (4-7 SUP)
1 993-0012-702 CALLWISE MONITOR V1.1 (8-13 SUP)
1 993-0012-703 CALLWISE MONITOR V1.1 (14-21 SUP)
1 993-0012-704 CALLWISE MONITOR V1.1 (22-33 SUP)
1 993-0012-705 CALLWISE MONITOR V1.1 (34-65 SUP)
1 993-0012-730 CALLWISE MONITOR V1.1 (1-3 SUP)
1 993-0012-731 CALLWISE MONITOR V1.1 (4-7 SUP)
1 993-0012-732 CALLWISE MONITOR V1.1 (8-13 SUP)
1 993-0012-733 CALLWISE MONITOR V1.1 (14-21 SUP)
1 993-0012-734 CALLWISE MONITOR V1.1 (22-33 SUP)
1 993-0012-735 CALLWISE MONITOR V1.1 (34-65 SUP)
1 993-0240-028 OAJ 1st CHANNEL 1
3 993-0240-029 OAJ LINK ADDITIONAL CHANNEL
1 993-0242-017 ACD BASIC LEVEL III (21-MAX GROUPS)
1 993-0242-018 ACD DELUXE LEVEL III (21-MAX GROUPS)
- ------------------------------------------------------------------------------------------
</TABLE>
BANKERS LEASING ASSOCIATION, INC. CARDMEMBER PUBLISHING CORPORATION
By: By:
------------------------------ ------------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
--------------------------- ---------------------------
Date: Date:
---------------------------- ----------------------------
<PAGE> 13
EXHIBIT "A"
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
QUANTITY EQUIPMENT DESCRIPTION (Include Make, Model, Serial No. and All Attachments)
- ------------------------------------------------------------------------------------------
VENDOR: INTECOM, INC.
LOCATION: 7324 S.W. Freeway, Suite 2000, Houston, TX
Hardware
--------
<S> <C>
1 100-0587-001 POWER FAILURE TRANSFER GRP
1 100-0727-002 RECORDER/ANNOUNCER 4 CHANNEL
1 100-0727-003 RECORDER/ANNOUNCER 6 CHANNEL
1 993-0050-120 9600 BAUD SMX MODEM W/CABLE
1 993-0079-112 BLANK CRT TAPE 4 Gb SSU QTY 5
1 993-0050-128 SYS CONSOLE
1 993-009-046 SYS PRINTER 200 CPS
1 993-0050-124 ADMINISTRATIVE CONSOLE
1 993-0079-109 4Gb BOOT/DATA TAPE
3 400-1533-001 INTERFACE SHELF BLANK PANEL
16 400-1533-002 INTERFACE SHELF 50 TELCO PANEL
9 500-1376-001 CABLE SET ASSY, 36 PORT ITE W/PA
2 300-0282-101 MULTISERVICE FUNCTION
1 300-0283-002 DIAGNOSTIC TEST INTERFACE CARD
0 300-0291-001 2 WIRE TRUNK
0 300-0299-001 DID TRUNK
1 300-0325-001 STE/OPX LINE CARD
4 300-0400-101 INTF. & LINK SHELF BXI
1 300-0430-101 STE LINE CARD
2 993-0055-309 IXL DIGITAL TRUNK W/CABLE
5 993-0055-310 ISDN PRIMARY RATE INTF. W/CABLE
2 993-0055-316 CARD ITE 36 PORT W/CABLE
1 500-1472-001 MODULE FILLER PANEL
1 993-0070-001 30" RACK
2 993-0075-001 INTERFACE MODULE W/PWR
1 993-0075-300 RINGER OPTION CARD
1 500-1435-001 TALK BATTERY FILTER
1 993-0079-036 SERVER MODULE SSU (32 MEG. W/1.2 4Gb)
2 100-0633-001 HIB TERM (BCT)
2 500-1344-002 HIB CABLE 3FT
2 500-1344-005 HIB CABLE 12 FT
1 500-1347-051 28 INCH TEST BUS CABLE W/RING
15 993-0067-010 LINE FILTER
18 500-1273-002 MDF CABLE ITE PVC 100 FT
3 500-1274-002 MDF CABLE PVC 100 FT
1 500-1244-001 TRUNK FUSE BLOCK
1 993-0075-370 EBC W/O FDDI
<CAPTION>
Software
--------
<S> <C>
1 993-0240-001 OPERATING SYS/TCP/IP LICENSE
1 993-0240-015 SURVIVABLE SWITCHING UNIT
1 993-0247-000 INITIAL SOFTWARE UPGRADE PKG HI
1 993-0247-028 OAJ 1st CHANNEL PKG HIB
1 993-0247-040 ISDNNET PRI LEVEL PKG HIB
- ------------------------------------------------------------------------------------------
</TABLE>
BANKERS LEASING ASSOCIATION, INC. CARDMEMBER PUBLISHING CORPORATION
By: By:
------------------------------ ------------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
--------------------------- ---------------------------
Date: Date:
---------------------------- ----------------------------
<PAGE> 14
EXHIBIT "A"
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
QUANTITY EQUIPMENT DESCRIPTION (Include Make, Model, Serial No. and All Attachments)
- ------------------------------------------------------------------------------------------
VENDOR: INTECOM, INC.
LOCATION: 680 Washington Blvd., Stamford, CT
Hardware
--------
<S> <C>
1 100-0587-001 POWER FAILURE TRANSFER GRP
0 520-1000-004 PDI 1000
1 993-0050-120 9600 BAUD SMX MODEM W/CABLE
1 993-0079-112 BLANKCRT TAPE 45 Gb SSU QTY5
1 993-0050-128 SYS CONSOLE
1 993-0009-046 SYS PRINTER 200CPS
1 993-0050-124 ADMINISTRATIVE CONSOLE
1 993-0079-109 4 Gb BOOT/DATA TAPE
4 400-1533-001 INTERFACE SHELF BLANK PANEL
14 400-1533-002 INTERFACE SHELF 50 TELCO PANEL
10 500-1376-001 CABLESET ASSY, 36 PORT ITE W/PA
3 300-0282-101 MULTISERVICE FUNCTION
1 300-0283-002 DIAGNOSTIC TEST INTERFACE CARD
1 300-0291-001 2 WIRE TRUNK
4 300-0400-101 INTF. & LINK SHELF BXI
2 300-0430-101 STE LINE CARD
2 993-0055-309 IXL DIGITAL TRUNK W CABLE
2 993-0055-309 T1 DIGITAL TRUNK W CABLE
1 993-0055-310 ISDN PRIMARY RATE INTF. W CABLE
4 993-0055-316 CARD ITE, 36 PORT, W/CABLE
1 500-1472-001 Module Filler Panel
1 993-0070-001 30" Rack
2 993-0075-001 Interface Module w/PWR
1 993-0075-300 Ringer Option Card
1 500-1435-001 Talk Battery Filter
1 993-0079-036 Server Module SSU (32 Meg, w/1.2, 4Gb
4 100-0633-001 HIB TERM (BCT)
2 500-1344-002 HIB CABLE 3 FT
2 500-1344-005 HIB CABLE 12 FT
1 500-1347-051 28 INCH TEST BUS CABLE/w RING
13 993-0067-010 LINE FILTER
19 500-1273-002 MDF CABLE ITE PVC 100 FT
2 500-1274-002 MDF CABLE ITE PVC 100 FT
1 500-1244-001 TRUNK FUSE BLOCK
0 100-0019-007 ATT CON HEADSET
<CAPTION>
Software
--------
<S> <C>
0 993-0012-325 PC ATTEND CONSOLE SW
1 993-0240-001 OPERATING SYS/TCP/IP LICENSE
1 993-0240-015 SURVIVABLE SWITCHING UNIT
2 993-0247-000 INITIAL SOFTWARE UPGRADE PKG HI
1 993-0247-028 OAI 1st CHANNEL PKG HIB
1 993-0247-040 ISDNNET PRI LEVEL PKG HIB
<CAPTION>
Modem Pooling Option
--------------------
<S> <C>
10 993-0004-055 MODEM POOL, RACKMOUNT
4 100-0392-001 CABLE ADAPTER 25P/12 TELCO
2 400-1063-001 SHELF, 7"
1 219-0018-001 RACK, 19" x 84"
3 500-1210-002 POWER SUPPLY, ADT 4 to 1
- ------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 15
<TABLE>
<S> <C>
- ------------------------------------------------------------------------------------------
2 500-1273-002 MDF CABLE ITE PVC 100 FT
1 No Part # Installation/Implementation
- ------------------------------------------------------------------------------------------
</TABLE>
BANKERS LEASING ASSOCIATION, INC. CARDMEMBER PUBLISHING CORPORATION
By: By:
------------------------------ ------------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
--------------------------- ---------------------------
Date: Date:
---------------------------- ----------------------------
<PAGE> 16
EXHIBIT "A"
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
QUANTITY EQUIPMENT DESCRIPTION (Include Make, Model, Serial No. and All Attachments)
- ------------------------------------------------------------------------------------------
VENDOR: INTECOM, INC.
LOCATION: 11165 Mill Valley Road, Omaha, NE
Hardware
--------
<S> <C>
1 993 0028 203 WinTRACK ProPACK II Calling Accounting
Single User, 1000 extensions/authorizations codes
1 993 0028 001 ProPAK Database Import
1 993 0028 224 Network Optimization
TRAK Fraud Toil Fraud Detection
1 993 0028 225 (includes 1 buffer, 1 support modem)
3 993 0028 226 Remote Trunk Costing
ProPAK/1Q Admin Interface (Target)
1 993-0028 232 Availability 2Q96)
1 993 0028 014 POLLCAB-LC Buffer
2 993 0028 015 14.4 bps External Modem
2 993 0028 016 Surge Protector/Power Strip
ProPAK 1 Installation & Training -2
1 993 0028 700 Days, incl. travel
TRAK Fraud Installation & Training
Addon to ProPAK II or Remote Site
1 993-0028 704 Installation - 1 Day per site, inc. travel
ProPAK II Option Installation & Training,
except IQ Admin interfaces, Addon to
1 993 0028 706 ProPAK II - 1 Day
ProPAK/IQ Admin Interface Installation &
Training, Addon to ProPAK - 2 Days
1 993 0028 708 incl. travel
1 520 1000 004 PDI 1000S DCE, Dove Gray
1 993-0079-100 Cable Group, OAI/PDI to AP
1 No Part # Installation/Implementation
<CAPTION>
LOCATION: 11043 I-Street, Omaha, NE
Hardware
--------
<S> <C>
1 500-1497-001 RACK ASSY, 19" SO
2 122-0415-001 POWER STRIP, 6 OUTLET
0 993-0075-333 INTECOME-SO FXL MEDIUM
0 993-0075-100 CABLE, SO INFO LINK
0 993-0075-101 POWER FAILURE TRANSFER SO
1 993-0079-109 4 Gb BOOT/DATA TAPE
1 993-0079-302 SERVER SWITCH MATRIX
1 993-0075-304 CARD, MSF SO
1 993-0075-305 CARD, BXI SO
1 993-0075-306 CARD, DTI SO
1 993-0075-309 CARD ITE, SO 36 PORT
1 993-0075-312 CARD, STE SO
0 993-0075-313 CARD, 2WT SO
1 993-0075-316 IXL DIGITAL TRUNK W CABLE
2 993-0067-010 LINE FILTER
2 500-1273-002 MDF CABLE ITE PVC 100 FT
1 500-1274-002 MDF CABLE PVC 100 FT
1 100-0633-001 HIB TERM(BCT)
1 500-1344-003 HIB CABLE 5 FT
1 500-1244-001 TRUNK FUSE BLOCK
1 993-0247-000 INITIAL SOFTWARE UPGRADE PKG HI
1 993-0247-040 ISDNNET SW UPGRADE PKG HIB
- ------------------------------------------------------------------------------------------
</TABLE>
BANKERS LEASING ASSOCIATION, INC. CARDMEMBER PUBLISHING CORPORATION
By: By:
------------------------------ ------------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
--------------------------- ---------------------------
Date: Date:
---------------------------- ----------------------------
<PAGE> 17
EXHIBIT "A"
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
QUANTITY EQUIPMENT DESCRIPTION (Include Make, Model, Serial No. and All Attachments)
- ------------------------------------------------------------------------------------------
VENDOR: INTECOM, INC.
LOCATION: 11165 Mill Valley Road, Omaha, NE
Technical Training
------------------
<S> <C>
3 993-0015-563 INTECOM ORIENTATION
3 993-0015-562 INTECO E STATION DATABASE
2 993-0015-520 CALLWISE OAI ACD ADMIN
2 993-0015-560 CALLWISE ACD
TECHNICAL TRAINING TOTAL
<CAPTION>
Documentation
-------------
<S> <C>
40 993-0001-027 ITE 12SD USERS GUIDE
35 993-0001-034 ITE 30SD QUICK REF. CARD
0 993-0003-002 ATT CON USERS GUIDE
1 596-9090-000 DOCUMENTATION PACKAGE
1 993-0017-107 ACD DOCUMENTATION KIT
1 590-2371-001 ACD ADMINISTRATION GUIDE
1 590-9031-000 INTELAN DOCUMENTATION
0 993-0003-002 ATT CON USERS GUIDE
0 596-9090-000 DOCUMENTATION PACKAGE
0 596-9090-000 DOCUMENTATION PACKAGE
1 596-9092-000 DOCUMENTATION PACKAGE SO
1 596-9091-000 DOCUMENTATION PACKAGE
1 596-9091-000 DOCUMENTATION PACKAGE
Documentation Total
-------------------
<CAPTION>
Power Equipment
---------------
<S> <C>
1 993-0015-617 Host 15 min. BBU
1 993-0015-617 OMAHA WAREHOUSE MINI UPS, APC/Omaha Warehouse;
11043 I-Street, Omaha, NB
1 993-0015-617 Stamford Corp. 15 min. BBU/Stamford
1 993-0015-617 Addt'l. Operations Center #1 15 min BBU/Houston
<CAPTION>
20 Digital Ports, 121 Hrs of Storage
------------------------------------
<S> <C>
1 02000-62045 VS1110 (20MHZ/12MB) 386 Cabinet
1 02000-61615 LIC-12 Line Interface Card
1 02000-60962 T1 LIM-24 Line Interface Module
1 02000-62049 1.2 GB Disk Drive
1 02000-71686 InfoMail 3.0 Application Software
1 02000-71553 IBX Integration
1 02000-71511 CallController Application Software
1 02000-60946 LIC-8 Line Interface Card
1 993-0024-439 InteMail Peripherals Set
1 520 1000 004 PDI 1000S DCE, Dove Gray
1 993-0079-100 Cable Group, OAI/PDI to AP
1 993-0055-313 Card, Trunk, T1 Digital w/Cable
1 993-0067-010 Line Filter
1 400-1533-002 Panel, Telco, Interface Shelf General
1 02000-62020 Fax-12 (14.4) Fax Interface Card
1 02000-715090 Fax Messaging & Overflow Software
1 No Part # Installation/Implementation
- ------------------------------------------------------------------------------------------
</TABLE>
BANKERS LEASING ASSOCIATION, INC. CARDMEMBER PUBLISHING CORPORATION
By: By:
------------------------------ ------------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
--------------------------- ---------------------------
Date: Date:
---------------------------- ----------------------------
<PAGE> 18
EXHIBIT "A"
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
QUANTITY EQUIPMENT DESCRIPTION (Include Make, Model, Serial No. and All Attachments)
- ------------------------------------------------------------------------------------------
VENDOR: INTECOM, INC.
LOCATION: 11165 Mill Valley Road, Omaha, NE
SOFTGEN
-------
<S> <C>
1 No Part 2 days of On-site research design,
& information gathering
1 No Part 23 days of software development based on
accessibility of the RS/6060 & AS/400
1 No Part 12 days of on-site installation & monitorin
1 No Part # 1 day of on-site training
1 No Part # Travel costs based on 3 trips to Omaha's airfare based on
7-day advanced ticketing
1 No Part Per diem expenses for hotel and meals
for 3 trips to Omaha
1 No Part Miscellaneous per diem expenses for 3 tr to Omaha
1 No Part # 2 years of warranty & maintenance
<CAPTION>
IBM
---
<S> <C>
1 Feature 2617 AS/400 Ethernet Controller
<CAPTION>
EN POINTE
---------
<S> <C>
1 87G7187 TCP/IP, 2.1.1,D,3,PROG TOOL KIT
1 993-0242-250 IQ Admin, SMAC, Intecom E, 3 LMS
Embedded
IQ Admin, ProPAK & BillBAK Integration
1 993-0030-060 Embedded
1 520-1100-004 PDI-1000S DTE, Dove Gray
1 993-0079-100 Cable
993-0242-420 V2.1/Digital Sound Integration Intercom
E-3 LMS, Embedded
1 No Part # Installation/Implementation
<CAPTION>
0 Host Interface Equipment
------------------------
<S> <C>
1 993-0078-100 RS/6000 Modem Kit
1 993-0078-101 Cartridge, 112 M/365 FT 8 MM Pkg 10
1 993-0015-639 Laser Printer
4 520-1000-004 PDI 1C00S DCE, Dove Gray
4 993-0079-100 Cable Grap, 0A1/PD1 to AP
- ------------------------------------------------------------------------------------------
</TABLE>
BANKERS LEASING ASSOCIATION, INC. CARDMEMBER PUBLISHING CORPORATION
By: By:
------------------------------ ------------------------------
Name: Name:
---------------------------- ----------------------------
Title: Title:
--------------------------- ---------------------------
Date: Date:
---------------------------- ----------------------------
<PAGE> 19
CardMember Publishing
- --------------------------------------------------------------------------------
Corporation
- --------------------------------------------------------------------------------
ADDENDUM NO. 1
TO
MASTER LEASE AGREEMENT DATED AS OF MAY 7, 1996
BETWEEN
BANKERS LEASING ASSOCIATION, INC., AS LESSOR
AND
CARDMEMBER PUBLISHING CORPORATION, AS LESSEE
WITH RESPECT TO EQUIPMENT SCHEDULE NO. 1
This addendum is supplemental to and made a part of the Master Lease Agreement
dated as of May 7, 1996 and Equipment Schedule No. 1 related thereto. Lessor and
Lessee hereby agree that the Master Lease Agreement is hereby amended with
respect to Equipment Schedule No. 1 only as follows:
9. USE AND RETURN OF EQUIPMENT
In line 4 thereof after the phrase "maintained under the" delete the word "best"
with no replacement therefor:
10. RISK OF LOSS AND DAMAGE
Add to end of subsection (c) after "in connection with such Loss." the
following"Notwithstanding the foregoing, LESSOR shall extend LESSEE'S due date
for obligations incurred under this subsection (c) to a date forty-five (45)
days subsequent to the date of an Event of Loss for the purpose of allowing
LESSEE time to file any related insurance claims and to make progress toward
receiving payment on any such claims. Furthermore, LESSEE may request that
LESSOR approve an additional forty-five (45) day extension provided that LESSEE
is diligently pursuing the payment of any such insurance claims and that said
approval shall be at LESSOR'S sole discretion. It is furthermore acknowledged
that this accommodation by LESSOR is an attempt to provide LESSEE with a better
matching of LESSEE'S obligations to LESSOR with the receipt of related insurance
proceeds, however, LESSEE acknowledges that its obligations to LESSOR are in no
way conditioned or tied to LESSEE's receipt of any insurance proceeds and that
the amounts due hereunder shall be paid in all circumstances within 90 days of
the date of an Event of Loss.
24. MISCELLANEOUS
Add to the end of subsection (2) to subsection (c) after "...Profit and Loss
Statement of LESSEE." the following "However, provided LESSEE is not in default
under the LEASE, LESSEE shall not be obligated to provide LESSOR with Financial
statements during periods where the disclosure of such information would be
prohibited by securities law.
Delete subsection (h) in its entirety with no replacement therefore.
All other terms and conditions of the Master Lease Agreement remain intact and
unchanged.
IN WITNESS WHEREOF, the parties hereto, by their authorized signatories, have
executed this Addendum No. 1 as of May 7, 1996.
LESSOR: LESSEE:
BANKERS LEASING ASSOCIATION, INC. CARDMEMBER PUBLISHING CORPORATION
BY: BY:
------------------------------ ------------------------------
NAME: NAME:
---------------------------- ----------------------------
TITLE: TITLE:
--------------------------- ---------------------------
DATE: DATE:
---------------------------- ----------------------------
- --------------------------------------------------------------------------------
680 Washington Blvd., Suite 1100 11165 Mill Valley Road
Stamford, Connecticut 06901-3709 Omaha, Nebraska 68154-3933
(203) 324-7635 FAX (203) 964-0239 (402) 493-8498 FAX (402) 493-8355
- --------------------------------------------------------------------------------
<PAGE> 20
RIDER NO. 1
TO EQUIPMENT SCHEDULE NO. 1 TO THAT CERTAIN MASTER LEASE AGREEMENT BETWEEN
BANKERS LEASING ASSOCIATION, INC., AS LESSOR, AND CARDMEMBER PUBLISHING
CORPORATION, AS LESSEE, DATED AS OF MAY 7, 1996.
LESSEE, AT ITS SOLE OPTION, MAY ELECT TO TERMINATE THIS LEASE EFFECTIVE
THE FINAL DAY OF THE 48 MONTH OF THE BASE LEASE TERM ("THE TERMINATION
DATE") BY PAYING TO LESSOR THE TERMINATION FEE AS DETERMINED BELOW AND
RETURNING ALL, BUT NOT LESS THAN ALL, OF THE EQUIPMENT TO LESSOR ON OR
BEFORE THE TERMINATION DATE IN ACCORDANCE WITH THE RETURN PROVISIONS OF
THE LEASE. TO ELECT THIS OPTION LESSEE MUST NOTIFY LESSOR AT LEAST TWO
HUNDRED TEN (210) DAYS PRIOR TO THE TERMINATION DATE VIA CERTIFIED MAIL
OF LESSEE'S DESIRE TO ELECT SAID OPTION.
TERMINATION FEE CALCULATION: LESSEE SHALL PAY TO LESSOR ON OR BEFORE
THE TERMINATION DATE AN AMOUNT EQUAL TO 17.85% OF THE EQUIPMENT'S
ORIGINAL COST PLUS APPLICABLE SALES TAX AND ALL ACCRUED BUT UNPAID LATE
CHARGES, INTEREST TAXES, PENALTIES AND/OR ANY AND ALL OTHER SUMS DUE
AND OWING UNDER THE LEASE.
THIS OPTION SHALL BE NULL AND VOID IF ANY OF THE TERMS AND CONDITIONS
IN THIS ADDENDUM ARE NOT SPECIFICALLY ADHERED TO OR IF AN EVENT OF
DEFAULT HAS OCCURRED OR IS CONTINUING UNDER THIS LEASE.
IN WITNESS WHEREOF the parties hereto, by their authorized signatories, have
executed this Rider at the date set forth below their respective signatures.
LESSEE: LESSOR:
CARDMEMBER PUBLISHING CORPORATION BANKERS LEASING ASSOCIATION, INC.
BY: BY:
------------------------------ ------------------------------
NAME: NAME:
---------------------------- ----------------------------
TITLE: TITLE:
--------------------------- ---------------------------
DATE: DATE:
---------------------------- ----------------------------
<PAGE> 21
BANKERS
CardMember Publishing Corporation
655 Washington Boulevard, Suite 1000
Stamford, CT 06901
Ladies and Gentlemen:
Reference is made to that Rider No. 1 to Equipment Schedule No. 1 to the Master
Lease Agreement dated as of May 7, 1996, between CardMember Publishing
Corporation as Lessee, and Bankers Leasing Association, Inc. as Lessor (the
"Rider"). Notwithstanding anything to the contrary contained therein, and to the
limited extent hereof, this Letter Agreement amends and supersedes the said
Rider and is hereby incorporated by reference therein.
Lessee and Lessor are desirous of eliminating the termination option provided
for in the Rider. Therefore, Lessee and Lessor agree to delete the Rider in its
entirety with no replacement therefore.
All other terms and conditions contained in the Rider shall remain unchanged.
The said Rider is hereby amended to incorporate the foregoing revisions. Please
acknowledge your acceptance of same by your authorized signature below and
return the original of this Letter Agreement to Bankers Leasing Association,
inc. within five (5) days from the date hereof.
A FACSIMILE SHALL BE DEEMED AN ORIGINAL
Very truly yours,
Bankers Leasing Association, Inc.
READ, ACKNOWLEDGED AND ACCEPTED THIS
- --------------------------------- 1 DAY OF MAY, 1996.
CARDMEMBER PUBLISHING CORPORATION
BY:
-----------------------------
NAME:
-----------------------------
TITLE:
-----------------------------
- --------------------------------------------------------------------------------
BANKERS Direct Leasing 800/695-8898 - 714/833-1933 - Fax 714/833-2933
A division of Bankers Leasing Association, Inc.
3931 MacArthur Blvd., Suite 102, Newport Beach, CA 92660
<PAGE> 1
EXHIBIT 10.9
AMENDED PROMISSORY NOTE
September 9, 1994
$133,333.33
Stamford, Connecticut
FOR VALUE RECEIVED CARDMEMBER PUBLISHING CORPORATION, a Delaware
corporation (the "Maker"), hereby unconditionally promises to pay to the order
of THOMAS ST. DENIS of Stamford, Connecticut, the principal sum of ONE HUNDRED
THIRTY-THREE THOUSAND THREE HUNDRED THIRTY-THREE DOLLARS AND 33/100
($133,333.33) together with interest earned thereon payable monthly in arrears
at the rate of twelve percent (12%) per annum. All amounts of principal and
unpaid interest thereon shall be due and payable on February 28, 1997.
In the event that the undersigned defaults in the payment of principal
or interest under this Note, the holder of this Note shall be entitled to
recover from the undersigned all costs of collection including reasonable
attorneys' fees.
In the event of a default in the payment of any installment of
principal or interest under this Note, and if such default continues for a
period of 30 days after written notice of such
<PAGE> 2
default, at the option of the holder hereof, all amounts due under this Note
shall become immediately due and payable.
The payment of principal and interest under this Note are
subordinated to payments of principal and interest under the Credit Agreement
dated as of September 9, 1994 among the Maker, the Lenders thereunder, and
Brown Brothers Harriman & Co., as Agent for the Lenders.
Dated at Stamford, Connecticut as of this 9th day of September, 1994.
CARDMEMBER PUBLISHING
CORPORATION
By /s/ Gary A. Johnson
--------------------------------
Its President
<PAGE> 1
EXHIBIT 10.10
AMENDED PROMISSORY NOTE
September 9, 1994
Stamford, Connecticut $133,333.33
FOR VALUE RECEIVED CARDMEMBER PUBLISHING CORPORATION, a Delaware
corporation (the "Maker"), hereby unconditionally promises to pay to the order
of GARY JOHNSON of Stamford, Connecticut, the principal sum of ONE HUNDRED
THIRTY-THREE THOUSAND THREE HUNDRED THIRTY-THREE DOLLARS AND 33/100
($133,333.33) together with interest earned thereon payable monthly in arrears
at the rate of twelve percent (12%) per annum. All amounts of principal and
unpaid interest thereon shall be due and payable on February 28, 1997.
In the event that the undersigned defaults in the payment of principal
or interest under this Note, the holder of this Note shall be entitled to
recover from the undersigned all costs of collection including reasonable
attorneys' fees.
In the event of a default in the payment of any installment of
principal or interest under this Note, and if such default continues for a
period of 30 days after written notice of such
<PAGE> 2
default, at the option of the holder hereof, all amounts due under this Note
shall become immediately due and payable.
The payment of principal and interest under this Note are
subordinated to payments of principal and interest under the Credit Agreement
dated as of September 9, 1994 among the Maker, the Lenders thereunder, and
Brown Brothers Harriman & Co., as Agent for the Lenders.
Dated at Stamford, Connecticut as of this 9th day of September, 1994.
CARDMEMBER PUBLISHING
CORPORATION
By /s/ THOMAS ST. DENIS
---------------------------------
Its Secretary
<PAGE> 1
Exhibit 10.11
AMENDED AND RESTATED CREDIT AGREEMENT dated as of April 8, 1996 among
CARDMEMBER PUBLISHING CORPORATION, a Delaware corporation (the "Company"), the
lenders parties hereto (each a "Lender" and, collectively, the "Lenders"), and
BROWN BROTHERS HARRIMAN & CO., as agent for the Lenders (in such capacity, the
"Agent")
WITNESSETH
WHEREAS, the Company, the Lenders and the Agent entered into a Credit
Agreement dated as of September 9, 1994 (as amended, supplemented or modified
from time to time, the "Credit Agreement"); and
WHEREAS, the Company, the Lenders and the Agent wish to amend and
restate such Credit Agreement;
NOW, THEREFORE, in consideration of the premises and agreements herein
contained, the parties hereto agree to amend and restate such Credit Agreement
as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:
"Affiliate": shall mean as to any Person, (a) any Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person or (b) any Person who is a director or officer (i) of such
Person or (ii) of any Person described in clause (a) above. Anything herein to
the contrary notwithstanding, each of the Shareholders, their spouses, their
parents, children and siblings and any spouse or child of their parents,
children and siblings and any Person controlled by any of the foregoing shall be
deemed for purposes of this Agreement to be an Affiliate of the Company and each
of its Subsidiaries.
"Agreement": shall mean this Amended and Restated Credit Agreement, as
amended, restated, supplemented or otherwise modified from time to time.
"Bankruptcy Event": shall mean one or more of the following events: (a)
the Company or any of its Subsidiaries shall commence any case, proceeding or
other action (1) 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 it, or
seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition or
other relief with respect to it or its debts, or (2) seeking appointment of a
receiver, trustee, custodian or other similar official for it or for all or any
substantial part of its assets, or the Company or any of its
<PAGE> 2
Subsidiaries shall make a general assignment for the benefit of its creditors;
or (b) there shall be commenced against the Company or any of its Subsidiaries
any case, proceeding or other action of a nature referred to in clause (a) above
which results in the entry of an order for relief or any such adjudication or
appointment; or (c) the Company or any of its Subsidiaries shall take any action
in furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (a) or (b) above; or (d) the Company or
any of its Subsidiaries shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due.
"Base Rate": shall mean, with respect to any day, the higher of (i) rate
of interest established by Brown Brothers Harriman & Co. as its base commercial
lending rate for such day and (ii) the Federal Funds Rate for such day plus 0.5%
per annum.
"Borrowing": shall mean a borrowing hereunder consisting of Loans made
at the same time by the Lenders to the Company pursuant to Section 2.
"Business Day": shall mean a day on which commercial banks in New York,
New York are not authorized or required by law or executive order to close.
"Capitalized Lease": shall mean, as to any Person, (a) any lease of
property, real or personal, if the then present value of the minimum rental
commitment thereunder should, in accordance with GAAP, be capitalized on a
balance sheet of such Person, and (b) any other such lease the obligations under
which are capitalized on the balance sheet of such Person.
"CERCLA": shall have the meaning given to such term in subsection 5.15.
"Closing Date": shall mean the date on which the initial Loans hereunder
are made.
"Code": shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": shall mean any property in which the Collateral Agent, for
the benefit of the Agent and the Lenders, has been granted a security interest
pursuant to the Security Agreement, the Shareholder Pledge Agreement or a
Subsidiary Security Agreement.
"Collateral Agent": shall mean Brown Brothers Harriman & Co., in its
capacity as collateral agent.
"Consolidated Net Income": shall mean, with respect to any Person for
any period, the consolidated net income (or loss) of such Person and its
Subsidiaries for such period, determined in accordance with GAAP.
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<PAGE> 3
"Control": shall mean, with respect to any Person, the power, direct or
indirect, to vote 5% or more of the securities having ordinary voting power for
the election of directors (or persons performing similar functions) of such
Person or to direct or cause the direction of the management and policies of
such Person whether through ownership of voting securities, by contract or
otherwise. Notwithstanding any provision herein to the contrary, Thomas St.
Denis shall not be deemed to control the Company for purposes of this
definition.
"Dollars" and "$": shall mean lawful currency of the United States of
America.
"Environmental Laws": shall mean any and all federal, state, local and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment including, without limitation, ambient air, surface water, ground
water, or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes.
"ERISA": shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA Group": shall mean the Company and all members of a controlled
group of corporations and all trades or businesses (whether or not incorporated)
under common control which, together with the Company, are treated as a single
employer under Section 4001 of ERISA or Section 414(b), (c), (m), (n) or (o) of
the Code.
"Federal Funds Rate": shall mean, for any day, the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three Federal funds brokers of
recognized standing selected by it.
"GAAP": shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"Governmental Authority": shall mean any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
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<PAGE> 4
"IMPAO": shall mean IMPAQ Marketing Corporation, a Delaware corporation
wholly-owned by the Company.
"Lending Office": shall mean, with respect to each Lender the office
specified opposite such Lender's name on Schedule I or such other office as such
Lender may designate in writing from time to time to the Company and the Agent.
"Lien": shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, security interest, lien (statutory or other)
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement, any Capitalized Lease having
substantially the same economic effect as any of the foregoing, and the filing
of any financing statement under the Uniform Commercial Code or comparable law
of any jurisdiction in respect of any of the foregoing).
"Loan": shall mean a loan by a Lender pursuant to subsection 2.1.
"Maximum Amount": shall mean $3,000,000.
"Multiemployer Plan": shall mean a Plan which is a multiemployer plan as
defined in Section 4001(a) (3) of ERISA.
"Note": shall mean an amended and restated demand promissory note of the
Company payable to the order of a Lender, evidencing the Loans made by such
Lender as provided for herein, substantially in the form of Exhibit A, and any
promissory note or notes of the Company issued in substitution thereof.
"Notice of Borrowing": shall mean an irrevocable notice from the Company
to the Agent, substantially in the form of Exhibit B, pursuant to which the
Company requests a Borrowing.
"Obligations": shall mean any and all of the debts, obligations and
liabilities of the Company to the Lenders or the Agent provided for or arising
under this Agreement or the Related Documents to which the Company is a party
(including, without limitation, the Obligation to repay all Loans and to pay
interest thereon or fees related thereto and to pay all costs of collection,
including the fees and disbursements of counsel), whether now existing or
hereafter arising, voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, and whether or not from time to time
decreased or extinguished and later increased, created or incurred.
"PBGC": shall mean the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA or any successor thereto.
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<PAGE> 5
"Percentage of Maximum Amount": shall mean, with respect to any Lender,
the percentage of the Maximum Amount represented by such Lender's right to make
Loans to the Company.
"Person": shall mean an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Plan": shall mean any employee benefit plan which is covered by Title
IV of ERISA or is subject to the funding requirements under Section 412 of the
Code (or the corresponding provisions of ERISA) and in respect of which the
Company or any member of the ERISA Group is (or, if such plan were terminated at
such time, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"Quarterly Payment Dates": shall mean the last day of each February,
May, August and November of each year, commencing May 31, 1996.
"RCRA": shall have the meaning given to such term in subsection 5.15.
"Related Documents": shall mean each Note, the Security Agreement, the
Shareholder Guarantee, the Shareholder Pledge Agreement, each Subsidiary
Guaranty and each Subsidiary Security Agreement.
"Reportable Event": shall mean any of the events set forth in Section
4043(b) of ERISA.
"RSVP": shall mean RSVP Publishing Limited, a company organized under
the laws of England and Wales.
"Security Agreement": shall mean the Security Agreement in substantially
the form of Exhibit C between the Company and the Collateral Agent.
"Shareholders": shall mean Gary Johnson, Thomas St. Denis, Dennis
Walker, or any of them, as the context may require.
"Shareholder Guarantee": shall mean the Guarantee in substantially the
form of Exhibit D executed by each of the Shareholders, on a joint and several
basis (and acknowledged by their respective spouses, guaranteeing the payment of
the Obligations.
"Shareholder Pledge Agreement": shall mean the Pledge Agreement in
substantially the form of Exhibit E among the Shareholders and the Collateral
Agent securing the Shareholder Guarantee.
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<PAGE> 6
"Single Employer Plan": shall mean any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"Subsidiary": shall mean as to any Person, a corporation or other
business entity of which shares of stock or other ownership interests having
ordinary voting power to elect a majority of the board of directors or other
managers of such corporation or other business entity are at the time owned,
directly or indirectly through one or more intermediaries, by such Person.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
the Company.
"Subsidiary Guarantee": shall mean the Guarantee in substantially the
form of Exhibit F executed by a Subsidiary of the Company guaranteeing payment
of the Obligations.
"Subsidiary Security Agreement": shall mean the Security Agreement in
substantially the form of Exhibit G between a Subsidiary of the Company and the
Collateral Agent securing such Subsidiary's obligations under a Subsidiary
Guarantee.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the Related Documents or any certificate or other document made or
delivered pursuant hereto or thereto.
(b) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section, subsection,
schedule and exhibit references are to this Agreement unless otherwise
specified.
(c) Defined terms in this Agreement shall include in the singular
number, the plural and in the plural number, the singular. The correlative of
any term defined in this Agreement shall, unless the context otherwise requires,
have the same meaning as such defined term.
(d) Unless the context otherwise requires, any pronoun shall include the
corresponding masculine, feminine and neuter forms.
(e) References in this Agreement to any other agreement, document or
instrument shall, unless the context otherwise requires, include such other
agreement, document or instrument as the same may be from time to amended,
restated, supplemented or otherwise modified.
1.3 Accounting Principles. (a) As used herein and in the Related
Documents, and any other certificate or other document made or delivered
pursuant hereto or thereto, accounting terms relating to the Company not defined
in subsection 1.1 shall have the respective meanings given to them under GAAP.
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<PAGE> 7
(b) Unless (i) otherwise required under applicable accounting rules,
(ii) required in the case of a filing of a registration statement with the
Securities and Exchange Commission in connection with an initial public offering
of securities by the Company or (iii) the Company and its firm of independent
accountants of nationally recognized standing acceptable to the Lenders deem a
change to be appropriate, the Company shall not make any change in the
accounting treatment utilized by the Company under GAAP without the consent of
the Lenders; provided, that if any of clause (i), (ii) or (iii) is applicable,
the Company will notify the Lenders prior thereto and advise the Lenders of the
effect, if any, such change will have on the presentation of the Company's
financial statements and the financial computations required hereunder.
SECTION 2. CREDIT FACILITIES
2.1 Loans. From time to time after the Closing Date, the Company may
request Loans, provided, that, without limiting in any manner any Lenders'
discretion to make Loans available to the Company, the sum of all outstanding
Loans immediately after the making of each Loan shall not exceed the Maximum
Amount.
2.2 Manner of Borrowing. The Company shall give the Agent a duly
completed Notice of Borrowing not later than 10:00 a.m., New York City time, on
the Business Day immediately preceding the date of such Borrowing. Each such
Notice of Borrowing shall be irrevocable and shall specify: (i) the amount of
such Borrowing, which shall be an amount of $100,000 or a multiple thereof; and
(ii) the date of such Borrowing, which shall be a Business Day. Each Lender will
review each such request on a case by case basis. The decision to make a Loan
shall be made by such Lender in its absolute and sole discretion and
irrespective of whether or not the Company is in compliance with any of the
terms or conditions of this Agreement or any of the Related Documents. Each
Lender reserves the right to summarily refuse any request for a Loan without any
review. No Borrowing shall be made unless all of the Lenders agree to
participate in such Borrowing. This AGREEMENT DOES NOT CONSTITUTE A COMMITMENT,
AND EACH LENDER SHALL HAVE NO OBLIGATION HEREUNDER, TO ISSUE OR GRANT ANY LOANS.
If each Lender has agreed to participate in such Borrowing, each Borrowing shall
be made ratably from the Lenders in proportion to each Lender's Percentage of
the Maximum Amount. Upon receipt by the Agent of a Notice of Borrowing as
aforesaid, the Agent shall promptly advise each Lender of the details thereof.
2.3 Disbursement of Loans. Upon notification from the Agent that all of
the Lenders have agreed to a Borrowing requested by the Company pursuant to
subsection 2.2, each Lender shall make the Loans to be made by it available by
transferring the amount thereof in Dollars to the Agent not later than 12:00
noon, New York City time, on the relevant borrowing date. The Agent shall make
the amounts received from the Lenders immediately available to the Company by
crediting the amount thereof on the date of borrowing to the Company's account
with the Agent.
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<PAGE> 8
2.4 Notes. The Loans made by each Lender shall be evidenced by a Note.
Each Lender will note on its internal records the date and amount of each Loan
made by such Lender, the date and amount of each repayment of principal thereof
and will, prior to any transfer of its Note, endorse on the reverse side thereof
the outstanding principal amount of the Loans evidenced thereby. Failure to so
record any such information shall not alter the obligations of the Company under
this Agreement or such Note.
2.5 Repayment of Principal.
(a) EACH LOAN SHALL BE REPAYABLE ON THE EARLIER OF (i) DEMAND, (ii) THE
OCCURRENCE OF A BANKRUPTCY EVENT, OR (iii) TERMINATION OF THIS AGREEMENT BY THE
COMPANY PURSUANT TO SUBSECTION 2.7. In addition, if at any time the aggregate
outstanding principal amount of all Loans exceeds the Maximum Amount, then the
Company shall immediately pay to the Agent for the account of the Lenders the
amount equal to such excess, together with accrued interest thereon.
(b) Anything herein to the contrary notwithstanding, the Company may at
any time and from time to time repay the then outstanding Loans comprising any
Borrowing, in whole or in part, without premium or penalty, upon not less than
one (1) Business Day's irrevocable notice to the Agent, specifying the date and
amount of repayment and, if more than one Borrowing is outstanding, which
Borrowing is to be repaid. Upon receipt of such notice the Agent shall promptly
notify each Lender thereof. Any notice of repayment given by the Company shall
obligate the Company to make the repayment specified in such notice on the date
specified therein. Accrued interest on any amount repaid in accordance with the
terms hereof shall, in accordance with subsection 2.6, be payable on the date
such repayment is required to be made as provided herein. Any partial repayment
of a Borrowing shall be in an aggregate principal amount of $100,000 or whole
multiples of $100,000 in excess thereof, and shall not result in the remaining
amount of such Borrowing being less than $100,000.
2.6 Payment of Interest. The Company shall pay interest on the unpaid
principal amount of each Loan from and including the date of such Loan to but
not including the date on which such Loan is paid in full at a fluctuating rate
per annum equal to the Base Rate in effect from time to time plus the applicable
margin payable quarterly in arrears on each Quarterly Payment Date and on the
date such Loan is paid in full. The applicable margin referred to in the
preceding sentence shall be 1.50%, provided, that if the Company's Consolidated
Net Income for the fiscal year ending June 30, 1996 is greater than or equal to
$1,200,000, then the applicable margin shall be 1.00% (such change to be
effective from and including June 30, 1996 so long as the Company delivers its
consolidated financial statements and accompanying certificate to the Agent
pursuant to subsection 6.1(a), provided that if the Company shall fail to
deliver such financial statements on a timely basis, such change shall be
effective as of the date on which the Company delivers such financial
statements).
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<PAGE> 9
Notwithstanding the foregoing, if the Company shall fail to pay any installment
of principal of or interest on any Loan when due, or shall fail to perform any
of its other obligations under this Agreement or any Related Document, then the
Company shall pay interest as provided in subsection 7.3. The Agent agrees to
promptly notify the Company and the Lenders of each change in the Base Rate,
provided that any failure to give such notice shall not affect any such change
or relieve the Company of any of its Obligations except that the Company shall
not be required to pay interest as provided in subsection 7.3 in the event that
the Company pays less than the full amount of interest when due solely as a
result of the Agent's failure to provide such notice of a change in the Base
Rate to the Company.
2.7 Termination. The Company may terminate this Agreement upon not less
than 30 days' prior written notice to the Agent and the Lenders at any time,
provided, that on the date specified by the Company for termination all amounts
due and payable to the Agent, the Collateral Agent and the Lenders under this
Agreement and the Related Documents shall have been paid in full. No termination
of this Agreement, for whatever reason, shall affect the obligations and
liabilities of the Company hereunder which arose prior to such termination or
the Agent's, the Collateral Agent's or any Lenders' rights, powers and remedies
with respect thereto.
SECTION 3. FEES; PAYMENTS
3.1 Fees.
(a) Amendment Fee. The Company shall pay to the Agent, for the account
of the Lenders, on the Closing Date an amendment fee equal to $25,000.
(b) Arrangement Fee. The Company shall pay to the Agent, for its own
account, an arrangement fee from and including the Closing Date to and including
the later of (x) the date of termination of this Agreement in accordance with
the terms hereof and (y) the date on which all Loans are paid in full, computed
at the rate of 1.0% per annum of the Maximum Amount. Such fee shall be payable
quarterly in arrears on each Quarterly Payment Date and on the later of the
dates specified in clauses (x) and (y) of the preceding sentence. The Agent may
not change the amount of the arrangement fee unless it provides the Company with
not less than 90 days prior written notice of its intention to do so.
3.2 Computation of Interest and Fees. All interest and fees shall be
calculated on the basis of a 360-day year and paid for the actual days elapsed.
Any change in the interest rate on a Loan resulting from a change in the Base
Rate shall become effective as of the opening of business on the day on which
such change is announced. In computing the amount of interest or fees payable in
respect of any period, the first day of such period shall be included and the
last day of such period shall be excluded.
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<PAGE> 10
3.3 Pro Rata Treatment and Payments. Each Borrowing by the Company from
the Lenders and each payment by the Company on account of any fee (other than
fees for the account of the Agent) shall be made pro rata according to each
Lender's Percentage of the Maximum Amount, except as otherwise expressly
provided herein. Each payment by the Company on account of principal of and
interest on the Loans shall be made pro rata according to the respective
outstanding principal amounts of such Loans held by each Lender. All payments to
be made by the Company on account of principal, interest and fees shall be made
without set-off or counterclaim and shall be made to the Agent, for the account
of the Lenders (except for fees for the account of the Agent), at the Agent's
office designated for such purpose, in Dollars and in immediately available
funds not later than 12:00 noon, New York City time, on the date on which such
payment shall become due. Any payment received after such time on any Business
Day shall be deemed to have been received on the next Business Day. The Agent
shall distribute such payments to the Lenders in like funds on the day of
receipt or deemed receipt of such payments. If any payment hereunder becomes due
and payable on a day other than a Business Day, such payment shall be extended
to the next succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension.
3.4 Taxes. (a) All payments made by the Company under this Agreement and
the Notes shall be made free and clear of, and without reduction for or on
account of, any present or future taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding, in the case of
the Agent and each Lender, net income and franchise taxes imposed on it by the
jurisdiction under the laws of which it is organized or in which it has its
principal office or its Lending Office or any political subdivision or taxing
authority thereof or therein (such non-excluded taxes being called "Taxes"). If
any Taxes are required to be withheld from any amounts payable to the Agent or
any Lender hereunder or under the Notes, the amounts so payable shall be
increased to the extent necessary to yield to the Agent or such Lender (after
payment of all Taxes) interest or any such other amounts payable hereunder or
under the Notes at the rates or in the amounts specified in this Agreement and
the Notes. Whenever any Taxes are payable by the Company, as promptly as
possible thereafter, the Company shall send to the Agent for its own account or
for the account of each Lender, as the case may be, a certified copy of an
original official receipt showing payment thereof. If the Company fails to pay
Taxes when due to the appropriate taxing authority or fails to remit to the
Agent the required receipts or other required documentary evidence, the Company
shall indemnify and hold harmless the Agent and the Lenders against, and
reimburse the Agent and the Lenders upon demand for, any incremental taxes,
interest or penalties that may become payable by the Agent or any Lender as a
result of any such failure.
(b) Each Lender will promptly notify the Company and the Agent upon
becoming aware of any event which will cause the Company to pay any additional
amount pursuant to paragraph (a) above.
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3.5 Assumed Payments. Unless the Agent shall have been notified by a
Lender or the Company prior to the date on which such Lender or the Company is
scheduled to make payment to the Agent of (in the case of a Lender) the proceeds
of a Loan to be made by it hereunder or (in the case of the Company) a payment
to the Agent for account of one or more of the Lenders hereunder (such payment
being herein called the "Required Payment"), which notice shall be effective
upon receipt, that it does not intend to make the Required Payment to the Agent,
the Agent may assume that the Required Payment has been made and may, in
reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient(s) on such date and, if such Lender
or the Company (as the case may be) has not in fact made the Required Payment to
the Agent, the recipient(s) of such payment shall, on demand, repay to the Agent
the amount so made available. In addition, the party that failed to make the
Required Payment shall, on demand, pay interest to the Agent for its own account
in respect of each day during the period commencing on the date such amount was
so made available by the Agent until the date the Agent recovers such amount at
a rate equal to the sum of the Base Rate plus 5.50% per annum; provided,
however, that if the party that failed to make the Required Payment is a Lender,
such interest shall accrue at the Federal Funds Rate for the first three
Business Days such amount is unpaid and thereafter at the Base Rate plus 2% per
annum.
3.6 Capital Adequacy. (a) In the event that any Lender shall have
determined that the adoption or implementation of, or any change in, any law,
rule, regulation or guideline regarding capital adequacy, capital maintenance or
similar requirement or any change in the interpretation or application thereof
or compliance by any Lender or any corporation controlling any Lender with any
request, guideline, policy or directive regarding capital adequacy (whether or
not having the force of law) from any central bank or other Governmental
Authority, has or would have the effect of reducing the rate of return on such
Lender's or such Lender's controlling corporation's capital as a consequence of
its obligations hereunder or its Loans to a level below that which such Lender
or such Lender's controlling corporation could have achieved but for such
adoption, implementation, change or compliance (taking into consideration such
Lender's or such Lender's controlling corporation's policies with respect to
capital adequacy), then from time to time, upon demand by such Lender to the
Company (with a copy to the Agent), the Company shall pay to such Lender such
additional amount or amounts as will compensate such Lender for such reduction.
(b) Any such Lender will promptly notify the Company and the Agent upon
becoming aware of any event which will cause it to demand payment of any
additional amount pursuant to paragraph (a) above and shall furnish to the
Company a certificate containing a determination made in good faith of such
additional amount and the justification therefor and showing in reasonable
detail the computation thereof. Determinations and allocations by any Lender of
any additional amounts payable by the Company pursuant to paragraph (a) of this
subsection 3.6 shall be conclusive absent manifest error.
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(c) If any additional amount becomes or will in the future become
payable for the account of any Lender under paragraph (a) of this subsection
3.6, then such Lender will (if so requested by the Company, but without
prejudice to the provisions of this subsection 3.6) consult with the Company and
the Agent with a view to agreeing upon a mutually acceptable alternative
arrangement including the transfer of such Lender's Lending Office to another
jurisdiction, if, in its sole discretion, such transfer is not in any way
disadvantageous to it or contrary to its policies) which will avoid or minimize
the payment of such additional amount in the future and which is not prejudicial
to it.
(d) The agreements contained in this subsection 3.6 shall survive for a
period of one year following repayment of the Obligations.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Effectiveness. This Agreement shall be effective upon
the satisfaction of each of the following conditions precedent:
(a) This Agreement. The Agent shall have received, with copies for each
Lender, a counterpart hereof duly executed by the Company;
(b) Notes. The Agent shall have received the Notes;
(c) Legal Opinions of Counsel to the Company. The Agent shall have
received, with copies for each Lender, an executed legal opinion, addressed to
the Agent and the Lenders, of Diserio Martin O'Connor & Castiglioni, counsel to
the Company and the Shareholders, substantially in the form of Exhibit H;
(d) Corporate Proceedings. The Agent shall have received, with a copy
for each Lender, a copy of resolutions, in form and substance reasonably
satisfactory to the Agent, of the Board of Directors of the Company authorizing
the execution, delivery and performance by it of this Agreement and the Notes,
certified by the Secretary or an Assistant Secretary of the Company, which
certificate shall state that the resolutions thereby certified are in full force
and effect and have not been amended, modified, revoked or rescinded as of the
date of such certificate;
(e) Good Standing Certificates. The Agent shall have received, with a
copy for each Lender, a certificate from the Secretary of State, or other
appropriate authority, evidencing the good standing of the Company in its
jurisdiction of incorporation;
(f) Corporate Documents. The Agent shall have received, with a copy for
each Lender, a copy of (i) the charter of the Company, and all amendments
thereto, certified by the Secretary of State, or other appropriate authority, of
the jurisdiction of its incorporation, and (ii) the by-laws of the Company,
certified by its Secretary or an Assistant Secretary;
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(g) Incumbency Certificate. The Agent shall have received, with an
executed counterpart for each Lender, a certificate of the Secretary or an
Assistant Secretary of the Company certifying as to the incumbency and
signatures of the officers of the Company executing this Agreement and the Notes
and any certificate or other document to be delivered by it pursuant hereto and
thereto, together with evidence of the incumbency of such Secretary or Assistant
Secretary;
(h) Officer's Certificate. The Agent shall have received, with a copy
for each Lender, a certificate from an appropriate officer of the Company
certifying that (i) the representations and warranties contained in Section 5
and in the Related Documents are accurate and complete and (ii) the Company has
not failed to perform any of its obligations under this Agreement or any Related
Document;
(i) Fees and Expenses. The Agent shall have received all compensation
and other amounts payable to it, including, without limitation, all amounts
payable under subsections 3.1(a), 3.1(b) and 9.5(a), on or prior to the date of
the initial Loan;
(j) Collateral. The Collateral Agent shall have received (i) evidence
that all filings and other action necessary to perfect the Collateral Agent's
security interest in the Collateral, on behalf of the Agent and the Lenders,
have been made and the Lien perfected by such filings has priority over any
other Liens except as otherwise provided herein, and (ii) to the extent
Collateral is maintained on any of the leased premises listed on Schedule 4.1,
an agreement from the landlord thereof confirming that such landlord has
subordinated its landlord lien in the Company's personal property to the
security interests of the Collateral Agent, for the benefit of the Agent and the
Lenders, and that such landlord will provide the Collateral Agent with
reasonable access to such facility to exercise, to the extent permitted by law,
the Collateral Agent's remedies.
(k) Supporting Documents. The Agent shall have received, with copies for
each Lender, such other documents, certificates, opinions or financial or other
information as the Agent or any of the Lenders may reasonably request; and
(l) Other. All corporate and other proceedings, and all documents,
instruments and other legal matters in connection with the transactions
contemplated by this Agreement and the Related Documents, shall be reasonably
satisfactory in form and substance to the Agent and its counsel. The Company
hereby instructs the counsel referred to in subsection 4.1(c) to prepare its
legal opinion and to deliver it to the Agent for the benefit of the Agent and
each Lender.
SECTION 5. REPRESENTATIONS AND WARRANTIES
The Company hereby makes the following representations and warranties to
the Agent and to each Lender.
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5.1 Financial Condition. (a) The consolidated balance sheets of the
Company as at June 30, 1990, 1991, 1992, 1993 and 1994 and 1995 and the related
consolidated statements of income, stockholders' investment and cash flows for
the fiscal year ended on each such date, audited by Price Waterhouse, copies of
which have heretofore been furnished to the Agent and to each Lender, are
complete and correct and present fairly the consolidated financial condition of
the Company as at each such date, and the consolidated results of its operations
and cash flows for the fiscal years then ended. All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by such accountants or officer, as the case may be, and as
disclosed therein).
(b) As of the date hereof, the Company does not have any material
liability or obligation of any nature, absolute, accrued, contingent or
otherwise, or any material judgment or long term lease or unusual forward or
long term commitment, which is not reflected in the financial statements
referred to in subsection 5.1(a), or the notes accompanying such financial
statements, or otherwise set forth on Schedule 4.1 other than liabilities and
obligations incurred under this Agreement.
(c) The Company's financial projections and forecasts covering the
period from 1996 through 1997 delivered to the Agent and each Lender prior to
the date thereof were prepared in good faith on the basis of the assumptions set
forth therein (which assumptions were believed to be reasonable) and
represented, as of the date thereof, the Company's best reasonable estimate of
the information purported to be shown therein and the Company is not aware of
any information which would reasonably lead it to believe that such projections
or forecasts, are misleading in any material respect.
(d) The Company is not entering into the arrangements contemplated
hereby and by the Related Documents nor does it intend to make any transfer or
incur any obligations hereunder or thereunder with actual intent to hinder,
delay or defraud either present or future creditors. On and as of the Closing
Date, on a pro forma basis after giving effect to the transactions, contemplated
hereby (x) the Company will not have incurred nor does the Company intend or
believe that it will incur debts beyond its ability to pay such debts as such
debts mature (taking into account the timing and amounts of cash to be received
from any source and amounts payable on or in respect of any of its debts); (y)
the Company, after taking into account all other anticipated uses of its cash,
anticipates being able to pay all amounts on or in respect of its debts when
such amounts are required to be paid; and (z) the Company has sufficient capital
with which to conduct its present and proposed business and its property does
not constitute unreasonably small capital with which to conduct its present or
proposed business. For purposes of this subsection 5.1(d), "debt" means any
liability on a claim, and a "claim" means a (i) right to payment whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured
or unsecured; or (ii) right to an equitable remedy for breach of
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performance if such breach gives rise to a payment, whether or not such right to
an equitable remedy is reduced to judgment, fixed, contingent, matured,
unmatured, disputed, undisputed, secured or unsecured. On the date of each
Borrowing (and after giving effect to all Borrowings as of such date), the
representations set forth in this subsection 5.1(d) shall be true and correct
with respect to the Company on such date.
5.2 No Change. Since June 30, 1995, there has been no material adverse
change in the business, operations, prospects, or financial condition of the
Company or any of its Subsidiaries or in any of the Collateral or the ability of
the Company to perform its obligations under this Agreement, the Notes or any
other Related Document to which it is a party.
5.3 Corporate Existence. The Company and each of its Subsidiaries (a) is
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (b) has the corporate power and authority to own
and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently engaged, (c) has obtained all
licenses (governmental or otherwise), authorizations and consents necessary to
own and operate its properties and transact its business and (d) is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction in which a failure so to qualify could reasonably be expected to
have a material adverse effect on its business, operations, prospects or
financial condition. The Company has no Subsidiaries except IMPAQ and
Countrywide Dental, Inc. Neither IMPAQ or Countrywide Dental, Inc. has any
Subsidiaries. IMPAQ owns a 50% interest in RSVP.
5.4 Corporate Power; Authorization. The Company has the corporate power
and authority to execute, deliver and perform its obligations under this
Agreement and the Related Documents to which it is a party and to consummate the
transactions contemplated herein and therein and has taken all necessary
corporate action to authorize the execution and delivery of this Agreement and
the Related Documents to which it is a party and the consummation of the
transactions contemplated herein and therein. Each Subsidiary has the corporate
power and authority to execute, deliver and perform its obligations under the
Related Documents to which it is a party and to consummate the transactions
contemplated therein and has taken all necessary corporate action to authorize
the execution, delivery and performance of the Related Documents to which it is
a party and the consummation of the transactions contemplated therein.
5.5 Binding Effect. This Agreement and the Related Documents to which
the Company is a party have been duly executed and delivered by the Company and
constitute its legal, valid and binding obligations enforceable against it in
accordance with their respective terms. The Related Documents to which each
Subsidiary is a party have been duly executed and delivered by such Subsidiary
and constitute its legal, valid and binding obligations enforceable against it
in accordance with their terms.
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5.6 Consents; Non-Contravention. No consent or authorization of, filing
with or other act by or in respect of any Governmental Authority or any other
Person is required in connection with the execution, delivery or performance by
the Company or any Subsidiary of this Agreement and the Related Documents or the
consummation of the transactions contemplated herein and therein, except such as
have been obtained or made and are in full force and effect. The execution and
delivery of this Agreement and the Related Documents and the consummation of the
transactions contemplated hereby and thereby, will not (a) violate any law, rule
or regulation applicable to the Company or its Subsidiaries or any provision of
the charter or by-laws of the Company or any of its Subsidiaries, (b) conflict
with, result in a breach or termination of, or constitute a default under, any
provision of any indenture, mortgage, lease (capital or operating) or other
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any of their
respective assets is bound, or any license, judgment, order or decree of any
Governmental Authority having jurisdiction over the Company or any of its
Subsidiaries or any of their respective activities or properties or (c) result
in, or require the creation or imposition of, any Lien upon or with respect to
any properties now or hereafter owned by the Company or any of its Subsidiaries
other than the Liens created under the Security Agreement and any Subsidiary
Security Agreement.
5.7 No Material Litigation. Except as set forth on Schedule 5.7, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Company,
threatened by or against the Company or any of its Subsidiaries or against any
of their respective properties or revenues (a) which if adversely determined may
have a material adverse effect on the business, operations, prospects or
financial condition of the Company and its Subsidiaries, taken as a whole, or on
the ability of the Company to perform its obligations under this Agreement and
the Related Documents to which it is a party or (b) which questions or would
question the validity or enforceability of this Agreement or the Related
Documents.
5.8 No Default. Neither the Company nor any of its Subsidiaries is in
violation of or in default under any term or provision of any (a) charter or
by-law or (b) mortgage, indenture, lease, agreement, instrument, law, rule,
regulation, judgment, decree, order, writ or injunction applicable to it, except
in the case of this clause (b) for such violations or defaults that would not
have a material adverse effect on the business, operations, prospects or
financial condition of the Company and its Subsidiaries, taken as a whole, or on
the ability of the Company or any Subsidiary to perform its obligations under
this Agreement and the Related Documents to which it is a party. The Company has
not failed to perform any of its obligations under this Agreement or any Related
Document.
5.9 Ownership of Property; Liens. (a) The Company and each of its
Subsidiaries has good and valid title to, or valid leasehold interests in, all
its real property and other property, subject in each case only to encumbrances
that do not
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materially adversely affect its ability to use such property for the purposes
for which it is currently being used, and none of such property is subject to
any Lien.
(b) The Company and each of its Subsidiaries possesses sufficient
permits, licenses, patents, patent rights, trademarks, trademark rights', trade
names, trade name rights, service marks, service mark rights and copyrights
necessary for the conduct of the business of the Company and each of its
Subsidiaries.
5.10 No Burdensome Restrictions. Neither the Company nor any of its
Subsidiaries is party to any agreement or instrument or subject to any
legislative or charter or other corporate restriction or any judgment, order,
writ, injunction, decree, rule or regulation which could reasonably be expected
to materially and adversely affect its business, operations, prospects or
financial condition.
5.11 Taxes. The Company and each of its Subsidiaries have filed or
caused to be filed all tax returns that are required to be filed and have paid
all taxes shown to be due and payable on said returns or on any assessment
relating to such tax returns made against it or any of its properties and all
other taxes, assessments, fees or other charges imposed on it or any of its
properties by any Governmental Authority or agency which are not yet delinquent,
except for any taxes, assessments, fees or other charges which are being
contested in good faith by appropriate proceedings and for which adequate
reserves, to the extent required by GAAP, have been established; no tax liens
have been filed other than Liens for taxes on property not yet delinquent, and,
to the knowledge of the Company, no material claims are being asserted with
respect to any such taxes, fees or other charges, except for any claims which
are being contested in good faith by appropriate proceedings and for which
adequate reserves, to the extent required by GAAP, have been established.
5.12 Margin Regulations. Neither the Company nor any of its Subsidiaries
is engaged, principally or as one of its important activities, in the business
of extending credit for the purpose of "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulations U and T of the Board of Governors of the Federal Reserve System. No
part of the proceeds of any Loans hereunder will be used directly or indirectly
for "purchasing" or "carrying" any "margin stock" within the respective meanings
of each of the quoted terms under Regulations U and T of the Board of Governors
of the Federal Reserve System or for any purpose which violates, or which would
be inconsistent with, the provisions of the regulations of such Board of
Governors.
5.13 Investment Company Act. Neither the Company nor any of its
Subsidiaries is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
5.14 Compliance with ERISA. Each member of the ERISA Group has fulfilled
its obligations under the minimum funding standards of ERISA and the Code with
respect to each Single Employer Plan and is in compliance in all material
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respects with the presently applicable provisions of ERISA and the Code with
respect to each Single Employer Plan. No member of the ERISA Group has (i)
sought a waiver of the minimum funding standard under Section 412 of the Code in
respect of any Single Employer Plan, (ii) failed to make any contribution or
payment to any Single Employer Plan or Multiemployer Plan, or made any amendment
to any Single Employer Plan, which has resulted in, or could result in, the
imposition of a Lien or the posting of a bond or other security under ERISA or
the Code, (iii) incurred any liability under Title IV of ERISA with respect to
any Plan which has not been paid in full, other than a liability to the PBGC for
premiums under Section 4007 of ERISA, (iv) taken any steps to terminate any
Single Employer Plan or to appoint a receiver to administer any such Plan, or to
withdraw from any Multiemployer Plan or initiated steps to do so or (v) adopted
any amendment to a Plan with respect to which security is required pursuant to
Section 401(a) (29) of the Code or initiated any steps to do so. No Reportable
Event or non-exempt "prohibited transaction" (as defined in Section 4975 of the
Code or Section 406 of ERISA) has occurred with respect to any Single Employer
Plan or, to the best of its knowledge, any Multiemployer Plan. No condition
exists under which any member of the ERISA Group could have liability under
Section 4069 or 4212 of ERISA.
5.15 Environmental Matters. (a) The Company and each of its Subsidiaries
has complied and is currently in compliance with all Environmental Laws; (b) no
solid or hazardous or toxic wastes or hazardous substances (as defined in the
Comprehensive Environmental Response, Compensation and Liability Act, as amended
("CERCLA"), or the Resources Conservation and Recovery Act, as amended ("RCRA"),
or under any successor or similar law or any applicable state or local law) are
processed, discharged, stored, treated, disposed of, or managed at any facility
owned, leased or operated by the Company or any of its Subsidiaries or, at the
request or behest of the Company or any of its Subsidiaries, at any adjoining
site, so as to require a license, permit or authorization of any type from any
Governmental Authority other than licenses, permits or authorizations which have
been obtained or applied for or where the failure to obtain such licenses,
permits or authorizations could not have a material adverse effect on the
Company or any of its Subsidiaries; and (c) no claim has been made against the
Company or any of its Subsidiaries or, to the best of its knowledge, against any
predecessor in respect of any "facility" owned, leased or operated by it under
CERCLA, or under a federal, state, local or municipal statute, ordinance or
regulation in respect of the environment, or by the Environmental Protection
Agency or by any federal, state, local or municipal enforcement agency having
jurisdiction over the protection of the environment, or by any private Person
bringing an action in respect of or under any law designed to protect the
environment. To the best of the Company's knowledge, the Company and each of its
Subsidiaries is in compliance with all applicable zoning and land use and
building codes, laws, rules, regulations and ordinances.
5.16 Disclosure. No representation or warranty made by the Company in
this Agreement, or by the Company, any Subsidiary or any Shareholder in the
Related Documents to which it is a party or in any other document furnished from
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time to time in connection herewith or therewith, contains any misrepresentation
of a material fact or omits to state any material fact necessary to make the
statements herein or therein not misleading. There is no fact known to the
Company which materially adversely affects, or which reasonably could be
expected in the future to materially adversely affect, the business, operations,
prospects or financial condition of the Company or any of its Subsidiaries or
the ability of the Company and its Subsidiaries to perform their respective
obligations under this Agreement and the Related Documents.
5.17 Collateral. The Security Agreement, the Shareholder Pledge
Agreement and each Subsidiary Security Agreement creates or will create a valid
security interest in favor of the Collateral Agent, acting on behalf of the
Agent and the Lenders, in the Collateral described therein securing the payment
of the obligations secured thereby. All action necessary to perfect the security
interest of the Collateral Agent, for the benefit of the Agent and the Lender,
in such Collateral has been, or will be, taken, and such security interest has,
or will have, priority over all other Liens except any perfected Liens arising
in connection with any Capitalized Lease entered into by the Company.
5.18 Employment Agreements. Set forth on Schedule 5.18 is a complete
list of agreements between the Company or any of its Subsidiaries and any other
Person providing for employment, severance, deferred or bonus payments, stock
options or similar payments or arrangements for the benefit of any officer or
director of the Company or any of its Subsidiaries. A true, correct and complete
copy of each agreement or other document listed on Schedule 5.18 has been
provided to the Agent which shall provide copies to each of the Lenders.
5.19 Dividends. Since June 30, 1994, the Company has not declared or
paid any dividends (other than dividends declared but not paid on the Series E
Preferred Stock and the Series F Preferred Stock of the Company) or made any
other distributions in respect of its capital stock or redeemed, retired,
purchased or otherwise acquired for value any shares of its capital stock other
than with respect to the Series G Preferred Stock.
SECTION 6. COVENANTS
The Company hereby agrees that, so long as this Agreement remains in
effect, and until the payment and performance in full of all Obligations, the
Company shall:
6.1 Financial Statements. Furnish to the Agent (which will provide
copies to each Lender):
(a) as soon as available, but in any event within 90 days after the end
of each fiscal year of the Company, a copy of (i) the audited consolidated
balance sheet of the Company as at the end of such year and the related audited
consolidated
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statements of income, stockholders' investment and cash flows for such year,
setting forth in each case in comparative form the figures as of the end of and
for the previous year, all in reasonable detail, certified, without
qualification, by a firm of independent accountants of nationally recognized
standing acceptable to the Lenders; and
(b) as soon as available, but in any event not later than 45 days after
the end of each of the first three fiscal quarters of each fiscal year of the
Company, a copy of the unaudited consolidated balance sheet of the Company as at
the end of each such fiscal quarter and the related unaudited consolidated
statements of income, stockholders' investment and cash flows of the Company for
such quarter and the portion of the fiscal year through such date, all in
reasonable detail and setting forth in comparative form the figures as of the
end of and for the corresponding period of the previous year, certified as to
fairness of presentation by the chief financial officer, treasurer or controller
of the Company;
all such financial statements to be complete and correct in all material
respects (subject, in the case of interim statements, to normal year-end audit
adjustments) and to be prepared in reasonable detail and in accordance with GAAP
(except, in the case of interim financial statements, that such financial
statements need not contain footnotes and shall be prepared substantially in
accordance with GAAP) applied consistently throughout the periods reflected
therein (except as approved by the Company's independent accountants and
disclosed therein). In addition to the financial statements required to be
delivered pursuant to (a) and (b) above, the Company agrees to deliver
consolidating financial statements (including a balance sheet and statements of
income, stockholders' investment and cash flows) at the same time it delivers
its consolidated financial statements if either (i) the Company begins preparing
consolidating financial statements in the ordinary course of its business or
otherwise, or (ii) the gross revenues of any Subsidiary account for 15% or more
of the Company's consolidated gross revenues.
6.2 Certificates: Other Information. Furnish to the Agent (which shall
provide copies to each Lender):
(a) concurrently with the delivery of the financial statements referred
to in subsection 6.1(a) (or on such later date as received by the Company), a
copy of the management letter delivered to the Company by its independent
accountants in connection with such financial statements or, if there is no
management letter, a letter from such independent accountants that no material
weakness in internal control came to the attention of such accountants during
such examinations other than weaknesses that have been corrected;
(b) concurrently with the delivery of the financial statements referred
to in subsections 6.1(a) and (b), a certificate signed by the chief financial
officer of the Company containing a statement that, to the best of such
officer's knowledge, the Company during the relevant period has observed or
performed all of its covenants
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and other agreements hereunder, and satisfied every condition contained in this
Agreement to be observed, performed or satisfied by it, except as described in
such certificate (any such description to be in reasonable detail and to include
a description of any action to be taken thereto);
(c) within 30 days prior to the beginning of each fiscal year of the
Company, a copy of projected consolidated balance sheets, statements of income
and statements of cash flows of the Company, for such fiscal year, accompanied
by a certificate of the chief financial officer of the Company stating the
assumptions on which such statements were prepared;
(d) promptly, copies of any regular and periodic financial information,
and any other information and reports, which the Company shall send or make
generally available to all its securityholders;
(e) within 45 days after the end of each fiscal year of the Company, a
report in form and substance reasonably satisfactory to the Agent outlining any
changes in the Company's insurance coverage during such year and any changes
planned in the subsequent fiscal year which materially affect such insurance
coverage; and
(f) promptly, such additional financial and other information as the
Agent or any Lender (acting through the Agent) may from time to time reasonably
request.
6.3 Compliance with Laws. Comply, and cause each of its Subsidiaries to
comply, with all laws, rules and regulations applicable to it (including,
without limitation, all Environmental Laws), non-compliance with which could,
singly or in the aggregate, materially adversely affect its business,
operations, prospects or financial condition or which could impair the ability
of the Company or any Subsidiary to perform its obligations under this
Agreement, the Notes or any of the other Related Documents to which it is a
party.
6.4 Conduct of Business and Maintenance of Existence. Continue, and
cause each of its Subsidiaries to continue, to engage in business of the same
general type as now conducted by it and reasonable extensions thereof and
preserve, renew and keep in full force and effect its corporate existence and
take all reasonable action to maintain, and cause each of its Subsidiaries to
maintain, all rights, privileges, contracts, copyrights, patents, trademarks,
trade names and franchises necessary or desirable in the normal conduct of its
business.
6.5 Maintenance of Property; Insurance. Keep, and cause each of its
Subsidiaries to keep, all property useful and necessary in its business in good
working order and condition; maintain, and cause each of its Subsidiaries to
maintain, with financially sound and reputable insurance companies (i) insurance
on all its and its Subsidiaries' property in at least such amounts and against
at least such risks (but including, in any event, public liability and product
liability insurance if available) as are usually insured against in the same
general area by companies
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engaged in the same or a similar business and (ii) key man life insurance on
Gary Johnson, naming the Company as the primary beneficiary, in a minimum amount
of $3,000,000; and furnish to the Agent on behalf of the Lenders, upon written
request, full information as to all insurance carried. All insurance policies
required by this subsection 6.5 shall be in form and substance and issued by
companies reasonably satisfactory to the Agent and the Lenders. The Company may
maintain the coverages required by clause (i) of this subsection 6.5 under
blanket policies covering the premises and other locations owned or operated by
the Company or any of its Subsidiaries if the terms of such blanket policies
otherwise comply with the provisions of this subsection 6.5. All insurance
policies shall name the Collateral Agent, for the benefit of the Agent and the
Lenders, as sole loss payee and as an additional insured. Each policy of
insurance required under this subsection 6.5 shall provide that it may not be
cancelled or otherwise terminated without at least 30 days' prior written notice
(or such other period as the Lenders may agree) to the Collateral Agent and
shall permit (but not require or obligate) the Collateral Agent to pay any
premium there for within 10 days after receipt of any notice stating that such
premium has not been paid when due. Settlement of any claim under any of the
insurance policies referred to in clause (i) of this subsection 6.5 involving a
loss of $250,000 or more (in the reasonable judgment of the Agent) or under the
key man life insurance policy referred to clause (ii) of this subsection 6.5
shall require the prior written approval of the Agent and all the Lenders. At
least 30 days prior to the expiration of any insurance policy (or such other
period as the Lenders may agree), a policy or policies renewing or extending
such expiring policy or renewal or extension certificates shall be delivered to
the Collateral Agent, together with a receipt showing payment of the premium
therefor. The Company shall not purchase separate insurance policies concurrent
in form or contributing in the event of loss with those policies required to be
maintained under this subsection 6.5, unless the Collateral Agent, for the
benefit of the Agent and the Lenders, is included thereon as a named insured
and, if applicable, with loss payable to the Collateral Agent under a standard
endorsement of the character described in this subsection 6.5 and the policy
evidencing such insurance otherwise complies with the requirements of this
subsection 6.5. The Company shall immediately notify the Agent whenever any such
separate insurance policy is obtained and shall promptly deliver to the
Collateral Agent the policy or certificate evidencing such insurance. The
Company shall, immediately upon receipt of any written notice of any failure by
the Company to pay any insurance premium in respect of any insurance required to
be maintained under this subsection 6.5, furnish a copy of such notice to the
Agent and the Collateral Agent.
6.6 Inspection of Property; Books and Records; Discussions. (a) Keep,
and cause each of its Subsidiaries to keep, proper books and records and
accounts in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all dealings and transactions in relation
to its business and activities; and (b) permit, and cause its Subsidiaries to
permit, representatives and agents of the Agent or any Lender to visit and
inspect any of its properties and examine and make abstracts from any of its
books and records upon reasonable notice at any reasonable
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time and as often as may reasonably be desired, and to discuss its business,
operations, properties and financial and other condition with its officers,
employees and independent accountants.
6.7 Notice of Certain Events. Furnish to the Agent (which shall provide
copies to each Lender):
(a) promptly, and in any event within two Business Days of obtaining
knowledge thereof, notice of the occurrence of any failure by the Company to
perform its obligations under this Agreement or any Related Document, which
notice shall be accompanied by a reasonably detailed description thereof and of
any action to be taken with respect thereto;
(b) promptly, and in any event within five Business Days of obtaining
knowledge thereof, notice of any (i) litigation, investigation or proceeding
which may exist at any time between the Company or any of its Subsidiaries and
any Governmental Authority or other Person, which if adversely determined would
have a material adverse effect on the business, operations, prospects or
financial condition of the Company or any of its Subsidiaries or on the ability
of the Company to perform its obligations under this Agreement, the Notes or any
of the other Related Documents to which it is a party, (ii) any litigation,
investigation or proceeding which questions the validity or enforceability of
this Agreement or any of the Related Documents or (iii) any litigation or
proceeding potentially adversely affecting the Company or any of its
Subsidiaries if the amount involved among all such litigations or proceedings in
the aggregate is $1,000,000 or more, or in which injunctive or similar relief is
sought, and of any judgment or decree entered against the Company involving a
liability of $350,000 or more (singly or in the aggregate) or in which
injunctive or similar relief is granted;
(c) if and when the Company knows that any member of the ERISA Group (i)
gives or is required to give notice to the PBGC of any Reportable Event with
respect to any Single Employer Plan which might constitute grounds for a
termination of such Plan under Title IV of ERISA, or knows that the plan
administrator of any Single Employer Plan has given or is required to give
notice of any such Reportable Event, a copy of the notice of such Reportable
Event given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA with respect to
any Multiemployer Plan or notice that any Multiemployer Plan is in
reorganization, is insolvent or has been terminated, a copy of such notice;
(iii) receives notice from the PBGC under Title IV of ERISA of an intent to
terminate, impose liability (other than for premiums under Section 4007 of
ERISA) in respect of, or appoint a trustee to administer, any Single Employer
Plan, a copy of such notice; (iv) applies for a waiver of the minimum funding
standard under Section 412 of the Code, a copy of such application; (v) gives
notice of intent to terminate any Single Employer Plan under Section 4041(c) of
ERISA, a copy of such notice and other information filed with the PBGC; (vi)
gives notice of withdrawal from any Single Employer Plan pursuant to -Section
4063 of
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ERISA, a copy of such notice; or (vii) fails to make any material payment or
contribution to any Single Employer Plan or Multiemployer Plan or makes any
amendment to any Single Employer Plan which has resulted or could result in the
imposition of a Lien or the posting of a bond or other security, a certificate
of the chief financial officer of the Company setting forth details as to such
occurrence;
(d) promptly, and in any event, within five Business Days of obtaining
knowledge thereof, notice of any occurrence or development which causes the
representation contained in subsection 5.15 to be incorrect in any material
respect;
(e) promptly, and in any event at least five Business Days prior to the
filing thereof with any Governmental Authority, copies of any amendment or
supplement to its charter;
(f) promptly, and in any event within five Business Days after obtaining
knowledge thereof, notice of any change or proposed change in any law, statute,
rule or regulation applicable to the Company or any of its Subsidiaries,
including, without limitation, any law, statute, rule or regulation governing
negative option renewals, that has or may reasonably be expected to have a
material adverse effect on the business, operations, prospects or financial
condition of the Company or any of its Subsidiaries; and
(g) promptly, and in any event, within five Business Days of obtaining
knowledge thereof, notice of any material adverse change in the business,
operations, prospects or financial condition of the Company or any of its
Subsidiaries.
Each notice pursuant to this subsection 6.7 shall be accompanied by a statement
of an appropriate officer of the Company setting forth details of the occurrence
referred to therein and stating what action the Company or, if applicable, the
member of the ERISA Group proposes to take with respect thereto.
6.8 Payment of Taxes and Claims. Pay and discharge, and cause each of
its Subsidiaries to pay and discharge, promptly all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits or
upon any of its properties, as well as all lawful claims for labor, materials
and supplies which, if unpaid, will by law become a Lien upon any of its
properties; provided that the payment of any such tax, assessment, charge, levy
or claim shall not be required so long as the amount, applicability or validity
thereof shall be contested in good faith by appropriate proceedings (or, in the
case of any such tax, assessment, charge or levy, so long as payment may be made
without penalty) and adequate reserves are established with respect thereto in
accordance with GAAP.
SECTION 7. REMEDIES
7.1 Remedies. If the Company shall fail to pay any amount payable
hereunder or under any Related Document when due or fails to perform any of its
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other obligations hereunder or under any Related Document, the Agent may, and at
the request of the Lenders the Agent shall, enforce its rights and remedies
hereunder and under any other document or instrument delivered in connection
herewith, including directing the Collateral Agent to enforce any or all of its
rights and remedies under the Security Agreement, the Shareholder Guarantee, the
Shareholder Pledge Agreement, any Subsidiary Guarantee and any Subsidiary
Security Agreement. Except as expressly set forth herein, the Company hereby
waives presentment, demand, protest and all other notices of any kind.
7.2 Set-Off. In addition to any rights and remedies of the Agent or the
Lenders provided by law, the Agent and each Lender shall have the right, without
prior notice to the Company, any such notice being expressly waived by the
Company to the extent permitted by applicable law, upon the occurrence of any
failure by the Company to perform its obligations under this Agreement or any
Related Document, to set off and apply against any indebtedness, whether matured
or unmatured, of the Company to the Agent or such Lender, any amount owing from
the Agent or such Lender at any of its branches or offices or from a corporation
controlling the Agent or such Lender to the Company at, or at any time after,
the occurrence of any failure by the Company to perform its obligations under
this Agreement or any Related Document. The Agent and each Lender agrees
promptly to notify the Company and the Agent after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application.
7.3 Default Interest. Notwithstanding any other provision of this
Agreement to the contrary, (a) except as otherwise provided in the proviso to
the third sentence of subsection 2.07, if the Company shall fail to pay any
amount owing to the Agent or any Lender under this Agreement when due (whether
at stated due date, on acceleration or otherwise), then the Company will pay
interest (before, as well as after, judgment) on demand to the Agent or such
Lender, as the case may be, on the amount in default from the date such payment
became due until payment in full at a rate equal to the sum of the Base Rate
plus 5.50% per annum, such rate to change as and when the Base Rate changes and
(b) if any failure by the Company to perform its obligations under this
Agreement or any Related Document or any Bankruptcy Event shall occur, then
during the period such failure to perform or Bankruptcy Event shall be
continuing, the rate of interest payable hereunder shall be the rate as provided
in clause (a) above.
SECTION 8. THE AGENT AND THE COLLATERAL AGENT
8.1 Appointment. Each Lender hereby irrevocably designates and appoints
each of the Agent and the Collateral Agent as the agents of such Lender under
this Agreement and the Related Documents, and each Lender irrevocably authorizes
the Agent and the Collateral Agent to take such action on its behalf under the
provisions of this Agreement and the Related Documents and to exercise such
powers and
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perform such duties as are delegated to the Agent or the Collateral Agent, as
the case may be, by the terms hereof or thereof, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, neither the Agent nor the Collateral Agent
shall have any duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any Related Document or otherwise exist against the Agent
or the Collateral Agent.
8.2 Delegation of Duties. The Agent and the Collateral Agent may execute
any of their duties under this Agreement and the Related Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. Neither the Agent nor the
Collateral Agent shall be responsible for the negligence or misconduct of any
agents or attorneys-in-fact selected by them with reasonable care except to the
extent otherwise required by subsection 8.3.
8.3 Exculpatory Provisions. Neither the Agent nor the Collateral Agent
nor any of their respective partners, officers, directors, employees, attorneys,
agents, attorneys-in-fact or Affiliates shall be (i) liable for any action
lawfully taken or omitted to be taken by it or such Person under or in
connection with this Agreement or any Related Document (except for its or such
Person's own gross negligence or willful misconduct), or (ii) responsible in any
manner to any of the Lenders for any recitals, statements, representations or
warranties made by the Company or any of its Affiliates or any officer thereof
contained in this Agreement or any Related Document or in any certificate,
report, statement or other document referred to or provided for in or received
by the Agent or the Collateral Agent under or in connection with this Agreement
or any Related Document or for the value, validity, effectiveness (except its
own due execution hereof), genuineness, enforceability or sufficiency of this
Agreement or any Related Document or for any failure of the Company to perform
its obligations hereunder or thereunder. Except as otherwise provided herein,
neither the Agent nor the Collateral Agent shall be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any Related
Document, or to inspect the properties, books or records of the Company or any
of its Affiliates. Neither the Agent nor the Collateral Agent shall be
responsible to any Lender for the effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any Related
Document or for any representations, warranties, recitals or statements made
herein or therein or made in any written or oral statement or any financial or
other statements, instruments, reports, certificates or any other documents in
connection herewith or therewith furnished, or made in reliance on information
furnished by or on behalf of the Company, by the Agent or the Collateral Agent
to the Lenders or by or on behalf of the Company to the Agent, the Collateral
Agent or any Lender.
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8.4 Reliance by Agent and Collateral Agent. The Agent and the Collateral
Agent shall be entitled to rely, and shall be fully protected in relying, upon
any Note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Company), independent accountants and other experts selected by the Agent and
the Collateral Agent. The Agent and the Collateral Agent may deem and treat the
payee of any Note as the owner thereof for all purposes unless a written notice
of assignment, negotiation or transfer thereof shall have been filed with the
Agent or the Collateral Agent. The Agent and the Collateral Agent shall each be
fully justified in failing or refusing to take any action under this Agreement
or any Related Document unless it shall first receive such advice or concurrence
of the Lenders as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense (other
than any liability or expense resulting from the Agent's or the Collateral
Agent's gross negligence or wilful misconduct) which may be incurred by it by
reason of taking or continuing to take any such action. The Agent and the
Collateral Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement or any Related Document in
accordance with a request of the Lenders, and such request and any action taken
or failure to act pursuant thereto shall be binding upon all future holders of
the Notes.
8.5 Notice of Failure to Perform. Unless the Agent has actual notice of
the failure by the Company to perform its obligations under this Agreement or
any Related Document, the Agent shall not be deemed to have knowledge or notice
of the occurrence of any such failure hereunder unless the Agent has received
notice from a Lender `or the Company referring to this Agreement, describing
such failure and stating that such notice is a "notice of failure to perform its
obligations". In the event that the Agent receives such a notice, the Agent
shall promptly give notice thereof to the Lenders. In the case of any failure by
the Company to perform its obligations under this Agreement or any Related
Document, the Agent shall take such action with respect to such failure as shall
be reasonably directed by the Lenders, provided, however, that unless and until
the Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action for the protection and preservation of the
Collateral as it shall deem advisable in the best interests of the Lenders. Each
Lender agrees that it shall not make any demand for repayment of any amounts
payable to such Lender hereunder unless each Lender agrees to make a demand for
repayment of all amounts payable to such Lender. Prior to taking any such
actions, the Lenders shall consult with each other and the Agent to determine
the general plan of action and the steps to be taken in connection with such
action, and they shall continue to consult with one another with respect
thereto.
8.6 Credit Decision. Each Lender expressly acknowledges that neither the
Agent nor the Collateral Agent nor any of their respective partners, officers,
directors, employees, attorneys, agents, attorneys-in-fact or Affiliates has
made any
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representations or warranties to it and that no act by the Agent or the
Collateral Agent hereafter taken, including any review of the affairs of the
Company, shall be deemed to constitute any representation or warranty by the
Agent or the Collateral Agent to any Lender. Each Lender represents to the Agent
and the Collateral Agent that it has, independently and without reliance upon
the Agent, the Collateral Agent or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Company and made its own decision to make
its Loans hereunder and enter into this Agreement. Each Lender also represents
that it will, independently and without reliance upon the Agent, the Collateral
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement,
and to make such investigation as it deems necessary to inform itself as to the
business, operations, property, financial and other condition and
creditworthiness of the Company. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Agent hereunder or are
furnished to the Agent pursuant to the terms hereof in sufficient copies or
counterparts for or for the account of the Lenders, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, financial and other
condition or creditworthiness of the Company or any of its Affiliates which may
come into the possession of the Agent or any of its partners, officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
8.7 Indemnification. The Lenders agree to indemnify the Agent and the
Collateral Agent (to the extent not reimbursed by the Company and without
limiting the obligation of the Company to do so), ratably according to their
respective Percentages of Maximum Amount, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Notes)
be imposed on, incurred by or asserted against the Agent or the Collateral Agent
in any way relating to or arising out of this Agreement or the Related
Documents, or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Agent or the Collateral Agent under or in connection with any of the
foregoing; provided, however, that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting solely
from the Agent's or the Collateral Agent's gross negligence or willful
misconduct. The agreements in this subsection 8.7 shall survive the repayment of
the Obligations.
8.8 Individual Capacity. The Agent, the Collateral Agent and their
respective Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Company and any of its Subsidiaries as
though it were not the
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Agent or the Collateral Agent. With respect to its Loans made or renewed by it
and any Note issued to it, the Agent and the Collateral Agent shall have the
same rights and powers under this Agreement and the Related Documents as any
Lender and may exercise the same as though it were not the Agent or the
Collateral Agent, and the terms "Lender" and "Lenders" shall include the Agent
and the Collateral Agent in their individual capacities.
8.9 Successor Agents. Subject to the last sentence of this subsection
8.9, the Agent and the Collateral Agent may resign as Agent or Collateral Agent,
as the case may be, at any time by giving written notice thereof to the Lenders
and the Company and may be removed at any time with or without cause by the
Lenders, provided that no such resignation or removal shall become effective
until a successor Agent or Collateral Agent, as the case may be, shall have been
appointed and shall have accepted such appointment as provided in this
subsection 8.9. Upon any such resignation or removal, the Lenders shall have the
right to appoint a successor Agent or Collateral Agent, as the case may be. If
no successor Agent or Collateral Agent shall have been so appointed by the
Lenders and shall have accepted such appointment within 30 days after the
retiring Agent's or Collateral Agent's giving of notice of resignation or the
Lenders' removal of the retiring Agent or Collateral Agent, then, upon five
Business Days' notice to the Company and the Lenders, the retiring Agent or
Collateral Agent may, on behalf of the Lenders, appoint a successor Agent or
Collateral Agent, as the case may be, which shall be a bank which maintains an
office in the United States, or a commercial bank organized under the laws of
the United States of America or of any State thereof, or any Affiliate of such a
bank, having a combined capital and surplus of at least $100,000,000. Upon the
acceptance of any appointment as Agent or Collateral Agent hereunder by a
successor Agent or Collateral Agent, such successor Agent or Collateral Agent,
as the case may be, shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent or Collateral Agent,
as the case may be, and the retiring Agent or Collateral Agent shall be
discharged from its duties and obligations under this Agreement. After the
retiring Agent's or Collateral Agent's resignation or removal hereunder as such
agent, the provisions of this Section 8 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was such agent under this
Agreement. Anything in this subsection 8.9 to the contrary notwithstanding, so
long as the Company has not failed to perform its obligations under this
Agreement or under any Related Document, Brown Brothers Harriman & Co. agrees
not to resign as Agent or Collateral Agent or to take any action in its capacity
as a Lender to remove itself as Agent or Collateral Agent.
SECTION 9. GENERAL PROVISIONS
9.1 Amendments and Waivers. With the written consent of all of the
Lenders, the Agent and the Company may, from time to time, enter into written
amendments, supplements or modifications hereto for the purpose of adding any
provisions to this Agreement or any Related Document or changing in any manner
the rights of the Lenders or of the Company hereunder or thereunder, and with
the
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written consent of all of the Lenders, the Agent on behalf of the Lenders may
execute and deliver to the Company a written instrument waiving, on such terms
and conditions as the Agent or the Lenders may specify in such instrument, any
of the requirements of this Agreement or the Related Documents or any failure by
the Company to perform its obligations under this Agreement or any Related
Document and its consequences; provided, however, that no such waiver and no
such amendment, supplement or modification shall reduce any fees owing to the
Agent or the Collateral Agent or amend, modify, supplement or waive any
provision of Section 8 without the written consent of the Agent. Any such waiver
and any such amendment, supplement or modification shall apply equally to each
of the Lenders and shall be binding upon the Company, the Lenders, the Agent and
all present and future holders of the Notes.
9.2 Notices. Except as expressly otherwise provided herein, all notices,
requests and demands to or upon the respective parties hereto shall be in
writing (including by telecopy or telex) and shall be effective when actually
received at the following address in the case of the Company, the Agent and the
Collateral Agent, and at the address set forth in Schedule I in the case of the
other parties hereto, or in each case at such other address as may be hereafter
notified by the respective parties hereto and any future holders of the Notes:
The Company:
CardMember Publishing Corporation
680 Washington Blvd. - Suite 1100
Stamford, CT 06901-3709
Attn: Steven Levenherz
Telephone: (203) 324-7635
Telecopy: (203) 969-0812
The Agent:
Brown Brothers Harriman & Co.
59 Wall Street
New York, NY 10005
Attn: Chief Credit Officer
Telephone: (212) 483-1818
Telecopy: (212) 493-7280
The Collateral Agent:
Brown Brothers Harriman & Co.
59 Wall Street
New York, NY 10005
Attn: Chief Credit Officer
Telephone: (212) 483-1818
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Telecopy: (212) 493-7280
Any notice, request or demand received on a day which is not a Business Day
shall be deemed to have been received on the next following Business Day.
9.3 No Waiver: Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Agent or any Lender, any right, remedy, power
or privilege hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege. The rights, remedies, powers and privileges herein
provided are cumulative and not exclusive of any rights, remedies, powers and
privileges provided at law, in equity or otherwise.
9.4 Survival of Representations and Warranties. All representations and
warranties made hereunder, in any Related Document and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the Related
Documents for a period of three (3) years after the repayment of the
Obligations.
9.5 Payment of Expenses and Taxes. The Company agrees (a) to pay or
reimburse the Agent for all its out-of-pocket costs and expenses incurred in
connection with the preparation, execution and delivery of, and any amendment,
restatement, supplement or modification to, this Agreement and the Related
Documents, and the consummation of the transactions contemplated hereby and
thereby, including, without limitation, the reasonable fees and disbursements of
counsel to the Agent, (b) to pay or reimburse each Lender and the Agent for all
their out-of-pocket costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement or the Related
Documents, including, without limitation, reasonable fees and disbursements of
counsel to the Agent and to each Lender, (c) to pay, and indemnify and hold
harmless each Lender, the Agent and the Collateral Agent from and against, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, documentary, stamp, excise and other
taxes (other than income taxes), if any, which may be payable or determined to
be payable in connection with the execution and delivery of, or consummation of
any of the transactions contemplated by, or any amendment, supplement or
modification of, or any waiver or consent under or in respect of, this Agreement
or the Related Documents, and (d) to pay, and indemnify and hold harmless each
Lender, the Agent and the Collateral Agent from and against, any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses (including, without limitation, reasonable fees and
disbursements of counsel) or disbursements of any kind or nature whatsoever
incurred with respect to the execution, delivery, enforcement, performance and
administration of this Agreement and the Related Documents (all the foregoing,
collectively, the "indemnified liabilities"), provided that the Company shall
have no obligation hereunder to the Agent, the Collateral Agent or any Lender
with respect to
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indemnified liabilities arising from the gross negligence or willful misconduct
of the Agent, the Collateral Agent or any such Lender. The agreements in this
subsection 9.5 shall survive the repayment of the Obligations.
9.6 Benefit of Agreement; Participation; Assignments. (a) This Agreement
shall be binding upon and inure to the benefit of the Company, the Lenders, the
Agent, the Collateral Agent and their respective successors and assigns, except
that (i) the Company may not assign or transfer any of its rights or obligations
under this Agreement without the prior written consent of each Lender and (ii)
the Lenders may assign or transfer their respective rights or obligations under
this Agreement only as provided in paragraphs (b) and (c) of this subsection
9.6. Any Lender may from time to time change the office, branch or agency of
such Lender at which the Loans are made or carried; provided that if at the time
of any change from one office, branch or agency to another the effect thereof
would be to increase any amount payable by the Company under this Agreement then
such change shall not be made without the prior written consent of the Company.
(b) Any Lender may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("Participants") participating interests in any Loan
owing to such Lender, any Note held by such Lender, or any other rights and
obligations of such Lender hereunder. In the event of any such sale by a Lender
of participating interests to a Participant, such Lender's rights and
obligations under this Agreement to the other parties under this Agreement shall
remain unchanged, such Lender shall remain solely responsible for the
performance thereof, such Lender shall remain the holder of any such Note for
all purposes under this Agreement, and the Company and the Agent shall continue
Lender's and under Agreement. Company agrees that each Participant shall be
entitled to the benefits of subsection 3.4 with respect to its participation in
the Loans outstanding from time to time; provided that no Participant shall be
entitled to receive any greater amount pursuant to such subsection than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
had no such transfer occurred. No Participant shall have the right to consent to
any amendment to, or waiver of, any provision of this Agreement, except any such
amendment or waiver which would require the consent of all of the Lenders
pursuant to subsection 9.1.
(c) Subject to the last sentence of this paragraph (c), any Lender may,
in the ordinary course of its commercial banking business and in accordance with
applicable law, at any time sell to any Lender or to one or more additional
banks or financial institutions (each an "Assignee") all or any part of its
rights and obligations under this Agreement and the Notes pursuant to an
assignment agreement between such Assignee and such transferor Lender,
substantially in the form of Exhibit I. Such assignment agreement shall be
executed by such Assignee and such transferor Lender and shall be delivered to
the Agent for acceptance by the Agent not less than five Business Days before
the proposed effective date of such assignment, together
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with the payment of a $2,000 assignment fee for the Agent. Upon such execution,
delivery, acceptance and payment, from and after the effective date specified in
such assignment agreement, (x) the Assignee thereunder shall be a party hereto
and, to the extent of the portion of the rights and obligations of the
transferor Lender purchased by it, have the rights and obligations of a Lender
hereunder and under the Related Documents and (y) the transferor Lender
thereunder shall, to the extent of the portion of its rights and obligations so
sold, be released from its obligations under this Agreement (and, in the case of
an assignment agreement covering all or the remaining portion of a transferor
Lender's rights and obligations under this Agreement, such transferor Lender
shall cease to be a party hereto). On or after the effective date specified in
such assignment agreement, upon request of the transferor Lender or the
Assignee, the Company shall issue a new Note to the transferor Lender and/or the
Assignee. Anything in this paragraph (c) notwithstanding, no transfer shall be
made pursuant to this paragraph (c) if (i) such transfer by any one transferor
Lender to any one Assignee which is not a Lender is in respect of less than
$1,000,000 of the rights and obligations of such transferor Lender, or (ii) when
less than all of the rights and obligations of such transferor Lender is
transferred, the amount held by any transferor Lender would be less than
$1,000,000 after giving effect to such transfer.
(d) Notwithstanding anything to the contrary contained in this
Agreement, any Lender may pledge, hypothecate or otherwise grant a security
interest in all or any part of its rights hereunder or under its Note to any
Federal Reserve Bank; provided that no such pledge, hypothecation or grant shall
relieve such Lender of any of its obligations under this Agreement.
9.7 Sharing of Payments. If any Lender (a "benefitted Lender") shall at
any time receive any payment of all or part of its Loans, or interest thereon,
or receive any Collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, or otherwise) in a greater proportion than any such
payment to and Collateral received by any other Lender, if any, in respect of
such other Lender's Loans, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders such portion of each such other
Lender's Loans, or shall provide such other Lenders with the benefits of any
such Collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such Collateral or
proceeds ratably with each of the Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest. The
Company agrees, to the extent it may do so under applicable law, that each
Lender so purchasing a portion of another Lender's Loans may exercise all rights
of payment (including, without limitation, rights of set-off) with respect to
such portion as fully as if such Lender were the direct holder of such portion.
9.8 Counterparts. This Agreement may be executed in one or more
counterparts and by the different parties hereto on separate counterparts, all
of which
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<PAGE> 34
counterparts taken together shall be deemed to constitute one and the same
instrument.
9.9 Headings. The Section and subsection headings in this Agreement are
for convenience of reference only and shall not affect the interpretation
hereof.
9.10 Obligations Several. The rights and obligations of each Lender
hereunder is several, and no Lender shall be responsible for the obligations of
any other Lender hereunder. The amounts payable by the Company at any time
hereunder or under any Note to each Lender shall be a separate and independent
debt and each Lender shall be entitled to protect and enforce its rights arising
hereunder and thereunder and it shall not be necessary for any other Lender or
the Agent to consent to, or be joined as an additional party in, any proceedings
for such purpose. Nothing contained in this Agreement and no action taken by
Lenders pursuant hereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES.
9.12 Submission to Jurisdiction. The Company hereby irrevocably and
unconditionally: (i) submits for itself and its property in any legal action or
proceeding relating to this Agreement or any Related Document, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof; (ii) consents that any such action or
proceeding may be brought in such courts, and waives any objection that it may
now or hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient forum and
agrees not to plead or claim the same; (iii) agrees that service of process in
any such action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail),
postage prepaid, to the Company at its address set forth in or designated
pursuant to subsection 9.2; and (iv) agrees that nothing herein shall affect the
right to effect service of process in any other manner permitted by law or shall
limit the right to sue in any other jurisdiction.
9.13 WAIVER OF JURY TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT
IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY AS TO ANY
ISSUE RELATING HERETO IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
34
<PAGE> 35
9.14 Severability. Any provision of this Agreement (or any Related
Document) that is illegal, invalid or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such illegality,
invalidity or unenforceability without invalidating the remaining provisions
hereof (or thereof) or affecting the legality, validity or enforceability of
such provision in any other jurisdiction. The parties hereto agree to negotiate
in good faith to replace any illegal, invalid or unenforceable provision of this
Agreement (or such Related Document) with a legal, valid and enforceable
provision that, to the extent possible, will preserve the economic bargain of
this Agreement (or such Related Document), or to otherwise amend this Agreement
(or such Related Document) to achieve such result.
9.15 Amendment and Restatement. This Agreement amends, restates and
replaces the Credit Agreement in its entirety.
9.16 DEMAND OBLIGATIONS. THE COMPANY HEREBY EXPRESSLY ACKNOWLEDGES AND
AGREES THAT, NOTWITHSTANDING THE INCLUSION IN THIS AGREEMENT OF COVENANTS, ALL
OBLIGATIONS OF THE COMPANY UNDER THIS AGREEMENT AND EACH OF THE RELATED
DOCUMENTS TO WHICH IT IS A PARTY ARE PAYABLE ON DEMAND AND THAT, BUT FOR SUCH
AGREEMENT, EACH LENDER WOULD NOT HAVE BEEN WILLING TO PROVIDE ANY LOANS
HEREUNDER. THE COMPANY HEREBY IRREVOCABLY WAIVES AND AGREES NOT TO ASSERT ANY
CLAIM OR DEFENSE AGAINST ANY LENDER THAT THE OBLIGATIONS ARE NOT DUE AND PAYABLE
ON DEMAND. THE COMPANY HEREBY REPRESENTS TO EACH LENDER THAT IT HAS CONSULTED
WITH COUNSEL REGARDING THE IMPLICATIONS OF SUCH WAIVERS AND AGREEMENTS AND THAT
IT HAS MADE SUCH WAIVERS AND AGREEMENTS IN A KNOWING MANNER WITH A FULL
UNDERSTANDING THEREOF.
35
<PAGE> 36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
CARDMEMBER PUBLISHING CORPORATION
By: /s/ Steven H. Levenherz
------------------------------------
Name: Steven H. Levenherz
Title: Senior Vice President
per pro BROWN BROTHERS HARRIMAN & CO.,
as Agent
/s/ W. C. Sullivan III
------------------------------------
Name: W. Carter Sullivan III
Title: Senior Manager
36
<PAGE> 37
<TABLE>
<CAPTION>
Percentage of Maximum Amount Lenders
- ---------------------------- -------
<S> <C>
100% per pro BROWN BROTHERS HARRIMAN &
CO., as Agent
/s/ W.C. Sullivan III
-----------------------------------
Name: W. Carter Sullivan III
Title: Senior Manager
</TABLE>
<PAGE> 38
SCHEDULE 1
LENDING OFFICES AND NOTICE ADDRESSES
Brown Brothers Harriman & Co.
Brown Brothers Harriman & Co.
59 Wall Street
New York, NY 10005
Attention: Chief Credit Officer
Telephone: 212-483-1818
Fax: 212-493-7280
39
<PAGE> 39
SCHEDULE 4.1
LIST OF LEASED PREMISES
a. CardMember Publishing Corporation
1. 680 Washington Blvd. Suite 1100
Stamford, Connecticut 06901
2. 11043 I Street
Omaha, Nebraska 68137
3. 11165 Mill Valley Road
Omaha, Nebraska 68154
4. Arena Tower II
7324 Southwest Freeway, Suite 2000
Houston, Texas 77074
<PAGE> 40
SCHEDULE 5.7
MATERIAL LITIGATION
The Company is named as a defendant in a lawsuit brought by Thomas St.
Denis in the Superior Court, Judicial District of Stamford/Norwalk at Stamford
(Connecticut).
<PAGE> 41
SCHEDULE 5.18
LIST OF EMPLOYMENT AGREEMENTS
1. Agreement dated as of July 31, 1989 between CardMember Publishing
Corporation and Gary Johnson
2. Agreement dated as of July 31, 1989 between CardMember Publishing
Corporation and Thomas St. Denis
3. Agreement dated as of July 31, 1989 between CardMember Publishing
Corporation and Dennis P. Walker
4. Employee, Director and Executive Stock Option Plans
<PAGE> 1
Exhibit 10.12
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of September 9, 1994, made by CARDMEMBER
PUBLISHING CORPORATION, a Delaware corporation (the "Company"), in favor of
BROWN BROTHERS HARRIMAN & CO. (the "Holder") with respect to warrants (the
"Warrants") to purchase shares (the "Warrant Shares") of the Company's Class A
Common Stock, $.01 per share (the "Class A Common Stock").
W I T N E S S E T H:
WHEREAS, the Holder has on the date hereof entered into a Credit
Agreement (the "Credit Agreement") among the Company, the lender parties thereto
(including Holder) and Holder, as agent on behalf of such tenders; and
WHEREAS, in connection with the Credit Agreement, the Company has
agreed to issue Warrants to the Holder as a placement fee; and
WHEREAS, the Company desires to enter into this Warrant Agreement to
set forth the terms and conditions of the issuance, transfer, exchange and
replacement of the certificates evidencing the Warrants to be issued hereunder
(the "Warrant Certificates") and the terms and conditions of the Warrants and
the rights of the holders thereof and to set forth the respective rights and
obligations of the Company relating thereto;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereto agree as follows:
SECTION 1. Warrants. The Company hereby agrees that the Holder shall
receive on the date of the initial loan under the Credit Agreement Warrants to
purchase 20,000 Warrant Shares. Each Warrant shall entitle the Holder, or any
assign thereof, subject to the provisions of this Warrant Agreement, to
purchase, at any time after such loan is made and before the close of business
on December 31, 1999 (the "Expiration Date"), one fully paid and nonassesable
share of Class A Common Stock, at a price of $15.00 per share, subject to
adjustments as provided in Section 5 hereof (the "Exercise Price").
For purposes of this Warrant Agreement, the term "close of business" on
any given date shall mean 5 p.m., New York time, on such day or if such day is
not a business day on the next succeeding business day. For purposes of this
Warrant Agreement, the term "business day" shall mean any day other than a
Saturday, Sunday or a day on which banking institutions in New York, New York
are authorized or obligated by law to be closed.
SECTION 2. Warrant Certificates; Reservation of Shares. Simultaneously
with the execution and delivery of this Agreement, the Company shall deliver to
the Holder a duly executed Warrant Certificate representing the Warrants. The
Warrant Certificates (and the Form of Election to Purchase and the Form of
Assignment to be printed on the reverse thereof) shall be in registered form
only and shall be substantially in the form
<PAGE> 2
set forth in Exhibit A hereto, and may have such letters, numbers or other marks
of identification or designation and such legends, summaries or endorsements
printed, lithographed or engraved thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Warrant Agreement, or as
may be required to comply with any law, or with any rule or regulation made
pursuant thereto, or with any rule or regulation of any stock exchange on which
the Class A Common Stock or the Warrants may be listed, or to conform to usage.
Subsequent to issuance of the Warrant Certificates, the Company shall sign a
Warrant Certificate only if the Warrant Certificate is issued in exchange or
substitution for one or more previously signed Warrant Certificates or in
connection with their transfer, as herein provided. The Warrants shall be
exercisable only for whole shares and cash will be paid in lieu of fractional
shares in accordance with Section 7. Each Warrant Certificate shall be dated as
of the date of execution by the Company.
Each Warrant Certificate shall be executed on behalf of the Company by
the manual signature of the president or a Vice President of the Company under
its corporate seal, attested by the manual signature of the Secretary or an
Assistant Secretary of the Company. In case any officer of the Company who shall
have signed any Warrant Certificate shall cease to be such officer of the
Company before issue and delivery thereof by the Company, such Warrant
Certificate, nevertheless, may be issued and delivered with the same force and
effect as though the person who signed such Warrant Certificate had not ceased
to be such officer of the Company.
The Company will at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but unissued Class A
Common Stock the full number of shares of Class A Common Stock deliverable upon
exercise of all outstanding Warrants for the purpose of enabling the Company to
satisfy its obligation to issue shares of Class A Common Stock upon exercise of
the Warrants.
SECTION 3. Transfers and Exchanges of Warrant Certificates. The Company
will keep or cause to be kept books for registration of ownership and transfer
of the Warrant Certificates issued hereunder. Such registration books shall show
the names and addresses of the respective holders of the Warrant Certificates
and the number of Warrants evidenced by each such Warrant Certificate.
The Company shall register the transfer and exchange of any outstanding
Warrant Certificates upon the registration books maintained by the Company for
that purpose, upon surrender of the Warrant Certificates to the Company at the
corporate offices of the Company in Stamford, Connecticut, at any time on or
before the Expiration Date, and accompanied by appropriate instruments of
transfer all in form reasonably satisfactory to the Company and payment of a sum
sufficient to cover any governmental tax or other charge that may be imposed in
connection with such exchange or transfer.
-2-
<PAGE> 3
Whenever any Warrant Certificate is surrendered for exchange or
transfer, the Company shall promptly cancel the surrendered Warrant Certificate
and deliver to the transferee a new Warrant Certificate duly executed by the
Company for the number of full Warrants transferred to such transferee;
provided, however, that in case the registered holder of any Warrant Certificate
shall elect to transfer fewer than all of the Warrants evidenced by such Warrant
Certificate, the Company in addition shall promptly deliver to such registered
holder a new Warrant Certificate or Certificates duly executed by the Company
for the number of full Warrants not so transferred.
SECTION 4. Mutilated, Destroyed, Lost or Stolen Warrant Certificates.
Upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of any Warrant Certificate and (i) in the
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, or (ii) in the case of mutilation, upon surrender and
cancellation of the Warrant Certificate, the Company shall deliver a new Warrant
Certificate duly executed by the Company of like tenor for the same number of
Warrants.
SECTION 5. Adjustments of Number and Kind of Shares Purchasable and
Exercise Price. The Exercise Price and the number of shares of Class A Common
Stock (or other securities or property) issuable upon exercise of a Warrant
shall be subject to adjustment from time to time upon the occurrence of certain
events, as provided below:
(a) For purposes of this Section 5, the following definitions shall
apply:
(i) "Common Stock": shall mean the Class A Common Stock and
the Class B Common Stock;
(ii) "Class B Common Stock" shall mean the Company's Class B
Common Stock, par value $.01 per share.
(iii) "Preferred Stock": shall mean the shares issued and
outstanding as of the date hereof of the Company's Series A Preferred Stock,
Series B preferred Stock, Series C Preferred Stock and Series D preferred Stock;
(iv) "Option": shall mean right, option or warrant to
subscribe for, purchase or otherwise acquire either Common Stock or Convertible
Securities;
(v) "Convertible Securities": shall mean any evidences of
indebtedness, stock (other than Common Stock or preferred Stock) or other
securities directly or indirectly convertible into or exchangeable for Common
Stock; and
(vi) "Additional Shares of Common Stock: shall mean all shares
of Common Stock issued (or, pursuant to Section 5(c), deemed issued) by the
Company after the date hereof, other than shares of Class A Common Stock issued
or issuable:
-3-
<PAGE> 4
(A) Upon the conversion of shares of Stock;
(B) Upon the exercise of any Warrant;
(C) To officers, directors or employees of, or consultants to,
the Company pursuant to a stock purchase or option plan or other employee stock
incentive program (collectively, the "Plans") approved by the Board of Directors
in an amount not to exceed one hundred twelve thousand (112,000) shares of Class
B Common Stock (including all outstanding Options to purchase Class B Common
Stock and Class B Common Stock issued pursuant to the plans); or
(D) Upon conversion of shares of Class A Common Stock to
shares of Class B Common Stock.
(b) No adjustment in the number of shares of Class A Common Stock
deliverable upon the exercise of a Warrant shall be made, by adjustment of the
Exercise Price in respect of the issuance of Additional Shares of Common Stock
or otherwise, unless the consideration per share for an Additional Share of
Common Stock issued or deemed issued by the Company is less than the Exercise
Price in effect on the date of and immediately prior to the issuance of such
Additional Shares of Common Stock.
(c) (i) In the event the Company at any time or from time to time
after the date hereof shall issue any options or Convertible Securities or shall
fix a record date for the determination of holders of any class of securities
entitled to receive any such Options or Convertible Securities, then the maximum
number of shares (as set forth in the instrument relating thereto without regard
to any provisions contained therein for a subsequent adjustment of such number)
of Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Class A
Common Stock issued as of the time of such issue, or in case such a record date
shall have been fixed, as of the close of business on such record date, provided
that Additional Shares of Common Stock shall not be deemed to have been issued
unless the consideration per share (determined pursuant to Section 5(e) hereof)
of such Additional Shares of Common Stock would be less than the Exercise Price
in effect on the date of and immediately prior to such issue, or such record
date, as the case may be, and provided further that in any such case in which
Additional Shares of Class A Common Stock are deemed to be issued:
(A) No further adjustment in the Exercise Price shall be made
upon the subsequent issue of Convertible Securities or shares of Common Stock
upon the exercise of such Options or conversion or exchange of such Convertible
Securities;
(B) If such Options or Convertible Securities by their terms
provide, with the passage of time or otherwise, for any increase or decrease in
the
-4-
<PAGE> 5
consideration payable to the Company, or increase or decrease in the number of
shares of Common Stock issuable, upon the exercise, conversion or exchange
thereof, the Exercise Price computed upon the original issue thereof (or upon
the occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon any such increase or decrease becoming
effective, be recomputed to reflect such increase or decrease insofar as it
affects such Options or the rights of conversion or exchange under such
Convertible Securities;
(C) Upon the expiration of any such Options or any rights of
conversion or exchange under such Convertible Securities which shall not have
been exercised, the Exercise Price computed upon the original issue thereof (or
upon the occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be recomputed as if:
(I) In the case of Convertible Securities or Options for
Common Stock the only Additional Shares of Common Stock issued were the shares
of Common Stock, if any, actually issued upon the exercise of such Options or
the conversion or exchange of such Convertible Securities and the consideration
received therefor was the consideration actually received by the Company for the
issue of all such Options, whether or not exercised, plus the consideration
actually received by the Company upon such exercise, or for the issue of all
such Convertible Securities which were actually converted or exchanged, plus the
additional consideration, if any, actually received by the Company upon such
conversion or exchange, and
(II) in the case of Options for Convertible Securities only
the Convertible Securities, if any, actually issued upon the exercise thereof
were issued at the time of issue of such Options, and the consideration received
by the corporation for the Additional Shares of Common Stock deemed to have been
then issued was the consideration actually received by the Company for the issue
of all such Options, whether or not exercised, plus the consideration deemed to
have been received by the Company (determined pursuant to Section S (e)) upon
the issue of the Convertible Securities with respect to which such Options were
actually exercised;
(D) No readjustment pursuant to clause (B) or (C) above shall have
the effect of increasing the Exercise Price to an amount which exceeds the lower
of (i) the Exercise Price on the original adjustment date, or (ii) the Exercise
Price that would have resulted from any issuance of Additional Shares of Common
Stock between the original adjustment date and such readjustment date;
(E) In the case of any Options which expire by their terms not
more than 30 days after the date of issue thereof, no adjustment of the Exercise
Price shall be made until the expiration or exercise of all such Options,
whereupon such adjustment shall be made in the same manner provided in clause
(C) above; and
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<PAGE> 6
(F) If such record date shall have been fixed and such Options
or Convertible Securities are not issued on the date fixed therefor, the
adjustment previously made in the Exercise Price which became effective on such
record date shall be canceled as of the close of business on such record date,
and thereafter the Exercise Price shall be adjusted pursuant to this Section
5(c) as of the actual date of their issuance.
(ii) In the event the Company at any time or from time to time
after the date hereof shall declare or pay any dividend or make any other
distribution on the Common Stock payable in Common Stock, or effect a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in Common Stock), then and in any such
event, Additional Shares of Common Stock shall be deemed to have been issued:
(A) In the case of any such dividend or distribution,
immediately after close of business on the record date for the determination of
holders of any class of securities entitled to receive such dividend or
distribution, or
(B) In the case of any such subdivision, at the close of
business on the date immediately prior to the date upon which such corporate
action becomes effective.
If such record date shall have been fixed and such dividend shall not
have been fully paid on the date fixed therefor, the adjustment previously made
in the Exercise Price which became effective on such record date shall be
cancelled as of the close of business on such record date, and thereafter the
Exercise Price shall be adjusted pursuant to this Section 5(c) as of the time of
actual payment of such dividend.
(d) In the event the Company shall issue or shall be deemed to issue
Additional Shares of Common Stock (including Additional Shares of Common Stock
deemed to be issued pursuant to Section 5 (c) (i), but excluding Additional
Shares of Common Stock issued pursuant to Section 5 (c) (ii), which event is
dealt with in Section 5 (f) hereof), without consideration or for a
consideration per share less than the Exercise Price in effect on the date of
and immediately prior to such issue, then and in such event, the Exercise Price
shall be reduced, concurrently with such issue, to a price determined by
multiplying such Exercise Price by a fraction (x) the numerator of which shall
be (1) the number of shares of Class A Common Stock outstanding immediately
prior to such issue (including shares of Class A Common Stock issuable
upon conversion of any outstanding Preferred Stock or Convertible Securities or
upon exercise of any outstanding options), plus (2) the number of shares of
Class A Common Stock which the aggregate consideration received by the Company
for ,the total number of Additional Shares of Class A Common Stock so issued
would purchase at the Exercise Price in effect on the date of and immediately
prior to such issue, and (y) the denominator of which shall be (1) the number of
shares of Class A Common Stock outstanding immediately prior to such issue
(including shares of Class A Common Stock issuable
-6-
<PAGE> 7
upon conversion of any outstanding preferred Stock or Convertible Securities or
upon exercise of any outstanding options), plus (2) the number of such
Additional Shares of Common Stock so issued. In the event of any such
adjustments the number of shares of Class A Common Stock purchasable upon
exercise of a Warrant shall be adjusted to a number determined by dividing the
number of shares of Class A Common Stock subject to purchase upon exercise of
each such Warrant immediately prior to such adjustment by the fraction used for
purposes of the adjustment described in the immediately preceding sentence.
(e) For purposes of this Section 5, the consideration received by the
Company for the issue of any Additional Shares of Common Stock shall be computed
as follows:
(i) Such consideration shall:
(A) Insofar as it consists of cash, be computed at the
aggregate amount of cash received by the Company excluding amounts paid or
payable for accrued interest or accrued dividends;
(B) Insofar as it consists of property other than cash, be
computed at the fair value thereof at the time of such issue, as determined in
good faith by the Board of Directors; and
(C) in the event Additional Shares of Common Stock are issued
together with other shares or securities or other assets of the Company for
consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (A) and (B) above, as determined in
good faith by the Board of Directors.
(ii) The consideration per share received by the Company for
Additional Shares of Common Stock deemed to have been issued pursuant to Section
5(c) (i), relating to Options and convertible Securities, shall be determined by
dividing:
(A) The total amount, if any, received or receivable by the
Company as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the Company upon the exercise of such Options or the conversion or exchange of
such Convertible Securities. or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, by
(B) The maximum number of shares of Common Stock (as set forth
in the instruments relating thereto, without regard to any provision contained
-7-
<PAGE> 8
therein for a subsequent adjustment of such number) issuable upon the exercise
of such Options or the conversion or exchange of such Convertible Securities.
(f) (i) In the event the Company shall issue Additional Shares of
Common Stock pursuant to Section 5(c) (ii) in a stock dividend, stock
distribution or subdivision, then (A) the Exercise Price in effect immediately
prior to such stock dividend, stock distribution or subdivision shall,
concurrently with the effectiveness of such stock dividend, stock distribution
or subdivision, be adjusted to a price determined by multiplying such Exercise
Price by a fraction, the numerator of which shall be the number of shares of
Class A Common Stock outstanding immediately prior to such issue (including
shares of Class A Common Stock issuable upon conversion of any outstanding
preferred Stock or Convertible Securities or upon exercise of any outstanding
Options) and the denominator of which shall be the number of shares of Class A
Common Stock outstanding immediately prior to such issue (including such shares
of Class A Common stock issuable upon conversion of any outstanding preferred
Stock or Convertible Securities or upon exercise of any outstanding Options)
plus the number of such Additional Shares of Common Stock so issued and (B) the
number of shares of Class A Common Stock subject to purchase upon exercise of
each Warrant shall, concurrently with the effectiveness of such stock dividend,
stock distribution or subdivision, be adjusted to a number determined by
multiplying the number of shares of Class A Common Stock subject to purchase
upon exercise of each Warrant immediately prior to such issue by a fraction, the
numerator of which shall be the number of shares of Class A Common Stock
outstanding immediately prior to such issue (including shares of Class A Common
Stock issuable upon conversion of any outstanding Preferred Stock or Convertible
Securities or upon exercise of any outstanding options) plus the number of such
Additional Shares of Class A Common Stock so issued and the denominator of which
shall be the number of shares of Class A Common Stock outstanding immediately
prior to such issue (including shares of Class A Common Stock issuable upon
conversion of any outstanding preferred Stock or Convertible Securities or upon
exercise of any outstanding options).
(ii) In the event the outstanding shares of Common Stock shall be
combined or consolidated, by reclassification or otherwise, into a lesser number
of shares of Common Stock, then (A) the Exercise Price in effect immediately
prior to such combination or consolidation shall, concurrently with the
effectiveness of such combination or consolidation, be adjusted to a price
determined by multiplying such Exercise Price by a fraction, the numerator of
which shall be the number of shares of Class A Common Stock outstanding
immediately prior to such combination or consolidation (including shares of
Class A Common Stock issuable upon conversion of any outstanding Preferred Stock
or Convertible Securities or upon exercise of any outstanding Options) and the
denominator of which shall be the number of shares of Class A Common Stock
outstanding immediately after such Stock issuable upon conversion of any
outstanding Preferred Stock combination or consolidation (including shares of
Class A Common or Convertible Securities or upon exercise of any outstanding
-8-
<PAGE> 9
options) and (B) the number of shares of Class A Common Stock subject to
purchase upon exercise of each Warrant shall, concurrently with the
effectiveness of such combination or consolidation, be adjusted to a number
determined by multiplying the number of shares of Class A Common Stock subject
to purchase upon exercise of each Warrant immediately prior to such combination
or consolidation by a fraction, the numerator of which shall be the number of
shares of Class A Common Stock outstanding immediately after such combination or
consolidation (including shares of Class A Common stock issuable upon conversion
of any outstanding preferred Stock or Convertible Securities or upon exercise of
any outstanding options) and the denominator of which shall be the number of
shares of Class A Common Stock outstanding immediately prior to such combination
or consolidation (including shares of Class A Common stock issuable upon
conversion of any outstanding preferred Stock or Convertible Securities or upon
exercise of any outstanding Options).
(g) In case of any recapitalization, reorganization,
reclassification, consolidation, merger or the conveyance of all or
substantially all of the assets of the Company pursuant to which the holders of
Common Stock are entitled to receive (either directly or on subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock (an "Organic Change"), the holders of Warrants shall thereafter
have the right to acquire and receive, in lieu of or in addition to (as the case
may be) the shares of Class A Common Stock purchasable upon the exercise of such
Warrants, such shares of stock, securities or assets as such holders would have
received if such holders had purchased shares of Class A Common Stock
immediately prior to such Organic Change. In each such case, the Company shall
also make appropriate provisions to insure that the holders of Warrants upon the
exercise of such Warrants may purchase at the Exercise Price that number of
shares of stock or other securities or property to which a holder of the number
of shares of Class A Common Stock of the Company deliverable upon exercise of a
Warrant would have been entitled upon such consolidation, merger or conveyance
and that appropriate adjustment (as determined by the Board of Directors) shall
be made in the application of the provisions herein set forth with respect to
the rights and interest thereafter of the holders of warrants to purchase shares
of Class A Common Stock, to the end that the provisions set forth herein
(including provisions with respect to changes in and other adjustments of the
Exercise Price and the number of shares purchasable upon exercise of the
Warrants) shall thereafter be applicable as nearly as reasonably may be, in
relation to any shares of stock or other property thereafter deliverable upon
the exercise of this Warrant. The Company shall not effect any such Organic
Changes unless prior to the consummation thereof, the successor entity (if other
than the company) assumes by written instrument the obligations set forth
herein.
(h) Upon the happening of any event requiring an adjustment of the
Exercise Price, the Company shall forthwith give written notice thereof to the
holders of Warrants stating such adjusted Exercise Price and the adjusted number
of shares of Class A Common Stock purchasable upon the exercise of the Warrants
held by such
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<PAGE> 10
holder resulting from such event, and setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based. The
Board of Directors of the Company shall determine the computation made hereunder
in accordance with the terms of this Agreement.
SECTION 6. Exercise of Warrants. The registered holder of any Warrant
Certificate may exercise the Warrants evidenced thereby, in whole at any time or
in part from time to time on or after the issuance thereof but prior to the
close of business on the Expiration Date. Warrants may be exercised by the
holders as follows:
(a) Exercise of Warrants shall be accomplished upon surrender of
the Warrant Certificate evidencing such Warrants, with the Form of Election to
purchase on the reverse side thereof duly completed and executed, to the Company
at the corporate offices of the Company in Stamford, Connecticut, together with
payment to the Company of the Exercise Price (as of the date of such surrender)
of the Warrants then being exercised. Payment of the Exercise Price must be made
in lawful money of the United States of America and in cash or by certified or
official bank check or by bank wire transfer in immediately available funds to
the order of the Company.
(b) After the exercise of any Warrant, the Company shall issue and
deliver to or upon the order of the registered holder of such Warrant
Certificate, in such name or names as such registered holder may designate, a
certificate or certificates for the number of full shares of the Class A Common
Stock to be purchased, together with cash made available by the Company pursuant
to Section 7 hereof in respect of any fraction of a share of such Class A Common
Stock otherwise issuable upon such exercise.
(c) In case the registered holder of any Warrant Certificate shall
exercise fewer than all of the Warrants evidenced by such Warrant Certificate,
the Company also shall issue and deliver to the registered holder of such
Warrant Certificate, or to his duly authorized assigns, a new Warrant
Certificate or Certificates duly executed by the Company evidencing the number
of Warrants that were so exercised.
(d) Each person in whose name any certificate for Class A Common
Stock is issued upon the exercise of Warrants shall for all purposes be deemed
to have become the holder of record of the Class A Common Stock represented
thereby as of, and such certificate shall be dated, the date upon which the
Warrant Certificate was duly surrendered in proper form and payment of the
Exercise Price was made; provided, however, that if the date of such surrender
and payment is a date on which the stock transfer books of the Company are
closed, such person shall be deemed to have become the record holder of such
shares as of, and the certificate for such shares shall be dated, the next
succeeding business day on which the stock transfer books of the Company are
open (whether before or after the Expiration Date) and the Company shall be
under no duty to deliver the certificate for such shares until such date. The
Company covenants
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<PAGE> 11
and agrees that it shall not cause its stock transfer books to be closed for a
period of more than 20 consecutive business days except upon consolidation,
merger, sale or all or substantially all of its assets, dissolution or
liquidation or as otherwise provided by law.
(e) The Company shall pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue and delivery of the
Warrant Shares on exercise of any Warrant; provided, however, that the Company
shall not be required to pay any such tax in connection with any transfer of the
Warrants to a person other than Holder.
SECTION 7. Fractional Interests. The Company shall not be required to
issue any Warrant Certificate evidencing a fraction of a Warrant or to issue
fractions of shares of securities on the exercise of the Warrants. If any
fraction (calculated to the nearest one-tenth) of a Warrant or a share of
securities would, except for the provisions of this Section 7, be issuable on
the exercise of any Warrant, the Company shall purchase such fraction for an
amount in cash equal to such fraction multiplied by the Current Market Price per
share. By accepting a Warrant Certificate, the holder thereof expressly waives
any right to receive a Warrant Certificate evidencing any fraction of a Warrant
or to receive any fraction of a share of securities upon exercise of a Warrant.
As used in this Warrant Agreement, "Current Market Price" of a share of
Class A Common Stock means, at any date, (i) the closing market price on the
trading day immediately preceding such date or (ii) if there is no such market
price because the Company's Class A Common Stock is not then currently traded,
the fair market value of the Class A Common Stock as determined jointly by the
Company and the Holder or, if there is then more than one holder, by the holders
of Warrants representing the right to acquire a majority of the Warrant Shares
then issuable on exercise of all then outstanding Warrants; provided that if
such parties are unable to reach agreement within a reasonable period of time,
Current Market Price shall be determined by an appraiser jointly selected by the
Company and the Holder or if there is then more than one holder, by holders of
Warrants representing the right to acquire a majority of the Warrant Shares then
issuable on exercise of the then outstanding Warrants, which determination will
be final and binding on the Company and all holders of Warrants. The fees and
expenses of such appraiser will be paid by the Company.
SECTION 8. Warrant Certificate Holder Not Deemed a Stockholder. No
holder, as such, of any Warrant Certificate shall be entitled to vote, receive
dividends or be deemed the holder of Class A Common Stock which may at any time
be issuable on the exercise of the Warrants represented thereby for any purpose
whatever, nor shall anything contained herein or in any Warrant Certificate be
construed to confer upon the holder of any Warrant Certificate, as such, any of
the rights of a stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any meeting
thereof, or to give or withhold consent to any corporate
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<PAGE> 12
action (whether upon any recapitalization, issuance of stock, reclassification
of stock, change of par value or change of stock to no par value, consolidation,
merger, conveyance or otherwise), or to receive notice of meetings or other
actions affecting stockholders or to receive dividend or Subscription rights, or
otherwise, until such Warrant Certificate shall have been exercised in
accordance with the provisions hereof and the receipt and collection of the
Exercise Price and any other amounts payable upon such exercise by the Company.
SECTION 9. Legend. The Warrants and the Warrant Shares deliverable upon
exercise of the Warrants have not been registered under the Securities Act of
1933, as amended (the "Act") or under any state securities law and any Warrant
Shares issued upon the exercise of the Warrants shall bear the following legend:
The shares of Class A Common Stock represented by this
certificate have not been registered under the Securities Act of
1933, as amended, or under any state securities law.
SECTION 10. Cancellation of Warrant Certificates. In the event that the
Company shall purchase or otherwise acquire any Warrant Certificate or
certificates after the issuance thereof, such Warrant Certificate or
Certificates shall thereupon be cancelled by the Company and retired. The
Company shall also cancel any Warrant Certificate delivered to it for exercise,
in whole or in part, or delivered to it for transfer, split-up, combination or
exchange.
SECTION 11. Payment of Expenses by the Company. The Company agrees to
pay all expenses, including counsel fees, and other disbursements incurred in
the administration and execution of this Warrant Agreement and the exercise and
performance of its duties hereunder.
SECTION 12. Issuance of New Warrant Certificates. Notwithstanding
anything to the contrary in this Warrant Agreement or the several Warrant
Certificates, the Company may, at its option, issue new Warrant Certificates in
such form as may be approved by this Board of Directors to reflect any
adjustment or change in the Exercise Price or the number and kind of shares
purchasable under the several Warrant Certificates made in accordance with the
provisions of this Warrant Agreement.
SECTION 13. Financial Reports and Other Information. The Company agrees
to provide each registered holder of a Warrant at its address reflected on the
Company's registration books, promptly after they become available, with copies
of all regular, special and periodic financial and other information and reports
which it sends or makes generally available to its stockholders.
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<PAGE> 13
SECTION 14. Notices. Notice or demand pursuant to this Warrant
Agreement to be given or made on the Company by the registered holder of any
Warrant Certificate shall be sufficiently given or made if sent by first-class
or registered mail, postage prepaid, addressed (until another address is filed
in writing by the Company with the registered holders of Warrant Certificates)
as follows:
CardMember Publishing Corporation
655 Washington Blvd. - Suite 1000
Stamford, Connecticut 06901-3724
Attention: Chief Financial Officer
Any notice or demand authorized to be given or made to the registered holder of
any Warrant Certificate under this Warrant Agreement shall be sufficiently given
or made if sent by first-class or registered mail, postage prepaid, to the last
address of such holder as it shall appear on the registers maintained by the
Company.
SECTION 15. Amendments. This Warrant Agreement may be modified or
amended only by a written agreement signed by the Company and the Holder or, if
there is more than one holder, by holders of Warrants representing the right to
acquire a majority of the Warrant Shares then issuable on exercise of the then
outstanding Warrants.
SECTION 16. Successors. All the covenants and provisions of this
Warrant Agreement by or for the benefit of the Company and the registered
holders of Warrant Certificates shall bind and inure to the benefit of their
respective successors and assigns hereunder.
SECTION 17. Benefits of this Warrant Agreement. Nothing in this Warrant
Agreement or in the Warrant Certificates shall be construed to give to any
person or corporation other than the Company, the registered holders of the
Warrant Certificates and their respective successors and assigns hereunder, any
legal or equitable right, remedy or claim under this Warrant Agreement. This
Warrant Agreement shall be for the sole and exclusive benefit of the Company,
the registered holders of the Warrant Certificates and their respective
successors and assigns hereunder.
SECTION 18. Description Headings. The descriptive headings of the
several Sections of this Warrant Agreement are inserted for convenience only and
shall not control or affect the meaning of construction of any of the provisions
hereof.
SECTION 19. Counterparts. This Warrant Agreement may be executed in any
number of counterparts, each of which shall be an original, but such
counterparts shall together constitute one and the same instrument.
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<PAGE> 14
IN WITNESS WHEREOF, the parties hereto have caused this Warrant Agreement to be
duly executed, all as of the day and year first above written.
The Company:
CARDMEMBER PUBLISHING CORPORATION
By: /s/ Gary Johnson
--------------------------------------
Name: Gary Johnson
Title:
The Holder:
per pro BROWN BROTHERS HARRIMAN & CO
/s/ W. C. Sullivan III
------------------------------------------
Name: W. C. Sullivan III
Title:
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<PAGE> 1
Exhibit 10.13
THIS WARRANT WAS ORIGINALLY ISSUED ON MARCH 30, 1994 AND HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAW.
THE TRANSFER OF THIS WARRANT IS SUBJECT TO CERTAIN RIGHTS OF FIRST OFFER,
RESTRICTIONS ON TRANSFER, VOTING AGREEMENTS AND OTHER CONDITIONS SPECIFIED IN
THE AMENDED AND RESTATED STOCKHOLDERS AGREEMENT DATED AS OF DECEMBER 28, 1990,
AS AMENDED FROM TIME TO TIME, AMONG THE ISSUER (THE "COMPANY") AND CERTAIN
INVESTORS OF THE COMPANY, AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE
TRANSFER OF THIS WARRANT UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT
TO SUCH TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FORWARDED BY THE COMPANY TO
THE HOLDER UPON WRITTEN REQUEST AND WITHOUT CHARGE.
THIS WARRANT SHALL BE VOID AFTER 5:00 P.M. CONNECTICUT TIME
ON THE EXPIRATION DATE OF THIS WARRANT
_______ SHARES
March 30, l994
FORM OF WARRANT FOR THE PURCHASE OF
CLASS A COMMON STOCK, PAR VALUE $.01 SHARE
CARDMEMBER PUBLISHING CORPORATION
(Incorporated Under the Laws of the State of Delaware)
This is to certify that, for value received, _________ or its
registered assigns (the "Holder") is entitled to purchase, subject to the terms
and conditions hereinafter set forth during the period specified in Paragraph 1
below, an aggregate of shares of Class A Common Stock, par value $.01 per share
(the "Class A Common"), of CARDMEMBER PUBLISHING CORPORATION (hereinafter called
the "Corporation") at the purchase price of $26.07 per share, as may be adjusted
pursuant to the term set forth herein (the "Purchase Price"), and to receive,
and the Corporation shall issue, a certificate or certificates for the shares of
Class A Common so purchased, upon presentation and surrender to the Corporation
of this Warrant with the form of Subscription duly executed and accompanied by
payment by certified or cashier's check (or in the manner described in Section
15 hereof) of the Purchase Price for the shares of Class A Common at the
Purchase Price per share of Class A Common for the number of shares of Class A
Common purchased. The purchase rights represented by this Warrant are
exercisable at the option of the registered owner hereof, at any time or from
time to time in whole or in part, subject to the terms and conditions set forth
herein.
<PAGE> 2
This Warrant is issued pursuant to, and is subject to the
terms and conditions of, that certain Securities Purchase Agreement, dated as of
March 30, 1994 (the "Securities Purchase Agreement"), among the Corporation, the
original Holder and the holders of the other warrants to purchase shares of
Class A Common (the "Other Warrants") issued by the Corporation pursuant to the
Securities Purchase Agreement. Pursuant to the Securities Purchase Agreement,
the Corporation also issued its convertible promissory notes (the "Notes") to
the Holder and the holders of the Other Warrants. This Warrant and the Other
Warrants are sometimes collectively referred to herein as the "Warrants".
1. Exercise of Warrant. The rights hereunder to purchase
shares of Class A Common shall be exercisable by the Holder immediately upon the
issuance hereof for a period of five (5) years from the date hereof (the
"Expiration Date"). The Corporation shall provide the Holder with notice that
this Warrant shall expire on the Expiration Date and such notice shall be given
to the Holder no more than sixty (60) and no less than thirty (30) days prior to
the Expiration Date. In the event the Holder shall purchase less than the
maximum number of shares of Class A Common purchasable upon the exercise of this
Warrant, the Corporation shall issue to the Holder a new warrant of like tenor
to this Warrant for the balance of the shares of Class A Common.
2. Stock To Be Fully Paid. The Corporation covenants and
agrees that all shares of Class A Common which may be delivered upon the
exercise of this Warrant will, upon delivery, be fully paid and non-assessable
and free from all taxes, liens and charges with respect to the purchase thereof
hereunder.
3. Adjustment of Price and Number of Shares Purchasable.
The number of shares of Class A Common purchasable upon the exercise of this
Warrant and the Purchase Price shall be subject to adjustment from time to time
as set forth herein. No fractional shares of Class A Common or script
representing fractional shares of Class A Common shall be issued upon the
exercise of this Warrant, but the Corporation shall pay to the Holder upon the
exercise of this Warrant an amount in cash equal to the Fair Market Value (as
defined in paragraph 15) of that portion of a share of Class A Common.
4. Reservation of Shares. The Corporation agrees at all
tines to reserve or hold available a sufficient number of shares of Class A
Common to cover the number of shares of Class A Common issuable upon the
exercise of this and all other warrants to purchase shares of Class A Common
outstanding from the date of this Warrant. The Corporation agrees at all times
to reserve or hold available a sufficient number of shares of Class B Common
Stock, par value $.01 per share (the "Class B Common") into which the Class A
Common is convertible.
5. Voting Rights and Dividends. This Warrant shall not
entitle the Holder to any voting rights or other rights or obligations as a
shareholder of the
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<PAGE> 3
Corporation, or to any other rights whatsoever except the rights and obligations
herein expressed and as are set forth herein and as set forth in the Securities
Purchase Agreement, and no dividends shall be payable or accrue in respect of
this Warrant or the interest represented hereby or the shares of Class A Common
purchasable hereunder until or unless, and except to the extent that, this
Warrant shall be exercised.
6. Adjustments to Purchase Price for Diluting Issues:
(i) Special Definitions. For purposes of this
Section 6, the following definitions shall apply:
(1) "Common Stock" shall mean the Class
A Common and the Class B Common.
(2) "Original Issue Date" shall mean
the date on which this Warrant is issued as identified on the face of this
Warrant.
(3) "Preferred Stock" shall mean any
series of preferred shares of capital stock issued by the Corporation and shall
include the Series A Preferred Stock, par value $.01 per share (the "Series A
Preferred") , the Series B Preferred Stock, par value $.01 per share (the
"Series B Preferred"), the Series C Preferred Stock, par value $.01 per share
(the "Series C Preferred"), the Series D preferred Stock, par value $.01 per
share (the "Series D Preferred"), the Series E Preferred Stock, par value $.01
per share (the "Series E Preferred"), and the Series F Preferred Stock, par
value $.01 per share (the "Series F Preferred").
(4) "Option" shall mean rights, options
or warrants to subscribe for, purchase or otherwise acquire either Common Stock
or Convertible Securities.
(5) "Convertible Securities" shall mean
any evidences of indebtedness, shares (other than Common Stock and Preferred
Stock) or other securities directly or indirectly convertible into or
exchangeable for Common Stock.
(6) "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued (or, pursuant to Section 6(iii),
deemed to be issued) by the Corporation after the Original Issue Date, other
than shares of Common Stock issued or issuable:
(A) Upon the conversion of
shares of Preferred Stock, upon the conversion or upon the exercise of the
Warrant or Other Warrants;
(B) To officers, directors or
employees of, or consultants to, the Corporation pursuant to a stock purchase or
option plan or other
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<PAGE> 4
employee stock incentive program (collectively, the "Plans") approved by the
Board of Directors in an amount not to exceed one hundred twelve thousand
(112,000) shares of Class B Common (including all outstanding options to
purchase Class B Common and Class B Common issued pursuant to the Plans);
(C) Upon exercise of the
warrant issued to Brown Brothers Harriman to purchase an aggregate of no more
than 20,000 shares of Common Stock for an exercise of price of not less than $15
per share but only to the extent such warrant is issued on or before September
30, 1994 in connection with a new credit facility of not less than $6 million by
Brown Brothers Harriman;
(D) Upon conversion of shares
of the Class A Common; or
(E) By way of dividend or
other distribution on shares of Common Stock excluded from the definition of
Additional Shares of Common Stock by the foregoing clauses (A), (B), (C), (D) or
this clause (E) or on shares of Common Stock so excluded.
(ii) No Adjustment of Purchase Price. No
adjustment in the number of shares of Class A Common purchasable upon the
exercise of this Warrant shall be made, by adjustment in the Purchase Price for
such shares of Class A Common in respect of the issuance of Additional Shares of
Common Stock or otherwise, unless the consideration per share for an Additional
Share of Common Stock issued or deemed to be issued by the Corporation is less
than the Purchase Price in effect on the date hereof, and immediately prior to,
the issue of such Additional Share of Common Stock.
(iii) Issue of Securities Doped Issue of
Additional Shares of Common Stock.
(1) Options and Convertible Securities.
In the event the Corporation at any time or from time to time after the Original
Issue Date shall issue any Options or Convertible Securities or shall fix a
record date for the determination of holders of any class of securities entitled
to receive any such Options or Convertible Securities, then the maximum number
of shares (as set forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment to such number) of
Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue, or in case such a record date shall have
been fixed, as of the close of business on such record date, provided that
Additional Shares of Common Stock shall not be deemed to have been issued unless
the consideration per share (determined pursuant to Section 6(v) hereof) of such
Additional Shares of Common Stock would be less than the Purchase Price in
effect on the date of and immediately prior to such issue,
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<PAGE> 5
or such record date, as the case may be, and provided further that in any such
case in which Additional Shares of Common Stock are deemed to be issued:
(A) No further adjustment in
the Purchase Price shall be made upon the subsequent issue of Convertible
Securities or shares of Common Stock upon the exercise of such Options or
conversion or exchange of such Convertible Securities;
(B) If such Options or
Convertible Securities by their terms provide, with the passage of time or
otherwise, for any increase or decrease in the consideration payable to the
Corporation, or increase or decrease in the number of shares of Common Stock
issuable, upon the exercise, conversion or exchange thereof, the Purchase Price
computed upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based thereon, shall,
upon any such increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities;
(C) Upon the expiration of any
such Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Purchase Price computed upon
the original issue thereof (or upon the occurrence of a record date with respect
thereto), and any subsequent adjustments based thereon, shall, upon such
expiration, be recomputed as if:
(I) In the case of
Convertible Securities or Options for Common Stock the only Additional Shares of
Common Stock issued were the shares of Common Stock, if any, actually issued
upon the exercise of such options or the conversion or exchange of such
Convertible Securities and the consideration received therefor was the
consideration actually received by the Corporation for the issue of all such
Options, whether or not exercised, plus the consideration actually received by
the Corporation upon such exercise, or for the issue of all such Convertible
Securities which were actually converted or exchanged, plus the additional
consideration, if any, actually received by the Corporation upon such conversion
or exchange, and
(II) in the case of
options for Convertible Securities only the Convertible Securities, if any,
actually issued upon the exercise thereof were issued at the time of issue of
such Options, and the consideration received by the corporation for the
Additional Shares of Common Stock deemed to have been then issued was the
consideration actually received by the Corporation for the issue of all such
options, whether or not exercised, plus the consideration deemed to have been
received by the Corporation (determined pursuant to Section 6(v)) upon the issue
of the Convertible Securities with respect to which such Options were actually
exercised;
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<PAGE> 6
(D) No readjustment pursuant
to clause (B) or (C) above shall have the effect of increasing the Purchase
Price to an amount which exceeds the lower of (i) the Purchase Price on the
original adjustment date, or (ii) the Purchase Price that would have resulted
from any issuance of Additional Shares of Common Stock between the original
adjustment date and such readjustment date;
(E) In the case of any options
which expire by their terms not more than 30 days after the date of issue
thereof, no adjustment of the Purchase Price shall be made until the expiration
or exercise of all such Options, whereupon such adjustment shall be made in the
same manner provided in clause (C) above; and
(F) If such record date shall
have been fixed and such Options or Convertible Securities are not issued on the
date fixed therefor, the adjustment previously made in the Purchase Price which
became effective on such record date shall be canceled as of the close of
business on such record date, and thereafter the Purchase Price shall be
adjusted pursuant to this subparagraph 6(iii) as of the actual date of their
issuance.
(2) Stock Dividends, Stock
Distributions and Subdivisions. In the event the Corporation at any time or from
time to time after the Original Issue Date shall declare or pay any dividend or
make any other distribution on the Common Stock payable in Common Stock, of
effect a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in Common Stock),
then and in any such event, Additional Shares of Common Stock shall be deemed to
have been issued:
(A) In the case of any such
dividend or distribution, immediately after close of business on the record date
for the determination of holders of any class of securities entitled to receive
such dividend or distribution, or
(B) In the case of any such
subdivision, at the close of business on the date immediately prior to the date
upon which such corporate action becomes effective.
If such record date shall have been fixed
and such dividend shall not have been fully paid on the date fixed therefor, the
adjustment previously made in the Purchase Price which became effective on such
record date shall be canceled as of the close of business on such record date,
and thereafter the Purchase Price shall be adjusted pursuant to this
subparagraph 6(iii) as of the time of actual payment of such dividend.
(iv) Adjustment of Purchase Price Upon Issuance
of Additional Shares of Common Stock. In the event the Corporation shall issue
or shall be deemed
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<PAGE> 7
to issue Additional Shares of Common Stock (including Additional Shares of
Common Stock deemed to be issued pursuant to Section 6(iii), but excluding
Additional Shares of Common Stock issued pursuant to Section 6(iii)(2), which
event is dealt with in Section 6(vi) hereof, without consideration or for a
consideration per share less than the Purchase Price in effect on the date of
and immediately prior to such issue, then and in such event such Purchase Price
shall be reduced, concurrently with such issue in order to increase the number
of shares of Class A Common purchasable upon exercise of this Warrant, to a
price determined by multiplying such Purchase Price by fraction (x) the
numerator of which shall be (1) the number of shares of Class A Common
outstanding immediately prior to such issue (including shares of Class A Common
issuable upon conversion of any outstanding Preferred Stock or Convertible
Securities or upon exercise of any outstanding Options), plus (2) the number of
shares of Class A Common which the aggregate consideration received by the
Corporation for the total number of Additional Shares of Common Stock so issued
would purchase at such Purchase Price, and (y) the denominator of which shall be
(1) the number of shares of Class A Common outstanding immediately prior to such
issue (including shares of Class A Common issuable upon conversion of any
outstanding Preferred Stock or Convertible Securities or upon exercise of any
outstanding Options), plus (2) the number of such Additional Shares of Common
Stock so issued.
(v) Determination of Consideration. For
purposes of this Section 6(v), the consideration received by the Corporation for
the issue of any Additional Shares of Common Stock shall be computed as follows:
(1) Cash and Property: Such
consideration shall:
(A) Insofar as it consists of
cash, be computed at the aggregate amount of cash received by the Corporation
excluding amounts paid or payable for accrued interest or accrued dividends;
(B) Insofar as it consists of
property other than cash, be computed at the fair value thereof at the time of
such issue, as determined in good faith by the Board of Directors; and
(C) In the event Additional
Shares of Common Stock are issued together with other shares or securities or
other assets of the Corporation for consideration which covers both, be the
proportion of such consideration so received, computed as provided in clauses
(A) and (B) above, as determined in good faith by the Board of Directors.
(2) Options and Convertible Securities.
The Consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Section 6(iii)(1), relating
to Options and Convertible Securities, shall be determined by dividing:
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<PAGE> 8
(x) The total amount, if any,
received or receivable by the Corporation as consideration for the issue of such
Options or Convertible Securities, plus the minimum aggregate amount of
additional consideration (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment of
such consideration) payable to the Corporation upon the exercise of such options
or the conversion or exchange of such Convertible Securities, or in the case of
Options for Convertible Securities, the exercise of such Options for Convertible
Securities and the conversion or exchange of such Convertible Securities, by
(y) The maximum number of
shares of Common Stock (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment of
such number) issuable upon the exercise of such options or the conversion or
exchange of such Convertible Securities.
(vi) Adjustment for Dividends, Distributions,
Subdivisions, Combinations or Consolidation of Common Stock.
(1) Stock Dividends, Distributions or
Subdivisions. In the event the Corporation shall issue Additional Shares of
Common Stock pursuant to Section 6(iii) (2) in a stock dividend, stock
distribution or subdivision, the Purchase Price in effect immediately prior to
such stock dividend, stock distribution or subdivision shall, concurrently with
the effectiveness of such stock dividend, stock distribution or subdivision, be
proportionately decreased.
(2) Combinations or Consolidations.
In the event the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Common Stock, the Purchase Price in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.
(vii) Adjustment for Merger or Reorganization.
etc. In case of any recapitalization, reorganization, reclassification,
consolidation, merger or the conveyance of all or substantially all of the
assets of the Corporation pursuant to which the holders of Common Stock are
entitled to receive (either directly or on subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock (an
"Organic Change"), the Holder of this Warrant shall thereafter have the right to
acquire and receive, in lieu of or in addition to (as the case may be) the
shares of Class A Common purchasable upon the exercise of this Warrant, such
shares of stock, securities or assets as such Holder would have received if such
Holder had purchased shares of Class A Common immediately prior to such organic
Change. In each such case, the Corporation shall also make appropriate
provisions to insure that the Holder of this Warrant upon the exercise of this
Warrant may purchase at the Purchase Price that number of shares of stock or
other securities or property to which a holder of the number of shares of
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<PAGE> 9
Class A Common of the Corporation deliverable upon exercise of this Warrant
would have been entitled upon such consolidation, merger or conveyance and that
appropriate adjustment (as determined by the Board of Directors) shall be made
in the application of the provisions herein set forth with respect to the rights
and interest thereafter of the Holder or of holders of warrants to purchase
shares of Class A Common, to the end that the provisions set forth herein
(including provisions with respect to changes in and other adjustments of the
Purchase Price) shall thereafter be applicable, as nearly as reasonably may be,
in relation to any shares of stock or other property thereafter deliverable upon
the exercise of this Warrant. The Corporation shall not effect any such organic
Changes unless prior to the consummation thereof, the successor entity (if other
than the Corporation) assumes by written instrument the obligations set forth
herein.
7. Notice of Change. Upon the happening of any event
requiring an adjustment of the Purchase Price per share of Class A Common set
forth in this Warrant, the Corporation shall forthwith give written notice
thereof to the Holder of this Warrant stating such adjusted Purchase Price and
the adjusted number of shares of Class A Common purchasable upon the exercise of
this Warrant resulting from such event, and setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based.
The Board of Directors of the Corporation shall determine the computation made
hereunder in accordance with the terms of this Warrant.
8. Dissolution Provisions and Notice. In case any
voluntary or involuntary dissolution, liquidation or winding up of the
Corporation shall at any time be proposed, the Corporation shall give at least
twenty (20) days prior written notice thereof to the Holder stating the date on
which such event is to take place and the date (which shall be at least twenty
(20) days after the giving of such notice) as of which the holders of shares of
Class A Common of record shall be entitled to exchange their shares of Class A
Common for securities or other property deliverable upon such dissolution,
liquidation or winding up (on which date, in the event such dissolution,
liquidation or winding up shall actually take place, this Warrant and all rights
with respect hereto shall terminate). Notices pursuant to this paragraph shall
be given by first class mail, postage prepaid, addressed to the Holder of this
Warrant at the address of such Holder appearing in the records of the
Corporation.
For the purposes of this Paragraph 8, the merger or
Consolidation of the Corporation into or with another entity or entities in
which the Corporation shall not survive, or the sale or transfer of all or
substantially all the assets of the Corporation, or a merger in which the
Corporation is the survivor but its Common Stock is exchanged for stock,
securities or property of another entity, or a merger in which the Corporation
is the survivor but the holders of the Corporation's outstanding capital stock
possessing the voting power (under ordinary circumstances) to elect a majority
of the Corporation's board of directors immediately prior to the merger do not
continue to own the Corporation's outstanding capital stock possessing the
voting power under ordinary circumstances) to elect a majority of the
Corporation's board of directors immediately
-9-
<PAGE> 10
after the merger, shall be deemed to be a liquidation, dissolution and winding
up of the Corporation. The Holder shall have the right to elect the benefits of
either this Paragraph 8 or Paragraph 6(vii) in connection with any such merger,
consolidation or sale of assets.
9. Title. This Warrant is issued subject to the
condition, and every Holder of this Warrant by accepting the same agrees with
every subsequent Holder of this Warrant and with the Corporation, that title to
this Warrant and all rights hereunder shall be transferable by delivery of this
Warrant duly endorsed, subject to paragraph 10 below, and the Corporation and
all persons dealing with this Warrant may treat the registered Holder of this
Warrant, or when this Warrant is presented duly endorsed in blank or endorsed to
a specified person, the Corporation and all persons dealing with this Warrant
may treat that holder or person, as the Holder hereof for all purposes, any
notice to the contrary notwithstanding.
10. Covenants. The above provisions are subject to the
following:
This Warrant and the shares of Class A Common
purchasable upon exercise of this Warrant have not been registered under the
Securities Act of 1933, as amended (the "Act"). This Warrant has been issued for
investment purposes only and is not intended to be distributed or resold, and
the Holder of this Warrant may not pledge, hypothecate, grant a security
interest in or otherwise transfer this Warrant or any shares of Class A Common
purchased upon the exercise of this Warrant without an effective registration
statement for such Warrant or such shares of Class A Common or an opinion of
counsel for the Corporation that registration of this Warrant or such shares of
Class A Common is not required under the Act. Any shares of Class A Common
issued upon the exercise of this Warrant shall bear the following legend:
The securities represented by this certificate were originally
issued on March 30, 1994 and have not been registered under
the Securities Act of 1933, as amended, or under any state
securities law. The transfer of the securities represented by
this certificate is subject to certain rights of first offer,
restrictions on transfer, voting agreements and other
conditions specified in the Amended and Restated Stockholders'
Agreement dated as of December 28, 1990, as amended from time
to time, among the issuer (the "Company") and certain
investors of the Company, and the Company reserves the right
to refuse the transfer of such securities until such
conditions have been fulfilled with respect to such transfer.
A copy of such conditions shall be forwarded by the Company to
the holder upon written request and without charge.
-10-
<PAGE> 11
11. Absolute Ownership. The Corporation may deem and
treat the registered Holder of this Warrant at any time as the absolute owner
hereof for all purposes and shall not be affected by any notice to the contrary.
12. Investment Letter. Upon exercise of this Warrant, as
a condition precedent to the Corporation's obligation to issue shares pursuant
hereto, the Holder of this Warrant shall execute an investment letter reasonably
satisfactory to counsel for the Corporation and deliver such investment letter
to the Corporation.
13. Governing Law. This Warrant shall be governed by, and
construed in accordance with, the laws of the State of Delaware.
14. Amendments. The provisions of this Warrant and the
other Warrants may be amended, and the Corporation may take any action herein
prohibited or omit to perform any act herein required to be performed by the
Corporation, only if the Corporation has obtained the written consent of the
holders of Warrants representing at least sixty-six and two-thirds percent
(66-2/3%) of the number of shares of Class A Common purchasable upon the
exercise of the outstanding Warrants.
15. Alternative Method of Payment of Purchase Price. Upon
the Holder's exercise of this Warrant to purchase shares of Common Class A, in
addition to payment of the Purchase Price by certified or cashiers check as set
forth in this Warrant, the Holder shall have the right to pay the Purchase Price
by surrendering to the Corporation (a) a Note or Notes having an outstanding
principal amount and accrued and unpaid interest equal to such Purchase Price,
(b) Preferred Stock of the Corporation having a liquidation value and accrued
and unpaid dividends equal to such Purchase Price, or (c) other securities of
the Company (including shares of Class A Common issuable upon exercise of this
Warrant) having a Fair Market Value equal to such Purchase Price; provided,
however, that the maximum number of shares of Class A Common so purchased shall
not exceed the number of shares of Class A Common purchasable hereunder. For
purposes of this Warrant, the term "Fair Market Value" shall mean the price at
which a willing seller would sell and a willing purchaser would purchase in an
arm's-length transaction, neither being under any compulsion to sell or
purchase. Fair Market Value shall be determined jointly by the Company and the
holders of Warrants representing a majority of the Class A Common purchasable
upon exercise of all outstanding Warrants (the "Majority Holders"); provided
that if such parties are unable to reach agreement within a reasonable period of
time, such Fair Market Value shall be determined by an appraiser jointly
selected by the Company and the Majority Holders, which determination will be
final and binding on the Company and all holders of Warrants. The fees and
expenses of such appraiser will be paid by the Company.
* * * *
-11-
<PAGE> 12
IN WITNESS WHEREOF, The Corporation has caused this Warrant to be
executed and attested by its duly authorized officers and has caused its
corporate seal to be hereunder affixed.
CARDMEMBER PUBLISHING CORPORATION
By:
----------------------------------------
Gary Johnson
President
ATTEST:
- ---------------------------------
Thomas St. Denis
Secretary
-12-
<PAGE> 13
CARDMEMBER PUBLISHING CORPORATION
SUBSCRIPTION
To Be Signed Only Upon Exercise of Warrant
TO: CARDMEMBER PUBLISHING CORPORATION
655 Washington Blvd., Suite 806
STAMFORD, CONNECTICUT 06901
The undersigned, the Holder of the within Warrant, hereby
irrevocably elects to exercise the rights represented by this Warrant for the
purchase of, and to purchase thereunder, _______ shares of Class A Common Stock
of CARDMEMBER PUBLISHING CORPORATION, and herewith makes payment of $________
theretofore, and requests that the certificates for such shares of Class A
Common Stock be issued in the name of and be delivered to
________________________, whose address is _______________ and whose shares of
Class A Common Stock shall be less than all of the shares of Class A Common
Stock purchasable hereunder, that a new Warrant of like tenor for the balance of
the shares of Class Common Stock purchasable hereunder be delivered to the
undersigned.
Dated: ________________________
________________________________
Name:
Title:
-13-
<PAGE> 1
EXHIBIT 10.14
THIS WARRANT HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THIS WARRANT (AND ANY SECURITIES ISSUABLE UPON
EXERCISE THEREOF) MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM. IN ADDITION, THE TRANSFER OF THIS
WARRANT AND SUCH SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN SECTION 8
OF THE SECURITIES PURCHASE AGREEMENT DATED AS OF JULY 31, 1995, BETWEEN
CARDMEMBER PUBLISHING CORPORATION AND THE INVESTORS LISTED THEREIN. NO TRANSFER
OF THIS WARRANT OR SUCH SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED.
CARDMEMBER PUBLISHING CORPORATION _____ SHARES
FORM OF STOCK SUBSCRIPTION AS OF JULY 31, 1995
WARRANT
THIS CERTIFIES that, for valuable consideration, ______________________
_____________ (the "Holder"), or its registered assigns, is entitled to
subscribe for and purchase from CARDMEMBER PUBLISHING CORPORATION, a Delaware
corporation (the "Corporation"), on the terms and subject to the conditions
hereof:
(a) _____ shares of Class A Common Stock; par value $.01 per share (the
"Warrant Shares") of the Corporation;
(b) at the price (the "Warrant Price") of $.01 per share;
(c) at any time or from time to time during the period (the "Exercise
Period") commencing with the date of issuance of this Warrant and ending with
the fifth anniversary of the date of issuance. The number of Warrant Shares and
the Warrant Price are subject to adjustment, and the number of Warrant Shares is
subject to reduction, as provided in this Warrant.
This Warrant is issued pursuant to, and is subject to the terms and
conditions of, that certain Securities Purchase Agreement dated as of July 31,
1995 (the "Securities Purchase Agreement"), among the Corporation, the original
Holder and the holders of the other warrants to purchase shares of Class A
Common Stock (the "Other Warrants") issued by the Corporation pursuant to the
Securities Purchase Agreement. This Warrant and the Other Warrants are sometimes
collectively referred to herein as the "Warrants".
SECTION 1. EXERCISE OF WARRANT. (a) The rights represented by this Warrant
may be exercised (a "Warrant Exercise") by the Holder, in whole at any time or
in part from time to time during the Exercise Period, but not as to any
fractional share of Class A Common Stock, by the surrender of this Warrant,
accompanied by a
<PAGE> 2
properly completed and executed Notice of Exercise in the form attached, at the
executive offices of the Corporation, or at such other agency or office of the
Corporation in the United States of America as it may designate by notice in
writing to the Holder at the address of the Holder appearing on the books of the
Corporation.
(b) The closing of any Warrant Exercise shall take place at the
offices of the Corporation on the date specified in the Notice of Exercise (the
"Exercise Date"), which shall be within five days after the delivery of such
Notice. At such closing, (i) the Corporation shall issue and deliver to the
Holder or its designee a certificate or certificates for the Warrant Shares to
be issued upon such Warrant Exercise, registered in the name of the Holder or
such designee, and if such Warrant Exercise shall not have been for all Warrant
Shares, a new Warrant, registered in the name of the Holder, of like tenor to
this Warrant for the number of remaining Warrant Shares, and (ii) the Holder
shall deliver to the Corporation the aggregate Warrant Price.
SECTION 2. RECORD DATE. The person in whose name any certificate for
shares of Class A Common Stock is issued upon any Warrant Exercise or Warrant
Exchange shall for all purposes be deemed to have become the holder of record of
such shares on the date of such issuance pursuant to Section 1(b).
SECTION 3. RESERVATION OF COMMON STOCK. (a) The Corporation has duly
reserved, and shall at all times duly reserve, a sufficient number of shares of
authorized Class A Common Stock for issuance upon exercise or exchange of this
Warrant. Upon issuance, sale and delivery of any Warrant Shares, such Warrant
Shares shall be validly issued and outstanding, fully paid and nonassessable,
and shall not be subject to preemptive or any similar rights of any person or
entity. Without limiting the generality of the foregoing, the Company shall take
all such action as may be necessary to assure that the par value per share of
Class A Common Stock is at all times equal to or less than the Warrant Price
then in effect.
(b) The Corporation has duly reserved, and shall at all times duly
reserve, a sufficient number of shares of authorized Class B Common Stock, $.01
par value (the "Class B Common Stock"), for issuance upon conversion of Warrant
Shares. The Class A Common Stock and the Class B Common Stock are referred to as
the "Common Stock."
SECTION 4. ADJUSTMENT OF WARRANT PRICE. (a) If, at any time during the
Exercise Period, the number of outstanding shares of Class A Common Stock is (i)
increased by a stock dividend payable in shares of Class A Common Stock or by a
subdivision or split-up of shares of Class A Common Stock, or (ii) decreased by
a combination of shares of Class A Common Stock, then, following the record date
fixed for the determination of holders of Class A Common Stock entitled to
receive the benefits of such stock dividend, subdivision, split up, or
combination, the Warrant Price shall be adjusted to a new amount equal to the
product of (A) the Warrant Price in effect
-2-
<PAGE> 3
on such record date and (B) the quotient obtained by dividing (x) the number of
shares of Class A Common Stock outstanding on such record date (without giving
effect to the event referred to in the foregoing clause (i) or (ii)) by (y) the
number of shares of Class A Common Stock which would be outstanding immediately
after the event referred to in the foregoing clause (i) or (ii), if such event
had occurred immediately following such record date.
(b) If, at any time during the Exercise Period, the Corporation
shall issue or be deemed to have issued (as provided below) shares of Common
Stock other than Excluded Stock (as defined below) without consideration or for
a consideration per share less than the Warrant Price in effect immediately
prior to such issuance or deemed issuance, then such Warrant Price shall be
lowered to a price equal to the quotient obtained by dividing (i) an amount
equal to the sum of (A) the product of (x) the number of shares of Common Stock
outstanding immediately prior to such issuance or deemed issuance and (y) the
then existing Warrant Price, and (B) the total consideration received or deemed
received by the Corporation upon such issuance or deemed issuance, by (ii) the
total number of shares of Common Stock outstanding immediately after such
issuance or deemed issuance. For the purposes of any adjustment of the Warrant
Price pursuant to this paragraph, the following provisions shall be applicable:
(i) In the case of the issuance of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor without
deducting therefrom any discounts, commissions or other expenses allowed, paid
or incurred by the Corporation for any underwriting or otherwise in connection
with such issuance.
(ii) In the case of the issuance of Common Stock for no
consideration, the consideration shall be deemed to be $.01 per share.
(iii) In the case of the issuance 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 by the
Board of Directors of the Corporation, irrespective of any accounting treatment.
(iv) In the case of the issuance of options to purchase or rights to
subscribe for Common Stock, securities by their terms convertible into or
exchangeable for Common Stock, or options to purchase or rights to subscribe for
such convertible or exchangeable securities:
(A) The shares of Common Stock deliverable upon exercise of such
options to purchase or rights to subscribe for Common Stock shall be deemed to
have been issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner provided in
clauses (i) through (iii) above), if any, received by the Corporation upon the
issuance of such options or rights
-3-
<PAGE> 4
plus the minimum purchase price provided in such options or rights for the
Common Stock covered thereby.
(B) The shares of Common Stock deliverable upon conversion of or in
exchange for any such convertible or exchangeable securities or upon the
exercise of options to purchase or rights to subscribe for such convertible or
exchangeable securities and subsequent conversions or exchanges thereof shall be
deemed to have been issued at the time such securities were issued or such
options or rights were issued and for a consideration equal to the consideration
received by the Corporation for any such securities and related options or
rights (excluding any cash received on account of accrued interest or accrued
dividends), plus the additional consideration, if any, to be received by the
Corporation upon the conversion or exchange of such securities or the exercise
of any related options or rights (the consideration in each case to be
determined in the manner provided in clauses (i) through (iii) above).
(C) Upon any change in the exercise price or number of shares of
Common Stock deliverable upon exercise of any such options or rights or
conversion of or exchange for such convertible or exchangeable securities
(including any such change resulting from the termination of any such options,
rights, or securities), other than a change resulting from the antidilution
provisions thereof, the Warrant Price shall be readjusted to such Warrant Price
as would have obtained had the adjustment made upon the issuance of such
options, rights or securities not converted prior to such change been made upon
the basis of such change.
(D) No further adjustments of the Warrant Price shall be made upon
the actual issuance of such Common Stock or of such convertible or exchangeable
securities, upon exercise of such options or rights, or upon the actual issuance
of such Common Stock upon conversion or exchange of such convertible or
exchangeable securities.
(v) "Excluded Stock" means (1) the shares of Class A Common Stock
and the shares of Class B Common Stock, $.01 par value, of the Corporation
issued upon the conversion or exercise of the securities listed on Schedule 4.6
to the Securities Purchase Agreement dated as of July 31, 1995 (the "Securities
Purchase Agreement"), among the Corporation and the investors listed therein;
(2) those stock subscription warrants with voting rights for the purchase of
Class A Common Stock of the corporation dated August 3, 1995, and issued to
Sprout Growth II, L.P. and DLJ Capital Corporation as such warrants may from
time to time be amended in accordance with their terms; (3) (i) those certain
warrants for the purchase of Class A Common Stock dated March 30, 1994 and
issued pursuant to the Securities Purchase Agreement, (ii) those certain
warrants for the purchase of Class A Common Stock dated September 9, 1994, and
issued to Brown Brothers Harriman & Co. and (iii) those certain warrants for the
purchase of a minimum of 6,094 shares and up to 10,000 shares of Class A Common
Stock as contemplated by the Securities Purchase Agreement dated as of July 31,
1995, in each case as such warrants may from time to time be amended in
accordance with their terms; and (4)
-4-
<PAGE> 5
shares of any class of capital stock issued, on a pro rata basis to all holders
of such class as a stock dividend or upon any stock split or other subdivision
of shares of capital stock.
(c) All calculations under this Section shall be made to the nearest
one hundredths (1/100) of a cent.
(d) Whenever the Warrant Price shall be adjusted as provided above,
the Corporation shall deliver to the Holder a statement, signed by its chief
financial officer, showing in detail the facts requiring such adjustment and the
Warrant Price that shall be in effect after such adjustment.
SECTION 5. ADJUSTMENT OF WARRANT SHARES. (a) Upon each adjustment of the
Warrant Price as provided in Section 5, the Holder shall thereafter be entitled
to subscribe for and purchase, at the Warrant Price resulting from such
adjustment, the number of Warrant Shares equal to the product of (i) the number
of Warrant Shares existing prior to such adjustment and (ii) the quotient
obtained by dividing (A) the Warrant Price existing prior to such adjustment by
(B) the new Warrant Price resulting from such adjustment. No fractional shares
of Class A Common Stock shall be issued upon exercise of this Warrant. Instead
of any fractional shares of Class A Common Stock which would otherwise be
issuable upon exercise of this Warrant, the Holder may deduct from the aggregate
Warrant Price an amount equal to the product of (i) the fair market value of one
share of Class A Common Stock as determined in good faith by the Holder and (ii)
such fractional interest.
(b) Following any Organic Change (as defined in the Certificate of
Incorporation of the Company) during the Exercise Period, this Warrant shall
represent the right to subscribe for and purchase the kind and number of shares
of capital stock or other securities or property which the Holder would have
owned or have been entitled to receive with respect to each Warrant Share had
this Warrant been exercised immediately prior to such Organic Change. The
foregoing provision shall similarly apply to successive Organic Changes.
SECTION 6. DISSOLUTION PROVISIONS AND NOTICE. In case any voluntary or
involuntary dissolution, liquidation or winding up of the Corporation shall at
any time be proposed, the Corporation shall give at least twenty (20) days prior
written notice thereof to the Holder stating the date on which such event is to
take place and the date (which shall be at least twenty (20) days after the
giving of such notice) as of which the holders of shares of Class A Common of
record shall be entitled to exchange their shares of Class A Common for
securities or other property deliverable upon such dissolution, liquidation or
winding up (on which date, in the event such dissolution, liquidation or winding
up shall actually take place, this Warrant and all rights with respect hereto
shall terminate). Notices pursuant to this paragraph shall be given by first
class mail, postage
-5-
<PAGE> 6
prepaid, addressed to the Holder of this Warrant at the address of such Holder
appearing in the records of the Corporation.
For the purposes of this Paragraph 6, the merger or consolidation of the
Corporation into or with another entity or entities in which the Corporation
shall not survive, or the sale or transfer of all or substantially all the
assets of the Corporation, or a merger in which the Corporation is the survivor
but its Common Stock is exchanged for stock, securities or property of another
entity, or a merger in which the Corporation is the survivor but the holders of
the Corporation's outstanding capital stock possessing the voting power (under
ordinary circumstances) to elect a majority of the Corporation's board of
directors immediately prior to the merger do not continue to own the
Corporation's outstanding capital stock possessing the voting power (under
ordinary circumstances) to elect a majority of the Corporation's board of
directors immediately after the merger, shall be deemed to be a liquidation,
dissolution and winding up of the Corporation.
SECTION 7. TITLE. This Warrant is issued subject to the condition, and
every Holder of this Warrant by accepting the same agrees with every subsequent
Holder of this Warrant and with the Corporation, that title to this Warrant and
all rights hereunder shall be transferable by delivery of this Warrant duly
endorsed, subject to paragraph 9 below, and the Corporation and all persons
dealing with this Warrant may treat the registered Holder of this Warrant, or
when this Warrant is presented duly endorsed in blank or endorsed to a specified
person, the Corporation and all persons dealing with this Warrant may treat that
holder or person, as the Holder hereof for all purposes, any notice to the
contrary notwithstanding.
SECTION 8. COVENANTS. The above provisions are subject to the following:
This Warrant and the shares of Class A Common purchasable upon exercise of
this Warrant have not been registered under the Securities Act of 1933, as
amended (the "Act"). This Warrant has been issued for investment purposes only
and is not intended to be distributed or resold, and the Holder of this Warrant
may not pledge, hypothecate, grant a security interest in or otherwise transfer
this Warrant or any shares of Class A Common purchased upon the exercise of this
Warrant without an effective registration statement for such Warrant or such
shares of Class A Common or an opinion of counsel for the Corporation that
registration of this warrant or such shares of Class A Common is not required
under the Act. Any shares of Class A Common issued upon the exercise of this
warrant shall bear the following legend:
The securities represented by this certificate were originally
issued as of July 31, 1995 and have not been registered under the
Securities Act of 1933, as amended, or under any state securities
law. The transfer of the securities represented by this certificate
subject to certain rights of first offer, restrictions on transfer,
voting agreements and other conditions
-6-
<PAGE> 7
specified in the Amended and Restated Stockholders' Agreement dated
as of December 28, 1990, as amended from time to time, among the
issuer (the "Company") and certain investors of the Company, and the
Company reserves the right to refuse the transfer of such securities
until such conditions have been fulfilled with respect to such
transfer. A copy of such conditions shall be forwarded by the
Company to the holder upon written request and without charge.
SECTION 9. ABSOLUTE OWNERSHIP. The Corporation may deem and treat the
registered Holder of this Warrant at any time as the absolute owner hereof for
all purposes and shall not be affected by any notice to the contrary.
SECTION 10. INVESTMENT LETTER. Upon exercise of this Warrant, as a
condition precedent to the Corporation's obligation to issue shares pursuant
hereto, the Holder of this Warrant shall execute an investment letter reasonably
satisfactory to counsel for the Corporation and deliver such investment letter
to the Corporation.
SECTION 11. GOVERNING LAW. This Warrant shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 12. AMENDMENTS. The provisions of this Warrant and the other
Warrants may be amended, and the Corporation may take any action herein
prohibited or omit to perform any act herein required to be performed by the
Corporation, only if the Corporation has obtained the written consent of the
holders of Warrants representing at least sixty-six and two-thirds percent
(66-2/3%) of the number of shares of Class A Common purchasable upon the
exercise of the outstanding Warrants.
SECTION 13. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant
is lost, stolen, mutilated or destroyed, the Corporation shall, on such terms as
to indemnity or otherwise as it may in its reasonable discretion impose (which
shall, in the case of a mutilated Warrant, include the surrender thereof), issue
a new Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated or destroyed.
SECTION 14. ALTERNATIVE METHOD OF PAYMENT OF WARRANT PRICE. Upon the
Holder's exercise of this Warrant to purchase shares of Class A Common Stock, in
addition to payment of the Warrant Price by certified or cashiers check as set
forth in this Warrant, the Holder shall have the right to pay the Warrant Price
by surrendering to the Corporation (a) a Note or Notes having an outstanding
principal amount and accrued and unpaid interest equal to such Warrant Price,
(b) Preferred Stock of the Corporation having a liquidation value and accrued
and unpaid dividends equal to such Warrant Price, or (c) other securities of the
Company (including, without limitation, shares of Class A Common Stock issuable
upon exercise of this Warrant or shares of Class B Common Stock into which such
Class A Common Stock is convertible, or a net exercise of this Warrant) having a
Fair Market Value equal to such Warrant Price;
-7-
<PAGE> 8
provided, however, that the maximum number of shares of Class A Common Stock so
purchased shall not exceed the number of shares of Class A Common Stock
purchasable hereunder. In the event the Holder wishes to effect a net exercise
of the Warrant, the Corporation shall deliver to the holder (without payment by
the holder of any exercise price or any cash or other consideration) (X) that
number of shares of Common Stock equal to the quotient obtained by dividing the
value of this Warrant (or the specified portion hereof) on the Exercise Date,
which value shall be determined by subtracting (A) the aggregate Warrant Price
of the particular number of Warrant Shares being exercised (the "Converted
Warrant Shares") immediately prior to the exercise of the Warrant from (B) the
aggregate fair market value of the Converted Warrant Shares issuable upon
exercise of this Warrant (or the specified portion hereof) on the Exercise Date
by (Y) the fair market value of one share of Common Stock on the Exercise Date.
Expressed as a formula, such conversion shall be computed as follows:
B-A
X =-----
Y
Where: X = the number of shares of Common Stock to be issued to holder
Y = the fair market value (FMV) of one share of Common Stock
A = the aggregate Warrant Price (i.e., Converted Warrant Shares x
Warrant Price)
B = the aggregate FMV (i.e., FMV x Converted Warrant Shares)
No fractional shares shall be issuable upon a net exercise of this
Warrant, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Exercise Date.
For purposes of this Warrant, the term "Fair Market Value" shall mean the
price at which a willing seller would sell and a willing purchaser would
purchase in an arm's-length transaction, neither being under any compulsion to
sell or purchase. Fair Market Value shall be determined jointly by the Company
and the holders of Warrants representing a majority of the Class A Common Stock
purchasable upon exercise of all outstanding Warrants (the "Majority Holders");
provided that if such parties are unable to reach agreement within a reasonable
period of time, such Fair Market Value shall be determined by an appraiser
jointly selected by the Company and the Majority Holders, which determination
will be final and binding on the Company and all holders of Warrants. The fees
and expenses of such appraiser will be paid by the Company.
* * * * *
-8-
<PAGE> 9
IN WITNESS WHEREOF, The Corporation has caused this Warrant to be executed
and attested by its duly authorized officers and has caused its corporate seal
to be hereunder affixed.
CARDMEMBER PUBLISHING CORPORATION
By:
-----------------------------------------------------------
Gary Johnson
President
ATTEST:
- -------------------------
Steve Levenherz
Assistant Secretary
-9-
<PAGE> 10
PAGE ONE AND SIGNATURE PAGE OF WARRANTS
ISSUED TO OTHER INVESTORS
-10-
<PAGE> 1
Exhibit 10.15
THIS WARRANT HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THIS WARRANT (AND ANY SECURITIES ISSUABLE UPON
EXERCISE THEREOF) MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM. IN ADDITION, THE TRANSFER OF THIS
WARRANT AND SUCH SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN SECTION 6
OF THE AMENDING AGREEMENT DATED AUGUST 3, 1995, BETWEEN CARDMEMBER PUBLISHING
CORPORATION AND THE INVESTORS LISTED THEREIN. NO TRANSFER OF THIS WARRANT OR
SUCH SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED.
------------------------------
CARDMEMBER PUBLISHING CORPORATION
FORM OF STOCK SUBSCRIPTION
WARRANT
WITH VOTING RIGHTS
August 3, 1995
THIS CERTIFIES that, for valuable consideration, _______________
_______ (the "Investor"), or its registered assigns, is entitled to
subscribe for and purchase from CARDMEMBER PUBLISHING CORPORATION, a Delaware
corporation (the "Corporation"), ____ shares (the "Warrant Shares") of Class
A Common Stock, $.01 par value (the "Class A Common Stock"), of the Corporation,
at the price (the "Warrant Price") of $.01 per share, at any time or from time
to time during the period (the "Exercise Period") commencing with the date of
issuance of this Warrant and ending with the fifth anniversary of such date. The
number of Warrant Shares and the Warrant Price are subject to adjustment, and
the number of Warrant Shares is subject to reduction, as provided in this
Warrant.
This is one of the "Additional Warrants" referred to in the
Amending Agreement dated the date hereof, among the Corporation, the Investor,
and the other party listed therein. The Investor and any registered assigns
thereof are referred to as the "Holder."
SECTION 1. EXERCISE OF WARRANT. (a) The rights represented by
this Warrant may be exercised (a "Warrant Exercise") by the Holder, in whole at
any time or in part from time to time during the Exercise Period, but not as to
any fractional
<PAGE> 2
share of Class A Common Stock, by the surrender of this Warrant, accompanied by
a properly completed and executed Notice of Exercise in the form attached, at
the executive offices of the Corporation, or at such other agency or office of
the Corporation in the United States of America as it may designate by notice in
writing to the Holder at the address of the Holder appearing on the books of the
Corporation.
(b) The closing of any Warrant Exercise shall take place at the
offices of the Corporation on the date specified in the Notice of Exercise (the
"Exercise Date"), which shall be within five days after the delivery of such
Notice. At such closing, (i) the Corporation shall issue and deliver to the
Holder or its designee a certificate or certificates for the Warrant Shares to
be issued upon such Warrant Exercise, registered in the name of the Holder or
such designee, and if such Warrant Exercise shall not have been for all Warrant
Shares, a new Warrant, registered in the name of the Holder, of like tenor to
this Warrant for the number of remaining Warrant Shares, and (ii) the Holder
shall deliver to the Corporation the aggregate Warrant Price.
SECTION 2. EXCHANGE OF WARRANT. (a) At any time and from time to
time during the Exercise Period, the Holder may, at its option, exchange this
Warrant, in whole or in part (a "Warrant Exchange"), into the number of Warrant
Shares determined in accordance with paragraph (b) below, by the surrender of
this Warrant, accompanied by a properly completed and executed Notice of
Exchange in the form attached, at the agency or office of the Corporation
referred to in Section 1.
(b) In connection with any Warrant Exchange, this Warrant shall
represent the right to subscribe for and acquire the excess (rounded to the next
higher integer) of (i) the number (the "Total Number") of Warrant Shares
specified in the Notice of Exchange over (ii) the number of Warrant Shares equal
to the quotient obtained by dividing (A) the product of the Total Number and the
existing Warrant Price by (B) the Fair Market Value. "Fair Market Value" means:
(i) If the Class A Common Stock is then listed on a national
securities exchange or reported on the national Association of
Securities Dealers Automated Quotation System ("NASDAQ"), the average
daily closing or last sale price per share of Class A Common Stock for
the 30-day period preceding the delivery of the Notice of Exchange;
(ii) if the Class A Common Stock is then not so listed or
reported but traded in the over-the-counter market, the average daily
closing bid and asked prices per share of Class A Common Stock for the
30-day period preceding the delivery of the Notice of Exchange; or
(iii) in all other cases, the fair market value per share of
outstanding
-2-
<PAGE> 3
Class A Common Stock, as determined by a nationally recognized
independent investment banking firm jointly selected by the Corporation
and the Holder or, if such selection cannot be made within five days
after delivery of the Notice of Exchange, by a nationally recognized
independent investment banking firm selected by the American
Arbitration Association in accordance with its rules.
(c) The closing of any Warrant Exchange shall take place at the
offices of the Corporation on the date specified in the Notice of Exchange (the
"Exchange Date"), which shall be not less than five and not more than 30 days
after the delivery of such Notice. At such closing, the Corporation shall issue
and deliver to the Holder or its designee a certificate or certificates for the
Warrant Shares to be issued upon such Warrant Exchange, registered in the name
of the Holder or such designee, and if such Warrant Exchange shall not have been
for all Warrant Shares, a new Warrant, registered in the name of the Holder, of
like tenor to this Warrant for the number of shares still subject to this
Warrant following such Warrant Exchange (i.e., the excess of (i) the number of
shares subject to this Warrant immediately before such Warrant Exchange over
(ii) the Total Number).
SECTION 3. RECORD DATE. The person in whose name any certificate
for shares of Class A Common Stock is issued upon any Warrant Exercise or
Warrant Exchange shall for all purposes be deemed to have become the holder of
record of such shares on the date of such issuance pursuant to Section 1(b) or
2(c).
SECTION 4. RESERVATION OF COMMON STOCK. (a) The Corporation has
duly reserved, and shall at all times duly reserve, a sufficient number of
shares of authorized Class A Common Stock for issuance upon exercise or exchange
of this Warrant. Upon issuance, sale and delivery of any Warrant Shares, such
Warrant Shares shall be validly issued and outstanding, fully paid and
nonassessable, and shall not be subject to preemptive or any similar rights of
any person or entity. Without limiting the generality of the foregoing, the
Company shall take all such action as may be necessary to assure that the par
value per share of Class A Common Stock is at all times equal to or less than
the Warrant Price then in effect.
(b) The Corporation has duly reserved, and shall at all times
duly reserve, a sufficient number of shares of authorized Class B Common Stock,
$.01 par value (the "Class B Common Stock"), for issuance upon conversion of
Warrant Shares. The Class A Common Stock and the Class B Common Stock are
referred to as the "Common Stock."
SECTION 5. ADJUSTMENT OF WARRANT PRICE. (a) If, at any time
during the Exercise Period, the number of outstanding shares of Class A Common
Stock is (i) increased by a stock dividend payable in shares of Class A Common
Stock or by a subdivision or split-up of shares of Class A Common Stock, or (ii)
decreased by a combination of shares of Class A Common Stock, then, following
the record date
-3-
<PAGE> 4
fixed for the determination of holders of Class A Common Stock entitled to
receive the benefits of such stock dividend, subdivision, split-up, or
combination, the Warrant Price shall be adjusted to a new amount equal to the
product of (A) the Warrant Price in effect on such record date and (B) the
quotient obtained by dividing (x) the number of shares of Class A Common Stock
outstanding on such record date (without giving effect to the event referred to
in the foregoing clause (i) or (ii)) by (y) the number of shares of Class A
Common Stock which would be outstanding immediately after the event referred to
in the foregoing clause (i) or (ii), if such event had occurred immediately
following such record date.
(b) If, at any time during the Exercise Period, the Corporation
shall issue or be deemed to have issued (as provided below) shares of Common
Stock other than Excluded Stock (as defined below) without consideration or for
a consideration per share less than the Warrant Price in effect immediately
prior to such issuance or deemed issuance, then such Warrant Price shall be
lowered to a price equal to the quotient obtained by dividing (i) an amount
equal to the sum of (A) the product of (x) the number of shares of Common Stock
outstanding immediately prior to such issuance or deemed issuance and (y) the
then existing Warrant Price, and (B) the total consideration received or deemed
received by the Corporation upon such issuance or deemed issuance, by (ii) the
total number of shares of Common Stock outstanding immediately after such
issuance or deemed issuance. For the purposes of any adjustment of the Warrant
Price pursuant to this paragraph, the following provisions shall be applicable:
(i) In the case of the issuance of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor
without deducting therefrom any discounts, commissions or other
expenses allowed, paid or incurred by the Corporation for any
underwriting or otherwise in connection with such issuance.
(ii) In the case of the issuance of Common Stock for no
consideration, the consideration shall be deemed to be $.01 per share.
(iii) In the case of the issuance 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 by the Board of Directors of the Corporation, irrespective
of any accounting treatment.
(iv) In the case of the issuance of options to purchase or
rights to subscribe for Common Stock, securities by their terms
convertible into or exchangeable for Common Stock, or options to
purchase or rights to subscribe for such convertible or exchangeable
securities:
(A) The shares of Common Stock deliverable upon exercise
of
-4-
<PAGE> 5
such options to purchase or rights to subscribe for Common Stock
shall be deemed to have been issued at the time such options or
rights were issued and for a consideration equal to the
consideration (determined in the manner provided in clauses (i)
through (iii) above), if any, received by the Corporation upon
the issuance of such options or rights plus the minimum purchase
price provided in such options or rights for the Common Stock
covered thereby.
(B) The shares of Common Stock deliverable upon
conversion of or in exchange for any such convertible or
exchangeable securities or upon the exercise of options to
purchase or rights to subscribe for such convertible or
exchangeable securities and subsequent conversions or exchanges
thereof shall be deemed to have been issued at the time such
securities were issued or such options or rights were issued and
for a consideration equal to the consideration received by the
Corporation for any such securities and related options or
rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the additional
consideration, if any, to be received by the Corporation upon
the conversion or exchange of such securities or the exercise of
any related options or rights (the consideration in each case to
be determined in the manner provided in clauses (i) through
(iii) above).
(C) Upon any change in the exercise price or number of
shares of Common Stock deliverable upon exercise of any such
options or rights or conversion of or exchange for such
convertible or exchangeable securities (including any such
change resulting from the termination of any such options,
rights, or securities), other than a change resulting from the
anti-dilution provisions thereof, the Warrant Price shall be
readjusted to such Warrant Price as would have obtained had the
adjustment made upon the issuance of such options, rights or
securities not converted prior to such change been made upon the
basis of such change.
(D) No further adjustments of the Warrant Price shall be
made upon the actual issuance of such Common Stock or of such
convertible or exchangeable securities, upon exercise of such
options or rights, or upon the actual issuance of such Common
Stock upon conversion or exchange of such convertible or
exchangeable securities.
(v) "Excluded Stock" means (1) up to 686,570 shares of Class A
Common Stock, 1,576,191 shares of Class B Common Stock, and 38,358
shares of Series F Preferred Stock, $.01 par value, of the Corporation
issued upon the conversion or exercise of the securities listed on
Schedule 4.6 to the Securities Purchase Agreement dated September 26,
1994, among the Corporation and
-5-
<PAGE> 6
the investors listed therein; (2) the shares of Class A Common Stock
issued upon the exercise of the stock subscription warrants issued
under such Securities Purchase Agreement; (3) the Warrant Shares; and
(4) shares of any class of capital stock issued on a pro rata basis to
all holders of such class as a stock dividend or upon any stock split
or other subdivision of shares of capital stock.
(c) All calculations under this Section shall be made to the
nearest one hundredths (1/100) of a cent.
(d) Whenever the Warrant Price shall be adjusted as provided
above, the Corporation shall deliver to the Holder a statement, signed by its
chief financial officer, showing in detail the facts requiring such adjustment
and the Warrant Price that shall be in effect after such adjustment.
SECTION 6. ADJUSTMENT OF WARRANT SHARES. (a) Upon each
adjustment of the Warrant Price as provided in Section 5, the Holder shall
thereafter be entitled to subscribe for and purchase, at the Warrant Price
resulting from such adjustment, the number of Warrant Shares equal to the
product of (i) the number of Warrant Shares existing prior to such adjustment
and (ii) the quotient obtained by dividing (A) the Warrant Price existing prior
to such adjustment by (B) the new Warrant Price resulting from such adjustment.
No fractional shares of Class A Common Stock shall be issued upon exercise of
this Warrant. Instead of any fractional shares of Class A Common Stock which
would otherwise be issuable upon exercise of this Warrant, the Holder may deduct
from the aggregate Warrant Price an amount equal to the product of (i) the fair
market value of one share of Class A Common Stock as determined in good faith by
the Holder and (ii) such fractional interest.
(b) Following any Organic Change (as defined in the Certificate
of Incorporation of the Company) during the Exercise Period, this Warrant shall
represent the right to subscribe for and purchase the kind and number of shares
of capital stock or other securities or property which the Holder would have
owned or have been entitled to receive with respect to each Warrant Share had
this Warrant been exercised immediately prior to such Organic Change. The
foregoing provision shall similarly apply to successive Organic Changes.
SECTION 7. VOTING RIGHTS. This Warrant shall entitle the Holder
to the voting rights set forth in the Certificate of Incorporation of the
Company.
SECTION 8. TRANSFER OF WARRANT. Subject to the restrictions on
transfer set forth herein and in the Amending Agreement dated the date hereof,
among the Corporation, the Investor, and the other party listed therein, this
Warrant and all rights hereunder are transferable, in whole or in part. Any
transfer shall be
-6-
<PAGE> 7
effected by the Holder in person or by duly authorized attorney by surrendering
this Warrant, properly endorsed, at the agency or office of the Corporation
referred to in Section 1. Each taker and holder of this Warrant, by taking or
holding the same, consents and agrees that this Warrant, when endorsed, in
blank, shall be deemed negotiable, and, when so endorsed the holder hereof may
be treated by the Corporation and all other persons dealing with this Warrant as
the absolute owner hereof for any purposes and as the person entitled to
exercise the rights represented by this Warrant, or to the transfer hereof on
the books of the Corporation, any notice to the contrary notwithstanding; but
until such transfer on such books, the Corporation may treat the registered
holder hereof as the owner hereof for all purposes.
SECTION 9. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this
Warrant is lost, stolen, mutilated or destroyed, the Corporation shall, on such
terms as to indemnity or otherwise as it may in its reasonable discretion impose
(which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination and tenor as the Warrant so
lost, stolen, mutilated or destroyed.
SECTION 10. TRANSFER TAXES; EXPENSES. The Corporation shall pay
(i) all transfer taxes, stamp duties, and similar taxes or fees payable in
connection with any exercise or exchange of this Warrant, and (ii) the fees and
charges of any investment banking firm engaged under Section 2.
SECTION 11. GOVERNING LAW. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the principles governing conflicts of laws.
IN WITNESS WHEREOF, the undersigned has executed this Warrant on the
date first above written.
CARDMEMBER PUBLISHING
CORPORATION
By:
____________________________________
Name: Gary Johnson
Title: President
-7-
<PAGE> 8
NOTICE OF EXERCISE
(To be executed by the Holder
in order to exercise the Warrant.)
The undersigned hereby irrevocably elects to exercise the right to
purchase _____ shares of Class A Common Stock of CARDMEMBER PUBLISHING
CORPORATION, covered by this Warrant according to the conditions thereof. The
undersigned desires to consummate such purchase on _______________.
Dated: _______________________
Name of Holder
By: ___________________
-8-
<PAGE> 9
NOTICE OF EXCHANGE
(To be executed by the Holder in
order to exchange the Warrant.)
The undersigned hereby irrevocably elects to exchange this Warrant into
___________ shares (the foregoing number constituting the "Total Number"
referred to in Section 2(b) of this Warrant) of Class A Common Stock of
CARDMEMBER PUBLISHING CORPORATION, minus any shares to be deducted from the
foregoing number in accordance with the terms of this Warrant, according to the
conditions thereof. The undersigned desires to consummate such exchange on
_______________.
Dated: ____________________________
Name of Holder
By:_________________________
-9-
<PAGE> 1
Exhibit 10.16
THIS WARRANT HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933. THIS WARRANT (AND ANY SECURITIES ISSUABLE UPON
EXERCISE THEREOF) MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM. IN ADDITION, THE TRANSFER OF THIS
WARRANT AND SUCH SECURITIES IS SUBJECT TO THE CONDITIONS SPECIFIED IN SECTION 8
OF THE SECURITIES PURCHASE AGREEMENT DATED AUGUST 15, 1995, BETWEEN CARDMEMBER
PUBLISHING CORPORATION AND THE INVESTORS LISTED THEREIN. NO TRANSFER OF THIS
WARRANT OR SUCH SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS
HAVE BEEN FULFILLED.
CARDMEMBER PUBLISHING CORPORATION _______ SHARES
FORM OF STOCK SUBSCRIPTION AUGUST 15, 1995
WARRANT
THIS CERTIFIES that, for valuable consideration, (the
"Holder"), or its registered assigns, is entitled to subscribe for and purchase
from CARDMEMBER PUBLISHING CORPORATION, a Delaware corporation (the
"Corporation"), on the terms and subject to the conditions hereof:
(a) 177 shares of Class A Common Stock; par value $.01 per share (the
"Warrant Shares") of the Corporation;
(b) at the price (the "Warrant price") of $.01 per share;
(c) at any time or from time to time during the period (the "Exercise
Period") commencing with the date of issuance of this Warrant and ending with
the fifth anniversary of the date of issuance. The number of Warrant Shares and
the Warrant Price are subject to adjustment, and the number of Warrant Shares is
subject to reduction, as provided in this Warrant.
This Warrant is issued pursuant to, and is subject to the terms and
conditions of, that certain Securities Purchase Agreement dated August 15, 1995
(the "Securities Purchase Agreement"), among the Corporation, the original
Holder and the holders of the other warrants to purchase shares of Class A
Common Stock (the "Other Warrants") issued by the Corporation pursuant to the
Securities Purchase Agreement. This Warrant and the Other Warrants are sometimes
collectively referred to herein as the "Warrants".
SECTION 1. EXERCISE OF WARRANT. (a) The rights represented by this
Warrant may be exercised (a "Warrant Exercise") by the Holder, in whole at any
time or in part from time to time during the Exercise Period, but not as to any
fractional share of Class A Common Stock, by the surrender of this Warrant,
accompanied by a properly completed and executed Notice of Exercise in the form
attached, at the executive offices
<PAGE> 2
of the Corporation, or at such other agency or office of the Corporation in the
United States of America as it may designate by notice in writing to the Holder
at the address of the Holder appearing on the books of the Corporation.
(b) The closing of any Warrant Exercise shall take place at the offices
of the Corporation on the date specified in the Notice of Exercise (the
"Exercise Date"), which shall be within five days after the delivery of such
Notice. At such closing, (i) the Corporation shall issue and deliver to the
Holder or its designee a certificate or certificates for the Warrant Shares to
be issued upon such Warrant Exercise, registered in the name of the Holder or
such designee, and if such Warrant Exercise shall not have been for all Warrant
Shares, a new Warrant, registered in the name of the Holder, of like tenor to
this Warrant for the number of remaining Warrant Shares, and (ii) the Holder
shall deliver to the Corporation the aggregate Warrant Price.
SECTION 2. RECORD DATE. The person in whose name any certificate for
shares of Class A Common Stock is issued upon any Warrant Exercise or Warrant
Exchange shall for all purposes be deemed to have become the holder of record of
such shares on the date of such issuance pursuant to Section 1(b).
SECTION 3. RESERVATION OF COMMON STOCK. (a) The Corporation has duly
reserved, and shall at all times duly reserve, a sufficient number of shares of
authorized Class A Common Stock for issuance upon exercise or exchange of this
Warrant. Upon issuance, sale and delivery of any Warrant Shares, such Warrant
Shares shall be validly issued and outstanding, fully paid and nonassessable,
and shall not be subject to preemptive or any similar rights of any person or
entity. Without limiting the generality of the foregoing, the Company shall take
all such action as may be necessary to assure that the stated or par value per
share of Class A Common Stock is at all times equal to or less than the Warrant
Price then in effect.
(b) The Corporation has duly reserved, and shall at all times duly
reserve, a sufficient number of shares of authorized Class B Common Stock, $.01
par value (the "Class B Common Stock"), for issuance upon conversion of Warrant
Shares. The Class A Common Stock and the Class B Common Stock are referred to as
the "Common Stock."
SECTION 4. ADJUSTMENT OF WARRANT PRICE. (a) If, at any time during the
Exercise Period, the number of outstanding shares of Class A Common Stock is (i)
increased by a stock dividend payable in shares of Class A Common Stock or by a
subdivision or split-up of shares of Class A Common Stock, or (ii) decreased by
a combination of shares of Class A Common Stock, then, following the record date
fixed for the determination of holders of Class A Common Stock entitled to
receive the benefits of such stock dividend, subdivision, split up, or
combination, the Warrant Price shall be adjusted to a new amount equal to the
product of (A) the Warrant Price in effect on such record date and (B) the
quotient obtained by dividing (x) the number of shares
2
<PAGE> 3
of Class A Common Stock outstanding on such record date (without giving effect
to the event referred to in the foregoing clause (i) or (ii)) by (y) the number
of shares of Class A Common Stock which would be outstanding immediately after
the event referred to in the foregoing clause (i) or (ii), if such event had
occurred immediately following such record date.
(b) If, at any time during the Exercise Period, the Corporation shall
issue or be deemed to have issued (as provided below) shares of Common Stock
other than Excluded Stock (as defined below) without consideration or for a
consideration per share less than the Warrant Price in effect immediately prior
to such issuance or deemed issuance, then such Warrant Price shall be lowered to
a price equal to the quotient obtained by dividing (i) an amount equal to the
sum of (A) the product of (x) the number of shares of Common Stock outstanding
immediately prior to such issuance or deemed issuance and (y) the then existing
Warrant price, and (B) the total consideration received or deemed received by
the Corporation upon such issuance or deemed issuance, by (ii) the total number
of shares of Common Stock outstanding immediately after such issuance or deemed
issuance. For the purposes of any adjustment of the Warrant Price pursuant to
this paragraph, the following provisions shall be applicable:
(i) In the case of the issuance of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor without
deducting therefrom any discounts, commissions or other expenses allowed, paid
or incurred by the Corporation for any underwriting or otherwise in connection
with such issuance.
(ii) In the case of the issuance of Common Stock for no consideration,
the consideration shall be deemed to be $.01 per share.
(iii) In the case of the issuance 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 by the Board of
Directors of the Corporation, irrespective of any accounting treatment.
(iv) In the case of the issuance of options to purchase or rights to
subscribe for Common Stock, securities by their terms convertible into or
exchangeable for Common Stock, or options to purchase or rights to subscribe for
such convertible or exchangeable securities:
(A) The shares of Common Stock deliverable upon exercise of such
options to purchase or rights to subscribe for Common Stock shall be deemed to
have been issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner provided in
clauses (i) through (iii) above), if any, received by the Corporation upon the
issuance of such options or rights plus the minimum purchase price provided in
such options or rights for the Common Stock covered thereby.
3
<PAGE> 4
(B) The shares of Common Stock deliverable upon conversion of or in
exchange for any such convertible or exchangeable securities or upon the
exercise of options to purchase or rights to subscribe for such convertible or
exchangeable securities and subsequent conversions or exchanges thereof shall be
deemed to have been issued at the time such securities were issued or such
options or rights were issued and for a consideration equal to the consideration
received by the Corporation for any such securities and related options or
rights (excluding any cash received on account of accrued interest or accrued
dividends), plus the additional consideration, if any, to be received by the
Corporation upon the conversion or exchange of such securities or the exercise
of any related options or rights (the consideration in each case to be
determined in the manner provided in clauses (i) through (iii) above).
(C) Upon any change in the exercise price or number of shares of Common
Stock deliverable upon exercise of any such options or rights or conversion of
or exchange for such convertible or exchangeable securities (including any such
change resulting from the termination of any such options, rights, or
securities), other than a change resulting from the antidilution provisions
thereof, the Warrant Price shall be readjusted to such Warrant Price as would
have obtained had the adjustment made upon the issuance of such options, rights
or securities not converted prior to such change been made upon the basis of
such change.
(D) No further adjustments of the Warrant Price shall be made upon the
actual issuance of such Common Stock or of such convertible or exchangeable
securities, upon exercise of such options or rights, or upon the actual issuance
of such Common Stock upon conversion or exchange of such convertible or
exchangeable securities.
(v) "Excluded Stock" means (1) the shares of Class A Common Stock and
the shares of Class B Common Stock, $.01 par value, of the Corporation issued
upon the conversion or exercise of the securities listed on Schedule 4.6 to the
Securities Purchase Agreement dated as of July 31, 1995 (the "Securities
Purchase Agreement"), among the Corporation and the investors listed therein;
(2) those stock subscription warrants with voting rights for the purchase of
Class A Common Stock of the corporation dated as of August 3, 1995, and issued
to Sprout Growth II, L.P. and DLJ Capital Corporation as such warrants may from
time to time be amended in accordance with their terms; (3) (i) those certain
warrants for the purchase of Class A Common Stock dated March 30, 1994 and
issued pursuant to the Securities Purchase Agreement, (ii) those certain
warrants for the purchase of Class A Common Stock dated September 9, 1994, and
issued to Brown Brothers Harriman & Co. and (iii) those certain warrants for the
purchase of a minimum of 6,094 shares and up to 10,000 shares of Class A Common
Stock as contemplated by the Securities Purchase Agreement dated as of July 31,
1995, in each case as such warrants may from time to time be amended in
accordance with their terms; and (4) shares of any class of capital stock
issued, on a pro rata basis to all holders of such class as a stock dividend or
upon any stock split or other subdivision of shares of capital stock.
4
<PAGE> 5
(c) All calculations under this Section shall be made to the nearest
one hundredths (1/100) of a cent.
(d) Whenever the Warrant Price shall be adjusted as provided above, the
Corporation shall deliver to the Holder a statement, signed by its chief
financial officer, showing in detail the facts requiring such adjustment and the
Warrant Price that shall be in effect after such adjustment.
SECTION 5. ADJUSTMENT OF WARRANT SHARES. (a) Upon each adjustment of
the Warrant Price as provided in Section 5, the Holder shall thereafter be
entitled to subscribe for and purchase, at the Warrant Price resulting from such
adjustment, the number of Warrant Shares equal to the product of (i) the number
of Warrant Shares existing prior to such adjustment and (ii) the quotient
obtained by dividing (A) the Warrant Price existing prior to such adjustment by
(B) the new Warrant Price resulting from such adjustment. No fractional shares
of Class A Common Stock shall be issued upon exercise of this Warrant. Instead
of any fractional shares of Class A Common Stock which would otherwise be
issuable upon exercise of this Warrant, the Holder may deduct from the aggregate
Warrant Price an amount equal to the product of (i) the fair market value of one
share of Class A Common Stock as determined in good faith by the Holder and (ii)
such fractional interest.
(b) Following any Organic Change (as defined in the Certificate of
Incorporation of the Company) during the Exercise Period, this Warrant shall
represent the right to subscribe for and purchase the kind and number of shares
of capital stock or other securities or property which the Holder would have
owned or have been entitled to receive with respect to each Warrant Share had
this Warrant been exercised immediately prior to such Organic Change. The
foregoing provision shall similarly apply to successive Organic Changes.
SECTION 6. DISSOLUTION PROVISIONS AND NOTICE. In case any voluntary or
involuntary dissolution, liquidation or winding up of the Corporation shall at
any time be proposed, the Corporation shall give at least twenty (20) days prior
written notice thereof to the Holder stating the date on which such event is to
take place and the date (which shall be at least twenty (20) days after the
giving of such notice) as of which the holders of shares of Class A Common of
record shall be entitled to exchange their shares of Class A Common for
securities or other property deliverable upon such dissolution, liquidation or
winding up (on which date, in the event such dissolution, liquidation or winding
up shall actually take place, this Warrant and all rights with respect hereto
shall terminate). Notices pursuant to this paragraph shall be given by first
class mail, postage prepaid, addressed to the Holder of this Warrant at the
address of such Holder appearing in the records of the Corporation.
For the purposes of this paragraph 6, the merger or consolidation of
the Corporation into or with another entity or entities in which the Corporation
shall not
5
<PAGE> 6
survive, or the sale or transfer of all or substantially all the assets of the
Corporation, or a merger in which the Corporation is the survivor but its Common
Stock is exchanged for stock, securities or property of another entity, or a
merger in which the Corporation is the survivor -but the holders of the
Corporation's outstanding capital stock possessing the voting power (under
ordinary circumstances) to elect a majority of the Corporation's board of
directors immediately prior to the merger do not continue to own the
Corporation's outstanding capital stock possessing the voting power (under
ordinary circumstances) to elect a majority of the Corporation's board of
directors immediately after the merger, shall be deemed to be a liquidation,
dissolution and winding up of the Corporation.
SECTION 7. TITLE. This Warrant is issued subject to the condition, and
every Holder of this Warrant by accepting the same agrees with every subsequent
Holder of this Warrant and with the Corporation, that title to this Warrant and
all rights hereunder shall be transferable by delivery of this Warrant duly
endorsed, subject to paragraph 10 below, and the Corporation and all persons
dealing with this Warrant may treat the registered Holder of this Warrant, or
when this Warrant is presented duly endorsed in blank or endorsed to a specified
person, the Corporation and all persons dealing with this Warrant may treat that
holder or person, as the Holder hereof for all purposes, any notice to the
contrary notwithstanding.
SECTION 8. COVENANTS. The above provisions are subject to the
following:
This Warrant and the shares of Class A Common purchasable upon exercise
of this Warrant have not been registered under the Securities Act of 1933, as
amended (the "Act"). This Warrant has been issued for investment purposes only
and is not intended to be distributed or resold, and the Holder of this Warrant
may not pledge, hypothecate, grant a security interest in or otherwise transfer
this Warrant or any shares of Class A Common purchased upon the exercise of this
Warrant without an effective registration statement for such Warrant or such
shares of Class A Common or an opinion of counsel for the Corporation that
registration of this warrant or such shares of Class A Common is not required
under the Act. Any shares of Class A Common issued upon the exercise of this
warrant shall bear the following legend:
The securities represented by this certificate were originally
issued August 15, 1995 and have not been registered under the
securities Act of 1933, as amended, or under any state securities
law. The transfer of the securities represented by this certificate
subject to certain rights of first offer, restrictions on transfer,
voting agreements and other conditions specified in the Amended and
Restated Stockholders' Agreement dated as of December 28, 1990, as
amended from time to time, among the issuer (the "Company") and
certain investors of the Company, and the Company reserves the right
to refuse the transfer of such securities until such conditions have
been fulfilled with respect to such transfer. A copy of
6
<PAGE> 7
such conditions shall be forwarded by the Company to the holder upon
written request and without charge.
SECTION 9. ABSOLUTE OWNERSHIP. The Corporation may deem and treat the
registered Holder of this Warrant at any time as the absolute owner hereof for
all purposes and shall not be affected by any notice to the contrary.
SECTION 10. INVESTMENT LETTER. Upon exercise of this Warrant, as a
condition precedent to the Corporation's obligation to issue shares pursuant
hereto, the Holder of this Warrant shall execute an investment letter reasonably
satisfactory to counsel for the Corporation and deliver such investment letter
to the Corporation.
SECTION 11. GOVERNING LAW. This Warrant shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 12. AMENDMENTS. The provisions of this Warrant and the other
Warrants may be amended, and the Corporation may take any action herein
prohibited or omit to perform any act herein required to be performed by the
corporation, only if the corporation has obtained the written consent of the
holders of Warrants representing at least sixty-six and two-thirds percent
(66-2/3%) of the number of. shares of Class A Common purchasable upon the
exercise of the outstanding Warrants.
SECTION 13. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this
Warrant is lost, stolen, mutilated or destroyed, the Corporation shall, on such
terms as to indemnity or otherwise as it may in its reasonable discretion impose
(which shall, in the case of a mutilated Warrant, include the surrender
thereof), issue a new Warrant of like denomination and tenor as the Warrant so
lost, stolen, mutilated or destroyed.
SECTION 14. ALTERNATIVE METHOD OF PAYMENT OF WARRANT PRICE. Upon the
Holder's exercise of this Warrant to purchase shares of Class A Common Stock, in
addition to payment of the Warrant Price by certified or cashiers check as set
forth in this Warrant, the Holder shall have the right to pay the Warrant Price
by surrendering to the Corporation (a) a Note or Notes having an outstanding
principal amount and accrued and unpaid interest equal to such Warrant Price,
(b) Preferred Stock of the Corporation having a liquidation value and accrued
and unpaid dividends equal to such Warrant Price, or (c) other securities of the
Company (including, without limitation, shares of Class A Common Stock issuable
upon exercise of this Warrant or shares of Class B Common Stock into which such
Class A Common Stock is convertible, or a net exercise of this Warrant) having a
Fair Market Value equal to such Warrant Price; provided, however, that the
maximum number of shares of Class A Common Stock so purchased shall not exceed
the number of shares of Class A Common Stock purchasable hereunder. In the event
the Holder wishes to effect a net exercise of the Warrant, the Corporation shall
deliver to the holder (without payment by the holder of any exercise price or
any cash or other consideration) (X) that number of shares of Common Stock
7
<PAGE> 8
equal to the quotient obtained by dividing the value of this Warrant (or the
specified portion hereof) on the Exercise Date, which value shall be determined
by subtracting (A) the aggregate Warrant Price of the particular number of
Warrant Shares being exercised (the "Converted Warrant Shares") immediately
prior to the exercise of the Warrant from (B) the aggregate Fair Market Value of
the Converted Warrant Shares issuable upon exercise of this Warrant (or the
specified portion hereof) on the Exercise Date by (Y) the Fair Market Value of
one share of Common Stock on the Exercise Date.
Expressed as a formula, such conversion shall be computed as follows:
X = B-A
---
Y
Where: X = the number of shares of Common Stock to be issued to holder
Y = the Fair Market Value (FMV) of one share of Common Stock
A = the aggregate Warrant Price (i.e., Converted Warrant Shares x
Warrant price)
B = the aggregate FMV (i.e., FMV x Converted Warrant Shares)
No fractional shares shall be issuable upon a net exercise of this
Warrant, and, if the number of shares to be issued determined in accordance with
the foregoing formula is other than a whole number, the Company shall pay to the
holder an amount in cash equal to the fair market value of the resulting
fractional share on the Exercise Date.
For purposes of this Warrant, the term "Fair Market Value" shall mean
the price at which a willing seller would sell and a willing purchaser would
purchase in an arm's-length transaction, neither being under any compulsion to
sell or purchase. Fair Market Value shall be determined jointly by the Company
and the holders of Warrants representing a majority of the Class A Common Stock
purchasable upon exercise of all outstanding Warrants (the "Majority Holders");
provided that if such parties are unable to reach agreement within a reasonable
period of time, such Fair Market Value shall be determined by an appraiser
jointly selected by the Company and the Majority Holders, which determination
will be final and binding on the Company and all holders of Warrants. The fees
and expenses of such appraiser will be paid by the Company.
* * * * *
8
<PAGE> 9
IN WITNESS WHEREOF, the undersigned has executed this Warrant on the date first
above written.
CARDMEMBER PUBLISHING CORPORATION
By:
---------------------------------------
Gary Johnson
Its President
ATTEST:
- ------------------------------
Steven H. Levenherz
Assistant Secretary
9
<PAGE> 1
Exhibit 10.17
SHAREHOLDER GUARANTEE
GUARANTEE (the "Guarantee") made as of September 9, 1994 by GARY
JOHNSON, THOMAS ST. DENIS and DENNIS WALKER (collectively, the "Guarantors" and
individually, a "Guarantor") in favor of (i) the lenders (the "Lenders") parties
to the Credit Agreement referred to below, and (ii) BROWN BROTHERS HARRIMAN &
CO., as agent for such tenders (the "Agent").
W I T N E S S E T H:
WHEREAS, each of the Guarantors is a shareholder of CardMember
Publishing Corporation, a Delaware corporation (the "Company"); and
WHEREAS, the Company has entered into a Credit Agreement dated as of
September 9, 1994 (as amended, modified and supplemented from time to time, the
"Credit Agreement") with the Lenders and the Agent pursuant to which the Lenders
have agreed to make loans to the Company; and
WHEREAS, it is a condition to the Lenders obligations to make loans
under the Credit Agreement that the Guarantors execute and deliver this
Guarantee guaranteeing the Obligations of the Company under the Credit Agreement
and the Related Documents to which the Company is a party;
NOW, THEREFORE, in consideration of the premises, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Guarantors, and each of them, hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. Capitalized terms used but not defined herein shall
have the meanings provided in the Credit Agreement.
SECTION 2. GUARANTEE
2.2 Guarantee of Obligations. Each Guarantor, jointly and severally with
each other Guarantor, hereby unconditionally and irrevocably guarantees (as
primary obligor and not merely as surety) to the Lenders and the Agent the full
payment by the Company, when due (whether at stated maturity, by acceleration or
otherwise), of all the Obligations.
Each Guarantor hereby agrees that it will forthwith pay the Obligations
immediately upon demand by the Agent or any Lender; provided, however, that the
Lenders and the Agent may not make any demand under this Guarantee for a period
of 90 days after the occurrence of an Event of Default. During such period, the
Lenders and the Agent shall in good faith proceed to collect the Obligations
from the
<PAGE> 2
Company through the exercise of such right and remedies, including realizing on
any Collateral for the Obligations (other than this Guarantee or any Collateral
securing this Guarantee), as the Lenders and Agent, in their sole and absolute
discretion, may elect. The foregoing notwithstanding, neither the Agent nor any
Lender shall have any obligation to exercise any particular right or remedy or
to realize on any Collateral or to consult with or otherwise notify any
Guarantor regarding the foregoing. In making any demand under this Guarantee,
the Agent or the Lenders, as the case may be, shall certify to each Guarantor
upon which such demand is made that the period set forth in the first sentence
of this paragraph has passed. Such certificate, absent manifest error, shall be
conclusive as to the passage of such period.
2.2 Costs and Expenses. Each Guarantor, jointly and severally with each
other Guarantor, further irrevocably and unconditionally agrees to pay any and
all reasonable costs and expenses (including, without limitation, attorneys'
fees and disbursements) incurred by any of the Lenders or the Agent in enforcing
their respective rights or remedies under this Guarantee or in connection with
this Guarantee.
2.3 Guarantee Absolute. This Guarantee is an unconditional and absolute
guaranty of payment (and not merely of collection) and shall apply to all of the
Obligations without limitation as to either amount or period of time. The
Obligations shall be conclusively presumed to have been created in reliance on
this Guarantee. This Guarantee shall be enforceable against the Guarantors, or
any of them, and their respective estates, executors, administrators, legal
representatives, successors and assigns. Each Guarantor, jointly and severally
with each other Guarantor, guarantees that all the Obligations will be paid,
strictly in accordance with the terms of the Credit Agreement and the Related
Documents to which the Company is a party, regardless of any law, regulation or
order, now or hereafter in effect in any jurisdiction affecting any of such
terms or the rights of the Lenders or the Agent with respect thereto and
notwithstanding any claim, defense or right of set-off the Company, such
Guarantor or any other Guarantor or Person may have against the Agent or any
Lender.
2.4 Waivers. Except to the extent otherwise provided in the second
paragraph of subsection 2.1, each Guarantor hereby waives (i) the right to have
the Lenders or the Agent pursue any other remedy or enforce any other rights,
(ii) the right to receive notice of acceptance of this Guarantee or notice of
the incurrence, existence or non-payment of any of the Obligations and (iii)
presentment, demand, notice of dishonor, protest or any other notice or demand
to which such Guarantor might otherwise be entitled. No Guarantor shall be
exonerated or discharged from liability hereunder by any time or grace period
given to the Company or by any other indulgence or concession granted to the
Company, including, without limitation, any such period, indulgence or
concession whatsoever affecting or preventing a recovery of the Obligations
which, but for this provision, might operate
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<PAGE> 3
to exonerate or discharge the Guarantors, or any of them, from their obligations
hereunder. If the Company merges or consolidates with or into another entity,
loses its separate legal identity or ceases to exist, the Guarantors shall
nonetheless continue to be jointly and severally liable for the payment of all
the Obligations.
2.5 Guarantee Not Affected by Changes. This Guarantee shall be a
continuing guarantee, and the obligations and liability of the Guarantors
hereunder shall in no way be affected, impaired, released, reduced or discharged
by reason of the occurrence of any of the following, although without further
notice to or consent of the Guarantors, or any of them:
(a) the amendment, modification or supplement (whether material
or otherwise) of any of the Obligations, the Credit Agreement or any of
the Related Documents;
(b) the assertion of any of the rights or remedies of the
Lenders or the Agent under the Credit Agreement or any of the Related
Documents;
(c) except to the extent otherwise provided in the second
paragraph of subsection 2.1, the failure, omission or delay on the part
of the Lenders or the Agent to enforce, assert or exercise any right,
power or remedy conferred on or available to the Lenders or the Agent
under the Credit Agreement or any of the Related Documents;
(d) any bankruptcy, insolvency, reorganization, arrangement,
assignment for the benefit of creditors, receivership or trusteeship
affecting the Company;
(e) any lack of validity or enforceability of any of the
Obligations, the Credit Agreement, any of the Related Documents or any
other agreement or instrument relating thereto;
(f) any release or amendment or waiver of or consent to or
departure from any other guarantee or security for all or any of the
Obligations; or
(g) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, the Company or the Guarantors,
or any of them.
This Guarantee shall continue to be effective or be reinstated, as the
case may be, if at any time, any payment of any amounts payable by the Company
is rescinded or must otherwise be returned by the Agent or any Lender upon the
insolvency, bankruptcy or reorganization of the Company or otherwise, all as
though such
-3-
<PAGE> 4
payment had not been made. If an event permitting the acceleration of any of the
Obligations of the Company shall at any time have occurred and be continuing and
such acceleration shall at such time be prevented by reason of the pendency
against the Company of a case or proceeding under any bankruptcy or insolvency
law, each Guarantor agrees that, for purposes of this Guarantee and such
Guarantor's obligations hereunder, the Obligations of the Company shall be
deemed to have been accelerated and such Guarantor shall forthwith pay such
Obligations, and the other obligations hereunder, without any further notice or
demand (including interest which but for the filing of a petition in bankruptcy
with respect to the Company, would accrue on the Obligations).
2.6 Payments. Each payment to be made by a Guarantor under this
Guarantee or in connection herewith to any Person shall be made without set-off
or deduction of any kind whatsoever and also shall be made free and clear of,
and without deduction or withholding for or on account of, any tax, reserve,
levy or duty of, or imposed by, any governmental or taxing authority in any
jurisdiction unless such Guarantor is required to make such a payment subject to
the deduction or withholding of such tax, in which case the amount payable by
such Guarantor in respect of which such deduction or withholding is required to
be made shall be increased to the extent necessary to ensure that, after the
making of such deduction or withholding such other Person receives and retains
(free from any liability in respect of any such deduction or withholding) a net
amount equal to the amount which it would have received and so retained had no
such deduction or withholding been made or required to be made. The provisions
of this subsection 2.6 shall survive termination of the Commitments and the
payment in full of the Obligations.
2.7 Subrogation. (a) Each Guarantor hereby expressly waives any and all
rights of subrogation, reimbursement, contribution, exoneration and indemnity
(contractual, statutory or otherwise) arising from the existence or performance
of this Guarantee and, further, irrevocably waives any right to enforce any
remedy which the Agent or the Lenders now have or may hereafter have against the
Company, any other Guarantor or any other Person, and waives any benefit of, and
any right to participate in, any security now or hereafter held by the
Collateral Agent, the Agent or any Lender. The provisions of this subsection
2.7(a) shall survive the termination of the Commitments and the payment in full
of the Obligations.
(b) Anything herein to the contrary notwithstanding, the Guarantors may
enter into a contribution arrangement among themselves, provided, however, that
no such arrangement shall in any manner limit, affect or impair the obligations
of the Guarantors, or any of them, hereunder or otherwise require the Agent or
any Lender to proceed against any or all of the Guarantors in seeking to
exercise their rights and remedies hereunder or under the Credit Agreement or
any other Related Document.
-4-
<PAGE> 5
SECTION 3. REPRESENTATIONS AND WARRANTIES
Each Guarantor represents and warrants to the Agent and the Lenders
that:
3.1 Legal Right. Such Guarantor has the legal right and capacity to
execute and deliver this Guarantee and to perform his obligations hereunder.
3.2 Binding Effect. This Guarantee has been duly executed and delivered
by such Guarantor and constitutes his legal, valid, and binding obligation
enforceable against him in accordance with its terms.
3.3 Consent. No consent of any other Person and no consent, license,
permit, approval or authorization of, exemption by, notice or report to, or
registration, filing or declaration with, any Governmental Authority, domestic
or foreign, is required to be obtained by such Guarantor in connection with the
execution, delivery or performance by him of this Guarantee.
3.4 Non-contravention. The execution, delivery and performance of this
Guarantee will not violate or contravene any provision of any mortgage, lease,
contract or other agreement, instrument or undertaking to which such Guarantor
is a party or which purports to be binding upon him or upon any of his assets,
and will not result in the creation or imposition of any Lien on any of his
assets. The execution, delivery or performance of this Guarantee will not
violate or contravene any provision of any applicable law or regulation, or of
any order, judgment, writ, award or decree of any court, arbitrator or
Governmental Authority, domestic or foreign.
3.5 Litigation. No litigation, investigation or proceeding of or before
any arbitrator or Governmental Authority is pending, or to the best of such
Guarantor's knowledge, threatened by or against him or any of his properties or
revenues (a) which if adversely determined may have a material adverse effect on
his financial condition or on his ability to perform his obligations under this
Guarantee or (b) which questions the validity or enforceability of this
Guarantee.
SECTION 4. NOTICE OF CERTAIN EVENTS
4.1 Notice of Adverse Change. For so long as this Guarantee shall remain
in effect, each Guarantor agrees to promptly, and in any event within two (2)
Business Days after obtaining knowledge thereof, notify the Agent and the
Lenders of any event which could reasonably be expected to have a material
adverse affect on such Guarantor's financial condition or on his ability to
perform his obligations hereunder or under any other Related Documents.
-5-
<PAGE> 6
SECTION 5. MISCELLANEOUS
5.1 Parties. This Guarantee shall be binding upon the Guarantors, and
each of them, and their respective estates, executors, administrators, legal
representatives, successors and assigns and inure to the benefit of the Agent
and the Lenders and their successors and assigns. No Guarantor may assign any of
his rights and obligations hereunder without the written consent of the Agent
and the Lenders.
5.2 Remedies Cumulative. All of the rights and remedies of the Lenders
and the Agent under this Guarantee and the Credit Agreement and the other
Related Documents are intended to be distinct, separate and cumulative and no
such right or remedy is intended to be an exclusion of or a waiver of any of the
others. All rights and remedies may be enforced concurrently, separately, in any
order and in any combination.
5.3 Survival. All representations, warranties and agreements made herein
and in statements or certificates delivered pursuant hereto shall continue in
full force and effect until all of the obligations of the Guarantors, and each
of them, under this Guarantee shall be fully performed in accordance with the
terms hereof, and until the payment in full of all of the Obligations of the
Company under the Credit Agreement and the Related Documents to which it is a
party in accordance with the terms and provisions of such agreements and the
termination of the Commitments under the Credit Agreement.
5.4 Severability; Amendments; Headings. If any term of this Guarantee or
any application thereof shall be invalid or unenforceable, the remainder of this
Guarantee and any other application of such term shall not be affected thereby.
Any term of this Guarantee may be amended, waived, discharged or terminated only
by an instrument in writing signed by the Agent and the Lenders. The headings in
this Guaranty are for purposes of reference only and shall not limit or define
the meaning hereof.
5.5 Governing Law; Waiver of Jury Trial; Submission to Jurisdiction.
(a) This Guarantee shall be governed by and construed in
accordance with the law of the State of New York. EACH OF THE GUARANTORS
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES THE RIGHT TO TRIAL BY JURY
IN ANY LITIGATION IN CONNECTION WITH THIS GUARANTEE AS TO WHICH ANY OF
THE GUARANTORS, THE AGENT OR ANY OF THE LENDERS SHALL BE ADVERSE
PARTIES.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
GUARANTEE MAY BE BROUGHT IN THE SUPREME COURT OF THE STATE OF NEW YORK
FOR NEW YORK COUNTY OR OF THE UNITED
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<PAGE> 7
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS GUARANTEE, EACH OF THE GUARANTORS
CONSENTS, FOR HIMSELF AND IN RESPECT OF HIS PROPERTY, TO THE
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<PAGE> 8
IN WITNESS WHEREOF, each Guarantor has duly executed and delivered this
Guarantee as of the date first above written.
/s/ Gary Johnson
------------------------
Gary Johnson
/s/ Thomas St. Denis
------------------------
Thomas St. Denis
/s/ Dennis Walker
------------------------
Dennis Walker
-8-
<PAGE> 9
STATE OF NEW YORK )
: SS
COUNTY OF NEW YORK )
BEFORE ME, the undersigned, a Notary Public in and for said County and
State, on this day personally appeared Gary Johnson, known to me to be the
person whose name is subscribed to the foregoing instrument and he acknowledged
to me that the execution of such instrument by him was his knowing and
intentional act for the purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 9th day of September, 1994.
/s/ Deborah Martinez
-------------------------------
Notary Public
DEBORAH MARTINEZ
Notary Public State of New York
No. 01MA5027115
Qualified in Queens County
Commission Expires May 2,1996
-9-
<PAGE> 10
STATE OF NEW YORK )
: SS
COUNTY OF NEW YORK )
BEFORE ME, the undersigned, a Notary Public in and for said County and
State, on this day personally appeared Thomas St. Denis, known to me to be the
person whose name is subscribed to the foregoing instrument and he acknowledged
to me that the execution of such instrument by him was his knowing and
intentional act for the purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 9th day of September, 1994.
/s/ Deborah Martinez
-------------------------------
Notary Public
DEBORAH MARTINEZ
Notary Public State of New York
No. 01MA5027115
Qualified in Queens County
Commission Expires May 2,1996
-10-
<PAGE> 11
STATE OF NEBRASKA )
: SS
COUNTY OF DOUGLAS )
BEFORE ME, the undersigned, a Notary Public in and for said County and
State, on this day personally appeared Dennis Walker, known to me to be the
person whose name is subscribed to the foregoing instrument and he acknowledged
to me that the execution of such instrument by him was his knowing and
intentional act for the purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 9th day of September, 1994.
/s/ Pamela S. Soderquist
------------------------
Notary Public
-11-
<PAGE> 12
SPOUSAL CONSENT
The undersigned, being the spouse of one of the Guarantors party to the
Guarantee to which this consent is attached and forms a part, hereby
acknowledges the execution of such Guarantee by the undersigned's spouse;
provided, however, that the undersigned shall have no obligation or liability
under such Guarantee as a co-guarantor or otherwise by virtue of this consent.
/s/ Barbara S. Johnson
----------------------
Barbara Johnson
/s/ Ellen St. Denis
----------------------
Ellen St. Denis
/s/ Diane Walker
----------------------
Diane Walker
-12-
<PAGE> 13
STATE OF CONNECTICUT )
: SS
COUNTY OF FAIRFIELD )
BEFORE ME, the undersigned, a Notary Public in and for said County and
State, on this day personally appeared Barbara Johnson, known to me to be the
person whose name is subscribed to the foregoing instrument and she acknowledged
to me that her execution of such instrument was her knowing and intentional act.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 9th day of September, 1994.
/s/ Susan F. Marforano
----------------------
Notary Public
-13-
<PAGE> 14
STATE OF CONNECTICUT )
: SS
COUNTY OF FAIRFIELD )
BEFORE ME, the undersigned, a Notary Public in and for said County and
State, on this day personally appeared Ellen St. Denis, known to me to be the
person whose name is subscribed to the foregoing instrument and she acknowledged
to me that her execution of such instrument was her knowing and intentional act.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 9th day of September, 1994.
/s/ Susan F. Manforano
----------------------
Notary Public
-14-
<PAGE> 15
STATE OF NEBRASKA )
: SS
COUNTY OF DOUGLAS )
BEFORE ME, the undersigned, a Notary Public in and for said County and
State, on this day personally appeared Diane Walker, known to me to be the
person whose name is subscribed to the foregoing instrument and she acknowledged
to me that her execution of such instrument was her knowing and intentional act.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 9th day of September, 1994.
/s/ Pamela S. Soderquist
------------------------
Notary Public
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<PAGE> 1
Exhibit 10.18
SHAREHOLDER PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT (the "Agreement"), dated as of September 9, 1994,
among GARY JOHNSON, THOMAS ST. DENIS and DENNIS WALKER, as pledgors
(collectively, the "Pledgors" and individually, a "Pledgor"), and BROWN BROTHERS
HARRIMAN & CO., as collateral agent (the "Collateral Agent") for (i) the lenders
(the "Lenders") parties to the Credit Agreement referred to below and (ii) Brown
Brothers Harriman & Co., as agent (the "Agent") for such Lenders.
WHEREAS, each of the Pledgors is a Shareholder of CardMember Publishing
Corporation, a Delaware corporation (the "Company"); and
WHEREAS, the Company has entered into a Credit Agreement dated September
9, 1994 (as the Same may be amended, Supplemented or otherwise modified from
time to time, the "Credit Agreement") with the Lenders and the Agent pursuant to
which the Lenders have agreed to make Loans to the Company; and
WHEREAS, in connection with the Credit Agreement, the Pledgors have
executed and delivered in favor of the Lenders and the Agent a Guarantee, dated
as of September 9, 1994 (as the Same may be amended, Supplemented or modified
from time to time the "Shareholder Guarantee"), guaranteeing the prompt and
complete payment by the Company of its obligations under the Credit Agreement
and the Related Documents to which it is a party; and
WHEREAS, in order to secure the obligations of each of the Pledgors
under the Shareholder Guarantee, each of the Pledgors has agreed to pledge to
the Collateral Agent, for the benefit of the Lenders and the Agent, all of the
issued and Outstanding capital stock of the Company owned by such Pledgor (the
"Pledged Shares");
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto mutually agree as follows:
SECTION 1. Definitions. (a) As used in this Agreement, the following
terms Shall have the following meanings:
"Obligations" shall mean any and all of the debts, obligations and
liabilities of the Pledgors, and each of them, to the Agent or the
Lenders provided for or arising under the Shareholder Guarantee, this
Agreement or any other document, agreement or instrument executed and
delivered in connection with the Shareholder Guarantee or this Agreement
(including, without limitation, the obligation to pay all amounts owing
by the Company under the Credit Agreement and the Related Documents to
which it is a party and to pay all costs and expenses incurred by the
Agent or the Lenders in enforcing any remedies or rights under the
Shareholder
<PAGE> 2
Guarantee, including attorneys' fees and disbursements), whether now
existing or hereafter arising, voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, and
whether or not from time to time decreased or extinguished and later
increased, created or incurred.
(b) Capitalized terms used but not defined herein shall have
the meanings provided in the Credit, Agreement.
SECTION 2. Security Interest. As security for the Obligations, each
Pledgor hereby pledges and assigns to the Collateral Agent, for the ratable
benefit of the Lenders and the Agent, and creates in the Collateral Agent, for
the ratable benefit of the Lenders and the Agent, a security interest in and
lien on all of its right, title and interest in and to all of such Pledgor's
Pledged Shares together with all rights and privileges of such Pledgor with
respect thereto, all proceeds, income and profits thereof and all property
received in addition thereto, in exchange thereof or in substitution therefor
(the "Collateral").
SECTION 3. Stock Dividends, Options, Or Other Adjustments. Except as
otherwise provided below, prior to the full payment and performance of the
Obligations, the Collateral Agent shall receive, as Collateral, any and all
additional shares of stock or any other property of any kind received,
receivable, distributed or distributable on or by reason of the Collateral
pledged hereunder, whether in the form of or by way of cash or stock dividends,
warrants, subscription rights, partial liquidation, conversion, prepayments or
redemptions (in whole or in part), liquidation, or otherwise. If any additional
shares of capital stock, instruments, or other property against which a security
interest can only be perfected by possession by the Collateral Agent, which are
received, receivable, distributed or distributable on or by reason of the
Collateral pledged hereunder, shall come into the possession or control of a
Pledgor, such Pledgor shall hold or control the same in trust for the Collateral
Agent, for the ratable benefit of the Lenders and the Agent, and immediately
transfer and deliver the same to the Collateral Agent subject to the provisions
hereof.
SECTION 4. Delivery of Share Certificates. Simultaneously with the
execution and delivery hereof, each Pledgor is delivering to the Collateral
Agent all instruments and stock certificates representing such Pledgor's Pledged
Shares, together with appropriate undated instruments of transfer or assignment
duly executed in blank. In addition, each Pledgor shall promptly deliver to the
Collateral Agent, or cause the Company to deliver directly to the Collateral
Agent, share certificates or other documents representing any Collateral
acquired or received after the date of this Agreement duly endorsed and
Subscribed or with appropriate instruments of transfer or assignment duly
executed in blank by such Pledgor. Any such share certificates or other
documents representing any Collateral acquired or received by a Pledgor after
the date of this Agreement shall be held by such Pledgor in trust for the
Collateral Agent,
2
<PAGE> 3
for the ratable benefit of the Lenders and the Agent and shall forthwith be
delivered by such Pledgor to the Collateral Agent. If at any time the Collateral
Agent notifies a Pledgor that additional endorsements or other instruments of
transfer or assignment with respect to the Collateral held by the Collateral
Agent are required, such Pledgor shall promptly execute the same in blank and
deliver such endorsements or other instruments of transfer or assignment as the
Collateral Agent may request.
SECTION 5. Power of Attorney. Each Pledgor hereby constitutes and
irrevocably appoints the Collateral Agent, for the ratable benefit of the
Lenders and the Agent, with full power of substitution and revocation by the
Collateral Agent, as such Pledgor's true and lawful attorney-in-fact, to the
full extent permitted by law, for the purpose of carrying out the provisions of
this Agreement and taking any action and executing any instrument that the
Collateral Agent deems necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, to affix to certificates and documents
representing the Collateral the endorsements or other instruments of transfer or
assignment delivered with respect thereto and to transfer or cause the transfer
of the Collateral, or any part thereof, on the books of the Company. The power
of attorney granted pursuant to this Agreement and all authority hereby
conferred are granted and conferred solely to protect the Lenders' and the
Agent's interest in the Collateral and shall not impose any duty upon the
Collateral Agent, the Lenders or the Agent to exercise any power. This power of
attorney shall be irrevocable as one coupled with an interest.
SECTION 6. Representations of Pledgors. Each Pledgor represents and
warrants to the Collateral Agent, the Lenders and the Agent that:
(a) Such Pledgor has the legal right and capacity to grant
the lien on the Collateral pursuant hereto;
(b) No consent or authorization of, filing with, or other
act by or in respect of, any arbitrator or Governmental Authority and no consent
of any other Person is required (i) for the pledge by such Pledgor of any
Collateral pursuant to this Agreement, or (ii) for the exercise by the
Collateral Agent of the rights provided for in this Agreement or the remedies in
respect of the Collateral pursuant to this Agreement, except such as have been
obtained or made or may be required under federal or state securities laws in
connection with any sale of the Collateral;
(c) Such Pledgor is the sole legal and beneficial owner of,
and has valid and transferrable title to, the Collateral pledged by such Pledgor
to the Collateral Agent pursuant hereto, free and clear of all Liens, other than
the Lien in favor of the Collateral Agent, for the ratable benefit of the
Lenders and the Agent, created by this Agreement;
3
<PAGE> 4
(d) There are no outstanding options, warrants or other
agreements with respect to such Pledgor's Pledged Shares, except such as have
been terminated or waived or as described on Exhibit B hereto;
(e) Such Pledgor's Pledged Shares represent the percentage
of the issued and outstanding capital stock of the Company set forth on Schedule
I and have been validly issued and are fully paid and non-assessable and, except
as set forth on Schedule I, are not subject to any charter, bylaw, statutory,
contractual or other restrictions governing their issuance, transfer, ownership
or control; and
(f) All actions required to create and perfect the Lien of
the Collateral Agent, for the benefit of the Lenders and the Agent, in the
Collateral have been taken and the delivery to the Collateral Agent of the
Collateral is effective to create a valid, perfected and exclusive first
priority Lien on the Collateral in favor of the Collateral Agents for the
benefit of the Lenders and the Agent.
SECTION 7. Obligations of Pledgors. Each Pledgor further represents,
warrants, and covenants to the Collateral Agent, on behalf of the Lenders and
the Agent, that:
(a) Such Pledgor will not sell, transfer or convey any
interest in, or suffer or permit any Lien on or with respect to, any of the
Collateral (other than as created under this Agreement) during the term of this
Agreement;
(b) Such Pledgor will, at his own expense, at any time and
from time to time at the request of the Collateral Agent, do, make, procure,
execute and deliver all acts, things, writings, assurances and other documents
as may be reasonably requested by the Collateral Agent to further enhance,
preserve, establish, demonstrate, perfect or enforce the Collateral Agent's
rights, interests and remedies created by, provided in or emanating from this
Agreement; and
(c) Such Pledgor will cause the Company to execute and
deliver the letter attached hereto as Exhibit A.
SECTION 8. Rights of Pledgors. So long as no Event of Default has
occurred and is continuing, each Pledgor shall be entitled to vote or consent
with respect to his Collateral in any manner not inconsistent with this
Agreement, the Shareholder Guarantee, the Credit Agreement or any other Related
Document. Upon the occurrence and during the continuance of an Event of Default,
the Collateral Agent shall have the exclusive right to vote the Collateral. Each
Pledgor hereby grants to the Collateral Agent, for the ratable benefit of the
Lenders and the Agent, an irrevocable proxy to vote the Collateral, which proxy
shall be effective immediately upon the occurrence of an Event of Default, and
upon request of the Collateral Agent, such Pledgor agrees to deliver to the
Collateral Agent such further evidence of such irrevocable proxy or such further
irrevocable proxy to vote the Collateral as the Collateral Agent may request.
4
<PAGE> 5
SECTION 9. Rights of the Collateral Agent. At any time upon and during
the continuance of an Event of Default, the Collateral Agent may (but shall not
be obligated or required to):
(a) Cause the Collateral to be transferred to its name or to
the name of its nominee or nominees and thereafter exercise as to such
Collateral all of the rights, powers and remedies of an owner;
(b) Collect by legal proceedings or otherwise all dividends,
interest, principal payments, capital distributions and other sums now or
hereafter payable on account of the Collateral, and hold the same as part of the
Collateral, or apply the same to any of the Obligations in such manner as the
Agent and the Lenders may direct in their sole discretion;
(c) Enter into any extension, subordination, reorganization,
deposit, merger, or consolidation agreement, or any other agreement relating to
or affecting the Collateral, and in connection therewith deposit or surrender
control of such Collateral thereunder, and accept other property in exchange
therefor and hold and apply such property or money so received in accordance
with the provisions hereof; and
(d) Discharge any taxes or Liens levied or placed on the
Collateral or pay for the maintenance and preservation of the Collateral; the
amount of such payments, plus any and all fees, costs and expenses of the
Collateral Agent, the Lenders or the Agent (including attorneys' fees and
disbursements) in connection therewith, shall, at the Collateral Agent's option,
be reimbursed by the Pledgors, or any of them, on demand.
SECTION 10. Event of Default; Remedies. Upon and during the
continuance of an Event of Default:
(a) The Collateral Agent shall have all the rights and
remedies of a secured party under the Uniform Commercial Code. In addition, the
Collateral Agent shall have the right, without demand of performance or other
demand, advertisement or notice of any kind, except as specified below, to or
upon the Pledgors, or any of them, or any other Person (all and each of which
demands, advertisements and/or notices are hereby expressly waived to the extent
permitted by law), to proceed forthwith to collect, receive, appropriate and
realize upon the Collateral, or any part thereof and to proceed forthwith to
sell, assign, give an option or options to purchase, contract to sell, or
otherwise dispose of and deliver the Collateral or any part thereof in one or
more parcels at public or private sale or sales at any stock exchange, broker's
board or at any of the Collateral Agent's offices or elsewhere at such prices
and on such terms and restrictions (including, without limitation, a requirement
that any purchaser of all or any part of the Collateral shall be required to
purchase any securities constituting the Collateral solely for investment and
without any intention to make a distribution thereof)
5
<PAGE> 6
as the Collateral Agent may deem appropriate without any liability for any loss
due to decrease in the market value of the Collateral during the period held.
The Collateral Agent shall give each Pledgor five Business Days' prior notice of
any intended disposition of such Pledgor's Collateral. Such notice shall be
deemed reasonable and properly given if hand delivered or made by facsimile to
the address of such Pledgor indicated below. Any disposition of the Collateral
or any part thereof may be for cash or on credit or for future delivery without
assumption of any credit risk, with the right to the Collateral Agent or any
Lender or the Agent to purchase all or any part of the Collateral so sold at any
such sale or sales, public or private, free of any equity or right of
redemption, which right or equity is, to the extent permitted by applicable law,
hereby expressly waived and released by each Pledgor.
(b) All of the Collateral Agent's rights and remedies under
this Agreement and under applicable law, including but not limited to the
foregoing, shall be cumulative and not exclusive and shall be enforceable
alternatively, successively or concurrently as the Collateral Agent may deem
expedient.
(c) The Collateral Agent may elect to obtain the advice of
any independent nationally-known investment banking firm with respect to the
method and manner of sale or other disposition of any of the Collateral, the
best price reasonably obtainable therefor, the consideration of cash and/or
credit terms, or any other details concerning such sale or disposition.
(d) Each Pledgor recognizes that the Collateral Agent may be
unable to effect a public sale of all or a part of the Collateral by reason of
certain prohibitions contained in the Securities Act of 1933, as amended (the
"Securities Act"), or other relevant securities laws in any jurisdiction, but
may be compelled to resort to one or more private sales to a restricted group of
purchasers who will be obligated to agree, among other things, to acquire the
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Each Pledgor agrees that private sales so made
may be at prices and on other terms less favorable to the seller than if the
Collateral were sold at public sale, and that the Collateral Agent has no
obligation to delay the sale of any Collateral for the period of time necessary
to permit the registration of the Collateral for public sale under the
Securities Act or other relevant securities laws in any jurisdictions. Each
Pledgor agrees that a private sale or sales made under the foregoing
circumstances shall be a commercially reasonable sale.
(e) If any consent, approval or authorization of, or filing
with, any Governmental Authority or any other Person should be necessary to
effectuate any sale or other disposition of the Collateral, or any partial
disposition of the Collateral, each Pledgor agrees to execute all such
applications and other instruments as may be required in connection with
securing any such consent, approval or authorization, and will otherwise use its
best efforts to secure the same. Each Pledgor further agrees to use its
6
<PAGE> 7
best efforts to secure such sale or other disposition of the Collateral as the
Collateral Agent may deem necessary pursuant to the terms of this Agreement.
(f) Upon any sale or other disposition, the Collateral Agent
shall have the right to deliver, endorse, assign and transfer to the purchaser
thereof the Collateral so sold or disposed of. Each purchaser at any such sale
or other disposition, including the Collateral Agent, any Lender or the Agent,
shall hold the Collateral free from any claim or right of whatever kind,
including any equity or right of redemption. Each Pledgor specifically waives,
to the extent permitted by applicable law, all rights of stay or appraisal which
such Pledgor had or may have under any rule of law or statute now existing or
hereafter adopted.
(g) The Collateral Agent shall not be obligated to make any
sale or other disposition unless the terms thereof shall be satisfactory to it
and the Lenders and the Agent. The Collateral Agent may, without notice or
publication, adjourn any private or public sale, and, upon five Business Days'
prior notice to the Pledgors, hold such sale at any time or place to which the
same may be so adjourned. In case of any sale of all or any part of the
Collateral, on credit or future delivery, the Collateral so sold may be retained
by the Collateral Agent until the selling price is paid by the purchaser
thereof, but the Collateral Agent and the Lenders and the Agent shall incur no
liability in case of the failure of such purchaser to take up and pay for the
property so sold and, in case of any such failure, such property may again be
sold as herein provided.
SECTION 11. Disposition of Proceeds. The proceeds of any sale or
disposition of all or any part of the Collateral shall be applied (after payment
of any amounts payable to the Collateral Agent pursuant to Section 13 hereof) by
the Collateral Agent (as directed by the Agent and the Lenders) to the payment
of all of the Obligations. Any surplus thereafter remaining shall be paid to the
Pledgors, subject to the rights of any holder of a Lien on the Collateral of
which the Collateral Agent has actual notice. If the proceeds from the sale of
the Collateral are insufficient to satisfy the Obligations, the Pledgors, and
each of them, shall remain jointly and severally liable for any deficiency in
accordance with the terms of the Shareholder Guarantee and this Agreement.
SECTION 12. Termination. This Agreement shall:
(a) create a continuing security interest in the Collateral;
(b) remain in full force and effect for so long as the
Pledgors shall have any Obligations;
(c) be binding upon the Pledgors, and each of them, and
their respective estates, executors, administrators, legal representatives,
successors and assigns; and
7
<PAGE> 8
(d) inure to the benefit of the Collateral Agent, the
Lenders and the Agent and their respective successors, transferees and assigns.
Without limiting the foregoing, any Lender may assign or otherwise transfer any
Loans held by it or its Commitment under the Credit Agreement to any other
Person, in accordance with the terms of the Credit Agreement, and such other
Person shall thereupon become vested with all the benefits in respect thereof
granted herein or otherwise. No Pledgor may assign its rights or obligations
under this Agreement without the prior written consent of the Collateral Agent,
the Lenders and the Agent.
SECTION 13. Expenses of the Collateral Agent. All expenses (including,
without limitation, attorneys' fees and disbursements) incurred by the
Collateral Agent in connection with the failure by any Pledgor to perform or
observe any provision of this Agreement, the exercise or enforcement of any
rights of the Collateral Agent under this Agreement and the custody or
preservation of any of the Collateral and any actual or attempted sale or
exchange of, or any enforcement, collection, compromise or settlement
respecting, the Collateral, or any other action taken by the Collateral Agent
hereunder whether directly or as attorney-in-fact pursuant to a power of
attorney or other authorization herein conferred, shall be deemed a joint and
several obligation of the Pledgors and shall be deemed an Obligation for all
purposes of this Agreement and the Collateral Agent may apply the Collateral to
payment of or reimbursement of itself for such liability.
SECTION 14. Collateral Agent's Duty. The Collateral Agent shall not be
required to take any action hereunder in respect of an Event of Default unless
instructed by the Agent in accordance with such subsection 8.2 of the Credit
Agreement. The Collateral Agent shall not be liable for any acts, omissions,
errors of judgment or mistakes of fact or law including, without limitation,
acts, omissions, errors or mistakes with respect to the Collateral, except for
those arising out of or in connection with the Collateral Agent's (i) gross
negligence or willful misconduct, or (ii) failure to use reasonable care with
respect to the safe custody of any certificate evidencing any of the Pledged
Shares which are in the physical possession of the Collateral Agent. Without
limiting the generality of the foregoing, the Collateral Agent shall be under no
obligation to take any steps necessary to preserve rights in the Collateral
against any other parties but may do so at its option, and all expenses incurred
in connection therewith shall be for the account of the Pledgors, and shall be
added to the Obligations secured hereby.
SECTION 15. General Provisions. (a) The Collateral Agent or its
designee is hereby appointed the attorney-in-fact of each Pledgor for the
purpose of carrying out the provisions of this Agreement in accordance with the
terms hereof and taking any action and executing any instrument which the
Collateral Agent may deem necessary and advisable to accomplish the purposes
hereof in accordance with the terms hereof, which appointment as
attorney-in-fact is irrevocable as one coupled with an interest.
8
<PAGE> 9
(b) No failure on the part of the Collateral Agent, any
Lender or the Agent to exercise, and no delay in exercising, any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise by the Collateral Agent, any Lender or the Agent of any right,
power or remedy hereunder preclude any other or future exercise thereof, or the
exercise of any other right, power or remedy. The representations, covenants and
agreements of the Pledgors herein contained shall survive the date hereof.
(c) This Agreement is a Related Document to which reference
is made in, and which is executed pursuant to, the Credit Agreement and shall
(unless otherwise expressly indicated herein) be construed, administered and
applied in accordance with the terms and provisions thereof.
(d) No amendment or waiver of any provision of this
Agreement nor consent to any departure by the Pledgors, or any of them, herefrom
nor release of all or any part of the Collateral shall in any event be effective
unless the same shall be in writing, signed by the Collateral Agent and
consented to in writing by the Lenders and the Agent. Any such waiver or consent
or release shall be effective only in the specific instance and for the specific
purpose for which it is given.
(e) The obligations of the Pledgors under this Agreement
shall remain in full force and effect without regard to, and shall not be
impaired or affected by:
(i) any amendment or modification or addition or
supplement to the Credit Agreement, the Shareholders Guarantee
or any other Related Document, any document or instrument
delivered in connection therewith or any assignment or transfer
thereof;
(ii) any exercise, non-exercise or waiver by the
Collateral Agent, any Lender or the Agent of any right, remedy,
power or privilege under or in respect of, or any release of any
guaranty or collateral provided pursuant to, the Credit
Agreement, the Shareholders Guarantee or any other Related
Document;
(iii) any waiver, consent, extension, indulgence or
other action or inaction in respect of the Credit Agreement, the
Shareholders Guarantee or any other Related Document or any
assignment or transfer of any thereof; or
(iv) any bankruptcy, insolvency, reorganization,
arrangement, readjustment, composition, liquidation or the like,
of the Pledgors, or any of them, or any other Person;
9
<PAGE> 10
in all cases, whether or not the Pledgors, or any of them, shall have notice or
knowledge of any of the foregoing.
(f) Any written communication or document to be made or
delivered by one party to another pursuant to this Agreement shall (unless
otherwise specified herein or such other party has, by not less than 15 days'
prior written notice to the communicating party specified another address or
facsimile number) be made or delivered to such other party at the address or
facsimile number identified with its signature below. All such communications
and documents shall, when transmitted by overnight delivery or transmitted by
facsimile, be effective when delivered for overnight delivery or transmitted by
facsimile (to be promptly confirmed by the sender by telephone), respectively,
or if delivered by other means, upon delivery.
(g) THIS AGREEMENT SHALL BE GOVERNED BY, AND INTERPRETED AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. EACH PLEDGOR
HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT HE MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT.
(h) Each Pledgor hereby consents to the non-exclusive
jurisdiction of the Supreme Court of the State of New York for New York County
and the United States District Court for the Southern District of New York with
respect to any suit, claim, action or proceeding arising out of or related to
this Agreement or the transactions contemplated hereby and hereby waives any
objection which he may have now or hereafter to the venue of any suit, claim,
action or proceeding arising out of or related to this Agreement or the
transactions contemplated hereby and brought in the courts specified above and
also hereby waives any claim that any such suit, claim, action or proceeding has
been brought in an inconvenient forum.
(i) If any provision of this Agreement is determined by a
court of competent jurisdiction to be unenforceable, such provision shall be
automatically reformed and construed so as to be valid, operative and
enforceable to the maximum extent permitted by the law while most nearly
preserving its original intent. The invalidity of any part of this Agreement
shall not render invalid the remainder of the Agreement.
(j) This Agreement may be executed in counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts taken together shall constitute but one and the same instrument.
(k) The section headings in this Agreement are for
convenience of reference only and shall not affect the interpretation hereof.
10
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
Pledgors:
/s/ Gary Johnson
-----------------------------------------
Gary Johnson
Address:
c/o CardMember Publishing Corporation
655 Washington Blvd., Suite 1000
Stamford, Connecticut 06901
Tel: (203) 324-7635
Fax: (203) 969-0812
/s/ Thomas St. Denis
-----------------------------------------
Thomas St. Denis
Address:
c/o CardMember Publishing Corporation
655 Washington Blvd., Suite 1000
Stamford, Connecticut 06901
Tel: (203) 324-7635
Fax: (203) 969-0812
/s/ Dennis Walker
-----------------------------------------
Dennis Walker
Address:
c/o CardMember Publishing Corporation
655 Washington Blvd., Suite 1000
Stamford, Connecticut 06901
Tel: (203) 324-7635
Fax: (203) 969-0812
11
<PAGE> 12
The Collateral Agent:
per pro BROWN BROTHERS
HARRIMAN & CO.
/s/ W. C. Sullivan III
-----------------------------------------
Name: W. C. Sullivan III
Title: Senior Manager
Address:
59 Wall Street
New York, New York 10005
Attention: Chief Credit Officer
Tel: 212-483-1818
Fax: 212-493-7280
12
<PAGE> 13
EXHIBIT A
to
Shareholder Pledge
Agreement
CARDMEMBER PUBLISHING CORPORATION
655 Washington Boulevard Suite 1000
Stanford, Connecticut 0690l-3724
September 9, 1994
Brown Brothers Harriman & Co.,
as Collateral Agent
59 Wall Street
New York, New York 10005
Gentlemen:
Reference is made to the Shareholder Pledge Agreement dated as of the
date hereof (the "Pledge Agreement") among Messrs. Gary Johnson, Thomas St.
Denis and Dennis Walker, as pledgors (collectively, the "Pledgors" and
individually, a "Pledgor"), and you, as collateral agent on behalf of the
Lenders and the Agent referred to therein. Capitalized terms used but not
defined herein have the meanings provided in the Pledge Agreement.
In connection with the pledge of the Collateral to you by the Pledgors,
the undersigned, as issuer of the Pledged Shares, hereby agrees with you as
follows:
(i) To deliver directly to you at your address set forth in
the Pledge Agreement, any and all instruments and/or share certificates
evidencing any right, option or warrant, and all new, additional or substituted
securities issued to, or to be received by, any Pledgor by virtue of his
ownership of the Pledged Shares or upon exercise by such Pledgor of any option,
warrant or right attached to such Pledged Shares;
(ii) To pay directly to you any and all cash dividends which
might be declared and payable (including any unpaid dividend accrued prior to
the date hereof) on any of the Pledged Shares or any of the other collateral;
and
<PAGE> 14
(iii) at any time upon and during the continuance of an Event
of Default, upon your presentation of executed instruments of transfer or
assignment naming you or your nominee as transferee, together with stock
certificates representing the Pledged Shares to be transferred, to register the
transfer of such Pledged Shares to you or your nominee, as applicable.
In addition, the undersigned agrees that, if at any time after
the undersigned has registered any of its securities under the Securities Act or
the Securities Exchange Act of 1934, as amended, you shall determine to exercise
your right to sell all or any of the Collateral, the undersigned will, upon your
request and at the undersigned's expense:
(a) execute and deliver, and cause its directors and
officers to execute and deliver, all such instruments and documents, and do or
cause to be done all such other acts and things, as may be necessary or, in your
opinion, advisable to register such Collateral under the Securities Act, to
cause the registration statement relating thereto to become effective and to
remain effective for such period as prospectuses are required by law to be
furnished, and to make all amendments and supplements thereto and to the related
prospectus that, in your opinion, are necessary or advisable, all in conformity
with the requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto;
(b) use its best efforts to qualify the Collateral under the
state securities or "blue sky" laws and to obtain all necessary approvals of all
applicable Government Authorities for the sale of the Collateral, as you may
request;
(c) to make available to its security holders, as soon as
practicable, an earnings statement that will satisfy the provisions of Section
11(a) of the Securities Act and the rules and regulations thereunder;
(d) provide you with such other information and projections
as may be necessary or, in your opinion, advisable to enable you to effect the
sale of the Collateral; and
(e) do or cause to be done all such other acts and things as
may be necessary to make such sale of the Collateral or any part thereof valid
and binding and in compliance with applicable law.
You are hereby authorized, in connection with any sale of the Collateral, to
deliver or otherwise disclose to any prospective purchaser of the Collateral (i)
any registration statement or prospectus, and all supplements and amendments
thereto, prepared pursuant to subsection (a) above, (ii) any information and
projections provided to you pursuant to subsection (d) above and (iii) any other
information in your possession or the possession of any Lender or the Agent
relating to the undersigned or the Collateral.
<PAGE> 15
Very truly yours,
CARDMEMBER PUBLISHING CORPORATION
By:
-------------------------------------
Name:
Title:
Acknowledged, Consented and Agreed To:
- -----------------------------
Gary Johnson
- -----------------------------
Thomas St. Denis
- -----------------------------
Dennis Walker
<PAGE> 1
Exhibit 10.19
CONSULTING AGREEMENT
CONSULTING AGREEMENT, dated as of January 1, 1996, by and between GIGA
INFORMATION GROUP, INC., a Delaware corporation (the "Company"), and Neill
Brownstein, an individual residing at 536 West Crescent Drive, Palo Alto,
California 94301 (the "Consultant").
INTRODUCTION
A. The Consultant has expertise which would be of benefit to the Company
and, as a director of the Company, has extensive knowledge of the operations of
the Company, as well as its personnel and prospects.
B. The Company now desires to retain the Consultant as a consultant in
order to make the expertise of the Consultant more fully available to the
Company, and the Consultant desires to be so retained by the Company.
Accordingly, in consideration of the premises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
SERVICES; TERM; DUTIES
1.1 Services. The Company hereby agrees to retain the Consultant upon the
terms and conditions hereinafter set forth to provide, as an independent
contractor and not as an employee, consulting and advisory services with respect
to the business and affairs of the Company as requested, from time to time by
the Board of Directors of the Company or a duly appointed officer of the
Company, and the Consultant hereby agrees to provide such services.
1.2 Term. The service of the Consultant hereunder shall be provided for a
period (the "Term") of one (1) year commencing on the date hereof.
1.3 Extent of Services. During the Term, Consultant shall, if and when so
requested by the Company, and at a time and place mutually convenient to the
parties hereto, furnish to the Company, consulting and advisory services with
respect to the Company's business and affairs. The Consultant shall devote 25%
of his working time to the services rendered under this Agreement. Nothing
herein shall preclude Consultant from rendering any services, whether as a
consultant or otherwise, to any person, firm or corporation; provided, however,
that Consultant shall not engage in any activities in contravention of (i) the
provision of any other agreement with the Company to which he is a party or (ii)
his fiduciary duties as a member of the Company's board of directors.
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ARTICLE II
COMPENSATION
2.1 Compensation. For all services rendered by the Consultant hereunder
and all covenants and conditions undertaken by him pursuant to this Agreement,
the Company shall pay a consulting fee (the "fee") at the rate of $60,000 per
annum, payable no less frequently than quarterly in arrears.
2.2 Deductions. The Company shall deduct from the fee described in this
Article II any federal, state or local withholding taxes, social security
contributions and any other amounts which are required to be deducted or
withheld by the Company pursuant to any federal, state or local laws, rules or
regulations.
ARTICLE III
DEATH: DISABILITY
3.1 Death or Disability. In the event of the death or disability of
Consultant during the term hereof, or in the event that the parties hereto
mutually agree that the Consultant will not render services during a portion of
a quarter, the Consultant shall be paid for services rendered in such quarter
on a pro-rated basis.
ARTICLE IV
CONFIDENTIALITY
4.1 Confidentiality. Consultant covenants and agrees that during the
period that he provides services hereunder and for a period of one year
thereafter (the "Effective Period") he will not use for his own account,
directly or indirectly, any of the proprietary information, customer lists,
trade names, goodwill or trade secrets owned or used by the Company in its
business as of the date hereof, or directly or indirectly, disclose or furnish
to any other person, firm, corporation or entity, the methods by which the
business of the Company is conducted, any of the methods of which the customers
or business of the Company is obtained, or any confidential or proprietary
information of the Company, including without limitation, the names of any of
the customers or prospective customers of the Company; provided, however, the
foregoing shall not apply to the extent such information is general public
knowledge or to the extent Consultant is compelled to disclose it by subpoena
or by applicable law.
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ARTICLE V
MISCELLANEOUS
5.1 Independent Contractor. Under this Agreement, Consultant
shall, at all times, be an independent contractor and not an employee. This
Agreement does not grant Consultant any authority to bind or commit the
Company, including any subsidiary or any affiliate of the Company, with respect
to any matter.
5.2 Waiver. A waiver by a party hereto of a breach of any term,
covenant or condition of this Agreement by the other party hereto shall not
operate or be construed as a waiver of any other or subsequent breach by such
party of the same or any other term, covenant or condition hereof.
5.3 Applicable Law. This Agreement shall be governed by and
construed in accordance with the substantive laws of the State of Washington
without giving effect to principles relating to conflicts of law.
5.4 Expenses. During the Term, the Consultant shall be entitled to
incur reasonable expenses in the performance of his duties in accordance with
Company policies in effect from time to time. Upon presentation by the
Consultant of appropriate supporting documentation to the Company, the
Consultant shall be entitled to reimbursement of such expenses.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
GIGA INFORMATION GROUP, INC.
By
------------------------------
Name:
Title:
CONSULTANT
---------------------------------
Neill Brownstein
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<PAGE> 1
Exhibit 10.20
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
AGREEMENT
This Agreement ("Agreement") is made and entered into effective as of
October 7 , 1994, by and between Sears, Roebuck and Co., a New York corporation
with offices at 3333 Beverly Road, Hoffman Estates, IL 60179 ("Sears"), and
CardMember Publishing Corporation, a Delaware corporation with offices at 655
Washington Blvd., Suite 1000, Stamford, CT 06901 ("CPC"), the owner and
administrator of the Countrywide Dental Programsm ("CDP").
WITNESSETH:
Whereas, CPC is in the business of developing and administering, among
other things, membership programs, including the Countrywide Dental Program, a
dental program offering members among other benefits discounted fees for dental
services; and
Whereas, Sears desires to use the services of CPC to administer and
market a dental program, subject to the terms and conditions herein provided;
Whereas, CPC represents that it has the skill, knowledge, expertise,
and financial capability to properly administer and market such a dental
program, and is desirous of doing so under the terms and conditions of this
Agreement;
Now, therefore, in consideration of the mutual covenants and agreements
of the parties contained herein and other good and valuable consideration, the
parties, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, each of the following terms shall
have the respective meaning indicated, unless the context clearly requires
otherwise:
(a) "Dental Network" shall mean a group or association of
Providers which has entered into a contractual relationship
with CPC to participate in the Dental Program.
(b) "Dental Program" shall mean a discount dental program marketed
to Sears customers, in which Members pay a membership fee in
exchange for a predetermined schedule of discounted fees for
certain dental services available from the relevant Dental
Network, as the same may be modified from time to time with
Sears's approval.
<PAGE> 2
(c)"Member" shall mean an individual who enrolls in the Dental Program. Members
shall at all times be deemed customers of Sears, and all lists and other
compilations of Members' identities, addresses, and phone numbers shall be the
exclusive property of Sears.
(d)"Membership Fee" shall mean the fee paid by a Member for enrollment in the
Dental Program, or for renewal of said membership.
(e)"Provider" shall mean an individual dental professional, or a professional
association of individual dental professionals, who (i) has entered into a
contractual relationship with a Dental Network, and (ii) has agreed to
participate in the Dental Program.
(f)"Provider Contract" shall mean the contract between a Provider and a
Dental Network.
(g)"Service Area" shall refer to the geographical area(s) that the parties
hereto may mutually agree upon from time to time.
ARTICLE II
RESPONSIBILITIES OF CPC
2.1 CPC RESPONSIBILITIES. While this Agreement is in effect, CPC agrees to
provide the following services (the "Services"):
(a) meet with Sears representatives at such reasonable times and
places as necessary to fulfill the terms of this Agreement;
(b) establish and maintain appropriate contractual relationships
with Providers and/or a Dental Network or Dental Networks,
satisfactory to Sears and CPC sufficient to properly service
the Dental Program;
(c) conduct and document consistent and verifiable Provider
credentialing, and maintain and update the Provider database
based on such credentialing, which credentialing shall include
at a minimum:
(1) obtaining Provider disclosure forms;
(2) verifying annually that each Provider's license is in
good standing in the state of practice;
(3) ensuring that each Provider has entered into a
Provider Contract satisfactory to Sears;
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(4) confirming annually that each Provider maintains at
least $500,000 per occurrence and aggregate
professional liability from an insurer rated at least
A-VII by A.M. Best and Company (for Providers with
liability limits of less than $500,000 under policies
in effect as of the effective date of this Agreement,
CPC shall ensure that such Providers increase their
liability limits to at least the aforesaid minimum
upon renewal of such policies);
(5) verifying annually that there is no evidence of
repetitive or significant complaints against a
Provider made available by such Provider's state
dental examination board;
(6) terminating, from participation in the Dental
Program, Providers who fail to satisfy any of the
credentialing requirements set forth herein or who
are otherwise deemed unacceptable by Sears to
participate or continue participating in the Dental
Program;
(7) obtaining or verifying such other information as
Sears or CPC shall reasonably deem necessary; and
(8) performing on-site evaluations of each Provider with
acceptable performance at least one unannounced visit
every three (3) years; Providers with below
acceptable performance (administrative or
service-related complaints) will be visited within
sixty days of CPC's knowledge of the unacceptable
performance if such Provider has not been terminated
from the Dental Network; if such Provider fails to
achieve acceptable performance within sixty days of
CPC's first knowledge of the unacceptable
performance, CPC shall terminate such Provider from
further participation in the Dental Network;
(d) conduct all Member marketing, promotion, enrollment, billing and
collection of cash transactions, if any, and customer service required
in connection with the Dental Program for all initial and renewing
Members, and maintain all Member eligibility information;
(e) establish and maintain an "800" telephone number to be used solely
for receiving calls from actual or prospective Members hereunder;
(f) establish and maintain a post office box to be used solely for
receiving mail from actual or prospective Members hereunder;
(g) ensure that only Membership Fees approved by Sears are quoted or
charged to actual or proposed Members;
(h) send out all membership materials within forty-eight (48) hours of an
order being placed by a prospective Member;
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(i) obtain Sears's approval of all SearsCharge sales, and send all
third-party credit transactions to Sears for authorization and
billing;
(j) collect Membership Fees from Members paying by check, money order,
and other cash transaction, and remit such amounts and all
pertinent membership information to Sears on a daily basis;
(k) respond to complaints about a Provider within one business day
after the complaint is conveyed to CPC and resolve complaints in
accordance with Sears's policy of satisfaction guaranteed or CPC
will refund the annual membership fee. CPC will use its best
efforts to mediate or resolve the Member's dispute/complaint
satisfactorily. If after repeated efforts, the Member believes
that his/her dispute/complaint was not reconciled satisfactorily,
and the complaint/dispute:
(i) is administrative in nature (e.g. fees charged
by a participating Provider versus fees stated
in the CDP schedule), CPC will resolve the
Member's complaint/dispute in accordance with
Sears's policy of "Satisfaction Guaranteed or
Your Money Back", or
(ii) concerns the quality or appropriateness of
treatment, CPC will inform the Member how to
initiate the peer review process.
(l) maintain a peer review group to resolve Member complaints
concerning dental treatment by Providers, and to conduct periodic
review of applications from potential Providers;
(m) identify and implement a means (such as providing members with
identification cards) reasonably acceptable to Sears to enable
Providers to determine Members' current eligibility to access the
Dental Program;
(n) offer any actual or proposed Members only those products or
services for which CPC has obtained prior written approval of
Sears;
(o) comply with all federal, state, and local statutes, ordinances,
laws, rules, regulations, and licensing requirements applicable to
the Services provided by CPC under this Agreement and the Dental
Program;
(p) use its best efforts to have the Dental Networks and Providers
comply with all federal, state, and local statutes, ordinances,
laws, rules, and regulations applicable to the Dental Program;
(q) upon wntten request, provided Sears gives reasonable notice and at
Sears's expense, permit Sears to review, audit, and copy CPC
records relating to the Dental Program, including, but not limited
to, the Dental
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Networks, the Providers, and
actual and proposed Members; CPC's information will be kept
confidential in accordance with Section 6.5;
(r) use its best efforts to have permitted subcontractors of CPC
adhere to all standards established between CPC and Sears;
(s) use its best efforts to have the Dental Program discounted fee
schedule agreed to by Providers and Dental Networks is honored
with respect to such services provided to Members;
(t) adhere to Sears's outbound telemarketing standards and
in-bound customer service standards, as the same may be
amended from time to time by Sears;
(u) pay all list processing, membership order billing systems,
Dental Network, and any other third-party charges incurred by
or on behalf of CPC in connection with this Agreement; and
(v) allow Sears to review customer service manuals and scripts,
and to monitor customer service telemarketing vendors and
fulfillment vendors on an unannounced basis during normal
business hours.
2.2 MARKETING. All marketing and promotion of the Dental Program shall be
mutually agreed to by Sears and CPC, and shall be set forth in a marketing
matrix substantially in the form of Exhibit C hereto. Marketing of the Dental
Program shall be conducted only in geographical areas in which there are
sufficient Providers in order to adequately service the Members. CPC will secure
Sears's prior written approval (not to be unreasonably withheld or delayed) of
all enrollment and marketing materials (including scripts for radio, television,
video or audio cassette, electronic media, telemarketing, or other unprinted
materials). All marketing materials shall clearly disclose that the Dental
Program does not constitute an insurance product and that Members will be solely
responsible for the payment of all fees for scheduled dental services. All of
the Dental Program marketing and enrollment activities shall be conducted in
compliance with all applicable laws and regulations, shall not be misleading,
and shall be conducted in a professional manner. CPC will not solicit or enroll
any prospective Member in any state for which Sears has not given specific,
advance written approval. Sears also reserves the right to withdraw
prospectively any such approval if Sears advises CPC that in Sears's judgment,
the Dental Program has not met or cannot meet applicable regulatory requirements
in such state. In such event, CPC shall immediately cease any further marketing
and enrollment activities involving the affected state(s); provided, however,
that CPC may renew, in accordance with this Agreement, existing Members in any
affected state if approved by that state's regulatory authorities.
2.3 NO INSURANCE. This Dental Program does not involve insurance. Under no
circumstances will Sears pay or reimburse, or become liable to pay or reimburse,
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Members, Dental Networks, or Providers any fees or expenses incurred for dental
services provided to Members.
ARTICLE III
RESPONSIBILITIES OF SEARS
3.1 SEARS'S RESPONSIBILITIES. While this Agreement is in effect, Sears agrees
to:
(a) meet with CPC representatives at such reasonable times and
places as necessary to fulfill the terms of this Agreement;
(b) use reasonable efforts to allow enrollment of its customers in
the Dental Program;
(c) conduct periodic third-party audits of CPC and its
subcontractors at Sears's expense; Sears shall give CPC at
least forty-eight (48) hours prior notice of such audits,
except with respect to telemarketing vendors;
(d) provide a list or lists of its customers to be marketed
hereunder through mutually acceptable media and format;
(e) institute systems for credit review for transactions over the
prescribed floor limit;
(f) provide billing service to Members as part of Sears regular
billing statement to Members, reflecting the total amount due
by the Member for the Dental Program;
(g) collect the amounts due from Members on behalf of CPC, and
settle with CPC for its portion of said funds;
(h) provide CPC with information concerning Member cancellations,
credits, adjustments, and other transactions resulting from
inquiries communicated to Sears units;
(i) arrange for the approval of SearsCharge sales by Sears Credit
Managers designated by Sears. The approval of such Sears
Credit Manager shall be required for each individual credit
sale. No part of the finance charges which may be made by
Sears in connection with any credit sale shall be payable to
or credited in any way to CPC, and CPC shall not be
responsible for or charged with credit losses on such credit
sales that have been authorized by Sears;
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(j) collect all authorized credit sale amounts due from Members on
behalf of CPC. CPC shall not be responsible for the collection
of any accounts due with respect to SearsCharge sales
authorized by Sears. However, CPC shall be responsible for
losses, including the gross sales amount and credit finance
charges accrued, if any, resulting from any checks,
unauthorized credit sales, or other cash transactions, if any;
provided, however, that Sears shall not earn any Membership
Fee with respect to any dishonored checks, unauthorized credit
sales, or any other cash transaction for which the funds are
not actually received by CPC or Sears. Losses resulting from
any authorized third-party credit charges shall be borne by
Sears and CPC in proportion to their respective shares of Net
Membership Fees as set forth in Exhibit A;
(k) not knowingly solicit or contact any Providers (excluding
Providers who are existing or prospective licensees of Sears,
or who are employed or otherwise retained by such a licensee)
through the use of any Provider lists or other data provide by
or obtained from CPC, unless CPC has given its prior written
approval;
(l) while this Agreement is in effect, Sears Direct Response
Department will not contract with any other party to supply
dental network services unless at least sixty (60) days prior
written notice has been given to CPC.
ARTICLE IV
PAYMENT
4.1 PAYMENT TO CPC. In full payment for all Services provided hereunder, Sears
shall pay CPC in accordance with the provisions of Exhibit A, attached hereto
and made a part hereof.
ARTICLE V
TERM AND TERMINATION
5.1 TERM OF AGREEMENT. This Agreement shall become effective as of the date
hereof and shall remain in effect for an initial term of one (1) year ending on
the first anniversary of the date hereof, unless sooner terminated in accordance
with the provisions of this Agreement. Upon expiration of the initial term and
each subsequent renewal period, if any, this Agreement shall automatically renew
for a renewal period of one (1) year, unless either party gives the other party
written notice of its intent not to renew no later than sixty (60) days prior to
the then-current expiration date.
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5.2 TERMINATION. This Agreement may be terminated by either party for "good
cause" upon written notice to the other party.
5.3 GOOD CAUSE. The term "good cause" shall mean, as to the party who delivers
the notice of termination:
(a) fraud or embezzlement on the part of the other party;
(b) willful and material violation on the part of the other party
of any law, statute, rule, or regulation, if such violation is
not cured within thirty (30) days after receipt of notice of
such violation from the applicable governmental authority;
(c) material breach of this Agreement by the other party if such
breach is not cured within sixty (60) days after written
notice thereof by the non-breaching party;
(d) determination by Sears, in its sole discretion, to cease
marketing the Dental Program as a result of poor responses,
marketplace changes, or a change in Sears's corporate
direction, in which event Sears shall provide CPC with at
least sixty (60) days prior written notice;
(e) determination by Sears, in its reasonable discretion, to cease
marketing the Dental Program due to regulatory actions against
or involving Sears by any federal, state, or local
governmental body or unit.
5.4 TERMINATION AND RIGHTS TO RENEWAL OF EXISTING MEMBERS. With the exception of
termination due to a violation by CPC of Section 5.3(a), (b), or (c), or
termination by Sears pursuant to Section 5.5, if this Agreement is otherwise
terminated for good cause or either party decides not to renew this Agreement,
Sears shall allow CPC to renew only those Members existing as of the termination
date (i) until either the Member cancels or non-renews his or her Membership, or
(ii) until Sears refuses to approve credit authorization to the Member in
accordance with Sears's standard credit requirements, whichever first occurs.
CPC shall pay Sears its percentage of the Net Membership Fees as set forth in
the then-current Exhibit A for each Member renewal. Notwithstanding termination
and/or non-renewal of this Agreement and the parties' other rights and
obligations contained herein, the following sections of this Agreement shall
continue in full force and effect with respect to Members who are renewed
pursuant to the above: 1.1, Article II, 3.l(e)-(k), 4.1, and Articles V through
IX.
5.5 TERMINATION AND CONTINUATION OF SERVICES. If Sears decides, in its sole
discretion, to assume the marketing and administrative obligations to be
performed by CPC hereunder, Sears may terminate this Agreement, without cause,
without penalty, and without liability as a result of such termination, by
giving CPC at least sixty (60) days prior written notice stating the effective
date of termination. The termination of this Agreement shall not affect the
rights of Members who have paid
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or contracted for the Dental Program at the time of such termination. If Sears
terminates the Agreement pursuant to this section, Sears will pay CPC, either
(i) a mutually agreeable flat fee per existing Member or (ii) a mutually
agreeable commission upon each Member's renewal. If the parties are unable to
reach agreement on a fee or commission by the effective date of termination, the
parties shall submit the issue to binding arbitration by a panel of three
arbitrators; provided, however, that Sears shall have the right to assume the
marketing and administrative obligations as of the effective date of
termination, it being understood that the arbitrators' decision regarding the
fee or commission shall be retroactive to the effective date of termination. In
addition, if both Sears and CPC mutually agree on either a fee or a commission
as noted above, Sears will pay CPC a rental fee for use of its Dental Network(s)
in accordance with the wholesale pricing schedule attached hereto and
incorporated herein as Exhibit B.
5.6 CPC'S RESPONSIBILITIES UPON TERMINATION. Upon termination of this Agreement
pursuant to Sections 5.3(a), (b),or (c) or 5.5, and in addition to any other
obligations set forth in this Agreement, CPC shall immediately, upon Sears's
request:
(a) provide Sears, in a mutually agreeable medium, all information
and files regarding Members, at Sears's expense;
(b) transfer to Sears, or as Sears directs, all post office boxes
used by CPC in connection with this Agreement, at Sears's
expense;
(c) transfer to Sears, or as Sears directs, all "800" telephone
numbers used in connection with this Agreement, at Sears's
expense;
(d) arrange for Sears to have access to the CPC Dental Network
used in connection with this Agreement;
(e) use good faith efforts to cause the Dental Networks and any
subcontractors of CPC to comply with the obligations set forth
in this Section 6.3, at Sears's expense.
5.7 RESPONSIBILITIES UPON NON-RENEWAL BY CPC. If requested by Sears, and upon
non-renewal of this Agreement by CPC pursuant to Section 5.1, and upon payment
by Sears to CPC of either (i) a mutually agreeable flat fee per existing Member
or (ii) a mutually agreeable commission for each Member's renewal, in addition
to any other obligations set forth in this Agreement, CPC shall immediately:
(a) provide Sears, in a mutually agreeable medium, all information
and files regarding Members, at CPC's expense;
(b) transfer to Sears, or as Sears directs, all post office boxes
used by CPC in connection with this Agreement, at CPC's
expense;
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(c) transfer to Sears, or as Sears directs, all "800" telephone
numbers used in connection with this Agreement, at CPC's
expense;
(d) arrange for Sears to have access to the CPC Dental Network for
which Sears will pay CPC a rental fee in accordance with
Exhibit B hereto;
(e) use good faith efforts to cause the Dental Networks and any
subcontractors of CPC to comply with the obligations set forth
in this section, at CPC's expense.
5.8 USE OF PROVIDER LIST/PROVIDERS. Sears shall not make use of CPC's
proprietary Provider list for twenty-four (24) months from the termination of
this Agreement. Notwithstanding the foregoing, Sears shall be entitled to
contract with other parties of its choice to access Provider information, some
of which may contain information of the same or similar nature as is contained
in the CPC proprietary list.
ARTICLE VI
PROPRIETARY INFORMATION
6.1 TRADE NAMES AND TRADEMARKS. Neither party shall use any of the other party's
trade names, trademarks, logos, or names of any affiliated company in any
advertising or promotional materials, or otherwise, without the prior written
consent of the other party. No Provider, Dental Network, or any permitted
subcontractor of CPC shall have any right to use any trade name, trademark, or
logo of Sears's without its prior written consent.
6.2 SEARS MARKS. CPC recognizes that all trade names, trademarks, and service
marks, including, but not limited to, "Sears" and "Sears Dental Access Program"
(hereinafter "Sears Marks") used in connection with the Dental Program are owned
exclusively by Sears. Any and all use of such Sears Marks shall inure to the
benefit of Sears. CPC will use the Sears Marks only in connection with the
Dental Program and only in a manner approved in writing by Sears prior to such
use. Upon expiration or termination of this Agreement for any reason, CPC shall
immediately cease the use of any and all of Sears Marks. CPC recognizes that
Sears may, in its sole discretion, obtain federal trademark registrations for
any or all of the Sears Marks used in connection with the Dental Program. CPC
will not at any time during the term of this Agreement or after the termination
of the Agreement attempt to register any of the Sears Marks used in connection
with the Dental Program. CPC recognizes that all federal, state, and common law
rights in the Sears Marks belong to Sears. CPC agrees to notify Sears of any
unlawful use of the Sears Marks by third parties not connected with the Dental
Program that CPC becomes aware of during the term of this Agreement. CPC agrees
to reasonably assist Sears in taking legal action against such unlawful use.
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6.3 COPYRIGHTS. Sears shall have sole copyright ownership in (a) any format
and/or materials which are prepared exclusively for Sears, (b) the name "Sears",
any Sears Mark, or any picture or reference to any product or service bearing a
Sears Mark, or (c) any design, format, or materials, or any part thereof, that
are listed by Sears in an exhibit hereto as having originated with Sears. CPC
shall have the sole copyright ownership of any format and materials prepared by
CPC, excluding any items included in categories (a), (b), or (c) in the
preceding sentence. CPC shall not use any materials or formats prepared in
connection with this Agreement without first deleting therefrom any Sears Mark,
the name "Sears", any picture or illustration that depicts a Sears Mark, or any
other material that is specifically listed by Sears in an exhibit hereto or
which was prepared exclusively for Sears. CPC and Sears agree to the use of a
Sears copyright notice and CPC's copyright notice on all printed materials
prepared for distribution under this Agreement. Such notices shall indicate the
appropriate copyright ownership between the parties as set forth above.
6.4 BOOKS AND RECORDS. CPC agrees that the records created or maintained by CPC
pursuant to this Agreement regarding Members shall be the property of Sears.
Upon termination or expiration of this Agreement, CPC shall promptly return to
Sears all such records in the same format in which they are maintained by CPC
according to the terms of Sections 5.6 and 5.7.
6.5 CONFIDENTIAL INFORMATION.
(a) CPC and Sears acknowledge that as a result of the performance
of their responsibilities under this Agreement, they will
obtain access to confidential and proprietary information
concerning the Dental Program, Members, Dental Networks,
Providers, and each other. All such information shall be
deemed to be confidential unless it is clearly intended for
public distribution (e.g., marketing materials). This
Agreement, including all exhibits hereto, is hereby designated
as confidential within the meaning of this section. CPC and
Sears shall each take all necessary measures to ensure the
confidentiality of such information received by them and to
prevent the disclosure to and/or use thereof by third parties,
including, but not limited to, instructing their employees,
agents, and contractors of the foregoing and requiring them to
be bound by appropriate confidentiality agreements. CPC and
Sears shall not use any such information for any purpose other
than to perform their responsibilities under this Agreement.
(b) Sears shall not use any CPC materials, including but not
limited to dental lists, names, addresses and telephone
numbers of Providers, quantity and breakdown of Providers by
specialty and/or of practice, fee schedules, solicitation
materials, dental contracts, and any other information
regarding the operation of the CDP panel, as currently
existing or as changed from time to time, whether written or
oral, for any purpose other than that which is outlined in
this Agreement, without the prior written consent of CPC.
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(c) Unless CPC gives its prior written consent, Sears shall not
reproduce, release, or in any way make available or furnish,
whether directly or indirectly, to any person, firm,
corporation, association, or organization at any time, any
Provider lists provided by CPC or any dental Provider lists
and/or information concerning any Provider receiving any
promotional mailings or materials under this Agreement. Upon
demand by CPC and/or termination or non-renewal of this
Agreement for any reason, and at CPC's expense, Sears shall
promptly deliver to CPC all copies of such Provider lists and
all lists and information relating to said Providers. All
papers, tapes, discs, and other retention or storage media
bearing such lists and information shall be and remain the
property of CPC.
(d) Each party acknowledges that irreparable injury would be
caused to the other party in the event of unauthorized use of
the other party's confidential information, and agrees that
preliminary and permanent injunctive relief would be
appropriate in the event of breach of this section. Upon
termination or expiration of this Agreement, each party agrees
to promptly return the confidential information of the other
party.
6.6 CUSTOMER AND MEMBER LISTS. Unless Sears gives its prior written consent, CPC
shall not reproduce, release, or in any way make available or furnish, either
directly or indirectly, to any person, firm, corporation, association, or
organization at any time, any customer lists provided by Sears or any Member
lists and/or information concerning any Member receiving any promotional
mailings or materials under this Agreement. Upon demand by Sears and/or
termination or non-renewal of this Agreement for any reason, CPC shall
immediately deliver to Sears all copies of such customer lists and all lists and
information relating to said Members. All papers, tapes, discs, and other
retention or storage media bearing such lists and information shall be and
remain the property of Sears. CPC agrees not to use said lists and information
concerning Sears's customers and/or the Members in any manner except as
necessary in the performance of this Agreement. CPC shall at all times maintain
any such lists and information physically and electronically separate and
distinct from any lists and information CPC may maintain that are unrelated to
this Agreement. CPC shall protect all such lists and information from
destruction, loss, and theft during this Agreement and until such lists and
information are delivered to Sears.
6.7 TELEPHONE NUMBERS/P.O. BOXES. All published telephone numbers designating an
identity with Sears and all post office boxes used in connection with this
Agreement shall be separate from the telephone numbers and post office boxes
used by CPC in its other business operations, if any, and such numbers and boxes
shall be deemed to be the property of Sears. Upon termination of this Agreement
for any reason, CPC shall cease to use such Sears telephone numbers and post
office boxes and, at Sears's option, shall transfer or cause the transfer of
such telephone numbers and/or post office boxes to Sears at Sears's expense.
12
<PAGE> 13
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
6.8 PUBLICITY. Neither CPC nor Sears will issue any publicity or press release
regarding its contractual relationship with the other party hereunder or
regarding the other party' s activities hereunder without obtaining the other
party's prior written approval of and consent to such release.
ARTICLE VII
INSURANCE
7.1 CPC hereby agrees and covenants that CPC, at its expense, shall obtain and
maintain during the term of this Agreement the following policies of insurance
from insurance companies rated at least A-VII by the A.M. Best Company and
adequate to fully protect Sears:
(a) Workers' Compensation Insurance with coverage for all costs,
benefits, and liabilities under Workers' Compensation and
similar state laws which may accrue in favor of any person
employed by CPC, and Employers' Liability Insurance with
limits of at least ********** per accident or disease;
(b) Commercial General Liability Insurance providing coverage for
premises/operations, contractual liability, personal injury,
and advertising injury liability with combined single limits
of liability for bodily injury and property damage of at least
********** per occurrence, and naming Sears as an additional
insured with respect to operations performed for Sears by CPC;
(c) Automobile Liability Insurance for owned, non-owned, and hired
vehicles with limits of at least ********** per accident for
bodily injury and property damage combined;
(d) Professional Liability Insurance providing coverage for losses
not insured or insufficiently insured by Providers as
stipulated in Section 2.1(c)(4) herein. Such insurance shall
have limits of liability of not less than ********** per
occurrence and ********** aggregate, and shall be available
to protect Sears from any and all claims of professional
error or omission arising out of or in connection with
professional services rendered by any Provider, Dental
Network, CPC, and any of their respective employees, agents,
or contractors. Such insurance may be effected through an
endorsement to CPC's commercial general liability insurance
policy, and in any event shall name Sears, Roebuck and Co.
as an additional insured.
13
<PAGE> 14
CPC shall furnish to Sears certificates evidencing such insurance upon execution
of this Agreement, and thereafter throughout the term of this Agreement as such
insurance is renewed. The foregoing policies shall not be materially changed or
canceled without thirty (30) days prior written notice to Sears. Failure of CPC
to provide and maintain such insurance shall be considered a material breach for
purposes of Section 5.3(c) of this Agreement.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY CPC. CPC shall protect, defend, indemnify, and hold
harmless Sears, its officers, directors, and employees against any and all
claims, demands, actions, and causes of action, including the payment of
reasonable attorneys' fees and other legal expenses, for any death of or injury
to any person, damage to or destruction of any property, or other loss or damage
actually or allegedly resulting from, arising out of, or in connection with:
(a) any acts or omissions of CPC, any Dental Network, any
Provider, or any of their respective employees, agents, or
contractors in connection with any goods or services provided
in connection with the Dental Program; or
(b) the failure of CPC, any Dental Network, any Provider, or any
of their respective employees, agents, or contractors to
comply with any applicable statute, ordinance, law, rule, or
regulation relating to providing any goods or services in
connection with the Dental Program; or
(c) any inquiries, investigations, or actions brought or conducted
by any governmental agency relating to providing any goods or
services in connection with the Dental Program or the
involvement therewith by CPC, any Dental Network, any
provider, or any of their respective employees, agents, or
contractors; or
(d) any dental services provided, or that were supposed to have
been provided, by any Dental Network, any Provider, or any of
their respective employees, agents, or contractors; or
(e) any debts, purchases, contracts, or obligations of CPC
relating to providing any goods or services in connection with
the Dental Program.
8.2 INDEMNIFICATION BY SEARS. Sears shall protect, defend, indemnify, and hold
harmless CPC, its officers, directors, and employees against any and all claims,
demands, actions, and causes of action, including the payment of reasonable
attorneys' fees and other legal expenses, for any death of or injury to any
person,
14
<PAGE> 15
damage to or destruction of any property, or other loss or damage actually or
allegedly resulting from, arising out of, or in connection with any acts or
omissions of Sears, its employees or agents in the performance of Sears's duties
and obligations hereunder.
8.3 INDEMNIFICATION CLAIM PROCEDURES.
(a) Promptly after receipt by an indemnified party of notice of a
claim or the commencement of any action which may result in a
claim for indemnification pursuant to this Agreement, the
indemnified party will notify in writing the indemnifying
party thereof. Thereafter the indemnifying party shall advise
the indemnified party in writing within ten (10) business days
of the indemnifying party's acknowledgment of and instructions
with respect to the indemnity obligation, including the
obligation to promptly defend any such action. The indemnified
party shall thereafter cooperate fully with the indemnifying
party's reasonable requests, at the indemnifying party's sole
expense, to effectuate the terms of this indemnity. Should the
indemnifying party refuse or fail to acknowledge its indemnity
obligation hereunder, the indemnified party shall thereafter
have the right to defend such action with counsel chosen by
the indemnified party, including the right to settle or
otherwise resolve any such dispute without the written consent
of the indemnifying party, all without prejudice to the
indemnified party's rights against the indemnifying party.
(b) An indemnified party who has received an acknowledgment of
acceptance of indemnity shall have the right (1) to employ
separate counsel in any action as to which indemnification may
be or has been sought under any provision of the Agreement and
to participate in the defense thereof; or (2) to the extent
that it may wish, jointly with any other indemnified party, to
assume the defense of any such action with counsel reasonably
satisfactory to indemnifying party, but the fees and expenses
of such counsel shall be at the expense of such indemnified
party unless the indemnifying party has agreed in writing to
pay such fees and expenses.
(c) Except as set forth above, the indemnifying party shall not be
liable for any settlement of any action effected without its
written consent, which shall not be unreasonably withheld. If
any action is settled with such written consent, or if there
is a final judgment against any indemnified party in any such
action, the indemnifying party shall indemnify and hold
harmless any indemnified party to the extent provided above
from and against any loss, claim, damage, liability or expense
by reason of such settlement or judgment.
15
<PAGE> 16
ARTICLE IX
GENERAL
9.1 NO AGENCY. The parties shall operate as independent contractors. Nothing
contained in this Agreement shall be construed as creating a partnership, joint
venture or agent/principal relationship between CPC and Sears. The parties shall
disclose the nature of their relationship to Providers and Members.
9.2 NO REPRESENTATIONS. CPC acknowledges and agrees that no promises or
representations whatsoever have been made as to the potential amount of business
CPC can expect to receive at any time during the term of this Agreement. CPC
acknowledges and agrees that, except as may be set forth in this Agreement, it
is solely responsible for any expenses incurred or capital investments made by
CPC in connection with this Agreement, and agrees that Sears shall not be
obligated for any such expenses or capital expenditures.
9.3 SEVERABILITY. In the event any court of competent jurisdiction should
determine that any provision of this Agreement is contrary to any law to which
it is subject, such provision shall not be declared invalid but, rather, shall
be modified and enforced to the maximum extent permitted by law. All remaining
provisions shall further be given full force and effect.
9.4 NOTICES. All notices which are or may be required to be given by either
party to the other under this Agreement shall be in writing and shall be deemed
to have been properly given (a) when delivered personally, or (b) three (3) days
after being sent by certified mail, return receipt requested, first class
postage prepaid, or (c) one (1) day after being sent by a nationally recognized
overnight delivery service, addressed as follows:
If to Sears:
Sears, Roebuck and Co.
D/702CDR, E4, 272B
3333 Beverly Road
Hoffman Estates, IL 60179
Attention: Maryanne Metz
with a copy to:
Sears, Roebuck and Co.
D/766, B6, 234B
3333 Beverly Road
Hoffman Estates, IL 60179
Attention: Vice President and General Counsel
16
<PAGE> 17
If to CPC:
Card Member Publishing Corporation
655 Washington Blvd.
Suite 1000
Stamford, CT 06901
Attention: President
Each party to this Agreement shall notify the other party in writing and in
accordance with this section of any change in address.
9.5 AMENDMENT AND MODIFICATION. This Agreement may not be amended, modified, or
supplemented except by an agreement in writing and duly-executed by an
authorized representative of each of the parties hereto.
9.6 WAIVER OF COMPLIANCE. No waiver of compliance of any obligation, covenant,
agreement, or condition provided for in this Agreement shall be effective unless
evidenced by an agreement in writing duly-executed by the party to be charged
with such waiver or consent, but such waiver, consent, or failure shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure or future compliance.
9.7 HEADINGS. The headings of this Agreement are inserted solely for convenience
and shall not be used in any interpretation or construction of this Agreement.
9.8 ASSIGNMENT. This Agreement may not be transferred or assigned by either
party without the prior written consent of the other party. The sale of a
party's business, the transfer of a majority of its stock, or any other
transaction or event that shifts the control of that party shall be deemed such
a transfer or assignment requiring the other party's written consent. Any
transfer or assignment lacking the requisite consent of the other party shall be
of no force or effect vis a vis the non-consenting party, and shall be grounds
for termination of this Agreement pursuant to Section 5.3 herein.
9.9 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, and shall benefit and be
binding upon the parties hereto and their respective permitted successors and
assigns.
9.10 ENTIRE AGREEMENT. This Agreement, including the exhibits and other
attachments referenced herein, constitute the complete, exclusive, and final
agreement and understanding of the parties hereto with respect to the subject
matter hereof. This Agreement supersedes any and all prior agreements,
negotiations, correspondence, undertakings, promises, covenants, arrangements,
communications, representations, and warranties, whether oral or written, of the
parties hereto.
17
<PAGE> 18
IN WITNESS WHEREOF, the parties hereto, by their duly authorized
representatives, have entered into this Agreement as of the date and year first
above written.
SEARS, ROEBUCK AND CO. CARDMEMBER PUBLISHING CORPORATION
By: /s/ E. V. Pennebaker By: /s/ Gary Johnson
----------------------------- ---------------------------
Name: E. V. Pennebaker Name: Gary Johnson
--------------------------- -------------------------
Title: Vice President Title: President
-------------------------- ------------------------
18
<PAGE> 19
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
EXHIBIT A
PAYMENT PROVISIONS
1. Sears will remit to CPC ********** of the Net Membership Fees, in
accordance with the procedures set forth below. "Net Membership Fees",
as used herein, shall mean the total amount of Membership Fees that
accrue during the applicable time period, less all refunds, credits,
allowances, adjustments, and sales/use tax, if any.
2. Each week Sears shall prepare a reconciliation of the parties' accounts
with respect to Net Membership Fees. In the event that the
reconciliation results in a balance due CPC, Sears shall pay CPC that
amount within fifteen (15) days of the date of the weekly
reconciliation. In the event that the reconciliation results in a
balance due Sears, Sears may deduct and setoff the amount of that
balance due Sears from a future remittance to CPC. In the event that
such a balance due Sears is not recouped by such a deduction/setoff,
then Sears shall so notify CPC and CPC shall remit the amount of the
balance due Sears within thirty (30) days of receiving notice to that
effect from Sears.
3. Sears shall have the right to deduct and setoff from any amounts
otherwise due and owing CPC any amounts due Sears from CPC, including,
but not limited to, any adjustments that Sears is required to make with
Members pursuant to Sears's policy of "Satisfaction Guaranteed Or Your
Money Back".
19
<PAGE> 20
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
EXHIBIT B
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
# OF MEMBERS COST OF MEMBER PER
MONTH(1)
- -------------------------------------------------------------------------------
<S> <C>
********** **********
- -------------------------------------------------------------------------------
********** **********
- -------------------------------------------------------------------------------
********** **********
- -------------------------------------------------------------------------------
********** **********
- -------------------------------------------------------------------------------
********** **********
- -------------------------------------------------------------------------------
********** **********
- -------------------------------------------------------------------------------
</TABLE>
(1) The prices noted in the above schedule assume that Sears will undertake
and assume the full expense for all marketing functions including, but not
limited to, solicitation, printing, fulfillment, and customer service.
20
<PAGE> 21
FIRST AMENDMENT TO AGREEMENT
This First Amendment To Agreement ("First Amendment") is made and
entered into this 16 day of January, 1995, by and between Sears, Roebuck and
Co., a New York corporation with offices at 3333 Beverly Road, Hoffman Estates,
IL 60179 ("Sears"), and CardMember Publishing Corporation, a Delaware
corporation with offices at 655 Washington Blvd., Suite 1000, Stamford, CT 06901
("CPC").
WITNESSETH:
Whereas, Sears and CPC entered into that certain Agreement dated
October 7, 1994, regarding a dental program marketed to Sears customers
("Agreement");
Whereas, Sears and CPC desire to amend the Agreement as set forth
below;
Now, therefore, in consideration of the mutual covenants and agreements
of the parties contained herein and in the Agreement, and other good and
valuable consideration, the parties agree as follows:
1. The last sentence of Section 7.1(d) is hereby amended to delete the
words "and in any event shall name Sears, Roebuck and Co. as an additional
insured". The foregoing amendment shall be effective retroactively to the
October 7, 1994 effective date of the Agreement.
2. All other terms and provisions of the Agreement shall remain in full
force and effect, and the Agreement, as herein amended, is hereby ratified by
the parties.
IN WITNESS WHEREOF, the parties hereto, by their duly-authorized
representatives, have entered into this First Amendment To Agreement as of the
date first written above.
SEARS, ROEBUCK AND CO. CARDMEMBER PUBLISHING
CORPORATION
By: /s/ E. V. Pennebaker By: /s/ Steven H. Levenherz
----------------------------- ---------------------------
Name: E. V. Pennebaker Name: Steven H. Levenherz
--------------------------- -------------------------
Title: Divisional Vice President Title: Senior Vice President
-------------------------- ------------------------
<PAGE> 1
Exhibit 10.21
LICENSE AGREEMENT
CON 3.4
SEARS, ROEBUCK AND CO.
DEPARTMENT 702CDR
No part of this publication may be reproduced, stored in a retrieval system, or
transmitted in any form or by any means - electronic, mechanical, photocopying,
recording, or otherwise - without the permission of Department 702CDR Specialty
Business Manager.
COMPANY CONFIDENTIAL
<PAGE> 2
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
LICENSE AGREEMENT
THIS LICENSE AGREEMENT (hereinafter referred to as "Agreement") is made
this 1st day of AUGUST, 1990, by and between CARD MEMBER PUBLISHING CORPORATION,
a(n) DELAWARE corporation (hereinafter referred to as "Licensee"), and SEARS,
ROEBUCK AND CO., a New York corporation (hereinafter referred to as "Sears").
WHEREAS, Licensee is desirous of selling various Product(s) to certain
holders of the credit cards issued by Sears (hereinafter referred to as
"Customers") marketed under various program(s) (hereinafter referred to as
"Program");
WHEREAS, this License Agreement will govern all Program(s) and the
Rider(s), if any, will provide the specific information concerning each Program,
if any;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
DEFINITIONS
1. The following words and phrases as used herein shall have the
following meanings.
a. "Backend Package" -- A Bounceback, Negative Option Plan and/or
Speed-Up Letter, all of which are included in the definition
of Product. Although a Backend Package may be different than
Product as described in the Rider, if any, Backend Package is
included in the definition of Product.
b. "Bangtail" -- A return envelope mailed with the Customer's
regular Sears billing statement which has a second flap that
is perforated and designed for use as an order blank for
purchase of Product
c. "Bounceback" -- A solicitation enclosed with Product shipped
to an Enrollee. Although the item offered on the Bounceback
may be different than Product as described in the Rider, if
any, the item offered on the Bounceback is included in the
definition of Product.
d. "Computerized Elimination of Duplicate Names" -- A process by
which the names of persons in similar programs being operated
by Licensee are removed from the list of Customers to whom a
Solo Mailing Promotion will be made.
<PAGE> 3
e. "Continuity" -- The offering of Products for sale by Solo
Mailing Promotion as a series of small purchases rather than a
one time purchase. Products have a common theme and are
shipped at regular or specific time intervals.
f. "Enrollee" -- Customer who purchases Product offered in the
Continuity format.
g. "Gross Sales" -- All revenue received for all sales of Product
which arise out of operations hereunder including, but not
limited to, sales arising out of referrals, contracts or
recommendations obtained through operation hereunder.
h. "Insert" -- Any document, except for Bangtails, included in a
credit billing statement envelope mailed to Customers that
promotes the Product.
i. "Negative Option Plan" -- A contractual plan or arrangement,
as governed under 16 C.F.R. 425 or other applicable statute(s)
which may be in effect from time to time, under which Licensee
periodically sends to Enrollees an announcement which
identifies such plan, and the Enrollees thereafter receive and
are billed for the Product identified in each such
announcement, unless by a date or within a time specified by
the Licensee with respect to each such announcement the
Enrollees in conformity with the provisions of such plan,
instruct the Licensee not to send the identified Product.
j. "Net Sales" -- Gross Sales less returns and allowances, not to
include shipping charges, handling charges, sales taxes or use
taxes charged to Enrollees.
k. "Postage" -- All postal permit costs, fees, address correction
change expenses, stamps, return postage, and other charges for
delivery and/or return of an item involving the Program.
l. "Print Promotion" _- An Enrollee acquisition device using
newspapers and magazines.
m. "Product" -- is (are) described in Rider(s), if any, hereto
and made a part hereof. Backend Packages, if any, are included
in the definition of the Product.
n. "Promotional Expense -- All direct costs relating to
preparation of items involving the following functions and
related costs: creative
-2-
<PAGE> 4
art and copy work, typesetting, printing preparation and
printing, batching and bundling, and lettershop expenses.
o. "Rollout" - Marketing efforts, if any, which take place after
a Test.
p. "Solo Mailing Promotion" -- A mail solicitation which is
delivered directly to an Enrollee that promotes Product.
q. "Speed-Up Letter" -- An offer communicated to Enrollee(s)
permitting the Enrollee to obtain Product within a shorter
period of time than was originally described in the initial
offer of Product.
r. "Test" -- The initial marketing effort.
THE PROGRAM
2. a. (1) Sears hereby grants to Licensee the privilege of conducting
and operating, and Licensee hereby agrees to conduct and
operate, pursuant to the terms, provisions and conditions
contained in this Agreement, the Program, which shall consist
of the offering of Product in a Continuity format.
(2) The Enrollee shall not be required to make any minimum number
of purchases of Product. The Enrollee will have the option of
returning any Product, in which event the Enrollee will not be
obligated to purchase the Product.
THE DIRECT MARKETING METHOD
b. (1) The direct marketing method used to solicit Enrollees for the
Program shall be limited to Solo Mailing Promotions and when
and if agreed to by Sears, in its sole discretion, Inserts
and/or Bangtails. The Program shall not use Print Promotions
or other direct marketing methods including, but not limited
to, television, radio, cable television, telemarketing,
satellite communications, and other similar electronic media,
unless otherwise agreed to in writing by both parties.
(2) If the parties agree in writing to the use of electronic
media, then Licensee will (a) use its best efforts to make
certain that the programming during which the Product
advertising appears will not cause Sears to incur damage to
its goodwill, reputation, and/or customer relations, and (b)
submit to Sears for review a copy of the script to be used in
the electronic media. Sears review shall be consistent with
the provisions of Paragraph
-3-
<PAGE> 5
5.b.(2)(b) hereof.
OTHER ITEMS OR SERVICES
c. The offering of Product in conjunction with any other item, Backend
Package, or service shall not be permitted, unless mutually agreed
upon in writing by both parties hereto. Except as required by law or
as mutually agreed upon by the parties hereto, materials and
messages other than those referring to Product shall not be included
with or placed on materials delivered by Licensee to Enrollees.
TERM
3. The term (hereinafter referred to as "Term") of this Agreement shall
be for a period beginning on AUGUST 1, 1990, and ending at the close
of business on JULY 31, 1991, or the last date of any Program which
is described in a Rider(s), whichever is later, unless sooner
terminated under any provision hereof.
SEARS SALES ACTIVITIES
4. a. Nothing in this Agreement shall prohibit Sears from offering
advertising, selling and/or continuing to offer, advertise, and/or
sell in any manner during the Term of this Agreement or any
extension thereof, at any time to any of its customers, including
those who may be Customers or Enrollees, items similar to or
identical to Product.
AUTHORIZED ACTIVITIES
b. Licensee represents and warrants that, during the Term of this
Agreement unless otherwise agreed to by Sears in writing, Licensee
shall perform only those services and engage in only those
activities under any of Sears marks, as defined in Paragraph 23.a.
hereof, as are expressly authorized herein. Sears represents and
warrants that, during the Term of this Agreement unless otherwise
agreed to by Licensee in writing, Sears shall perform only those
services and engage in only those activities under Licensee's mark,
as defined in Paragraph 24.a. hereof, as are expressly authorized
herein.
TEST
5. a. The Test will consist of the mailing of direct mail solicitations.
The quantity and timing therefor are specified in the Rider(s), if
any, hereto.
-4-
<PAGE> 6
LICENSEE'S RESPONSIBILITIES FOR THE TEST
b. Licensee will be responsible for the following functions and the
related expenses of the Test.
(1) The Licensee will manufacture or acquire all Product sold to
the Enrollees. The Licensee will, to the extent necessary,
negotiate and enter into royalty, purchase and other
agreements with suppliers and others to obtain all rights
necessary to allow Licensee to offer and sell the Product
under this Agreement.
(2) The Licensee will:
(a) develop the initial offer and all direct mail
promotional materials including copy and artwork for the
initial offer and the Backend Package, if any; and
(b) deliver to Sears samples of all promotional artwork,
advertising copy, correspondence, order forms,
envelopes, brochures, catalogs, Product, Backend
Package, and other materials, if any, to be mailed
and/or delivered to Customers or Enrollees by Licensee
at such time before publication or shipment to Customers
or Enrollees which enables Sears to have a reasonable
period of time to review such samples prior to
publication or shipment to the Customers or Enrollees,
as the case may be. Sears shall have the right to
disapprove any sample insofar as the sample does not
properly use Sears marks; may subject Sears to
liability, loss of good will, damage to Sears reputation
or Sears customer relations, may fail to adhere to the
requirements of any Federal, State or local governmental
rules, regulations and laws; or may fail to conform to
community or Sears standards of good taste and honest
dealing. Licensee hereby acknowledges the expense for
any printing, preparation, or other commitment for items
to be distributed to Customer(s) prior to Sears approval
of the sample of said item is entirely at Licensee's
risk.
(3) With respect to Test formats, as may be agreed to by Sears and
Licensee, the Licensee will:
(a) for a Solo Mailing Promotion,
(i) print all promotional materials, including
response vehicles for mail orders, for the initial
offer and
-5-
<PAGE> 7
Backend Package, if any, and pay for all related
Promotional Expenses;
(ii) subject to Sears written approval, request in
writing quantities of names and any special
criteria for selection of the list of names and
people who will be sent the solicitation (Licensee
will be responsible for and pay for all charges
for generation, refinement, and analyses of the
list. Sears will invoice Licensee for these
charges. The list shall be protected under the
confidentiality provisions of Paragraph 32
hereof.);
(iii) arrange for Computerized Elimination of Duplicate
Names and any other refinement to the list
provided to the Licensee prior to the generation
of names to be mailed (Eliminated names, as well
as names to which materials will be mailed, shall
be protected under the confidentiality provisions
of Paragraph 32 hereof.); and
(iv) mail all promotional materials, including response
vehicles for mail orders, for the initial offer
and Backend Package, if any, and pay for all
Postage.
(b) for Inserts, if any,
(i) print and deliver to Sears all promotional
materials for the initial offer and pay for all
related Promotional Expenses;
(ii) pay for all insertion costs incurred by Sears,
including insertion costs for response vehicles
for mail orders;
(iii) print all promotional materials, including
response vehicles for mail orders, for the Backend
Package, if any and pay for all related
Promotional Expenses;
(iv) mail all promotional materials, including response
vehicles for mail orders, for the Backend Package,
if any, and pay for all Postage.
(c) for Bangtails, if any,
-6-
<PAGE> 8
(i) provide Sears with lithographic color separations
in final one-piece negative form complete with
proofs using the actual film furnished for the
initial offer and pay for all related Promotional
Expenses;
(ii) pay for all printing costs and insertion costs for
mailings, including response vehicles for mail
orders;
(iii) print all promotional materials, including
response vehicles for mail orders, for the Backend
Package, if any, and pay for all related
Promotional Expenses;
(iv) mail all promotional materials, including response
vehicles for mail orders, for the Backend Package,
if any, and pay for all Postage.
(4) Licensee will perform all functions necessary to maintain day
to day operations, including but not limited to:
(a) mailing negative option correspondence, if any, to
Enrollees at specified intervals;
(b) processing all Customer orders;
(c) shipping Product at specified intervals;
(d) maintaining shipment records and change of address
records as may be provided by Customers or Sears;
(e) providing Sears with appropriate cross reference and
Enrollee information to enable Sears to fulfill Sears
responsibilities under this Agreement (Licensee shall
also provide Sears with billing detail, sales and use
tax information, and other Enrollee information, as
provided in Paragraph 19 of this Agreement, and as may
be reasonably requested by Sears in the future.);
(f) forwarding to Sears all billing inquiries related to the
Program or Sears, correspondence which is related to the
Program or Sears, bill payments, and returned
merchandise other than Product;
(g) providing Sears with the information requested by Sears
which is necessary to resolve inquiries related to the
Program;
-7-
<PAGE> 9
(h) processing Customer or Enrollee returns, reimbursing
Customer or Enrollee for postage for returning the
Product and for shipping and handling charges for
delivery of said returned Product, and handling all
matters related to Customer service, including
maintaining Sears policy of Satisfaction Guaranteed; and
(i) reimbursing Customer or Enrollee, as appropriate, for
all Postage, shipping and handling charges for all
returns of Product.
SEARS RESPONSIBILITIES FOR THE TEST
c. Except as otherwise provided, Sears will be responsible for the
following functions and the related expenses of the Test.
(1) Sears will provide a list, in tape or label format (as
requested by Licensee), of names and addresses of Customers
selected for the Test. The list will be refined to exclude
Customers who live in Alaska, Hawaii, areas marketed by
commissioned Sears Merchants and Agents, and foreign
countries. As provided in Paragraph 5.b. (3) (a) (ii),
Licensee will be responsible for and pay for all charges for
generation, refinement, and non-Sears analyses of the list.
The list shall be protected under the confidentiality
provisions of Paragraph 32 hereof.
(2) Sears will provide advice in analyzing the specific results of
the Test.
(3) Sears will institute systems for credit review for
transactions over the prescribed floor limit.
(4) Sears will provide billing service to the Enrollee as a one
line entry, as part of Sears regular billing statement to the
Enrollee, reflecting the total amount due by the Enrollee for
Product.
(5) Sears shall collect the amounts due from the Enrollee on
behalf of Licensee as provided in Paragraph 17.c. hereof.
Sears will make settlement with Licensee as provided in
Paragraph 19 hereof.
(6) Sears will provide Licensee with information concerning
Enrollee cancellations, credits, adjustments and other
transactions resulting from inquiries communicated to Sears
units. All data transmitted to Licensee will include and be
sequenced by the individual Enrollee account number.
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(7) With respect to sales to Enrollees who paid cash to Sears for
Product or who charged purchases on their Sears credit plan,
Sears will collect all applicable sales or use taxes required
by law and will file reports there for as required by law.
Sears will withhold from settlement remittance to Licensee an
amount equal to sales or use taxes payable on said sales.
(8) With respect to the following Test formats, as may be agreed
to by Sears and the Licensee, Sears will:
(a) for a Solo Mailing Promotion, have no additional
responsibilities;
(b) for Inserts, if any, insert and mail the Insert and pay
for all Postage to mail the initial offer (As provided
for in Paragraph 5.b. (3) (b) (ii), Licensee will pay
for all insertion costs. Sears will invoice Licensee for
the insertion costs.); and
(c) for Bangtails, if any, Sears will (i) print promotional
material for the initial offer from lithographic color
separations provided by Licensee, and (ii) mail the
Bangtail. As provided in Paragraph 5.b. (3) (c) (ii),
Licensee will pay for all printing costs and insertion
costs. Sears will invoice Licensee for the printing
costs and the insertion costs. Sears will pay for all
postage to mail the initial offer.
LICENSEE'S RESPONSIBILITIES FOR ROLLOUTS, IF ANY
6. a. For Rollouts, if any, Licensee will have the same responsibilities
as provided for in Paragraphs 5.b. hereof.
SEARS RESPONSIBILITIES FOR ROLLOUTS, IF ANY
b. For Rollouts, if any, Sears will have the same responsibilities as
provided for in Paragraphs 5.c. hereof.
SEARS NOT OBLIGATED TO PURCHASE PRODUCT OR SURPLUS INVENTORY
7. a. Licensee hereby agrees to sell Product to Enrollees as provided by
this Agreement. Sears has no obligation to purchase any minimum
quantity of Product from Licensee, nor does Sears have any
obligation to purchase or promote any surplus inventory of Product,
which may exist after a Test or Rollout, if any.
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PRODUCT MUST BE MERCHANTABLE
b. Said Product shall be merchantable and conform to applicable
requirements of all Federal, State and local laws, any regulations
issued pursuant to such laws, including but not limited to any
Federal Trade Commission Rules, Guides or Orders.
SPECIFICATION
c. The term "specification" as used herein, shall mean all, or any part
of, the detailed description of Product. By agreeing to and using
any such specification or any design, Product modification or other
manufacturing or Product suggestion, whether originating with Sears
or elsewhere, Licensee agrees that it adopts as its own, accepts
full responsibility for, and relieves Sears of all responsibility
for such specifications, design, modification or suggestion.
LICENSEE TO PROVIDE CERTIFICATES
d. Licensee agrees to provide Sears with any applicable certificate(s)
of compliance or guaranty(ies) of compliance with any statute, rule
or regulation provided for or permissible therein and in such form
as Sears may designate, covering Product sold to Enrollees by
Licensee.
LICENSEE HAS SUFFICIENT INVENTORY
e. Licensee represents and warrants that it has the Product in its
inventory or it has written contract(s) with reputable manufacturers
to provide said Product in quantities sufficient to meet anticipated
Enrollee demand.
CUSTOMS DOCUMENTATION
f. Licensee represents and warrants that (1) for all Product entering
United States commerce from a foreign country, Licensee has or will
obtain all U.S. Customs documentation necessary to have the Product
enter United States commerce, and (2) it will take all necessary
steps to have the Product legally enter the United States commerce.
PACKAGING
g. Licensee, at its expense, shall provide adequate and appropriate
packaging, packing, labeling, and shipping. Licensee shall comply
with all packaging, packing, labeling and shipping requirements as
provided in the Operating Guidelines, industry standards and/or
established by applicable laws, regulations, carrier tariffs and
classifications.
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SHIPPING OF PRODUCT
h. Licensee shall ship Product to Enrollees who order the Product,
except that (1) Licensee shall immediately cease shipping Product to
any Enrollee after such time as Licensee has received written
notification from Sears to cease shipping Product to that Enrollee;
and (2) Licensee shall immediately cease shipping Product to any
Enrollee who notifies Licensee that such Enrollee does not desire to
receive the Product. Licensee shall not receive any payment from
Sears or the Enrollee for Product shipped to any Enrollee after such
time as Licensee has received written notification from Sears or
Enrollee(s) to cease shipping Product to such Enrollee(s).
SYSTEMS COMPATIBILITY
8. Both parties agree that they will jointly provide whatever technical
expertise is required to assure systems compatibility and accurate data
transfer. Both parties will establish whatever reasonable systems and
procedures that are necessary to assure such compatibility and accurate
transfer of data. Licensee agrees to bear expense for using third party
data processing as may be recommended by Sears and agreed to by Licensee.
Licensee agrees that Sears shall not be liable for any loss suffered by or
any damage to Licensee or any property of Licensee actually or allegedly,
directly or indirectly, arising or resulting from or connected with third
party data processing.
OPERATING GUIDELINES
9. In performing their obligations under this Agreement, the parties will
follow operating procedures set forth in the Operating Guidelines. If
there is any conflict between the provisions of this Agreement and the
Operating Guidelines, then the provisions of this Agreement shall govern.
FACILITIES AND EQUIPMENT
10. Licensee, at its expense, shall provide all facilities and equipment as
may be necessary and proper for the conduct of its obligations pursuant to
this Agreement. Sears, at its expense, shall provide all facilities and
equipment as may be necessary and proper for the conduct of its
obligations pursuant to this Agreement.
PERMITS, LICENSES
11. a. Licensee, at its expense, shall obtain all permits and licenses
which may be required under any applicable Federal, State or local
law, ordinance, rule or regulation by virtue of any acts performed
by Licensee in the performance of this Agreement, and Licensee shall
in the conduct of its
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business and in the performance of this Agreement comply fully with
all applicable Federal, State and local laws, ordinances, rules and
regulations, including without limiting the foregoing, compliance
with all rules and regulations of the Federal Trade Commission.
b. If Licensee does not own the Licensee's mark, which is described in
Paragraph 24.a. hereof, or any non-Sears copyrighted materials; then
Licensee will provide Sears with a letter(s) from the owner(s) of
said mark and/or said non-Sears copyrighted materials granting
Licensee and Sears, individually, permission to use the mark and/or
said non-Sears copyrighted materials in this Program. Said letter
shall be delivered to Sears concurrently with the execution and
delivery of this Agreement.
FEES, TAXES
12. a. With respect to sales to Enrollees who paid cash to Sears for
Product or who charged purchases on their Sears credit plan, Sears
will collect all applicable sales or use taxes required by law and
will file reports therefor as required by law. Sears will withhold
from settlement remittance to Licensee an amount equal to sales or
use taxes payable on said sales.
b. Except as otherwise provided in this Paragraph, Licensee, at its
expense, shall pay and discharge all license fees, business, use,
gross receipts, income, property or other similar or different taxes
or assessments which may be properly charged or levied upon Licensee
by reason of anything performed under this Agreement, excluding,
however, all taxes and assessments applicable to Sears income or
applicable to Sears property.
TELEPHONE NUMBERS
13. All published telephone numbers designating an identity with Sears, if
any, used in connection with the Program shall be separate from the
telephone numbers used by Licensee in its other business operations, if
any, and such numbers shall be deemed to be the property of Sears so that
upon termination of this Agreement for any reason, Licensee shall cease to
use such Sears telephone numbers and at Sears option shall transfer such
telephone numbers to Sears. These numbers will be protected under the
provisions of Paragraph 26 hereof.
PUBLICITY
14. Neither licensee nor Sears will issue any publicity or press release
regarding its contractual relations with the other party hereunder or
regarding other party's
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activities hereunder without obtaining the other party's prior written
approval and consent to such release.
CUSTOMER ADJUSTMENTS
15. All of the services performed by Licensee in connection with the Program
shall be up to a high standard of workmanship and all Product sold in
connection with the Program shall be of high quality. Licensee shall at
all times maintain the general policy of satisfaction of Customers and/or
Enrollees and shall adjust all complaints of and controversies with
Customers and/or Enrollees with respect to said sales made under this
Agreement. Such adjustments, if any, shall include reimbursing the
Customer or Enrollee for postage for returning the Product and for
shipping and handling charges for delivery of said returned Product. In
any case in which said adjustment is unsatisfactory to the Customer and/or
Enrollee, Sears shall have the right, at Licensee's expense, to make such
further adjustment as Sears may deem necessary under the circumstances and
any adjustment made by Sears, even when in excess of the sales price of
the Product in question, shall be conclusive and binding upon Licensee and
Licensee shall abide by and comply with such adjustment. Licensee shall
maintain and make available to Sears the files pertaining to Customer and
Enrollee complaints and their adjustment. Sears may deduct the amount of
any such adjustments as provided in Paragraph 19 hereof.
EMPLOYEE DISCOUNT
16. Licensee shall inform Sears, National Manager, Direct Response Marketing,
D/702CDR, 900 Skokie Blvd., Northbrook, IL 60062, in writing, of all
details concerning; discounts, if any, that Licensee intends to offer to
Sears employees. Licensee shall also notify said National Manager, in
writing, of any offering, change, or discontinuance of said discount at
least thirty (30) days prior to said offering, change, or discontinuance.
CREDIT SALES
17. a. It is intended that payment for all sales made by Licensee hereunder
shall be made only on credit. All such sales shall be made with the
approval of the Sears Credit Manager designated by Sears and made on
such of Sears regularly established credit plans as may be first
approved by such Sears Credit Manager. The approval of such Sears
Credit Manager shall be required for each individual credit sale; or
a blanket "floor" approval may be granted for sales below a
specified amount. Sears will determine the floor approval amount.
Neither party will encourage cash sales, but in the event that
payment for a sale is made in cash, the transaction will be handled
in the manner prescribed in the Operating Guidelines.
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FINANCE CHARGES
b. No part of the finance charges which may be made by Sears in
connection with any credit sale shall be payable to or credited in
any way to Licensee, and Licensee shall not be responsible for or
charged with credit losses on such credit sales that have been
authorized by Sears.
COLLECTION
c. Sears will collect all amounts due from Enrollees on behalf of
Licensee. Licensee shall not be responsible for the collection of
any accounts due with respect to credit sales authorized by Sears
and checks received from Enrollees. However, Licensee shall be
responsible for losses, including the Gross Sales amount plus
applicable sales tax or use tax, shipping and handling charges, and
credit finance charge accrued, if any, resulting from unauthorized
credit sales.
DEL CREDERE AGENT
d. Any losses sustained by Sears as a result of non-payment of checks,
Sears credit plan, or otherwise, shall be borne by Sears as del
credere agent.
CONSIDERATION
18. a. In consideration of the performance by Sears of its responsibilities
as provided in this Agreement and in consideration of the privileges
granted to Licensee to operate hereunder, Sears shall receive a
commission as specified in the Rider(s), if any, hereto. Prior to
initiating a subsequent Test(s) or Rollout(s), if any, Sears and
Licensee shall mutually determine in writing whether the mailing is
a Test or Rollout, if any.
b. Licensee shall receive the balance of Net Sales plus charges for
shipping and handling, as provided in Paragraph 19. Notwithstanding
the foregoing, Sears will remit to Licensee said balance less any
amounts for which Sears is entitled a credit, including credits
pursuant to the provisions of Paragraph 15 hereof.
SETTLEMENT
19. a. At the end of each week, Licensee will provide Sears with (1)
magnetic tapes of sales and return activities for the preceding
week, which tapes shall be in the format specified in the Operating
Guidelines, (2) an invoice for the amount due to Licensee for
shipments made during the
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preceding week, (3) a credit memo for any amounts for which Sears is
entitled a credit, including credits pursuant to the provisions of
Paragraph 15 hereof, (4) copies of evidence of shipment to
Enrollees, as provided for in the Operating Guidelines, (5)
documents required for processing of sales made on Sears regularly
established credit plans, as described in Paragraph 17.a. hereof,
(6) any other documentation required in the Operating Guidelines,
and (7) any other documents reasonably requested by Sears. The
amount due to the Licensee will be paid by Sears within thirty (30)
days after receipt of invoice.
b. At the end of each calendar month, Licensee will provide Sears with
a report in the form of Exhibit A, a copy of which is attached
hereto and made a part hereof.
AUDIT RIGHT
20. Licensee shall keep and maintain books and records which accurately
reflect the sales, shipments, and other operations of Licensee under this
Agreement. Said books and records shall be kept and maintained according
to consistently applied standard and accepted accounting practices. Sears
has the right to review and audit the Licensee's books and records
relating to the Program at any reasonable time.
ADDRESS
21. All promotions made to Customers and/or Enrollees under the Program and
all response vehicles for mail orders will carry Sears name and the
address specified in the Rider(s), if any, hereto.
TITLE TO PRODUCT
22. Product shall be held by Licensee without risk or expense to Sears or
Enrollees pending shipment by Licensee pursuant to shipping instructions.
Title to Product shall not pass to Enrollee until Product is delivered to
the Enrollee.
SEARS TRADEMARKS, TRADE NAMES, SERVICE MARKS
23. a. Licensee agrees that it will use the name "Sears" and any of Sears
trademarks, trade names or service marks (herein collectively called
"Sears marks") only in connection with the conduct and operation of
the Program under this Agreement. Licensee expressly recognizes and
acknowledges that the use of Sears marks shall not confer upon
Licensee any proprietary rights to any such Sears marks. Upon
expiration or upon termination of Licensee's right to use Sears
marks for any cause, Licensee shall immediately cease all use of all
such Sears
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marks and will not use any such Sears marks thereafter. Licensee
agrees not to question, contest or challenge the ownership by Sears
of any such right, title or interest in any such mark, except the
right to use the same pursuant to the terms and conditions of this
Agreement, and will not seek to register the same. Licensee agrees
that upon expiration or termination of rights to use Sears marks
pursuant to this Agreement for any cause or without cause, Licensee
will execute all necessary or appropriate documents to confirm Sears
said ownership or to transfer any rights it may have acquired from
Sears.
b. Other than with respect to Licensee mark (as hereinafter defined),
Licensee acknowledges that Sears may register any and all of the
trademarks, service marks or trade names for the Program under this
Agreement in its own name, and that Licensee's use thereof shall
inure to the benefit of Sears for such purpose, as well as for other
purposes. Licensee shall cooperate in any such registration by Sears
or application thereof.
c. Licensee recognizes that each of Sears marks possesses a special,
unique and extraordinary character which makes it difficult to
assess the monetary damage which Sears would sustain in the event of
unauthorized use. Licensee expressly recognizes and agrees that
irreparable injury would be caused to Sears by such unauthorized use
and agrees that preliminary or permanent injunctive relief would be
appropriate in the event of breach of this Paragraph by Licensee
provided that such remedy shall not be exclusive of other legal
remedies otherwise available.
d. Licensee agrees that if it receives knowledge of any manufacture or
sale by anyone else of products or services, if any, offered under
the Program as would be confusingly similar in the minds of the
public and which bear or are promoted in association with any of
Sears marks, or any names, symbols, emblems, designs or colors which
would be confusingly similar in the minds of the public, Licensee
will promptly notify Sears. Sears shall have the sole right, at its
expense, to take such action with respect thereto as it determines,
in its sole discretion, is appropriate. Licensee undertakes to
reasonably cooperate and assist in such protest or legal action at
Sears expense. Licensee shall not undertake such protest or legal
action on its own behalf without first securing Sears written
permission to do so. In the event Sears shall permit Licensee to
undertake such protest or legal action, such protest or legal action
shall be at Licensee's expense. Sears agrees to cooperate and assist
reasonably therein at Licensee's expense. For the purposes of the
foregoing, expenses shall include reasonable attorneys' fees. All
recovery in the form of legal damages or settlement shall belong to
the party bearing the expense of such protest or legal action.
Licensee
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agrees that upon expiration or termination of Licensee's rights to
use Sears marks pursuant to this Agreement for any cause, that
nothing in this Agreement shall be construed as to bar Sears from
protecting its rights to the exclusive use of its trademarks,
service marks or trade names against infringement thereof by any
party or parties, including Licensee.
LICENSEE'S TRADEMARK, TRADE NAME
24. a. Licensee hereby grants to Sears the privilege of using the trademark
or trade name, as specified in the Rider(s), if any, hereto (herein
called "Licensee's mark") and any of Licensee's rights therein only
in connection with the conduct and operation of the Program under
this Agreement. Sears expressly recognizes and acknowledges that the
use of Licensee's mark in the Program shall not confer upon Sears
any proprietary rights to Licensee's mark; however, this Agreement
does not create for Sears or the Licensee any greater rights in
Licensee's mark than existed prior to the execution of this
Agreement, specifically Sears may use any Licensee's mark which is
descriptive or generic or which is later found to be descriptive or
generic to the same extent that the general public may use
Licensee's mark. Upon expiration or upon termination of Sears rights
to use Licensee's mark for any cause, Sears shall immediately cease
all use of Licensee's mark and will not use any such Licensee's mark
thereafter. Sears agrees not to question, contest or challenge the
ownership by Licensee of Licensee's mark during the Term of this
Agreement or thereafter. Sears will claim no right, title or
interest in Licensee's mark, except the right to use the same
pursuant to the terms and conditions of this Agreement, and will not
seek to register the Licensee s mark. Sears agrees that upon
expiration or termination of rights to use Licensee's mark pursuant
to this Agreement for any cause or without cause, it will execute
all necessary or appropriate documents to confirm Licensee's said
ownership or to transfer any rights it may have acquired from
Licensee.
b. Sears recognizes that Licensee's mark possesses a special, unique
and extraordinary character which makes it difficult to assess the
monetary damage which Licensee would sustain in the event of
unauthorized use. Subject to the provisions of Paragraph 24.a.,
Sears expressly recognizes and agrees that irreparable injury would
be caused to Licensee by such unauthorized use and agrees that
preliminary or permanent injunctive relief would be appropriate in
the event of breach of this Paragraph by Sears provided that such
remedy shall not be exclusive of other legal remedies otherwise
available.
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STANDARDS
25. Licensee shall provide Sears with copies of its written
procedures/policies establishing minimum standards of quality and/or
performance for this Program. Licensee shall immediately advise Sears of
any changes in said standards. Licensee agrees to observe no less than
said minimum standards of quality and/or performance. Licensee agrees that
Sears has the right to visit offices, work sites and/or other places of
business involving the Program at any reasonable time and upon ten (10)
days prior notice for the purpose of verifying Licensee's compliance with
said standards of quality and/or performance.
COPYRIGHT NOTICES
26. Sears shall have sole copyright ownership in (a) any format and/or
materials which are prepared exclusively for Sears, (b) the word "Sears,"
any Sears mark, or any picture or reference to any product having a Sears
trademark or (c) any design, format or materials or part thereof that are
listed by Sears on a Rider as having originated with Sears. Licensee shall
have the sole copyright ownership of any format and materials prepared by
Licensee, not including any items covered by categories (a) through (c) in
the preceding sentence.
Licensee shall not use the materials and format prepared for distribution
under this Agreement and other programs, without first deleting therefrom
any Sears trademark, the word "Sears," any picture or illustration which
depicts a Sears trademark or any other material that is specifically
listed in a Rider by Sears or which was prepared exclusively for Sears.
Licensee and Sears agree to the use of a Sears copyright notice and a
Licensee s copyright notice on all printed materials prepared for
distribution under this Agreement. Such notices shall indicate the
appropriate copyright ownership between the parties as stated above.
EMPLOYEES
27. a. (1) Licensee shall have no authority to employ persons on behalf
of Sears and no employees of Licensee shall be deemed to be
employees or agents of Sears, said employees at all times
shall remain Licensee's employees. Licensee shall have the
sole and exclusive control over its labor and employee
relations policies and policies relating to wages, hours,
working conditions, or conditions of its employees. Licensee
shall have the sole and exclusive right to hire, transfer,
suspend, lay off, recall, promote, assign, discipline, adjust
grievances and discharge said
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employees, provided, however, that at any time Sears so
requests, Licensee will give consideration to the transfer
from the Program of any employee who is objectionable to Sears
for reasons of health, safety and/or security of Enrollees,
Customers, employees or merchandise and/or whose manner
impairs Sears customer relations.
(2) Licensee agrees to assume complete responsibility for all
salaries and other compensation of all Licensee's employees
and will make all necessary salary deductions and withholdings
from said employees' salaries and other compensation, and
assumes full responsibility for the payment of any and all
contributions, taxes and assessments and agrees to meet all
other requirements of the Federal Social Security and Federal
and State Unemployment Compensation and Federal, State and
Local Withholding of Income Tax Laws and all salary and other
compensation of said employees.
(3) Licensee further agrees and warrants that Licensee will comply
with any other Federal or State or local law or regulation
regarding compensation, hours of work, or other conditions of
employment, including, but not limited to, Federal or State
laws or regulations regarding minimum compensation, overtime
and equal opportunities for employment to the extent they are
applicable to Licensee, and terms of the Federal Civil Rights
Act and the Federal Labor Standards Act, to the extent they
are applicable to Licensee.
b. Licensee agrees and warrants that said employees, while working in
connection with this Agreement, will comply with any and all
Federal, State and local laws, regulations and ordinances applicable
to Licensee.
INDEPENDENT CONTRACTOR
28. Licensee shall operate in the capacity of an independent contractor and
nothing contained in or performed pursuant to this Agreement shall be
construed as creating an agency (except Sears shall be a del credere agent
as discussed in Paragraph 17.d.) partnership, or joint venture. Except as
may be otherwise expressly provided in this Agreement, neither party shall
become bound by any representation, act or omission of the other party
hereto.
PURCHASES
29. Licensee will not make any purchases or incur any obligation or expense of
any kind in the name of Sears.
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CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
INSURANCE
30. a. Licensee, at its expense, hereby agrees and covenants that it shall
obtain and maintain during the Term of this Agreement the following
policies of insurance from companies satisfactory to Sears,
containing provisions satisfactory to Sears, and adequate to fully
protect Sears as well as Licensee from and against any and all
claims, demands, actions, liabilities, damages, losses, costs and
expenses arising out of the subjects covered by such policies of
insurance:
(1) Workers' Compensation Insurance containing a waiver of
subrogation in favor of Sears executed by the insurance
company and covering all costs, benefits and liability under
State Workers' Compensation and similar laws which may accrue
in favor of any person employed by Licensee, and Employer's
Liability Insurance with limits of not less than **********;
(2) Comprehensive General Liability Insurance including, but not
limited to, coverage for product liability, with a broad form
vendor's endorsement in favor of Sears for all Product and
materials relating to this Agreement, and personal injury with
limits of not less than ********** combined single limits for
bodily injury and property damage per occurrence;
(3) Contractual Liability Insurance specifically endorsed to cover
the indemnity provisions of this Agreement with limits of not
less than ********** combined single limits for bodily injury
and property damage per occurrence;
(4) Motor Vehicle Liability Insurance with a Non-Ownership
Liability Endorsement in Licensee's name covering all vehicles
used in connection with Licensee's operations under this
Agreement with limits of not less than ********** combined
single limits for bodily injury and property damage per
occurrence; and
(5) (a) For the Test, Umbrella Excess Liability Insurance
including, but not limited to, product liability,
blanket contractual liability, personal injury and
advertising liability with limits of not less than
********** combined single limits for bodily injury and
property damage per occurrence; and
(b) For the Rollout, if any, Umbrella Excess Liability
Insurance including, but not limited to, product
liability, blanket contractual liability, personal
injury and advertising liability with limits of not less
than ********** combined
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single limits for bodily injury and property damage per
occurrence.
SEARS TO BE NAMED AS ADDITIONAL INSURED
b. Each insurance policy obtained by Licensee shall name Sears as an
additional insured and shall contain a severability of
interest/cross liability endorsement. Each policy obtained by
Licensee shall expressly provide that it shall not be subject to
change or cancellation without at least thirty (30) days prior
written notice to Sears. Licensee shall furnish Sears with copies of
the policies required to be maintained by Licensee by Paragraph
30.a.(1), (2), (3), (4), and (5) or certificates thereof
concurrently with the execution and delivery of this Agreement. If
Licensee obtains additional insurance, then Licensee shall have
Sears named as an additional insured on each of said insurance
policies without any charge to Sears. In order to avoid conflicts
between insurance companies, Licensee shall use its best efforts to
have all policies of insurance obtained by Licensee issued by one
(1) insurance company.
ADEQUATE PROTECTION
c. If, in Sears opinion, such policies do not afford adequate
protection for Sears, then Sears will so notify Licensee. If
Licensee does not furnish evidence of additional coverage within
thirty (30) days of such notice, then Sears, at its option but
without limitation of any other rights or remedies, shall have the
right to obtain such additional insurance at the expense of
Licensee.
APPROVAL OF POLICY
d. Any approval by Sears of any insurance policies or additional
insurance obtained by Sears shall not relieve Licensee of any
responsibility hereunder including, but not limited to, claims in
excess of limits described above.
INDEMNIFICATION
31. Licensee agrees that it will protect, defend, hold harmless and indemnify
Sears, its successors, assigns, directors, officers and employees, and
their respective heirs and representatives from and against any and all
claims, demands, actions, liabilities, damages, losses, fines, penalties,
costs and expenses (including attorneys' fees) of any kind whatsoever
(including without limitation of the foregoing, those relating to actual
or alleged death of or injury to person and damage to property) , actually
or allegedly, directly or indirectly, arising or resulting from or
connected with (a) Licensee's
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performance or failure of performance of this Agreement; (b) any Product;
(c) Licensee carrying out its functions hereunder including, but not
limited to, all allegations that Product, materials, and/or communications
prepared by or distributed by or through Licensee constitute: (1) libel,
slander, and/or defamation; (2) patent infringement, trademark
infringement or dilution, unfair competition, or infringement of any
statutory copyright, common law right, title or slogan; (3) piracy,
plagiarism, the misappropriation of another's ideas or unfair competition;
and/or (4) invasion of rights of privacy or rights of publicity; (d) all
purchases, contracts, debts and/or obligations made by Licensee; (e) the
omission or commission of any act, lawful or unlawful, by Licensee or any
of Licensee's agents or employees, whether or not such act is within the
scope of employment of such agents or employees; (f) the failure of
Licensee or this Agreement to comply with any applicable law, ordinance,
rule or regulation; (g) inquiries and/or investigations of any
governmental agency; (h) the alleged negligence of Sears; and/or (i) the
failure of Licensee to comply with any provisions of this Agreement.
Notwithstanding anything contained in the foregoing, Licensee shall not be
liable for damage to third parties which is caused by the active and
primary negligence of Sears, its agents or employees.
CUSTOMER LISTS AND INFORMATION
32. Licensee shall not reproduce, release or in any way make available or
furnish, either directly or indirectly, to any person, firm, corporation,
association or organization at any time, any Customer or Enrollee lists
and/or information concerning any Customer or Enrollee receiving any
promotional mailings, Product, or materials under this Agreement, and upon
demand by Sears and/or termination of this Agreement for any reason
Licensee shall immediately deliver to Sears all copies of lists and
information relating to said Customers or Enrollees. All papers, tapes,
discs and other retention or storage items bearing such lists and
information shall be and remain the property of Sears. Licensee agrees not
to use said lists and information concerning the Customers or Enrollees in
any manner except the performance of this Agreement. Licensee shall at all
times maintain any lists and information relating to the Customers or
Enrollees physically separate and distinct from any lists and information
Licensee may maintain that are unrelated to this Agreement. Licensee shall
protect all such lists and information from destruction, loss or theft
during the Term of this Agreement and until such lists and information are
delivered to Sears. Notwithstanding the foregoing, Licensee may maintain
and utilize copies of that portion of said information consistent with
Paragraph 42 hereof. Thereafter, Licensee shall immediately deliver said
lists and information to Sears.
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<PAGE> 24
STRICT CONFIDENCE
33. a. Licensee agrees to hold in strict confidence and will not utilize
otherwise than in connection with the performance of its obligations
under this Agreement all information with respect to Sears
operations, plans and programs furnished by Sears or which become
known to Licensee because of services rendered under this Agreement
by Licensee.
b. Licensee expressly recognizes that irreparable injury would be
caused to Sears by any unauthorized use of confidential information
and agrees that preliminary or permanent injunctive relief would be
appropriate in the event of breach of this Paragraph by Licensee.
NO ASSIGNMENTS
34. This Agreement is not transferable or assignable by Licensee in whole or
in part without prior written consent of Sears. If Licensee transfers,
assigns or attempts to transfer or assign this Agreement or any part
thereof, expressly or by operation of law without prior written consent of
Sears, then Sears, at its option, may immediately terminate this Agreement
without any notice whatsoever. The sale of Licensee's business or any
other transaction which shifts the rights to another controlling interest
shall be such a transfer.
DEFAULT BY LICENSEE
35. a. If (1) Licensee does not have Product, which is merchantable and
conforming to specifications, ready for shipment in the quantities
and at the times specified; (2) it should be alleged that Product
infringes any patent, trademark or copyright, or was manufactured or
was to be sold in violation of any statute, ordinance or
administrative order, rule or regulation; (3) Licensee shall refuse
to furnish appropriate guaranties to protect Sears as permitted by
law, rule or regulation; (4) any bankruptcy or insolvency
proceedings should be commenced by or against Licensee or a
substantial part of the property of Licensee passes into the hands
of any receiver, assignee, officer of the law or creditor; (5) the
Licensee admits, in writing, its inability to pay its debts as they
become due; (6) Licensee vacates, abandons, or ceases to operate
under this Agreement; or (7) Licensee otherwise fails to comply with
any material provision or condition of this Agreement and fails to
cure such default after fifteen (15) days written notice from Sears;
then, in any such event, Sears shall have the right immediately to
terminate this Agreement without affecting any other rights or
remedies which Sears may have by reason thereof.
-23-
<PAGE> 25
b. If Sears, in its opinion, determines that the number of complaints
involving the Product or Licensee is excessive, then Sears shall
notify Licensee. Notwithstanding the provisions of Paragraph
35.a.(7), if Licensee fails to provide Sears with adequate
assurance, as determined solely by Sears and within fifteen (15)
days after notice to Licensee, that the issue(s) involving
complaints has (have) been resolved to Sears satisfaction, then
Sears may immediately terminate this Agreement.
DEFAULT BY SEARS
36. a. If (a) any bankruptcy or insolvency proceedings should be commenced
by or against Sears, or a substantial part of the property of Sears
passes into the hands of any receiver, assignee, officer of the law
or creditor; (b) Sears is unable to pay its debts as they come due;
(c) Sears vacates, abandons or ceases to operate under this
Agreement; or (d) Sears fails to comply with any material provision
or condition of this Agreement and fails to cure such default after
fifteen (15) days written notice from Licensee; then, in any such
event, Licensee shall have the right immediately to terminate this
Agreement without however affecting any other rights or remedies
which Licensee may have by reason thereof.
WAIVER
37. a. No waiver of any provision or breach shall be implied by failure to
enforce any rights or remedy herein provided, and no express waiver
shall affect any provision or breach other than that to which the
waiver is applicable and only for that occurrence.
CUMULATIVE REMEDIES
b. All rights and remedies are cumulative, and the exercise of any
right or remedy herein provided shall be without prejudice to the
right to exercise any other right or remedy provided herein, by law,
or by equity.
SEVERABILITY
c. The invalidity or unenforceability of any provision of this
Agreement shall not affect or impair the enforcement of any other
provision, and this Agreement shall be construed as if such invalid
or unenforceable provision had never been contained herein.
EXCUSED PERFORMANCE
d. Neither party shall be liable for any failure, inability or delay to
perform hereunder, if such failure, inability or delay is due to an
act of God,
-24-
<PAGE> 26
war, strike, lockout, labor disturbance, social conflict, fire,
explosion, or sabotage. If Licensee's performance shall be
prevented, delayed or materially impaired by any such cause, then
Sears may elect to suspend this Agreement, in whole or in part, so
long as such situation continues, but without thereby effecting an
extension of its Terms.
MUTUAL RIGHT OF TERMINATION
38. Either party herein shall have the right to terminate this Agreement
and/or any Rider without cause, without penalty and without liability for
any damages as a result of such termination, at any time by giving to the
other party at least ninety (90) days prior written notice of such
termination.
FUTURE OBLIGATIONS
39. a. Licensee shall have no right or interest in future contracts with
Sears relating to any operation similar to that under this
Agreement, and Sears may, without incurring any liability to
Licensee:
(1) enter into an agreement for the operation of a similar
business with any person or organization Sears chooses,
including, but not limited to, Licensee or any of Licensee's
counterparts,
(2) directly operate a similar business itself, or
(3) completely terminate the operation of the business.
b. Licensee acknowledges that in arriving at the commission rate
hereunder it was taken into consideration that all Customer and
Enrollee lists and Customer and Enrollee information, as described
in Paragraph 32 hereof, and goodwill generated by the operation
under this Agreement shall be owned by Sears and inure completely to
the benefit of Sears and that Licensee has no right or interest in
said Customer and Enrollee lists, Customer and Enrollee information
and goodwill.
NOTICES
40. All notices herein provided for or which may be given in connection with
this Agreement shall be registered mail with postage prepaid and return
receipt requested. If any such notice be given by Licensee to Sears, it
shall be addressed to:
SEARS, ROEBUCK AND CO.
Attention: Specialty Business Manager
D/702CDR
-25-
<PAGE> 27
900 Skokie Blvd.
Northbrook, IL 60062
with copies to:
SEARS, ROEBUCK AND CO.
Attention: Director of Merchandising
Department 702CDR
900 Skokie Blvd.
Northbrook, IL 60062
and if given by Sears to Licensee, such notice shall be addressed to:
CARD MEMBER PUBLISHING CORPORATION
Attention: President
655 Washington Blvd., Suite 806
Stamford, CT 06901
and such notices, if sent by United States mail, shall be deemed to have been
given when deposited in the United States mail.
REPRESENTATIONS CONCERNING AMOUNT OF BUSINESS
41. a. It is understood that no promises or representations whatsoever have
been made as to the potential amount of business Licensee can expect
at any time during the Term of this Agreement. Licensee represents
and warrants that Licensee is solely responsible for any expenses
incurred by it related to this Agreement and agrees that Sears shall
not be obligated for any expense incurred by Licensee in connection
with any increase in the number of Licensee's employees or
expenditures made by Licensee for additional facilities or
equipment.
b. It is understood that no promises or representations whatsoever have
been made as to the potential amount of business Sears can expect at
any time during the Term of this Agreement. Sears represents and
warrants that Sears is solely responsible for any expenses incurred
by it related to this Agreement and agrees that Licensee shall not
be obligated for any expense incurred by Sears in connection with
any increase in the number of Sears employees or expenditures made
by Sears for additional facilities or equipment.
ADDITIONAL REPRESENTATIONS AND WARRANTIES
c. (1) Licensee represents and warrants to Sears that (a) Licensee
has the right to sell and provide Product as provided
hereunder and to perform all actions required of Licensee
hereunder, (b) the
-26-
<PAGE> 28
quality of Product and other services provided by Licensee
hereunder shall be equivalent to the quality of product and
services provided by Licensee in similar programs, if any, (c)
it will not discriminate against Customers or Enrollees
hereunder and therefore the prices charged to Enrollees for
Products and services hereunder will not be greater than the
prices charged by Licensee in similar programs, if any, and
(d) all billing detail and other information provided to Sears
hereunder will be accurate.
(2) Sears represents and warrants to Licensee that Sears has the
right to perform all actions required of Sears hereunder.
COMPLETION OF OUTSTANDING ORDERS
42. In the event this Agreement is terminated or expires and if requested in
writing by Sears, Licensee shall faithfully and promptly fulfill all
orders received from Enrollees prior to the effective date of such
termination or expiration consistent with the provisions of this
Agreement, and Sears shall be obligated to faithfully and promptly pay to
Licensee the amount it has agreed to pay hereunder with respect to such
orders.
PRICES
43. Nothing contained in this Agreement shall be construed as giving Sears any
right or power to affect or control the prices at which Product and
services shall be offered, said right and power being retained by
Licensee.
PARAGRAPH HEADINGS
44. The Paragraph headings in this Agreement have been placed thereon for the
mere convenience of the parties and shall not be considered in any
construction or interpretation of this Agreement.
GOVERNING LAW
45. This Agreement shall be interpreted and governed by the internal laws of
the State of Illinois.
ENTIRE AGREEMENT
46. This Agreement sets forth the entire agreement and understanding between
the parties with respect to the subject matter hereof. This Agreement
shall not be supplemented, modified or amended except by a written
instrument signed by a duly authorized officer of Licensee and by a duly
authorized representative of Sears, and no other person has or shall have
the authority to supplement, modify or amend this Agreement in another
manner.
-27-
<PAGE> 29
IN WITNESS WHEREOF, the parties have signed this Agreement as of the day
and year first above written by their proper officers or representative duly
authorized thereunto.
SEARS, ROEBUCK AND CO.
By: /s/ E. Vachel Pennebaker
----------------------------------
Title: Vice President
-------------------------------
ATTEST: (AFFIX SEAL) CARD MEMBER PUBLISHING
CORPORATION
__________________________ By: Gary Johnson
Secretary ----------------------------------
Title: President
-------------------------------
-28-
<PAGE> 30
AMENDMENT TO LICENSE AGREEMENT
THIS AMENDMENT TO LICENSE AGREEMENT is made and entered into effective
January 1, 1995, by and between Sears, Roebuck and Co., a New York corporation
(hereinafter "Sears"), and CARDMEMBER PUBLISHING CORPORATION, a(n) DELAWARE
corporation (hereinafter "Licensee").
WHEREAS, Sears and Licensee entered into that certain License Agreement
dated the 1st day of August, 1990, as the same may have been heretofore amended
and/or extended (hereinafter "License Agreement");
WHEREAS, Sears and Licensee want to amend the License Agreement as set
forth herein;
NOW, THEREFORE, in consideration of the mutual covenants set forth herein
and in the License Agreement, the parties agree as follows:
1. The following definition is added to Paragraph 1 (Definitions) of
the License Agreement:
"`Matrix' -- A writing, substantially in the form of Exhibit A
hereto, setting forth the specific Product, marketing period,
marketing method, Sears commission, and other specific Program
information agreed to by the parties hereto for each Program. Each
Matrix shall be signed by both parties, whereupon the Matrix shall
be deemed governed by and incorporated into this License Agreement."
2. The word "Matrix" (or "Matrices") shall be substituted for the word
"Rider" (or "Riders") throughout the License Agreement.
3. Paragraph 3 (Term) of the License Agreement is amended by adding the
following after the first sentence:
"Thereafter, this Agreement shall automatically renew for subsequent
one-year periods unless and until either party has terminated this
Agreement in accordance with the provisions herein. Unless this
Agreement or any Program is terminated by Sears due to a default by
Licensee pursuant to Paragraph 35 hereof, Licensee will be entitled
to its portion of the revenues received by Sears for a minimum of
two (2) annual renewals billed through Sears Charge Card for each
Enrollee enrolled pursuant to a Program initiated under this
Agreement prior to the effective date of termination. Additional
renewals, if any, shall be at Sears's sole discretion and, if agreed
to, will be billed through the Enrollee's SearsCharge Card."
-29-
<PAGE> 31
4. Paragraph 40 of the License Agreement is amended to substitute the
following for addresses to which notices given to Sears are to be
sent:
Sears, Roebuck and Co.
D/702CDR, E4, 272B
3333 Beverly Road
Hoffman Estates, IL 60179
Attention: General Manager, Clubs and Services
with a copy to:
Sears, Roebuck and Co.
D/702CDR, E4, 259B
3333 Beverly Road
Hoffman Estates, IL 60179
Attention: Vice President, Direct Response
5. The License Agreement, as heretofore and as herein amended, shall
continue in full force and effect according to its terms and is
hereby ratified by the parties.
SEARS, ROEBUCK AND CO. CARDMEMBER PUBLISHING CORP.
By: /s/ E. Vachel Pennebaker By: /s/ Steven H. Levenhevz
------------------------------- --------------------------------------
Name: E. Vachel Pennebaker Name: Steven H. Levenhevz
----------------------------- ------------------------------------
Title: Vice President Title: Sr. Vice President and CFO
---------------------------- -----------------------------------
-30-
<PAGE> 32
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
NOVEMBER, 1993 TELEMARKETING PAGE 1 of 2
RIDER NUMBER CPC-93-11
THIS RIDER is made and entered into as of the 7th day of November 1993,
by and between SEARS, ROEBUCK AND CO., a New York corporation (hereinafter
referred to as "Sears"), and CARDMEMBER PUBLISHING CORPORATION, a DELAWARE
corporation (hereinafter referred to as "Licensee").
Reference is made to the License Agreement, entered into on the 1st day
of August, 1990, by and between Sears and Licensee wherein Sears granted
Licensee the privilege of conducting and operating various Program(s), as such
may have been extended, amended, and otherwise modified (hereinafter referred to
as "License Agreement").
NOW, THEREFORE, in consideration of the mutual covenants provided in the
License Agreement and contained herein, the parties hereto agree as follows:
1. The name of the Program shall be HEALTHTRENDS.
2. The Product shall be HEALTH SERVICES. A description of the Product is
attached hereto and made a part hereof as Exhibit 1.
3. The Term for this rider shall be for a period beginning on NOVEMBER
7, 1993 and ending at the close of business on NOVEMBER 6, 1996 unless sooner
terminated under any provisions of the License Agreement. This Rider pursuant to
this Agreement shall be in effect for three (3) years from its effective date to
permit Licensee one initial enrollment and two (2) successive annual renewals of
members enrolled under this Rider. Thereafter, the Riders may be extended solely
at Sears option. All Riders are subject to termination at any time in accordance
with the default provisions of the License Agreement.
4. Approximately ********** outbound phone solicitations will be made,
equivalent to ********** beginning on November 7, 1993 and completed December
6, 1993. The telemarketing is to be treated as a ROLLOUT, and Sears Commission
will be ********** of Net Sales.
5. All promotions made to customers under the Program described in this
Rider and all response vehicles for mail orders therefore will carry Sears name
and the following address:
HEALTHTRENDS
P.O. BOX 24843
OMAHA, NE 68124-0843
6. The Licensee's mark for this Program is HEALTHTRENDS(sm).
<PAGE> 33
CPC-93-11 CONT'D PAGE 2 of 2
7. Said License Agreement is in all other respects fully ratified and
confirmed, including any mutual right termination contained therein.
IN WITNESS WHEREOF, the parties have signed this Rider as of the day and
year first written by their proper officers or representatives duly authorized
thereunto.
SEARS, ROEBUCK AND CO.
By: /s/ E. V. Pennebaker
------------------------------
E.V. Pennebaker
Vice President
Circulation & Mktg. Analysis
CARDMEMBER PUBLISHING
CORPORATION
By: /s/ Gary A. Johnson
_______________________________
Title: President
ATTEST: (Affix Corporate Seal)
/s/ Thomas St. Denis
_______________________________
Secretary
<PAGE> 34
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
DECEMBER, 1993 TELEMARKETING PAGE 1 of 2
RIDER NUMBER CPC-93-12
THIS RIDER is made and entered into as of the 7th day of December, 1993,
by and between SEARS, ROEBUCK AND CO., a New York corporation (hereinafter
referred to as "Sears"), and CARDMEMBER PUBLISHING CORPORATION, a DELAWARE
corporation (hereinafter referred to as "Licensee").
Reference is made to the License Agreement, entered into on the 1st day
of August, 1990, by and between Sears and Licensee wherein Sears granted
licensee the privilege of conducting and operating various Program(s), as such
may have been extended, amended, and otherwise modified (hereinafter referred to
as "License Agreement").
NOW, THEREFORE, in consideration of the mutual covenants provided in the
License Agreement and contained herein, the parties hereto agree as follows:
1. The name of the Program shall be HEALTHTRENDS.
2. The Product shall be HEALTH SERVICES. A description of the Product is
attached hereto and made a part hereof as Exhibit 1.
3. The Term for this rider shall be for a period beginning on DECEMBER
7, 1993, and ending at the close of business on DECEMBER 6, 1996 unless sooner
terminated under any provisions of the License Agreement. This Rider pursuant to
this Agreement shall be in effect for three (3) years from its effective date to
permit Licensee one initial enrollment and two (2) successive annual renewals of
members enrolled under this Rider. Thereafter, the Riders may be extended solely
at Sears option. All Riders are subject to termination at any time in accordance
with the default provisions of the License Agreement.
4. Approximately ********** outbound phone solicitations will be made,
equivalent to ********** beginning on December 7, 1993 and completed
January 6, 1994. The telemarketing is to be treated as a ROLLOUT, and Sears
Commission will be ********** of Net Sales.
5. All promotions made to customers under the Program described in this
Rider and all response vehicles for mail orders therefore will carry Sears name
and the following address:
HEALTHTRENDS
P.O. BOX 24843
OMAHA, NE 68124-0843
6. The Licensee's mark for this Program is HEALTHTRENDS(sm).
<PAGE> 35
CPC-93-12 CONT'D PAGE 2 of 2
7. Said License Agreement is in all other respects fully ratified and
confirmed, including any mutual right termination contained therein.
IN WITNESS WHEREOF, the parties have signed this Rider as of the day and
year first written by their proper officers or representatives duly authorized
thereunto.
SEARS, ROEBUCK AND CO.
By: /s/ E. V. Pennebaker
---------------------------------
E. V. Pennebaker
Vice President
Circulation & Mktg. Analysis
CARDMEMBER PUBLISHING CORPORATION
By: /s/ Gary A. Johnson
________________________________
Title: President
ATTEST: (Affix Corporate Seal)
/s/ Thomas St. Denis
- -------------------------------
Secretary
<PAGE> 36
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
JANUARY, 1994 TELEMARKETING PAGE 1 of 2
RIDER NUMBER CPC-94-01
THIS RIDER is made and entered into as of the 7th day of January, 1994,
by and between SEARS, ROEBUCK AND CO., a New York corporation (hereinafter
referred to as "Sears"), and CARDMEMBER PUBLISHING CORPORATION, a DELAWARE
corporation (hereinafter referred to as "Licensee").
Reference is made to the License Agreement, entered into on the 1st day
of August, 1990, by and between Sears and Licensee wherein Sears granted
Licensee the privilege of conducting and operating various Program(s), as such
may have been extended, amended, and otherwise modified (hereinafter referred to
as "License Agreement").
NOW, THEREFORE, in consideration of the mutual covenants provided in the
License Agreement and contained herein, the parties hereto agree as follows:
1. The name of the Program shall be HEALTHTRENDS.
2. The Product shall be HEALTH SERVICES. A description of the Product is
attached hereto and made a part hereof as Exhibit 1.
3. The Term for this rider shall be for a period beginning on JANUARY 7,
1994 and ending at the close of business on JANUARY 6, 1997 unless sooner
terminated under any provisions of the License Agreement. This Rider pursuant to
this Agreement shall be in effect for three (3) years from its effective date to
permit Licensee one initial enrollment and two (2) successive annual renewals of
members enrolled under this Rider. Thereafter, the Riders may be extended solely
at Sears' option. All Riders are subject to termination at any time in
accordance with the default provisions of the License Agreement.
4. Approximately ********** outbound phone solicitations will be made,
equivalent to ********** beginning on January 7, 1994 and completed February 6,
1994. The telemarketing is to be treated as a ROLLOUT, and Sears' Commission
will be ********** of Net Sales.
5. All promotions made to customers under the program described in this
Rider and all response vehicles for mail orders therefore will carry Sears name
and the following address:
HEALTHTRENDS
P.O. BOX 24843
OMAHA, NE 68124-0843
6. The Licensee's mark for this Program is HEALTHTRENDS(sm).
<PAGE> 37
CPC-93-12 CONT'D PAGE 2 OF 2
7. Said License Agreement is in all other respects fully ratified and
confirmed, including any mutual right termination contained therein.
IN WITNESS WHEREOF, the parties have signed this Rider as of the day and
year first written by their proper officers or representatives duly authorized
thereunto.
SEARS, ROEBUCK AND CO.
By: /s/ E.V. Pennebaker
__________________________________
E.V. Pennebaker
Vice President
Circulation & Mktg. Analysis
CARDMEMBER PUBLISHING
CORPORATION
By: /s/ Gary A. Johnson
__________________________________
Title: President
ATTEST: (Affix Corporate Seal)
/s/ Thomas St. Denis
_______________________________
Secretary
<PAGE> 38
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
FEBRUARY, 1994 TELEMARKETING PAGE 1 of 2
RIDER NUMBER CPC-94-02
THIS RIDER is made and entered into as of the 7th day of February, 1994,
by and between SEARS, ROEBUCK AND CO., a New York corporation (hereinafter
referred to as "Sears"), and CARDMEMBER PUBLISHING CORPORATION, a DELAWARE
corporation (hereinafter referred to as "Licensee").
Reference is made to the License Agreement, entered into on the 1st day
of August, 1990, by and between Sears and Licensee wherein Sears granted
Licensee the privilege of conducting and operating various Program(s), as such
may have been extended, amended, and otherwise modified (hereinafter referred to
as "License Agreement").
NOW, THEREFORE, in consideration of the mutual covenants provided in the
License Agreement and contained herein, the parties hereto agree as follows:
1. The name of the Program shall be HEALTHTRENDS.
2. The Product shall be HEALTH SERVICES. A description of the Product is
attached hereto and made a part hereof as Exhibit 1.
3. The Term for this rider shall be for a period beginning on FEBRUARY
7, 1994 and ending at the close of business on FEBRUARY 6, 1997 unless sooner
terminated under any provisions of the License Agreement. This Rider pursuant to
this Agreement shall be in effect for three (3) years from its effective date to
permit Licensee one initial enrollment and two (2) successive annual renewals of
members enrolled under this Rider. Thereafter, the Riders may be extended solely
at Sears' option. All Riders are subject to termination at any time in
accordance with the default provisions of the License Agreement.
4. Approximately ********** outbound phone solicitations will be made,
equivalent to ********** beginning on February 7, 1994 and completed March 6,
1994. The telemarketing is to be treated as a ROLLOUT, and Sears' Commission
will be ********** of Net Sales.
5. All promotions made to customers under the Program described in this
Rider and all response vehicles for mail orders therefore will carry Sears name
and the following address:
HEALTHTRENDS
P.O. BOX 24843
OMAHA, NE 68124-0843
6. The Licensee's mark for this Program is HEALTHTRENDS(sm).
<PAGE> 39
CPC-94-02 CONT'D PAGE 2 of 2
7. Said License Agreement is in all other respects fully ratified and
confirmed, including any mutual right termination contained therein.
IN WITNESS WHEREOF, the parties have signed this Rider as of the day and
year first written by their proper officers or representatives duly authorized
thereunto.
SEARS, ROEBUCK AND CO.
By: /s/ E.V. Pennebaker
_________________________________
E.V. Pennebaker
Vice President
Circulation & Mktg. Analysis
CARDMEMBER PUBLISHING
CORPORATION
By: /s/ Gary A. Johnson
_________________________________
Title: President
ATTEST: (Affix Corporate Seal)
/s/ Thomas St. Denis
__________________________________
Secretary
<PAGE> 40
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
MARCH, 1994 TELEMARKETING PAGE 1 OF 2
RIDER NUMBER CPC-94-03
THIS RIDER is made and entered into as of the 29th day of April, 1994,
by and between SEARS, ROEBUCK AND CO., a New York corporation (hereinafter
referred to as "Sears"), and CARDMEMBER PUBLISHING CORPORATION, a DELAWARE
corporation (hereinafter referred to as "Licensee").
Reference is made to the License Agreement, entered into on the 1st day
of August, 1990, by and between Sears and Licensee wherein Sears granted
licensee the privilege of conducting and operating various Program(s), as such
may have been extended, amended, and otherwise modified (hereinafter referred to
as "License Agreement").
NOW, THEREFORE, in consideration of the mutual covenants provided in the
License Agreement and contained herein, the parties hereto agree as follows:
1.The name of the Program shall be HEALTHTRENDS.
2.The Produce shall be HEALTH SERVICES. A description of the Product
is attached hereto as Exhibit 1.
3.The Term for this rider shall be for a period beginning on MARCH 7,
1994, and ending at the close of business on MARCH 6, 1997 unless sooner
terminated under any provisions of the License Agreement. This Rider pursuant to
this Agreement shall be in effect for three (3) years from its effective date to
permit Licensee one initial enrollment and two (2) successive annual renewals of
members enrolled under this Rider. Thereafter, the Riders may be extended solely
at Sears option. All Riders are subject to termination at any time in accordance
with the default provisions of this Agreement.
4.Appriximately ********** outbound phone solicitations will be made,
equivalent to ********** beginning on March 7, 1994 and completed April 5,
1994. The telemarketing is to be treated as a ROLLOUT, and Sears Commission
will be ********** of Net Sales.
5.All promotions made to customers under the Program described in this
Rider and all response vehicles for mail orders therefore will carry Sears name
and the following address:
HEALTHTRENDS
P.O. BOX 24843
<PAGE> 41
CPC-94-03 CONT'D PAGE 2 of 2
OMAHA, NE 68124-0843
6.The Licensee's mark for this Program is HEALTHTRENDS sm.
7.Said License Agreement is in all other respects fully ratified and
confirmed, including any mutual rights of termination contained therein.
IN WITNESS WHEREOF, the parties have signed this Rider as of the day and
year first written by their proper officers or representatives duly authorized
thereunto.
SEARS, ROEBUCK AND CO.
By: /s/ E.V. Pennebaker
______________________________________
E.V. Pennebaker
Title:Divisional Vice President & President,
Direct Response
CARDMEMBER PUBLISHING
CORPORATION
By: /s/ Gary A. Johnson
_______________________________________
Title: President
ATTEST: (Affix Corporate Seal)
/s/ Thomas St. Denis
- -------------------------------------
Secretary
<PAGE> 42
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
APRIL, 1994 TELEMARKETING PAGE 1 of 2
RIDER NUMBER CPC-94-04
THIS RIDER is made and entered into as of the 1st day of June, 1994, by
and between SEARS, ROEBUCK AND CO., a New York corporation (hereinafter referred
to as "Sears"), and CARDMEMBER PUBLISHING CORPORATION, a DELAWARE corporation
(hereinafter referred to as "Licensee").
Reference is made to the License Agreement, entered into on the 1st day
of August, 1990, by and between Sears and Licensee wherein Sears granted
Licensee the privilege of conducting and operating various Program(s), as such
may have been extended, amended, and otherwise modified (hereinafter referred to
as "License Agreement").
NOW, THEREFORE, in consideration of the mutual covenants provided in the
License Agreement and contained herein, the parties hereto agree as follows:
1. The name of the Program shall be HEALTHTRENDS.
2. The Product shall be HEALTH SERVICES. A description of the Product is
attached hereto and made a part hereof as Exhibit 1.
3. The Term for this rider shall be for a period beginning on APRIL 6,
1994 and ending at the close of business on APRIL 5, 1997 unless sooner
terminated under any provisions of the License Agreement. This Rider pursuant to
this Agreement shall be in effect for three (3) years from its effective date to
permit Licensee one initial enrollment and two (2) successive annual renewals of
members enrolled under this Rider. Thereafter, the Riders may be extended solely
at Sears' option. All Riders are subject to termination at any time in
accordance with the default provisions of this Agreement.
4. Approximately ********** outbound phone solicitations will be made,
equivalent to ********** beginning on April 6, 1994 and completed May 6, 1994.
The telemarketing is to be treated as a ROLLOUT, and Sears' Commission will
be ********** of Net Sales.
5. All promotions made to customers under the Program described in this
Rider and all response vehicles for mail orders therefore will carry Sears' name
and the following address:
HEALTHTRENDS
P.O. BOX 24843
OMAHA, NE 68124-0843
6. The Licensee's mark for this Program is HEALTHTRENDS(sm).
<PAGE> 43
CPC-94-04 CONT'D PAGE 2 of 2
7. Said License Agreement is in all other respects fully ratified and
confirmed, including any mutual right termination contained therein.
IN WITNESS WHEREOF, the parties have signed this Rider as of the day and
year first written by their proper officers or representatives duly authorized
thereunto.
SEARS, ROEBUCK AND CO.
By: /s/ E.V. Pennebaker
___________________________________
E.V. Pennebaker
Divisional Vice President & President
Direct Response
CARDMEMBER PUBLISHING
CORPORATION
By: /s/ Gary A. Johnson
___________________________________
Title: President
ATTEST: (Affix Corporate Seal)
/s/ Thomas St. Denis
_____________________________________
Secretary
<PAGE> 44
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
MAY, 1994 TELEMARKETING PAGE 1 of 2
RIDER NUMBER CPC-94-05
THIS RIDER is made and entered into as of the 6th day of July, 1994, by
and between SEARS, ROEBUCK AND CO., a New York corporation (hereinafter referred
to as "Sears"), and CARDMEMBER PUBLISHING CORPORATION, a DELAWARE corporation
(hereinafter referred to as "Licensee").
Reference is made to the License Agreement, entered into on the 1st day
of August, 1990, by and between Sears and Licensee wherein Sears granted
Licensee the privilege of conducting and operating various Program(s), as such
may have been extended, amended, and otherwise modified (hereinafter referred to
as "License Agreement").
NOW, THEREFORE, in consideration of the mutual covenants provided in the
License Agreement and contained herein, the parties hereto agree as follows:
1. The name of the Program shall be HEALTHTRENDS.
2. The Product shall be HEALTH SERVICES. A description of the Product is
attached hereto and made a part hereof as Exhibit 1.
3. The Term for this rider shall be for a period beginning on MAY 7,
1994 and ending at the close of business on MAY 6, 1997 unless sooner terminated
under any provisions of the License Agreement. This Rider pursuant to this
Agreement shall be in effect for three (3) years from its effective date to
permit Licensee one initial enrollment and two (2) successive annual renewals of
members enrolled under this Rider. Thereafter, the Riders may be extended solely
at Sears' option. All Riders are subject to termination at any time in
accordance with the default provisions of the License Agreement.
4. Approximately ********** outbound phone solicitations will be made,
equivalent to ********** beginning on May 7, 1994 and completed June 5,
1994. The telemarketing is to be treated as a ROLLOUT, and Sears' Commission
will be ********** of Net Sales.
5. All promotions made to customers under the program described in this
Rider and all response vehicles for mail orders therefore will carry Sears name
and the following address:
HEALTHTRENDS
P.O. BOX 24843
OMAHA, NE 68124-0843
6. The Licensee's mark for this Program is HEALTHTRENDS (sm).
<PAGE> 45
CPC-94-05 CONT'D PAGE 2 of 2
7. Said License Agreement is in all other respects fully ratified and
confirmed, including any mutual right termination contained therein.
IN WITNESS WHEREOF, the parties have signed this Rider as of the day and
year first written by their proper officers or representatives duly authorized
thereunto.
SEARS, ROEBUCK AND CO.
By: /s/ E.V. Pennebaker
________________________________
E.V. Pennebaker
Title: Divisional Vice President &
President, Direct Response
CARDMEMBER PUBLISHING
CORPORATION
By: /s/ Gary A. Johnson
________________________________
Title: President
ATTEST: (Affix Corporate Seal)
/s/ Steven H. Levenherz
___________________________________
Assistant Secretary
<PAGE> 46
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
JUNE, 1994 TELEMARKETING PAGE 1 of 2
RIDER NUMBER CPC-94-06
THIS RIDER is made and entered into as of the 26th day of July, 1994, by
and between SEARS, ROEBUCK AND CO., a New York corporation (hereinafter referred
to as "Sears"), and CARDMEMBER PUBLISHING CORPORATION, a DELAWARE corporation
(hereinafter referred to as "Licensee").
Reference is made to the License Agreement, entered into on the 1st day
of August, 1990, by and between Sears and Licensee wherein Sears granted
Licensee the privilege of conducting and operating various Program(s), as such
may have been extended, amended, and otherwise modified (hereinafter referred to
as "License Agreement").
NOW, THEREFORE, in consideration of the mutual covenants provided in the
License Agreement and contained herein, the parties hereto agree as follows:
1. The name of the Program shall be HEALTHTRENDS.
2. The Product shall be HEALTH SERVICES. A description of the Product is
attached hereto and made a part hereof as Exhibit 1.
3. The Term for this rider shall be for a period beginning on JUNE 6,
1994 and ending at the close of business on JUNE 5, 1997 unless sooner
terminated under any provisions of the License Agreement. This Rider pursuant to
this Agreement shall be in effect for three (3) years from its effective date to
permit Licensee one initial enrollment and two (2) successive annual renewals of
members enrolled under this Rider. Thereafter, the Riders may be extended solely
at Sears' option. All Riders are subject to termination at any time in
accordance with the default provisions of the License Agreement.
4. Approximately ********** outbound phone solicitations will be made,
equivalent to ********** beginning on June 6, 1994 and completed July 6, 1994.
The telemarketing is to be treated as a ROLLOUT, and Sears' Commission will be
********** of Net Sales.
5. All promotions made to customers under the program described in this
Rider and all response vehicles for mail orders therefore will carry Sears name
and the following address:
HEALTHTRENDS
P.O. BOX 24843
OMAHA, NE 68124-0843
6. The Licensee's mark for this Program is HEALTHTRENDS(sm).
<PAGE> 47
CPC-94-06 CONT'D PAGE 2 of 2
7. Said License Agreement is in all other respects fully ratified and
confirmed, including any mutual right termination contained therein.
IN WITNESS WHEREOF, the parties have signed this Rider as of the day and
year first written by their proper officers or representatives duly authorized
thereunto.
SEARS, ROEBUCK AND CO.
By: /s/ E.V. Pennebaker
_________________________________
E.V. Pennebaker
Title: Divisional Vice President &
President, Direct Response
CARDMEMBER PUBLISHING
CORPORATION
By: /s/ Gary A. Johnson
_________________________________
Title: President
ATTEST: (Affix Corporate Seal)
/s/ Steven H. Levenherz
___________________________________
Assistant Secretary
<PAGE> 48
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
JULY, 1994 TELEMARKETING PAGE 1 of 2
RIDER NUMBER CPC-94-07
THIS RIDER is made and entered into as of the 29th day of September,
1994, by and between SEARS, ROEBUCK AND CO., a New York corporation (hereinafter
referred to as "Sears"), and CARDMEMBER PUBLISHING CORPORATION, a DELAWARE
corporation (hereinafter referred to as "Licensee").
Reference is made to the License Agreement, entered into on the 1st day
of August, 1990, by and between Sears and Licensee wherein Sears granted
Licensee the privilege of conducting and operating various Program(s), as such
may have been extended, amended, and otherwise modified (hereinafter referred to
as "License Agreement").
NOW, THEREFORE, in consideration of the mutual covenants provided in the
License Agreement and contained herein, the parties hereto agree as follows:
1. The name of the Program shall be HEALTHTRENDS.
2. The Product shall be HEALTH SERVICES. A description of the Product is
attached hereto and made a part hereof as Exhibit 1.
3. The Term for this rider shall be for a period beginning on JULY 7,
1994 and ending at the close of business on JULY 6, 1997 unless sooner
terminated under any provisions of the License Agreement. This Rider pursuant to
this Agreement shall be in effect for three (3) years from its effective date to
permit Licensee one initial enrollment and two (2) successive annual renewals of
members enrolled under this Rider. Thereafter, the Riders may be extended solely
at Sears' option. All Riders are subject to termination at any time in
accordance with the default provisions of the License Agreement.
4. Approximately ********** outbound phone solicitations will be made,
equivalent to ********** beginning on July 7, 1994 and completed August 7,
1994. The telemarketing is to be treated as a ROLLOUT, and Sears' Commission
will be ********** of Net Sales.
5. All promotions made to customers under the program described in this
Rider and all response vehicles for mail orders therefore will carry Sears name
and the following address:
HEALTHTRENDS
P.O. BOX 24843
OMAHA, NE 68124-0843
6. The Licensee's mark for this Program is HEALTHTRENDS(sm).
<PAGE> 49
CPC-94-07 CONT'D PAGE 2 of 2
7. Said License Agreement is in all other respects fully ratified and
confirmed, including any mutual right termination contained therein.
IN WITNESS WHEREOF, the parties have signed this Rider as of the day and
year first written by their proper officers or representatives duly authorized
thereunto.
SEARS, ROEBUCK AND CO.
By: /s/ E.V. Pennebaker
_______________________________
E.V. Pennebaker
Title: Divisional Vice President &
President, Direct Response
CARDMEMBER PUBLISHING
CORPORATION
By: /s/ Gary A. Johnson
_______________________________
Title: President
ATTEST: (Affix Corporate Seal)
/s/ Steven H. Levenherz
_______________________________
Assistant Secretary
<PAGE> 50
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
AUGUST, 1994 TELEMARKETING PAGE 1 of 2
RIDER NUMBER CPC-94-08
THIS RIDER is made and entered into as of the 29th day of September,
1994, by and between SEARS, ROEBUCK AND CO., a New York corporation (hereinafter
referred to as "Sears"), and CARDMEMBER PUBLISHING CORPORATION, a DELAWARE
corporation (hereinafter referred to as "Licensee").
Reference is made to the License Agreement, entered into on the 1st day
of August, 1990, by and between Sears and Licensee wherein Sears granted
Licensee the privilege of conducting and operating various Program(s), as such
may have been extended, amended, and otherwise modified (hereinafter referred to
as "License Agreement").
NOW, THEREFORE, in consideration of the mutual covenants provided in the
License Agreement and contained herein, the parties hereto agree as follows:
1. The name of the Program shall be HEALTHTRENDS.
2. The Product shall be HEALTH SERVICES. A description of the Product is
attached hereto and made a part hereof as Exhibit 1.
3. The Term for this rider shall be for a period beginning on AUGUST 8,
1994 and ending at the close of business on AUGUST 7, 1997 unless sooner
terminated under any provisions of the License Agreement. This Rider pursuant to
this Agreement shall be in effect for three (3) years from its effective date to
permit Licensee one initial enrollment and two (2) successive annual renewals of
members enrolled under this Rider. Thereafter, the Riders may be extended solely
at Sears option. All Riders are subject to termination at any time in accordance
with the default provisions of the License Agreement.
4. Approximately ********** outbound phone solicitations will be made,
equivalent to ********** beginning on August 8,1994 and completed September 6,
1994. The telemarketing is to be treated as a ROLLOUT, and Sears Commission
will be ********** of Net Sales.
5. All promotions made to customers under the program described in this
Rider and all response vehicles for mail orders therefore will carry Sears name
and the following address:
HEALTHTRENDS
P.O. BOX 24843
OMAHA, NE 68124-0843
6. The Licensee's mark for this Program is HEALTHTRENDS(sm).
<PAGE> 51
CPC-94-08 CONT'D PAGE 2 of 2
7. Said License Agreement is in all other respects fully ratified and
confirmed, including any mutual rights of termination contained therein.
IN WITNESS WHEREOF, the parties have signed this Rider as of the day and
year first written by their proper officers or representatives duly authorized
thereunto.
SEARS, ROEBUCK AND CO.
By: /s/ E.V. Pennebaker
__________________________________
E.V. Pennebaker
Title: Divisional Vice President &
President, Direct Response
CARDMEMBER PUBLISHING
CORPORATION
By: /s/ Gary A. Johnson
__________________________________
Title: President
ATTEST: (Affix Corporate Seal)
/s/ Steven H. Levenherz
_____________________________________
Assistant Secretary
<PAGE> 52
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
SEPTEMBER, 1994 TELEMARKETING PAGE 1 of 2
RIDER NUMBER CPC-94-09
THIS RIDER is made and entered into as of the 9th day of January, 1995,
by and between SEARS, ROEBUCK AND CO., a New York corporation (hereinafter
referred to as "Sears"), and CARDMEMBER PUBLISHING CORPORATION, a DELAWARE
corporation (hereinafter referred to as "Licensee").
Reference is made to the License Agreement, entered into on the 1st day
of August, 1990, by and between Sears and Licensee wherein Sears granted
Licensee the privilege of conducting and operating various Program(s), as such
may have been extended, amended, and otherwise modified (hereinafter referred to
as "License Agreement").
NOW, THEREFORE, in consideration of the mutual covenants provided in the
License Agreement and contained herein, the parties hereto agree as follows:
1. The name of the Program shall be HEALTHTRENDS.
2. The Product shall be HEALTH SERVICES. A description of the Product is
attached hereto and made a part hereof as Exhibit 1.
3. The Term for this rider shall be for a period beginning on September
7, 1994 and ending at the close of business on September 6, 1997 unless sooner
terminated under any provisions of the License Agreement. This Rider pursuant to
this Agreement shall be in effect for three (3) years from its effective date to
permit Licensee one initial enrollment and two (2) successive annual renewals of
members enrolled under this Rider. Thereafter, the Riders may be extended solely
at Sears option. All Riders are subject to termination at any time in accordance
with the default provisions of the License Agreement.
4. Approximately ********** outbound phone solicitations will be made,
equivalent to ********** beginning on September 7, 1994 and completed October
6, 1994. The telemarketing is to be treated as a ROLLOUT, and Sears Commission
will be ********** of Net Sales.
5. All promotions made to customers under the program described in this
Rider and all response vehicles for mail orders therefore will carry Sears name
and the following address:
HEALTHTRENDS
P.O. BOX 24843
OMAHA, NE 68124-0843
6. The Licensee's mark for this Program is HEALTHTRENDS(sm).
<PAGE> 53
CPC-94-09 CONT'D PAGE 2 of 2
7. Said License Agreement is in all other respects fully ratified and
confirmed, including any mutual rights of termination contained therein.
IN WITNESS WHEREOF, the parties have signed this Rider as of the day and
year first written by their proper officers or representatives duly authorized
thereunto.
SEARS, ROEBUCK AND CO.
By: /s/ E.V. Pennebaker
_________________________________
E.V. Pennebaker
Title: Divisional Vice President &
President, Direct Response
CARDMEMBER PUBLISHING
CORPORATION
By: /s/ Gary A. Johnson
_________________________________
Title: President
ATTEST: (Affix Corporate Seal)
/s/ Steven H. Levenherz
___________________________________
Assistant Secretary
<PAGE> 54
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
OCTOBER, 1994 TELEMARKETING PAGE 1 of 2
RIDER NUMBER CPC-94-10
THIS RIDER is made and entered into as of the 9th day of January, 1995,
by and between SEARS, ROEBUCK AND CO., a New York corporation (hereinafter
referred to as "Sears"), and CARDMEMBER PUBLISHING CORPORATION, a DELAWARE
corporation (hereinafter referred to as "Licensee").
Reference is made to the License Agreement, entered into on the 1st day
of August, 1990, by and between Sears and Licensee wherein Sears granted
Licensee the privilege of conducting and operating various Program(s), as such
may have been extended, amended, and otherwise modified (hereinafter referred to
as "License Agreement").
NOW, THEREFORE, in consideration of the mutual covenants provided in the
License Agreement and contained herein, the parties hereto agree as follows:
1. The name of the Program shall be HEALTHTRENDS.
2. The Product shall be HEALTH SERVICES. A description of the Product is
attached hereto and made a part hereof as Exhibit 1.
3. The Term for this rider shall be for a period beginning on October 7,
1994 and ending at the close of business on October 6, 1997 unless sooner
terminated under any provisions of the License Agreement. This Rider pursuant to
this Agreement shall be in effect for three (3) years from its effective date to
permit Licensee one initial enrollment and two (2) successive annual renewals of
members enrolled under this Rider. Thereafter, the Riders may be extended solely
at Sears option. All Riders are subject to termination at any time in accordance
with the default provisions of the License Agreement.
4. Approximately ********** outbound phone solicitations will be made,
equivalent to ********** beginning on October 7, 1994 and completed November 6,
1994. The telemarketing is to be treated as a ROLLOUT, and Sears Commission
will be ********** of Net Sales.
5. All promotions made to customers under the program described in this
Rider and all response vehicles for mail orders therefore will carry Sears name
and the following address:
HEALTHTRENDS
P.O. BOX 24843
OMAHA, NE 68124-0843
6. The Licensee's mark for this Program is HEALTHTRENDS(sm).
<PAGE> 55
CPC-94-10 CONT'D PAGE 2 of 2
7. Said License Agreement is in all other respects fully ratified and
confirmed, including any mutual rights of termination contained therein.
IN WITNESS WHEREOF, the parties have signed this Rider as of the day and
year first written by their proper officers or representatives duly authorized
thereunto.
SEARS, ROEBUCK AND CO.
By: /s/ E.V. Pennebaker
________________________________
E.V. Pennebaker
Title: Divisional Vice President &
President, Direct Response
CARDMEMBER PUBLISHING
CORPORATION
By: /s/ Gary A. Johnson
________________________________
Title: President
ATTEST: (Affix Corporate Seal)
/s/ Steven H. Levenherz
___________________________________
Assistant Secretary
<PAGE> 56
CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
NOVEMBER, 1994 TELEMARKETING PAGE 1 of 2
RIDER NUMBER CPC-94-11
THIS RIDER is made and entered into as of the 4th day of January, 1995,
by and between SEARS, ROEBUCK AND CO., a New York corporation (hereinafter
referred to as "Sears"), and CARDMEMBER PUBLISHING CORPORATION, a DELAWARE
corporation (hereinafter referred to as "Licensee").
Reference is made to the License Agreement, entered into on the 1st day
of August, 1990, by and between Sears and Licensee wherein Sears granted
Licensee the privilege of conducting and operating various Program(s), as such
may have been extended, amended, and otherwise modified (hereinafter referred to
as "License Agreement").
NOW, THEREFORE, in consideration of the mutual covenants provided in the
License Agreement and contained herein, the parties hereto agree as follows:
1. The name of the Program shall be HEALTHTRENDS.
2. The Product shall be HEALTH SERVICES. A description of the Product is
attached hereto and made a part hereof as Exhibit 1.
3. The Term for this rider shall be for a period beginning on November
7, 1994 and ending at the close of business on November 6, 1997 unless sooner
terminated under any provisions of the License Agreement. This Rider pursuant to
this Agreement shall be in effect for three (3) years from its effective date to
permit Licensee one initial enrollment and two (2) successive annual renewals of
members enrolled under this Rider. Thereafter, the Riders may be extended solely
at Sears option. All Riders are subject to termination at any time in accordance
with the default provisions of the License Agreement.
4. Approximately ********** outbound phone solicitations will be made,
equivalent to ********** beginning on November 7, 1994 and completed December
7, 1994. The telemarketing is to be treated as a ROLLOUT, and Sears Commission
will be ********** of Net Sales.
5. All promotions made to customers under the program described in this
Rider and all response vehicles for mail orders therefore will carry Sears name
and the following address:
HEALTHTRENDS
P.O. BOX 24843
OMAHA, NE 68124-0843
6. The Licensee's mark for this Program is HEALTHTRENDS (sm).
<PAGE> 57
CPC-94-11 CONT'D PAGE 2 of 2
7. Said License Agreement is in all other respects fully ratified and
confirmed, including any mutual rights of termination contained therein.
IN WITNESS WHEREOF, the parties have signed this Rider as of the day and
year first written by their proper officers or representatives duly authorized
thereunto.
SEARS, ROEBUCK AND CO.
By: /s/ E.V. Pennebaker
_________________________________
E.V. Pennebaker
Title: Divisional Vice President &
President, Direct Response
CARDMEMBER PUBLISHING
CORPORATION
By: /s/ Gary A. Johnson
_________________________________
Title: President
ATTEST: (Affix Corporate Seal)
/s/ Steven H. Levenherz
____________________________________
Assistant Secretary
<PAGE> 1
Exhibit 10.22
LEASE AGREEMENT
Between
STAMFORD TOWERS LIMITED PARTNERSHIP
Landlord,
and
CARDMEMBER PUBLISHING CORPORATION
Tenant
<PAGE> 2
LEASE AGREEMENT
BETWEEN
STAMFORD TOWERS LIMITED PARTNERSHIP
and
CARDMEMBER PUBLISHING CORPORATION
TABLE OF CONTENTS
Page
ARTICLE 1: REFERENCE DATA 2
ARTICLE 2: DEFINITIONS 4
ARTICLE 3: DEMISED PREMISES AND TERM 7
Section 3.1. Demised Premises; Common Areas and Parking 7
Section 3.2. Term; Construction of Tenant's Work 7
Section 3.3. Establishing Commencement Date 9
ARTICLE 4: RENT AND SECURITY DEPOSIT 10
Section 4.1. Fixed Rent 10
Section 4.2. Additional Rent 10
Section 4.3. Past Due Rent 10
Section 4.4. Security Deposit 11
Section 4.5. No Rent Waiver 12
Section 4.6. Rent Restrictions 13
Section 4.7. No Accord and Satisfaction 13
ARTICLE 5: TENANT'S SHARE OF OPERATING COSTS 13
Section 5.1. Definitions 13
Section 5.2. Tenant's Share of Total Costs 18
<PAGE> 3
Change to Fiscal Year 20
Changes in Tenant's Share of Total Costs. 20
ARTICLE 6: TAXES ON TENANT'S PROPERTY 20
Tenant's Property. 20
ARTICLE 7: CONDITION OF DEMISED PREMISES 21
Condition of Demised Premises 21
Landlord's Representations 21
ARTICLE 8: USE OF DEMISED PREMISES 22
Use of Demised Premises. 22
Compliance with Laws and Requirements
of Public Authorities 22
Use of Common Area 25
ARTICLE 9: REPAIRS, ALTERATIONS AND MAINTENANCE 25
Care of Premises 25
Tenant's Repairs 25
Landlord's Repairs 26
Tenant's Alterations 27
Mechanics and Other Liens. 29
ARTICLE 10: UTILITIES AND BUILDING SERVICES 29
Heating and Air-Conditioning 29
Water 30
Cleaning Service 30
Elevators 31
Security; Access 31
Interruption of Services 31
Electricity 32
Adjustment for Utilities and Building Services 33
ARTICLE 11: INSURANCE AND INDEMNITY 34
Insurance 34
Indemnity and Non-Liability 37
Waiver of Subrogation 38
ii
<PAGE> 4
Landlord's Insurance 38
ARTICLE 12: DAMAGE BY CASUALTY 38
Casualty Damage. 38
ARTICLE 13: EMINENT DOMAIN 41
Taking of Demised Premises 41
Termination of Lease 41
Awards 41
ARTICLE 14: RIGHTS RESERVED TO LANDLORD 42
Access to Demised Premises 42
Additional Rights 43
ARTICLE 15: ASSIGNMENT AND SUBLETTING 45
Consent Required 45
Landlord's Rights to Assignments and Leasebacks 45
Required Documents 47
Landlord's Consent 47
Limitations 48
Attornment of Subtenant 49
Sums Payable to Landlord 50
Waiver 50
Mortgagee Notice 51
Permitted Sublease 51
ARTICLE 16: TENANT'S DEFAULT AND LANDLORD'S REMEDIES 51
Events of Default 51
Landlord's Remedies 52
Damages 53
No Waiver; Injunction 55
Remedies Cumulative 55
ARTICLE 17: SURRENDER OF PREMISES AND SURVIVAL OF
TENANT'S OBLIGATIONS 56
Surrender 56
iii
<PAGE> 5
Trade Fixtures, Personal Property and Improvements 56
Merger 56
Survival; Payments After Termination 56
ARTICLE 18: HOLDING OVER 57
ARTICLE 19: ESTOPPEL CERTIFICATE, SUBORDINATION
ATTORNMENT 57
Estoppel Certificates 57
Subordination and Non-Disturbance 58
Attornment 58
Mortgages 58
ARTICLE 20: QUIET ENJOYMENT 59
Quiet Enjoyment 59
ARTICLE 21: NOTICES 59
Notices 59
ARTICLE 22: MISCELLANEOUS PROVISIONS 60
Applicable Law 60
Parties Bound 60
Rules and Regulations 60
Signs 60
Entire Agreement 61
Severability 61
Brokers 62
Exculpatory Clause 63
No Recording; Notice of Lease 64
Financial Information 64
Light and Air 65
Inability to Perform 65
Counterclaims, Etc. 65
No Surrender 65
Modification of Lease 66
Headings 66
iv
<PAGE> 6
Parking 66
Authoritv 67
Opinions of Counsel, Etc. 67
Lease Condition; Mortgagee Notice 67
Joint and Several Liability 68
No Offer 68
Security 68
Roof-top Antenna 68
<PAGE> 7
EXHIBITS INDEX
RIDER 1 RENEWAL OPTION
RIDER 2 RIGHT OF FIRST OFFER
EXHIBIT A FLOOR PLAN SHOWING DEMISED PREMISES
EXHIBIT A-1 DESCIPTION OF PROJECT
EXHIBIT A-2 HOLIDAYS
EXHIBIT B WORK LETTER
EXHIBIT B-1 REQUIRED TENANT'S WORK
EXHIBIT C COMMENCMENT DATE AGREEMENT
EXHIBIT D RULES AND REGULATIONS
EXHIBIT E CLEANING SPECIFICATIONS
This Lease is made between Landlord and Tenant named in Article 1. Landlord and
Tenant agree to the terms and conditions set forth in this Lease.
<PAGE> 8
ARTICLE 1: REFERENCE DATA
Each reference in this Lease to any of the following subjects shall
incorporate the following data for that subject:
DATE OF THIS LEASE: As of January 15, 1996.
LANDLORD: STAMFORD TOWERS LIMITED PARTNERSHIP, a Delaware limited partnership,
having an address at c/o CB Commercial Real Estate Group, 680 Washington
Boulevard, Stamford, Connecticut 06902.
TENANT: CARDMEMBER PUBLISHING CORPORATION (a Delaware corporation) having its
principal office at 655 Washington Boulevard, Stamford, Connecticut 06902,
Attention: Steven Levenherz.
DEMISED PREMISES: Approximately 18,650 rentable square feet on the eleventh
(11th) floor of the Building as shown on the floor plan attached hereto as
Exhibit A.
TENANT'S USE OF THE DEMISED PREMISES: Executive and general office use (provided
Tenant's particular use shall not be in violation of any applicable laws or
regulations as defined in Section 8.2 (a) herein) and for no other use and
purpose whatsoever.
COMMENCEMENT DATE: Shall be the earlier to occur of (i) March 15, 1996, (ii)
five (5) business days following the issuance of a certificate of occupancy for
the Demised Premises, or (iii) the date that Tenant takes possession of any part
of the Demised Premises. The Tenant's obligation to pay Fixed Rent and
Additional Rent (as defined in this Lease) shall commence upon the Commencement
Date. Once the Commencement Date is established, the Landlord and Tenant shall
each execute the Commencement Date Agreement attached hereto as Exhibit C.
TERM: Ten (10) years, commencing upon the Commencement Date and expiring upon
the Expiration Date, unless sooner terminated pursuant to the provisions hereof.
ANNUAL FIXED RENT:
Months 1-6 of the Lease Term: One Hundred Seventy-Seven Thousand One Hundred
Seventy-Five Dollars ($177,175), per annum.
Months 7-60 of the Lease Term: Three Hundred Fifty-Four Thousand Three Hundred
Fifty Dollars ($354,350), per annum.
Months 61-120 of the Lease Term: Four Hundred Thousand Nine Hundred Seventy-Five
Dollars ($400,975), per annum.
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MONTHLY FIXED RENT:
Months 1-6 of the Lease Term: $14,764.58 per month.
Months 7-60 of the Lease Term: $29,529.17 per month
Months 61-120 of the Lease Term: $33,414.58 per month
TENANT'S OPERATING
SHARE: 5.7 %
TENANT'S TAX SHARE: 14.1 %
BASE YEAR: Shall consist of the twelve (12) month period beginning July 1, 1996
and ending on June 30, 1997.
RENTABLE AREA OF THE DEMISED PREMISES: Approximately 18,650 rentable square
feet.
NUMBER OF PARKING SPACES: Two and one/half (2.5) parking spaces per each 1,000
rentable square feet in the Demised Premises (e.g. forty-seven (47) parking
spaces for the 18,650 rentable square feet of the Demised Premises), which shall
be furnished to Tenant on a non-exclusive and rent-inclusive basis. Landlord
shall furnish Tenant with three and one/half (3.5) passenger motor-vehicle
parking garage/lot use cards per 1,000 rentable square feet in the Demised
Premises (e.g. sixty-five (65) parking garage/lot use cards for the 18,650
rentable square feet of the Demised Premises). All such parking garage/lot use
cards shall provide the holder with passenger motor-vehicle access to the
Building parking garage and the Building outdoor parking lot at all times during
the Term, provided, however, that Tenant shall only be guaranteed the use, at
any one time, of a total number of parking spaces in the Building garage and
outdoor parking lot as specified in the first sentence of this paragraph.
SECURITY DEPOSIT: One Hundred Seventy-Five Thousand Dollars ($175,000) upon
Lease execution, to be reduced in accordance with the provisions of Section 4.4
(Security Deposit) herein.
BROKERS: Rostenberg-Doern Company, Inc. of Stamford, Connecticut, as exclusive
agent for Landlord, and The Galbreath Company of Stamford, Connecticut, as
Tenant's exclusive broker.
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ARTICLE 2: DEFINITIONS
Notwithstanding the data stated in Article 1 hereof, for all purposes of
this Lease, the terms defined in this Article shall have the meanings specified
in this Article unless the context otherwise requires.
(a) "Additional Rent" shall mean any sums of money or charges to be paid
by Tenant pursuant to the provisions of this Lease, including, but not limited
to electricity charges, other than Fixed Rent. Tenant's obligation to pay
Additional Rent shall commence upon the Commencement Date.
(b) "Allowance" shall have the meaning ascribed to it in Exhibit B
hereto.
(c) "Base Rate" shall mean the fluctuating annual interest rate
announced publicly from time to time by Chemical Bank of New York (or its
successor), as its Prime Rate.
(d) "Building" shall mean that portion of the Land as is described as
Parcel 2 on Exhibit A-1 hereto, together with the building and all improvements
located thereon and replacements thereof to the office tower having an address
at 680 Washington Boulevard, Stamford, Connecticut known as the South Tower.
(e) "Commencement Date" shall have the meaning provided in Article 1
above.
(f) "Common Area" shall mean those parts of the Building and/or the
Project designated by Landlord for the common use of all tenants, invitees and
others, including, but not limited to, the parking areas, sidewalks,
landscaping, curbs, driveways, entrances, passageways, delivery passages,
loading areas, non-dedicated mechanical, telephone and storage rooms, lighting
facilities, drinking fountains, lobbies, security and/or concierge areas,
elevators, public toilets, and such other areas and/or facilities therein as
Landlord may, from time to time, make generally available for use by all such
parties.
(g) "Days" shall mean calendar days unless specifically stated otherwise
in this Lease.
(h) "Environmental Law" shall mean and include the Resource Conservation
and Recovery Act of 1976, 42 U.S.C. Section 6901-6987, as amended by the
Hazardous and Solid Waste Amendments of 1984, the Comprehensive Environmental
Response. Compensation and Liability Act, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. Section 9601-9657, the Hazardous
Materials Transportation Act of 1975, 49 U.S.C. Section 1801-1812, the Toxic
Substances Control Act, the
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Clean Air Act, 42 U.S.C. Section 7401 et seq., the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. Section 136 et seq., but shall not
include any amendments to any of the foregoing from and after the date of this
Lease and shall not include any future new laws howsoever similar.
(i) "Expiration Date" shall mean the date which is one hundred twenty
(120) calendar months after the Commencement Date, unless adjusted pursuant to
Section 3.2 (c). Unless sooner terminated pursuant to the provisions of this
Lease, the Term of this Lease shall expire on the Expiration Date.
(j) "Fixed Rent" shall mean the Monthly Fixed Rent, when such term is
not otherwise specifically designated herein as the Monthly Fixed Rent.
(k) "Force Majeure" shall mean and include those situations beyond the
party's reasonable control including, but not limited to: acts of God;
accidents; third-party repairs; strikes or other labor actions; shortages of
labor, supplies or materials; severe weather conditions; natural disasters; fire
or other casualty and delays in adjustments with insurance carriers; in the case
of Landlord, any default by Tenant or any other tenant in the Project in its
leasehold obligations; government preemption in connection with a national
emergency, or by reason of any rule, order or regulation of any department or
subdivision thereof of any government agency; or by reason of the conditions of
supply and demand which have been or are affected by war or other emergency.
(l) "Hazardous Substances" shall mean and include any, each and all
substances or materials regulated pursuant to any Environmental Laws, including,
but not limited to, any such substance, emission or material presently defined
as or deemed to be a regulated substance, hazardous substance, toxic substance,
pesticide, explosives, radioactive materials, hazardous waste or any similar or
like classification or categorization thereunder, but shall not include any
substances deemed hazardous under any Environmental Law after the date of this
Lease.
(m) "Holidays" shall mean those days listed on Exhibit A-2 hereto.
(n) "Improvements" shall mean any and all equipment, fixtures, wires,
cables, conduits, partitions or other items installed in or about and any and
all alterations and/or additions made to the Demised Premises and/or the
Building by or on behalf of Tenant including without limitation, all Tenant's
Work (as defined in Exhibit B hereto). Improvements shall not include personal
property owned by Tenant and located in the Demised Premises.
(o) "Landlord" shall mean the then owner of the Building of which the
Demised Premises form a part.
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(p) "Lease Year" shall mean the twelve (12) month period beginning on
the Commencement Date and each ensuing twelve (12) month period during the Term.
(q) "Loss" shall have the meaning ascribed to it in Article 11.
(r) "Normal Business Hours" shall mean 8:00 a.m. until 6:00 p.m.
weekdays, exclusive of Holidays.
(s) "Overnight Parking Area" shall mean that portion, if any, of the
parking area designated by Landlord for overnight parking.
(t) "Project" shall mean the land described in Exhibit A-1 (the "Land")
the Building, the building having an address of 750 Washington Boulevard,
Stamford, Connecticut (also known as the North Tower) and all and other
improvements now located on the Land and any replacements thereof having on the
date hereof approximately 325,416 rentable square feet, currently known as
Stamford Towers, to the extent that the same are owned by Landlord.
(u) "Rent" shall mean Fixed Rent, Additional Rent and any other charge
which Tenant is obligated to pay under this Lease.
(v) "Rules and Regulations" shall mean the rules and regulations
promulgated by Landlord and to be observed by Tenant and its servants, agents,
employees, invitees and contractors, as set forth in Exhibit D, and any changes
thereto.
(w) "Tenant" shall mean the Tenant named in this Lease and any person,
firm, corporation or other legal entity, immediate or remote, to which Tenant's
interest in this Lease may be permissibly assigned pursuant to the terms of this
Lease.
(x) "Term" shall mean the term of this Lease, commencing on the
Commencement Date and ending on the Expiration Date, unless sooner terminated or
otherwise extended pursuant to the terms of this Lease.
Note: "Landlord" and "Tenant" as defined in this Article 2 are separately
defined in each of Article 11 and Paragraph 17 of Exhibit D for purposes of that
Article and Paragraph only.
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ARTICLE 3: DEMISED PREMISES AND TERM
Section 3.1 Demised Premises; Common Areas and Parking. Landlord hereby
leases to Tenant, and Tenant hereby leases from Landlord for the Term and Rent
and upon the other conditions and covenants provided herein, the Demised
Premises, together with the right to use in common with Landlord, other tenants
in the Building, their invitees and others, the Common Area accesses, lobbies,
and hallways which are intended for their common use. In addition, the Demised
Premises are leased together with the number of parking spaces indicated in
Article 1, on a non-exclusive, but rent-inclusive basis. The parking spaces
shall, as determined by Landlord, either be in the garage at the Building or in
the outdoor parking lot adjoining the Building. Tenant's use of the non-reserved
parking facilities in the Building and outdoor lot shall be in common with other
tenants or occupants of the Building and shall be subject to (a) the rules and
regulations of Landlord for such parking facilities which may be established or
altered by Landlord at any time or from time to time during the Term, and (b)
Section 22.17 hereof.
Section 3.2. Term; Construction of Tenant's Work.
(a) Term. The Term of this Lease shall commence on the Commencement Date
and shall end on the Expiration Date, unless sooner terminated or otherwise
extended as herein provided.
(b) Delay in Delivery of Possession. If for any reason whatsoever,
Landlord cannot deliver possession of the Demised Premises to Tenant on the date
specified in Article 1 as the Commencement Date, this Lease shall not be void or
voidable, nor shall Landlord be liable to Tenant for any loss or damage
resulting therefrom. In that event, the commencement of the Term and Tenant's
obligations for Rent hereunder shall commence on the date Landlord delivers
possession of the Demised Premises to Tenant, and such date shall thereafter be
the Commencement Date for all purposes hereof, unless such delay in delivery is
due in whole or in part by any act or omission by Tenant, its officers,
employees, contractors, agents and/or invitees, or by an event of Force Majeure,
in which case there shall be no delay in the Commencement Date or in Tenant's
obligations to pay Rent hereunder. Notwithstanding the foregoing, in the event
Landlord is unable to deliver possession of the Demised Premises to Tenant on or
before the date which is one hundred eighty days (180) after the Commencement
Date then Tenant may elect to terminate this Lease effective as of the day which
is thirty (30) days after Tenant delivers written notice to Landlord of Tenant's
election hereunder, unless Landlord is able to deliver possession of the Demised
Premises to Tenant during such thirty (30) day period in which event Tenant's
termination notice shall be deemed ineffective and this Lease shall remain in
full force and effect in accordance with its terms.
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(c) Change in Commencement Date. If the Commencement Date is changed
pursuant to Section 3.2(b), Landlord shall, in accordance with the foregoing,
fix the Commencement Date and Expiration Date (which shall be one hundred twenty
(120) months from the Commencement Date), and shall notify Tenant of the dates
so fixed. The parties shall, within fifteen (15) days thereafter, at Landlord's
request, execute a written agreement confirming such dates in the form of
Exhibit C hereto. Any failure of the parties to execute such agreement shall not
affect the validity of the Commencement Date and Expiration Date as fixed by
Landlord as aforesaid.
(d) Tenant to Construct Tenant's Work to Demised Premises; Landlord's
Allowance. (i) Tenant shall, at Tenant's sole cost and expense, subject to the
terms of Section 3.2(d)(ii) (Allowance) below, perform all such work to the
Demised Premises as may be necessary or desirable for Tenant's use and occupancy
thereof, including, but not limited to, any electrical (including the
installation of an outlet box receptacle for Tenant's data, communications and
telephone lines), plumbing, air-conditioning, mechanical or structural work to
meet Tenant's Requirements ("Tenant's Work"). The final plans and specifications
for the Tenant's Work shall be subject to Landlord's prior approval in
accordance with Exhibit B. All Tenant's Work shall be undertaken and completed
in accordance with the provisions of this Lease, including without limitation,
Exhibits B and B-1 hereto and Article 9 hereto. Performance of Tenant's Work
shall not serve to extend the Commencement Date or abate or extend the date for
commencement of Tenant's obligation to pay Rent under this Lease; providing,
however, that if Landlord's failure to substantially comply with any of its
obligations under this Lease, including Exhibit B hereto, should be the sole
cause of any delay in the Tenant's substantial completion of the Tenant's Work
necessary to prepare the Demised Premises for Tenant's initial occupancy thereof
(with Tenant and Tenant's contractors not having caused any delay in such
substantial completion), then the Commencement Date shall be postponed by a
period of time equivalent to the length of such Landlord delay. Tenant shall pay
Landlord a fee for Landlord's review of the Space Plans and the Working Drawings
for Tenant's Work and for the Landlord's inspection, administration and
coordination of Landlord's Work as determined under paragraph 8 (n) of Exhibit B
hereto.
(ii) Allowance. Providing that Tenant fulfills all of its obligations
under this Article 3 in connection with the construction of the Tenant's Work
which is necessary to prepare the Demised Premises for the Tenant's initial
occupancy thereof and provided further that Tenant is not then in default under
this Lease, Landlord shall provide Tenant with the Allowance amount specified in
Exhibit B hereto, in accordance with the terms and conditions set forth in
Exhibit B, which Allowance amount shall be applied towards the cost of
constructing the Tenant's Work necessary to prepare the Demised Premises for the
Tenant's initial occupancy thereof in accordance with plans and specifications
approved by Landlord prior to the execution of this Lease and in accordance with
the terms of Exhibit B. Landlord does not represent that the Allowance will be
adequate to pay for the cost of
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Tenant's Work to prepare the Demised Premises for Tenant's initial occupancy and
Tenant shall be solely responsible for all costs of Tenant's Work in excess of
the Allowance amount. All defined terms used in Exhibit B are hereby
incorporated as if the definitions were fully set forth herein.
(iii) Tenant's Contractors. The general contractor and all
subcontractors used for the construction of the Tenant's Work shall be subject
to Landlord's prior approval. The general contractor used for the construction
of the Tenant's Work must enter into Landlord's standard form of AIA Contract
and Rider. Landlord hereby approves The Galbreath Company of Stamford,
Connecticut as the Tenant's general contractor for the construction of the
initial Tenant's Work, to be undertaken prior to the Commencement Date, which
may be necessary to prepare the Demised Premises for the Tenant's initial
occupancy thereof. If the Tenant does not use The Galbreath Company as its
general contractor for the initial Tenant's Work, the general contractor used
for the construction of the initial Tenant's Work shall be jointly selected by
Landlord and Tenant from competitive bids procured by Landlord and Tenant.
Landlord's approval of The Galbreath Company as the Tenant's general contractor
for the construction of the initial Tenant's Work shall not constitute
Landlord's approval of The Galbreath Company as the Tenant's general contractor
for any future Tenant's Work which the Tenant may be permitted to perform
pursuant to this Lease. The general contractor used for the construction of any
Tenant's Work, which may be undertaken by Tenant subsequent to the initial
Tenant's Work, shall be jointly selected by Landlord and Tenant from competitive
bids procured by Landlord and Tenant.
(e) Collateral Assignment of Tenant's Architect's and Engineer's
Contracts. In consideration for this Lease and the Allowance amount, Tenant
hereby collaterally assigns to Landlord all architectural and engineering
contracts which Tenant may have entered into in connection with the Tenant's
Work, including all original plans and drawings produced by any such architects
and engineers in connection therewith. Upon the occurrence of an Event of
Default hereunder and Landlord's exercise of any of its remedies set forth in
Section 16.2 herein, Landlord may, but shall not be obligated to, succeed to all
of Tenant's right, title and interest in and to such contracts and plans.
Section 3.3. Establishing Commencement Date. Upon the occurrence of the
Commencement Date, Landlord shall, in accordance with the foregoing, fix the
Commencement Date and Expiration Date (which shall be one hundred twenty (120)
months from the Commencement Date), and shall notify Tenant of the dates so
fixed. The parties shall, within fifteen (15) days thereafter, execute a written
agreement confirming such dates in the form of Exhibit C hereto. Any failure of
the parties to execute such agreement shall not affect the validity of the
Commencement Date and the Expiration Date as fixed by Landlord as aforesaid.
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ARTICLE 4: RENT AND SECURITY DEPOSIT
Section 4.1. Fixed Rent. Tenant agrees to pay to Landlord, at the
address set forth in Article 1 or at any other place designated by Landlord from
time to time, without any prior demand or notice and without any deduction or
set off whatsoever, the Fixed Rent as defined in Article 1, which shall be due
and payable in twelve (12) monthly installments, each equal to the Monthly Fixed
Rent as defined in Article 1. The Monthly Fixed Rent shall be paid in advance,
on the first day of each calendar month during the Term, except that Tenant's
first installment of Monthly Fixed Rent on account of the first (1st) month of
the Term shall be paid to Landlord upon Tenant's execution of this Lease. In the
event that Tenant fails to pay any installment of Fixed Rent within five (5)
days of its due date, Tenant shall pay interest on said overdue amount
commencing on the day following such fifth (5th) day through the date of payment
at the Base Rate plus five percent (5%). All payments of Fixed Rent shall be
made by the wiring of immediately available funds to such account as Landlord
may advise Tenant or by check payable to Landlord drawn on a bank which or is a
member of the New York Clearinghouse or its successor. If either the
Commencement Date or the Expiration Date is a day other than the first day of a
calendar month, then Tenant's Monthly Fixed Rent due for such partial calendar
month(s) shall be prorated on a per diem basis.
Section 4.2. Additional Rent. Additional Rent hereunder shall be payable
within ten (10) days after Landlord gives written notice and demand for payment,
except as otherwise specifically set forth herein. Payment shall be made in the
same manner as the Fixed Rent. Landlord shall have the same rights against
Tenant for the default in payment of Additional Rent as for a default in the
payment of the Fixed Rent. In the event that Tenant fails to pay any installment
of Additional Rent within five (5) days of its due date, all sums payable as
Additional Rent under this Lease shall be paid together with interest thereon at
the Base Rate plus five percent (5%) from the date Landlord incurs the costs or
makes the payment giving rise to such Additional Rent obligation. If Tenant
disputes the amount of Additional Rent payable as set forth in any notice from
Landlord, Tenant shall nonetheless pay the amount claimed by Landlord to be
payable, and if it is determined that the amounts so paid exceeded those
properly payable by Tenant, Landlord will refund any overpayment to Tenant.
Section 4.3. Past Due Rent. If Tenant fails to pay any Rent on or before
the fifth (5th) day after such Rent is due, Tenant agrees to pay as Additional
Rent for the period that the Rent remains unpaid a late charge equal to ten
percent (10%) of the overdue payment; provided, however, that not more than once
in a given Lease Year the foregoing late charge shall not be applicable unless
and until Tenant shall fail to pay any Rent on or before the tenth (10th) day
after such Rent is due. Tenant agrees that such amount is not a
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penalty, but is a reasonable amount to reimburse Landlord for the loss of the
use of the money and the additional administrative costs resulting from late
payments.
Section 4.4 Security Deposit. (a) Tenant will deposit with Landlord upon
signing this Lease, and throughout the Term of this Lease, shall keep on deposit
with Landlord, under Tenant's identification tax number, a Security Deposit in
the amount specified in Article I hereof (subject to reduction as provided
below) as security for Tenant's payment of the Rent and Tenant's faithful
performance of all of its obligations under this Lease. Landlord agrees to place
such sum in an interest-bearing account, with the interest accruing to the
benefit of the Tenant as provided in Section 4.4 (b) below. If at any time
during the Term or any extension term, Tenant defaults in the performance of any
provisions of this Lease, Landlord may, but shall not be required to, use the
Security Deposit (and any monies theretofore paid by Tenant to Landlord, whether
as advanced Rent or otherwise), or so much thereof as necessary, to pay any Rent
in default, or to reimburse any expense or damages incurred by Landlord by
reason of Tenant's default. In such event, Tenant shall, on written demand of
Landlord, immediately wire to Landlord a sufficient amount of immediately
available funds to restore the Security Deposit to its original amount. Within
sixty (60) days after the end of the Term, and in the event such Security
Deposit has not been entirely utilized as provided above, any remaining balance
of the Security Deposit will be refunded to Tenant. Landlord will deliver the
Security Deposit to the purchaser of Landlord's interest in the Demised Premises
in the event such interest is sold, and Landlord shall thereupon be discharged
from further liability with respect to the Security Deposit, provided such
purchaser assumes Landlord's obligations hereunder with respect to the Security
Deposit. Notwithstanding the provisions of this Section 4.4, if the claims of
Landlord exceed the Security Deposit, Tenant will remain liable for the balance
of such claims.
(b) Reduction of Security Deposit Amount.
(i) Provided that Tenant has not been in default beyond the expiration
of all cure periods under the terms of this Lease at any time during the first
two (2) Lease Years and provided that Tenant is not in default hereunder on the
second (2nd) anniversary of the Commencement Date hereunder, the Security
Deposit required to be maintained hereunder shall, upon the second (2nd)
anniversary of the Commencement Date, be reduced to $150,000, by payment to
Tenant, upon Landlord's receipt of a written request from Tenant therefor and
within thirty (30) days after the second (2nd) anniversary of the Commencement
Date, of all amounts then being held by Landlord as Security Deposit hereunder
in excess of the sum of $ 150,000, together with any and all interest accrued on
the Security Deposit from and after the Commencement Date, less an
administrative fee of one-half of one percent (.5%) per annum of the original
Security Deposit amount which may be retained by Landlord.
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(ii) Provided that the Tenant was entitled to the reduction of the
Security Deposit amount to $150,000 upon the second anniversary of the
Commencement Date in accordance with the preceding subsection and providing
further that the Tenant not been in default beyond the expiration of all cure
periods under the terms of this Lease at any time during the third Lease Year
hereunder and provided the Tenant is not in default hereunder on the third (3rd)
anniversary of the Commencement Date hereunder, then the Security Deposit
required to be maintained hereunder shall, upon the third (3rd) anniversary of
the Commencement Date, be reduced to $75,000, by payment to Tenant, upon
Landlord's receipt of a written request from Tenant therefor and within thirty
(30) days after the third (3rd) anniversary of the Commencement Date, of all
amounts then being held by Landlord as Security Deposit hereunder in excess of
$75,000, together with any and all interest accrued on the balance of the
Security Deposit amount remaining from and after the first reduction (if any) of
the Security Deposit under subsection (i) above, less an administrative fee of
one-half of one percent (.5%) per annum of the Security Deposit held by Landlord
from and after the first reduction (if any) of the Security Deposit under
subsection (i) above, which may be retained by Landlord.
(iii) Notwithstanding anything to the contrary contained herein, after
any second reduction of the Security Deposit under subsection (ii) above, the
Tenant shall maintain a Security Deposit in the amount of $75,000 for the
duration of the Term of this Lease and any Extension Term. Any interest which
may accrue on such balance of the Security Deposit amount remaining after
deductions under this Section 4.4 (b) shall be held by Landlord through the end
of the Lease Term, and if Tenant has not been in default of its obligations
under this Lease beyond the expiration of applicable cure periods during such
period, any accrued interest less an administrative fee of one-half of one
percent (.5%) of such remaining Security Deposit amount per annum shall be paid
to Tenant, upon written request from Tenant therefor within sixty (60) days
after the end of the Lease Term. Notwithstanding anything to the contrary
contained herein, if at any time during the Term of this Lease Tenant is in
default of its obligations under this Lease beyond the expiration of all cure
periods more than once in any twelve (12) month period, Tenant shall forever
waive any subsequent entitlement to receive any interest payments on the
Security Deposit, such waiver being in addition to such other remedies available
to Landlord under this Lease or otherwise on account of such default.
Section 4.5. No Rent Waiver. In no event shall any acceptance by
Landlord of any late payments of Fixed Rent or Additional Rent be determined to
be a consent by Landlord to any future late payments of Fixed Rent or Additional
Rent, nor shall such acceptance constitute a waiver by Landlord of any of its
rights or remedies hereunder or at law or equity. The receipt or acceptance by
Landlord of Fixed Rent and/or Additional Rent with knowledge of any breach by
Tenant of any term, agreement, covenant, condition or obligation of this Lease
shall not be deemed a waiver of such breach.
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Section 4.6. Rent Restrictions. If the Fixed Rent or any Additional Rent
shall be or become uncollectible, reduced or required to be refunded by virtue
of any law, governmental order or regulation or direction of any public officer
or body pursuant to law (in the nature of a rent freeze or rent restriction),
Tenant shall enter into such agreement(s) and take such other action (without
additional expense to Tenant) as Landlord may request and as may be legally
permissible, to permit Landlord to collect the maximum Fixed Rent and Additional
Rent which may from time to time during the continuance of such legal rent
restriction be legally permissible, provided that in no event shall the amount
payable by Tenant as restricted rent exceed the Fixed Rent and Additional Rent
hereunder. Upon any termination of such a rent restriction prior to the
Expiration Date, (a) the Fixed Rent and Additional Rent shall become and
thereafter be payable under this Lease in the amount of the Fixed Rent and
Additional Rent set forth in this Lease for the period following such
termination, and (b) Tenant shall pay to Landlord, to the maximum extent legally
permissible, an amount equal to (i) the Fixed Rent and Additional Rent which
would have been payable pursuant to this Lease, but for such legal rent
restriction, less (ii) the Fixed Rent and Additional Rent paid by Tenant during
the period that such legal rent restriction was in effect. In the event Landlord
should at any time request that Tenant enter into any written agreement pursuant
to the terms of this Section 4.6, then Landlord shall reimburse Tenant for any
reasonable legal fees paid by Tenant to Tenant's outside legal counsel in
connection with Tenant's compliance with the terms of this Section 4.6.
Section 4.7. No Accord and Satisfaction. No payment by Tenant or receipt
by Landlord of a lesser amount than the Fixed Rent or Additional Rent due
hereunder shall be deemed to be other than a payment on account, nor shall any
endorsement or statement on any check or any letter accompanying any check or
payment be deemed to effect or evidence an accord and satisfaction, and Landlord
may accept such check or payment without prejudice to Landlord's right to
recover the balance or pursue any other remedy in this Lease or at law or
equity.
ARTICLE 5: TENANT'S SHARE OF OPERATING COSTS
Section 5.1. Definitions. As used in this Lease:
(a) "Real Estate Taxes" shall mean the total amount of all taxes,
charges and assessments levied or assessed against the Building, including,
without limitation, real property taxes, assessments, water taxes and
assessments, sewer rentals, rates, taxes and charges, and any other governmental
or quasi-governmental charges, general, special, ordinary or extraordinary,
foreseen or unforeseen, of any kind and nature whatsoever which may at any time
prior to or during the Term become due and payable, or be levied, assessed or
imposed by any authority having power to do so, on, against or with respect to
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the Building and any appurtenance thereof, but excluding, however, any income,
franchise, transfer, inheritance and capital stock taxes of Landlord and
excluding any taxes paid by Tenant, or any other tenants of the Building, under
the terms of Section 6.1 (Tenant's Property) hereof or under the terms of
similar provisions of other leases of space in the Project. The said exclusions
notwithstanding, Real Estate Taxes shall include any tax, charge, or other
imposition levied by the State of Connecticut or political subdivision thereof
against Landlord's interest in this Lease or Rent (whether gross or net) derived
from this Lease, and shall also include any other tax, fee or other excise,
however described, that may be levied or assessed as a substitute for, or as an
addition to, in whole or in part, any other Real Estate Taxes, whether or not
now customary or in the contemplation of the parties hereto as of the date of
this Lease.
(b) (1) "Operating Expenses" shall mean all costs and expenses in
connection with the operation, maintenance, repair and replacement (whether
structural or nonstructural, and whether capital or non-capital in nature, but
subject to the limitations expressly stated hereinbelow) of any and all parts of
the Project, as Class-A office buildings, and the improvements thereon and
therein, including, without limitation, the following: all materials, supplies
and equipment, purchased or hired therefor; service contracts for any of the
foregoing (including, without limitation, elevator, electric, heating,
air-conditioning and plumbing); maintenance and repair of grounds; maintenance
and repairs in and to Project and Building systems including, without
limitation, the heating and ventilating and air-conditioning systems;
maintenance and repair of underground pipes, lines, equipment and systems;
repaving; resurfacing; painting (including line-painting) of all roofs,
rooftops, and all parts thereof, whether decorative or otherwise; lighting;
removal of snow, ice, trash, garbage and other refuse; fuel, including, without
limitation, oil or gas used in connection with heating the Project; electricity
used in connection with the Project (other than in the Demised Premises or other
portions leased to tenants) including, without limitation, that used in
air-conditioning, ventilating and heating and for any interior and exterior
Common Area; water; telephone and other utilities; cleaning and sanitary
services; window cleaning services; refurbishing; extermination; the cost of
personnel engaged in the operation, maintenance or repair of the Project
(including, without limitation, salaries, wages, medical, surgical and general
welfare benefits, group insurance, savings and retirement benefits, payroll
taxes, worker's compensation insurance, disability insurance and all taxes,
charges and assessments levied or assessed against any personal property of
Landlord used in the operation of the Building or the Project; the operation,
maintenance and repair of the custodian's office (which "custodian" as used
herein shall mean a person who devotes all of or a portion of his working time
to the maintenance and/or operation of all or a portion of the Project)); the
custodian's telephone charges pertaining to the operation of the Project, the
custodian's utilities, and all other fringe benefits; fire protection;
alterations and improvements made by reason of laws or requirements of any
governmental or quasi-governmental authority, insurance body or Landlord's
insurer or mortgagee; all insurance carried by Landlord applicable to the
Project
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(including, without limitation, primary and excess liability, and further
including vehicle insurance, fire and extended coverage, vandalism and all
broad-form coverage including, without limitation, riot, strike, and war risk
insurance, flood insurance, boiler insurance, plate glass insurance, rent
insurance and sign insurance); management fees and the costs of operation,
maintenance and repair of a property management office, legal (other than those
for preparation of this and other leases) and accounting fees, commissions and
charges; damages and other losses; taxes (including, without limitation, sales
and use taxes); energy; security systems, security personnel, traffic systems,
and traffic personnel; at Landlord's option, the Annualized Amortization Amount
specified in Section 5.1(b) (2) herein; any other costs and expenses, consistent
with the operation of Class-A office buildings, in connection with the
operation, maintenance and repair of the Project; a pro rata portion of any
costs and expenses in connection with the operation, maintenance, repair and
drainage of any part of those roads, walks, and other areas forming a part of
the Project or used in connection with the Project and whether dedicated to any
municipal authority or used in common with others (sometimes collectively called
"Roadway Common Areas"), it being understood that said proration shall be based
upon the respective number of rentable square feet of the Project.
The following shall, nonetheless, be excluded from Operating
Expenses:
(i) any expense to the extent to which Landlord is compensated by
insurance or by any manufacturer's warranty;
(ii) Real Estate Taxes and Real Estate Taxes (defined similarly) for the
Project;
(iii) any executive salary above the grade of superintendent or Building
or Project manager;
(iv) costs of leasehold improvements made by Landlord in the Demised
Premises or in other space in the Project leased to Tenant or other tenants;
(v) any particular charge or expense (rather than a category of charge
or expense) which is specifically payable by Tenant or another tenant in the
Project;
(vi) brokerage commissions;
(vii) mortgage principal and interest and financing and/or refinancing
charges on indebtedness of Landlord which is secured by a mortgage or other
encumbrance against the title to the Project;
(viii) depreciation and amortization of Landlord's initial acquisition
and construction costs
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for any future capital additions of leaseable space to the Project which expand
the external footprint of the Project;
(ix) Legal fees of Landlord incurred in connection with the leasing of
space in the Project or incurred in connection with any disputes with tenants or
other occupants of space in the Project, or in connection with the enforcement
of any leases of space in the Project, or incurred in connection with
refinancing indebtedness secured by the Project or incurred in connection with
the sale of the Landlord's fee simple interest in the Project;
(x) advertising and marketing expenses incurred in connection with
leasing space in the Project which exceed the sum of $100,000 in any given
Computation Year;
(xi) costs (including permit, license and inspection fees) incurred in
renovating or otherwise improving, decorating, painting or altering demised
space (other than Common Areas, Roadway Common Areas and parking areas) for the
exclusive use of less than all of the tenants or occupants of the Project;
(xii) interest and penalties payable to the City of Stamford by reason
of Landlord's failure to make timely payment of Real Estate Taxes, unless
Landlord is contesting such Real Estate Taxes, interest or penalties;
(xiii) property management fees paid to affiliates of Landlord, but only
to the extent such fees are in excess of competitive market rates paid to other
property managers of Class-A office buildings;
(xiv) costs in excess of $100,000 in any single Computation Year
incurred to remediate, contain or abate any single spill or release of Hazardous
Substances, from the Property, unless the presence of such spill or release of
Hazardous Substances on the Property is due to the actions or omissions of the
Tenant or any other Project tenants, or their respective employees, agents,
invitees or contractors;
(xv) costs in excess of $100,000 incurred in any single Computation Year
to cause any single item (e.g. any single bathroom, ramp, hallway, doorway,
etc.) at the Project to comply with the Americans with Disabilities Act, 42
U.S.C. 12101 et seq.; and
(xvi) costs in excess of $100,000 incurred in any single Computation
Year to remedy any single, or particular violation of the building codes or the
fire codes of the City of Stamford, but such costs shall only be excluded from
Operating Expenses if such violation (1) was in existence as of the date of this
Lease, (2) pertains to a Common Area or Parking Area of the Building or to an
existing base Building system located in unimproved "shell" space in the
Building which "shell" space was not previously and is not
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currently leased to a tenant but is intended for lease, and (3) Landlord had
received written notice of such violation from the City of Stamford prior to the
date of this Lease. Costs to cure violations of building codes or fire codes
which Landlord has not received written notice of prior to the date of this
Lease or which arise or occur after the date of this Lease shall not be excluded
from Operating Expenses by virtue of this subparagraph (xvi).
(2) Amortization of Certain Capital Items. In the event any particular
or single structural or capital repairs, replacements or restorations to the
Project, or any part thereof, costs more than the sum of One Hundred Thousand
Dollars ($100,000) and may properly be capitalized in accordance with a tax
depreciation schedule, as opposed to being fully deducted in the year such costs
were incurred, then Landlord shall only include in Operating Expenses for any
given Computation Year (A) that portion of the cost of such particular or single
structural or capital repair, replacement or restoration which is equal to the
total cost of such single or particular structural or capital repair,
replacement or restoration divided by the number of years such cost may be
depreciated in accordance with the appropriate tax-depreciation schedule, and
(B) interest at the Base Rate plus three (3) percent on the remaining balance of
such cost. Notwithstanding the foregoing, Landlord may include in Operating
Expenses the full cost of any items of a decorative nature in the Computation
Year Landlord incurs such costs. Amounts which are includable in Operating
Expenses on an amortized basis pursuant to this Section 5.1(b) (2) are herein
collectively referred to as the "Annualized Amortization Amount".
(3) If a cost or expense may permissibly be included under more than one
category of Operating Expenses, such cost or expense shall be included only once
where to do so more than once would cause a duplication of, and a similar
increase in, Operating Expenses. Notwithstanding various provisions of this
Lease which provide that Landlord shall do or perform certain obligations or
services at Landlord's cost and/or expense, the same shall be included in
Operating Expenses to the extent that they otherwise would be included pursuant
to this Section 5.1(b); and this shall be so notwithstanding that in certain
instances throughout this Lease there is specification that a certain expense
shall be an Operating Expense, while in other instances there is no such
specification.
(c) "Base Expenses" shall mean the Operating Expenses incurred in the
Base Year.
(d) "Base Taxes" shall mean the Real Estate Taxes (determined after the
resolution of any appeals) which are payable with respect to the Base Year.
(e) "Computation Year" shall mean each July 1 fiscal year during the
Term.
(f) "Total Costs" shall mean Operating Expenses and Real Estate Taxes.
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(g) "Base Year" shall mean the year so designated in Article 1.
Section 5.2. Tenant's Share of Total Costs. Tenant shall pay to Landlord
Tenant's Operating Share of Operating Expenses and Tenant's Tax Share of Real
Estate Taxes (collectively, "Tenant's Share of Total Costs") at the times and in
the manner provided below. Sums payable under this Section 5.2 may, from time to
time, be hereafter referred to as "5.2 Rent."
(a) Tenant's Share of Total Costs for any Computation Year shall be the
sum of (i) the product of Tenant's Operating Share and the amount by which the
Operating Expenses for that Computation Year exceed the Base Expenses, and (ii)
the product of Tenant's Tax Share and the amount by which the Real Estate Taxes
for that Computation Year exceed the Base Taxes.
(b) At the beginning of each Computation Year, Landlord shall compute
and deliver to Tenant a reasonable estimate of the amount to be paid by Tenant
as Tenant's Share of Total Costs for the appropriate Computation Year, and
without further notice Tenant shall pay to Landlord, simultaneously with
Tenant's Monthly Fixed Rent during such Computation Year, monthly installments
of one-twelfth (1/12) of such estimate (plus, if such estimate is submitted
after the commencement of any Lease Year, one-twelfth (1/12) of such sum times
the number of months, or partial months, which have elapsed since such
commencement). Landlord and Tenant agree that Landlord may estimate Tenant's
Share of Total Costs for any Computation Year by doubling its budget for the
first six (6) calendar months of the Computation Year in question. Landlord's
failure to render an estimate with respect to increases in Total Costs for any
Computation Year shall not prejudice Landlord's right to render an estimate
thereafter with respect thereto or with respect to any subsequent Computation
Year. Landlord may, in its discretion, but no more than twice in any Computation
Year, revise its estimate for any Computation Year upon notice to Tenant, and
Tenant shall, beginning ten (10) days after notice of such revision, pay
one-twelfth (1/12) of this revised estimate in the manner provided above.
(c) Unless delayed by Force Majeure, Landlord shall deliver to Tenant,
within one year after the end of each Computation Year, a written statement (the
"Statement"), prepared in accordance with generally accepted accounting
principles, specifying the amount of Tenant's Share of Total Costs and stating
on a reasonably detailed line item basis, the total amount of Total Costs for
the prior Computation Year. If the aggregate of monthly installments of Tenant's
Share of Total Costs actually paid by Tenant to Landlord differs from the amount
of Tenant's Share of Total Costs payable according to the Statement under this
Section 5.2, Tenant shall pay the increase without interest within ten (10) days
after the date of delivery of the Statement or be credited with a decrease
without interest on the next installment(s) of Fixed Rent and 5.2 Rent payable
hereunder, as appropriate.
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(d) If Landlord and Tenant disagree on the accuracy of Tenant's Share of
Total Costs as set forth in the Statement, Tenant shall (i) nevertheless make
payment to Landlord in full in accordance with the Statement, and (ii) provide
Landlord with notice of such disagreement within thirty (30) days of the
Tenant's receipt of such statement. Landlord and Tenant shall then attempt to
mutually resolve such disagreement within thirty (30) days from Landlord's
receipt of Tenant's notice of such disagreement, during which time Landlord
shall, upon prior written request from Tenant, provide Tenant with reasonable
access to Landlord's books and records relating to the calculation of Operating
Expenses for the Computation Year at issue, at a time designated by Landlord
between the hours of 9:00 a.m. to 5:00 p.m. on Landlord's business days, and if
the parties are unable to resolve such disagreement within such period of time
the disagreement shall then be referred by Landlord for prompt decision by a
mutually acceptable "Big Six" certified public accounting firm, which shall be
deemed to be acting as expert and not as an arbitrator, and a determination
signed by the selected expert shall be final and binding on both Landlord and
Tenant. In the event that no mutually acceptable "Big Six" certified public
accounting firm is willing to undertake the foregoing engagement, then the
disagreement shall be referred by Landlord, for prompt decision, by a mutually
acceptable commercial real estate broker who is licensed by the State of
Connecticut and has at least ten (10) years experience in the real estate
leasing industry in Stamford, Connecticut and is familiar with the commercial
real estate market in the Stamford, Connecticut area. No individual real estate
broker or real estate agent who has represented either party hereto in
connection with this Lease or with any other real estate transaction may be
appointed to resolve a dispute under this subparagraph (d). Further, any real
estate broker appointed to resolve a dispute under this subparagraph (d) must
first agree that they will be compensated for their services hereunder only by
payment of a reasonable and customary hourly rate for their time expended on
this matter. Any adjustment required to any previous payment made by Tenant or
Landlord by reason of any such decision shall be made within thirty (30) days
after the date of the decision. Tenant will pay the costs of retaining the
expert. Tenant shall maintain all information obtained from reviewing Landlord's
books and records in strict confidence and shall not disclose the same to any
party other than Landlord's attorneys and agents who shall be directly involved
with assisting Tenant in the resolution of a dispute hereunder and who shall be
instructed by Tenant, in writing, to respect and maintain the confidentiality of
such financial information.
(e) Tenant may not dispute the statement or claim a readjustment in
respect of Tenant's Share of the Operating Costs, except by notice delivered to
Landlord within thirty (30) days after the date of delivery of the Statement.
(f) In the event that, in the Base Year or any Computation Year, the
tenant space of the Project is not ninety-five percent (95%) or more occupied,
an appropriate adjustment shall be made so that Tenant's Share of Operating
Expenses and Real Estate
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Taxes shall be computed as though the tenant space of the Project had been
ninety-five percent (95%) occupied for the Base Year or such Computation Year.
In no event shall Landlord be able to finally collect more than one hundred
percent (100%) of the actual Total Costs.
Section 5.3. Change to Fiscal Year. Notwithstanding anything to the
contrary contained in this Article 5, Landlord, at Landlord's option, may, at
any time and from time to time, calculate applicable sums under Section 5.1(b)
of this Lease on a fiscal year basis rather than on a calendar year basis, but
adjusted such that Tenant shall not be subject to duplicate charges. In such
event, if less than a full fiscal year is involved, appropriate adjustment and
prorations shall be made to reflect such partial fiscal year.
Section 5.4. Changes in Tenant's Share of Total Costs. Tenant's
Operating Share and Tenant's Tax Share specified in Article 1 are based upon a
fraction, the numerator of which is the Rentable Area of the Demised Premises,
the denominator of which is the rentable area of the Project and of the Building
respectively. If the Rentable Area of the Demised Premises should change (e.g.,
by Tenant leasing additional space in the Project) and/or if the rentable area
of the Project or the Building should change, then Tenant's Operating Share
and/or Tenant's Tax Share and/or Total Costs for the Base Year shall be
recalculated equitably. Unless Tenant should lease additional space, Landlord
shall not recalculate the Rentable Area of the Demised Premises under this
Section 5.4 unless Landlord also recalculates the Rentable Area of any other
part of the Building.
ARTICLE 6: TAXES ON TENANT'S PROPERTY
Section 6.1. Tenant's Property. In addition to the Fixed Rent and other
charges to be paid by Tenant hereunder, Tenant shall pay Landlord upon demand,
as Additional Rent, or where applicable directly to the taxing authority when
due, for its share of any and all taxes payable by Landlord (other than net
income taxes) whether or not now customary or within the contemplation of the
parties hereto: (a) upon, allocable to, or measured by the Rent payable
hereunder, including, without limitation, any gross receipts tax or excise tax
levied by any governmental or taxing body with respect to the receipt of such
Rent; (b) upon or with respect to the possession, leasing, operation,
management, maintenance, alteration (subsequent to the construction of the
initial Tenant's Work, undertaken by Tenant, to ready the Demised Premises for
Tenant's initial occupancy thereof), repair, use or occupancy by Tenant of all
or any part of the Demised Premises; and (c) upon (i) the measured value of
Tenant's personal property located in the Demised Premises or in any storeroom,
garage or any other place in the Demised Premises or the Project, and (ii) any
and all fixtures and/or improvements in or to the Demised Premises which are
owned by Tenant and/or constructed, installed and/or paid for by Tenant,
subsequent to the construction of the initial Tenant's Work, undertaken by
Tenant, to ready the Demised Premises for Tenant's initial occupancy thereof, it
being the intention of
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Landlord and Tenant that, to the extent possible, any such taxes (real, personal
or otherwise) shall be billed to and paid directly by Tenant. Tenant shall pay
all such taxes coming due after the expiration of the Term which are
attributable to a portion of the Term. No taxes required to be paid by Tenant
under this Section 6.1 shall be included in Real Estate Taxes or Operating
Expenses, as such terms are defined in Section 5.1 herein.
ARTICLE 7: CONDITION OF DEMISED PREMISES
Section 7.1. Condition of Demised Premises. Tenant acknowledges that it
has inspected the Demised Premises and, except as may be otherwise expressly
provided in Section 7.2 (Landlord's Representations) below, accepts the Demised
Premises in its "AS IS" condition. Tenant relies on no warranties or
representations, express or implied, of Landlord or any agent or other party
associated with Landlord as to the nature, condition or repair of the Demised
Premises or the Project, except as may be otherwise expressly provided in this
Lease.
Section 7.2. Landlord's Representations. The Landlord represents to
Tenant, to the best of Landlord's knowledge and belief, as of the date of the
execution of this Lease, as follows:
(a) Tenant shall have no obligation or liability under this Lease by
reason of the presence in the Demised Premises or upon the Common Areas of the
Project, as of the date of this Lease, of any Hazardous Substances in any
quantity which violates Environmental Law, unless due, in whole or in part, to
the actions or omissions of Tenant, or Tenant's employees, agents, contractors
or invitees. Landlord shall and hereby agrees to indemnify and hold Tenant
harmless from and against any and all loss, damages, cost, claim, liability or
expense (including without limitation, reasonable attorneys fees and court
costs) arising out of any liability which Tenant may incur within the scope of
the first sentence of this subparagraph (a). Notwithstanding the foregoing,
Tenant shall indemnify and hold Landlord harmless from and against any and all
loss, damages, cost, claim, liability or expense (including without limitation,
reasonable attorneys fees and court costs) which Landlord may incur by reason of
the presence of any Hazardous Substances which Tenant, or Tenant's employees,
agents, contractors or invitees may introduce or permit to be introduced onto
the Demised Premises or the Project from and after the date of this Lease.
(b) Landlord has not received any written notice from any governmental
authority or agency, which has not been substantially complied with, or
contested in good faith, as of the date of this Lease, directing Landlord to
remediate, abate or control any "substantial" spill or release of Hazardous
Substances at the common areas at the Project (e.g. a "substantial" spill or
release is a spill or release of Hazardous Substances which will
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cost in excess of $100,000 to remediate, abate or control, in accordance with
Environmental Laws).
(c) Landlord has not received any written notice from any governmental
authority or agency, which has not been substantially complied with, or
contested in good faith, as of the date of this Lease, advising Landlord that
the Common Areas of the Project are not "substantially" in compliance with the
Americans with Disabilities Act, 42 U.S.C. 12101 et seq. (e.g. that the cost to
cure or remedy such non-compliance with respect to any single item (e.g. any
single bathroom, ramp, hallway, doorway, etc.) will cost more than the sum of
$100,000).
(d) Landlord has not received any written notice from the City of
Stamford, which has not been substantially complied with, or contested in good
faith, as of the date of this Lease, claiming that the Common Areas of the
Project are not "substantially" in compliance with the building and fire codes
of the City of Stamford (e.g. that the cost to cure any single instance or
aspect of non-compliance with local building or fire codes will cost more than
the sum of $100,000).
(e) Landlord has not received any written notice from People's Bank,
which has not been substantially complied with, or contested in good faith, as
of the date of this Lease, stating that the Landlord is in monetary default
under the Superior Mortgage beyond the expiration of all applicable notice and
cure periods.
In the event it should ever be determined that Landlord has breached any
of the representations made by Landlord in Section 7.2 (b), (c), (d) or (e),
then, as Tenant's sole remedy by reason of such breach, Tenant shall be relieved
of any obligation to pay for any portion of the cost of complying with any
governmental or lender notice Landlord may have received contrary to the
representations made in this Section 7.2, and the costs of complying with any
such governmental order or lender notice shall not be included in Operating
Expenses hereunder.
ARTICLE 8: USE OF DEMISED PREMISES
Section 8.1. Use of Demised Premises. Tenant shall use the Demised
Premises only for the purposes set forth in Article 1 and for no other use or
purpose whatsoever.
Section 8.2. Compliance with Laws and Requirements of Public
Authorities.
(a) Tenant shall not at any time use the Demised Premises or cause or
permit anything to be done in or about the Demised Premises which results in the
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committing of waste or which interferes with the other tenants, or occupants,
permitted usage of the Project, and Tenant, at its sole cost and expense, shall
comply, at its expense, with all laws, statutes, ordinances, orders and
governmental rules or regulations now in force or which may be enacted or
promulgated in the future and shall comply, at its expense, with all orders,
rules and regulations of the Connecticut Board of Fire Underwriters or any
similar body which shall impose any violation, order or duty upon Landlord or
Tenant with respect to the Tenant's use of the Demised Premises.
(b) Tenant shall not keep, use, sell or offer for sale in or upon the
Demised Premises any article which may be prohibited by the then available
customary forms of fire, boiler and/or casualty insurance policies with extended
coverage or other insurance required to be furnished by Landlord under the terms
of any lease, mortgage or deed of trust to which this Lease is or may hereafter
become subordinate, or use or occupy the Demised Premises in any way that causes
an increase in the premiums charged during the Term for the insurance carried by
Landlord on the Demised Premises, the Building and/or the Project, above the
rate which would apply for typical executive and general office use. Tenant
agrees to pay, as Additional Rent, any such increase resulting from an atypical
use or manner of business conducted by Tenant in the Demised Premises, whether
or not Landlord has consented to that business or manner of use. In determining
whether increased premiums are the result of Tenant's atypical use of the
Demised Premises, a schedule issued by the organization setting forth the
increased insurance rate and showing the various components of such rate shall
be conclusive evidence thereof.
(c) Tenant's use of the Demised Premises for the purposes specified in
Article 1 hereof shall not in any event be deemed to include, and Tenant shall
not use, or permit the use of, the Demised Premises or any part thereof for:
(i) sale of, or traffic in, serving or consumption of any alcoholic
beverages, provided, however, that the foregoing restriction shall not prevent
Tenant from serving wine or other alcoholic beverages at the Demised Premises to
customers and employees of Tenant, providing (A) Tenant may not sell wine or
other alcoholic beverages to customers, employees, members of the general public
or otherwise, (B) prior to serving any wine or other alcoholic beverages to its
employees or customers, Tenant obtains any and all permits and approvals as may
be required by municipal and state laws, statutes, rules, codes and regulations
and Tenant otherwise complies with all applicable statutes, laws, rules and
regulations and with the directives of any governmental authority in connection
with the serving of wine or other alcoholic beverages in, on or about the
Demised Premises, (C) prior to serving wine or other alcoholic beverages, Tenant
complies with its obligation to procure host liquor liability as set forth in
Section 11.1(a) (1) herein, and (D) Tenant's indemnification obligations under
Section 11.2 (b) of this Lease shall apply to any damage or injury resulting
from, or liability incurred by Landlord arising out of, Tenant serving wine or
other alcoholic beverages in, on or about the Demised Premises;
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(ii) sale at retail or otherwise of products or materials kept in the
Demised Premises, by vending machines or otherwise, or demonstrations to the
public, except as may be specifically agreed to by Landlord in writing;
(iii) manufacturing, printing or electronic data processing, except for
the operation of normal business office reproduction and printing equipment,
business machines and electronic data processing equipment incidental to the
conduct of Tenant's business and for Tenant's own requirements at the Demised
Premises, provided that such use shall not exceed that portion of the mechanical
or electrical capabilities of the Building equipment allocable to the Demised
Premises;
(iv) the rendition of medical, dental or other diagnostic or therapeutic
services;
(v) the conduct of a public auction or assembly of any kind;
(vi) the receipt of money for transmission (except as is incidentally
required in the conduct of Tenant's normal business activity);
(vii) the sale of tobacco, newspapers, magazines, beverages, food or
similar items, or the preparation, dispensing or consumption of food or
beverages in any manner whatsoever, other than the consumption of the foregoing
by Tenant's employees and by customers of Tenant at receptions held on an
occasional basis for Tenant's customers; or
(viii) an employment or recruitment agency, school, college, university
or educational institution, whether or not for profit, union, charitable or
other not for profit entity, or by any government or subdivision or agency of
any government, or for any purpose which is likely to generate more visitor
traffic than would typical executive and general office use.
(d) If any governmental or quasi-governmental license or permit shall be
required for the proper and lawful conduct of Tenant's business in the Demised
Premises, or any part thereof (including, without limitation, the Certificate of
Occupancy for the Demised Premises) and if the failure to secure such license or
permit would in any way affect Landlord, then Tenant, at its expense, shall duly
procure and thereafter maintain such license or permit, but in no event shall
failure to procure and maintain same by Tenant affect Tenant's obligations
hereunder. Tenant shall not at any time use or occupy, or suffer or permit
anyone to use or occupy the Demised Premises, or do or permit anything to be
done in or about the Demised Premises, in violation of the Certificate of
Occupancy for the Demised Premises or the Certificate of Occupancy for the
Building.
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Section 8.3. Use of Common Area. Tenant's use of all or part of (a) any
Common Area, or (b) any other portion of the Project which is not part of the
Demised Premises (the "Other Areas"), shall be subject to the provisions of
Section 8.2, this Section 8.3, Sections 22.3 and 22.4, and any other applicable
provisions of the Lease. Tenant's use of all or part of any Common Area or Other
Areas to the exclusion of other tenants of the Project is prohibited.
ARTICLE 9: REPAIRS, ALTERATIONS AND MAINTENANCE
Section 9.1. Care of Premises. Subject to the Landlord's repair
obligations set forth in Section 9.3 (Landlord's Repairs) below, and subject to
the services to be provided by Landlord as set forth in Exhibit E hereto,
Tenant, at its expense, shall take good care of the Demised Premises, including
all Building equipment, Improvements and systems, partitions, carpets, drapes,
ceilings, lights, doors and other interior finish items therein. Tenant shall
repair and maintain all such items as necessary to preserve them in good order,
condition and appearance.
Section 9.2. Tenant's Repairs. Tenant shall, at its sole cost and
expense, make and be responsible for (a) all maintenance, repairs and
replacements, as and when needed, to preserve the Demised Premises (including,
without limitation, Tenant's property and fixtures, all bathrooms, showers,
bathroom and shower plumbing, appliances and fixtures located on or in the
bathroom and shower facilities located on the eleventh (11th) floor of the
Building and all plumbing, electrical lines and facilities and air intake and
exhaust systems constructed or installed in the Demised Premises by or for
Tenant after the date of this Lease and, subject to the terms of Section 9.3
(Landlord's Repairs) below, all heating, HVAC and heat-pump systems constructed
or installed in the Demised Premises by or for Tenant after the date of this
Lease) in good order, condition and repair; and (b) except to the extent to
which Landlord is compensated or reimbursed from any insurance maintained by
Landlord with respect to the Building, the maintenance, repair and replacement
of the Building equipment, systems and structural aspects, the need for which
arises out of or results from (i) the performance or existence of any alteration
or modification to the Demised Premises made by Tenant, (ii) the installation,
use, or operation of Tenant's property or fixtures, (iii) the moving of Tenant's
property or fixtures in or out of the Building or in and about the Demised
Premises, or (iv) any acts, omissions, negligence or misuse by Tenant, those
holding under Tenant or Tenant's servants, employees, agents, contractors,
invitees, or licensees, or their use or occupancy or manner of use or occupancy
of the Demised Premises. All repairs shall conform to the provisions of Section
9.4 and shall be at least equal in quality and class to the standards then
applicable for the Building as established by Landlord. If Tenant fails, after
five (5) days, prior notice from Landlord, to proceed with due diligence to make
repairs required to be made by Tenant (except in the event of an emergency,
wherein Landlord may proceed to
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make any such repair immediately if Tenant does not immediately proceed to
repair), the same may be made by Landlord at the expense of Tenant, and the
expenses of repairs incurred by Landlord, together with a fifteen percent (15%)
administrative fee, shall be reimbursed immediately as Additional Rent after
submission to Tenant of a bill or statement for the repairs.
Section 9.3. Landlord's Repairs. Landlord shall make all necessary
repairs, to keep the common areas of the Project and the base Building equipment
and systems, in good order and repair, consistent with standard for Class-A
office buildings, excluding, however, all repairs which Tenant is obligated to
make pursuant to Section 9.2 and those required to be made by other tenants of
the Project. Tenant shall give Landlord prompt notice of any defective condition
known to Tenant in the Project or, in particular, in any base Building plumbing,
heating system or electrical lines located in, servicing, or passing through the
Demised Premises. Following such notice, Landlord shall remedy the condition
with reasonable diligence, subject to Force Majeure, but at the expense of
Tenant if repairs are necessitated by any of the conditions described in Section
9.2(b). Following Landlord's receipt of notice from Tenant requesting that
Landlord do so, Landlord shall, with reasonable diligence, repair, at Landlord's
expense, any HVAC and heat-pump systems which were located in the Demised
Premises prior to the date of the Lease, and Landlord shall repair, at Tenant's
sole cost and expense (subject to Tenant's payment of Landlord's fee under
paragraph 8 (n) of Exhibit B hereto and inclusive of Landlord's administrative
fee), any HVAC and/or heat-pump systems which (i) were existing in the Demised
Premises prior to the date of this Lease but were subsequently relocated by or
for Tenant, or for which the capacity was increased, by or for Tenant after the
date of this Lease, or (ii) were installed in the Demised Premises by or for
Tenant after the date of this Lease. Except as otherwise specifically provided
in this Lease, there shall be no allowance to Tenant for a diminution of rental
value and no liability on the part of Landlord by reason of inconvenience,
annoyance, interruption or injury to business arising from Landlord, Tenant or
others making any repairs, alterations, additions or improvements in or to any
portion of the Building, the Demised Premises or the Project. Subject to
Tenant's obligations contained in this Lease, Landlord agrees to maintain the
Building and the Project in a manner consistent with the standards for Class-A
office buildings in the Stamford, Connecticut market. Notwithstanding anything
to the contrary contained hereinabove, Landlord shall undertake to complete any
repairs required to be made by Landlord in a manner reasonably designed to
minimize interference with the conduct of Tenant's business in the Demised
Premises, provided, however, that Landlord shall have no obligation to undertake
such repairs outside of Tenant's normal business hours unless Tenant first
agrees to pay any overtime expenses incurred thereby.
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Section 9.4. Tenant's Alterations.
(a) (i) Provided Tenant has secured the prior written consent of
Landlord in each instance, which consent shall not be unreasonably withheld or
delayed so long as they do not affect the Building systems or structure, Common
Areas, Project exterior and may not be seen from outside of the Demised
Premises, and subject to the requirements of this Section 9.4 and Exhibits B and
Exhibits B-1 hereto, Tenant may, at Tenant's sole cost and expense, make
installations, alterations and other Improvements to the Demised Premises by
using contractors and subcontractors (if any) first approved by Landlord. It
shall be deemed reasonable for Landlord to withhold its approval of any
contractor or subcontractor with whom Landlord has had unfavorable business
dealings. All Improvements shall meet or exceed the standards specified in
Exhibit B-1 hereto. Tenant shall, at its sole cost and expense, obtain all plans
for such installations or alterations as well as all permits, approvals and
certificates required by any governmental or quasi-governmental bodies, both
before initiating and upon completing the installations and other alterations,
as applicable, and Tenant shall promptly deliver to Landlord duplicates of all
such plans, permits, approvals, and certificates. Tenant shall pay Landlord, as
Additional Rent, a fee reasonably established by Landlord, as well as Landlord's
attorneys' and consultants' fees for Landlord's review of such plans, permits,
approvals, certificates or other applicable documents in connection with said
installations or alterations and, where appropriate, Landlord's supervision of
the making thereof. Such fee shall be determined under paragraph 8 (n) of
Exhibit B hereto. Tenant agrees to carry and will cause Tenant's contractors and
subcontractors to carry such workmen's compensation, general liability, and
personal and property damage insurance as Landlord may require. Certificates
evidencing such insurance coverage shall be delivered to Landlord prior to
commencing any such installations or alterations.
(ii) Notwithstanding the foregoing, Tenant may make minor alterations to
the Demised Premises which cost, in the aggregate, less than $50,000 in any
Lease Year to construct and which do not require the issuance of a building
permit or certificate of occupancy and which do not affect the Building systems
or structure, Common Areas, Project exterior and may not be seen from the
outside of the Demised Premises (hereafter collectively, called "minor
alterations"), without obtaining Landlord's prior consent, using contractors and
subcontractors (if any) first approved by Landlord, provided Tenant nonetheless
undertakes such minor alterations in full compliance with the provisions of this
Section 9.4, the requirements of Exhibit B and the standards of Exhibit B-1.
(iii) Any increase in Real Estate Taxes or any other taxes or insurance
as a result of installations or other alterations by Tenant undertaken
subsequent to the initial Tenant's Work undertaken by Tenant to prepare the
Demised Premises for Tenant's initial occupancy (and with respect to any space
which Tenant may lease pursuant to Rider 2 hereof, which is undertaken
subsequent to any initial Tenant's Work undertaken to prepare
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such Rider 2 space for Tenant's initial occupancy thereof) shall be paid
entirely by Tenant when due.
(b) All Improvements shall, upon installation, become the property of
Landlord and shall remain upon and be surrendered with the Demised Premises,
except as provided in this Section 9.4. Notwithstanding the foregoing, Landlord
shall have the right, by notice to Tenant no later than twenty (20) days prior
to the end of the Term, to elect to have any Improvements and/or Tenant's Work
removed by Tenant, in which event Tenant shall remove the same and repair and
restore the Demised Premises prior to the end of the Term, at Tenant's sole cost
and expense. Notwithstanding the foregoing, in the event that, at the time
Tenant requests the Landlord's consent to any alterations or installations which
Tenant may propose to make to the Demised Premises, Tenant also specifically
requests in writing that Landlord also consent to the Tenant's non-removal of
such proposed alterations or installations from the Demised Premises at the
expiration or termination of this Lease, then in the event Landlord shall
consent to the making of such proposed alterations the Landlord shall also
indicate whether such alterations or installations (i) must be removed by Tenant
on or prior to the expiration or termination of this Lease, or (ii) may remain
upon the Demised Premises at the expiration or termination of this Lease. In the
event that at the time Landlord consents to the making of any proposed
alterations or installations the Landlord does not specifically consent to the
non-removal of such proposed alterations or installations upon the expiration or
termination of this Lease, then, in the event that not later than one hundred
eighty (180) days prior to the expiration or termination of this Lease the
Tenant requests in writing that Landlord consider waiving the requirement that
Tenant remove from the Demised Premises any specified alterations or Tenant's
Work, then Landlord shall respond to such written request from Tenant not later
than sixty (60) days prior to the expiration of the Lease term. The second
sentence of this Section 9.4 (b) shall not apply to the initial Tenant's Work
undertaken by Tenant prior to the Commencement Date to initially prepare the
Demised Premises for Tenant's occupancy, provided that Tenant must remove, prior
to the expiration or termination of this Lease, (1) any raised computer floor,
and (2) any fitness or exercise room or facilities, including any shower
facilities, which Tenant may construct or install in the Demised Premises.
(c) Nothing in this Section 9.4 shall be construed to give Landlord
title to or to prevent Tenant's removal of trade fixtures or movable office
furniture and equipment, but upon removal of any such equipment and fixtures
from the Demised Premises or upon removal or other installations as may be
required by Landlord, Tenant shall, immediately and at its sole cost and
expense, repair and restore the Demised Premises to the condition existing prior
to installation, reasonable wear and tear excepted, and Tenant shall repair any
damage to the Demised Premises, the Building or the Project due to such removal.
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Section 9.5. Mechanics and Other Liens. Tenant shall keep the title to
the Building and/or the Project free and clear of any lien or encumbrance in
respect of any work ordered by or on account of Tenant in the Demised Premises,
including the Tenant's Work, and any taxes (real, personal or otherwise) imposed
upon Tenant, or any other claim arising by, through or under Tenant. Tenant
shall indemnify, defend and hold Landlord harmless from and against any Loss (as
defined in Article 11 below), whether in respect of any lien or otherwise,
arising out of the supply of material, services or labor for such work. Tenant
shall immediately notify Landlord of any such lien, claim of lien, or other
action of which it has or reasonably should have knowledge of and which affects
the title to the Building or the Project, and shall fully bond, or at Landlord's
request, cause the same to be removed from the title to the Project, within
twenty (20) days, failing which Landlord may take such action as Landlord deems
necessary to remove or release the same, and the entire cost of removal or
release of such lien shall be immediately due and payable by Tenant to Landlord
as Additional Rent. Any liens which are discharged by bonding shall, immediately
upon formal resolution of the dispute giving rise thereto, be removed of record
by Tenant at its sole cost and expense. The terms and provisions of this Section
9.5 shall survive the expiration or sooner termination of this Lease.
ARTICLE 10: UTILITIES AND BUILDING SERVICES
Section 10.1. Heating and Air-Conditioning.
(a) Subject to limitations and restrictions imposed by federal, state
and/or local authorities, and so long as Tenant is not in default under this
Lease, Landlord shall furnish Building-standard heating and air-conditioning to
the Demised Premises during Normal Business Hours. If Tenant desires heating
and/or air-conditioning during other than during Normal Business Hours,
Landlord, upon not less than 24 hours, advance notice from Tenant, will make
arrangements therefore, but Tenant shall pay all costs thereof (including an
administrative fee therefore, payable by Landlord to its managing agent), as
Additional Rent. Such costs shall initially be $35.00 per hour per floor,
subject to change from time to time by Landlord to reflect any change in costs
therefor, plus Landlord's administrative fee.
(b) Landlord, in no event, shall be responsible or liable to Tenant for
any failure of the air-conditioning systems adequately to cool and dehumidify
the Demised Premises where such failure results from (i) the occupancy of the
Demised Premises by more than an average of one (1) person for each one hundred
fifty (150) usable square feet of the Demised Premises, (ii) Tenant installing
operating machines, equipment and appliances the installed electrical load of
which when combined with the load of all lighting fixtures exceeds five (5)
watts per usable square foot of in the Demised Premises, (iii) Tenant's
rearranging its partitioning after Tenant's Work is complete, (iv) Tenant's
failure to lower and close window coverings when necessary because of the sun's
position
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whenever the air-conditioning system is in operation, or (v) Tenant's
failure to cooperate fully with Landlord and to abide by all the regulations and
requirements which Landlord may prescribe for the proper functioning and
protection of the said air-conditioning system. Wherever heat-generated machines
or equipment are used in the Demised Premises which affect the temperature
otherwise maintained by the air-conditioning system, Landlord reserves the right
to require Tenant, at Tenant's sole cost and expense, to install and maintain
supplemental air-conditioning units in the Demised Premises, if Landlord should
reasonably determine that the installation of such supplemental air-conditioning
units is necessary for the efficient operation of base Building HVAC systems.
The operation, repair and maintenance of any such supplemental air-conditioning
units installed in the Demised Premises shall be done by Tenant at its sole cost
and expense.
(c) Any air-conditioning units required for Tenant's computer systems
shall be installed by Tenant, subject to Landlord's prior written consent, and
at the sole cost and expense of Tenant, and shall become the property of
Landlord. Tenant shall, however, operate, repair and maintain such units at
Tenant's sole cost and expense.
Section 10.2. Water. Landlord shall furnish cold water from city water
mains for drinking, lavatory and toilet purposes drawn through fixtures
installed by Landlord, and hot water for lavatory purposes from regular Building
or Project supply. Tenant shall not waste water.
Section 10.3. Cleaning Service. (a) Landlord has furnished to Tenant its
current cleaning and janitorial specifications, a copy of which is attached
hereto as Exhibit E. Tenant shall not engage any other janitorial or cleaning
services.
(b) Tenant shall pay to Landlord on demand as Additional Rent the costs
incurred by Landlord for (x) cleaning work in the Demised Premises or the
Building or otherwise on or about the Building required because of (i) misuse or
neglect on the part of Tenant or its employees or visitors, (ii) use of portions
of the Demised Premises for preparation, serving or consumption of food or
beverages, reproducing operations, private lavatories or toilets or other
special purposes requiring greater or more difficult cleaning work than other
office areas, (iii) interior glass surfaces, (iv) non-building standard
materials or finishes installed by Tenant, or at its request, or (v) increases
in frequency or scope in any of the items set forth in Exhibit E requested by
Tenant; or (y) removal from the Demised Premises and the Building of (i) so much
of any refuse and rubbish of Tenant as shall exceed that normally accumulated
daily in a typical executive and general office use, and (ii) all of the refuse
and rubbish of Tenant's machines and the refuse and rubbish of any other eating
facilities requiring special handling (known as "wet garbage"). Landlord and its
cleaning contractor and their employees shall have after-hours access to the
Demised Premises and the use of Tenant's light, power and water in the Demised
Premises as may be reasonably required for the purpose of cleaning the Demised
Premises.
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Extraordinary waste (such as crates, cartons, boxes, etc., and used furniture or
equipment) shall be removed from the Building by Tenant at Tenant's sole cost
and expense. At no time shall Tenant place any waste of any kind in any Common
Area. If Tenant does so, the parties agree that everything so placed shall be
deemed abandoned and of no value to Tenant and Landlord may have the same
removed and disposed of at Tenant's sole cost and expense. Such cost and expense
shall be deemed Additional Rent.
(c) If Tenant requires any reasonable cleaning and/or janitorial
services in excess of those set forth in Exhibit E, Landlord shall arrange with
Landlord's contractor for the performance thereof at Tenant's sole cost and
expense. Landlord agrees that its contractor's charges for such supplementary
services shall be reasonably competitive with those of cleaning contractors in
the Stamford, Connecticut market.
Section 10.4. Elevators. During Normal Business Hours, four (4)
automatic passenger elevators shall generally be available for use by Tenant,
one (1) of which shall be available for freight use during such hours as
Landlord may establish. Tenant shall pay a fee, as may be established by
Landlord, for any extraordinary use of the freight elevator or any use thereof
outside of Normal Business Hours. One (1) of these passenger elevators shall be
available on an "on-call" basis at other times. No fee for freight elevator use
shall be charged to Tenant for (i) the construction of the initial Tenant's Work
to the Demised Premises, prior to the Commencement Date, to prepare the Demised
Premises for Tenant's initial occupancy thereof, or (ii) Tenant's initial move
into the Demised Premises on or about the Commencement Date; provided, however,
that Tenant shall pay Landlord a fee, determined pursuant to paragraph 8 (n) of
Exhibit B, to monitor Tenant's use of freight elevators during any period
outside of Landlord's normal business hours and if Landlord shall be required to
take any measures to protect elevators from damage.
Section 10.5. Security; Access. Tenant and its employees shall have
access to the Building 24 hours per day, 7 days per week; provided, however,
that Landlord may impose such security measures as Landlord may deem necessary
in connection with such access including, but not limited to, requiring any
person seeking access outside of Normal Business Hours to present a Building
identification card and/or to use a security access card. In no event shall
Landlord be liable for any good faith refusal by any security guard of a request
of access to the Building.
Section 10.6. Interruption of Services. Landlord does not warrant that
any service will be free from interruptions caused by repairs, replacements,
improvements, changes of service, alterations or Force Majeure. No interruption
of service shall be deemed an eviction or disturbance of Tenant's use and
possession of the Demised Premises, or render Landlord liable to Tenant for
damages, or relieve Tenant from performance of Tenant's obligations under this
Lease, or otherwise render Landlord liable
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in any manner whatsoever, provided Landlord uses all reasonable diligence to
restore any interrupted service as promptly as possible. Any planned
interruptions of electric service to the Demised Premises shall, if feasible, be
preceded by reasonable prior notice to Tenant of such interruption and shall be
undertaken in a manner reasonably designed to minimize any interference with
Tenant's use of the Demised Premises, provided, however, that, except to the
extent Landlord would have elected of its own accord to perform any such work or
repairs outside of Landlord's normal business hours and on an overtime basis,
Landlord shall have no obligation to undertake such work or repairs outside of
Landlord's normal business hours unless Tenant first agrees to pay any overtime
expenses incurred thereby. Tenant hereby waives and releases all claims against
Landlord for damages for interruption or stoppage of service.
Section 10.7. Electricity.
(a) Tenant agrees that its use of electric power shall at no time exceed
the capacity of existing feeders to the Building or its risers or wiring
installation, and Tenant shall not use any electrical equipment which, in the
reasonable judgment of Landlord, will overload such installations or interfere
with the use thereof by other tenants of the Building or the Project. Tenant
shall not, without Landlord's prior written consent in each instance, perform or
permit any alteration to wiring installations or other electrical facilities or
equipment in or upon the Demised Premises or the Project, or perform or permit
any additions to electrical fixtures, business machines, office equipment or
other appliances in the Demised Premises which utilize electricity. In no event
shall Tenant's total use of electricity in the Demised Premises exceed seven (7)
watts per usable square foot thereof. Landlord represents that the Demised
Premises is supplied with not less than five (5) watts of electricity per usable
square foot of space.
(b) Tenant shall pay Landlord, within ten (10) days of Landlord's
submission to Tenant of bills therefor, the cost of all electricity used in the
Demised Premises, in the annual amount of One Dollar and Fifty Cents ($1.50) per
rentable square foot of the Demised Premises, which amount shall be subject to
increase, from time to time, to reflect increases in the Landlord's cost of
furnishing such electricity to Tenant. Alternatively, Tenant may elect to pay
for electricity to the Demised Premises as measured by an Intellimeter
Submetering System, or similar system, installed, at Tenant's expense, as part
of the Tenant's Work described in Exhibit B hereto, at a rate equal to
Landlord's submetered cost for electricity for the Building. Landlord shall
maintain such submetering system, at Tenant's sole cost and expense and Tenant
shall be responsible for the payment of all meter reading fees and Landlord's
reasonable cost for issuing invoices to Tenant. Any Intellimeter Sub-metering
System which Tenant may elect to install shall measure the consumption of
electricity for the entire floor of the Building in which the Demised Premises
is located, including electricity for the use and operation of bathrooms and
showers on the eleventh (11th) floor of the Building and all electricity used
for (i) any
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perimeter and core HVAC systems or heat pumps which may be relocated by or for
Tenant (but only to the extent that the tonnage of such HVAC systems or heat
pumps is increased in connection with the relocation of same), and (ii) any
perimeter or core HVAC systems or heat pumps which may be installed in the
Demised Premises by or for Tenant, but shall not measure the electricity
consumed by HVAC systems or heat pumps existing in the Demised Premises as of
the date of this Lease, unless such HVAC systems or heat pumps are subsequently
relocated by Tenant, in which case only the electricity consumed by reason of
any increase in the tonnage of such relocated HVAC systems or heat-pumps shall
be measured.
(c) After the initial Tenant Work, Tenant, at Tenant's expense, shall
purchase and install all lamps (including incandescent and fluorescent),
starters and ballasts used in the Demised Premises. All such purchases shall be
from Landlord, unless Landlord elects otherwise. Prices for such items charged
to Tenant shall be at rates competitive with those charged by other Class-A
office buildings in the Stamford, Connecticut area. Tenant may only install
energy efficient items. Current standards for energy efficient items are set
forth in Exhibit B-1. Landlord reserves the right to revise the energy
efficiency standards, from time to time, set forth in Exhibit B. Such revised
energy efficiency standards shall only be applicable to any Tenant's Work which
Tenant may desire to undertake subsequent to the completion of the initial
Tenant's Work undertaken by Tenant to prepare the Demised Premises for Tenant's
initial occupancy.
(d) During any period in which any meter servicing the Demised Premises
is inoperative, Tenant's electricity consumption charges shall be determined by
Landlord, based upon its reasonable estimate of Tenant's actual consumption of
and demand for electricity, and the electric rate or cost per kilowatt and cost
per kilowatt hour then in effect. Landlord shall take prior metered bills for
the Demised Premises into account in making such reasonable estimate.
Section 10.8. Adjustment for Utilities and Building Services.
Notwithstanding anything to the contrary contained herein, if Tenant uses,
consumes or requires any utilities or Building services provided for in this
Lease (including, without limitation, heating, air-conditioning, water, gas,
oil, janitor or cleaning services, refuse removal or security) in quantities or
levels which exceed the normal office usage of other office tenants in the
Project (of which fact Landlord shall reasonably judge), Landlord shall have the
right to charge Tenant for such excess usage of utilities or Building services
at amounts which are competitive with those being charged in other Class-A
office buildings as Landlord may establish from time to time, and Tenant shall
pay Landlord, as Additional Rent, the charges imposed therefor.
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ARTICLE 11: INSURANCE AND INDEMNITY
Section 11.1. Insurance.
(a) Tenant shall, at its sole cost and expense, maintain throughout the
Term commencing with the earlier of (i) the performance of any work in the
Demised Premises by or on behalf of Tenant under Articles 3 and 9 hereof; and
(ii) the moving of any personal property of Tenant into the Demised Premises
(unless otherwise provided in this Section) the following types of insurance:
(1) Insurance against any and all claims for personal injury (including
libel, slander, defamation of character, wrongful eviction, invasion of a right
of privacy, mental injury, humiliation) bodily injury and property damage
occurring in, upon, adjacent, or connected with the Demised Premises and any
part thereof. Such insurance shall be for limits not less than $5,000,000 per
occurrence including umbrella liability and shall be written on a broad form
basis and shall include, without limitation, products and completed operations
liability, independent contractors liability, broad form property damage, liquor
law liability (if applicable), host liquor liability and not less than $300,000
per occurrence of fire damage legal liability insurance coverage.
(2) Comprehensive auto liability insurance covering owned, hired,
non-owned and borrowed vehicles, if any, providing bodily injury and property
damage liability in the amount of $5,000,000 combined single limit. An umbrella
liability policy can be used to satisfy policy limits.
(3) Worker's compensation and employer's liability as required by law.
(4) Connecticut disability benefits liability as required by law.
(5) During the performance by or on behalf of Tenant of any Tenant's
Work, Tenant's Improvements or any other work under this Lease (including the
initial Tenant's Work to prepare the Demised Premises for Tenant's occupancy)
and until completion thereof, in an amount equal to the full replacement value
thereof. Such insurance shall be on an "all risk" basis. A builder's risk form
or its equivalent shall be delivered to Landlord prior to commencement of any
work.
(6) Insurance covering personal property, improvements and betterments
on an "All Risk" basis in the amount equal to the full replacement cost of such
property. "All-Risk" property insurance upon Tenant's property, the
Improvements, including contents and trade fixtures; such coverage is to be
written on a replacement cost basis
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and in an amount of not less than one hundred percent (100%) of the replacement
value thereof.
(7) If Tenant installs any supplemental air conditioning equipment or
electrical switch panels to service their data processing facilities, coverage,
including coverage for miscellaneous electrical apparatus in such amounts as
Landlord shall reasonably determine.
(8) Such other insurance and any of the insurance described in (1)
through (7) above in such amounts as Landlord or the holder of any superior
mortgage, deed of trust or lease may require from time to time or as are carried
with respect to properties similar to the Project.
(b) With respect to all insurance provided by Tenant or others
performing work for Tenant hereunder:
(i) Such insurance shall be written by insurance companies licensed to
do business in the State of Connecticut, authorized to issue such insurance
policies and having a rating of no less than "A-XV" in the most current edition
of Best's Key Rating Guide (or its nearest equivalent, if it has ceased
publication). Appropriate certificates (together with evidence of waivers of
subrogation required by this Article) shall be deposited with Landlord prior to
the Commencement Date. Tenant shall have the right to insure and maintain such
insurance under blanket insurance policies covering other premises used or
operated by Tenant so long as such blanket policies are aggregated so that at
all times when required by this Lease there is adequate insurance attributable
to the Demised Premises or to this Lease so as to comply with the insurance
provisions set forth in this Lease.
(ii) Landlord, Stamford Towers, Inc. and the holder of any superior
mortgage or of any superior lease, to the extent that Tenant has been notified
(collectively called "Landlord and Others in Interest") shall be an additional
insured on all insurance required to be provided by Tenant under this Lease.
(iii) All property insurance policies shall cover the interest of Tenant
and Landlord and Others in Interest, as their interests may appear, and shall
provide that the adjustment of any losses thereunder or any related negotiations
not be settled or finalized (or any resulting awards or recoveries be payable)
without the direct involvement and consent of Landlord and Others in Interest,
to the extent applicable, and shall contain a provision allowing other insurance
that is provided to or for Landlord.
(iv) Notwithstanding anything to the contrary contained in this Lease,
at least thirty (30) days prior to commencement of any construction in the
Demised Premises,
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Tenant and Tenant's contractor shall deliver to Landlord (and Others in
Interest, if required by them) certificates of insurance or policies (as
provided in Section 11.1 (b)(i) hereof) evidencing all insurance coverage
provided in this Article 11. Tenant's contractor shall be required to comply
with all of such insurance obligations through final completion of all such
work.
(v) If Tenant performs any work in or to the Demised Premises Tenant or
Tenant's general contractor shall, in accordance with all of the insurance
requirements of this Article 11, obtain professional liability insurance for all
architects, designers and engineers with regard to all of their work in or in
connection with the Demised Premises, in a minimum policy amount of One Million
Dollars ($1,000,000.00) or the then customary amount for comparable work, if
higher.
(vi) The limits of all insurance provided under this Lease shall not
limit Tenant's liability to Landlord.
(vii) All policies of insurance maintained by Tenant under this Article
shall be written as primary policies not contributing with, nor in excess of,
insurance coverage that Landlord and Others in Interest may have. Tenant shall
not carry separate or additional insurance which, in the event of any loss or
damage, is concurrent in form or would contribute with the insurance required to
be maintained by Tenant under this Lease.
(viii) Each policy required to be provided hereunder (and each
certificate of insurance issued with respect thereto) shall contain endorsements
by the insurer, without disclaimers, that the policies will not be cancelled,
materially changed, amended, reduced or allowed to lapse without renewal without
(1) at least thirty (30) days, prior written notice to Landlord and Others in
Interest, or (2) at least ten (10) days, prior written notice to Landlord and
Others in Interest in the event of non-payment of premium; that the act or
omission of any insured will not invalidate the policy as to any other insured,
and that Tenant (or the general contractor, as the case may be) solely shall be
responsible for payment of all premiums under such policies and that neither
Landlord nor Others in Interest shall have any obligations for the payment
thereof.
(ix) In the event Tenant shall fail to procure and place any insurance
required under this Lease, after notice to Tenant, Landlord may, but shall not
be obligated to, procure and place the same, in which event the amount of the
premium paid shall be refunded by Tenant to Landlord as Additional Rent.
(c) Tenant shall provide Landlord with a certificate of the foregoing
insurance coverage (which shall provide for not less than thirty (30) days'
written notice to Landlord prior to termination of coverage for any reason)
before occupying the Demised Premises and annually thereafter, and Tenant shall
provide Landlord with renewal
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replacement certificates at least thirty (30) days prior to the expiration of
any such insurance policy. Landlord will not be required to carry insurance of
any kind on Tenant's personal property or fixtures, which shall be borne by
Tenant at its sole cost and expense. Tenant shall be responsible for insuring
Tenant's interest in all personal property in the Demised Premises. Except as
required by law or by this Lease, Landlord shall not be obligated to repair any
damage to or restore, rebuild or replace Tenant's personal property or fixtures.
Section 11.2. Indemnity and Non-Liability.
(a) Neither Landlord nor Landlord's agents (including, without
limitation, Landlord's managing agent for the Project), employees, contractors,
officers, directors, shareholders, partners or principals (disclosed or
undisclosed) ("Landlord," collectively for purposes of this Article 11) shall be
liable to Tenant or Tenant's agents, employees, contractors, subtenants,
assignees, invitees, licensees or any other occupant of the Demised Premises
("Tenant," collectively, for purposes of this Article 11) for any and all
liabilities, obligations, damages, penalties, injuries, claims, losses, costs
and expenses, including attorneys' fees and disbursements, paid, suffered or
incurred (individually and collectively, "Loss"), unless such Loss is due to the
gross negligence or willful misconduct of Landlord, in connection with (i) any
injury to Tenant or for any damage to, or loss of, any of Tenant's property
and/or the Improvements, (ii) any failure of Landlord to make repairs or
improvements in or to the Project, the Building, Building equipment or the
Demised Premises, (iii) any failure of Landlord to enforce the Rules and
Regulations (provided that all leases of office space in the Building are
subject to Rules and Regulations which are substantially similar to the Rules
and Regulations appended to this Lease), (iv) any injury to any persons or any
damage, caused by other tenants or persons in the Building, (v) any indirect or
consequential damages of Tenant, (vi) any interruption to Tenant's business, or
(vii) any latent defect in the Building, Building equipment or the Demised
Premises. Tenant waives, to the fullest extent permitted by law, any claim for
indirect or consequential damages in connection with any such Loss.
(b) Tenant shall indemnify, defend and save harmless Landlord from and
against all Loss as a result of (i) any breach by Tenant of any term, covenant
or condition of this Lease; (ii) the acts, omissions or negligence of Tenant; or
(iii) the use or occupancy of the Demised Premises and any act or omission
occurring on the Demised Premises during the term hereof. In case any claim,
action or proceeding is brought against Landlord by reason of any cause
described in this Section 11.2(b), Tenant, upon written notice from Landlord,
will at Tenant's sole cost and expense, resist and defend such claims, action or
proceeding by counsel approved by Landlord.
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(c) The Tenant shall pay to the Landlord, within ten (10) days following
rendition by Landlord of bills or statements therefore, sums equal to all
losses, liabilities, and expenses referred to in this Section 11.2.
(d) The terms and provisions of this Section 11.2 shall survive the
expiration or sooner termination of this Lease.
Section 11.3. Waiver of Subrogation. Each party hereby waives, for
itself and its respective insurance carrier(s), and shall use reasonable efforts
to cause each insurance policy insuring any risk relating to the Demised
Premises or property in or on the Demised Premises to contain a waiver of any
right or claim to subrogation against the other party with respect to any
occurrence covered by hazard, property damage or liability insurance. If either
party cannot obtain a waiver of subrogation in its insurance policy without the
payment of an additional premium, it shall so notify the other if it does not
wish to pay such additional premium, and the other party shall be afforded a
reasonable opportunity to pay such premium on the non-paying party's behalf.
Landlord represents that, as of the date of this Lease, Landlord's existing
insurance policy for the Project contains a waiver of subrogation in favor of
the Tenant with respect to claims covered by such policy.
Section 11.4 Landlord's Insurance. Landlord shall maintain fire and
hazard insurance for the Building in such forms and such amounts as Landlord
shall deem appropriate given that the Building is a Class-A office building.
ARTICLE 12: DAMAGE BY CASUALTY
Section 12.1. Casualty Damage.
(a)(i) If the Demised Premises shall be partially or totally damaged or
destroyed by fire or other casualty, then Landlord, subject to its rights under
Section 12.1(c) hereof, Force Majeure and adjustments with its insurance
carriers, shall substantially repair the damage and restore and rebuild the
Demised Premises as nearly to the extent of Building standard work as may be
reasonably practical to its condition and character immediately prior to such
drainage or destruction, with reasonable diligence from and after Tenant's
delivery of notice to Landlord of the damage or destruction, taking into account
the time required to collect applicable insurance proceeds payable to Landlord
and provided Tenant shall have assigned to Landlord the proceeds of the
insurance polices required to be maintained by Tenant under Section 11.1(a)(6).
(ii) Notwithstanding the foregoing, if the Demised Premises are damaged
by fire or other casualty and are rendered untenantable thereby, or if the
Building or Project shall be so damaged that Tenant shall be deprived of
reasonable access to the
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Demised Premises, and if Landlord shall elect to restore the Demised Premises,
Landlord shall, within ninety (90) days following the date of such damage, give
notice ("Restoration Notice") to Tenant of the date by which Landlord's
contractor or architect reasonably believes the restoration of the Premises
(exclusive of Tenant Work and any Tenant Improvements) shall be substantially
competed. If the Restoration Notice shall indicate that the restoration shall
not be completed on or before the date which shall be eighteen (18) months
following the date of such damage or destruction, then Tenant shall have the
right to terminate this Lease by giving written notice to Landlord ("Termination
Notice") not later than thirty (30) days following the receipt of such
statement. If Tenant gives a Termination Notice, this Lease shall be deemed
cancelled and terminated thirty (30) days after the giving of such Termination
Notice as if such date were the Expiration Date, and Fixed Rent and Additional
Rent shall be apportioned and shall be paid or refunded, as the case may be, up
to and including the date of such damage or destruction. If the Restoration
Notice shall indicate that the restoration shall be completed on or before the
date which shall be eighteen (18) months following the date of such damage or
destruction and such restoration shall not be completed on or before the date
which shall be twenty-four (24) months following the date of such damage or
destruction, then Tenant shall have the right to terminate this Lease by giving
written Termination Notice to Landlord not later than thirty (30) days following
the expiration of such twenty-four (24) month period. If Tenant gives a
Termination Notice, this Lease shall be deemed cancelled and terminated thirty
(30) days after the giving of such Termination Notice as if such date were the
Expiration Date, and Fixed Rent and Additional Rent shall be apportioned and
shall be paid or refunded, as the case may be, up to and including the date of
such damage or destruction.
(iii) Furthermore, notwithstanding anything to the contrary set forth in
this Article 12, if the Demised Premises are damaged by fire or other casualty
during the twelve (12) months prior to the Expiration Date (or the expiration of
any Extension Term then in effect) and such damage cannot be repaired or
restored within ninety (90) days from the date of such damage, then Tenant may,
at its option, elect to terminate this Lease, by notifying Landlord in writing
of such election within ninety (90) days after the date of such damage, in which
event this Lease shall terminate thirty (30) days from and after the date of
Tenant's written notice hereunder. If the Demised Premises are damaged by fire
or other casualty during the six (6) months prior to the Expiration Date (or the
expiration of any Extension Term then in effect) and such damage can not be
repaired or restored within thirty (30) days from the date of such damage, then
Tenant may, at its option, elect to terminate this Lease, by notifying Landlord
in writing of such election within thirty (30) days after the date of such
damage, in which event this Lease shall terminate thirty (30) days from and
after the delivery of Tenant's written notice to Landlord.
(b) If the damage or destruction just described is not attributable to
the fault, negligence or misuse of the Demised Premises by Tenant or any parties
included in
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the definition of Tenant under Article 11, the Fixed Rent and Additional Rent
payable under Article 5 shall be abated to the proportion that the Demised
Premises shall have been rendered untenantable, from the date of such damage or
destruction to the date the damage is substantially repaired, restored or
rebuilt to the condition required under Section 12.1(a) hereof. Should Tenant
reoccupy a portion of the Demised Premises during the period that the repair,
restoration or rebuilding is in progress and prior to the date that all of the
Demised Premises are rendered tenantable, all Fixed Rent and Additional Rent
allocable to such occupied portion (based upon that proportion which the area of
the part so occupied bears to the then Rentable Area of the Demised Premises)
shall be payable by Tenant from the date of such occupancy to the date the
balance of the Demised Premises are made tenantable. Any work to be performed by
Tenant shall be performed in accordance with Article 9 hereof applicable to
Tenant's alterations generally.
(c) In case the Project or the Building shall be so damaged by fire or
other casualty that substantial renovation, reconstruction or demolition of the
Project or the Building shall, in Landlord's opinion, be required (whether or
not the Demised Premises shall have been damaged by such fire or other
casualty), or if the available insurance proceeds are inadequate to fund the
necessary repair and/or restoration work, or if the Project or the Building are
damaged by fire or other casualty during the twelve (12) months prior to the
Expiration Date and such damage (or the expiration of any Extension Term then in
effect), then Landlord may, at its option, terminate this Lease, by notifying
Tenant in writing of such termination within one hundred twenty (120) days after
the date of such damage. If at any time prior to Landlord's giving Tenant the
aforesaid notice of termination or commencing repair and restoration pursuant to
Section 12.1(a), the holder of a superior mortgage or the lessor of a superior
lease or any person claiming under or through the holder of such superior
mortgage or the lessor of such superior lease takes possession of the Project or
the Building through foreclosure or otherwise, such holder, lessor or person
shall have a further period of sixty (60) days from the date of so taking
possession to terminate this Lease by appropriate written notice to Tenant. In
the event that such a notice of termination shall be given pursuant to either of
the two (2) immediately preceding sentences, this Lease and the Term shall
expire as of the date of such termination with the same effect as if that were
the Expiration Date, and the Fixed Rent and Additional Rent due and to become
due hereunder shall be apportioned as of such date if not earlier abated
pursuant to Section 12.1(b).
(d) No damages, compensation or claim shall be payable by Landlord for
inconvenience, loss of business or annoyance arising from any repair or
restoration of any portion of the Demised Premises or of the Project or Building
pursuant to this Article 12.
(e) For purposes of this Article 12, the term "casualty damage," to the
extent Landlord is responsible under this Article 12, shall be deemed not to
include damage caused by vandalism, unknown cause or other act not normally
covered under fire and
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extended coverage insurance policies applicable to office buildings in Stamford,
Connecticut. The provisions of this subparagraph (e) shall not affect, limit or
reduce Tenant's termination rights set forth in Section 12.1(a) above.
(f) Tenant agrees to cooperate fully with Landlord and its insurance
adjuster(s) and to provide such information as may be necessary in the
investigation of any insurance claim. Notwithstanding any of the foregoing
provisions of this Article, if such damage or destruction shall have been caused
(in whole or in part) by reason of some action or inaction on the part of Tenant
or any of its employees, agents or contractors, then, without prejudice to any
remedies which may be available against Tenant, the abatement of Fixed Rent or
Additional Rent provided for in this Article shall not be effective.
ARTICLE 13: EMINENT DOMAIN
Section 13.1. Taking of Demised Premises. If any part of the Demised
Premises is taken or condemned for a public or quasi-public use, but a part of
the Demised Premises remains susceptible of occupation under this Lease, this
Lease shall, as to the part so taken, terminate as of the date title vests in
the condemnor, and the Rent payable under this Lease will be adjusted so that
Tenant will be required to pay for the remainder of the Term such portion of the
Fixed Rent and Additional Rent as the Rentable Area of the Demised Premises in
the part remaining after the condemnation bears to the Rentable Area of the
entire Demised Premises at the date of condemnation.
Section 13.2. Termination of Lease. Notwithstanding Section 13.1, upon
the taking of more than twenty-five percent (25%) of the then Rentable Area of
the Demised Premises, either party hereto will have the option, exercisable by
notice to the other party hereto, to terminate this Lease as of the date when
title to the part condemned vests in the condemnor. Upon the taking of more than
twenty-five percent (25%) of the Building or the Project, or if during the
twelve (12) months prior to the Expiration Date (or the expiration of any
Extension Term then in effect) any portion of the Building or the Project shall
be taken, Landlord shall have the option exercisable by notice to Tenant to
terminate this Lease whether or not the Demised Premises are affected by such
taking.
Section 13.3. Awards. All compensation awarded in the event of any
condemnation or taking of all or part of the Demised Premises will belong to
Landlord, and Tenant will have no claim to that compensation. Further, Tenant
hereby irrevocably assigns and transfers to Landlord any right to compensation
or damages to which Tenant may be entitled during the Term by reason of any such
condemnation or taking. Nothing contained herein shall prevent Tenant from
seeking an award in a separate legal action from the condemnor for the value of
its leasehold improvements paid for solely by Tenant and for Tenant's moving
expenses and for other costs and expenses which, by law, Tenant may claim from
the condemning authority; provided that (i) Tenant shall not be entitled nor
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shall it seek any award on account of the value of its leasehold interest, and
(ii) no such award shall diminish or otherwise adversely affect the payment of
any award the Landlord would otherwise be entitled to receive.
ARTICLE 14: RIGHTS RESERVED TO LANDLORD
Section 14.1. Access to Demised Premises.
(a) Landlord or Landlord's agents shall have the right (but shall not be
obligated) to enter the Demised Premises in any emergency at any time, and to
perform any acts related to the safety, protection or preservation of the
Demised Premises, the Project or the Building.
(b) At other reasonable times, Landlord may enter the Demised Premises
upon reasonable advance oral or written notice to Tenant's office manager to
examine them or to make such repairs, replacements, improvements, and
alterations as Landlord may deem necessary or desirable to the Demised Premises
or to any other portion of the Project or the Building, or for the purpose of
complying with laws, regulations or other requirements of governmental
authorities. Landlord shall leave the Demised Premises (including carpeting),
after each such entry by Landlord, in reasonably the same condition it was in
prior to such entry, except for any improvements, repairs, installations and
renovations which Landlord has expressly reserved the right to make pursuant to
this Lease. Landlord may, during the progress of any work in the Demised
Premises, take all necessary materials and equipment into the Demised Premises
and close or temporarily suspend operation of entrances, doors, corridors,
elevators or other facilities without such interference constituting an eviction
or entitling Tenant to any abatement of Fixed Rent or Additional Rent.
Notwithstanding the foregoing, Landlord shall undertake to complete any such
repairs, replacements, improvements and alterations in a manner reasonably
designed to minimize interference with the conduct of Tenant's business in the
Demised Premises, provided, however, that except to the extent Landlord would
have elected of its own accord to perform any such repairs, replacements,
improvements or alterations outside of Landlord's normal business hours and on
an overtime basis, Landlord shall have no obligation to undertake such repairs,
alterations, replacements and improvements outside of the Landlord's normal
business hours, unless Tenant first agrees to pay any overtime expenses incurred
thereby. Tenant shall not be entitled to any damages by reason of loss or
interruption of business or otherwise during such periods.
(c) Throughout the Term, Landlord shall also have the right to enter the
Demised Premises at reasonable hours for the purposes of showing the same to
prospective purchasers or mortgagees of the Project or the Building, and, during
the last eighteen (18) months of the Term for the purpose of showing the same to
prospective tenants. Except in
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the event of an emergency, Landlord shall provide Tenant with reasonable notice
prior to entering the Demised Premises with contractors for the purpose of
conducting non-routine repairs or work to the Demised Premises.
(d) If Tenant is not present to provide entry to the Demised Premises,
as provided under this Section 14.1, Landlord or Landlord's agents may enter the
same whenever such entry may be necessary or permissible, by master key or
forcibly. Such entry shall not render Landlord or its agents liable for trespass
or any damage caused by such entry, nor in any event shall the obligations of
Tenant under this Lease be affected, provided, however that if Landlord should
forcibly enter the Demised Premises when such entry was not necessitated by a
real or reasonably perceived emergency, then Landlord shall repair any damage
caused by such non-emergency entry.
(e) All walls, windows and doors bounding the Demised Premises
(including exterior Building walls, core corridor walls and doors and any core
corridor entrance), except the inside surfaces thereof, any terraces (except as
provided in Section 8.4 herein) or roofs adjacent to the Demised Premises, any
space in or adjacent to the Demised Premises used for shafts, stacks, pipes,
conduits, fan rooms, ducts, electric or other utilities, sinks or other Building
facilities, and the use thereof, as well as access thereto through the Demised
Premises for the purposes of operation, maintenance, decoration and repair, are
reserved to Landlord.
(f) Tenant shall permit Landlord to install, use and maintain pipes,
ducts and conduits within or through the Demised Premises, or through the walls,
columns and ceilings therein. Where access doors are required for mechanical
trades in or adjacent to the Demised Premises, Landlord shall furnish and
install such access doors (at Landlord's expense, unless the installation of
such access doors are necessitated as a result of the construction of the
Initial Tenant's Work or any Alterations subsequently desired by Tenant in which
later case such access doors shall be constructed at Tenant's expense) and
Landlord and Tenant shall cooperate with each other in the location of
Landlord's and Tenant's facilities requiring such access doors.
Section 14.2. Additional Rights. Landlord shall have the following
additional rights exercisable without liability to Tenant for damage or injury
to property, person or business, and without effecting an eviction or
disturbance of Tenant's use or possession or giving rise to a claim for setoffs,
or abatement of Rent:
(a) To make such changes in the Building and/or the Project including
the Building equipment and systems, as well as to change the arrangement and/or
location of the Common Areas as Landlord may deem necessary or desirable,
providing Landlord shall not materially interfere with Tenant's access to the
Demised Premises.
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(b) To do or permit to be done any work in or about the Project or the
Building or any adjacent or nearby building, street, parking area, land or
alley;
(c) To grant to anyone the exclusive right to conduct any business or
render any services in the Project or the Building, provided such exclusive
right is consistent with the operation of a Class-A office building and shall
not operate to exclude Tenant from the use expressly permitted by Article 8;
(d) To close the Project or the Building to the general public at any
such reasonable times after Normal Business Hours as Landlord may determine,
subject, however, to Tenant's right to admittance under Section 10.5;
(e) To install and maintain a sign or signs on the interior or exterior
of the Building and/or the Project;
(f) To retain at all times passkeys to the Demised Premises;
(g) Landlord may enter upon the Demised Premises and may exercise any or
all of the foregoing rights hereby reserved without being deemed guilty of an
eviction or disturbance of Tenant's use or possession and without being liable
in any manner to Tenant and without abatement of Rent or affecting any of
Tenant's obligations hereunder, provided that except in the event of an
emergency, (1) Landlord shall provide Tenant with reasonable notice prior to
entering the Demised Premises with contractors for the purpose of conducting
non-routine repairs or work, and (2) Landlord shall undertake to exercise the
rights reserved herein in a manner reasonably designed to minimize interference
with the conduct of Tenant's business in the Demised Premises, provided,
however, that except to the extent Landlord would have elected of its own accord
to exercise such rights outside of Landlord's normal business hours and on an
overtime basis, Landlord shall have no obligation to exercise such rights
outside of Landlord's normal business hours unless Tenant first agrees to pay
any overtime expenses incurred thereby; and
(h) Upon prior notice to Tenant (except in the case of emergency when no
notice shall be required), to perform any act, obligation or other commitment
reasonably required of or by Tenant which Tenant has not performed for any
reason whatsoever, and to charge Tenant as Additional Rent all costs and
expenses incurred by Landlord for such performance.
Section 14.3 Landlord's Right to Relocate Tenant.
[INTENTIONALLY OMITTED]
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ARTICLE 15: ASSIGNMENT AND SUBLETTING
Section 15.1. Consent Required. Except as otherwise expressly permitted
in Section 15.10 (Permitted Sublease) herein, neither Tenant nor Tenant's legal
representatives or successors in interest shall, by operation of law or
otherwise, transfer, assign, mortgage or otherwise encumber this Lease (any of
such to be considered an assignment for purposes of this Article), nor sublet
nor suffer or permit the Demised Premises or any part thereof to be used or
occupied by others (any of such to be considered a subletting for purposes of
this Article), without the prior written consent of Landlord in each instance.
If this Lease is assigned, or if the Demised Premises or any part thereof are
sublet, Landlord may collect Rent from the assignee, subtenant or occupant, and
apply the net amount collected to the Rent herein reserved, but no assignment,
subletting, occupancy or collection shall be deemed a waiver of the provisions
hereof, the acceptance of the assignee, subtenant or occupant as tenant, or a
release of Tenant from Tenant's obligations or liabilities under this Lease. The
consent of Landlord to an assignment or subletting shall not in any way be
construed to relieve Tenant from obtaining the express consent in writing of
Landlord to any further assignment or subletting. In no event shall any
permitted subtenant assign or encumber its sublease or further sublet all or any
portion of its sublet space, without Landlord's prior written consent in each
instance. A modification, amendment or extension of a sublease shall be deemed a
separate sublease. If any lien is filed against the Demised Premises or the
Project or the Building for brokerage services claimed to have been performed
for Tenant, whether or not actually performed, the same shall be discharged by
Tenant within thirty (30) days thereafter, at Tenant's expense, by filing the
bond required by law or otherwise and paying any other necessary sums, and
Tenant agrees to indemnify and defend Landlord and its agents and hold them
harmless from and against any and all claims, losses or liability resulting from
such alleged brokerage services. All liens which are discharged by bonding
shall, upon final resolution of the dispute giving rise thereto, be removed of
record by Tenant at its sole cost and expense.
Section 15.2. Landlord's Rights to Assignments and Leasebacks.
(a) If Tenant desires to assign this Lease or to sublet all or any
portion of the Demised Premises, it shall first submit in writing to Landlord
the documents described in Section 15.3 hereof, and shall offer in writing (i)
with respect to a prospective assignment, to assign this Lease to Landlord, or
Landlord's designee or nominee, without any payment of monies or other
consideration therefor, or (ii) with respect to a prospective subletting, to
sublet to Landlord, or Landlord's designee or nominee, the portion of the
Demised Premises involved ("Leaseback Area") (1) for the term specified by
Tenant in its proposed sublease, (2) at a rent which is the lower of Tenant's
proposed subrental and the rate of Fixed Rent and Additional Rent provided in
this Lease, and (3) otherwise on the
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same terms, covenants and conditions (including provisions relating to
escalation rents) as are contained herein and as are allocable and applicable to
the portion of the Demised Premises to be covered by such subletting. The offer
shall specify the date (the "Effective Date") when the assignment or sublease
will be effective which date shall in no event be earlier than ninety (90) days
nor later than one hundred eighty (180) days following the acceptance of the
offer. If an offer of sublease is made, and if the proposed sublease will result
in all or substantially all of the Demised Premises being sublet, then Landlord
shall have the option to extend the term of its proposed sublease to equal the
balance of the Term of this Lease less one (1) day.
(b) Landlord, in any event, shall have a period of sixty (60) days from
the receipt of any such assignment or subletting offer from Tenant to accept or
reject (i) an assignment of this Lease to the Landlord, or the Landlord's
nominee or designee, or (ii) a sublease to Landlord, or its nominee or designee,
of the Leaseback Area. If Landlord shall accept such offer within such sixty
(60) day period, then Tenant shall then execute and deliver to Landlord, or to
anyone designated or named by Landlord, an assignment or sublease, as the case
may be, in form and substance satisfactory to Landlord's counsel.
(c) Terms of Sublease to Landlord. If a sublease is so made under (b)
above, it shall expressly:
(i) permit Landlord to make further subleases of all or any part of the
Leaseback Area and (at no cost or expense to Tenant) to make and authorize any
and all changes, alterations, installations and improvements in such space as
necessary;
(ii) provide that Tenant will at all times permit reasonably appropriate
means of ingress and egress from the Leaseback Area;
(iii) negate any implication that the estate created under such sublease
be merged with any other estate held by either of the parties;
(iv) provide that Landlord shall accept the Leaseback Area "as is"
except that Landlord, at Tenant's expense, shall perform all such work and make
all such alterations as may be required to separate the Leaseback Area
physically from the remainder of the Demised Premises and to permit lawful
occupancy;
(v) provide that at the expiration of the term of such sublease, Tenant
will accept the Leaseback Area in its then existing condition.
(d) Protection of Tenant. Except for Rent, if any, due under this Lease
in excess of the rents due under such sublease, performance by Landlord or its
designee under a sublease of the Leaseback Area shall be deemed performance by
Tenant of any similar
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obligation under this Lease and any default under any such sublease shall not
give rise to a default under a similar obligation contained in this Lease, nor
shall Tenant be liable for any default under this Lease or deemed to be in
default hereunder if such default is occasioned by or arises solely from any act
or omission of the subtenant under such sublease or is occasioned by or arises
solely from any act or omission of any occupant holding under or pursuant to any
such sublease.
(e) Landlord's Termination Option. As an alternative to Landlord's other
rights under this Section 15.2, within sixty (60) days of Landlord's receipt of
Tenant's notice that Tenant desires to assign this Lease or to sublease all or
substantially all of the Demised Premises, except with respect to a sublease
within the scope of Section 15.10 (Permitted Sublease) herein, Landlord may
elect to terminate this Lease as to the entire Demised Premises or as to the
relevant portion thereof (at Landlord's option) by delivering written notice of
such election to Tenant. If Landlord shall have elected to terminate this Lease
pursuant to this Section 15.2, such termination shall be effective as of the
Effective Date and thereupon the Term of this Lease shall cease and come to an
end on that day with the same force and effect as though that were the original
date set forth as the Expiration Date, and Tenant shall deliver broom clean
possession of the Demised Premises to Landlord, in accordance with the terms of
this Lease. Thereafter, neither party shall have any obligation to the other
hereunder, except for any Rent due and owing to the Landlord up to and including
the termination of this Lease, any obligations that expressly survive hereunder,
and as the parties hereto may have agreed otherwise in this Lease or by a
separate writing.
Section 15.3. Required Documents. If Tenant requests Landlord's consent
to a specific assignment or subletting, it shall submit in writing to Landlord
(a) the name and address of the proposed assignee or subtenant, (b) a statement
of the rent, additional rent and a description of the other material terms of
the proposed transaction, (c) satisfactory information as to the nature and
character of the business of the proposed assignee or subtenant, and as to the
nature of its proposed use of the space, and (d) banking, financial or other
information relating to the proposed assignee or subtenant reasonably sufficient
to enable Landlord to determine the financial responsibility, business
reputation and character of the proposed assignee or subtenant. In connection
with any request for Landlord's consent to a proposed assignment or sublease,
Tenant shall, as Additional Rent, pay a fee to be established by Landlord to
cover the administrative, accounting, legal and technical costs of reviewing
such request.
Section 15.4. Landlord's Consent. If Landlord does not accept Tenant's
offer or elect to terminate this Lease, as provided in Section 15.2, then
Landlord shall not unreasonably withhold or delay its consent to such specific
assignment or subletting. Any such consent of Landlord shall be subject to the
terms of this Article 15 and conditioned upon there being no default by Tenant
under any of the terms, covenants and conditions of
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this Lease at the time that Landlord's consent to any such subletting or
assignment is requested and on the date of the commencement of the term of any
such proposed sublease or the Effective Date of any such proposed assignment.
Upon receiving Landlord's written consent, a duly executed and complete copy of
the sublease or assignment, which must be acceptable to Landlord in form and
substance, shall be delivered to Landlord within ten (10) days after execution
thereof. Tenant acknowledges that Landlord's consent may be withheld and it
shall not be deemed unreasonable if the proposed assignee or subtenant's
creditworthiness is reasonably unacceptable to the Landlord in view of the
proposed assignee's obligations under the proposed assignment of this Lease or
the proposed sublessee's obligations under the proposed sublease. In no event
shall any assignment of the Lease or sublease of the Demised Premises relieve
Tenant from its obligations under this Lease. Any such sublease shall provide
that the subtenant shall comply with all applicable terms and conditions of this
Lease to be performed by the Tenant hereunder. Any such assignment of Lease
shall contain an assumption by the assignee of all of the terms, covenants and
conditions of this Lease to be performed by the Tenant. In the event of any
sublease or assignment, the Demised Premises must be restored and returned to
Landlord in the condition as originally existed at the Commencement Date,
reasonable wear and tear excepted, unless Landlord consents to have any proposed
changes remain at the expiration of the Term.
Section 15.5. Limitations. Anything herein contained to the contrary
notwithstanding:
(a) Prior to advertising, marketing or listing all or any portion of the
Demised Premises for sublease or assignment, Tenant shall send written notice
thereof to Landlord, specifying the approximate size of the premises being
marketed and the approximate term of the proposed sublease or assignment. Tenant
shall not advertise (nor list with brokers) its space for assignment or
subletting at a rent lower than the Rent then being paid by Tenant to Landlord
or the then rental schedule of Landlord for similar space in the Project.
(b) Except as otherwise specifically permitted in Section 15.10
(Permitted Sublease) herein, the transfer of a majority of the issued and
outstanding capital stock of any corporate tenant or subtenant of this Lease,
other than pursuant to a public offering, or a controlling interest in any
partnership tenant or subtenant, however accomplished, and whether in a single
transaction or in a series of related or unrelated transactions, shall be deemed
an assignment of this Lease or of such sublease.
(c) No assignment or subletting shall be made:
(i) When Landlord has other, comparable space in the Project available
for leasing by Landlord, to any person or entity which shall at that time be a
tenant, subtenant
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or other occupant of any part of the Project, or which dealt with Landlord or
Landlord's agent (directly or through a broker) with respect to space in the
Project during the twelve (12) months immediately preceding Tenant's request for
Landlord's consent. At Tenant's request, Landlord shall, from time to time, but
no often than once per Lease Year, provide Tenant with a current list of persons
or entities falling within the scope of Section 15.5 (c)(i) above;
(ii) By the legal representatives of the Tenant or by any person to whom
Tenant's interest under this Lease passes by operation of law, except in
compliance with the provisions of this Article;
(iii) To any person or entity for the conduct of a business which is not
in keeping with the standards and the general character of the Project as
Class-A office buildings;
(iv) To any entity which shall have or enjoy diplomatic immunity or to
any governmental or quasi-governmental entity;
(v) Which would violate any restrictive covenants then in effect for the
Project;
(vi) With respect to any portion of any space located on the tenth
(10th) floor of the Building which Tenant may lease from Landlord pursuant to
Rider 2 hereof within twelve (12) months of Tenant leasing any portion of such
10th floor space from Landlord. Thereafter, in the event Landlord should consent
to a proposed assignment or sublease of any space being leased by Tenant on the
tenth (10th) floor of the Building, then notwithstanding the terms of Section
15.7 (Sums Payable To Landlord) below, Tenant shall pay Landlord one hundred
percent (100%) of any and all "profit" (as defined in Section 15.7 below)
received by reason of such sublease or assignment of 10th floor space; or
(vii) Under no circumstances shall the Demised Premises be sublet to
more than two (2) subtenants at any one time and under no circumstances shall
less than thirty percent (30%) of the Demised Premises be sublet to any one (1)
subtenant.
(d) Tenant shall send to Landlord copies of all notices it sends or
receives in connection with any sublease or assignment.
Section 15.6. Attornment of Subtenant. Every sublease hereunder shall
contain a provision in which the subtenant shall agree for the benefit of
Landlord that, in the event this Lease is cancelled or terminated prior to the
expiration date of the sublease, whether by voluntary or involuntary means or by
operation of law, or for any reason
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whatsoever, the subtenant shall agree, if Landlord so requests, to make full and
complete attornment to Landlord for the balance of the term of the sublease,
which attornment shall be evidenced by an agreement in form and substance
satisfactory to Landlord, which the subtenant shall agree to execute and deliver
within ten (10) days of Landlord's request.
Section 15.7. Sums Payable to Landlord. If Landlord consents to any
assignment or subletting, then one-half (1/2) of (i) any rent or other
consideration paid by (1) any subtenant in excess of the Rent allocable to the
subleased space, less the reasonable brokers' commissions, reasonable
out-of-pocket attorney's fees incurred by Tenant, free-rent concessions (not to
exceed six (6) months) and the reasonable costs of alterations to the Demised
Premises to accommodate a sublease actually incurred by Tenant, or (2) any rent
paid by an assignee which is in excess of the Rent which is then being paid by
Tenant to Landlord pursuant to the terms hereof, less the reasonable brokers'
commissions, reasonable out-of-pocket attorney's fees incurred by Tenant and
free-rent concessions (not to exceed six (6) months) actually incurred by
Tenant, and (ii) any "other profit or gain" realized by Tenant (and/or any
successor-in-interest in the case of a further assignment or subletting) from
any such subletting or assignment, or, if the subletting or assignment is part
of a group or series of transactions, properly allocable thereto shall be paid
to Landlord when due to Tenant. For the purpose of this Section 15.7, "other
profit or gain" shall mean any sums paid to Tenant for the sale or rental of any
of Tenant's property to such assignee or sublessee, less, in the case of the
sale thereof, the then fair market value thereof, which shall be presumed to be
the net unamortized or undepreciated cost thereof determined on the basis of
Tenant's federal income tax returns. Notwithstanding the foregoing, the Landlord
hereby waives its rights under this Section 15.7 with respect to a permitted
sublease but only in the event such permitted sublease (i) is for no more than
5,000 rentable square feet, (ii) the term of such permitted sublease does not
extend past the forty-second (42nd) month of the initial Lease Term, and (iii)
the sublessee may not be a person or party within the scope of Section 15.5 (c)
(i) above.
Section 15.8. Waiver. In no event shall Tenant be entitled to make, nor
shall Tenant make, any claim, and Tenant hereby waives any claim, for money
damages (nor shall Tenant claim any money damages by way of set-off,
counterclaim or defense) based upon any claim or assertion by Tenant that
Landlord has unreasonably withheld or unduly delayed its consent or approval to
a proposed assignment or subletting as provided for in this Article. Tenant's
sole remedy shall be an action or proceeding for specific performance. In the
event Tenant should institute an action against Landlord which is within the
scope of this Section 15.8 and such action shall proceed to a final,
non-appealable judicial judgment, then the losing party in such action shall pay
the prevailing party's reasonable, out-of-pocket legal fees paid by the
prevailing party to outside (as opposed to "in-house") legal counsel in
connection with the prosecution or defense of such action.
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Section 15.9. Mortgagee Notice. Tenant shall send to the parties
mentioned in Section 22.20(b) below copies of any notices served by Tenant to
Landlord pursuant to this Article 15.
Section 15.10. Permitted Sublease. Notwithstanding anything to the
contrary contained herein, but subject to the restrictions stated in subsections
(c) (iii), (iv) and (v) of Section 15.5 (Limitations) herein, Tenant may sublet
all, or less than all of, the Demised Premises to a wholly-owned corporation of
Tenant (a "Subsidiary") or to any corporation the stock of which is entirely
owned by a corporation owning all of Tenant's stock or to an entity controlled
by, controlling or under common control with Tenant (an "Affiliate")
(hereinafter collectively referred to as "Permitted Sublease"), provided: (i)
Tenant provides Landlord with not less than sixty (60) days prior written
notice of such intended Permitted Sublease, together with a detailed summary of
the proposed business operations of such sublessee and detailed current
financial statements with respect to such sublessee which financial statements
must be reasonably acceptable to Landlord, (ii) Tenant is not in default under
this Lease; and (iii) in no event shall any Permitted Sublessee release or
relieve Tenant from any liability or obligation under this Lease whether arising
before or after such sublease.
ARTICLE 16: TENANT'S DEFAULT AND LANDLORD'S REMEDIES
Section 16.1. Events of Default. Any of the following occurrences will
be deemed an event of default under this Lease:
(a) Tenant's failure to pay any Fixed Rent or Additional Rent provided
for in this Lease within five (5) days of when the same shall become due and
payable; provided that, not more than once in any one Lease Year, Landlord shall
provide Tenant with written notice and five (5) days in which to cure a default
under this Section 16.1(a) before such failure to pay shall become an Event of
Default;
(b) Tenant's failure to comply with any provision of this Lease other
than Tenant's obligations to make timely payments of Fixed Rent and Additional
Rent, which remains uncured for a period of ten (10) days after written notice
thereof from Landlord. In the case of a default which cannot with due diligence
be cured within a period of ten (10) days, Tenant shall have such additional
time to cure same as may reasonably be necessary, provided Tenant commences to
cure such failure within the ten (10) day period and proceeds promptly,
effectively, continuously, and with due diligence to cure such failure after
receipt of said notice;
(c) Tenant's abandoning or vacating the Demised Premises for more
than ninety (90) consecutive days; and
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(d) The filing by or against Tenant in any court, pursuant to any
statute of the United States or of any State, a petition in bankruptcy,
insolvency, or reorganization (which in the case of a filing against Tenant
remains undischarged for thirty (30) days), or for the appointment of a
receiver, trustee, or conservator of all or a portion of Tenant's property, or
the making by Tenant of an assignment for the benefit of creditors, or a general
failure by Tenant to pay its debts when due.
Section 16.2. Landlord's Remedies.
(a) Upon the occurrence of any event of default by Tenant under Section
16.1, notwithstanding the fact that Landlord has, may have, also exercises, or
may exercise some other remedy under this Lease, at law or in equity, Landlord
may give to Tenant a notice (the "Termination Notice") terminating this Lease as
of a date specified therein, but not less than three (3) days after the date of
the Termination Notice, and the Term shall end upon the day so specified with
the same force and effect as if it were the Expiration Date, except as provided
below. On such specified date, all rights of Tenant under this Lease shall
terminate, and Tenant shall remain liable for damages as provided in this Lease.
Tenant hereby waives the service of any further notice to quit or notice of
intention to reenter or any other notice for breach or default as exists by
statute or at common law, except for any notice to quit which Landlord may, in
the future, be required, by Connecticut statute, to deliver to a commercial
(non-residential) tenant.
(b) From and after any termination date specified in the Termination
Notice, Landlord, without further notice, may enter and repossess the Demised
Premises, by summary proceedings, ejectment or otherwise, in accordance with
Connecticut laws, remove Tenant and all other persons and property from the
Demised Premises, and hold and enjoy the Demised Premises and the right to
receive all rental and other income of the Demised Premises. Landlord shall
incur no liability to any person for or by reason of any such entry,
repossession or removal of Tenant or any person claiming through or under
Tenant. After such entry into possession, Landlord may, but shall not be
obligated to attempt to, relet all or part of the Demised Premises for the
account of Tenant for such rent, for such time, and upon such terms as Landlord,
in Landlord's sole discretion, shall determine. Any rental and income received
shall, to that extent, reduce Tenant's obligation for damages to be paid under
this Lease. Tenant shall also pay to Landlord all reasonable expenses which
Landlord may incur from and after Tenant's default for legal expenses or fees,
brokerage commissions (pro-rated for the remaining balance of the Term and any
exercised Extension Term), or other costs paid or incurred by Landlord for
restoring the Demised Premises to good order and condition, altering,
decorating, redecorating, repairing or otherwise preparing the same for
reletting, maintaining the Demised Premises, reletting the same, or collecting
sums due from Tenant as provided herein. The right of Landlord to recover from
Tenant the amounts hereinabove provided shall survive the
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issuance of any order for possession or other cancellation or termination
hereof, and Tenant hereby expressly waives any defense that might be predicated
upon the issuance of such order for possession or other cancellation or
termination hereof. The words "enter" or "reenter," "possess" or "repossess" as
herein used are not restricted to their technical meaning.
(c) Tenant hereby expressly waives any and all right of redemption
granted by or under any present or future laws in the event of Tenant's being
evicted or dispossessed for any cause, or in the event of Landlord's obtaining
possession of the Demised Premises, by reason of the violation by Tenant of any
of the covenants and conditions of this Lease, or otherwise.
(d) TENANT ACKNOWLEDGES THAT THIS LEASE CONSTITUTES A COMMERCIAL
TRANSACTION WITHIN THE MEANING OF SECTION 52-278A OF THE CONNECTICUT GENERAL
STATUTES. PURSUANT TO SECTION 52-278F OF SAID CONNECTICUT GENERAL STATUTES,
TENANT HEREBY WAIVES AND RELINQUISHES ALL RIGHTS TO NOTICE AND HEARING AS
PROVIDED IN SECTION 52-278A THROUGH SECTION 52-278G OF SAID CONNECTICUT GENERAL
STATUTES PRIOR TO LANDLORD OBTAINING ANY PREJUDGMENT REMEDY AGAINST TENANT IN
CONNECTION WITH THE ENFORCEMENT BY LANDLORD OF ANY OF ITS RIGHTS OR REMEDIES
UNDER THIS LEASE. IF SUMMARY PROCESS IS UTILIZED, TENANT HEREBY WAIVES ALL
REQUIRED NOTICES, PURSUANT TO SECTION 47A-24 OF THE CONNECTICUT GENERAL
STATUTES, EXCEPT THOSE REQUIRED UNDER THIS LEASE.
Section 16.3. Damages. (a) If pursuant to the provisions of this Article
16, this Lease is terminated or if Landlord shall re-enter the Demised Premises
or in the event of the termination of this Lease, or of re-entry, by or under
any summary dispossess or other proceeding or action or any provision of law by
reason of default hereunder on the part of Tenant, Tenant shall pay to Landlord
as damages, at the election of Landlord:
(i)(x) an amount equal to the unamortized portion of the cost of
Tenant's Work which was paid for by Landlord, including the Allowance amount
(such cost being amortized on a straight-line basis over the Term of this
Lease), together with such expenses incurred by Landlord in removing or altering
Tenant's Work and Improvements in order to return the Demised Premises to a
condition that will allow Landlord to relet the Demised Premises, plus (y) all
Rent due and payable by Tenant as of the date of termination, plus a sum which
at the time of such termination of this Lease or at the time of such re-entry by
Landlord, as the case may be, represents the then present value as calculated
using a discount rate equal to Landlord's cost of funds, of the excess, if any,
of
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(1) the aggregate of the Fixed Rent and Additional Rent payable
hereunder which would have been payable by Tenant (conclusively presuming the
Additional Rent to be the same as was payable for the year immediately preceding
such termination) for the period commencing with such earlier termination of
this Lease or the date of any such re-entry, as the case may be, and ending with
the Expiration Date, had this Lease not so terminated or had Landlord not so
re-entered the Demised Premises, over
(2) the aggregate fair market rental value of the Demised Premises for
the same period, or
(ii) sums equal to the Rent (as above presumed) payable hereunder which
would have been payable by Tenant had this Lease not so terminated, or had
Landlord not so re-entered the Demised Premises, payable upon the due dates
therefor specified herein following such termination or such re-entry and until
the Expiration Date, provided, however, that if Landlord shall relet the Demised
Premises during said period, Landlord shall credit Tenant with the net rents
received by Landlord from such reletting, such net rents to be determined by
first deducting from the gross rents as and when received by Landlord such
reletting expenses incurred or paid by Landlord in terminating this Lease or in
re-entering the Premises and in securing possession thereof, as well as the
expenses of reletting, including altering and preparing the Demised Premises and
the rental therefrom; it being understood that any such reletting may be for a
period shorter or longer than the remaining term of this Lease; but in no event
shall Tenant be entitled to receive any excess of such net rents over the sums
payable by Tenant to Landlord hereunder, nor shall Tenant be entitled to any
suit for the collection of damages pursuant to this Section 16.3 or to a credit
in respect of any net rents from a reletting. If the Demised Premises or any
part thereof should be relet in combination with other space, then proper
apportionment on a square foot basis (for equivalent space) shall be made of the
rent received from such reletting and of the expenses of reletting. If the
Demised Premises or any part thereof is relet by Landlord for the unexpired
portion of the term of this Lease, or any part thereof, before presentation of
proof of such damages to any court, commission or tribunal, the amount of rent
reserved upon such reletting shall, prima facie, be the fair and reasonable
rental value for the Demised Premises, or part thereof, so relet during the term
of the reletting. Notwithstanding anything contained herein to the contrary,
Landlord shall not be liable or responsible to Tenant for any failure to relet
the Demised Premises, or if the Demised Premises are relet, for any failure to
collect the rent due thereunder.
All sums due under this Section 16.3(a) shall be paid together with
interest thereon from the date of such termination or re-entry by Landlord, at a
rate equal to one and one-half (1.5%) percent per month or the maximum rate
allowed by law, whichever is less.
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(b) Suit or suits for the recovery of damages, or any installments
thereof, may be brought by Landlord from time to time at its election, and
nothing contained herein shall be deemed to require Landlord to postpone suit
until the date when the Term of this Lease would have expired if it had not been
so terminated under the provisions of this Article 16, or under any provision of
law, or had Landlord not re-entered the Demised Premises. Tenant agrees to pay
all reasonable costs and expenses of Landlord, including, without limitation,
reasonable attorneys fees and disbursements incurred in connection with any such
suit or suits. Nothing herein contained shall be construed to limit or preclude
recovery by Landlord against Tenant of any sums or damages to which, in addition
to the damages particularly provided above, Landlord may lawfully be entitled by
reason of any default hereunder on the part of Tenant. Nothing herein contained
shall be construed to limit or prejudice the right of Landlord to prove for and
obtain as liquidated damages by reason of the termination of this Lease or
re-entry on the Demised Premises for the default of Tenant under this Lease, an
amount equal to the maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, such damages are to be
proved whether or not such amount is greater than, equal to, or less than any of
the sums referred to in this Section 16.3.
Nothing contained in this Lease shall be construed as limiting or
precluding the recovery by Landlord against Tenant of any damages to which
Landlord may lawfully be entitled in any case other than those particularly
provided for above.
Section 16.4 No Waiver; Injunction. No waiver by Landlord of a breach of
any of the covenants or conditions of this Lease shall be construed to be a
waiver of any future breach of the same or any other covenant or condition. In
the event of any breach or threatened breach by Tenant of any of the agreements,
terms, covenants or conditions contained in this Lease, Landlord shall be
entitled to enjoin such breach or threatened breach and shall have the right to
invoke any right and remedy allowed at law or in equity or by statute or
otherwise as though re-entry, summary proceedings, and other remedies were not
provided for in this Lease.
Section 16.5. Remedies Cumulative. The rights and remedies of Landlord
created by this Lease are cumulative, and the use of one remedy shall not be
taken to exclude or waive the right to use another. or exclude any other right
or remedy allowed by law, equity, statute or otherwise. Tenant hereby waives all
right of redemption to which Tenant or any person or entity claiming by, through
or under Tenant might be entitled by any law now or hereafter in effect.
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ARTICLE 17: SURRENDER OF PREMISES AND SURVIVAL OF TENANT'S
OBLIGATIONS
Section 17.1. Surrender. At the end of the Term or sooner termination of
this Lease, Tenant shall immediately surrender possession of the Demised
Premises, vacant and broom clean and shall leave the Demised Premises in the
same condition as they were at the beginning of the Term, except for ordinary
wear and tear, and, subject to the terms of Article 9 herein, including the
terms of Section 9.4 (b) herein, shall remove any Tenant's Work (as defined in
Exhibit B) undertaken subsequent to the initial Tenant's Work undertaken to
prepare the Demised Premises for Tenant's initial occupancy. Upon such
surrender, all right, title and interest of Tenant in the Demised Premises shall
cease.
Section 17.2. Trade Fixtures, Personal Property and Improvements.
Subject to Tenant's rights under Article 9, after the end of the Term or sooner
termination of this Lease and upon Tenant's vacating of the Demised Premises,
all of Tenant's trade fixtures, personal property and improvements remaining in
the Demised Premises shall be deemed conclusively to have been abandoned by
Tenant and may be withheld or disposed of by Landlord without notice or
obligation to compensate Tenant or to account for such property and
improvements. Tenant shall promptly reimburse Landlord for all costs and
expenses of removal, disposal or sale of such trade fixtures, personal property
and improvements, which obligation shall survive the termination of this Lease.
Section 17.3. Merger. The voluntary or other surrender of this Lease by
Tenant or the cancellation of this Lease by mutual agreement of Tenant and
Landlord shall not work a merger, and shall at Landlord's option either
terminate all or any subleases and subtenancies or operate as an assignment to
Landlord of all or any subleases or subtenancies. Landlord's option under this
Section 17.3 shall be exercised by notice to Tenant and all known subtenants in
the Demised Premises.
Section 17.4. Survival; Payments After Termination. All of Tenant's
obligations under this Lease to pay Rent and the parties, respective
indemnification obligations expressly stated in this Lease and all other
obligations of the parties expressly so stated shall survive the expiration or
sooner termination of the Lease. No payments of money by Tenant to Landlord
after the end of the Term shall reinstate, continue or extend the Term or make
ineffective any notice given to Tenant prior to the payment of such money. After
the service of notice or the commencement of a suit, or after final judgment
granting Landlord possession of the Demised Premises, Landlord may receive and
collect any sums of Rent due under this Lease, and the payment of Rent shall not
make ineffective any notice, or in any manner affect any pending suit or any
judgment previously obtained.
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ARTICLE 18: HOLDING OVER
Section 18.1. Holding Over. If Tenant retains possession of all or any
part of the Demised Premises after the end of the Term, or has failed on or
before the Expiration Date to deliver the Demised Premises to Landlord in the
condition required by Section 17.1, Tenant shall pay as Rent a sum equal to Two
Hundred Percent (200%) of the amount, including Fixed Rent, Additional Rent and
any other charges under this Lease, payable for the month preceding such holding
over, computed on a daily basis for each day that Tenant remains in possession.
In addition to this amount, Tenant shall be liable for all damages,
consequential as well as direct, sustained by reason of Tenant's holding over.
In no event shall a month-to-month tenancy be created by such holdover. Tenant
hereby agrees to indemnify, defend and hold Landlord harmless from and against
any Loss resulting from delay by Tenant in surrendering the Demised Premises
upon the expiration or termination of this Lease, including, without limitation,
any claims made by any succeeding or prospective tenant arising out of such
delay. Tenant's obligations under this Article 18 shall survive the expiration
or sooner termination of this Lease.
ARTICLE 19: ESTOPPEL CERTIFICATE, SUBORDINATION,
ATTORNMENT
Section 19.1. Estoppel Certificates. (a) Tenant's Obligations. Tenant
shall at any time, within ten (10) days of written request, execute and deliver
in recordable form and in substance satisfactory to Landlord, an estoppel
certificate certifying the date to which Rent has been paid; the amount of the
Security Deposit; that this Lease is in full force and effect and has not been
modified or amended (or if modified or amended, denominating the same) and that
there are no defenses or offsets to this Lease (or if any be claimed, specifying
the same); whether there are any defaults of Landlord under this Lease or any
existing condition which upon the giving of notice or lapse of time would
constitute a default (and, if so, specifying the same); that Tenant has no
option or rights other than as set forth in this Lease (or if Tenant has any
such option or rights, specifying the same); and such other matters as may be
requested by Landlord, any actual or prospective purchaser of the Building or
the Project or by any holder of any lease, mortgage or deed of trust to which
this Lease is or may become subordinate. If the certificate is to be delivered
to a purchaser of the Building or the Project, it shall further include the
agreement of Tenant to recognize such purchaser as Landlord under this Lease,
and thereafter to pay Rent to the purchaser or its designee in accordance with
this Lease. Tenant acknowledges that any such purchaser, mortgagee or ground
lessor of the Building and/or the Project may rely on such estoppel certificate.
Tenant's failure to deliver such certificate within such time shall be
conclusive evidence that this Lease is in full force and effect without
modification, that there are no defaults and that all of the foregoing and any
other matters required to be
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stated in the certificate are true and correct, subject to such conditions as
such interest holder may reasonably require.
(b) Landlord's Obligations. In the event the Tenant shall represent to
Landlord, in writing, that an Estoppel Certificate from Landlord shall be
necessary in order for Tenant to obtain financing for Tenant's operations or for
Tenant to issue a public stock offering, then Landlord shall, no more than once
in any given Lease Year, within twenty (20) days of written request from Tenant,
execute and deliver to Tenant an estoppel certificate, in form and substance
reasonably acceptable to Landlord, covering, as appropriate, substantially the
matters set forth in Section 19.1(a) above, except that the last sentence of
Section 19.1(a) above shall be inapplicable to Landlord's obligation under this
Section 19.1(b). Tenant shall reimburse Landlord for the reasonable legal fees
incurred by Landlord in complying with a request under this Section 19.1(b).
Section 19.2. Subordination and Non-Disturbance. This Lease is subject
and subordinate to all ground or underlying leases, mortgages and deeds of trust
which may now or hereafter affect the Project or the Building, and to all
renewals, modifications, consolidations, replacements and extensions thereof. It
is further agreed that Tenant, or Tenant's successors in interest, will execute
and deliver within ten (10) days upon the demand of Landlord any and all
instruments desired by Landlord or the holder of any such interest confirming in
the manner requested by Landlord the subordination of this Lease to such lease,
mortgage or deed of trust. Landlord shall provide Tenant with a non-disturbance
agreement from the holder of any such superior interest, which shall be in such
holder's standard form, providing in essence, that so long as Tenant is not in
default under any of the terms, covenants, provisions or conditions of this
Lease, Tenant shall have the right to peaceably and quietly enjoy the Demised
Premises subject to the terms of this Lease.
Section 19.3. Attornment. Tenant agrees that, at the option of the
landlord under any ground lease now or in the future affecting the Project or
the Building, Tenant shall attorn to said landlord in the event of the
termination or cancellation of such ground lease and if requested by said
landlord, enter into a new lease with said landlord (or a successor
ground-lessee designated by said landlord) for the balance of the Term upon the
same terms and conditions as in this Lease. In the event the Landlord shall
transfer, assign, or otherwise convey its interest in the Building or Project,
such transfer, sale, assignment or conveyance shall be subject to this Lease and
Tenant and all assignees and sublessees of Tenant shall attorn to and respect
such successor owner as the new Landlord hereunder.
Section 19.4. Mortgages. In the event of foreclosure or exercise of
power of sale under any mortgage or deed of trust now or in the future affecting
the Project or the Building, the holder of any such mortgage or deed of trust
(or purchaser at any sale pursuant to such mortgage or deed of trust) shall have
the option of (a) supplementing this
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Article, to require Tenant to attorn to such holder or purchaser, and to enter
into a new lease with such holder or purchaser (as Landlord) for the balance of
the Term upon the same terms and conditions as in this Lease, or (b)
notwithstanding this Article, to elect that this Lease shall become or remain,
as the case may be, superior to said mortgage or deed of trust. Tenant shall,
upon request by any such holder or purchaser, execute and deliver any and all
instruments desired by any such holder or purchaser evidencing the superiority
of this Lease to any said mortgage or deed of trust.
ARTICLE 20: QUIET ENJOYMENT
Section 20.1. Quiet Enjoyment. Landlord covenants and agrees with Tenant
that upon Tenant's paying, when due, the Fixed Rent and Additional Rent and any
other charges under this Lease and observing and performing in a timely manner
all of the terms, covenants and conditions on Tenant's part to be observed and
performed hereunder, Tenant may peaceably and quietly enjoy the Demised
Premises, in accordance with and subject to the terms and conditions of this
Lease and any ground leases, underlying leases, deeds of trust, and mortgages.
ARTICLE 21: NOTICES
Section 21.1. Notices. Whenever any notice, document or communication is
required or permitted hereunder (a "notice"), such notice shall be in writing
and shall be deemed to be delivered upon receipt, if by personal delivery, or
three (3) business days after being deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested (or, the next
business day after being deposited with a reputable overnight/express mail
carrier, such as Federal Express), addressed to the parties to this Lease at
their respective addresses in Article 1, or at such other addresses as they may
have specified by written notice delivered in accordance with this Section. All
notices to Landlord shall be sent to Stamford Towers Limited Partnership, c/o
Lehman Brothers Inc., Diversified Asset Group, Three World Financial Center, 200
Vesey Street-29th Floor, New York, New York 10285 Attention: Regina M. Hertl.
Copies of all notices sent to Landlord shall also be sent to Cummings &
Lockwood, Four Stamford Plaza, P.O. Box 120, Stamford, Connecticut 06904,
Attention: Geoffrey F. Fay, Esq. All notices to Tenant shall be sent to
Cardmember Publishing Corporation, 680 Washington Boulevard, 11th Floor,
Stamford, Connecticut 06902, Attention: Mr. Steven Levenherz. Copies of all
notices sent to Tenant shall also be sent to Diserio Martin O'Connor &
Castiglioni, One Atlantic Street, Stamford, Connecticut 06901-2402, Attention:
William A. Durkin III, Esq. In addition, Tenant shall send copies of any notices
of default by Landlord, in the manner required above, to the parties mentioned
in Section 22.20 below.
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ARTICLE 22: MISCELLANEOUS PROVISIONS
Section 22.1. Applicable Law. This Lease shall be governed by and
construed under the laws of the State of Connecticut.
Section 22.2. Parties Bound. It is agreed that this Lease, and each of
the covenants and obligations of this Lease, shall be binding upon and inure to
the benefit of the parties to this Lease and their respective heirs, executors,
administrators, successors and assigns, subject to all agreements and
restrictions contained in this Lease with respect to assignment or other
transfer of Tenant's interest in this Lease. However, the obligations of
Landlord under this Lease shall not be binding upon Landlord herein named with
respect to any period subsequent to the transfer of its interest in the Building
as owner or lessee thereof and in the event of such transfer, such obligations
shall thereafter be binding upon each transferee of the interest of Landlord
herein named as such owner or lessee of the Building, but only with respect to
the period ending with a subsequent transfer within the meaning of this Article,
and such transferee, by accepting such interest, shall be deemed to have assumed
such obligations except only as may be expressly otherwise provided elsewhere in
this Lease. A lease of Landlord's entire interest in the Building or the Project
as owner or lessee thereof shall be deemed a transfer within the meaning of this
Article.
Section 22.3. Rules and Regulations. Tenant and its servants, agents,
employees, invitees and contractors shall faithfully observe and comply strictly
with the Rules and Regulations set forth in Exhibit D attached hereto, and with
any reasonable changes thereto, whether by modification, elimination or
addition, but provided that Landlord gives written notice of any such changes to
Tenant. In the case of any conflict or inconsistency between the provisions of
this Lease and any of the Rules and Regulations as originally promulgated or as
changed, the provisions of this Lease shall control in each instance. Nothing in
this Lease shall be construed to impose upon Landlord any duty or obligation to
enforce the Rules and Regulations or the provisions of any other lease as
against any other tenant, and Landlord shall not be liable to Tenant for
violation of the same by any other tenant or said other tenant's servants,
agents, employees, invitees or contractors; however, Landlord shall not enforce
the Rules and Regulations in a discriminatory manner.
Section 22.4. Signs. Tenant shall not display or erect any lettering,
sign or advertisement on or outside the Demised Premises, or in or on the
Building, or in the Demised Premises (any of which shall be considered a sign
for purposes of this Lease) if the same can be seen through the exterior windows
of the Building without the prior written approval of the Landlord in each
instance. Tenant shall not display, erect or maintain any sign which does not
comply with all applicable governmental or quasi-governmental laws, ordinances,
rules and regulations and all the terms and provisions of
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this Lease including, but not limited to, Article 8 hereof. Tenant shall, at its
sole cost and expense, install, insure, operate and maintain all such signs in
good order, condition, appearance and repair. In addition, Tenant shall pay to
Landlord as Additional Rent a review fee, as established pursuant to paragraph
8(n) of Exhibit B, and provided that Tenant's proposed signage complies in all
respects with applicable codes of the City of Stamford. Landlord's signage
review fee for any given proposed sign shall not exceed the sum of $500. The
Landlord's signage review fee shall be an eligible Allowance expense. Tenant at
its sole cost and expense, shall furnish and install its identification signage
in its lobby. Landlord shall pay for the initial Building standard signage for
Tenant on the eleventh (11th) floor of the Building and in the Building lobby
directory. In the event Tenant shall ever request changes or additions to the
Building standard signage for Tenant on the eleventh (11th) floor of the
Building and/or in the Building lobby directory, such changes and/or additions
shall be at Tenant's sole cost and expense. The design of such identification
must conform to the Building standard signage, be approved by Landlord, which
approval shall not be unreasonably withheld or delayed, and be fabricated and
installed by a contractor that meets with Landlord's approval. All signs
installed by or on behalf of Tenant shall on or before the Expiration Date be
removed and Tenant shall repair and restore all areas where signs have been
installed to the condition in which they existed prior to the making of the
installation. The insurance required to be maintained by Tenant under Article 11
shall provide coverage for all signs wherever located.
Section 22.5. Entire Agreement. Neither Landlord nor Landlord's agents
have made any representations or promises with respect to the physical condition
of the Project, the Building, the Demised Premises, permissible uses of the
Demised Premises, the rents, leases, expenses of operation, or any other matter
or thing affecting or related to the Demised Premises, except as expressly set
forth in this Lease. No rights, easements or licenses are acquired by Tenant by
implication or otherwise except as expressly set forth in this Lease. All
understandings and agreements previously made between the parties are merged in
this contract, which alone fully and completely expresses the agreement between
Landlord and Tenant. Any executory agreement made shall be ineffective to
modify, discharge or surrender this Lease or the Demised Premises or any
interest of Tenant in same unless such executory agreement is in writing and
signed by Landlord and Tenant.
Section 22.6 Severability. If any provision of this Lease is found by a
court of competent jurisdiction to be illegal, invalid or unenforceable, the
remainder of this Lease shall not be affected, and, at Landlord's option, in
lieu of each provision which is found to be illegal, invalid or unenforceable,
there will be deemed added, as a part of this Lease, a provision as similar to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
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Section 22.7. Brokers.
(a) Tenant represents that it was represented by The Galbreath Company,
having an address of 177 Broad Street, Stamford, Connecticut ("Tenant's Broker")
in connection with this Lease and that no broker or agent, other than Tenant's
Broker, represented Tenant in any way in connection with this Lease or brought
the Building or Project to the Tenant's attention and that Tenant had no
conversations, negotiations or dealings with any broker or agent in connection
with this Lease other than Tenant's Broker and Landlord's Broker (defined
below).
(b) Landlord represents that no broker or agent other than Rostenberg-
Doern Company, Inc. of Stamford, Connecticut ("Landlord's Broker") represented
Landlord in connection with the negotiation of this Lease. Landlord shall pay
the commissions owed Landlord's Broker and Tenant's Broker by reason of this
Lease.
(c) Tenant acknowledges that Landlord shall not be obligated to pay any
commission or fee to any broker or real estate agent in connection with the
negotiation or execution of this Lease other than one commission to Tenant's
Broker and one commission to Landlord's Broker.
(d) Landlord shall have no obligation to pay any real estate agent's or
broker's commission, other than one (1) brokerage commission to (1) one
designated Tenant's Future Broker (as such term is defined below) and one (1)
brokerage commission to one (1) designated Landlord's broker, if any has been so
designated by Landlord, on account of or by reason of the following
transactions: (i) Tenant's exercise of its option to extend the Term pursuant to
the terms of Rider 1 (Option to Extend Term) herein, (ii) Tenant's exercise of
its right of first offer to lease any additional space in the Building pursuant
to the terms of Rider 2 herein, or (iii) any other extension or renewal of the
Term of this Lease or any lease, by Tenant, of any space in the Project other
than pursuant to the terms of the rights and options referred to in (i)-(iii)
above, provided, however, that LANDLORD SHALL ONLY BE OBLIGATED TO PAY ONE SUCH
TENANT'S REAL ESTATE BROKER'S OR AGENT'S COMMISSION WITH RESPECT TO ANY OF THE
FOREGOING TRANSACTIONS IN THE EVENT THAT (1) TENANT HAS PROVIDED LANDLORD WITH
WRITTEN NOTICE SPECIFYING AND IDENTIFYING TENANT'S ONE BROKER FOR THE SUBJECT OF
THE TRANSACTION SIMULTANEOUS WITH (A) TENANT'S DELIVERY TO LANDLORD OF A
TENANT'S ACCEPTANCE NOTICE PURSUANT TO THE TERMS OF RIDER 2 HEREOF, (B) TENANT'S
DELIVERY OF A TENANT'S EXTENSION NOTICE TO LANDLORD PURSUANT TO THE TERMS OF
RIDER 1 HEREOF, OR (C) TENANT'S COMMENCING ANY NEGOTIATIONS WITH LANDLORD
RELATIVE TO ANY OTHER LEASING TRANSACTION PERTAINING TO THE DEMISED PREMISES OR
ANY OTHER SPACE IN THE PROJECT, (2) such designated Tenant's broker actually
participates in the negotiations with Landlord relative to the subject leasing
transaction, (3) such designated Tenant's broker and Landlord enter into a
mutually acceptable leasing commission agreement, and (4) Tenant and Landlord
enter into a valid and binding lease or lease amendment respecting such
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leasing transaction (the designated Tenant's broker for any of the foregoing
transactions where all conditions to the payment of a commission to such
designated Tenant's broker have been fulfilled is herein referred to as the
"Tenant's Future Broker").
(e) Tenant hereby agrees to indemnify, defend and hold the Landlord
harmless from and against any and all costs, claims, expenses or liability for
commissions or other compensation and charges (including reasonable attorneys'
fees and court costs) claimed by any broker, agent or other person or entity,
other than as may be owed to Tenant's Broker disclosed in subparagraph (a)
above, claiming to have represented Tenant with respect to this Lease. Tenant
hereby further agrees to indemnify, defend and hold Landlord harmless from and
against any and all costs, claims, expenses or liability for commissions or
other compensation and charges (including reasonable attorneys' fees and court
costs) claimed by any broker, agent or other person or entity claiming to have
represented Tenant in connection with Tenant's exercise, subsequent to the date
hereof, of any right of Tenant or with respect to any other leasing transaction
referred to in subparagraph (d) above, other than any commission which Landlord
may agree to pay a Tenant's Future Broker pursuant to the terms of a written
brokerage agreement entered into between Landlord and such Tenant's Future
Broker.
(f) Landlord hereby agrees to indemnify, defend and hold the Tenant
harmless from and against any and all costs, claims, expenses or liability for
commissions or other compensation and charges (including reasonable attorneys'
fees and court costs) claimed by any broker, agent or other person or entity
claiming to have represented Landlord in connection with this Lease. Landlord
hereby further agrees to indemnify, defend and hold Tenant harmless from and
against any and all costs, claims, expenses or liability for commissions or
other compensation and charges (including reasonable attorneys' fees and court
costs) claimed by any Landlord's Future Broker and Tenant's Future Broker which
is entitled to payment of a commission, pursuant to the terms of a written
brokerage agreement entered into by Landlord and such broker pursuant to the
terms of subparagraph (d) above, by reason of any future exercise by Tenant of
Tenant's Extension Option set forth in Rider 1 hereof and/or Tenant's Right of
First Offer, set forth in Rider 2 hereof, or by reason of any other leasing
transaction referred to in subparagraph (d) above, other than any commissions
which Tenant may agree to pay any broker claiming to have represented Tenant.
(g) The terms and provisions of this Paragraph 11 (Brokers) shall
survive the expiration or sooner termination of this Lease.
Section 22.8. Exculpatory Clause. All separate or personal liability of
Landlord or any of its partners, officers, directors, employees and/or joint
ventures, is hereby waived by Tenant, and by every person now or hereafter
claiming by, through or under Tenant, and Tenant agrees that it shall look
solely to Landlord's interest in the
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Building for the payment or other satisfaction of any claim against Landlord. In
the event Landlord shall bring any legal or equitable action against the
original named Tenant herein seeking to enforce the terms of this Lease, then
for so long as the original named Tenant herein shall maintain its existence as
a corporation, duly existing and in good standing, Landlord shall not seek to
hold the officers, directors, shareholders or employees of the original named
Tenant herein liable for any default of the Tenant under the terms of this
Lease. The provisions of the preceding sentence shall not apply to any assignee
of the original named Tenant herein.
Section 22.9. No Recording; Notice of Lease. Tenant shall not record
this Lease or any portion hereof or reference to this Lease. In the event Tenant
violates this prohibition against recording, at Landlord's option, this Lease
shall terminate or Landlord may declare Tenant in default under this Lease and
pursue any and all of Landlord's remedies provided in this Lease.
Notwithstanding the foregoing, Landlord and Tenant shall execute and deliver
within sixty (60) days of the execution of this Lease duplicate originals of an
instrument, in recordable form, which will constitute a statutory Notice of
Lease, setting forth a description of the Demised Premises, the Term and any
other provisions required by statute, as Landlord may request. This instrument
shall be recorded in the Land Records of the City of Stamford, Connecticut, by
Landlord. Upon the Expiration Date or sooner termination of this Lease, Tenant,
upon Landlord's request, shall promptly execute and deliver an instrument in
recordable form terminating such Notice of Lease. The terms of this Section 22.9
shall survive the expiration or sooner termination of this Lease.
Section 22.10. Financial Information. Upon Landlord's request, initially
and thereafter annually during the Term hereof, Tenant shall provide Landlord
with evidence satisfactory to Landlord regarding such financial (audited and
unaudited) and descriptive information concerning Tenant and/or any entity
occupying any portion of the Demised Premises and such entity's business as
Landlord may deem necessary or desirable. If audited financial statements are
not prepared for Tenant or such approved assignee or sublessee for any given
Lease Year or Lease Years during the Term hereof, then Tenant shall provide
Landlord with such other reasonably descriptive unaudited financial reports,
including all footnotes, of Tenant's business prepared in accordance with
generally accepted accounting principles and certified by the Tenant's Chief
Financial Officer or, at Tenant's election in lieu of such unaudited financial
reports, Tenant may provide Landlord with complete copies of Tenant's signed and
filed federal income tax returns for such Lease Year(s). Landlord shall hold all
such financial information in strict confidence and shall not disclose the same
to any party, other than to Landlord's personnel, attorneys, agents and existing
and prospective lenders and purchaser, who shall be instructed to respect the
confidentiality of such financial information.
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Section 22.11. Light and Air. Tenant covenants and agrees that no
diminution of light, air or view by any structure which may hereafter be erected
(whether or not by Landlord) shall entitle Tenant to any reduction of Rent under
this Lease, result in any liability of Landlord to Tenant, or in any other way
affect this Lease or Tenant's obligations hereunder.
Section 22.12. Inability to Perform. This Lease and the obligation of
Tenant to pay Rent and other payments required hereunder and to comply with all
of the other provisions of this Lease, shall in no way be affected, impaired or
excused because Landlord is delayed in supplying any service expressly or
impliedly to be supplied, or is unable to make or is delayed in making any
repair, additions, alterations or decorations, or is unable to supply or is
delayed in supplying any equipment or fixtures, or is unable to fulfill or is
delayed in fulfilling any other obligation hereunder, if Landlord is so
prevented or delayed by reason of Force Majeure, provided that Landlord uses all
reasonable and commercially feasible efforts to fulfill all such obligations
despite such Force Majeure and in all events as promptly as possible after the
Force Majeure giving rise to such prevention or delay ceases to exist.
Section 22.13. Counterclaims, Etc.
(a) Tenant waives Tenant's rights, if any, to assert a counterclaim in
any summary proceeding brought by Landlord against Tenant, and Tenant agrees to
assert any such claim against Landlord only by way of a separate action or
proceeding, unless such counterclaim would be deemed waived or banned if not
brought by Tenant in such summary proceeding.
(b) Tenant waives Tenant's rights if any, to designate the items against
which any payments made by Tenant are to be credited, and Tenant agrees that
Landlord may apply any payments made by Tenant to any items it sees fit,
irrespective of and notwithstanding any designation or request by Tenant as to
the items against which any such payments shall be credited.
(c) To the extent not prohibited by applicable law, Landlord and Tenant
hereby waive trial by jury in any action, proceeding or counterclaim brought by
either against the other or any matter whatsoever arising out of or in any way
connected with this Lease, the relationship of Landlord and Tenant, or Tenant's
use or occupancy of the Demised Premises, or any emergency or other statutory
remedy with respect thereto.
Section 22.14. No Surrender. The delivery of keys to Landlord, an
employee of Landlord or its agent shall not operate as a termination of this
Lease or a surrender of the Demised Premises. Landlord or its agent is
authorized to receive Tenant's
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keys for any purposes without releasing Tenant from any of its obligations under
this Lease.
Section 22.15. Modification of Lease. If, in connection with obtaining,
continuing or renewing financing for the Project or any part thereof (or a
leasehold or any other interest therein) whereby the Project represents
collateral in whole or in part, a bank, insurance company or other lender shall
request modifications of this Lease as a condition of such financing, Tenant
will not withhold, delay or defer its consent thereto, provided that such
modifications do not increase the Rent and other financial obligations of Tenant
hereunder and do not increase the non-monetary obligations of Tenant (other than
to a de minimis extent) hereunder or adversely affect to a material degree the
Tenant's leasehold interest hereby created. Landlord shall pay Tenant's
reasonable, out-of-pocket attorney's fees incurred by Tenant in connection with
Tenant's compliance with any request made by Landlord under this Section 22.15.
Section 22.16. Headings. The Article and Section headings in this Lease
and the Table of Contents prefixed to this Lease are inserted only as a matter
of convenience or reference and are not to be given any effect whatsoever in
construing this Lease.
Section 22.17. Parking. (a) Notwithstanding anything to the contrary
contained herein, Landlord shall not be responsible or liable for any damage,
loss, collision, theft or vandalism to any automobiles parked at the parking
facilities at the Project, or to any personal property or contents of such
automobiles. The use of the parking facilities at the Project by Tenant or
Tenant's agents, employees, contractors, invitees or licensees shall be at their
sole risk, and all such parties hereby release Landlord from any and all claims,
costs or liabilities, for any damage, loss, collision, theft or vandalism to
such automobiles or personal property, however caused. The provision of security
services shall not be deemed to be a waiver of this subsection or to create any
liability upon or any estoppel against Landlord. Tenant and Tenant's agents,
employees, contractors, invitees and licensees shall be required to park, secure
and lock their own automobiles at all times while such automobiles are at the
parking facilities at the Project, and to comply with such parking rules and
regulations as may be prescribed by Landlord from time to time and to any
reasonable modifications and/or additions thereto.
(b) There shall not be overnight parking at the Project except in the
Overnight Parking Area, if any, the size and location of which may be
designated, from time to time, by Landlord. Any Overnight Parking Area
designated by Landlord shall be located in the Building garage. Tenant's
employees may only park personal, passenger motor-vehicles in such designated
Overnight Parking Area to facilitate business travel only and for no more than
five (5) consecutive business days at any one time, provided that Tenant
provides Landlord with no less than twenty-four (24) hours prior notice of
Tenant's need for such Overnight Parking. Tenant's notice shall specify the name
of the owner and
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the make, model and license plate number for cars to be parked in the Overnight
Parking Area. Tenant's employees may not use the Overnight Parking Area to park
motor vehicles while on vacation. Except as expressly provided above, Tenant
shall, and shall cause its personnel and visitors to, remove all automobiles
from the parking area at the end of Normal Business Hours. If any automobile
owned by Tenant or by its personnel or visitors remains in the parking area
overnight and the same interferes with the cleaning or maintenance of said area
(including, without limitation, snow removal), any costs or liabilities incurred
by Landlord in removing said automobile to effectuate cleaning or maintenance,
or any damages resulting to said automobile or to Landlord's equipment or
equipment owned by others by reason of the presence or removal of said
automobile shall be paid by Tenant to Landlord, as Additional Rent. Tenant and
Tenant's employees may only park passenger motor vehicles in the Project parking
areas. No motor-homes, recreational vehicles, buses or commercial vehicles may
be parked in the Project parking areas.
(c) Landlord shall furnish Tenant with three and one/half (3.5)
passenger motor-vehicle parking garage/lot use cards per 1,000 rentable square
feet in the Demised Premises. If any such key card is lost, damaged or
misplaced, Tenant shall pay a fee established by Landlord for its replacement,
which fee shall initially be $15.00.
Section 22.18. Authority. Each of the individuals executing this Lease
on behalf of Tenant warrants and represents individually to Landlord that Tenant
is a duly authorized and existing corporation, qualified to do business in the
State of Connecticut, that Tenant has the full right and authority to enter into
this Lease, and that each and every individual signing on behalf of Tenant is
duly authorized to do so. Tenant will provide evidence reasonably satisfactory
to Landlord confirming these representations.
Section 22.19. Opinions of Counsel, Etc. Upon execution of this Lease,
Tenant shall deliver an opinion of Tenant's counsel reasonably acceptable to
Landlord confirming that Tenant is a duly authorized and existing corporation
qualified to do business in the State of Connecticut and that each of the
individuals executing this Lease on behalf of Tenant is authorized to do so.
Tenant shall also furnish a certified copy of its corporate resolutions
authorizing this Lease, a recent good standing certificate from Delaware and
Connecticut and a Secretary's incumbency certificate attesting to the authority
and position of the signatory of this Lease.
Section 22.20. Lease Condition; Mortgagee Notice.
(a) This Lease is expressly conditioned upon Landlord's receiving the
consent and approval of Landlord's mortgagee to its terms and provisions.
Landlord's mortgagee shall review a final execution copy of the Lease once
finalized by the parties hereto and shall either approve or comment on said
draft prior to its execution. Should said
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consent not be received, Landlord may, at Landlord's option, cancel this Lease
and return any rent which Tenant has deposited with Landlord upon execution of
this Lease, and thereafter the parties shall have no further obligations to each
other with respect to this Lease. If, however, Landlord believes that such
consent is forthcoming, Landlord may unilaterally extend the 30-day time period
by such amount of time as it believes appropriate.
(b) Tenant agrees to give to People's Bank at the following address: 350
Bedford Street, Stamford, Connecticut 06901-1741 and to the holder of any other
interest to which this Lease is or may hereafter become subordinate, a copy of
any notice of default served by Tenant upon Landlord provided that, prior to
such notice, Tenant has been notified in writing (by way of notice of assignment
or otherwise) of the address of such holder(s). Tenant further agrees that, if
Landlord shall have failed to cure such default within the time provided for in
this Lease then such holder(s) shall have an additional sixty (60) days within
which to cure such default or if such default cannot be cured within that time
then such additional time as may be necessary if within such sixty (60) days any
such holder has commenced and is diligently pursuing the remedies necessary to
cure such default (including but not limited to commencement of foreclosure
proceedings, if necessary to effect such cure) in which event this Lease shall
not be terminated while such remedies are being so diligently pursued.
Section 22.21. Joint and Several Liability. If Tenant is composed of
more than one (1) signatory to this Lease, each such signatory will be jointly
and severally liable for the fulfillment and performance by Tenant of the terms
and provisions of this Lease.
Section 22.22. No Offer. It is understood and agreed that this Lease is
submitted to Tenant on the understanding that it shall not be considered an
offer and shall not bind Landlord in any way until (a) Tenant has duly executed
and delivered duplicate originals to Landlord and (b) Landlord has executed and
delivered one (1) of said originals to Tenant.
Section 22.23. Security. Landlord shall maintain security for the Common
Areas and the parking areas of the Project in a manner reasonably consistent
with Class-A office building standards as determined in Landlord's judgment.
Section 22.24. Roof-top Antenna. (a) Subject to Landlord's prior written
consent, which consent must be procured by Tenant on a case-by-case basis, and
which consent shall not be unreasonably withheld or delayed, and subject to
Tenant first obtaining all necessary building permits and all other required
governmental approvals and authorizations therefor, Landlord agrees to lease to
Tenant, for a term (e.g. duration) which is mutually acceptable (not less than
three (3) years) and subject to the other terms and conditions set forth below,
such area or areas located on the roof of the Building as
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Landlord may designate, for the purpose of enabling Tenant to install, operate
and maintain at its sole cost and expense, a reception only dish antenna (or
other comparable substitute telecommunications equipment of similar size and use
requiring a similar size area of the Building roof) approved by Landlord in
advance (herein collectively referred to as the "Antenna") on the roof of the
Building. For the purpose of this Section 22.24, criteria which Landlord may
consider in determining whether or not to approve Tenant's request to lease any
portion of the Building roof shall include, but not be limited to, (1) any
impact which such use may have on the aesthetic appearance of the Building, (2)
the size of the antenna or other equipment which Tenant may desire to install on
the roof, (3) the size and location of the area of the roof which Tenant desires
to use, (4) whether Tenant's use hereunder would cause damage to the roof or the
Building or interfere with the efficient operation of any Building systems.
Notwithstanding anything to the contrary set forth herein, Tenant may not
install and maintain on the Building roof, at any one time, more than one (1)
antenna or other such approved substitute telecommunications equipment.
(b) No Fixed Rent shall be payable by Tenant for any such Roof-top
Antenna Lease during the first Lease Year of this Lease. After the first Lease
Year, the Tenant shall pay Landlord a market-rate Monthly Fixed Rent for any
such Roof-top Antenna Lease, in an amount determined by Landlord. After the
first Lease Year, Landlord shall provide Tenant, on or about the start of each
Lease Year during the term of the Antenna Lease, with notice of the Fixed
Monthly Rent for the Antenna Lease for the following Lease Year. The Lease shall
automatically terminate, without notice to Tenant, upon the occurrence of an
Event of Default under the Lease. Upon thirty (30) days' prior written notice to
Tenant Landlord may require Tenant to relocate, at Tenant's sole cost and
expense, its Antenna to such other location of the roof as Landlord may
designate.
(c) Tenant shall not penetrate or otherwise damage the surface of the
roof in connection with the installation, operation, maintenance and repair of
the Antenna and Tenant shall promptly repair, at its sole cost and expense, all
damage caused by the installation, maintenance, operation, relocation and
removal of the Antenna. The provisions of the last sentence of Section 9.2
(Tenant's Repairs) herein shall be applicable in the event Tenant shall fail to
promptly repair such damage. In the event the Landlord should determine or be
advised that the operation of the Tenant's Antenna should interfere with the use
and operation of any other communication or electrical equipment at the Project,
then Tenant shall promptly cause such interference to cease immediately and if
Tenant is unable to operate its Antenna in a manner which eliminates such
interference, then Landlord may terminate the Antenna Lease immediately upon
delivery of notice of such termination to Tenant. The Antenna Lease, the
Tenant's operation of the Antenna and Tenant's use of the Building roof for the
purpose permitted in this Section 22.24 shall be subject to all of the other
terms and conditions of this Lease, including, without limitation, the terms and
conditions and Tenant's obligations under Sections 7.1, 8.2, 9.2, 9.4, 9.5,
69
<PAGE> 76
Article 11, Article 14 and Exhibit B. Notwithstanding anything to the contrary
contained in this Lease, upon the expiration or termination of the Roof-top
Antenna Lease Tenant shall, at its sole cost and expense, remove its Antenna and
all of its other equipment and property from the roof of the Building and shall
repair all damage caused thereby.
70
<PAGE> 77
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of
the date first above written.
LANDLORD:
WITNESSES: STAMFORD TOWERS LIMITED PARTNERSHIP,
a Delaware limited partnership
/s/ Geoffrey F. Fay By Stamford Towers, Inc.,
- -------------------- as General Partner
GEOFFREY F. FAY
- -------------------- By: /s/ Regina Hertl
-----------------------------
Name: REGINA HERTL
-----------------------------
Its: PRESIDENT
-----------------------------
TENANT:
WITNESSES: CARDMEMBER PUBLISHING CORPORATION,
a Delaware corporation
/s/ [ILLEGIBLE]
- -------------------------
/s/ William A. Durkin III By: /s/ Steven H. Levenherz
-----------------------------
Name: Steven H. Levenherz
-----------------------------
Its: Asst. Secretary
-----------------------------
71
<PAGE> 78
STATE OF CONNECTICUT )
) ss.: Stamford
COUNTY OF FAIRFIELD )
On this 15th day of January, 1996, personally appeared before Geoffrey
F. Fay, the undersigned officer STAMFORD TOWERS LIMITED PARTNERSHIP, a Delaware
limited partnership, acting herein Stamford Towers, Inc., a General Partner, by
Regina M. Hertl, its duly authorized President who acknowledged that she signed,
sealed and delivered the above and foregoing instrument as her free act and
deed, the free act and deed of said Stamford Towers, Inc., and the free act and
deed of said STAMFORD TOWERS LIMITED PARTNERSHIP, for the purposes therein
stated, before me.
/s/ Geoffrey F. Fay
----------------------------------
Commissioner of the Superior Court
STATE OF CONNECTICUT )
) ss.: Stamford
COUNTY OF FAIRFIELD )
On this 3rd day of January, 1996, personally appeared before William A.
Durkin III, the undersigned officer CARDMEMBER PUBLISHING CORPORATION, a
Delaware corporation, by Steven H. Levenherz, its duly authorized Asst. Vice
President who acknowledged that he/she signed, sealed and delivered the above
and foregoing instrument as his/her free act and deed and the free act and deed
of said CARDMEMBER PUBLISHING CORPORATION, for the purposes therein stated,
before me.
/s/ William A. Durkin III
----------------------------------
Commissioner of the Superior Court
72
<PAGE> 79
RIDER 1
TO LEASE BETWEEN
STAMFORD TOWERS LIMITED PARTNERSHIP
AND
CARDMEMBER PUBLISHING CORPORATION
OPTION TO EXTEND THE TERM
Option to Extend the Term. (a) Provided Tenant is not in default of the
terms, covenants and conditions of this Lease either at the time of its exercise
or as of the Expiration Date, and the Tenant named in Article 1 is in occupancy
of the entire Demised Premises (as the same may have been expanded, reduced or
otherwise modified by written amendment to this Lease) at each such time, Tenant
shall be entitled to an extension of the Term (the "Extension Term") for one
period of five (5) years, beginning on the day after the Expiration Date;
provided, however, that Tenant shall have given Landlord written notice
(hereafter referred to as "Tenant's Extension Notice") of Tenant's election to
extend not more than two (2) years and not less than one (1) year prior to the
Expiration Date, (unless Tenant should submit a Tenant's Extension Notice in
connection with Tenant's exercise of its Right of First Offer pursuant to the
terms of paragraph (a) (ii) (B) (2) of Rider 2 to this Lease, in which event
Tenant's Extension Notice shall be delivered simultaneous with Tenant's delivery
to Landlord of Tenant's Acceptance Notice pursuant to subparagraph (a) (ii) (B)
of Rider 2 hereof) with time being of the essence as to such dates.
SIMULTANEOUS WITH TENANT'S DELIVERY OF TENANT'S EXTENSION NOTICE TO
LANDLORD, TENANT SHALL PROVIDE LANDLORD WITH WRITTEN NOTICE IDENTIFYING AND
SPECIFYING TENANT'S BROKER (IF ANY) FOR THE TRANSACTION WHICH IS THE SUBJECT OF
THIS RIDER 1, AS REQUIRED UNDER THE TERMS OF SECTION 22.7(d) HEREIN.
The Extension Term shall be upon the same covenants and conditions as
those contained in the Lease, except as follows: The Annual Fixed Rent shall be
as provided in Paragraph (b) of this Rider 1; Landlord shall have no obligation
to perform any fit-out or other preparatory work to the Demised Premises or to
provide any allowances or concessions therefor; and Tenant shall have no further
option to extend the Lease. If Tenant does not fulfill any of the notice
requirements described in this Rider 1, Tenant's option to extend the Term shall
be of no further force or effect.
(b) The Annual Fixed Rent for the Extension Term (the "Extension Rent")
shall be determined as follows: Upon Landlord's receipt of Tenant's timely
notice of Tenant's election to extend, Landlord and Tenant shall have a period
of twenty (20) days within which to reach agreement as to what constitutes the
Extension Rent, which shall be
<PAGE> 80
One Hundred Percent (100%) of the then fair market rental value for comparable,
Class-A office space in the downtown Stamford, Connecticut, business district.
The determination of fair market rent hereunder shall reflect and include, inter
alia, any Tenant's broker's commissions which Landlord may be required to pay in
connection with Tenant's exercise of this extension option. If the parties are
unable to agree upon a fair market rental value within such twenty (20) day
period, then Tenant may, upon notice delivered to Landlord within five (5) days
after the expiration of such twenty (20) day period (with time being of the
essence as to such date), revoke its exercise of the Option to Extend the Term
in which event this Lease shall expire on the stated Expiration Date. If Tenant
does not revoke its exercise of such option, then Landlord shall be obligated to
lease the Demised Premises to the Tenant for the Extension Term and Tenant shall
be obligated to lease the Demised Premises from Landlord for the Extension Term
on the terms and conditions set forth herein and the matter of the Extension
Rent shall be resolved by binding arbitration in Stamford, Connecticut as
follows: Landlord and Tenant shall, within ten (10) days of the expiration of
such twenty (20) day period, each appoint an arbitrator who shall promptly
confer with each other and attempt to make a joint determination of Extension
Rent. No arbitrator appointed hereunder may be an individual real estate broker
or real estate agent who has represented either party hereto or any previous
Tenant in connection with this Lease or with any other real estate transactions.
Further, all arbitrators appointed hereunder must first agree that they will be
compensated for their services hereunder only by payment of a reasonable and
customary hourly rate for their time expended on this matter. If such
arbitrators are able, within ten (10) days of their appointment, to agree upon
Extension Rent they shall notify Landlord and Tenant in writing of their joint
determination which, absent fraud, bad faith, coercion or other misdeed, shall
be binding upon Landlord and Tenant. If such arbitrators shall fail to reach a
joint determination of Extension Rent within such ten (10) day period, then such
arbitrators shall immediately (1) prepare detailed written statements of the
reasons for their determinations of Extension Rent, (2) designate a third
arbitrator, and (3) submit copies of each such determination described in clause
(1) hereof to Landlord, Tenant and such third arbitrator. If the two arbitrators
shall fail to agree upon the designation of such third arbitrator within five
(5) days, either party may apply to the American Arbitration Association in
Connecticut or any successor organization thereto having jurisdiction and having
offices in Connecticut, for the designation of such third arbitrator. The third
arbitrator shall conduct such hearings and investigations as (s)he may deem
appropriate and shall, within ten (10) days after the date of his/her
designation, choose the determination of the two arbitrators who were originally
selected by the parties which is the nearest to the determination such third
arbitrator would have made acting alone, and that choice by the third arbitrator
absent fraud, bad faith, coercion or other misdeed shall be conclusively binding
upon Landlord and Tenant. Each party shall pay its own counsel fees and
expenses, if any, in connection with any arbitration under this subparagraph
(b), including the expenses and fees of any arbitrator selected by it in
accordance with the provisions of this Paragraph 2, and the parties hereto shall
share equally all other expenses and fees of any such arbitration,
2
<PAGE> 81
including, but not limited to, the fees of the third arbitrator who may be
appointed hereunder. Each arbitrator under this paragraph shall (i) have at
least ten (10) years, experience in the real estate leasing industry in
Stamford, Connecticut, and (ii) be familiar with the commercial real estate
market in the Stamford, Connecticut area. When the Extension Rent has been
determined, the parties hereto, on request of either of them, shall enter into a
signed, written stipulation with respect to the amount thereof and setting forth
the expiration date of such Extension Term.
(c) If Tenant possesses or occupies all or any part of the Demised
Premises after the Expiration Date without properly exercising its option to
extend (or after the expiration of the Extension Term), without receipt of
Landlord's prior consent, Tenant shall be deemed to be "holding over" and the
terms and provisions of Article 18 (Holding Over) of the Original Lease shall
apply. If Tenant has properly exercised its option to extend, pursuant to this
Rider 1, Tenant shall not be deemed to be "holding over" and the terms and
provisions of Article 18 (Holding Over) of the Original Lease shall not apply
even if the Extension Rent has not been finally determined prior to the
expiration of the initial Term of the Lease, providing that Tenant is not the
cause of any delay in the final determination of the Extension Rent. If Tenant
has properly exercised its option to extend the term of this Lease, pursuant to
this Rider 1 and the Extension Rent for the Extension Term has not been finally
determined by the first day of the Extension Term, then Landlord shall be
obligated to lease the Demised Premises to the Tenant for the Extension Term on
the terms and conditions set forth herein and Tenant shall be obligated to lease
the Demised Premises from Landlord for the Extension Term on the terms and
conditions set forth herein and until the Extension Rent shall be finally
determined pursuant to subparagraph (b) above, the Tenant shall pay Landlord (1)
Fixed Rent during the Extension Term at the rate initially proposed by Landlord
as the fair market rental rate for the Demised Premises at the time Tenant
exercised its option to extend the Term of this Lease pursuant to this Rider 1,
and (2) Additional Rent as provided in the Lease. Within twenty (20) days of the
date that the Extension Rent shall be finally determined under subparagraph (b)
above, the Landlord shall remit to Tenant any overpayment of Fixed Rent for the
Extension Term and the Tenant shall remit to Landlord any underpayment of Fixed
Rent for the Extension Term prior thereto.
(d) Each arbitrator under this subparagraph (d) is hereby instructed in
determining Extension Rent to give whatever weight (s)he deems appropriate to
the fact that Extension Rent is being determined for a five (5) year Extension
Term.
(e) Unless Tenant shall agree with Landlord, in writing, not later than
sixty (60) days prior to the Tenant's exercise of its option to extend hereunder
to be solely responsible for the payment of any Landlord's broker and any
Tenant's broker, the payment of Landlord's broker shall be in the form of a
renewal commission, if any, and the payment of Tenant's broker shall be in the
form of a renewal commission, if any.
3
<PAGE> 82
RIDER 2
TO LEASE BETWEEN
STAMFORD TOWERS LIMITED PARTNERSHIP
AND
CARDMEMBER PUBLISHING CORPORATION
RIGHT OF FIRST OFFER TO LEASE ADDITIONAL SPACE
(a) Tenant's Space Inquiry Notice; Landlord's Offer Notice. In the event
that Tenant shall desire, in any given calendar year during the Term hereof, to
lease space on the tenth (10th) floor of the Building, then Tenant shall, on the
first day of January of such calendar year, provide Landlord with written notice
of Tenant's desire to lease space on the tenth (10th) floor of the Building
(hereafter referred to as "Tenant's Space Inquiry Notice"), which Tenant's Space
Inquiry Notice must specify the rentable square footage of space desired by
Tenant and the length of the lease term for such space desired by Tenant. In the
event Landlord timely receives the foregoing Tenant's Space Inquiry Notice from
Tenant and provided that Tenant is not then in default of any of the terms,
covenants or conditions of this Lease and further provided that the Tenant named
in Article 1 hereof is then conducting its business operations in the entire
Demised Premises and has not assigned or is then subleasing any of the original
Demised Premises hereunder, then Landlord shall:
(i) notify Tenant in the event any space located on the tenth
(10th) floor of the Building should become available for lease during
such calendar year after the expiration or sooner termination of the
first letting of such space in question for a term in excess of one (1)
year (including any sublettings, assignments, renewals and/or
extensions thereof), (ii) provide Tenant with a notice (the "Landlord's
Offer Notice") pursuant to which Landlord shall specify the area and
location of the space on the tenth (10th) floor of the Building which
shall become available during such Lease Year (the "Offered Space") and
shall offer to lease such Offered Space for a rental rate and upon such
other conditions as may be set forth in the Landlord's Offer Notice
(Terms and conditions of such offered letting not specified in the
Landlord's Offer Notice, shall be as provided in this Lease), and (ii)
and Tenant shall be afforded a period of fifteen (15) days, from and
after the delivery of such Landlord's Offer Notice, in which to submit
to Landlord a binding, written commitment (hereafter referred to as the
"Tenant's Acceptance Notice") to Lease such specified tenth (10th)
floor space on the exact terms and conditions specified in such
Landlord's Offer Notice.
<PAGE> 83
SIMULTANEOUS WITH TENANT'S DELIVERY OF TENANT'S ACCEPTANCE
NOTICE TO LANDLORD, TENANT SHALL PROVIDE LANDLORD WITH WRITTEN NOTICE
IDENTIFYING AND SPECIFYING TENANT'S BROKER (IF ANY) FOR THE TRANSACTION
WHICH IS THE SUBJECT OF THIS RIDER 2, AS REQUIRED UNDER THE TERMS OF
SECTION 22.7(d) HEREIN.
(ii) The term (e.g. duration) of Tenant's lease of
the Offered Space shall be as follows:
(A) In the event the term of Tenant's lease of the Offered
Space and Tenant's obligation to pay Rent for the lease of the Offered
Space shall commence on a date which is within five (5) years from the
Commencement Date of this Lease, then the term of Tenant's lease of the
Offered Space shall be coterminous with the remaining initial Term of
the lease of the original Demised Premises and Tenant's lease of the
Offered Space shall expire on the Expiration Date specified in Article
2 of this Lease, unless such term is extended pursuant to the terms of
Rider 1.
(B) In the event the term of Tenant's lease of the Offered
Space and Tenant's obligation to pay Rent for its lease of the Offered
Space shall commence on a date which is more than five (5) years from
the Commencement Date of this Lease, then:
(1) simultaneous with Tenant's submission of its Tenant's
Acceptance Notice pursuant to the terms of this Rider 2, Tenant must
submit a Tenant's Extension Notice under Rider 1, pursuant to which
Tenant elects to extend the Term of Lease of the original Demised
Premises in accordance with terms and conditions of Rider 1 hereof, and
(2) the term of Tenant's lease of the Offered Space shall be
coterminous with the remaining initial Term, plus the Extension Term
and the Tenant's lease of the Offered Space shall expire upon the
expiration of the Extension Term.
(b) If Tenant accepts the offer to lease such space by
submitting its Tenant's Acceptance Notice (and, if required, Tenant's Extension
Notice) within the time and manner specified, Landlord and Tenant shall enter
into a written agreement modifying and supplementing this Lease and specifying
that such tenth (10th) floor Offered Space is part of the Demised Premises and
containing other appropriate terms and provisions, as determined by Landlord,
relating to the addition of such space (including, but not limited
5
<PAGE> 84
to, any increase or other adjustment of Rent as a result of such addition).
Except as expressly provided in Section 22.7 of the Lease, Landlord shall have
no obligation to pay any commission to any broker claiming to represent Tenant
in connection with Tenant's exercise of this Right of First Offer to Lease. If
Tenant does not accept, in writing, its legally binding offer to lease such
Offered Space on the exact terms specified in the Landlord's Offer Notice by
submitting its written Tenant's Acceptance Notice (and, if required, Tenant's
Extension Notice) to Landlord within fifteen (15) days of delivery of such
Landlord's Offer Notice to Tenant, with time being of the essence, Landlord
shall thereafter be free to rent such space to any third parties upon any terms
and conditions. Landlord shall have no obligation to negotiate the terms of such
letting with Tenant for any period of time, in good faith, or otherwise. Tenant
agrees to keep all such notices of available space in the Project strictly
confidential and to disclose such notices and/or the terms thereof only to such
officers and/or employees of Tenant who have a legitimate need to know the
information contained therein. All such officers and/or employees shall likewise
keep such information strictly confidential.
6
<PAGE> 85
EXHIBIT A
FLOOR PLAN SHOWING DEMISED PREMISES
EXHIBIT A-1
DESCRIPTION OF PROJECT
All those two certain parcels of land together with the buildings thereon,
situated in the City of Stamford, County of Fairfield, and State of Connecticut,
bounded and described as follows:
Parcel 1
All that certain piece, parcel or tract of land located in the City of Stamford,
County of Fairfield and State of Connecticut shown and designated on a certain
map entitled "Property Surveyed for: Stamford Towers Limited Partnership
Location: Washington Boulevard, Division Street and Clinton Avenue, Stamford,
Connecticut" which map is to be filed in the office of the Town Clerk of the
City of Stamford, reference thereto being hereby had.
Said premises as shown on said map are bounded and described as follows:
Commencing at a point where the westerly line of Washington Boulevard intersects
the northerly line of Division Street in the City of Stamford, County of
Fairfield and State of Connecticut and proceeding thence north along Division
Street N 79 degrees 42 minutes 20 seconds W a distance of 464.21 feet to Clinton
Avenue, thence along the easterly line of Clinton Avenue N 8 degrees 46 minutes
E a distance of 171.62 feet to land of Alice Rinck Ricklefs, thence proceeding S
81 degrees 35 minutes E 137.75 feet, thence N 18 degrees 40 minutes E 17.10
feet, thence N 9 degrees 3 minutes E 21.61 feet to land of Connecticut
Newspapers, Inc., thence southeasterly, northeasterly and again southeasterly
along land of Connecticut Newspapers, Inc. the following courses and distances:
S 81 degrees 30 minutes E a distance of 3 feet, thence N 17 degrees 3 minutes 30
seconds E a distance of 21.04 feet, S 77 degrees 18 minutes E a distance of
234.92 feet and S 77 degrees 47 minutes E a distance of 176.36 feet to
Washington Boulevard, thence proceeding S along the arc of a curve with a radius
of 441.24 feet a distance of 104.345 feet to land of Zarouhi N. Saradjian,
thence proceeding N 78 degrees 27 minutes W a distance of 161.60 feet, thence S
9 degrees 11 minutes 40 seconds W a distance of 60.05 feet, thence S 78 degrees
27 minutes E a distance of 133.74 feet to Washington Boulevard, thence
proceeding south along the westerly line of Washington Boulevard on the arc of a
curve with a radius of 441.24 feet a distance of 46.93 feet and proceeding south
along the arc of a curve with a radius of 497.85 feet a distance of 22.74 feet
to the point or place of beginning.
<PAGE> 86
Said premises are conveyed together with all of mortgagor's rights in and to the
southerly 3'9" area of the property owned by Alice R. Ricklefs adjoining the
premises as shown on the above referenced map and as reserved in a deed from
Emil Zantow to Harry C. Purdy dated November 9, 1920 and recorded in Book 239
Page 389 of the Stamford Land Records.
Parcel 2
All that certain piece, parcel or tract of land situated in the City of
Stamford, County of Fairfield and State of Connecticut shown and designated on a
certain map entitled "Map Showing a Consolidation of Properties Prepared for
Louis DeBeradinis, Stamford, Connecticut" which map is on file in the office of
the Town Clerk of the City of Stamford and numbered 11597 reference thereto
being hereby had.
Said premises as shown on said map are bounded and described as follows:
Beginning at a point where the southerly line of Division Street intersects the
westerly line of Washington Boulevard in the City of Stamford, County of
Fairfield, and State of Connecticut and proceeding south along the westerly line
of Washington Boulevard on the arc of a curve with a radius of 497.85 feet for a
distance of 218.307 feet, thence proceeding S 0 degrees 18 minutes 35 seconds W
a distance of 59.68 feet, thence proceeding S 89 degrees 39 minutes W a distance
of 192.24 feet to land now or formerly of Fannie Fishman and proceeding thence N
1 degree, 39 minutes E a distance of 139.20 feet, thence S 88 degrees 59 minutes
W a distance of 3.96 feet, thence proceeding N 1 degree 51 minutes 40 seconds W
a distance of 132.63 feet to the southerly line of Division Street, thence
proceeding along the southerly line of Division Street N 89 degrees 30 minutes
50 seconds E a distance of 59.17 feet and S 89 degrees 56 minutes 40 seconds E a
distance of 185.89 feet to the point or place of beginning.
Said Parcels 1 and 2 being the same premises as conveyed in Warranty Deed from
Louis DeBeradinis to Edward Feldman, Trustee, dated October 30, 1986, and
recorded on October 30, 1986, at 3:52 p.m. in the Stamford Land Records.
2
<PAGE> 87
EXHIBIT A-2
HOLIDAYS
New Year's Day*, Martin Luther King's Birthday, President's Day, Memorial Day,
Independence Day*, Labor Day, Columbus Day, Thanksgiving Day, Day after
Thanksgiving, Christmas Day*.
- ------------------------
*To be included in Holidays if it falls on a weekday. If it falls on a Saturday,
the immediately preceding Friday shall be included in Holidays. If it falls on a
Sunday, the immediately following Monday shall be included in Holidays.
<PAGE> 88
EXHIBIT B
WORK LETTER
(January 1996)
1. Tenant's Work. Tenant shall perform such work to the Demised Premises
as may be necessary or desirable for Tenant's initial use and occupancy of the
Demised Premises including, but not limited to, any electrical, plumbing,
air-conditioning, mechanical or structural work to meet Tenant's requirements
("Tenant's Work") in accordance with the provisions of this Work Letter and, to
the extent not expressly inconsistent herewith, in accordance with the
provisions of the Lease, including, without limitation, Article 3 and Article 9
thereof. Performance of Tenant's Work shall not serve to abate or extend the
date for commencement of Rent under the Lease. Landlord agrees to cooperate with
Tenant to expedite the performance of Tenant's Work and shall make its Building
Manager available to Tenant for reasonable periods of time between the hours of
9:00 a.m. to 5:00 p.m., Mondays to Fridays, and upon reasonable advance notice,
provided Tenant pays, as Additional Rent, all actual costs and expenses incurred
by Landlord in so doing. Tenant agrees, as a material inducement to Landlord to
enter into the Lease, to perform or cause to be performed as a part of Tenant's
Work, the installation of an Intellimeter electrical submetering system and such
other items as may be described on Exhibit B-1 (Minimum Tenant's Work) to the
Lease as may be applicable to any particular Tenant's Work.
2. Work Costs.
(a) Except as otherwise provided herein and in the Lease, Tenant shall
pay all costs (the "Work Costs") associated with Tenant's Work whatsoever,
including, without limitation, all costs for permits, approvals, authorizations,
inspections, space planners, interior designers, architects, engineers, and
contractors, utility connections, labor, materials, bonds, insurance, and any
structural or mechanical work, additional HVAC and control equipment or
sprinkler heads, modifications to any Building mechanical, electrical, plumbing
or other systems or equipment, or relocation of any existing sprinkler heads,
required as a result of the layout, design, or construction of Tenant's Work.
(b) Tenant shall submit to Landlord a final line item budget of all Work
Costs (a "Budget") for any proposed Tenant's Work which shall be subject to the
reasonable approval of Landlord and its lender. Tenant shall make any changes to
the Budget as may reasonably be requested by either or both such part(ies). Any
material decrease in the Budget as a whole or in one or more line items shall be
subject to the approval of Landlord and its lender.
<PAGE> 89
(c) Allowance amount. Landlord shall pay Tenant, subject to the terms of
the Lease, including the provisions of Article 3 thereof and this Section 2 (c),
up to the aggregate amount of SIX HUNDRED FIFTY-TWO THOUSAND SEVEN HUNDRED FIFTY
DOLLARS ($652,750) (based upon $35.00 per rentable square foot and 18,650
rentable square feet being in the Demised Premises) (hereinafter referred to as
the "Allowance") of the Work Costs incurred by Tenant in connection with the
Tenant's Work which shall be undertaken by Tenant in accordance with the Space
Plan (as defined herein) approved by Landlord prior to the execution of this
Lease (subject to change orders and modifications subsequently approved by
Landlord) for the initial fit-up of the Demised Premises to ready the Demised
Premises for Tenant's initial occupancy thereof. The Allowance shall be paid to
Tenant in installments upon presentation by Tenant, no more than once in each
calendar month, of a certificate of an officer of Tenant specifying the Work
Costs incurred on a line item basis since the last such presentation (if any)
and certifying that all Tenant's Work during such period has been completed in
conformity with the plans approved by Landlord in writing and in accordance with
the provisions hereof; provided, however, that no more than $3.50 per rentable
square foot of the Allowance shall be paid to Tenant on account of the costs,
fees and expenses of space planners, architects and engineers. No payment shall
be made on any request which would cause the aggregate amount of the Allowance
paid on any line item to exceed materially the amount provided for such item in
the Budget. Landlord shall be entitled to any rebate, credit or refund for any
items included in Work Costs for which an Allowance installment is sought
(including, without limitation, any rebate, credit or refund from any public
utilities). The amount of such rebate, credit or refund shall not be deducted
from the Allowance or Work Costs for which an Allowance installment may be paid.
Tenant, as a condition of the payment of each installment of the Allowance,
shall submit, together with its certificate, all invoices, lien waivers, AIA
form architects' certificates, and such other evidence as Landlord and/or its
lender may reasonably require showing that the Tenant's Work giving rise to such
Work Costs has been fully completed, and that no mechanic's, materialmen's or
other such liens have been or may be filed against the Building or the Demised
Premises arising out of the design or performance of Tenant's Work. If any such
liens are filed, Tenant shall cause the same to be removed and/or secured by the
posting of a bond as provided in Article 9 of this Lease, failing which Landlord
shall have the remedies available under the Lease including, without limitation,
those set forth in Article 9. After satisfaction of such payment conditions, for
each installment of the Allowance, Landlord shall pay to Tenant ninety percent
(90%) of the certified Work Costs for the period in question. The remaining ten
percent (10%) of each such installment shall be retained by Landlord until such
time as Tenant's Work has been fully completed to the reasonable satisfaction of
Landlord and Landlord's lender, and there have been delivered to Landlord final
lien waivers, AIA form architects' certificates and such other evidence as
Landlord and/or its lender may reasonably require showing that all of Tenant's
Work has been fully completed and that none of the aforementioned liens have or
may be filed (the "Retainage Release Conditions"). All amounts retained shall be
paid by Landlord to Tenant
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within thirty (30) days after fulfillment of the Retainage Release Conditions
therefor and Tenant's submission of appropriate evidence of the satisfaction of
the Retainage Release Conditions, as determined by Landlord, in its reasonable
judgment, and any Landlord lender. Notwithstanding anything to the contrary
contained herein, the Allowance shall not be requested for or applied toward any
fees or charges payable to Tenant, directly or indirectly, for Tenant's (or any
affiliate of Tenant's) overhead, administrative expenses or profit with respect
to Tenant's Work, nor for moving expenses, furniture, furnishings, equipment or
any other items which are not customarily and properly considered capitalizable
"fit-out" costs. Allowance amounts may be applied towards the cost of all
electrical wiring installed in the Demised Premises for Tenant's domestic
electric use.
(d) Except to the extent hereafter provided, Tenant shall pay all Work
Costs in a timely manner. Any delay in or dispute concerning the payment of the
Allowance or any installment thereof shall in no manner excuse Tenant from
paying or permit Tenant to delay the payment of any Work Costs if such failure
to pay or delay in payment shall in any manner adversely affect Landlord, its
lender or either of their interests in the Project or any part thereof.
3. Plans and Contracts, Etc.
(a) Prior to the commencement of any Tenant's Work, Tenant shall submit
to Landlord (i) one (1) set of fully dimensioned preliminary drawings, prepared
at Tenant's sole cost and expense, which shall indicate Tenant's intentions with
respect to the design of the Demised Premises, including a floor plan which
includes a fixture layout (collectively referred to herein as the "Space Plan"),
and (ii) executed architects and engineers contracts and all related
construction contracts on standard AIA forms and after the commencement of the
Tenant's Work Tenant shall promptly deliver to Landlord any and all monthly AIA
form draw requests related to payments under such contracts and any change
orders Tenant should desire to make.
(b) Landlord and Landlord's architect and/or engineer shall review
Tenant's Space Plan to help insure that Tenant's proposed design will not
conflict with, or adversely affect, the design, structure or systems of the
Building and/or the Project. If Landlord has not already done so, Landlord
shall, within ten (10) business days after receipt thereof, either approve said
Space Plan, or disapprove the same advising Tenant of the reasons for such
disapproval. In the event Landlord disapproves said Space Plan, Tenant shall
modify the same, taking into account the reasons given by Landlord for said
disapproval, and shall submit the revised Space Plan to Landlord within ten (10)
business days after receipt of Landlord's initial disapproval, and shall
continue to do so as necessary until the same are approved.
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(c) Unless attached as an exhibit to the Lease or otherwise previously
approved in writing by Landlord, within sixty (60) days after receipt of
Landlord's approval of the Space Plan, Tenant shall submit to Landlord four (4)
sets of fully dimensioned scale drawings, hereinafter referred to as "Working
Drawings," prepared at Tenant's sole cost and expense, which drawings shall
indicate the specific requirements of Tenant's space, including sections and
details, types of materials and colors, interior partitions, ceiling plans,
plumbing fixtures and electrical plans prepared by a licensed electrical
engineer setting forth all electrical requirements of Tenant, and Tenant shall
include all drawings, specifications and bid forms of such scope as to delineate
completely the mechanical, structural, heating, ventilation, air-conditioning,
electrical and construction work to be performed. The Working Drawings shall
contain indices and notes of abbreviations and symbols and shall include, but
not be limited to, the following architectural, mechanical and engineering
drawings, details and specifications (which specifications shall be noted on
such drawings):
(i) demising and interior partition layout and composition
sufficiently dimensioned from field-verified existing Building surfaces to be
constructed (no less than 1/8" per 1'0" scale);
(ii) millwork drawings sufficiently elevated as needed for
clarity;
(iii) exit plan showing distance to primary and alternate exits
from the Demised Premises to the Building stairs or doorways;
(iv) the locations and extent of floor loadings in excess of the
design capacity of the Building and location of all floor openings including,
without limitation, any interconnecting stairwell, and all other structural and
mechanical changes;
(v) estimated total electrical requirements including, without
limitation, lighting for the entire Demised Premises showing amount, location
and type and dimensioned drawings showing the location and capacity of
electrical, telephone and other outlets and switches;
(vi) partition and reflected ceiling plans including type and
location of all electrical and mechanical devices, and showing dimensional
locations with reference to the Building columns' center lines or other
structural elements and supply and return air grills and access panels to damper
equipment and valves, and specifications for special lighting fixtures, giving
the length, width and height of the portion which is to be installed above the
level of the finished ceiling;
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(vii) lighting plan overlaying architectural backgrounds
sufficiently detailed to be constructible (no less than 1/8" per 1'0" scale);
(viii) power plan;
(ix) electrical control plan;
(x) schedule of electrical equipment and panels sufficiently
detailed to be constructible;
(xi) the heat dissipated in each room by Tenant's equipment;
(xii) drawings showing door locations, swings, undercutting,
size and type, and hardware and frame schedule;
(xiii) drawings showing any cabinet work, ornamental metal work,
architectural installations and details;
(xiv) drawings showing heating, ventilation and air-conditioning
requirements and system specifications (including any special or supplementary
systems), number and location of people, equipment and special conditions;
(xv) schedules of equipment, ducts and pumps in sufficient
detail to be constructible;
(xvi) HVAC plans overlaying partition backgrounds, dimensioned
and signed to accurately depict the location of all equipment and duct sizes (no
less than 1/8" per 1'0" scale);
(xvii) elevations of potentially conflicting conditions between
HVAC and other mechanical equipment or architectural details;
(xviii) HVAC control diagrams as needed;
(xix) drawings showing specific electrical, structural, plumbing
and mechanical requirements, specifications and locations, including engineering
plans and sections;
(xx) schedule of plumbing equipment and fixtures contained in
the plans;
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(xxi) plumbing plans overlaying architectural backgrounds
sufficiently detailed to be constructible (no less than 1/8" per 1'0" scale);
(xxii) drawings showing any non-Building standard ceiling
heights and materials;
(xxiii) complete listing and specification of the finishes,
coverings, and/or treatments to be applied to all wall, ceiling and floor
surfaces, including any architectural detailing thereof, elevated as needed for
clarity;
(xxiv) drawings showing locations, structural and electrical
loads and dimensions of special equipment;
(xxv) drawings showing special fire protection and security
systems; and
(xxvi) such other plans specifications, drawings and details as
may be needed to perform or let contracts for the performance of Tenant's Work
(including the details of all such work and the dimensional locations and
elevation thereof with respect to the Building columns' center lines or other
structural elements and details and sections of conditions peculiar to the
Demised Premises).
If any of the foregoing items is not final and complete or does not
contain all of the required information, Tenant shall supply such final and
complete and/or additional information promptly as the same are available and in
any event prior to performing any Tenant's Work. Landlord and Tenant acknowledge
that certain preliminary plans submitted by Tenant to Landlord contain some of
the above information and details.
(d) Landlord and Landlord's architect and/or engineer shall review the
Working Drawings and within ten (10) business days after receiving the same
shall either approve the same, or disapprove the same advising Tenant of the
reasons for such disapproval. If Landlord disapproves the Working Drawings,
Tenant shall promptly modify and submit revised Working Drawings, taking into
account the reasons given by Landlord for disapproval, and shall continue to do
so as necessary until the same are approved. Once fully approved, Tenant shall
deliver four (4) sets and one (1) sepia of the Working Drawings to Landlord.
(e) Landlord's approval of the Space Plan and/or the Working Drawings
shall be subject to the approval thereof by Landlord's lender, to the extent
such lender so requires.
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(f) Tenant shall, at Tenant's sole cost and expense, arrange for and
oversee the filing of the Working Drawings and such other plans as may be
approved by Landlord for air-conditioning, plumbing, fire protection, mechanical
and electrical work forming a part of Tenant's Work and any other necessary and
appropriate plans and specifications for Tenant's Work with the appropriate
governmental authorities having jurisdiction and Tenant shall take whatever
action shall be necessary (including modification of Working Drawings) to obtain
and maintain all necessary approvals from said authorities with respect thereto
and the completion of the work reflected therein and shall deliver copies of all
of the same to Landlord. All material modifications to the Working Drawings
shall be subject to the approval of Landlord and its lender, which approval
shall be granted or withheld within three (3) business days after submission
thereof. Landlord and Tenant shall cooperate with each other in connection with
the aforesaid, provided that Landlord shall not be required to incur any costs
or expenses in connection with such cooperation.
(g) The Space Plan and the Working Drawings shall be prepared in
accordance with preexisting conditions and field measurements.
4. Space Planners, Architects, Engineers, and Contractors. The Space
Plan, Working Drawings and Tenant's Work shall be prepared and performed by
space planners, interior designers, architects, engineers, contractors and
subcontractors approved of by Landlord, that are licensed, bonded, reputable,
qualified and adequately insured and who will work in harmony with each other
and with those of the Landlord so as to ensure proper maintenance of good labor
relationships. All contracts and other agreements with contractors and
subcontractors shall be fully assignable to Landlord and its lender.
5. Changes. Except for non-material changes (a) not affecting the
Building's structure or mechanical and/or utility systems, and (b) not
materially affecting the mechanical and/or utility systems located within and
serving only the Demised Premises, no changes, modifications, alterations or
additions to the approved Space Plan or Working Drawings may be made without the
prior written approval of the Landlord and its lender after written request
therefor by Tenant. Any such changes shall be marked as follows: (A) encircling
any such changes on the drawings, (B) noting such changes by marginal insertion
of a delta sign, (C) consecutively numbering all such changes by inserting such
numbers within the delta sign noted marginally for each such change, (D)
indicating the date of all such changes in any set of drawings by inserting the
revision date in the title block of such drawing. One (1) sepia and four (4)
prints shall be distributed accordingly updating the list of drawings. Approval
or disapproval of any such change order shall be given within three (3) business
days after receiving the same, with any disapproval specifying the reasons
therefor.
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6. Compliance. Tenant's Work, the Space Plan and the Working Drawings
shall comply in all respects with the following: (a) the Building Code of the
City of Stamford and State of Connecticut and any other related or unrelated
applicable laws, codes, ordinances, statutes, rules, requirements and
regulations, (b) applicable standards of the National Board of Fire Underwriters
and National Electrical Code, and (c) building material manufacturers
specifications (collectively, "Codes"). In no event shall Tenant use or occupy
or permit the use or occupancy of any part of the Demised Premises or perform
any work or cause any work to be performed therein without having first
obtained, at its sole cost and expense, all necessary permits, authorizations
and approvals. Landlord shall reasonably cooperate with Tenant with regard
thereto at Tenant's cost and expense. In no event shall Tenant use and/or occupy
any portion of the Demised Premises for any purpose other than the performance
of Tenant's Work prior to its having obtained a Certificate of Occupancy for
such portion. Each contractor or subcontractor of Tenant's Work shall agree in
writing not to discriminate against employees or applicants on the basis of
race, creed, color, national origin, ancestry, sex or age.
7. Guarantees. Tenant shall obtain from each contractor and
subcontractor participating in Tenant's Work a written warranty or guarantee
that the portion thereof for which it is responsible shall be free from any
defects in workmanship and materials for a period of not less than one (1) year
after completion thereof. The correction of such work shall include, without
additional charge, all additional expenses and damages in connection with such
removal or replacement of all or any part of Tenant's Work, and/or the Project
and/or all Common Areas, of work which may be damaged or disturbed thereby. All
such warranties or guarantees as to materials or workmanship of or with respect
to Tenant's Work shall be contained in the contract or subcontract which,
together with all appropriate and/or related contracts for maintenance and/or
repair of Tenant's Work, shall be written such that said warranties, guarantees
or contracts shall inure to the benefit of both Landlord and Tenant, as their
respective interests may appear, and if Landlord or its agent so requests,
Tenant shall enforce the same on Landlord's behalf. Copies of all contracts and
subcontracts shall be furnished to Landlord promptly after the same are entered
into, and before Tenant's Work is commenced. The obtaining of and/or delivery to
Landlord of any such warranties, guaranties and/or contracts shall in no manner
limit or be deemed to limit or release Tenant from any of its obligations under
the Lease.
8. Performance.
(a) All Tenant's Work shall, subject to Paragraph 5 of this Exhibit B.
conform strictly with the Working Drawings approved by Landlord to the extent
such approval is required by this Exhibit B. Landlord, its lender and their
respective designated representatives shall have the right at all times to
inspect Tenant's Work for such compliance. Tenant's Work shall not unreasonably
interfere with or delay the completion of any other construction work or repairs
performed at the Building ("Other
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Work"). Other Work shall not unreasonably interfere with or delay the completion
of Tenant's Work. The use by Landlord of labor which causes Tenant's contractors
and/or subcontractors to refuse to perform Tenant's Work shall constitute
unreasonable interference by Landlord.
(b) Tenant's Work shall be performed in a first-class and workmanlike
manner as to workmanship and materials, and shall be in good and usable
condition at the date of completion.
(c) Each contractor and subcontractor shall be required to obtain prior
approval from Landlord for any space outside the Demised Premises, at or within
the Building, which such contractor or subcontractor desires to use for storage,
handling and moving of materials and equipment, or for location of any
facilities for its personnel. Landlord agrees that its project manager is
authorized to grant such approval on its behalf.
(d) The contractors and subcontractors shall be required, as part of
Tenant's Work, to remove from the Demised Premises and dispose of at least once
per week (and more frequently as Landlord may reasonably direct), all debris and
rubbish caused by or resulting from Tenant's Work. Upon completion of Tenant's
Work, Tenant or the contractors and subcontractors shall remove all surplus
materials, equipment, debris and rubbish of whatever kind remaining in or at the
Building which has been brought in or created in the performance of Tenant's
Work. If any contractor or subcontractor shall neglect, refuse or fail to remove
any such debris, rubbish, surplus material or temporary structures within five
(5) days after notice to Tenant from Landlord with respect thereto, Landlord may
cause the same to be removed, at Tenant's sole cost and expense.
(e) As security for the prompt performance and completion of Tenant's
Work and for the payment thereof, Tenant shall furnish to Landlord or shall
cause its general contractor to furnish to Landlord a bond in the amount of 120%
of the contract sum of the general contractor's portion of Tenant's Work as set
forth in the Budget. All such bonds shall be issued by reputable surety
companies authorized to do business in the State of Connecticut and shall run to
the Tenant, the Landlord and Landlord's lender as obligees.
(f) Landlord's acceptance of Tenant's Work as being complete in
accordance with the approved Space Plan and Working Drawings shall be subject to
Landlord's inspections and written approval. which approval shall not be
unreasonably withheld or delayed. Tenant shall give Landlord not less than ten
(10) days' prior written notice of the anticipated completion date of Tenant's
Work and Landlord shall arrange for a final inspection of Tenant's Work promptly
after the receipt of any necessary Certificate of Occupancy therefor. If
Landlord disapproves of Tenant's Work, such reason(s) therefore shall be
specified in writing to Tenant and Tenant shall, at Tenant's sole cost and
expense,
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promptly arrange for any required modification, correction, replacement or
repair which shall be reasonably required and upon completion of such corrective
work, Landlord shall re-inspect Tenant's Work within a reasonable time (not to
exceed thirty (30) days) after receipt of Tenant's notice of the completion of
such corrective work and the parties shall continue as aforesaid until Landlord
in its reasonable judgment, accepts Tenant's Work as being complete. Landlord's
acceptance of Tenant's Work shall be subject to the terms of paragraph 8 (i)
herein.
(g) Tenant shall at its cost and expense construct, purchase, install
and perform any and all items of Tenant's Work and employ its personnel so as to
obtain appropriate Certificates of Occupancy and to occupy the Demised Premises
as soon as is reasonably possible.
(h) Copies of "as built" drawings shall be provided to Landlord no later
than sixty (60) days after completion of the Tenant's Work.
(i) Landlord's approval of the Space Plan and/or the Working Drawings
(including any reasonable changes thereto requested by Landlord),
recommendations and/or approval of contractors. subcontractors, space planners,
engineers, architects and/or consultants and Landlord's final approval of
Tenant's Work shall in no event give rise to any liability on Landlord's part
should the same be of insufficient quality, be inappropriate or otherwise be
inadequate for the performance of Tenant's Work and its compliance with all
Codes upon completion, it being understood that such approvals and/or
recommendations are given without representation or warranty of any kind by
Landlord and without waiving Landlord's right to require the correction of
Tenant's Work which is subsequently determined to be faulty or defective or
which is subsequently found not to have been completed in accordance with
approved plans or which is subsequently determined as not being in compliance
with applicable Codes in effect at the time such Tenant's Work was completed.
Similarly, any plans and/or specifications supplied by Landlord to Tenant are
made with the understanding that (i) their contents shall be verified by Tenant
and (ii) they are given without representation or warranty of any kind by
Landlord as to measurements, dimensions or other matters discoverable by a
reasonable inspection of the Demised Premises by Tenant or its consultant(s).
(j) Landlord and Tenant shall and shall require their respective
contractor(s) and subcontractor(s) to use reasonable efforts to conduct their
labor relations so as to avoid strikes, picketing and boycotts of, on or about
the Demised Premises or the Building and/or any delay in the completion of
Tenant's Work, and any interference with Other Work.
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(k) Tenant shall pay (or cause its contractor to pay), as and when due,
any and all taxes, including, but not limited to any sales taxes, payable by
Tenant and/or its contractor for the performance or installation of Tenant's
Work.
(l) All of Tenant's Work shall be coordinated with Landlord's project
manager and shall be performed in harmony with all other contractors performing
work in the Project and in accordance with such rules and regulations as
Landlord and/or its project manager may determine to be reasonably necessary
including, but not limited to, rules concerning Landlord's supervision of
Tenant's Work, the hours during which Tenant's Work may be performed, and rules
concerning the use of scaffolding, loading dock(s) and freight elevator,
including, but not limited to, charges for the use thereof (which shall be
limited to the costs actually incurred by Landlord). Tenant and its contractors
shall have priority in the use of the loading dock and freight elevator,
provided the exercise of such priority does not unreasonably interfere with the
performance of Other Work. In any event, if the weight and/or size capacity of
the freight elevator is insufficient for any aspect of Tenant's Work, Tenant
shall make its own hoisting arrangements subject to such reasonable rules as
Landlord may establish. No fee shall be charged Tenant for elevator use, except
for Landlord's supervisory fee as specified in Section 10.4 (Elevators) of the
Lease.
(m) Landlord and Tenant agree that the approval and/or consent of
Landlord of or to any matter herein contained shall be subject to the approval
and/or consent thereof or thereto by Landlord's lender. If, for any reason,
Landlord's lender withholds or delays its approval and/or consent to any matter,
it shall be reasonable for Landlord to withhold or delay its approval and/or
consent thereto. However, Landlord agrees to use all reasonable efforts to
obtain Landlord's lender's approval and/or consent to any such matter.
(n) Tenant shall pay to Landlord a fee for Landlord's review of the
Space Plan and the Working Drawings and for the inspection, administration and
coordination of Tenant's Work, which fee shall include, but shall not be limited
to, an hourly rate for the time of Landlord's property manager spent on such
matters, which rate shall be $75.00 per hour as of the date of this Lease and
which hourly rate shall be subject to increase by Landlord, from time to time
and an hourly rate for other Building management personnel whose services may be
required, which hourly rates shall also be subject to increase, from time to
time. As of the date of this Lease, the regular hourly rate for the Building
Mechanical Engineer is $29.50 and the overtime rate is $44.10. With respect to
Landlord's review of the Space Plan and the Working Drawings for the initial
Tenant's Work and for the inspection, administration and coordination of initial
Tenant's Work to initially ready the Demised Premises for Tenant's occupancy,
such fee may be paid from the Allowance and, to the extent the Allowance is
insufficient, shall be paid by Tenant to Landlord as Additional Rent promptly
upon demand.
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9. Insurance. Supplementing Article 11 of the Lease: Tenant and all
contractors and subcontractors shall carry worker's compensation insurance
covering all of their respective employees in amounts as required by statute;
and all contractors shall also carry public liability insurance, including
property damage coverage, with reasonable limits and in form and companies as
are required to be carried by Tenant under the Lease; and the policies therefor
shall insure Landlord, Landlord's lender and Tenant as additional insureds as
their interests may appear, as well as the contractor and its subcontractors.
Tenant shall carry the casualty insurance coverage required under the Lease
respecting the construction and improvements to be made by Tenant, in the amount
of the anticipated cost of construction of Tenant's Work. Certificates of such
insurance as is obtained by Tenant, or with respect to insurance provided by
contractors and/or subcontractors, certificates or certified copies of all such
insurance policies shall be delivered to Landlord before the construction is
commenced or the contractor's equipment is moved to the Building. All policies
of insurance must require that the carrier give Landlord at least thirty (30)
days' advance written notice of any cancellation or lapse of the effective date
or any reduction in the amounts of insurance. In the event that during the
course of Tenant's Work, any damage shall occur to the Building or construction
and improvements being made by Tenant resulting from the actions or omissions of
Tenant and/or its contractors and/or subcontractors, then Tenant shall promptly
repair the same at Tenant's sole cost and expense.
10. Stop Work: Default.
(a) If Landlord reasonably believes that any of Tenant's Work has caused
or created a dangerous or hazardous condition landlord may without in any manner
limiting Landlord's other remedies under the Lease and without prior notice
order that until such dangerous or hazardous condition is remedied, no further
Tenant's Work shall be performed and no further deliveries shall be made with
respect to the matter giving rise to such condition other then as may be
necessary to remedy such condition, provided that Landlord shall provide Tenant
with telephonic notice of Landlord's directive as soon thereafter as is
reasonably practicable.
(b) Notwithstanding the terms and provisions of Section 16.1, any
default by Tenant under this Work Letter which remains uncured for a period of
fifteen (15) days after notice thereof from Landlord shall be an event of
default under the Lease.
11. Access to Demised Premises. After obtaining all approvals required
under Paragraph 3 hereof, Tenant and its contractors and employees shall, so
long as Tenant is not in default of any of the terms, covenants and conditions
of this Lease beyond applicable notice and grace periods, be entitled to access
the Demised Premises prior to the Commencement Date during the hours of 8:00
A.M. to 6:00 P.M. Monday
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through Friday. Upon reasonable advance notice to Landlord or its project
manager, such parties may access the Demised Premises at other times for matters
relating to Tenant's Work. provided, however, that Tenant shall be liable, as
Additional Rent under the Lease, for all overtime personnel costs and expenses
incurred by Landlord with respect to the supervision and administration thereof.
All access shall be at such parties' sole risk and shall be upon all the terms,
covenants and conditions of this Lease excepting only Tenant's obligation to pay
Fixed Rent, irrespective of whether the same by the express terms of this Lease
only apply from and after commencement of the Term. Electricity, heat and
ventilation stall be furnished to Tenant at Landlord's actual cost, together
with Landlord's administrative fee, to the extent they may be reasonably
required by Tenant during the aforementioned hours.
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EXHIBIT B-1
MINIMUM TENANT'S WORK
All work to the Demised Premises undertaken by or for Tenant shall
conform to the following Building Standard Requirements and all City of Stamford
codes, rules and regulations.
PARTITIONS
PUBLIC CORRIDOR AND TENANT DEMISING PARTITION
One (1) hour fire rated 3-3/4" (thickness of wall). First layer 5/8"
gypsum wallboard attached vertically on both sides, on 2-1/2" metal studs spaced
16" on center with 2-1/2" Thermofibre in cavity. Wall extend from floor to
concrete slab.
INTERIOR PARTITIONS -1 LF PER 15 RSF
One layer 5/8" fire-shield gypsum wallboard screw attached horizontally
or vertically to both sides on 2-1/2" metal screw studs spaced 24" on center
from floor to underside of dropping ceiling.
SMOKE EVACUATION SYSTEM
All return air openings in ceiling plenum must be provided to maintain
property operation of smoke evacuation system.
VINYL BASE
Four (4) inch vinyl base toe less for carpet floor and cover for
resilient floor tile in building standard color.
PAINT
Areas to be painted shall be all walls, non-acoustically treated
ceilings, metal doors and door bucks, and all other masonry or metal surfaces.
This painting shall
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consist of water base, flat on walls, and semi-gloss on doors, bucks and other
metal surfaces. Colors for the initial painting of the dry wall partitioning may
be selected by Tenant from Building Standards' color chart. A finish schedule
shall be provided to Landlord by Tenant. Such finish schedule shall mean the
complete listing of the finishes to be applied to all wall and floor surfaces
forming a part of the Finish Work and detailed specifications of such wall and
floor coverings, including cover samples, identification of materials by
manufacturers, catalog numbers if applicable.
DOORS
ENTRANCE DOOR - 1 PER TENANT
One single suite entrance door - 3'0" x 7'0" or one double door 6'0" x
7'0" flush panel solid core prefinished mahogany or oak with hardwood or metal
frame and lever hardware cloer: three butt hinges, heavy duty lockset; floor
mounted doorstop. All as selected by owner.
INTERIOR DOOR - MINIMUM OF 1 PER 350 RSF
Full height 3' 0" x 7'0" x 1-3/4" flush panel solid core prefinished
premium Quartered Mahogany or Oak veneer. Three bearing butt hinges; heavy duty
latchset; and floor/wall mounted door stop. As selected by owner.
SIGNS
TENANT I.D. - 1 PER TENANT
Entry shall have Building Standard suite identification graphics. As
specified by Owner.
EXIT SIGN - AS REQUIRED
Exit signs in accordance with City of Stamford code. Exit signs to be
LED type fixture and must meet or exceed requirements of North East Utilities
ECC Electronic Ballast Eligible Product List at time of installation.
ELECTRICAL
DUPLEX RECEPTACLE - MINIMUM OF 1 PER 150 RSF
Partition mounted outlets (110 volt) with plastic cover plate in
building outlet box.
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MOTION SENSOR LIGHT- MINIMUM OF 1 PER 500 RSF
Partition mounted single pole, motion sensor switch with plastic cover
plate in Building Standard outlet box to be tied into central lighting computer
system, mounted at handicap height (36" to bottom of box).
LIGHTING FIXTURE - MINIMUM OF 1 PER 75 RSF
2' x 4" Keene Lighttolier or equivalent 2 lamp, 12 cell parabolic with
air return adjustable dampers, 277V, high efficiency electronic ballast, 3,000
Kelvin Advantage XT-8 lamps and fitted with specular anodized aluminum parabolic
reflectors; or
2' x 2' Keene Lighttolier paralythe 9 cell or equivalent may be
substituted where necessary. All fixtures must conform to N.E. Utilities
eligible products list, all bulbs must be approved watt misers: or down lights;
or other light fixtures as selected by Tenant and subject to Landlord approval,
which shall not be unreasonably withheld or delay. All fixtures and ballasts
must conform to North East Utilities ECC Electronic Ballast Eligible Product
List at time of installation.
Compact Flourescreen 52 Watts or downlights may also be used with
ballasts that conform to North East Utilities ECC Electronic Ballast Eligible
Product List at time of installation.
TELEPHONE OUTLET - MINIMUM OF 1 PER 200 RSF
Partition mounted telephone rough outlet mounted horizontally 1'0" above
the floor with empty conduit back to the Tenant's telephone equipment located
within the tenant leasehold area; all cable, installation, and trim
plates/connectors provided and installed by the Tenant's telephone contractor.
EMERGENCY LIGHTING - AS REQUIRED
2' x 4' Keene Lightolier, 2 lamp, 12 cell 3-1/8" parabolic with air
return adjustable dampers, 277V, high efficiency electronic ballast, 3,000
Kelvin Advantage X-T8 lamps and fitted with specular anodized aluminum parabolic
reflectors.
2' x 2' model, 9 cell or equivalent may be substituted where necessary.
All fixtures must conform to N.E. Utilities eligible products list, all bulbs
must be approved watt misers; or down lights; or other light fixtures as
selected by Tenant and subject to Landlord approval, which shall not be
unreasonably withheld or delay. All fixtures and ballasts must conform to North
East Utilities ECC Electronic Ballast Eligible Product List at time of
installation.
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Emergency lighting to be in accordance with the City of Stamford code
and connected to building's emergency generator. Exit lights - as required.
Lithonia Signature Series LED (single face) and LED (double face). All fixtures
must conform to North East Utilities Electronic Eligible Products List at time
of installation, all bulbs must be approved watt misers.
INTELLIMETER SYSTEM
Tenant's use of electricity in and about the Demised Premises shall be
measured by an Intellimeter submetering system to be installed in conjunction
with electrical equipment included in tenant fit-out. Submetering equipment
manufactured and monitored by Neta Corporation of America.
CEILING
CEILING GRID - RSF
Chicao Metallic, spectra 3800, 2' x 2', finish. White-01.
CEILING TILE-RSF
Armstrong, Cirrus Travertone, 2' x 2' acoustical straight-edge tile
suspended at approximately 8' - 9' above finished floor.
WINDOW TREATMENT
EXTERIOR WINDOW TREATMENT - AS REQUIRED
Building Standard Levolor horizontal 1" mini blinds installed in
exterior windows in building standard color (#820, Squirrel Grey).
CARPET
Carpeting throughout the premises of a type and color, selected by
Tenant either (i) from Landlord's Building Standard, 30 oz. static resistant,
direct glue down, fire retardant, or (ii) of a superior quality, subject to
Landlord's reasonable approval.
HVAC
HEATING, VENTILATING AND AIR-CONDITIONING
Building Standard perimeter individually controlled floor mounted water
source heat pumps serving perimeter offices are Friedrich Climate Master model
#811-10E
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and #811-12E. Interior office spaces are served by 1 to 4 floor mounted water
source heat pumps each controlled by a space mounted electronic sensor
thermostat. Main duct distribution trunk lines are distributed throughout the
interior space for connection to ceiling air diffusers by the Tenant. Return air
to be provided through the building standard lighting fixtures and return air
grills where necessary. All automatic temperature controls must conform to
central energy management system. (CSI 7000)
The HVAC system is designed to provide 72 degrees F space temperature
based on outdoor coincident of 9 degrees F; 75 degrees F dry bulb and 50%
relative humidity when outside conditions are 86 degrees F dry bulb and 73
degrees F coincident wet bulb temperature. Design conditions include for people
density of 1 per 150 USF. The Building Standard auxiliary condenser water system
allows Tenants the option of adding auxiliary cooling equipment not to exceed
1.2 watts USF at their own cost.
The Base Building Energy Management System ("EMS") is a Climate
Master/CS I 7000 System, represented locally by W.C. Industries Controls, Inc.
of Stamford, Connecticut. All HVAC units shall be equipped with control modules
compatible to the Base Building EMS and wired into the base building control
system with appropriate interface modules. Twisted pair wiring will be installed
around the perimeter of the building to connect each of the perimeter heat pumps
to the core mechanical rooms. DDC Control modules compatible with the base
building EMS will be installed and connected to the twisted pair wiring. Each
perimeter heat pump requires one Climate Master Heat Pump Control Module and
communications card. Each Core Ducted Heat Pump requires one CSI Heat Pump
Control Module and communications card with space temperature sensor. The space
sensor will be wired to the core heat pump and installed in the tenant space.
One Control Interface Module will be installed in the Core Mechanical Room for
every 32 heat pumps within the tenant space. The Tenant will be responsible for
the start-up of the new controls, entering the control parameters into the
System Computer, and a full checkout under the supervision of the Landlord.
SPRINKLER AND FIRE LIFE SAFETY
Building Standard fire life safety and wet sprinkler system includes
sprinkler heads, exit signs, pull stations, alarms, portable fire extinguishers
and smoke evacuation for Tenant build-out. Tenant shall fully comply with all
City of Stamford and applicable codes.
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EXHIBIT C
COMMENCEMENT DATE AGREEMENT
THIS AGREEMENT is made this _ day of _______, 1996 by and between
STAMFORD TOWERS LIMITED PARTNERSHIP (hereinafter referred to as the "Landlord")
and CARDMEMBER PUBLISHING CORPORATION (hereinafter referred to as the "Tenant")
pertaining to certain space (the "Demised Premises") in the building located at
680 Washington Boulevard, Stamford, Connecticut (the "Building").
W I T N E S S E T H:
WHEREAS, by Lease dated as of the _____ day of January 1996 (the
"Lease"), Landlord leased Tenant the Demised Premises; and
WHEREAS, the Lease provided for the Commencement Date and the
Expiration Date to be determined; and
WHEREAS, Landlord and the Tenant now desire to fix the Commencement
Date and Expiration Date;
NOW, THEREFORE, the Landlord and the Tenant hereby agree as follows:
1. The term of the Lease shall be deemed to have commenced on
_______________, 1996 (the "Commencement Date"), and shall continue until
midnight on _____________,(the "Expiration Date"), unless sooner terminated or
extended as provided therein.
2. By execution hereof, the Tenant hereby acknowledges that all
improvements required to be made by the Landlord prior to the Commencement Date
have been satisfactorily performed and that Tenant does hereby accept the
Demised Premises delivered by the Landlord in full compliance with the terms of
the Lease.
3. This Agreement shall be binding upon the parties hereto, their
heirs, executors, successors, and assigns.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
Executed this __ day of _____,l99_
LANDLORD:
STAMFORD TOWERS LIMITED PARTNERSHIP
By:Stamford Towers, Inc.
a General Partner
By:_____________________________________________
Name:
Title:
TENANT:
CARDMEMBER PUBLISHING CORPORATION,
a _______________corporation
By:______________________________________________
Name:
Title:
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EXHIBIT D
RULES AND REGULATIONS
(1) Security. (a) Landlord may from time to time adopt appropriate
systems and procedures for the security of the Project and all persons and
property in the Project, and Tenant will comply with Landlord's requirements
relating to security. No customer or invitee of Tenant may be admitted after
Normal Business Hours unless accompanied by an employee of Tenant. Tenant and
Tenant's employees will be permitted in the Building 24 hours per day, 7 days
per week except as provided below. During the continuance of any invasion, mob,
riot, public excitement or other circumstance rendering such action advisable in
Landlord's opinion, Landlord reserves the right to prevent access to the
Project, by closing the doors or otherwise, for the safety of tenants and
protection of the Project and property in the Project. Landlord may from time to
time install and change locking mechanisms on entrances to the Project, the
Building, any Common Area, and the Demised Premises. Tenant shall not add to or
change existing lock mechanisms on any door in or to the Demised Premises. All
keys or other devices serving the same purpose as keys issued to Tenant will
remain the property of Landlord, may not be duplicated and must be returned to
Landlord at the end of the Term or upon request. Tenant shall not make or have
made additional copies of any keys or access devices provided by Landlord. In
the event of the loss of any keys or access devices so furnished by Landlord,
Tenant shall pay Landlord therefor.
(b) Tenant shall see that the doors of the Demised Premises are
closed and securely locked and must observe strict care and caution that all
water faucets or water apparatus are entirely shut off before Tenant or its
employees leave such Demised Premises, and that all utilities shall likewise be
carefully shut off, so as to prevent waste or damage, and for any default or
carelessness the Tenant shall make good all injuries sustained by other tenants
or occupants of the Project or Landlord. On multiple-tenancy floors, all tenants
shall keep the door or doors to the Building corridors closed at all times
except for ingress and egress. Tenant shall observe and abide by all security
measures or security systems for the Demised Premises and/or the Project now in
force or hereinafter adopted by Landlord. Tenant shall not use any security
systems or security measures which are in addition to or different from those
provided by Landlord without Landlord's prior written consent. If Landlord
consents to such additional or different security systems or security measures
(including, without limitation, extra locks, keys, guards or alarms), Tenant
shall pay Landlord, as Additional Rent, all costs and expenses which Landlord
incurs in connection with such increased security.
(2) Windows. Tenant shall observe Landlord's rules with respect to
maintaining uniform coverings at all windows in the Demised Premises so that
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the Building presents a uniform exterior appearance, and shall not install any
window shades, screens, drapes, covers or other material on or at any window in
the Demised Premises without Landlord's prior written consent. No articles shall
be placed against windows, glass partitions or glass doors which might appear
unsightly from outside the Building. Tenant shall ensure, to the best of its
ability, that window coverings are closed on all windows in the Demised Premises
while they are exposed to the direct rays of the sun.
(3) Repairs, Maintenance, Alterations and Improvements. Tenant shall
carry out Tenant's repairs, maintenance, alterations and Improvements in the
Demised Premises only during times agreed to in advance by Landlord and in a
manner which will not interfere with the rights of other tenants in the Project.
(4) Water Fixtures. Tenant shall not use water fixtures for any purpose
for which they are not intended, nor shall water be wasted by tampering with
such fixtures.
(5) Personal Use of Demised Premises. The Demised Premises shall not be
used or permitted to be used for residential, lodging or sleeping purposes or
for the storage of personal effects or property not required for business
purposes.
(6) Heavy Articles. Tenant shall not place upon any floor of the Demised
Premises a load exceeding the designed load per square foot or the load allowed
by law. Landlord may designate the location of any heavy articles in the Demised
Premises. No furniture, office equipment, packages or merchandise will be
received in the Building or carried up or down in the elevator, except during
such hours as shall be designated by Landlord. Landlord shall prescribe the
charge for freight elevator use and the method and manner in which any
merchandise, heavy furniture, equipment or safes shall be brought in or taken
out of the Building, and also the hours at which such moving may be done. All
damage done to the Building by taking in or out such merchandise, heavy
furniture or safes, or done to the Building while any of said property shall be
therein, shall be made good and paid for by Tenant on demand as Additional Rent.
(7) Use of the Demised Premises. Tenant shall not suffer or permit the
Demised Premises or any part thereof to be used in any manner, or anything to be
done therein, or suffer or permit anything to be brought into or kept therein
which would in any way:
(i) violate any of the provisions of any lease, mortgage or deed of
trust to which this Lease is or may hereafter become subordinate;
(ii) cause or be likely to cause physical damage to the Building or any
part thereof or the Project;
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(iii) constitute a public or private nuisance;
(iv) impair or, in Landlord's good faith judgment, be likely to impair
the appearance, character or reputation of the Building or the Project;
(v) result in members of the general public loitering in, on or about
the Building or the Project;
(vi) discharge objectionable fumes, vapors or odors into the Building
air conditioning system or into Building flues or vents not designed to receive
them or otherwise in such manner as may offend other occupants; or
(vii) impair or interfere with any of the Building or Project services
or the proper economic heating, cleaning, air conditioning or other servicing of
the Building or the Demised Premises or impair or interfere with or tend to
impair or interfere with the use of any of the other areas of the Project by, or
occasion discomfort, annoyance or inconvenience to, Landlord or any of the other
tenants or occupants of the Project.
(8) Carpet Pads. In those portions of the Demised Premises where carpet
has been provided directly or indirectly by Landlord (including by work letter
reimbursement), Tenant shall, at its sole cost and expense, install and maintain
pads to protect the carpet under all furniture having casters.
(9) Bicycles, Animals. Tenant shall not bring any animals or birds into
the Building (other than "seeing eye dogs"), and shall not permit bicycles or
other vehicles inside or on the sidewalks outside the Project except in the
areas designated from time to time by Landlord for such purposes.
(10) Deliveries. Tenant shall ensure that deliveries of materials and
supplies to the Demised Premises are made through such entrances, elevators, and
corridors and at such times as may from time to time be designated by Landlord.
Under no circumstances shall deliveries be made through the lobbies of the
Building.
(11) Furniture and Equipment. Tenant shall ensure that furniture and
equipment being moved into or out of the Demised Premises are moved through such
entrances, elevators and corridors and at such times as may from time to time be
designated by Landlord, and by movers or a moving company approved by Landlord.
(12) Solicitations. Landlord reserves the right to restrict or prohibit
canvassing, soliciting, or peddling in the Building or the Project.
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(13) Food and Beverages. Only persons approved from time to time by
Landlord may prepare or solicit orders for any such purpose. Except with
Landlord's prior written consent and in accordance with arrangements approved by
Landlord, Tenant shall not permit on the Demised Premises the use of equipment
for dispensing food or beverages or for the preparation, solicitation or orders
for, sale, serving or distribution of food or beverages. No cooking shall be
done or permitted by Tenant on the Demised Premises (except that use by Tenant
of Underwriters' Laboratory-approved equipment for the preparation of coffee,
tea, hot chocolate and similar beverages for Tenant and its employees shall be
permitted, provided that such equipment and use are in accordance with all
applicable federal, State and City laws, codes, ordinances, rules and
regulations, and Landlord has approved all of such equipment prior to
installation).
(14) Refuse. With respect to refuse in excess of that picked up by the
Building's janitorial service, Tenant shall place all refuse in proper
receptacles provided by Tenant at its expense in the Demised Premises or in
receptacles (if any) provided by Landlord for the Building, and shall keep
sidewalks and driveways outside the Project, and lobbies, corridors, stairwells,
ducts and shafts of the Building, free of all refuse. No material shall be
placed in the trash boxes or receptacles if such material is of such nature that
it may not be disposed of in the ordinary and customary manner of removing and
disposing of trash and garbage in the City of Stamford, without violation of any
law or ordinance governing such disposal. All trash, garbage and refuse disposal
shall be made only through entryways and elevators provided for such purposes
and at such times as Landlord shall designate.
(15) Obstructions. Tenant shall not obstruct or place anything in or on
the sidewalks or driveways outside the Building or the Project or in the
lobbies, corridors, stairwells, or any other Common Area, or use such locations
for any purpose except access to and exit from the Demised Premises, without
Landlord's prior written consent. Landlord may remove at Tenant's expense any
such obstruction or thing (unauthorized by Landlord) without notice or
obligation to Tenant.
(16) Proper Conduct. Tenant shall not conduct itself in any manner which
is inconsistent with the character of the Project as a first quality building or
which will impair the comfort or convenience of other tenants in the Project.
(17) Employees and Agents. In these Rules and Regulations, "Tenant"
includes the employees, invitees, agents, and licensees of Tenant and others
permitted by Tenant to use or occupy the Demised Premises.
(18) Noise. Tenant shall not make, or permit to be made, any unseemly
or disturbing noises or odors, or disturb or interfere with occupants of the
Building, the Project or neighboring buildings or premises or those having
business with them, whether
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by the use of any musical instrument, radio, television set, talking machine,
unusual noise, whistling, singing or in any other way. Business machines and
mechanical equipment belonging to Tenant which cause noise or vibration that may
be transmitted to the structure of the Building or to any space therein to such
a degree as to be objectionable to Landlord or to any tenants in the Building
shall be placed and maintained by Tenant, at Tenant's expense, in such a manner
as shall be sufficient, in Landlord's judgment, to absorb and prevent noise,
vibration or annoyance. The persons employed to move such equipment in or out of
the Building must be acceptable to Landlord.
(19) Parking. Upon Landlord's request, Tenant will furnish Landlord with
a complete list of the license numbers of all automobiles operated by Tenant and
its employees.
(20) Access. Sidewalks, halls, passages, exits, entrances, elevators,
escalators and stairways shall not be obstructed by Tenant or used by Tenant for
any purpose other than for ingress and egress from the Demised Premises. The
halls, passages, exits, entrances, elevators and stairways are not for the use
of the general public and Landlord shall in all cases retain the right to
control and prevent access thereto by all persons whose presence, in the
judgment of the Landlord, may be prejudicial to the safety, character,
reputation and interests of the Project, the Building or its tenants, provided
that nothing herein contained shall be construed to prevent such access to
persons with whom Tenant normally deals in the ordinary course of Tenant's
business unless such persons are engaged in illegal activities. Tenant shall not
go upon the roof of the Project or the Building, except as authorized by
Landlord.
(21) Signs. No sign, placard, picture, name, advertisement or notice
visible from the exterior of the Premises shall be inscribed, painted, affixed,
installed or otherwise displayed by Tenant either on the Premises or any part of
the Project without the prior written consent of Landlord, and Landlord shall
have the right to remove any such sign, placard, picture, name, advertisement or
notice without notice to and at the expense of Tenant. If Landlord shall have
given such consent to Tenant at any time, whether before or after the execution
of the Lease, such consent shall not in any way operate as a waiver or release
of any of the provisions hereof or of the Lease, and shall be deemed to relate
only to the particular sign, placard, picture, name, advertisement or notice so
consented to by Landlord and shall not be construed as dispensing with the
necessity of obtaining the specific written consent of Landlord with respect to
any other such sign, placard, picture, name, advertisement or notice. All
approved signs or lettering on doors and walls shall be printed. painted,
affixed or inscribed at the expense of Tenant by a person approved by Landlord.
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(22) Directory. The bulletin board or directory of the Building will be
provided exclusively for the display of the name and location of tenants only
and Landlord reserves the right to exclude any other names therefrom.
(23) Janitorial Service. Tenant shall not employ any person or persons
other than the janitor or cleaning contractor of Landlord for the purpose of
cleaning the Demised Premises unless otherwise agreed to by Landlord in writing.
Except with the written consent of Landlord in each instance, no person or
persons other than those approved by Landlord shall be permitted to enter the
Building for the purpose of cleaning the same. Tenant shall not cause any
unnecessary labor by reason of Tenant's carelessness or indifference in the
preservation of good order and cleanliness of the Demised Premises. Landlord
shall not in any way be responsible to Tenant for any loss of property on the
Demised Premises, however occurring, or for any damage done to the effects of
Tenant by the janitor or any other employee or any other person.
(24) Electricity, Water, Heating and Air-Conditioning. As more
specifically provided in the Lease, Tenant shall not waste electricity, water or
air- conditioning and agrees to cooperate fully with Landlord to assure the most
effective and efficient operation of the Building's heating and air
conditioning, and shall refrain from attempting to adjust any controls other
than room thermostats installed for Tenant's use. Tenant shall not use any
method of heating or air-conditioning other than that supplied by Landlord.
(25) Toilets. The toilet rooms, toilets, urinals, wash bowls and other
apparatus shall not be used for any purpose other than that for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown
therein, and the expense of any breakage, stoppage or damage resulting from the
violation of this rule by Tenant or Tenant's employees or invitees shall be
borne by Tenant.
(26) Hazardous Substances. Tenant shall not use or keep in the Demised
Premises, the Building or the Project any kerosene, gasoline or inflammable or
combustible fluid or material other than limited quantities necessary for the
operation or maintenance of routine office equipment. Upon Landlord's request,
Tenant shall provide Landlord with material data sheets identifying any and all
such substances used or stored at the Demised Premises.
(27) Wiring. Landlord will direct electricians as to where and how
telephone, telegraph, electrical communication and data transmissions wires,
cables and/or conduits are to be introduced or installed. No boring or cutting
for wires will be allowed without the prior written consent of Landlord. The
location of burglar alarms, telephones, call boxes and other office equipment
affixed to the Demised Premises shall be subject to
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the prior written approval of Landlord, and Tenant must obtain and comply with
Landlord's instructions as to their installation.
(28) Radio and Television. Except as may otherwise be provided in the
Lease, Tenant shall not install any radio or television antenna, loudspeaker or
any other device on the exterior walls or the roof of the Project or the
Building. Tenant shall not interfere with radio or television broadcasting or
reception from or in the Project, the Building or elsewhere.
(29) Infestation. If the Demised Premises become infested with insects
or vermin (or a reasonable threat of such infestation exists), Tenant, at its
sole cost and expense, shall cause the Demised Premises to be exterminated. from
time to time, to the satisfaction of Landlord, and shall employ such
exterminators therefor as shall be approved by Landlord.
(30) Floor Coverings. Tenant shall not lay linoleum, tile, carpet or any
other floor covering so that the same shall be affixed to the floor of the
Demised Premises in any manner except as approved in writing by Landlord.
(31) Vehicles. There shall not be used in any space, or in the public
areas of the Project, either by Tenant or others, any hand trucks except those
equipped with rubber tires and side guards or such other material-handling
equipment as Landlord may approve. No other vehicles of any kind shall be
brought by Tenant into or kept in or about the Demised Premises.
(32) Name of Building. Landlord shall have the right, exercisable
without notice and without liability to Tenant, to change the name and address
of the Project or the Building.
(33) Control of Project. Landlord reserves the right to exclude or expel
from the Project or the Building and/or the Project any person who, in
Landlord's judgment, is intoxicated or under the influence of liquor or drugs or
who is in violation of any of the rules and regulations of the Project or the
Building.
(34) Control of Name of Project. Without the prior written consent of
Landlord in each instance, Tenant shall not use the name of the Project or the
Building with or in promoting or advertising the business of Tenant except as
Tenant's address.
(35) Compliance With Safety Regulations. Tenant shall comply with all
safety, fire protection and evacuation procedures and regulations established by
Landlord or any governmental or quasi-governmental entity.
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(36) Tenant's Responsibility. Tenant assumes any and all responsibility
for protecting the Demised Premises from theft, robbery and pilferage, which
includes keeping doors locked and other means of entry to the Demised Premises
closed.
(37) Authorized Work. The requirements of Tenant will be attended to
only upon application at the office of the Project by an authorized individual.
Employees of Landlord shall not perform any work or do anything outside of their
regular duties, unless under special instructions from Landlord, and no
employees will admit any person (Tenant or otherwise) to any office without
specific instructions from Landlord.
(38) Waiver. Landlord may waive any one or more of these Rules and
Regulations for the benefit of any particular tenant or tenants, but no such
waiver by Landlord shall be construed as a waiver of such Rules and Regulations
in favor of any other tenant or tenants, nor prevent Landlord from thereafter
enforcing any such Rules and Regulations against any or all tenants of the
Building.
(39) Rules and Regulations. Landlord reserves the right to make such
other rules and regulations as in its judgment may from time to time be needed
or appropriate for safety and security, for care and cleanliness of the Project
and for the preservation of safety, efficiency and order therein. Tenant agrees
to abide by all such Rules and Regulations hereinafter stated and any additional
rules and regulations which are adopted.
(40) Observance of Rules and Regulations. Tenant shall be responsible
for the observance of all of the foregoing Rules and Regulations by Tenant's
employees, agents, clients, customers, invitees and guests.
(41) Definition of Terms. Unless otherwise defined, terms used in these
Rules and Regulations shall have the same meaning as in the Lease.
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EXHIBIT E
CLEANING SPECIFICATIONS
General
1. All flooring to be swept and/or dust mopped five times per week Damp
mopping as needed.
2. All carpeted areas and rugs vacuumed twice weekly.
3. All stairways to be swept five times per week.
4. Empty all waste paper baskets five times per week.
5. Floors, walls and interior surfaces of lobby, elevators and public
corridors to be maintained as required. Five times per week.
6. Dust all furniture and window sills as required. Five times per week.
7. Water cooler to be wiped five times per week.
8. Entrance lobby glass to be washed or wiped five times per week.
9. Clean all elevator cabs and tracks five times per week.
10. Clean entrance sidelights and transoms. Five times per week.
11. High-dust partitions, pipes, vents, moldings. Monthly.
12. Dust all venetian blinds, three times per year.
13. Leave on designated night lights, secure doors and windows, five times per
week.
14. Maintain janitor's closet, and clean related equipment, five times per
week.
15. Sweep and dust stairwells, landings, handrails five times per week.
16. Clean all finger marks and smudges around light switches and doorknobs,
five times per week.
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17. Dust and/or damp wipe radiator sills. Dust and/or damp wipe walls,
partitions, doors, sills, etc.. to remove finger marks and scuff marks,
five times per week.
18. Dust baseboards trim, louvers, pictures, charts quarterly.
19. Dust and wipe directories, mail boxes, etc., five times per week.
20. Spot shampoo all public corridors and elevator floors weekly.
21. All public areas to be vacuumed five times per week.
22. Dust all ceiling diffusers two times per year.
23. A "day porter" shall be provided on weekdays.
Main Lobby
Nightly
1. Sweep and damp-mop entrance floor.
2. Vacuum carpeted floors.
3. Dust all furniture.
4. Vacuum upholstered furniture.
5. Clean all outside ashtrays.
6. Sweep outside mat.
7. Clean front entrance doors thoroughly.
Monthly
1. Spray and buff floor.
Restrooms
Nightly
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1. Sweep and wash flooring with a germicidal solution. Wash and polish mirrors
powder shelves, brightwork etc.
2. Wash both sides of toilet seats and urinals, including piping, hinges,
bowls, basins, etc., with a germicidal detergent solution.
3. Dust partitions, tile walls, dispensers and receptacles.
4. Empty and clean towel and sanitary napkin disposal receptacles.
5. Remove wastepaper and refuse to a designated area.
6. Refill toilet tissue holders, soap and towel dispensers with supplies
furnished by client.
7. Spot-clean lavatory walls and stall partitions, five times per week.
Monthly
1. High-dust tops of partitions, vents, grills, etc.
2. Thoroughly wash walls and partitions.
Ouarterly
1. Power-scrub all lavatory flooring.
2. Dust exteriors of light fixtures.
Windows
1. Once per year clean all exterior windows on the inside only, provided that
window sills are free of any articles and access to the windows is not
obstructed.
2. Once per year clean all exterior windows on the outside.
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Exhibit 10.23
BUSINESS PROPERTY LEASE
APPROVED BY BUILDING OWNERS AND MANAGERS
1. ASSOCIATION OF OMAHA, INC.
THIS LEASE, made and executed in triplicate by and between the Lessor V
and R Joint Venture, 11205 John Galt Blvd., Omaha, NE 68137, and the Lessee
Cardmember Publishing Corporation, 655 Washington Blvd., Suite 1000, Stamford,
Connecticut 06901.
WITNESSETH: That the Lessor does hereby demise and lease unto the
Lessee, the following described property, situated in Omaha, Douglas county,
Nebraska, to-wit:
DESCRIPTION OF PROPERTY
Building #46. 11133-11135 Mill Valley Road, Omaha, Nebraska 68154 +
3,072 square foot as attached to exhibit - Part of Suite 13 and all of Suite
#14.
TERM AND PURPOSE
1. The Lessee agrees to use and occupy the premises for general office
purpose and no other purpose, for a term of Five (5) years, said lease term
beginning on July 1, 1995 and ending on June 30, 2000 unless sooner terminated
as hereinafter provided.
RENTAL
2. In consideration of the foregoing demise, the Lessee hereby
covenants to perform the agreements hereby imposed, and to pay the Lessor as
rental for said premises the sum of ________________________________
($__________), payable as follows:
For the period from July 1, 1995 to June 30, 2000, $2,483 per month said rental
to be payable monthly in advance, on the first day of each successive month, at
the office of V & R Joint Venture, 11205 John Galt Boulevard, Omaha, Nebraska
68137, or at such other place as the Lessor shall direct.
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<PAGE> 2
RENTAL ADJUSTMENT
2. (a) It is understood and agreed that the amount of rent stated above
in Paragraph 2 of this lease shall be the base rental and shall be adjusted on
the first day of the second year of this lease and each yearly anniversary
thereafter in order to reflect the change in purchasing power of the dollar.
Such adjustments shall be made upon the following basis of computation: The most
recent U.S. Department of Labor Consumer Price Index: U. S. City Average, All
Urban Consumers (CPI-U), 1982-84 = 100, All Items, report for the month of July
1995, showing the Index as when reported, shall be considered as the base and
the price index in effect for the corresponding month in each successive year
shall be compared with this base index figure. The annual rental shall be either
increased or decreased by the percentage of increase or decrease in the price
index. Such computation shall be made in the same manner on each yearly
anniversary of this lease in determining any adjustments in the rent for the
subsequent year. However, at no time will the rental be less than the base
rental stated above in this lease. The annual increase, if any, shall not be
compounded.
SERVICE
3. It is understood that for the rent mentioned, the Lessor shall
furnish service as follows: *See Note Below.
In the manner customary in the building it is hereby agreed that the
Lessor shall have the right to discontinue any service above mentioned or any
part thereof whenever and during any period for which bills for rent or other
service are not promptly paid by the Lessee. It is also agreed that the Lessor
shall not be liable for damages nor shall the rental hereinbefore stipulated be
abated for failure to furnish or delay in furnishing, any service above
mentioned or any part thereof as aforesaid when such failure to furnish, or
delay in furnishing, is occasioned by needed repairs, renewals or improvements,
or in whole or in part by any strike or labor controversy, or by any accident or
casualty whatsoever, or by an act or default of the Lessee or other parties, or
by any unauthorized act or default of any employee of the Lessor, nor for any
other cause or causes beyond the reasonable control of the Lessor. *In the event
services are interrupted, Landlord will make a diligent effort to ensure that
the services are restored.
WATER, GAS, ELECTRIC, SEWER USE FEES, ETC., CHARGES.
4. The Lessee further agrees to pay from time to time as same may
become due, all water, gas, electricity or other charges levied or assessed
against, incurred at or chargeable to or in connection with the leased premises
during the term of this lease and to save the premises and Lessor harmless
therefrom.
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<PAGE> 3
Lessee further agrees to pay any and all sewer use fees which may be
assessed against the demised premises whether based on a minimum fee, a
percentage charge, or whatever basis said fee shall be levied. In addition to
the usual monthly charge for water, the Lessor further agrees to pay any and all
additional charges which the Metropolitan Utilities District may make against
the demised premises for the use by the Lessee of water for air conditioning
purposes. Gas and electric utilities are separately metered and are placed in
tenant's name.
CONDITION OF PREMISES
5. Lessee has examined said premises prior to his acceptance and the
execution hereof and is satisfied with the physical condition thereof, including
all equipment and appurtenances, and his taking possession thereof shall be
conclusive evidence of the receipt thereof in satisfactory order and repair,
except as otherwise specified herein, and Lessee agrees and submits that no
representation as to the condition or repair hereof has been made by the Lessor
or his agent which is not herein expressed or indorsed hereon, and likewise
agrees and admits that no agreement or promise to decorate, alter, repair, or
improve said premises including all equipment and appurtenances, either before
or after the execution hereof, not contained herein, has been made by Lessor or
his agent.
REPAIRS
6. In consideration of the foregoing demise and the rate of rental
herein stipulated, the Lessee agrees during the term of this lease, at his own
expense, to keep in good and substantial order and repair and to make all
necessary repairs, renewals, replacements and decorations upon or in connection
with said premises, including all windows and doors and glass, wherever located,
and all plumbing, heating equipment, boilers, elevators, pipes, wiring, and gas,
steam and electrical fixtures, connections and fittings and all other equipment,
fixtures and appurtenances, and excepting only the exterior of the premises
(exterior of the premises shall not include windows, doors or any glass).
However, it is not the intention of the parties hereto that the foregoing
repairs, renewals, replacements, and/or decorations shall be made by the Lessee
when such repairs, renewals, replacements and/or decorations are occasioned by
fire, windstorm or other unavoidable casualty, except that the Lessee shall make
all glass replacements made necessary from any cause other than fire, windstorm
and structural deficiency of the building.
ASSIGNING, SUBLETTING, INSURANCE,
ALTERATIONS, AIR CONDITIONING, COOLING
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<PAGE> 4
7. It is provided that the Lessee shall not assign this lease nor let
or sublet said premises or any part thereof nor use the same nor permit the same
to be used for any purpose other than as above described, nor keep or store in
or about the premises anything which will increase the rate of insurance on the
building, nor permit any change in occupancy or transfer of this lease by
operation of law, or otherwise, nor make any alterations or additions or
improvements, including air conditioning and cooling systems in said premises,
nor place, affix or display in any manner in, upon or in connection with said
premises, any "for rent," display or advertising sign or device without the
written consent of the Lessor first obtained, and Lessee will not invalidate any
policies of insurance now or hereafter made on said building, and Lessee will
pay all extra insurance premiums on said building, if any, required on account
of extra risk caused by the Lessee's use of the demised premises, and it is
further provided that all additions, fixtures or improvements which may be made
by the Lessee to said premises, except movable office furniture and trade
fixtures, shall be made only after the Lessor has given written consent and
shall become the property of the Lessor, and shall remain and be surrendered in
good condition with the premises as a part thereof at the termination of this
lease, by lapse of time or otherwise.
It is understood and agreed, however, that Lessee shall maintain an
insurable interest in said additions, fixtures and improvements during the term
of this lease and that in the event of any casualty loss to said additions,
fixtures and improvements the Lessee shall be entitled to the proceeds from any
insurance the Lessee may have carried on the same.
Lessee agrees, upon the termination hereof, to remove all Lessee's
property except such as according to the conditions of this lease is to remain
as part of the premises.
COMPLIANCE WITH LAWS - KEEP PREMISES SAFE AND CLEAN
8. The Lessee shall keep said premises and operate his business therein
in a manner which shall be in compliance with all laws, rules and regulations,
orders and ordinances of the city, county, state and federal government and any
department of either, and will not suffer or permit the premises to be used for
any unlawful purpose, and he will protect the Lessor and save him and the said
premises harmless from any and all fines and penalties that may result from or
be due to any infractions of, or non-compliance with, the said laws, rules,
regulations, orders and ordinances. Lessee agrees to keep the said premises and
all sidewalks and approaches thereto in a safe condition and free and clear of
ice and snow and all other matter which may be dangerous to the public and free
of all obstructions. *Lessor is responsible for ice and snow maintenance on the
sidewalk.
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<PAGE> 5
Lessee will hold Lessor exempt and harmless for and on account of any
damages or injury to any person, or to the goods, wares and merchandise of any
person, arising from the use of the premises by Lessee, or arising from the
failure of Lessee to keep the premises in good condition as herein provided.
*Except to the extent caused by Landlord's negligence.
DAMAGE BY FIRE OR OTHER CASUALTY
TERMINATION PRIVILEGES
9. It is provided that in case the said premises, or any part thereof,
shall at any time be destroyed or damaged by fire or other unavoidable casualty,
so that the same shall be unfit for occupation or use, then the rent hereby
reserved, or a fair and just proportion thereof, according to the nature and
extent of the damage sustained in loss of occupation of the premises, shall be
suspended, cease to be payable and so continue until said premises shall be
rebuilt or made fit for occupation and use, or if such damage to the said
demised premises or to the building in which the demised premises are situated,
is to the extent of 50% or more, then this lease may be terminated at the
election of the Lessor, notice of which election, if exercised, shall be given
in writing within 25 days from date of casualty, provided also that in case the
building containing said premises is totally destroyed or work to put the
premises in tenantable condition is not commenced within one month from the time
of said damage and continued thereafter, with reasonable diligence, then this
lease may be terminated at the election of the Lessee, notice of which election,
if exercised, must be given in writing within 25 days from date of casualty.
Each party hereto hereby waives all claims for recovery from the other party for
any loss or damage to any of its property insured under valid and collectible
insurance policies to the extent of any recovery collectible under such
insurance, subject to the limitations that this waiver shall apply only when
permitted by the applicable policy of insurance.
PERSONAL PROPERTY AT RISK OF LESSEE
10. All personal property in the leased premises shall be at the risk
of the Lessee only and the Lessor shall not be or become liable for any damage
to said personal property, to said premises or to said Lessee or to any other
persons or property caused by water leakage, steam, sewerage, gas or odors or
for any damage whatsoever done or occasioned by or from any boiler, plumbing,
gas, water, steam or other pipes or any fixtures, equipment or appurtenances
whatsoever, or for any damage occasioned by water, snow or ice, being upon or
coming through the roof, sky-light, trap door, or otherwise, or for any damage
arising from any act or neglect of other tenants, occupants, or employees of the
building in which the leased premises are situated or arising by reason of the
use of, or any defect in, the said building or any of the fixtures, equipment or
appurtenances therein, or by the act or
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<PAGE> 6
neglect of any other person or caused in any other manner whatsoever. If
required by the Lessee, Lessor, in an expedient manner, will repair any
condition or defect that is causing or may result in damage to Lessee's personal
property. Lessee may also call upon any qualified Contractor directly for any
repairs in the premises. All costs of the repairs are to be the responsibility
of the Lessee.
RIGHT OF THE LESSOR TO ENTER FOR REPAIRS, ALTERATIONS, ETC.
11. The Lessor, his agents or representatives, shall have the right to
enter said premises at all reasonable times, to examine or exhibit the same, or
to make such repairs, additions or alterations as Lessor may see fit to make for
the safety, improvement or preservation thereof, or of the building of which the
leased premises are a part or for any other reasonable purpose. The Lessor may
display "for rent" signs on or about the said premises and in the windows
thereof for sixty days prior to the termination of this lease.
DEFAULT, BANKRUPTCY, ETC.
12. Should default be made by the Lessee in the payment of the rental
or any other sum required to be paid by Lessee hereunder, or any part thereof,
when and as herein provided; or should Lessee default in the performance,
fulfillment or observance of any of the Lessee's other covenants, conditions, or
agreements herein contained; or should any decree or order for relief be entered
by a court having jurisdiction adjudging the Lessee a bankrupt or insolvent, or
approving a petition seeking the reorganization, arrangement, adjustment or
composition in respect of Lessee, whether voluntarily or involuntarily, under
the federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or similar law, or appointing
a receiver, liquidator, assignee, custodian, trustee or similar official of the
Lessee, or any substantial part of Lessee's property, or ordering the winding up
or liquidation of Lessee's affairs; or should the demised premises become vacant
or abandoned; or should this Lease be transferred, voluntarily or involuntarily,
to any person other than the Lessee; or should the leasehold interest created by
this Lease be levied on under execution, then, and in every such case, the
Lessor may, at the Lessor's option, without demand of any kind or notice to
Lessee, or any other person, at once declare this Lease terminated and Lessor
may reenter the premises without formal notice or demand and hold and enjoy the
same thenceforth, as if this Lease had not been made, without prejudice,
however, to any right of action or remedy of the Lessor because of any breach by
the Lessee of any covenant, condition, provision or agreement herein contained.
In case Lessor does not elect to take advantage of the right to terminate this
Lease conferred by the foregoing provisions of this paragraph, the Lessor shall
nevertheless have, and Lessor is hereby expressly given, the right to reenter
the said premises, with or
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<PAGE> 7
without legal process, should any of the events hereinbefore specified take
place or occur, and to remove the Lessee's signs, and all property and effects
of the Lessee or other occupants of said premises, and if the Lessor so desires,
to relet the said premises, or any part thereof, upon such terms, and to such
person or persons and for such period of periods as may seem fit to the Lessor,
and in case of such reletting, the Lessee shall be liable to the Lessor for the
difference between the rents and payments herein reserved and agreed upon for
the residue of the entire stipulated term of this Lease and the net rent for
such residue of the term realized by such reletting, such net rent to be
determined by deducting from the entire rent received by Lessor from such
reletting the expenses or recovering possession, reletting, altering and
repairing said premises and collecting rent therefrom; and the Lessee hereby
agrees to pay such deficiency each month as the same may accrue, the Lessee to
pay to the Lessor within five (5) days after the expiration of each month during
such residue of the term, the difference between the rent and payments for said
month as fixed by this Lease and the net amount realized by the Lessor from the
premises during said month.
VACATION OF PREMISES BY LESSEE
SECURITY INTEREST IN PERSONAL PROPERTY
13. If Lessee shall not promptly remove all his property from the
premises whenever the Lessor shall become entitled possession thereof as herein
agreed, the Lessor may, without notice, remove the same, or any of the same, in
any manner that Lessor may choose, and Lessee will pay Lessor, upon demand, any
and all expenses incurred in such removal, together with storage on said effects
for any length of time during which the same shall be in Lessor's possession or
control; or if Lessee shall at any time vacate or abandon said premises, and
leave any personal property or fixtures in or about the premises for a period of
five (5) days after such vacation or abandonment or after the termination of
this Lease for any reason whatsoever, then the Lessor shall have the right to
sell all or any part of such property at public or private sale without giving
any notice to the Lessee, or any notice of sale, all notices required by statute
or otherwise being hereby expressly waived, and to apply the proceeds of such
sale first, to the payment of all costs and expenses of conducting the sale and
caring for and storing the property; and, second, the balance, if any, to any
indebtedness due from Lessee to Lessor; and third, to deliver any remaining sum,
on demand in writing, to the Lessee. Lessee hereby grants Lessor a security
interest in all items of personal property and fixtures of Lessee now or at any
time hereafter affixed to, attached to, placed in or upon the demised premises
as security for the payment of all rent and other sums due or to become due
hereunder and the performance by Lessee of all of the terms, conditions and
provisions of this Lease to be performed by Lessee. This Lease is intended to be
a financing statement within the purview of Section 9-402 of the Uniform
Commercial Code. The address of the Lessor (Secured Party) and the Lessee
(Debtor) are hereinafter set forth. This Lease may be
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<PAGE> 8
filed for record in the Offices of the Register of Deeds and County Clerk of the
County where the premises are located and the Office of the Secretary of State
of Nebraska. Unless otherwise indicated in this Lease the Lesor is the record
owner of the premises.
CONTINUED OCCUPANCY OF PREMISES
14. Provided also, and this lease is upon these express conditions,
that the Lessor and the Lessor's successor or assigns shall have the right to
terminate this lease absolutely at the end of the calendar month by first giving
to the Lessee, or the Lessee's assigns, or by leaving at said demised premises,
addressed to the Lessee, at least six months before the date of such
termination, a written notice of the Lessor's intention to remodel, remove or
demolish the said building, or to sell, or make a ground lease of the land
thereunder, the rate of rent herein stipulated being the consideration for this
agreement.
HOLDOVER
15. The Lessee agrees at the termination of this lease, by lapse of
time or otherwise, to forthwith leave, surrender and yield up the demised
premises in good and substantial order and repair. It is understood and agreed
that this lease shall not extend beyond the term herein granted, and a holding
over or continuance in the occupancy of the demised premises shall not work an
extension of the said lease, but in any and all such cases, the Lessee shall be
a trespasser or a tenant at will at the option of the Lessor, subject to removal
by the said Lessor by summary process and proceedings, it being provided further
that an acceptance of rent by the Lessor during such holding over period shall
operate to create a tenancy from month to month only, terminable upon thirty
days' notice, and in that case all provisions of this lease not inconsistent
with a tenancy from month to month shall remain in force.
ACCEPTANCE OF RENT AFTER PROCEEDINGS
16. It is agreed that after the service of notice of the commencement
of suit, or after final judgment for possession of the premises, the Lessor may
receive and collect any rent due without prejudice to, nor waiver of or effect
upon the said notice, suit or judgment.
CHARGES ADDED TO RENT
17. In the event of the failure of the Lessee to perform any of the
covenants, agreements or conditions herein contained, the Lessor shall have the
right but shall not be obligated to pay any sum or money or incur any expense
which should have been paid or incurred by the Lessee in the performance of any
such covenant,
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<PAGE> 9
agreement or condition. The Lessee covenants that in case the Lessor, by reason
of the failure of the Lessee to perform any of the covenants, agreements, or
conditions herein contained, shall be compelled to pay or shall pay any sum of
money, or shall be compelled to do or shall do any act which requires the
payment of money, then the sum or sums so paid or required to be paid, together
with interest, costs and damages, shall be added to the Installment of rent,
next becoming due and shall be collectible as additional rent in the same manner
and with the same remedies as if it had been originally reserved, any sum so
paid by Lessor to bear interest at the rate of 6% per annum from date of payment
by Lessor to date of repayment by Lessee. Lessor will give notice to the Lessee
if there is a failure on the Lessee's part to perform any of the covenants,
agreements or conditions herein contained.
WAIVER-NONE
18. The failure of the Lessor to insist upon a strict performance of
any of the covenants or conditions of this lease or to exercise any right or
option herein conferred in any one or more instances, shall not be construed as
a waiver or a relinquishment for the future of any such covenants, conditions,
rights or options, but the same shall remain in full force and effect; and the
doing by the Lessor of any act or thing which Lessor is not obligated to do
hereunder shall not be deemed to impose any obligation upon the Lessor to do any
such act or thing in the future or in any way change or alter any of the
provisions of this lease.
19. No surrender of the premises for the remainder of the term herein
shall be binding upon the Lessor unless accepted by the Lessor in writing.
Without limiting the scope or effect of the last preceding sentence, it is
agreed that the receipt or acceptance of the keys of the premises by the Lessor
shall not constitute an acceptance of a surrender of said premises.
LESSOR'S RIGHT CUMULATIVE - NO CHANGE HEREOF EXCEPT IN
WRITING
20. All rights and remedies of the Lessor under or in connection with
this lease shall be cumulative and none shall be exclusive of any other rights
or remedies allowed by law. No agreements shall be held as changing or in any
manner modifying, adding to or detracting from any of the terms or conditions of
this lease, unless such agreement shall be in writing, executed by both parties
hereto.
EMINENT DOMAIN
21. If the whole or any part of the premises hereby leased shall be
taken by any public authority under the power of eminent domain, then the term
of this lease shall cease on the part so taken from the day the possession of
that part shall be required for any purpose, and the rent shall be paid up to
that day, and if such
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<PAGE> 10
portion of the demised premises is so taken as to destroy the usefulness of the
premises for the purpose for which the premises were leased, then, from that day
the Lessee shall have the right either to terminate this lease and declare the
same null and void or to continue in the possession of the remainder of the same
under the terms herein provided, except that the minimum rent shall be reduced
in proportion to the amount of the premises taken. All damages awarded for such
taking shall belong in and be the property of the Lessor, including such damages
as shall be awarded as compensation for diminution in value to the leasehold,
provided, however, that the Lessor shall not be entitled to any portion of the
award made to the Lessee.
EXPLANATORY PROVISION
22. The words "Lessor" and "Lessee" shall be taken to include and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns, and shall be taken in the plural sense,
whenever the context requires, and all pronouns used herein and referring to
said parties shall be construed accordingly, regardless of the number of gender
thereof.
Headings of the various paragraphs herein are inserted merely as a
matter of convenience and for reference and shall not be considered as in any
manner defining, limiting or describing the scope or intent of the particular
paragraphs to which they refer or as affecting the meaning or construction of
the language in the body of such paragraphs.
23. If Lessor does not now have possession of the premises, it is
hereby covenanted and agreed that if the demised premises above described shall
not be available for occupancy at the date named in said lease as the time which
the lease term is to commence, then said lease shall commence on the date which
said premises shall be available for occupancy, and a pro rata abatement of the
rental herein provided shall be made until said premises are available for
occupancy but the expiration of said lease shall remain the same; and the Lessor
shall not be liable for any loss or damage of any kind whatsoever that the
Lessee may sustain or claim to have sustained by reason of such delay.
Until this lease is executed on behalf of all parties hereto, it shall
be construed as an offer of proposed Lessee to proposed Lessor. Time being of
the essence, this lease must be completed on behalf of all parties on or before
June 20, 1995 to be effective.
24. Any notice which either party may desire or be required to give to
the other party shall be in writing and shall be delivered by personal service
or sent by registered or certified mail, return receipt requested, addressed to:
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In case of Lessor:V & R Joint Venture. In case of Lessee: Cardmember
Publishing Corp.
Address: 11205 John Galt Blvd. Address: 655 Washington Blvd., Suite 1000
Omaha, NE 68137 Stamford, Connecticut 06901
*Lessee, upon execution of this Lease, must put all Gas and Electric Utility
Meters in their name. Under no circumstances whatsoever will Landlord continue
to maintain utilities in his name.
IN WITNESS WHEREOF, the parties hereto have executed this lease this 20
day of June, 1995.
WITNESS: V & R JOINT VENTURE
/s/Jackie Stover /s/Milo P. Vacanti
- ----------------------------------- ---------------------------------------
Lessor
Milo P. Vacanti, its Partner
- ----------------------------------- ---------------------------------------
Lessor
/s/Steven H. Levenherz
- ----------------------------------- ---------------------------------------
Steven Levenherz, Chief Financial
Officer Lessee
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ASSIGNMENT AND ACCEPTANCE
For value received, the Lessee hereby assigns all right, title and
interest in and to the within lease, from and after ____________________________
_________________________________________, 19_____, unto _______________________
____________________________________________________ his or its heirs and
assigns, and in consideration of the Lessor's consent to this assignment agrees
to remain primarily liable to the Lessor, jointly and severally with the
assignee, for the performance of all of the covenants on the part of the Lessee
in said lease mentioned.
Dated this ___________ day of ___________________, 19_____.
______________________________
______________________________
In consideration of the above assignment, and the written consent of
the Lessor hereto, the undersigned hereby assumes and agrees to make all
payments from and after ________________________________, 19_____, and to
perform all the covenants and conditions of the within lease to be made and
performed by the Lessee, and to hold the assignor harmless from all liability
thereunder.
Dated this ___________________ day of ___________________, 19____.
______________________________
______________________________
_____________
CONSENT TO ASSIGNMENT
Lessor hereby consents to the assignment of the within lease to
________________________________________________________ on the express
conditions, however that the assignor shall remain liable for the prompt payment
of the rent and performance of the covenants on the part of the Lessee as herein
mentioned and that no further assignment of said lease or subletting of the
premises, or any part hereof, shall be made without the written consent of the
Lessor first had thereto.
Dated this ______________ day of _________________, 19____.
______________________________
______________________________
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ADDENDUM TO LEASE
V & R JOINT VENTURE
and
CARDMEMBER PUBLISHING CORPORATION
25. Lessee must deposit the sum of $2,483.00 against damages upon
Lessee's removal from the Lease space. The parties, Lessor and Lessee, agree
that the first month's rental in the sum of $2,483.00 will be due upon execution
of the Lease, but the Lease will begin on July 1, 1995. It is understood the
Lessee has inspected the present betterments within the bays and is satisfied
with their condition, service, and capacity and relies on no representation from
the Lessor as to capacity or suitability of any of the electrical, mechanical,
plumbing, heating or other service installed in and about the building. Lessee,
in the installation of any improvements, shall strictly comply with all National
Building Codes and all rules and regulations, ordinances and statutes of the
United States, State of Nebraska and the City of Omaha, as well as Douglas
County. Nothing herein contained shall require the Lessor to do any decorating,
painting, finishing, floor covering or other improvements not specifically
herein listed. (1) Lessor guarantees the proper working condition of the
electrical, mechanical and HVAC system for the initial 30 days of the lease. (2)
At the conclusion of the lease and the Lessee's vacation of the premises, and as
long as the Lessee is in compliance with all the terms and conditions of the
lease, the security deposit will be promptly returned to the Lessee.
26. OPTIONS TO EXTEND INITIAL TERM: This Lease shall be granted options
2 ("Extended Terms") of 5 years each, from and after the expiration of the
initial Lease term or the Extended Term, as the case may be, provided that six
(6) months prior to the expiration of the initial Lease term or the Extended
Term of this Lease, as the case may be, Lessee notifies Lessor in writing of its
election to extend the Lease. This Lease shall remain in effect during each
Extended Term upon all of the terms and conditions of this Lease except that the
base rental during each such Extended Term shall be determined as follows.
A. The product obtained by multiplying the sum of $2,483.00 by
the Index Figures hereinafter defined.
B. The Index Figure shall be a fraction, the numerator of
which shall be the average monthly index shown on the Consumer Price Index -
U.S. - As Revised 1978 - All items (1982-84=100) published by the Bureau of
Labor Statistics of the U.S. Department of Labor, Kansas City, MO (Price Index)
for the last published month of the lease year of the term hereof and the
denominator of which shall be the average monthly Price Index for the first
month of the lease year of the term hereof.
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<PAGE> 14
C. If at any time the Price Index shall not be published and
available for the purpose of making the aforesaid computation, and Lessor and
Lessee shall agree upon a substitute index and the manner of its use within
sixty (60) days after either party hereto shall have notified the other party
hereto of the unavailability of the Price Index. In such event, the parties
shall select a reasonably adequate substitute index and specify the manner of
its use, or if no reasonably adequate substitute index exists, then the amount
of Lessor's payment hereunder shall be determined in accordance with the intent
of the parties which is that the rental for the renewal term is to be increased
proportionately with the increase in the cost of living from the first month of
the first year to the last month of the original term hereof.
D. In no event shall the rental decrease from the rental of
the original term.
E. Notwithstanding the fluctuations of the cost of living, in
no year shall the increase be less than 2% and in no year shall the increase be
more than 6% including option terms.
27. If the first extended option term is exercised, a second 5 year
extended option term is granted, provided six months prior written notice is
given to Lessor of the intention of Lessee to exercise its option. Should the
second extended option term be exercised, the Lessor will adjust the base rental
which shall be the amount of $2,483.00 as augmented and increased by the
application of paragraphs 26A, B, C, D, and E, and the formula in 26A, B, C, D
and E shall be again applied so as to reflect the increase in the cost of living
by the consumer price index from the extended option period and each and every
year of the second option period.
28. In addition to the rental payable pursuant to paragraph 2 hereof,
the Lessee shall pay to the Lessor, upon demand, a proportionate share of the
cost of managing and maintaining all common areas and facilities, including,
without limitation, all parking areas, roofs, access roads, sidewalks, sprinkler
landscaped space and other space used in common or available for use in common
by the Lessee or customers, employees, agents or other invitees. Managing,
operating and maintaining such areas and facilities, shall include, without
limitation, furnishing exterior and parking area lighting, cleaning, snow
removal, management fee, line painting, care of grass, shrubs and plants,
payment of water, sprinkler and sewerage charges and general maintenance of all
areas and facilities provided by the Lessor for the common use of the occupants
of the building. The term "proportionate share" as used in this paragraph or
elsewhere in this lease shall mean such fractional part of the total costs to
which said share applies as the total square feet area occupied by the Lessee
bears to the total square feet of rental floor area in the building. For
purposes of this paragraph, lessee shall pay 12.35% based on 3,072 +/- square
feet of space occupied by Lessee as that bears to the total square footage of
the building.
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<PAGE> 15
(a) Structural improvements to the roof and building will be considered "capital
improvements" and will be the Lessor's expense unless caused by the negligence
of the Lessee. (b) If requested by the Lessee, Lessor will repair in a prompt
manner and with minimal interruption to the Lessee and its business, any of the
respective systems listed in this paragraph. Lessee may also call upon any
qualified contractor directly for any repairs within the premises. All costs of
the repair are the responsibility of the Lessee.
29. Lessee has inspected the premises and relies on its own judgment
and that of its own attorneys, accountants and advisors as to the suitability
and accommodations present. Lessor has made no warranty nor representation which
is not herein set forth. This lease is not contingent upon any factor,
statement, or representation not specifically enumerated. Lessor has made no
representation as to present or proposed tenants or tenant "mix". Neither have
any representations been made to Lessee concerning the profitability or probable
success of Lessee's activity.
30. At the termination of this Lease, Lessee shall remove such of
Lessee's goods and effects as are not permanently affixed to the leased premises
and remove such of the alterations and additions made by Lessee as Lessor may
request; Lessee shall repair any damage caused by such removal; will peaceably
yield up the leased premises and all alterations and additions thereto (except
such as Lessor has requested Lessee to remove) and all fixtures, furnishings,
floor coverings and equipment which are permanently affixed to the leased
premises present at the termination of the Lease shall thereupon become the
property of the Lessor maintained, in clean and in good order, repair and
condition, damage by fire or unavoidable casualty excepted. All personal
property of Lessee not removed within twenty (20) days following such
termination shall become the property of the Lessor, at Lessor's option.
31. Lessee shall not suffer any mechanic's liens to be filed against
the leased premises by reason of any work, labor services or material performed
at or furnished to the leased premises through or under the Lessee. If any such
mechanic's lien shall at any time be filed against the leased premises, the
Lessee forthwith shall cause the same to be discharged within thirty (30) days
after being notified of the filing thereof, and before judgment or sale
thereunder, then, in addition to any other right or remedy of the Lessor, the
Lessor may, but shall not be obligated to, discharge the same by paying the
amount claimed to be due or by bonding or other proceeding deemed appropriate by
the Lessor, and the amount so paid by the Lessor, and/or all costs and expenses,
including reasonable attorney's fees, incurred by the Lessor in procuring the
discharge of such lien, shall be deemed to be additional rent for the leased
premises and shall be due and payable by the Lessee to the Lessor on the first
day of the next following month with interest at the rate of sixteen percent
(16%) per annum until repair. Nothing in this lease contained shall be construed
as a consent
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<PAGE> 16
on the part of the Lessor to subject the Lessor's estate in the leased premises
to any lien or liability under the laws of the State of Nebraska.
32. In the event of any failure of Lessee to pay any such rental due
hereunder within ten (10) days after the same shall become due, (in addition to
other rights previously provided) or any failure to perform any of the other
terms, conditions or covenants of this lease to be performed and observed by the
Lessee for more than fifteen (15) days (if Lessee is making diligent effort to
cure default, the fifteen (15) day period may be extended) after written notice
of such default shall have been mailed to the Lessee, or if Lessee shall abandon
said premises, or suffer this lease to be taken under any writ of execution,
then Lessor besides other rights which entry shall be justified by reasonable
cause which cause shall be determined by the Landlord, or remedies it may have,
shall have the immediate right of re-entry and may remove all persons and
property from the leased premises, and such property may be removed and stored
in a public warehouse or elsewhere at the cost of and for the account of Lessee
and Lessor shall make such repairs as may be necessary in order to re-let the
premises or any part thereof for such term or terms (which may be for a term
extending beyond the term of this lease) and at such rental or rentals and upon
such other terms and conditions as the Lessor in its own discretion may deem
advisable; upon such re-letting, shall be applied, first, to the payment of any
indebtedness other than rent due hereunder from the Lessee to Lessor; second, to
the payment of any costs and expenses of such re-letting, including brokerage
fees, reasonable attorney fees and costs of such repairs; third, to the payment
of rent due and unpaid hereunder, and the residue, if any, shall be held by the
Lessor and applied in payment of future rent if the same may become due and
payable hereunder. If such rentals received from such re-letting during any
month be less than that to be paid during that month by the Lessee hereunder,
Lessee shall pay any such deficiency to Lessor. Such deficiency shall be
calculated and paid monthly. No such re-entry or taking of possession by the
Lessor shall be construed as an election on its part to terminate this lease
unless a written notice of such intention be given to Lessee or unless the
termination thereof be decreed by a court of competent jurisdiction.
Notwithstanding any such re-letting without termination, Lessor may at any time
thereafter elect to terminate this lease for any such previous breach. Should
Lessor at any time terminate this lease for any breach, in addition to and not
in limitation of, any other remedies it may have, it may recover from the Lessee
all damages Lessor may incur by reason of such breach, including the costs of
recovering the leased premises, reasonable attorney fees, and including the
worth at the time of such termination of the excess, if any, of the amount of
rent and charges equivalent to rent reserved in this lease for the remainder of
the stated term over the then reasonable rental value of the leased premises for
the remainder of the stated term all of which amounts shall be immediately due
and payable from Lessee to Lessor. The rights and remedies herein provided shall
be cumulative and the exercise or act as a waiver of any other right or remedy
of the Lessor hereunder, or which may exist at law, in equity, or by statute.
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<PAGE> 17
33. During the term of this lease, the Lessee shall, at his own
expense, provide and maintain in full force and effect an insurance policy or
policies protecting Lessor and Lessee and their office and employees against any
loss, liability or expense from personal injury, death, property damage, or
otherwise arising or occurring upon or in connection with the premises or by
reason of the Lessee's operations upon or occupancy of the premises whether the
same occurs or the cause arises on or off the premises. The Lessor shall be an
additional insured under such policy or policies. Such insurance shall be
written by responsible insurance companies satisfactory to the Lessor and shall
be in an amount not less than $1,000,000.00 for injuries to any one person, not
less than $1,000,000.00 for injuries to more than one person arising out of any
one accident or occurrence, and not less than $500,000.00 for damage to
property. Certificates of insurance showing compliance with the foregoing
requirements shall be furnished by the Lessee to the Lessor. Such certificates
shall state the policies will not be canceled nor altered without at least ten
(10) days prior written notice to Lessor. During this term and any extension
thereof, policies in force on the premises secured by Lessor shall be paid by
Lessee proportionately and the "Proportionate Share" of such insurance premium
increase shall be determined and paid as in paragraph 28 above.
34. Lessee agrees to comply with all applicable air and water pollution
control and prevention laws, regulations and state and federal air pollution and
water pollution control agencies' recommendations in the maintenance and use of
all facilities located on the leased premises. Lessor assumes no liability for
environmental contamination from the activities of the Lessee. Lessee shall
indemnify, defend, and hold Lessor harmless from and against any and all loss,
claims, liability, damage or expense (including without limitation attorney's
fees, investigation and court costs) which Lessor may incur, sustain or suffer
or which may be asserted against Lessor by reason of any hazardous material
contamination or threat of natural gas, electrical rays, steam or gas heat,
atomic radiation of hazardous energy or material contamination. The
representations and indemnification of this paragraph shall survive the
expiration of this lease agreement.
35. This is a net-net-net lease and the parties agree and understand
that the Lessor will suffer to pay no expenses whatsoever for taxes, insurance,
gas, electric, water, sewer fee, improvements, repairs, changes or alterations,
special assessments, levies or other charges against the real estate whatsoever,
but that each tenant and Lessee in particular, shall pay a proportionate share
of the said real estate taxes, special assessments, charges, common area
charges, insurance and all other expenses in the proportion as shown above in
paragraph 28. Lessee shall pay proportionate share as shown in paragraph 28
above of the expenses within ten (10) days of billing. Expenses are due monthly
and are recalculated at the end of the calendar year. Tenant shall pay by
anticipation one-twelfth (1/12th) of the year's charges monthly. At the
conclusion of the first year and each year thereafter during the term or any
extension thereof, a recapitulation of actual charges shall be made, an
accounting
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<PAGE> 18
presented to Lessee and an adjustment made by billing if the monthly one-twelfth
(1/12th) payments added to rent have been insufficient to defray the actual
expenses. Management fees and common area fees are included in these charges.
Overpayment shall be refunded to Lessee. At any time and up to one year after
the end of the lease term, Lessee shall have the right to examine Lessors
records to verify fair billing for the cost of operating the center.
36. During the term of the lease, Tenant shall provide, with not less
than ten (10) days prior written notice from the Landlord, corporate financial
statements upon the request of the Lessor.
37. ESTOPPEL CERTIFICATE, SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT
AGREEMENT: (a) Estoppel Certificate. Within ten days after request therefore by
Lessor, or in the event that upon any sale, assignment or hypothecation of the
leased premises and/or the land thereunder by Lessor, an estoppel certificate
shall be required from Lessee; Lessee agrees to deliver in recordable form such
a certificate to any proposed mortgage or purchaser, or to Lessor, certifying
(if such be the case) that this lease is in full force and effect and that there
are no defenses or offsets thereto, or stating those claimed by Lessee and
including such other representations as the purchaser or mortgagee may
reasonably require. (b) Attornment. Lessee shall, in the event any proceedings
are brought for the foreclosure of, or in the event of exercise of the power of
sale under any mortgage made by the Lessor covering the leased premises, attorn
to the purchaser upon any such foreclosure or sale and recognize such purchaser
as the Lessor under this Lease. (c) Subordination. Upon request of the Lessor,
Lessee will subordinate its rights hereunder to the lien of any mortgage or
mortgages or the lien resulting from any other method of financing or
refinancing, now or hereafter in force against the land and/or buildings of
which the leased premises are a part or against any buildings hereafter placed
upon the land of which the leased premises are a part, and to all advances made
or hereafter to be made upon the security thereof.
38. It is agreed that V & R Joint Venture has no agreement with Lessee
for the payment of any real estate company or broker for the payment of any
commission or fee whatsoever. Lessee shall not be responsible for any real
estate commissions.
39. Under no circumstances will Lessee protrude through the roof deck
or outside the walls without the written consent of Lessor.
40. TRANSFER OF LEASE: In the event the Lessee desires to sublet the
lease, Lessee shall deliver a written request to Lessor together with a review
fee of one-hundred dollars ($100.00) and complete information regarding such
transfer or encumbrance of the lease. Lessee shall allow thirty (30) days after
receipt of all necessary information by Lessor for the evaluation of such
request. Approval may be
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<PAGE> 19
subject to such modification of the lease terms or other conditions as may be
deemed necessary by Lessor. If Lessee or any permitted subsequent Lessee of the
property is an individual, partnership, a trust or a privately held corporation,
a transfer of a general partner, beneficial interest or stock interest shall
constitute a conveyance or transfer for purposes of this paragraph. In no event
shall Lessee request a consent of Lessor during the first lease year.
41. Tenant improvements for the lease space will be based upon the
mutually agreed upon Floor Plan and Specifications attached to the Lease as
Exhibit "A".
LESSOR: V & R JOINT VENTURE
By: /s/ Milo P. Vacanti
------------------------------
Milo P. Vacanti, Its Partner
LESSEE: CARDMEMBER PUBLISHING
CORPORATION
By: /s/ Steven H. Levenherz
------------------------------
Steven H. Levenherz,
Chief Financial Officer
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<PAGE> 20
BUILDING RULES AND REGULATIONS
1. Nothing shall be affixed to the outside of the building by Lessee
without the prior written consent of Lessor. Lessee shall not place any
items on the window ledges or exterior of the building. Grand Opening
sign will be allowed during first 90 days of the lease.
2. Unless expressly permitted by Lessor, no sign, advertisement, notice or
other lettering shall be exhibited, inscribed painted or affixed on any
part of the outside or inside of the building, except on the glass or
panels of the doors of the Demised Premises, and then only of subject
matter and in such color, sized style and material as shall conform to
the specifications of Lessor. Lessor reserves the right to remove all
other signs or lettering, without notice to Lessee, at the expense of
Lessee. Any newspaper, magazine or other advertising done which in the
opinion of Lessor is objectionable, shall be immediately discontinued
upon notice from Lessor.
3. Unless expressly permitted by Lessor, no animal shall be brought or
permitted to be in the building or any part thereof outside of aid in
physical limitations.
4. Unless expressly permitted by Lessor, all doors leading from the leased
premises to areas outside the leased premises are to be kept closed at
all times except when in actual use for entrance to or exit from said
premises. Lessee shall be responsible for the locking of said doors and
lessee shall be responsible for any damage or loss resulting from
violation of this rule. No additional locks or devices shall be
attached to any door without Lessor's consent. A screen door may be
placed on the back door at Lessee's cost.
5. Moving or delivery of furniture, supplies, trade fixtures and
equipment, and freight by or for Lessee shall be done at such items and
in such manner as may be required by Lessor. Lessor reserves the right,
but shall not be obligated to inspect all articles being moved in or
out of the building; and Lessor shall not be liable to Lessee or to any
other person for loss of or damage to any furniture, trade fixtures and
equipment or other personal property from any cause, unless provided
otherwise in the lease between the parties.
6. Lessee shall not make or permit any noise or odor except food odor that
is objectionable to Lessor or to other occupants for the building to
emanate from said premises and shall not create or maintain a nuisance
therein, and shall not disturb, solicit or canvas any occupant of the
building, and shall not do any act tending to injure the reputation of
the building.
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<PAGE> 21
7. Lessor reserves the right, but shall not be held obligated, to exclude
or eject from the building, any or all solicitors, canvassers or
peddlers, and any persons conducting themselves in such manner as, in
the sole judgment of Lessor, constitutes an annoyance to any of the
tenants of the building or an interference with operation of the
building, or who are otherwise undesirable.
8. No hand trucks shall be brought into or used in or about the building
except those equipped with rubber tires and side guards, and only with
the prior written consent of the Lessor.
9. Lessee shall not request building employees to perform any work or do
anything outside of the regular duties, unless consent is obtained from
the Lessor of the building.
10. The sidewalks, entrances, passages, elevator, stairway and corridors
shall not be obstructed or encumbered by any Lessee.
11. The sashes, sash doors, windows and doors that reflect or admit light
and air into the halls, passages or other public places in the building
shall not be covered or obstructed by any Lessee nor shall any bottles,
parcels or other articles be placed on the window-sills or other public
places in the building.
12. No show cases or other articles shall be put in front of or affixed to
any part of the exterior of the building nor placed in the halls,
corridors or vestibules of the building without prior written consent
of the Lessor.
13. No curtains, blinds, shades or screens shall be attached to or hung in
or used in connection with any window or door of the building without
the prior written consent of the Lessor.
14. The water and water closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were constructed
and no sweepings, rubbish, rags or other substances shall be thrown
therein. All damage resulting from any misuse by Lessee of the fixtures
shall be borne by the Lessee.
15. No Lessee shall mark, paint, drill into or in any way deface any part
of the building. No boring, cutting, stringing or attaching of wires
shall be permitted except with the prior written consent of the Lessor
and as the Lessor may direct.
16. No article extra hazardous on account of fire and no explosive shall be
brought into said premises or into the building. The storage and use of
all flammable
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<PAGE> 22
and volatile materials or substances shall be in conformity with
applicable laws, rules and regulations of all duly constituted public
authorities.
17. Lessor reserves the right to charge Lessee any additional expense, over
and above what the normal expense would have been, (including overtime
or premium costs incurred by Lessor) in the event repairs, alterations,
decorating or other work in said premises or the building are, at
Lessee's request, not made during ordinary business hours.
18. No additional locks or bolts of any kind shall be placed upon any of
the doors by any Lessee nor shall any changes be made in the existing
locks or the mechanism thereof. Each Lessee must, upon the termination
of Lessee's tenancy, leave the doors and windows in the demised
premises in like condition to that at the outset of said lease and must
restore to the Lessor all keys to rooms, closets and toilets.
19. The Lessee shall not put up nor operate any engine, boiler, dynamo or
machinery of any kind, nor carry on any mechanical business in said
premises nor place any explosive therein, nor use any kerosene or oils
or burning fluids in said premises without first obtaining the written
consent of the Lessor.
20. If the Lessee desires telegraphic or telephonic connections, the Lessor
will direct the electricians as to where and how the wires are to be
introduced, and without such written directions no boring or cutting
for wires will be permitted.
21. The leased premises shall not be used for the purpose of lodging or
sleeping rooms, nor for any immoral or illegal purpose, nor in any way
to damage the reputation of the building; and the Lessee shall not
disturb nor permit the disturbance of other tenants by the use of
musical instruments or any unseemly noises nor by any interference
whatever; and in the use of said premises, the Lessee agrees that
nothing shall be done or permitted therein, contrary to, or in
violation of, any law or laws of the United States of America, the
State of Nebraska, or any ordinance or ordinances of the City of Omaha,
or any requirements of the police and health departments of the City of
Omaha; and that nothing shall be placed or permitted upon the outside
window sills or thrown from the windows of the building.
22. No aerial shall be erected on the roof or exterior walls of the
premises, or on the grounds, without in each instance, the written
consent of Lessor. Any aerial so installed without such written consent
shall be subject to removal without notice at any time.
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<PAGE> 23
23. No loud speakers, televisions, phonographs, radios or other devises
shall be used in a manner so as to be heard or seen outside of the
premises without the prior written consent of Lessor.
24. Normal office building hours are designated as being from 7:30 a.m.
until 5:30 p.m., Monday through Friday, and 8:00 a.m. until 12:00 noon,
Saturdays, national holidays excluded.
25. If the leased premises are to be equipped with a computer, or other
type of office equipment, beyond the normal meaning of the phrase,
Lessee shall not install it without Lessor's consent and then only when
said equipment has been provided with its own dedicated utility
connection and meter; the installation and payment of which shall be at
Lessee's sole cost and expense.
26. The rules and regulations which form a part of this lease may be
amended at any time upon written notice from the Lessor and shall apply
with equal effect to not only the Lessee, but also to the employees,
agents visitors, and licenses of the Lessee, as well as those having
business with the Lessee, unless provided otherwise in the lease
between the parties.
27. On a Site Plan attached to the Lease, Landlord will show the parking
areas designated for the Tenant's employees, Landlord will work with
the Tenant so that parking problems may be avoided between the
building's Tenants. Landlord will stripe parking lot behind building.
Tenant's parking ratio is approximately 7:1,000 square feet - see
Exhibit "B".
28. All Sub-Contractors of Lessee must park in the rear of the building and
all material must enter from the rear of the building. Under no
circumstances will Lessor tolerate construction workers parking in
front of the building.
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<PAGE> 24
SIGN CRITERIA
These criteria have been established for the purpose of assuring an outstanding
shopping center, and for the mutual benefit of all Tenants.
A. GENERAL REQUIREMENTS:
1. Each Tenant shall submit or cause to be submitted to the Project
Architect for approval before fabrication at least four (4) copies of detailed
drawings indicating the location, size, layout, design and color of the proposed
signs, including all lettering and/or graphics. The drawings shall be prepared
by one of the sign companies and approved by Landlord.
2. All permits for signs and their installation shall be obtained by
the Tenant or his representative.
3. Tenant shall be responsible for the fulfillment of all requirements
and specifications.
4. All signs shall be constructed and installed, including electrical
hook-up, at Tenant's expense. Tenant shall cause his sign to be installed no
later than forty-five (45) days after Tenant opens for business.
5. All signs shall be reviewed for conformance with this criteria and
overall design quality. Approval or disapproval of sign submittal based on
esthetics of design shall remain the sole right of the Landlord and Project
Architect.
6. No temporary or construction signs will be permitted without
Landlord's approval.
7. All signs shall be installed by a licensed sign contractor selected
from a list of approved sign contractors provided by Landlord.
B. GENERAL SPECIFICATIONS:
1. All signs are individual letter type in white lettering.
2. No exposed lamps, tubing, or raceways will be permitted.
3. No audible, flashing, animated, oscillating or moving signs will be
permitted.
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<PAGE> 25
4. Electrical service to all signs shall be on Tenant's meter at
Tenant's expense. Tenant will be responsible to run all wires and conduit from
Tenant's meter to the Landlord's stubbed conduit near the store front line,
above the ceiling.
5. No projections above or below the sign limits will be permitted.
Signs must be within dimensional limits as indicated.
6. No script or logo will be permitted unless it is part of an
established trademark of the Tenant.
7. All signs and their installation shall comply with all local
building and electrical codes.
8. No exposed raceways, crossovers or conduit will be permitted.
9. All conductors, transformers and other equipment shall be concealed.
10. Tenant shall be responsible for the installation and maintenance of
all signs.
11. All signs are to be installed under the direction of the Project
Architect or landlord's superintendent or representative.
12. Wording of signs shall not include the product sold except as part
of Tenant's established trade name or insignia.
13. Landlord's Architect will designate exact location of sign in
relation to Tenant's store front width and height prior to any installation.
Where the Tenant is using the Landlord's installed sheet metal can (raceway) the
Tenant's Sign contractor shall install a sheet metal (22 gauge) closure panel at
each end of the allowed sign width to prevent light leakage to an adjacent
tenant.
14. The maximum height of any sign letter shall not exceed 24". The
depth from the back of the sign fiasco of the individual surface mounted letters
shall be 5", unless the Project Architect specifies different Measurements. No
letter shall be less than 10" in height.
15. All signs shall be limited to individual letter, routed out of
Color Clad metal fiasco panel or 3/8" Plexiglas (Tenant has option to install
individual 3 dimensional plastic letters mounted on routed Color Clad panel or
individual lettering where color Clad or 3/8" Plexiglas routing occurs.)
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<PAGE> 26
16. Landlord has provided Tenant with a continuous sheet metal can, the
Tenant, (at Tenant's cost) shall install his lamps, ballast and wiring, within
this can.
17. Tenant's Sign Contractor's shall repair any damage caused by said
contractor's work, or by its agents or employees.
18. Tenant shall be liable for the operation of Tenant's Sign
Contractor.
19. No signs perpendicular to the face of the building or store front
will be permitted. No under canopy signs will be permitted.
20. Sign location shall be established by the Landlord or the
Landlord's Architect.
21. Within ten (10) calendar days of the termination of Tenant's lease
for any reason, Tenant shall have his sign removed by a sign company (approved
by Landlord). Sign fascia shall be replaced with a new matching panel.
C. CONSTRUCTION REQUIREMENTS:
1. Letter fastening and clips are to be concealed and be of galvanized,
stainless or aluminum metals.
2. No labels will be permitted on the exposed surface of signs, except
those required by local ordinance which shall be placed in an inconspicuous
location.
3. Tenant's shall have identification signs designed in a manner
compatible with and complimentary to adjacent and facing store fronts and the
overall design concept of the Center.
4. Design, layout and materials for Tenant signs shall conform in all
respects with the sign design drawings provided to Tenant. The maximum height
and dimensions for letter in the body of the signs shall be pursuant to approved
plans and specifications.
5. All penetrations of the building structure required for sign
installation shall be sealed in a watertight condition and shall be patched to
match adjacent finish.
6. All store front signs including plexiglass signs shall be fabricated
of material with a matte finish.
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<PAGE> 27
7. Tenant's Sign Contractor will be responsible to re-install the sign
fascia panel in the same workmanship manner as it was before including caulking,
reinforcing braces, sheet metal trim, etc.
D. MISCELLANEOUS REQUIREMENTS:
1. Each Tenant shall be permitted to place upon each entrance of its
Premises not more than 144 square inches of white vinyl pressure sensitive
letters not to exceed two inches (2") of individual letters in height,
indicating hours of business, emergency numbers, etc.
2. Except as provided herein, no advertising placards, banners,
pennants, names, insignia, trademarks, or other descriptive material, shall be
affixed or maintained upon the glass panes and supports of the show windows and
doors, or upon the exterior walls of buildings, or within 24" of the show
windows.
3. Each Tenant who has a non-customer door for receiving merchandise
may have uniformly applied on said door in location, as directed by the Project
Architect, in 2" high block letter, the Tenant's name and address. Where more
than one Tenant uses the same door, each name and address shall be applied.
Color of letters will be as selected by the Project Architect.
4. Tenant may install on the store front, if required by the U.S. Post
Office, the number only for the street address in exact location stipulated by
the Project Architect. Size, type and color of numbers shall be as stipulated by
the Project Architect.
5. Tenant's should note that approval action by the Project Architect
and Landlord will generally take one week. No installation will be permitted
without proper approvals.
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<PAGE> 28
LEASE EXTENSION
May 23, 1995
In consideration of the LEASE dated November 20, 1991, and as amended by
EXTENSION OF LEASE SPACE agreement dated 9/28/92 and LEASE EXTENSION agreement
dated 8/9/93 by V.R.B. COMPANY, Lessor and CARDMEMBER PUBLISHING CORPORATION,
Lessee, for the premises 11151, 11155, 11157, 11159, 11161, 11163, 11165, 11167
Mill Valley Road, Omaha, Nebraska.
For valuable consideration rendered, the parties hereby agree as follows:
Under the same terms and condition as the original lease and subsequent
amendments, the lease shall be extended through June 30, 2000.
EXCEPTION TO ORIGINAL LEASE:
V.R.B. Company will finish the Tenant Improvements in the designated space per
the attached plan defined as Exhibit A. Final execution of the Lease Extension
will be based upon the mutual agreement by both parties of the attached final
plans and specifications.
The Construction Schedule Agreement is incorporated by reference in and to the
terms of this Lease Extension Addendum.
IN TESTIMONY WHEREOF, the said parties have signed, sealed and executed this
instrument.
ACCEPTANCE
ATTEST V.R.B. COMPANY
/s/ Jackie Stover By: /s/ Milo P. Vacanti
- -------------------- ----------------------------------
Milo P. Vacanti, its Partner
6/20/95
- --------------------
Date
CARDMEMBER PUBLISHING CORPORATION
By: /s/ Steven H. Levenherz
----------------------------------
Steven H. Levenherz,
Chief Financial Officer
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<PAGE> 29
FLOOR PLAN
[Graphic]
SITE PLAN
[Graphic]
EXHIBIT "B"
Part of 11133 Mill Valley Road and
all of 11135 Mill Valley Road
3,072 Square Feet +/-
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<PAGE> 30
BUSINESS PROPERTY LEASE
APPROVED BY BUILDING OWNERS
AND MANAGERS ASSOCIATION OF OMAHA, INC.
THIS LEASE, Made and executed in triplicate by and between the LESSOR
K.V. JOINT VENTURE, 11205 John Galt Boulevard, Omaha, Nebraska 68137 and the
LESSEE CARDMEMBER PUBLISHING CORPORATION, 655 Washington Boulevard, Suite 806,
Stanford, Connecticut 06901
WITNESSETH: THAT THE LESSOR DOES HEREBY DEMISE AND LEASE UNTO THE
LESSEE, THE FOLLOWING DESCRIBED PROPERTY, SITUATED IN OMAHA, DOUGLAS COUNTY,
NEBRASKA, TO-WIT:
DESCRIPTION OF PROPERTY
Buildings #23 and #24 - Building #23 - 11031-11035-11039 "I" Street, Bays 8, 9
and 10 Building #24 - 11043-11045 "I" Street, Bays 1 and 2, Omaha, Nebraska
68137 consisting of 11,641 Square Feet, more or less and as shown on Exhibit "B"
attached hereto.
TERM AND PURPOSE
1. The Lessee agrees to use and occupy the premises for general office
purposes and no other purpose, for a term of five (5) years and two (2) months
said lease term beginning on January 1, 1994 and ending on February 28, 1999
unless sooner terminated as hereinafter provided.
RENTAL
2. In consideration of the foregoing demise, the Lessee hereby
covenants to perform the agreements hereby imposed, and to pay the Lessor as
rental for said premises the sum of ____________ ($_____), payable as follows:
For the period from January 1, 1994 to December 31, 1996, $4,000.00 per month
For the period from January 1, 1997 to February 28, 1999, $4,000.00 per month
said rental to be payable monthly in advance, on the first day of each
successive month, at the office of K.V. Joint Venture, 11205 John Galt
Boulevard, Omaha, Nebraska 68137, or at such other place as the Lessor shall
direct.
RENTAL ADJUSTMENT - OPTION PERIOD ONLY (3-1-00 - 2-28-2009)
2. (a) It is understood and agreed that the amount of rent stated above
in paragraph 2 of this lease shall be the base rental and shall be adjusted on
the first
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day of the first year of the option and each yearly anniversary thereafter in
order to reflect the change in purchasing power of the dollar. Such adjustments
shall be made upon the following basis of computation: The most recent U.S.
Department of Labor Consumer Price Index: U.S. City Average, ALL URBAN CONSUMERS
(CPI-U), 1982-84 = 100, All items, report for the month of 1-1-94, showing the
Index as when reported, shall be considered as the base and the price index in
effect for the corresponding month in each successive year shall be compared
with this base index figure. The annual rental shall be either increased or
decreased by the percentage of increase or decrease in the price index. Such
computation shall be made in the same manner on each yearly anniversary of this
lease to determine any adjustments in the rent for the subsequent year. However,
at no time will the rental be less than the base rental stated above in this
lease. The annual increase, if any, shall not be compounded.
SERVICE
3. It is understood that for the rent mentioned, the Lessor shall
furnish service as follows: Services per Paragraph 28. In the event that
services are interrupted, Landlord will made a diligent effort to ensure that
the services are restored. *SEE BELOW
*However, should needful repairs, renewals or improvements or any other cause
within the control of Lessor, disrupt telephonic communications for a period in
excess of 72 consecutive hours, rent shall be abated from the first day of the
[TEXT UNREADABLE]
In the manner customary in the building, it is hereby agreed that the Lessor
shall have the right to discontinue any service above mentioned or any part
thereof whenever and during any period for which bills for rent or other service
are not promptly paid by the Lessee. It is also agreed that the Lessor shall not
be liable for damages nor shall the rental hereinbefore stipulated be abated for
failure to furnish or delay in furnishing, any service above mentioned or any
part thereof as aforesaid when such failure to furnish, or delay in furnishing,
is occasioned by needful repairs, renewals or improvements, or in whole or in
part by any strike or labor controversy, or by any accident or casualty
whatsoever, or by an act or default of the Lessee or other parties, or by any
unauthorized act or default of any employee of the Lessor, nor for any other
cause or causes beyond the reasonable control of the Lessor.
WATER, GAS, ELECTRIC, SEWER USE FEES, ETC., CHARGES
4. The Lessee further agrees to pay from time to time as same may
become due, all water, gas, electricity or other charges levied or assessed
against, incurred at or chargeable to or in connection with the leased premises
during the term of this lease and to save the premises and Lessor harmless
therefrom.
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Lessee further agrees to pay any and all sewer use fees which
may be assessed against the demised premises whether based on a minimum fee, a
percentage charge, or whatever basis said fee shall be levied. In addition to
the usual monthly charge for water, the Lessee further agrees to pay any and all
additional charges which the Metropolitan Utilities District may make against
the demised premises for the use by the Lessee of water for air conditioning
purposes. *Gas and Electric utilities are separately metered and are placed in
the tenant's name.
CONDITION OF PREMISES
5. Lessee has examined said premises prior to his acceptance and the
execution hereof and is satisfied with the physical condition thereof, including
all equipment and appurtenances, and his taking possession thereof shall be
conclusive evidence of his receipt thereof in satisfactory order and repair,
except as otherwise specified herein, and Lessee agrees and admits that no
representation as in the condition or repair hereof has been made by the Lessor
or his agent which is not herein expressed or indorsed hereon; and likewise
agrees and admits that no agreement or promise to decorate, alter, repair, or
improve said premises including all equipment and appurtenances, either before
or after the execution hereof, not contained herein, has been made by Lessor or
his agent.
REPAIRS
6. In consideration of the foregoing demise and the rate of rental
herein stipulated, the Lessee agrees during the term of this lease, at his own
expense, to keep in good and substantial order and repair and to make all
necessary repairs, renewals, replacements and decorations upon or in connection
with said premises, including all windows and doors and glass, wherever located,
and all plumbing, heating equipment, boilers, elevators, pipes, wiring, and gas,
steam and electrical fixtures, connections and fittings and all other equipment,
fixtures and appurtenances, and excepting only the exterior of the premises
(exterior of the premises shall not include windows, doors or any glass).
However, it is not the intention of the parties hereto that the foregoing
repairs, renewals, replacements, and/or decorations shall be made by the Lessee
when such repairs, renewals, replacements and/or decorations are occasioned by
fire, windstorm or other unavoidable casualty, except that the Lessee shall make
all glass replacements made necessary from any cause other than fire, windstorm
and structural deficiency of the building. Lessee agrees to have preventative
maintenance contracts for the HVAC systems. Lessor warrants the operation of the
"compressors" and "blower" motors for the first year of the Lease if not
otherwise covered by the warranty on the new units installed.
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ASSIGNING, SUBLETTING, INSURANCE, ALTERATIONS,
AIR CONDITIONING, COOLING
7. It is provided that the Lessee shall not assign this lease nor let
or sublet said premises or any part thereof nor use the same nor permit the same
to be used for any purpose other than as above described, nor keep or store in
or about the premises anything which will increase the rate of insurance on the
building, nor permit any change in occupancy or transfer of this lease by
operation of law, or otherwise, nor make any alterations or additions or
improvements, including air conditioning and cooling systems in said premises,
nor place, affix or display in any manner in, upon or in connection with said
premises, any "for rent," display or advertising sign or device without the
written consent of the Lessor first obtained and Lessee will not invalidate any
policies of insurance now or hereafter made on said building, and Lessee will
pay all extra insurance premiums on said building, if any, required on account
of extra risk caused by the Lessee's use of the demised premises, and it is
further provided that all additions, fixtures or improvements which may be made
by the Lessee to said premises, except movable office furniture and trade
fixtures, shall be made only after the Lessor has given written consent and
shall become the property of the Lessor, and shall remain and be surrendered in
good condition with the premises as part thereof at the termination of this
lease, by lapse of time or otherwise.
It is understood and agreed, however, that Lessee shall maintain an
insurable interest in said additions, fixtures and improvements during the term
of this lease and that in the event of any casualty loss to said additions,
fixtures and improvements the Lessee shall be entitled to the proceeds from any
insurance the Lessee may have carried on the same.
Lessee agrees, upon the termination hereof, to remove all Lessee's
property except such as according to the conditions of this lease is to remain
as part of the premises.
COMPLIANCE WITH LAWS - KEEP PREMISES SAFE AND CLEAN
8. The Lessee shall keep said premises and operate his business therein
in a manner which shall be in compliance with all laws, rules and regulations,
orders and ordinances of the city, county, state and federal government and any
department of either, and will not suffer or permit the premises to be used for
any unlawful purpose, and he will protect the Lessor and save him and the said
premises harmless from any and all fines and penalties that may result from or
be due to any infractions of, or noncompliance with, the said laws, rules,
regulations, orders and ordinances. Lessee agrees to keep the said premises and
all sidewalks and approaches thereto in a safe condition and free and clear of
ice and snow and all other matter which may
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be dangerous to the public and free of all obstructions. *Lessor is responsible
for ice and snow maintenance on the sidewalk.
Lessee will hold Lessor exempt and harmless for and on account of any
damages or injury to any person, or to the goods, wares and merchandise of any
person, arising from the use of the premises by Lessee, or arising from the
failure of Lessee to keep the premises in good condition as herein provided.
*Except to the extent caused by Landlord's negligence.
DAMAGE BY FIRE OR OTHER CASUALTY
TERMINATION PRIVILEGES
9. It is provided that in the case of the said premises, or any part
thereof, shall at any time be destroyed or damaged by fire or other unavoidable
casualty, so that the same shall be unfit for occupation or use, then the rent
hereby reserved, or a fair and just proportion thereof, according to the nature
and extent of the damage sustained in loss of occupation of the premises, shall
be suspended, cease to be payable and so continue until said premises shall be
rebuilt or made fit for occupation and use, or if such damage to the said
demised premises or to the building in which the demised premises are situated,
is to the extent of 50% or more, then this lease may be terminated at the
election of the Lessor, notice of which election, if exercised, shall be given
in writing within 25 days from date of casualty, provided also that in case the
building containing said premises is totally destroyed or work to put the
premises in tenantable condition is not commenced within one month from the date
of said damage and continued thereafter, with reasonable diligence, then this
lease may be terminated at the election of the Lessee, notice of which election,
if exercised, must be given in writing within 25 days from date of casualty.
Each party hereto hereby waives all claims for recovery from the other party for
any loss or damage to any of its property insured under valid and collectible
insurance policies to the extent of any recovery collectible under such
insurance, subject to the limitations that this waiver shall apply only when
permitted by the applicable policy of insurance.
PERSONAL PROPERTY AT RISK OF LESSEE
10. All personal property in the leased premises shall be at the risk
of the Lessee only and the Lessor shall not be or become liable for any damage
to said personal property, to said premises or to said Lessee or to any other
persons or property caused by water leakage, steam, sewerage, gas or odors or
for any damage whatsoever done or occasioned by or from any boiler, plumbing,
gas, water, steam or other pipes or any fixtures, equipment or appurtenances
whatsoever, or for any damage occasioned by water, snow or ice, being upon or
coming through the roof, sky-light, trap door, or otherwise, or for any damage
arising from any act or neglect of other tenants, occupants, or employees of the
building in which the leased
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premises are situated or arising by reason of the use of, or any defect in, the
said building or any of the fixtures, equipment or appurtenances therein, or by
the act or neglect of any other person or caused in any other manner whatsoever.
*If required by the Lessee, Lessor in an expedient manner will repair any
condition or defect that is causing or may result in damage to Lessee's personal
property. Lessee may also call upon any qualified contractor directly for any
repairs in the premises. All costs of the repairs are to be the responsibility
of the Lessee.
RIGHT OF LESSOR TO ENTER FOR REPAIRS, ALTERATIONS, ETC.
11. The Lessor, his agents or representatives, shall have the right to
enter said premises at all reasonable times, to examine or exhibit the same, or
to make such repairs, additions or alterations as Lessor may see fit to make for
the safety, improvements or preservation thereof, or of the building of which
the leased premises are a part or for any other reasonable purpose and Lessor
shall make a diligent effort to keep disruption to Lessee's continued use and
enjoyment of the premises to a minimum. The Lessor may display "for rent" signs
on or about the said premises and in the windows thereof for sixty days prior to
the termination of this lease.
DEFAULT, BANKRUPTCY, ETC.
12. Should default be made by the Lessee in the payment of the rental
or any other sum required to be paid by Lessee hereunder, or any part thereof,
when and as herein provided, or should Lessee default in the performance,
fulfillment or observance of any of the Lessee's other covenants, conditions or
agreements herein contained; or should any decree or order for relief be entered
by a court having jurisdiction adjudging the Lessee a bankrupt or insolvent, or
approving a petition seeking the reorganization, arrangement, adjustment or
composition in respect of Lessee, whether voluntarily or involuntarily, under
the federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or similar law, or appointing
a received, liquidator, assignee, custodian, trustee or similar official of the
Lessee, or any substantial part of Lessee's property, or ordering the winding up
or liquidation of Lessee's affairs; or should the demised premises become vacant
or abandoned; or should this Lease be transferred, voluntarily or involuntarily,
to any person other than the Lessee; or should the leasehold interest created by
this Lease be levied or under execution, then, and in every such case, the
Lessor may, at the Lessor's option, without demand of any kind or notice to
Lessee, or any other person, at once declare this lease terminated and Lessor
may reenter the premises without formal notice or demand and hold and enjoy the
same thenceforth, as if this Lease had not been made, without prejudice,
however, in any right of action or remedy of the Lessor because of any breach by
the Lessee of any covenant, condition, provision or agreement herein contained.
In case Lessor does not elect to take advantage of the right to terminate this
Lease conferred
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by the foregoing provisions of this paragraph, the Lessor shall nevertheless
have, and Lessor is hereby expressly given, the right to reenter the said
premises, with or without legal process, should any of the events hereinbefore
specified take place or occur, and to remove the Lessee's signs, and all
property and effects of the Lessee or other occupants of said premises, and if
the Lessor so desires, to relet the said premises, or any part thereof, upon
such terms, and to such person or persons and for such period or periods as may
seem fit to the Lessor, and in case of such reletting, the Lessee shall be
liable to the Lessor for the difference between the rents and payments herein
reserved and agreed upon for the residue of the entire stipulated term of this
Lease and the net rent for such residue of the term realized by such reletting,
such net rent to be determined by deducting from the entire rent received by
Lessor from such reletting the expenses or recovering possession, reletting,
altering and repairing said premises and collecting rent therefrom; and the
Lessee hereby agrees to pay such deficiency each month as the same may accrue,
the Lessee to pay to the Lessor within five (5) days after the expiration of
each month during such residue of the term, the difference between the rent and
payments for said month as fixed by this Lease and the net amount realized by
the Lessor from the premises during said month.
VACATION OF PREMISES BY LESSEE
SECURITY INTEREST IN PERSONAL PROPERTY
13. If Lessee shall not promptly remove all his property from the
premises whenever the Lessor shall become entitled possession thereof as herein
agreed, the Lessor may, without notice, remove the same, or any of the same, but
with the exercise of reasonable [TEXT UNREADABLE] in any manner that Lessor may
choose, and Lessee will pay Lessor, upon demand, any and all expenses incurred
in such removal, together with storage on said effects for any length of time
during which the same shall be in Lessor's possession or control; or if Lessee
shall at any time vacate or abandon said premises, and leave any personal
property or fixtures in or about the premises for a period of five (5) days
after such vacation or abandonment or after the termination of this Lease for
any reason whatsoever, then the Lessor shall have the right to sell all or any
part of such property at public or private sale without giving any notice to the
Lessee, or any notice of sale, all notices required by statute or otherwise
being hereby expressly waived, and to apply the proceeds of such sale first, to
the payment of all costs and expenses of conducting the sale and caring for and
storing the property; and, second, the balance, if any, to any indebtedness due
from Lessee to Lessor; and third, to deliver any remaining sum, on demand in
writing, to the Lessee. Lessee hereby grants Lessor a security interest in all
items of personal property and fixtures of Lessee now or at any time hereafter
affixed to, attached to, placed in or upon the demised premises as security for
the payment of all rent and other sums due or to become due hereunder and the
performance by Lessee of all of the terms, conditions and provisions of this
Lease to be performed by Lessee. This Lease is intended to be a financing
statement within
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the purview of Section 9-402 of the Uniform Commercial Code. The address of
the Lessor (Secured Party) and the Lessee (Debtor) are hereinafter set forth.
This Lease may be filed for record in the Offices of the Register of Deeds and
County Clerk of the County where the premises are located and the Office of the
Secretary of State of Nebraska. Unless otherwise indicated in this Lease, the
Lessor is the record owner of the premises.
CONTINUED OCCUPANCY OF PREMISES
14. Provided also, and this lease is upon these express conditions,
that the Lessor and the Lessor's successor or assigns shall have the right to
terminate this lease absolutely at the end of the calendar month by first giving
to the Lessee, or the Lessee's assigns, or by leaving at said demised premises,
addressed to the Lessee, at least 9 months before the date of such termination,
a written notice of the Lessor's intention to remodel, remove or demolish the
said building or to sell, or make a ground lease of the land thereunder, the
rate of rent herein stipulated being the consideration for this agreement.
HOLDOVER
15. The Lessee agrees at the termination of this lease, by lapse of
time or otherwise, to forthwith leave, surrender and yield up the demised
premises in good and substantial order and repair. It is understood and agreed
that this lease shall not extend beyond the term herein granted, and a holding
over or continuance in the occupancy of the demised premises shall not work an
extension of the said lease, but in any and all such cases, the Lessee shall be
a trespasser or a tenant at will at the option of the Lessor, subject to removal
by the said Lessor by summary process and proceedings, it being provided further
that an acceptance of rent by the Lessor during such holding over period shall
operate to create a tenancy from month to month only, terminable upon thirty
days' notice, and in that case all provisions of this lease not inconsistent
with a tenancy from month to month shall remain in force.
ACCEPTANCE OF RENT AFTER PROCEEDINGS
16. It is agreed that after the service of notice of the commencement
of suit, or after final judgment (or possession of the premises, the Lessor may
receive and collect any rent due without prejudice to, nor waiver of or effect
upon the said notice, suit or judgment.
CHARGES ADDED TO RENT
17. In the event of the failure of the Lessee to perform any of the
covenants, agreements or conditions herein contained, the Lessor shall have the
right but shall not be obligated to pay any sum of money or incur any expense
which should have
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been paid or incurred by the Lessee in the performance of any such covenant,
agreement or condition. The Lessee covenants that in case the Lessor, by reason
of the failure of the Lessee to perform any of the covenants, agreements, or
conditions herein contained, shall be compelled to pay or shall pay any sum of
money, or shall be compelled to do or shall do any act which requires the
payment of money, then the sum or sums so paid or required to be paid together
with interest, costs and damages, shall be added to the installment of rent,
next becoming due and shall be collectible as additional rent in the same manner
and with the same remedies as if it had been originally reserved, any sum so
paid by Lessor to bear interest at the rate of 6% per annum from date of payment
by Lessor to date of repayment by Lessee. *Lessor will give notice to the Lessee
if there is failure on the Lessee's part to perform any of the covenants,
agreements or conditions herein contained.
WAIVER - NONE
18. The failure of the Lessor to insist upon a strict performance of
any of the covenants or conditions of this lease or to exercise any right or
option herein conferred in any one or more instances, shall not be construed as
a waiver or a relinquishment for the future of any such covenants, conditions,
rights or options, but the same shall remain in full force and effect; and the
doing by the Lessor of any act or thing which Lessor is not obligated to do
hereunder shall not be deemed to impose any obligation upon the Lessor to do any
such act or thing in the future or in any way change or alter any of the
provisions of this lease.
19. No surrender of the premises for the remainder of the term herein
shall be binding upon the Lessor unless accepted by the Lessor in writing.
Without limiting the scope or effect of the last preceding sentence, it is
agreed that the receipt or acceptance of the keys of the premises by the Lessor
shall not constitute an acceptance of a surrender of said premises.
LESSOR'S RIGHT CUMULATIVE - NO CHANGE HEREOF
EXCEPT IN WRITING
20. All rights and remedies of the Lessor under or in connection with
this lease shall be cumulative and none shall be exclusive of any other rights
or remedies allowed by law. No agreements shall be held as changing or in any
manner modifying, adding to or detracting from any of the terms or conditions of
this lease, unless such agreement shall be in writing, executed by both parties
hereto.
EMINENT DOMAIN
21. If the whole or any part of the premises hereby leased shall be
taken by any public authority under the power of eminent domain, then the term
of this lease shall cease on the part so taken from the day the possession or
that part shall be
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required for any purpose, and the rent shall be paid up to that day, and if such
portion of the demised premises is so taken as to destroy the usefulness of the
premises for the purpose for which the premises were leased, then, from that day
the Lessee shall have the right either to terminate this lease and declare the
same null and void or to continue in the possession of the remainder of the same
under the terms herein provided, except that the minimum rent shall be reduced
in proportion to the amount of the premises taken. All damages awarded for such
taking shall belong to and be the property of the Lessor, including such damages
as shall be awarded as compensation for diminution in value to the leasehold,
provided, however, that the Lessor shall not be entitled to any portion of the
award made to the Lessee.
EXPLANATORY PROVISION
22. The words "Lessor" and "Lessee" shall be taken to include and be
binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns, and shall be taken in the plural sense,
whenever the context requires, and all pronouns used herein and referring to
said parties shall be construed accordingly, regardless of the number or gender
thereof.
Headings of the various paragraphs herein are inserted merely as a
matter of convenience and for reference and shall not be considered as in any
manner defining,, limiting or describing the scope or intent of the particular
paragraphs to which they refer or as affecting the meaning or construction of
the language in the body of such paragraphs.
23. If Lessor does not now have possession of the premises, it is
hereby covenanted and agreed that if the demised premises above described shall
not be available for occupancy at the date named in said lease at the time when
the lease term is to commence, then said lease shall commence on the date when
said premises shall be available for occupancy, and a pro rata abatement of the
rental herein provided shall be made until said premises are available for
occupancy but the expiration of said lease shall remain the same; and the Lessor
shall not be liable for any loss or damage of any kind whatsoever that the
Lessee may sustain or claim to have sustained by reason of such delay.
Until this lease is executed on behalf of all parties hereto, it shall
be construed as an offer of proposed Lessee to proposed Lessor. Time being of
the essence, this lease must be completed on behalf of all parties on or before
August 9, 1993 to be effective.
24. Any notice which either party may desire or be required to give to
the other party shall be in writing and shall be delivered by personal service
or sent by registered or certified mail, return receipt requested, addressed to:
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In case of Lessor: K.V. Joint Venture In case of Lessee: Cardmember
Publishing
Corporation
Address: 11205 John Galt Boulevard Address: 655 Washington Boulevard
Omaha, Nebraska 68137 Suite 1000
Stamford, Connecticut 06901
*Lessee, upon occupancy of the space, must put all Gas and Electric Utility
Meters in their name. Under no circumstances whatsoever will Landlord continue
to maintain utilities in his name.
IN WITNESS WHEREOF, the parties hereto have executed this lease this 9
day of August, 1993.
WITNESS: K.V. JOINT VENTURE
/s/ Milo P. Vacanti
- ------------------------- -----------------------------------
Milo P. Vacanti, its Partner
- ------------------------- -----------------------------------
CARDMEMBER PUBLISHING CORPORATION
- ------------------------- -----------------------------------
/s/ Steven Levenherz
- ------------------------- -----------------------------------
Steven Levenherz,
Chief Financial Officer
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ASSIGNMENT AND ACCEPTANCE
For value received, the Lessee hereby assigns all right, title and
interest in and to the within lease, from and after ___________________________,
19__, unto __________________________________ his or its heirs and assigns, and
in consideration of the Lessor's consent to this assignment agrees to remain
primarily liable to the Lessor, jointly and severally with the assignee, for the
performance of all of the covenants on the part of the Lessee in said lease
mentioned.
Dated this ___________ day of _______________, 19_____.
______________________________
______________________________
In consideration of the above assignment, and the written consent of
the Lessor hereto, the undersigned hereby assumes and agrees to make all
payments from and after __________________________, 19__, and to perform all of
the covenants and conditions of the within lease to be made and performed by the
Lessee, and to hold the assignor harmless from all liability thereunder.
Dated this ___________ day of _______________, 19_____.
______________________________
______________________________
CONSENT TO ASSIGNMENT
Lessor hereby consents to the assignment of the within lease to
_________________________________________ on the express conditions, however
that the assignor shall remain liable for the prompt payment of the real and
performance of the covenants on the part of the Lessee as herein mentioned and
that no further assignment of said lease or subletting of the premises, or any
part hereof, shall be made without the written consent of the Lessor first had
thereto.
Dated this ___________ day of _______________, 19_____.
______________________________
______________________________
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ADDENDUM TO LEASE
K. V. JOINT VENTURE
AND
CARDMEMBER PUBLISHING CORPORATION
25. Lessee shall deposit the sum of FOUR THOUSAND DOLLARS AND NO CENTS
($4,000.00) against damage upon removal and the parties, Lessor and Lessee,
agree that the first month's rental in the sum of FOUR THOUSAND DOLLARS AND NO
CENTS ($4,000.00) will be due upon execution of the lease, but the rent will
begin on January 1, 1994. It is understood the Lessee has inspected the present
betterments within the bays and is satisfied with their condition, service and
capacity and relies on no representations from the Lessor as to capacity or
suitability of any of the electrical, mechanical, plumbing, heating or other
service installed in and about the building. Lessee, in the installation of any
improvements, shall strictly comply with all National Building Codes and all
rules and regulations, ordinances and statutes of the United States, State of
Nebraska and the City of Omaha, as well as Douglas County. Nothing herein
contained shall require the Lessor to do any decorating, painting, finishing,
floor covering or other improvements not specifically herein listed.
Lessor guarantees the proper working condition of the electrical,
mechanical and HVAC system for the initial 30 days of the Lease. All
warranties on new mechanical units shall transfer upon occupancy to the
Lessee.
At the conclusion of the Lease and the Lessee's vacation of the
premises, and as long as the Lessee is in compliance with all the terms
and conditions of the lease, the security deposit will be promptly
returned to the Lessee.
26. OPTIONS TO EXTEND INITIAL TERM: This Lease shall be extended
automatically for two (2) additional period(s) ("Extended Terms") of five (5)
years each, from and after the expiration of the initial term of this Lease and
Extended Term, as the case may be, unless at least six (6) months prior to the
expiration of the initial term or the prior Extended Term of this Lease, as the
case may be, Lessee notifies Lessor in writing of its election not to renew this
Lease. This Lease shall remain in effect during each Extended Term upon all of
the terms and conditions of this Lease except that the base rental during each
such Extended Term shall be determined as follows:
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A. The product obtained by multiplying the sum of FOUR THOUSAND DOLLARS
AND NO CENTS ($4,000.00) by the Index Figures hereinafter defined.
B. The Index Figure shall be a fraction, the numerator of which shall
be the average monthly index shown on the Consumer Price Index - U.S. -
As Revised 1978 - All items (1982-84=100) published by the Bureau of
Labor Statistics of the U.S. Department of Labor, Kansas City, MO
(Price Index) for the last published month of the lease year of the
term hereof and the denominator of which shall be the average monthly
Price Index for the first month of the lease year of the term hereof.
C. If at any time the Price Index shall not be published and available
for the purpose of making the aforesaid computation, and Lessor and
Lessee shall agree upon a substitute index and the manner of its use
within sixty (60) days after either party hereto shall have notified
the other party hereto of the unavailability of the Price Index. In
such event, the parties shall select a reasonably adequate substitute
index and specify the manner of its use, or if no reasonably adequate
substitute index exists, then the amount of Lessor's payment hereunder
shall be determined in accordance with the intent of the parties which
is that the rental for the renewal term is to be increased
proportionately with the increase in the cost of living from the first
month of the first year to the last month of the original term hereof.
D. In no event shall the rental decrease from the rental of the
original term.
E. Notwithstanding the fluctuations of the cost of living, in no year
shall the increase be less than 2% and in no year shall the increase be
more than 6% including option terms.
27. If the first extended option term is exercised, a second five (5)
year extended option term is granted. Should the second extended option term be
exercised, the Lessor will adjust the base rental which shall be the amount of
FOUR THOUSAND DOLLARS AND NO CENTS ($4,000.00) augmented and increased by the
application of paragraphs 26A, B, C, D, and E, and the formula in 26A, B, C, D,
and E shall be again applied so as to reflect the cost of living or consumer
price index raise from the first month of the original base for all extended
option terms.
28. As additional rental herein payable pursuant to paragraph 2 hereof,
the Lessee shall pay to the Lessor, upon demand, a proportionate share of the
cost of operating, management, and maintaining all common areas, roofs, access
roads, sidewalks, taxes, landscaped space and space used in common or available
for use in common by the Lessee or his customers, employees, agents or other
invitees. Operating and maintaining such areas and facilities shall include,
without limitation,
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furnishing exterior and parking area lighting, cleaning, snow removal, line
painting, care of grass, shrubs and plants, payment of water and sewage charges
and general maintenance of all areas and facilities provided by the Lessor for
the common use of the occupants of the building. The term "proportionate share"
as used in this paragraph or elsewhere in this lease shall mean such fractional
part of the total costs to which said share applies as the total square feet
area occupied by the Lessee bears to the total square feet of occupied rental
floor area in the building. For purposes of this paragraph, Lessee shall pay 32%
based on 11,641 +/- square feet of occupied space as that bears to the total
square footage of the building, that being 36,586 square feet. Square footage
figures will be on a useable basis.
Structural improvements to the roof and building will be considered
"capital improvements" and will be the Lessor's expense unless caused
by the negligence of the Lessee.
If requested by the Lessee, Lessor will repair in a prompt manner and
with minimal interruption to the Lessee and its business, any of the
respective systems listed in this paragraph. Lessee may also call upon
any qualified contractor directly for any repairs within the premises.
All costs of the repair are the responsibility of the Lessee.
29. Lessee has inspected the premises and relies on its own judgment
and that of its own attorneys, accountants and advisors as to suitability and
accommodations present. Lessor has made no warranty nor representation which is
not herein set forth. This lease is not contingent upon any factor, statement,
or representation not specifically enumerated. Lessor has made no representation
as to present or proposed tenants or tenant "mix." Neither have any
representations been made to Lessee concerning the profitability or probable
success of Lessee's activity.
30. At the termination of this Lease, Lessee shall remove such of
Lessee's goods and effects as are not permanently affixed to the leased premises
and remove such of the alterations and additions made by Lessee as Lessor may
request; Lessee shall repair any damage caused by such removal; will peaceably
yield up the leased premises and all alterations and additions thereto (except
such as Lessor has requested Lessee to remove) and all fixtures, furnishings,
floor coverings and equipment which are permanently affixed to the leased
premises present at the termination of the Lease shall thereupon become the
property of the Lessor maintained, in clean and good order, repair and
condition, damage by fire or unavoidable casualty excepted. All personal
property of Lessee not removed within thirty (30) days following such
termination shall become the property of the Lessor, at Lessor's option.
31. Lessee shall not suffer any mechanic's liens to be filed against
the leased premises by reason of any work, labor services or material performed
at or furnished
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to the leased premises through or under the Lessee. If any such mechanic's lien
shall at any time be filed against the leased premises, the Lessee forthwith
shall cause the same to be discharged within thirty (30) days after being
notified of the filing thereof, and before judgment or sale thereunder, then, in
addition to any other right or remedy of the Lessor, the Lessor may, but shall
not be obligated to, discharge the same by paying the amount claimed to be due
or by bonding or other proceeding deemed appropriate by the Lessor, and the
amount so paid by the Lessor, and/or all costs and expenses, including
reasonable attorney's fees, incurred by the Lessor in procuring the discharge of
such lien, shall be deemed to be additional rent for the leased premises and
shall be due and payable by the Lessee to the Lessor on the first day of the
next following month with interest at the rate of sixteen percent (16%) per
annum until repair. Nothing in this lease contained shall be construed as a
consent on the part of the Lessor to subject the Lessor's estate in the leased
premises to any lien or liability under the laws of the State of Nebraska.
32. In the event of any failure of Lessee to pay any such rental due
hereunder within three (3) days after the same shall become due, (in addition to
other rights previously provided) or any failure to perform any of the other
terms, conditions or covenants of this lease to be performed and observed by the
Lessee for more than fifteen (15) days, (if the Lessee is making diligent
efforts to cure the default, the 15 day period may be extended to thirty (30)
days) after written notice of such default shall have been mailed to the Lessee,
or if Lessee shall abandon said premises, or suffer this lease to be taken under
any writ of execution, then Lessor besides other rights or remedies it may have,
shall have the immediate right of re-entry and may remove all persons and
property from the leased premises, and such property may be removed and stored
in a public warehouse or elsewhere at the cost of and for the account of Lessee
and Lessor shall make such repairs as may be necessary in order to re-let the
premises or any part thereof for such term or terms (which may be for a term
extending beyond the term of this lease) and at such rental or rentals and upon
such other terms and conditions as the Lessor in its own discretion may deem
advisable; upon such re-letting, shall be applied, first, to the payment of any
indebtedness other than rent due hereunder from the Lessee to Lessor; second, to
the payment of any costs and expenses of such re-letting, including brokerage
fees, reasonable attorney fees and costs of such repairs; third, to the payment
of rent due and unpaid hereunder, and the residue, if any, shall be held by the
Lessor and applied in payment of future rent if the same may become due and
payable hereunder. If such rentals received from such re-letting during any
month be less than that to be paid during that month by the Lessee hereunder,
Lessee shall pay any such deficiency to Lessor. Such deficiency shall be
calculated and paid monthly. No such re-entry or taking of possession by the
Lessor shall be construed as an election on its part to terminate this lease
unless a written notice of such intention be given to Lessee or unless the
termination thereof be decreed by a court of competent jurisdiction.
Notwithstanding any such re-letting without termination,
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<PAGE> 46
Lessor may at any time thereafter elect to terminate this lease for any such
previous breach.
Should Lessor at any time terminate this lease for any breach, in
addition to and not in limitation of, any other remedies it may have, it may
recover from the Lessee all damages Lessor may incur by reason of such breach,
including the costs of recovering the leased premises, reasonable attorney fees,
and including the worth at the time of such termination of the excess, if any,
of the amount of rent and charges equivalent to rent reserved in this lease for
the remainder of the stated term over the then reasonable rental value of the
leased premises for the remainder of the stated term all of which amounts shall
be immediately due and payable from Lessee to Lessor. The rights and remedies
herein provided shall be cumulative and the exercise or act as a waiver of any
other right or remedy of the Lessor hereunder, or which may exist at law, in
equity, or by statute.
33. During the term of this lease, the Lessee shall, at his own
expense, provide and maintain in full force and effect an insurance policy or
policies protecting Lessor and Lessee and their office and employees against any
loss, liability or expense from personal injury, death, property damage, or
otherwise arising or occurring upon or in connection with the premises or by
reason of the Lessee's operations upon or occupancy of the premises whether the
same occurs or the cause arises on or off the premises. The Lessor shall be an
additional insured under such policy or policies. Such insurance shall be
written by responsible insurance companies satisfactory to the Lessor and shall
be in an amount not less than $1,000,000.00 for injuries to any one person, not
less than $1,000,000.00 for injuries to more than one person arising out of any
one accident or occurrence, and not less than $500,000.00 for damage to
property. Certificates of insurance showing compliance with the foregoing
requirements shall be furnished by the Lessee to the Lessor. Such certificates
shall state the policies will not be cancelled nor altered without at least ten
(10) days prior written notice to Lessor. During this term and any extension
thereof, policies in force on the premises secured by Lessor shall be paid by
Lessee proportionately and the "Proportionate Share" of such insurance premium
increase shall be determined and paid as in paragraph 28 above.
34. Lessee agrees to comply with all applicable air and water pollution
control and prevention laws, regulations and state and federal air pollution and
water pollution control agencies' recommendations in the maintenance and use of
all facilities located on the leased premises. Lessor assumes no liability for
environmental contamination from the activities of the Lessee. Lessee and Lessor
shall indemnify, defend, and hold each other harmless from and against any and
all loss, claims, liability, damage or expense (including without limitation
attorney's fees, investigation and court costs) which each other may incur,
sustain or suffer or which may be asserted against each other by reason of any
hazardous material contamination or threat of hazardous material contamination
caused by each other.
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<PAGE> 47
The representations and indemnification of this paragraph shall survive the
expiration of this lease agreement. Lessee assumes no liability for
environmental contamination from any previous Lessee of the premises or from
activities of Lessor on the premises prior to its entering the demised premises
and leasing it.
35. This is a net-net-net lease and the parties agree and understand
that the Lessor will suffer to pay, except as otherwise provided for herein, no
expenses whatsoever for taxes, insurance, gas, electric, water, sewer fee,
improvements, repairs, changes or alterations, special assessments, levies or
other charges against the real estate whatsoever, but that each tenant and
Lessee in particular, shall pay a proportionate share of the said real estate
taxes, special assessments, charges, common area charges, insurance and all
other expenses in the proportion as shown above in paragraph 28. Lessee shall
pay proportionate share as shown in paragraph 28 above of the expenses within
ten (10) days of billing. Expenses are due monthly and are recalculated at the
end of the calendar year. Tenant shall pay by anticipation one-twelfth (1/12th)
of the year's charges monthly. At the conclusion of the first year and each year
thereafter during the term or any extension thereof, a recapitulation of actual
charges shall be made, an accounting presented to Lessee and an adjustment made
by billing if the monthly one-twelfth (1/12th) payments added to rent have been
insufficient to defray the actual expenses. Net charges currently running at
$.74 per square foot for 1993. Tenant is responsible for cleaning of their
space. Lessee's prorata share of insurance shall pertain to buildings #23 and
#24 which is the total of 36,586 square feet.
36. During the term of the lease, Lessee shall provide, with not less
than ten (10) days prior written notice from Landlord, corporate financial
statements upon the request of the Lessor.
37. Estoppel Certificates: Lessor and Lessee shall, at any time upon
not less than ten (10) days prior written notice from the other party execute
and deliver to the other party a statement in writing (1) certifying that this
Lease is unmodified and in full force and effect (or if modified, stating the
nature of such modification and certifying that this Lease, as so modified, is
in full force and effect) and the date to which the rent and other charges are
paid in advance, if any, and (2) acknowledging that there are not, to the
party's knowledge, any uncured defaults on the part of the other party
hereunder, or so specifying such defaults if any are claimed.
38. It is agreed that K. V. JOINT VENTURE has no agreement with Lessee
for the payment of any real estate company or broker for the payment of any
commission or fee whatsoever. Lessee is not responsible for any leasing
commission.
39. Under no circumstances will Lessee protrude through the roof deck
or outside walls without written consent of K. V. JOINT VENTURE.
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40. TRANSFER OF LEASE: In the event the Lessee desires to sublet the
lease, Lessee shall deliver a written request to Lessor and complete information
regarding such transfer or encumbrance of the lease. Lessor will have thirty
(30) days to evaluate the request. Approval may be subject to such modification
of the lease terms or other conditions as may be deemed necessary by lessor. If
Lessee or any permitted subsequent Lessee of the property is an individual,
partnership, a trust or a privately held corporation, a transfer of a general
partner, beneficial interest or stock representing in excess of fifty (50%)
percent of ownership interest shall constitute a conveyance or transfer for
purposes of this paragraph. In no event shall Lessee request a consent of Lessor
during the first lease year. Lessor shall not unreasonably withhold permission.
Lessee to provide:
A. All phone equipment and installation;
B. Or any items not mentioned or enumerated in this Lease.
42. Final execution of this Lease will be based upon the mutual
agreement by both parties for the relocation of that portion of Tenant's lease
space in the Old Mill Business Campus.
42. Lessee shall have the right to sublet partial areas in their lease
space. Prior written approval of the landlord will be required. Landlord will
not unreasonably withhold permission to sublet space.
44. OCCUPANCY: All rights and provisions for Lessee and Lessor will
apply to both parties upon Lessee's occupancy of the lease space which will be
targeted for September 30, 1993. Any delay in occupancy after the September 30,
1993 date will be prorated and credited up to a maximum of thirty (30) days
against Lessee's base rental payment.
K. V. JOINT VENTURE
By: /s/ Milo P. Vacanti
------------------------------
Milo P. Vacanti, Its Partner
CARDMEMBER PUBLISHING CORPORATION
By: /s/ Steven H. Levenherz
------------------------------
Steven H. Levenherz
Chief Financial Officer
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EXHIBIT "B"
SIGN CRITERIA
These criteria have been established for the purpose of assuring an outstanding
shopping center, and for the mutual benefit of all Tenants.
A. GENERAL REQUIREMENTS:
1. Each Tenant shall submit or cause to be submitted to the Project
Architect for approval before fabrication at least four (4) copies of
detailed drawings indicating the location, size, layout, design and
color of the proposed signs, including all lettering and/or graphics.
The drawings shall be prepared by one of the sign companies approved by
Landlord.
2. All permits for signs and their installation shall be obtained by the
Tenant or his representative.
3. Tenant shall be responsible for the fulfillment of all requirements and
specifications.
4. All signs shall be constructed and installed, including electrical
hook-up, at Tenant's expense. Tenant shall cause his sign to be
installed no later than forty-five (45) days after Tenant opens for
business.
5. All signs shall be reviewed for conformance with this criteria and
overall design quality. Approval or disapproval of sign submittals
based on esthetics of design shall remain the sole right of the
Landlord and Project Architect.
6. No temporary or construction signs will be permitted without Landlord's
approval.
7. All signs shall be installed by a licensed sign contractor selected
from a list of approved sign contractors provided by Landlord.
B. GENERAL SPECIFICATIONS:
1. All signs are individual letter type in white lettering.
2. No exposed lamps, tubing, or raceways will be permitted.
3. No audible, flashing, animated, oscillating or moving signs will be
permitted.
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4. Electrical service to all signs shall be on Tenant's meter at Tenant's
expense. Tenant will be responsible to run all wires and conduit from
Tenant's meter to the Landlord's stubbed conduit near the store front
line, above the ceiling.
5. No projections above or below the sign limits will be permitted. Signs
must be within dimensioned limits as indicated.
6. No script or logo will be permitted unless it is part of an established
trademark of the tenant.
7. All signs and their installation shall comply with all local building
and electrical codes.
8. No exposed raceways, crossovers or conduit will be permitted.
9. All conductors, transformers and other equipment shall be concealed.
10. Tenant shall be responsible for the installation and maintenance of all
signs.
11. All signs are to be installed under the direction of the Project
Architect or Landlord's superintendent or representative.
12. Wording of signs shall not include the product sold except as part of
Tenant's established trade name or insignia.
13. Landlord's Architect will designate exact location of sign, in relation
to Tenant's store front width and height prior to any installation.
Where the Tenant is using the Landlord's installed sheet metal can
(raceway) the Tenant's Sign Contractor shall install a sheet metal (22
gauge) closure panel at each end of the allowed sign width to prevent
light leakage to an adjacent tenant.
14. The maximum height of any sign letter shall not exceed 24". The depth
from the back of the sign fascia of the individual surface mounted
letters shall be 5", unless the Project Architect specifies different
measurements. No letter shall be less than 10" in height.
15. All signs shall be limited to individual letters, routed out of Color
Klad metal fascia panel or 3/8" plexiglass (Tenant has option to
install individual 3 dimensional plastic letters mounted on routed
Color Klad panel or individual lettering where Color Klad or 3/8"
plexiglass routing occurs.)
16. All sign lettering shall be internally illuminated. Landlord has
provided Tenant with a continuous sheet metal can, the Tenant, at
Tenant's cost shall install his lamps, ballast and wiring, within this
can.
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17. Tenant's Sign Contractor's shall repair any damage caused by said
Contractor's work, or by its agents or employees.
18. Tenant shall be liable for the operations of Tenant's Sign Contractor.
19. No signs perpendicular to the face of the building or store front will
be permitted. No under canopy signs will be permitted.
20. Sign location shall be established by the Landlord or the Landlord's
Architect.
21. Within ten (10) calendar days of the termination of Tenant's lease for
any reason, Tenant shall have his sign removed by a sign company
(approved by Landlord). Sign fascia shall be replaced with a new
matching panel.
C. CONSTRUCTION REQUIREMENTS:
1. Letter fastening and clips are to be concealed and be of galvanized,
stainless or aluminum metals.
2. No labels will be permitted on the exposed surface of signs, except
those required by local ordinance which shall be placed in an
inconspicuous location.
3. Tenant's shall have identification signs designed in a manner
compatible with and complimentary to adjacent and facing store fronts
and the overall design concept of the Center.
4. Design, layout and materials for Tenant signs shall conform in all
respects with the sign design drawings provided to Tenant. The maximum
height and dimensions for letter in the body of the signs shall be
pursuant to approved plans and specifications.
5. All penetrations of the building structure required for sign
installation shall be sealed in a watertight condition and shall be
patched to match adjacent finish.
6. All store front signs including plexiglass signs shall be fabricated of
material with a matte finish.
7. Tenant's Sign Contractor will be responsible to re-install the sign
fascia panel in the same workmanship manner as it was before including
caulking, reinforcing braces, sheet metal trim, etc.
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D. MISCELLANEOUS REQUIREMENTS:
1. Each Tenant shall be permitted to place upon each entrance of its
Premises not more than 144 square inches of white vinyl pressure
sensitive letters not to exceed two inches (2") of individual letters
in height, indicating hours of business, emergency numbers, etc.
2. Except as provided herein, no advertising placecards, banners,
pennants, names, insignia, trademarks, or other descriptive material,
shall be affixed or maintained upon the glass panes and supports of the
show windows and doors, or upon the exterior walls of buildings, or
within 24" of the show windows.
3. Each Tenant who has a non-customer door for receiving merchandise may
have uniformly applied on said door in location, as directed by the
Project Architect, in 2" high block letter, the Tenant's name and
address. Where more than one Tenant uses the same door, each name and
address shall be applied. Color of letters will be as selected by the
Project Architect.
4. Tenant may install on the store front, if required by the U.S. Post
Office, the number only for the street address in exact location
stipulated by the Project Architect. Size, type and color of numbers
shall be as stipulated by the Project Architect.
5. Tenant's should note that approval action by the Project Architect and
Landlord will generally take one week. No installation will be
permitted without proper approvals.
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BUILDING RULES AND REGULATIONS
1. Nothing shall be affixed to the outside of the building by Lessee
without the prior written consent of Lessor. Lessee shall not place any
items on the window ledges or exterior of the building.
2. Unless expressly permitted by Lessor, no sign, advertisement, notice or
other lettering shall be exhibited, inscribed, painted or affixed on
any part of the outside or inside of the building, except on the glass
or panels of the doors of the Demised Premises, and then only of
subject matter and in such color, size, style and material as shall
conform to the specifications of Lessor. Lessor reserves the right to
remove all other signs or lettering, without notice to Lessee, at the
expense of Lessee. Any newspaper, magazine or other advertising done
from said premises, or referring to said premises or the building,
which in the opinion of Lessor is objectionable, shall be immediately
discontinued upon notice from Lessor.
3. Unless expressly permitted by Lessor, no bicycle or other vehicle and
no animal shall be brought or permitted to be in the building or any
part thereof.
4. Unless expressly permitted by Lessor, all doors leading from the leased
premises to areas outside the leased premises are to be kept closed at
all times except when in actual use for entrance to or exit from said
premises. Lessee shall be responsible for the locking of said doors and
Lessee shall be responsible for any damage or loss resulting from
violation of this rule. No additional locks or devices shall be
attached to any door without Lessor's consent.
5. Moving or delivery of furniture, supplies, trade fixtures and
equipment, and freight by or for Lessee shall be done at such times and
in such manner as may be required by Lessor. Lessor reserves the right,
but shall not be obligated, to inspect all articles being moved in or
out of the building; and Lessor shall not be liable to Lessee or to any
other person for loss of, or damage to, any furniture, trade fixtures
and equipment or other personal property from any cause, unless
provided otherwise in the lease between the parties.
6. Lessee shall not make or permit any noise or odor that is objectionable
to Lessor or to other occupants of the building to emanate from said
premises and shall not create or maintain a nuisance therein, and shall
not disturb, solicit or canvass any occupant of the building, and shall
not do any act tending to injure the reputation of the building.
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7. Lessor reserves the right, but shall not be held obligated, to exclude
or eject from the building any or all solicitors, canvassers or
peddlers, and any persons conducting themselves, in such manner as, in
the sole judgement of Lessor, constitutes an annoyance to any of the
tenants of the building or an interference with operation of the
building, or who are otherwise undesirable.
8. No hand trucks shall be brought into or used in or about the building
except those equipped with rubber tires and side guards, and only with
the prior written consent of the Lessor.
9. Lessee shall not request building employees to perform any work or do
anything outside of the regular duties, unless consent is obtained from
the Lessor or the building.
10. The sidewalks, entrances, passages, elevator, stairway and corridors
shall not be obstructed or encumbered by any Lessee.
11. The sashes, sash doors, windows and doors that reflect or admit light
and air into the halls, passages or other public places in the building
shall not be covered or obstructed by any Lessee nor shall any bottles,
parcels or other articles be placed on the window-sills or other public
places in the building.
12. No show cases or other articles shall be put in front of or affixed to
any part of the exterior of the building nor placed in the halls,
corridors or vestibules of the building without prior written consent
of the Lessor.
13. No curtains, blinds, shades or screens shall be attached to or hung in
or used in connection with any window or door of the building without
the prior written consent of the Lessor.
14. The water and water closets and other plumbing fixtures shall not be
used for any purposes other than those for which they were constructed
and no sweepings, rubbish, rags or other substances shall be thrown
therein. All damage resulting from any misuse by Lessee of the fixtures
shall be borne by the Lessee.
15. No Lessee shall mark, paint, drill into or in any way deface any part
of the building. No boring, cutting, stringing or attaching of wires
shall be permitted except with the prior written consent of the Lessor
and as the Lessor may direct. No Lessee shall install any electrical
appliance or equipment such as, but not limited to, heaters, grills,
toasters, fans, etc., without the prior written consent of the Lessor.
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16. No article extra hazardous on account of fire and no explosive shall be
brought into said premises or into the building. The storage and use of
all flammable and volatile materials or substances shall be in
conformity with applicable laws, rules and regulations of all duly
constituted public authorities.
17. Lessor reserves the right to charge Lessee any additional expense, over
and above what the normal expense would have been, (including overtime
or premium costs incurred by Lessor) in the event repairs, alterations,
decorating or other work in said premises or the buildings are, at
Lessee's request, not made during ordinary business hours.
18. No additional locks or bolts of any kind shall be placed upon any of
the doors by any Lessee nor shall any changes be made in the existing
locks or the mechanism thereof. Each Lessee must, upon the termination
of Lessee's tenancy, leave the doors and windows in the demised
premises in like condition to that at the outset of said lease and must
restore to the Lessor all keys to rooms, closets and toilets.
19. The Lessee shall not put up nor operate any engine, boiler, dynamo or
machinery of any kind, nor carry on any mechanical business in said
premises nor place any explosive therein, nor use any kerosene or oils
or burning fluids in said premises without first obtaining the written
consent of the Lessor.
20. If the Lessee desires telegraphic or telephonic connections, the Lessor
will direct the electricians as to where and how the wires are to be
introduced, and without such written directions no boring or cutting
for wires will be permitted.
21. The leased premises shall not be used for the purpose of lodging or
sleeping rooms, nor for any immoral or illegal purpose, nor in any way
to damage the reputation of the building; and the Lessee shall not
disturb nor permit the disturbance of other tenants, by the use of
musical instruments or any unseemly noises, nor by any interference
whatever; and in the use of said premises, the Lessee agrees that
nothing shall be done or permitted therein, contrary to, or in
violation of, any law or laws of the United States of America, the
State of Nebraska, or any ordinance or ordinances of the City of Omaha,
or any requirements of the police and health departments of the City of
Omaha; and that nothing shall be placed or permitted upon the outside
window sills or thrown from the windows of the building.
22. No aerial shall be erected on the roof or exterior walls of the
premises, or on the grounds, without in each instance, the written
consent of Lessor. Any aerial so installed without such written consent
shall be subject to removal without notice at any time.
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23. No loud speakers, televisions, phonographs, radios or other devices
shall be used in a manner so as to be heard or seen outside of the
premises without the prior written consent of Lessor.
24. Normal office building hours are designated as being from 7:30 A.M.
until 5:30 P.M., Monday through Friday, and 8:00 A.M. until 12:00 noon,
Saturdays, national holidays excluded.
25. If the leased premises are to be equipped with a computer, or other
type of office equipment, beyond the normal meaning of the phrase,
Lessee shall not install it without Lessor's consent and then only when
said equipment has been provided with its own dedicated utility
connection and meter; the installation and payment of which shall be at
Lessee's sole cost and expense.
26. The rules and regulations which from a part of this lease may be
amended at any time upon written notice from the Lessor and shall apply
with equal effect to not only the Lessee, but also to the employees,
agents, visitors, and licensees of the Lessee, as well as those having
business with the Lessee, unless provided otherwise in the lease
between the parties.
27. All Sub-Contractors of Lessee must park in the rear of the building and
all material must enter from the rear of the building. Under no
circumstances will Lessor tolerate construction workers parking in
front of the building.
-56-
<PAGE> 57
LEASE EXTENSION
JULY 2, 1996
In consideration of the Lease dated November 20, 1991, and as amended
by EXTENSION OF LEASE SPACE AGREEMENT dated 9/28/92 and LEASE EXTENSION
Agreement dated 8/9/93 by V.R.B. COMPANY, Lessor, and CARDMEMBER PUBLISHING
CORPORATION, Lessee, for the premises 11151, 11155, 11157, 11159, 11161, 11163,
11165, 11167 Mill Valley Road, Omaha, Nebraska.
Leasee shall sub-lease the former Merry Maids space 11113-11127
consisting of approximately 11,000 square feet from August 1, 1990-January 31,
1997 under the same terms and conditions as the original lease with the
exception that the base rent schedule shall be as follows:
8-1-96 - 1-31-97 = $5.00 per sq. ft. on an annualized basis
(i.e., monthly rental of $4,583.33)
The space shall be painted throughout and the carpet shall be cleaned
prior to occupancy. The space shall also have a general clean up along with any
ceiling tiles repaired as necessary.
The lease shall continue from February 1, 1997 - December 31, 1997 with
V.R.B. Company at $6.50 per square foot on an annualized basis (i.e., monthly
rental of $5,958.33 per month). The lease terms shall be negotiated for 1998
with V.R.B. Company based upon the status of Cardmember Publishing Corporation
expansion needs.
IN TESTIMONY WHEREOF, the said parties have signed, sealed and executed
this instrument.
ACCEPTANCE
ATTEST LESSOR:
V.R.B.
By: /s/ Milo P. Vacanti
- ---------------------------------- ------------------------------
Date
LESSEE:
Cardmember Publishing Corporation
By: /s/ Steven H. Levenherz
- ---------------------------------- ------------------------------
Date
<PAGE> 58
EXTENSION OF LEASE SPACE
K.V. JOINT VENTURE, 11205 John Galt Blvd., Omaha, Nebraska and
CARDMAKER PUBLISHING CORPORATION, 655 Washington Blvd., Suite 1000, Stamford,
Connecticut 06901, agree that by this EXTENSION OF LEASE SPACE, CARDMEMBER
PUBLISHING CORPORATION shall lease additional space at 11053-57 "I" Street
Omaha, Nebraska. The additional space will be an extension of the same terms and
conditions of the leased space at Building #23 and #24 at 11031-45 "I" Street,
Omaha, Nebraska. The additional space will be approximately 4,780 square feet,
with additional Base Rent per the following rent schedule:
(a)January 1, 1996 to December 31, 1998: $3,067.17 per month.
(b)January 1, 1999 to December 31, 2000: $3,286.25 per month.
Lessor and Lessee also agree that the same terms and conditions
prevailing in the Business Property Lease executed on August 9th, 1993 for the
leased space at Building #23 and #24 at 11031-45 "I" Street, Omaha, Nebraska
will be extended in full force in all respects from the original ending dated of
February 28, 1999 to the new date of December 31, 2000.
WITNESS: K.V. JOINT VENTURE
/s/ Nancy K. Johnson /s/ Milo P. Vacanti
- ------------------------------ ------------------------------
Milo P. Vacanti, Partner
10/4/95
- ------------------------------
Date
CARDMEMBER PUBLISHING
CORPORATION
/s/ Steven H. Levenherz, CFO
- ------------------------------ ------------------------------
Steven Levenherz
Chief Financial Officer
- ----------------------------
Date
-2-
<PAGE> 1
Exhibit 10.24
ARENA TOWER II LEASE AGREEMENT
By and Between
ARENA TOWER II CORPORATION
("Landlord")
and
CARDMEMBER PUBLISHING CORPORATION
("Tenant")
<PAGE> 2
ARENA TOWER II LEASE AGREEMENT
TABLE OF CONTENTS
Caption Page
- ------- ----
ARTICLE 1 - PREMISES................................................... 1
Section 1.01. Premises .......................................... 1
Section 1.02. Net Rentable Area ................................. 1
Section 1.03. Habendum .......................................... 3
ARTICLE 2 - TERM AND COMMENCEMENT ..................................... 3
Section 2.01. Term .............................................. 3
Section 2.02. Commencement Date ................................. 3
ARTICLE 3 - RENT ...................................................... 4
Section 3.01. Rent .............................................. 4
Section 3.02. Base Monthly Rent ................................. 4
Section 3.03. Additional Rent ................................... 5
Section 3.04. Operating Expenses ................................ 7
Section 3.05. Payment of Rent ................................... 10
Section 3.06. Holding Over ...................................... 11
ARTICLE 4 - USE AND PROHIBITED USES ................................... 11
Section 4.01. Use ............................................... 11
Section 4.02. Prohibited Uses ................................... 11
Section 4.03. Signs ............................................. 12
Section 4.04. Entry ............................................. 12
ARTICLE 5 - LANDLORD'S SERVICES ....................................... 12
Section 5.01. Landlord's Services ............................... 12
Section 5.02. Additional Service Cost ........................... 14
Section 5.03. Service Interruption .............................. 14
ARTICLE 6 - ALTERATIONS, REPAIRS AND MAINTENANCE ...................... 15
Section 6.01. Alterations....................................... 15
Section 6.02. Mechanic's and Materialman's Liens ................ 16
Section 6.03. Removal of Fixtures ............................... 16
Section 6.04. Tenant Repairs .................................... 17
Section 6.05. Landlord Repairs .................................. 17
Section 6.06. Changes by Landlord ............................... 18
ARTICLE 7 - PARKING ................................................... 18
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<PAGE> 3
Section 7.01. Basic Provisions ................................... 18
Section 7.02. Parking Information ................................ 18
ARTICLE 8 - INSURANCE; INDEMNITY ....................................... 19
Section 8.01. Landlord Insurance ................................. 19
Section 8.02. Tenant Insurance ................................... 19
Section 8.03. Legal Use and Violation of Insurance Coverage ...... 20
Section 8.04. Waiver of Subrogation .............................. 20
Section 8.05. Indemnity .......................................... 21
ARTICLE 9 - FIRE AND OTHER CASUALTY; CONDEMNATION ...................... 22
Section 9.01. Casualty ........................................... 22
Section 9.02. End of Term Casualty ............................... 23
Section 9.03. Condemnation ....................................... 23
ARTICLE 10 - SUBORDINATION AND ATTORNMENT .............................. 24
Section 10.01. Subordination ..................................... 24
Section 10.02. Notice to Landlord's Mortgagee .................... 26
Section 10.03. Attornment ........................................ 26
Section 10.04. Status Statement .................................. 26
Section 10.05. Quiet Enjoyment ................................... 27
ARTICLE 11 - ASSIGNMENT AND SUBLETTING ................................. 27
Section 11.01. Assignment and Subletting by Tenant ............... 27
Section 11.02. Corporate Conditions .............................. 29
Section 11.03. Continued Liability ............................... 29
Section 11.04. Consent ........................................... 29
Section 11.05. Proceeds .......................................... 29
Section 11.06. Assignment by Landlord ............................ 29
ARTICLE 12 - DEFAULT AND REMEDIES ...................................... 30
Section 12.01. Defaults by Tenant ................................ 30
Section 12.02. Landlord's Remedies ............................... 31
Section 12.03. Landlord's Damages and Indemnification by Tenant .. 34
Section 12.04. Controlling Provision ............................. 34
Section 12.05. Election of Remedies .............................. 34
Section 12.06. Non-Waiver Provision .............................. 35
Section 12.07. Bankruptcy or Insolvency of Tenant ................ 35
Section 12.08. Default by Landlord ............................... 38
Section 12.09. Liability of Landlord ............................. 39
ARTICLE 13 - LANDLORD'S LIEN ........................................... 39
Section 13.01. Landlord's Lien and Security Interest. ............ 39
Section 13.02. Security Agreement ................................ 39
ii
<PAGE> 4
ARTICLE 14 - SECURITY DEPOSIT .......................................... 39
Section 14.01. Security Deposit .................................. 39
ARTICLE 15 - ENVIRONMENTAL PROVISIONS .................................. 40
Section 15.01. Covenants and Agreements .......................... 40
Section 15.02. Environmental Indemnification ..................... 42
Section 15.03. Remedial Work ..................................... 43
Section 15.04. Notice of Claims .................................. 43
Section 15.05. Subrogation of Indemnity Rights ................... 43
Section 15.06. Survival .......................................... 44
ARTICLE 16 - NOTICE .................................................... 44
Section 16.01. Notice ............................................ 44
ARTICLE 17 - MISCELLANEOUS ............................................. 44
Section 17.01. Financial Statements .............................. 44
Section 17.02. Corporate Authority ............................... 45
Section 17.03. Use of Name ....................................... 45
Section 17.04. Rules and Regulations ............................. 45
Section 17.05. Inability to Perform .............................. 45
Section 17.06. Broker ............................................ 46
Section 17.07. Time of Essence ................................... 46
Section 17.08. Memorandum of Lease ............................... 46
Section 17.09. Severability ...................................... 46
Section 17.10. Parties and Successors ............................ 46
Section 17.11. Governing Law ..................................... 47
Section 17.12. Number; Gender; Captions; References; Headings .... 47
Section 17.13. Renewal ........................................... 47
Section 17.14. Attorney's Fees ................................... 47
Section 17.15. Substitution of Premises .......................... 47
Section 17.16. Additional Documents .............................. 47
Section 17.17. Non-waiver ........................................ 47
Section 17.18. Additional Provisions ............................. 48
Section 17.19. Entire Agreement .................................. 52
iii
<PAGE> 5
EXHIBITS
EXHIBIT A - FLOOR PLANS
EXHIBIT B - LEGAL DESCRIPTION
EXHIBIT C - TENANT IMPROVEMENT AGREEMENT
EXHIBIT D - DECLARATION OF COMMENCEMENT DATE
EXHIBIT E - RULES AND REGULATIONS
EXHIBIT F - RENEWAL OPTION
EXHIBIT G - DEFINITION OF MARKET BASE RENTAL RATE
EXHIBIT H - JANITORIAL SPECIFICATIONS
EXHIBIT I - PREFERENTIAL RIGHT SPACE
EXHIBIT J - HVAC SPECIFICATIONS
iv
<PAGE> 6
STANDARD
LEASE AGREEMENT
ARENA TOWER II
This Lease is entered into as of the 12th day of February, 1996,
between ARENA TOWER II CORPORATION ("Landlord"), whose address for purposes of
notice hereunder is 7322 Southwest Freeway, Suite 110, Houston, Texas 77074 and
CardMember Publishing Corporation ("Tenant"), whose address prior to the
Commencement Date (defined in Section 2.02 hereof) is 655 Washington Blvd.,
Stamford Connecticut 06901, and whose address after the Commencement Date shall
be 7324 Southwest Freeway, Suite 2000, Houston, Texas 77074.
W I T N E S S E T H:
ARTICLE 1 - PREMISES
Section 1.01. Premises. Landlord hereby Leases to Tenant, and Tenant
hereby Leases from Landlord, for the rent and subject to the provisions of this
Lease, the space (the "Premises") reflected on the floor plan(s) attached as
Exhibit "A" hereto, being suite 2000 located on floor twenty of the building
(the "Building") known as Arena Tower II, located at 7324 Southwest Freeway,
Houston, Harris County, Texas. The land ("Land") upon which the Building is
located is more particularly described on attached Exhibit "B". The Building,
the land and any parking areas and garages specified for use by Building
tenants, guests and invitees are collectively referred to as the "Project".
Landlord and Tenant hereby agree that the Premises contain approximately 21,081
square feet of net rentable area.
Section 1.02. Net Rentable Area. The term "Net Rentable Area", as used
herein, in the case of a floor occupied by more than one Tenant, shall refer to
the floor area or areas within the Building determined by adding the following:
(i) The Multi-Tenant Usable Area (defined below) of the area being
measured; and
(ii) The portion of the Building Common Areas (as defined below)
allocable to the area being measured; and
(iii) The portion of the Core Areas (as defined below) allocable to
the area being measured; and
(iv) The portion of the Lobby and Corridor Areas (as defined below)
allocable to the area being measured.
The term "Net Rentable Area", as used herein, in the case of a floor
occupied by a single tenancy, shall refer to the total Net Rentable Area for the
floor as calculated above.
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<PAGE> 7
"Multi-Tenant Usable Area", shall mean the square footage of all floor
area measured from the inside face of the outer glass of the Building to the
inside face of the opposite outer glass, or to the mid-point of demising walls
separating the Leased Premises from (a) areas Leased to or held for Lease to
other tenants, (b) Vertical Penetrations, (c) Building Common Areas, (d) Core
Areas, and (e) Lobby and Corridor Areas. No deductions from Usable Area shall be
made for columns or projections necessary for the Building.
"Single-Tenant Usable Area" shall mean the square footage of all floor
area measured from the inside face of the outer glass of the Building to the
inside face of the opposite outer glass, or to the mid-point of demising walls
separating the Leased Premises from (a) Vertical Penetrations, (b) Building
Common Areas, and (c) Core Areas. No deductions from Usable Area shall be made
for columns or projections necessary for the Building.
"Vertical Penetrations" shall mean the square footage of the areas
within (and measured from the mid-point of the wall enclosing) Building atrium,
stairs, elevators, pipe shafts, and vertical air ducts. Areas for the specific
use of Tenant and installed at the request of Tenant, such as special stairs or
elevators, are not included within the definition of Vertical Penetrations.
"Building Common Areas" shall mean the square footage of the areas
within (and measured from the midpoint of the walls enclosing) the Building's
ground floor atrium, elevator machine rooms, main mechanical and electrical
rooms and other penthouse areas, mail and express rooms, ground floor stair
exits, concierge area, public entrances, and other areas not leased or held for
lease within the Building, but which are necessary or desirable for the proper
utilization of the Building or to provide customary services to the Building.
The allocation to the Leased Premises of the Building Common Areas shall be
equal to the total Building Common Areas within the Building multiplied by a
fraction, the numerator of which is the Usable Area of the Leased Premises and
the denominator of which is the Building Usable Area.
"Core Areas" shall mean the square footage of the areas within (and
measured from the mid-point of the walls enclosing) the restrooms, janitor
rooms, telephone and equipment rooms, and other similar facilities for the use
of all tenants on the floor on which the Leased Premises are located. The
allocation to the Leased Premises of the Core Areas shall be equal to the total
Core Areas within the Building multiplied by a fraction, the numerator of which
is the Usable Area of the Leased Premises and the denominator of which is the
Building Usable area.
"Lobby and Corridor Areas" shall mean the square footage of the areas
within (and measured from the midpoint of the walls enclosing) the public
corridors and elevator lobbies for the use of all tenants on the floor on which
the Lease Premises
2
<PAGE> 8
are located. The allocation to the Leased Premises of the Lobby and Corridor
Areas shall be equal to the total Lobby and Corridor Areas within the Building
multiplied by a fraction, the numerator of which is the Usable Area of the
Leased Premises and the denominator of which of the Building Usable Area.
The Net Rentable Area of the Leased Premises has been calculated on the
basis of the foregoing definitions, and is stipulated for all purposes to be the
number of square feet specified in the basic Lease Provisions, whether the same
should be more or less as a result of minor variations resulting from actual
construction and completion of the Leased Premises for occupancy so long as such
work is in accordance with the terms and provisions of this Lease.
The net rentable area of the Premises calculated pursuant to this
provision shall be deemed to be the square footage set forth in Section 1.01
above. Neither the Base Rent payable hereunder nor any other obligation of
Tenant hereunder shall be reduced, increased or otherwise affected by a
determination that the amount of the net rentable area contained in the Premises
as determined by calculations made pursuant to the definitions set forth above
after construction of improvements and installations in the Premises is more or
less than the square footage set forth above.
Section 1.03. Habendum. TO HAVE AND TO HOLD the above described
Premises together with the rights, privileges, easements, and appurtenances
thereunto belonging or in any way pertaining to said premises unto the said
Tenant for and during said entire term, subject however to the limitations set
forth above with respect to the real property, and the terms, conditions and
covenants hereinafter contained.
ARTICLE 2 - TERM AND COMMENCEMENT
Section 2.01. Term. Subject to the other provisions hereof, this Lease
shall be for a term commencing on the Commencement Date (defined in Section 2.02
below) and expiring on July 31, 2006 (the "Expiration Date"). Such lease term,
as it may be modified pursuant to the provisions of this Lease or by written
agreement of the parties, is herein called the "Term."
Section 2.02. Commencement Date. As used herein, "Commencement Date"
means the later to occur of: (a) the date Tenant's leasehold improvements are
substantially complete in accordance with the Construction Agreement attached as
Exhibit "C" (or the date certified to by Landlord that said leasehold
improvements would have been substantially completed except for delays due on
the part of Tenant, its agents or contractors, including without limitation any
delays which constitute Tenant Delays as defined below; or (b) April 1, 1996.
Notwithstanding the foregoing, if Tenant occupies all or any part of the
Premises for its intended use by Tenant's employees (installation of furniture
is not considered occupancy) prior to (a) or (b)
3
<PAGE> 9
above, the Commencement Date shall be the date of such occupancy. Within five
(5) days after the Commencement Date and at any time thereafter upon the request
of Landlord, Tenant shall execute and deliver to Landlord a declaration (in the
form attached as Exhibit "D") specifying the actual date upon which the
commencement of the Term occurred. The Commencement Date, Expiration Date and
commencement of installments of Base Monthly Rent or Additional Rent shall not
be postponed or delayed as a result of Tenant Delay. Tenant Delay shall mean the
following: Any delay in providing Landlord information necessary to be able to
complete construction of the Premises in a timely manner to include completion
of working drawings, selection of materials not readily available, change in the
plans or construction changes which would cause the process to be prolonged
beyond the tine normally required to complete construction of the Premises or
installation of equipment or vital services. Tenant's inability to provide
Tenant supplied equipment which delays Landlord's ability to complete the
construction shall also be considered Tenant Delay.
ARTICLE 3 - RENT
Section 3.01. Rent. The "Rent" payable by Tenant under this Lease
consists of all amounts required to be paid by Tenant under the terms of this
Lease, including, without limitation, the Base Monthly Rent and Additional Rent,
and all such amounts are herein collectively called "Rent". All Rent not
received by Landlord within ten (10) days after the date such Rent is due shall
bear interest at the lesser of (i) eighteen percent (18%) per annum or (ii) the
maximum, non-usurious contract rate of interest allowed by applicable state or
federal law in effect at the time such interest accrues ("Maximum Legal Rate").
Furthermore, in the event any Rent becomes owing by Tenant to Landlord under the
provisions of this Lease and such payment is not received within five (5) days
after the due date thereof (without in any way implying Landlord's consent to
such late payment), Tenant, to the extent permitted by law, agrees to pay, in
addition to said installment of Base Monthly Rent or such other sums owed upon
the second occasion and any subsequent occasion during any 12 month period
Tenant shall pay, a late payment charge equal to five percent (5%) of the
installment of Base Monthly Rent or such other sums owed, it being understood
that said Late payment charge shall constitute liquidated damages and shall be
for the purpose of reimbursing Landlord for the additional cost and expenses
which Landlord presently expects to incur in connection with the handling and
processing of late installment payments of the Base Monthly Rent such other sums
which become owing by Tenant to Landlord hereunder.
Section 3.02. Base Monthly Rent. Tenant, in consideration for this
Lease, agrees to pay to Landlord base monthly rent ("Base Monthly Rent") in the
amount of $19,324.25 for the period of April 1, 1996 through March 31, 1997;
then $21,959.38 for the period of April 1, 1997 through July 31, 2006, beginning
on the Commencement Date and continuing for each month thereafter throughout the
Term of this Lease
4
<PAGE> 10
without notice, demand, counterclaim, set-off or abatement, in advance on the
first day of each calendar month throughout the Term, except that the first two
and one half (2.5) such monthly installments of Base Monthly Rent is due upon
the date of execution of this Lease by Tenant (since Tenant has free rent and
has paid 2.5 months in advance, upon execution, Tenant's first payment of Base
Rent shall then be due at the beginning of the fifth month of the Lease). If
this Lease commences or terminates on any day other than the first or last day
of a calendar month, the payment of Base Monthly Rent due hereunder for such
months shall be prorated on a daily basis. Notwithstanding anything to the
contrary in the foregoing and provided Tenant is not in default of the terms of
this Lease, Landlord agrees that it shall not collect from or demand of Tenant
Base Monthly Rent and Additional Rent in the sum equal to the first one and a
half (1.5) months and provided Tenant has not elected to terminate this Lease in
accordance with the Termination Option defined in Section 17.18 of this Lease
Agreement, then Landlord further agrees that it shall not collect from or demand
of Tenant Base Monthly Rent and Additional Rent in the sum equal to six months
beginning with the seventy-six (76) month and ending with month eighty-one (81)
of the Lease.
Section 3.03. Additional Rent. In addition to the Base Monthly Rent set
forth above, Tenant shall pay to Landlord as additional rent ("Additional Rent")
Tenant's Pro Rata Share (as defined below) of all Actual Operating Expense
Increases (as defined in Section 3.04 below) during the Term of this Lease. For
purposes of calculating such Additional Rent in accordance with the provisions
hereof, Landlord and Tenant agree that Tenant's pro rata share shall be
(5.4468%) ("Tenant's Pro Rata Share"). Additional Rent shall be paid, together
with the payment of Base Monthly Rent in advance on the first day of each
calendar month during the Term, in an amount equal to one-twelfth (1/12) of
Tenant's Pro Rata Share of the Estimated Operating Expense Increase (as defined
in Section 3.04 below), except that the first such monthly installment is due
upon the Commencement Date. On or before the Commencement Date and thereafter on
or before the first day of each calendar year during the Term, Landlord shall
provide to Tenant the Estimated Operating Expense Increase for the upcoming
year. Within one hundred fifty (150) days after the end of each calendar year
during the Term, Landlord shall furnish to Tenant a statement certified by
Landlord or Landlord's manager of the Actual Operating Expense Increase (as
defined in Section 3.04 below) for the immediately preceding calendar year,
which statement shall specify the various types of Operating Expenses and set
forth Landlord's calculations of Tenant's Pro Rata Share of such Actual
Operating Expense Increase. If Tenant's Pro Rata Share of the Estimated
Operating Expense Increase paid to Landlord during the previous calendar year
exceeds Tenant's Pro Rata Share of the Actual Operating Expense Increase, then
Landlord shall refund the difference to Tenant at the time Landlord furnishes
the statement of the Actual Operating Expense Increase to Tenant, or, at
Landlord's option unless this Lease has terminated, shall apply such excess
amounts to the payment of Tenant's Pro Rata Share of Estimated Operating Expense
Increase for the then next current month(s). If
5
<PAGE> 11
Tenant's payments of the Estimated Operating Expense Increase to Landlord during
the previous calendar year are less than Tenant's Pro Rata Share of the Actual
Operating Expense Increase for the same period, then within thirty (30) days
after Landlord furnishes such statement to Tenant, Tenant shall make a lump sum
payment to Landlord equal to the difference between Tenant's Pro Rata Share of
the Actual Operating Expense Increase and the Estimated Operating Expense
Increase previously paid by Tenant. If the Term commences on a day other than
the first day of the month or calendar year, or terminates on a day other than
the last day of a month or calendar year, the payments due as Additional Rent
shall be prorated on a daily basis.
Landlord shall provide to Tenant in substantial detail each year the
calculations performed to determine the Building Operating Costs in accordance
with the applicable provisions of the Lease. Landlord shall provide in
reasonable detail the calculation of Tenant's pro rata share of the Building
Operating Costs as said calculations are delineated in the Lease.
Tenant shall have the right, at its own expense, to audit or inspect Landlord's
detailed records each year with respect to Building Operating Costs, as well as
all other additional rent payable by Tenant pursuant to the Lease for any Lease
Year. Landlord shall utilize, and cause to be utilized, accounting records and
procedures for each Lease Year conforming to generally accepted accounting
principles consistently applied with respect to all of the Building Operating
Costs for such Lease Year, including without limitation, all payments for
Building Operating Costs, to enable the audit or inspection by Tenant pursuant
to this clause to be conducted. Tenant shall give Landlord not less than ten
(10) business days prior written notice of its intention to conduct any such
audit. Landlord shall cooperate with Tenant during the course of such audit,
which shall be conducted during normal business hours in Landlord's Building
management office. Landlord agrees to make such personnel available to Tenant as
is reasonably necessary for Tenant, Tenant's employees and agents, to conduct
such audit, but in no event shall such audit last more than five (5) business
days in duration for each Lease Year audited. Landlord shall make such records
available to Tenant, Tenant's employees and agents, for inspection during normal
business hours. Tenant, Tenant's employees and agents, shall be entitled to make
photostatic copies of such records, provided Tenant bears the expense of such
copying and Landlord's employees time spent on cooperating with the specific
request of Tenant to conduct such audit, and further provided that Tenant keeps
such copies in a confidential manner and does not show or distribute such copies
to any other third party.
The results of such audit, as reasonably determined by both Parties, shall be
binding upon Landlord and Tenant. If such audit discloses that the amount paid
by Tenant as Tenant's Share of Building Operating Costs, or of other additional
rental payable pursuant to the Lease, has been overstated by more than five
percent (5%), Landlord
6
<PAGE> 12
shall pay reasonable costs incurred by Tenant in connection with such audit. Any
overpayment shall be applied against Tenant's next Base Monthly Rent payment(s).
Section 3.04. Operating Expenses.
A. "Operating Expenses" shall mean and include any and all annual
amounts, expanses, and costs of every kind and nature paid or incurred by
Landlord because of or in connection with the ownership, management, operation,
repair and maintenance of the Project, computed on an accrual basis determined
in accordance with generally accepted accounting principle consistently applied,
and, including but not limited to the following:
(a) All taxes and assessments and governmental charges
attributable to the Project or its operation, (whether
federal, state, county, municipal, or taxing district);
(b) The cost of all utilities used in connection with the Project,
including electricity, gas, water, sewerage and telephone
(excluding costs billed to specific tenants as a result of
extraordinary uses);
(c) The cost of insurance applicable to the Project, including
without limitation, casualty, liability and rental value
insurance, and as to Landlord's personal property attached to
or used in connection with the Project;
(d) Wages and salaries of all employees (project manager and
below) directly engaged in the operation, repair, replacement,
maintenance and monitoring of the Project and including social
security taxes, unemployment taxes, hospitalization insurance
and other employee benefits relating thereto;
(e) The cost of all repairs, replacements and general maintenance
of the Project (net of any insurance recoveries and/or monies
received by Landlord from other tenants or parsons), including
the cost of all supplies and materials used in the operation,
maintenance, repair, replacement and monitoring of the
Project;
(f) The cost of all maintenance and service agreements relating to
the various components of the Project and all equipment
attached to or used in connection with the Project;
(g) Management fees and the cost of management contracts relating
to the Project presently three percent (3%) but not to exceed
management
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<PAGE> 13
charges for similarly situated buildings in the Houston area
in the event such charges are customarily in excess of three
percent (3%);
(h) Amortization of the cost of capital investment items installed
primarily for the purpose of saving energy or reducing
operating costs or which may be incurred in connection with
any governmental law, rule, regulation, code, order, decree or
directive, and amortization of the cost of capital investment
items such as equipment, machinery and tools to be used in the
operation, maintenance or repair of the Project; all such
costs to be amortized over the payback life of the capital
investment items, as determined in accordance with applicable
IRS regulations but in no event to extend beyond the
reasonable life of the Project and amortized at the then
current rate of interest;
(i) Landlord's central accounting costs and legal expenses
relating to the general administration of the Project and not
relating to any particular tenant; and
(j) Amortization in accordance with applicable IRS regulations or
direct costs that are $5,000.00 or less incurred by Landlord
in compliance with presently existing, new, revised or newly
interpreted federal, local or state laws, ordinances, codes or
regulations
Operating Expenses, however, shall exclude:
(A) Payments of principal, interest, loan fees, penalties and
other costs relating to the mortgage or any loans that
Landlord may have incurred;
(B) Leasing Commissions and advertising costs paid by Landlord in
connection with the lease of any space within the Project and
legal fees relating to tenant leasing;
(C) Specific costs for special items or services (including
electricity) above the Building Standard billed to and paid
for by specific tenants;
(D) Income and/or franchise taxes payable by Landlord;
(E) The cost of repair, replacements and general maintenance paid
by proceeds of insurance, or by Tenant, or by other third
parties;
(F) Expenses for which Landlord has been reimbursed by another
source;
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(G) All costs incurred by Landlord in connection with any
negotiations or disputes with individual tenants or occupants
within the Building or prospective tenants of the Building;
(H) Any repair or other work necessitated by condemnation, fire or
other casualty loss to the extent covered by insurance
proceeds or condemnation;
(I) Costs for which other tenants are being charged, unrelated to
operating expense charges;
(J) Any and all ad valorem taxes paid by Tenant or other tenants
in the Building for (i) personal property and (ii) on the
value of the leasehold improvements in the Premises, or the
premises of other tenants in the Building, to the extent the
same exceed the normal allowances for Building Standard;
(K) Costs incurred by Landlord in connection with the Project and
any improvements situated thereon which constituted capital
expenditures under generally accepted accounting principals,
including (without limitation) the cost of capital
improvements and capital equipment, excluding amortization of
the cost of capital investment items installed primarily for
the purpose of saving energy or reducing operating costs or
which may be incurred in connection with any governmental law,
rule, regulation, code, order, decree or directive, or capital
investment items such as equipment and machinery to be used in
the operation, maintenance, or repair of the Project;
(L) Depreciation of the Building, and all equipment, fixtures,
improvements, and facilities used in connection therewith;
(M) Costs of renovating or otherwise improving, painting,
decorating or redecorating space or vacant space for tenants
or other occupants, except in connection with general
maintenance of the Building;
(N) Expenses or costs incurred by Landlord relating to any
violation by Landlord or any other tenant of the terms and
conditions of any Lease covering the Project;
(O) Overhead and profit increment paid to subsidiaries, partners,
parent companies or other affiliates of Landlord for services
rendered to Landlord in connection with the Project or
equipment, fixtures and supplies sold to Landlord in
connection therewith, to the extent only that the cost of such
services or goods exceeds the cost which would be
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paid by Landlord therefore if the same were rendered or sold
to Landlord by an unrelated entity at competitive prices;
(P) Landlord's general overhead and administrative expenses which
are not chargeable to operating expenses of the Project or the
equipment, fixtures and facilities used in connection
therewith, in accordance with generally accepted accounting
principles, including salaries and expenses of Landlord's
executive officers;
(Q) Any compensation paid to clerks, attendants or other persons
in commercial concessions operated by Landlord;
(R) All items and services for which Tenant pays third parties;
and
(S) Cost related to maintaining Landlord's existence, either as a
corporation, partnership, or other entity.
B. The "Base Operating Expense" for the Project shall mean that amount
equal to 1996 Operating Expenses per square foot of net rentable area multiplied
by the total rentable area contained in the Building, which Landlord and Tenant
hereby agree is 387,035 square feet. The "Estimated Operating Expense Increase"
shall mean that amount equal to the positive difference, if any, between the
Landlord's estimate of Operating Expenses for the applicable calendar year less
the Base Operating Expense. Landlord's statement of the Estimated Operating
Expense Increase shall control for the year specified in such statement and for
each succeeding year during the Term until Landlord provides a new statement of
the Estimated Operating Expense Increase. The "Actual Operating Expense
Increase" shall equal the positive difference, if any, between the Actual
Operating Expenses for the applicable calendar year less the Base Operating
Expense. Notwithstanding any provision contained herein to the contrary, if
fewer than 95% of the total square feet of rentable area in the Building is
occupied by tenant(s), or Landlord is not supplying services to 95% of the total
square feet of rentable area of the Building at any time during any calendar
year, Operating Expenses for such calendar year shall be determined to be an
amount equal to the expense that would normally be expected to be incurred had
such occupancy been 95% of the Building's total square feet of rentable area and
had Landlord been supplying services to 95% of the Building's total square feet
of rentable area throughout such calendar year.
Section 3.05. Payment of Rent. The payment of Rent as herein provided
constitutes a condition for the continuance of this Lease. All Rent due
hereunder shall be paid at the address of Landlord as herein set forth, or such
other address as Landlord may designate from time to time in writing. All
payments provided in this Lease to be made by Tenant shall be made in legal
tender for the payment of public and private debts in the United States of
America.
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Section 3.06. Holding Over. At the termination of this Lease, whether
by expiration of time or otherwise, the Tenant shall immediately vacate the
Premises and surrender the same to Landlord in good condition and repair. Should
Tenant hold over the Premises or any part thereof after the termination of this
Lease, such holding over shall not renew or extend the Lease Term hereof, but
Tenant shall automatically become a tenant-at-will of the Landlord at a rent
equal to 150% of the Base Monthly Rent in effect at the time of termination of
this Lease plus all other amounts owed as Additional Rent (as hereinabove set
forth in Section 3.03), or otherwise owing by Tenant under the terms of this
Lease. Nothing herein shall be construed as Landlord's consent for Tenant to
hold over.
ARTICLE 4 - USE AND PROHIBITED USES
Section 4.01. Use. Tenant shall use and occupy the Premises only for
general office purposes in connection with its business of providing direct
marketing services to credit card issuers and cardholders and serving as a 24
hour customer call center, and for no other purposes without the prior written
consent of Landlord.
Section 4.02. Prohibited Uses. Tenant shall not do or permit anything
to be done in or about the Premises nor bring or keep anything therein that will
in any way increase the existing rate of or affect any fire or other insurance
upon the Project or any of its contents, or cause cancellation of any insurance
policy covering the Project or any part thereof or any of its contents. Tenant
shall not do or permit anything to be done in or about the Premises that will in
any way obstruct or interfere with the rights of other tenants or occupants of
the Project or injure or annoy them or tend to lower the first class character
of the Building or create unreasonable elevator loads or otherwise interfere
with standard Building operations. Tenant shall not permit any nuisance in, on
or about the Premises nor will Tenant commit or suffer to be committed any waste
in or upon the Premises. Tenant's use, occupancy or business conducted upon the
Premises shall not conflict with, or violate or cause a condition which
conflicts with or violates, any private restrictive covenant pertaining to the
Project, federal, state, county or municipal law, statute, ordinance, rule,
regulation, orders or requirements now in force or that may hereafter be enacted
or promulgated regulating the use, condition or occupancy of the Premises, and
Tenant, at its sole expense, shall promptly comply with all such applicable
laws, statutes, ordinances, rules restrictions, order and requirements, and
Tenant will indemnify and hold Landlord harmless from any fines, penalties,
actions, losses or claims arising from any failure to do so or which may
otherwise arise out of or in connection with the occupancy or use of the
Premises by Tenant, its employees, agents or invitees. Landlord shall give
notice detailing any violation to Tenant ten (10) days prior to Landlord
declaring Tenant to be in default for violation on any provisions of this
Section 4.02.
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Section 4.03. Signs. Subject to Section 17.18, Signage, Tenant shall
not inscribe, paint, affix or display any signs, advertisements or notices on
the exterior or in the Building, except for such tenant identification
information as Landlord permits to be included or shown on the directory board
in the main lobby and adjacent to the access door or doors to the Premises, and
any identification signs shall be subject to prior approved by Landlord as to
design, color and materials.
Section 4.04. Entry. Landlord, its agents, employees and
representatives, shall have the right to enter the Premises at any time upon
reasonable two (2) business days' notice to Tenant under the circumstances
(which notice may be oral and not in compliance with Article 16 hereof, but no
notice shall be required in the case of routine maintenance or an emergency) to
show the Premises to prospective purchasers or mortgagees, to determine Tenant's
compliance with its obligations hereunder, or for any purpose that Landlord may
reasonably deem necessary for the operation and maintenance of the Project, or,
during the last twelve (12) months of the Term upon one (1) business day to show
the Premises to prospective tenants, all without being guilty of an eviction and
without abatement of Rent, provided however, Landlord shall not unreasonably
interrupt Tenant's business operations. Tenant hereby waives any claim for
damages or for any injury or inconvenience to or interference with Tenant's
business, any loss of occupancy or quiet enjoyment of the Premises, and any
other loss occasioned thereby. For each of the aforesaid purposes, Landlord
shall at all times have and retain a key with which to unlock all of the doors
in, upon and about the Premises, excluding Tenant's vaults, safes and files.
Landlord shall have the right to use any and all means which Landlord may deem
proper to open the doors in, upon and about the Premises in an emergency in
order to obtain entry to the Premises without Liability to Tenant.
ARTICLE 5 - LANDLORD'S STANDARD SERVICES
Section 5.01. Landlord's Standard Services. Provided Tenant is not in
monetary default hereunder, as defined in Section 12.01 (a) of this Lease
Landlord shall, at Landlord's expense, except as provided to the contrary in
this Lease, furnish to Tenant the following services (Landlord's Standard
Services):
(a) Subject to curtailment as required by governmental laws, rules
or regulations, air conditioning and central heat, in season,
at such temperatures and in such amounts as are deemed by
Landlord to be standard in Houston, Texas, during normal
Building hours, which are presently scheduled to be 7:00 a.m.
through 6:00 p.m. on weekdays and 8:00 a.m. through 12:00 p.m.
on Saturdays, exclusive of normal business holidays. Normal
business holidays for purposes of this Lease shall mean New
Year's Day, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, the Friday following Thanksgiving Day and
Christmas Day. Landlord shall have the right to add additional
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holidays provided that similarly situated buildings in Houston
Texas are observing such holidays. If in the case of any
holiday described herein a different day shall be observed
than the respective day described, then the day which
constitutes the day observed by national banks in Houston,
Texas, on account of such holiday shall constitute the holiday
under this Lease. See attached Exhibit "J".
(b) Janitorial services in the Premises and public portions of the
Building for all days except Saturdays, Sundays, and normal
business holidays in accordance with the Janitorial
Specification attached as Exhibit "H" and it is agreed that
such specifications may change from time to time, however,
notwithstanding such specifications shall be substantially
similar as the attached Exhibit "H".
(c) Water at those points of supply provided for drinking, toilet,
and lavatory purposes.
(d) Normal and customary routine maintenance for all public,
structural, and exterior portions of the Project according to
Landlord's standards.
(e) Electric lighting service for all public portions of the
Project according to Landlord's standards.
(f) Reasonably adequate, non-exclusive automatic passenger
elevator service at all times for access to and egress from
the Premises subject to Landlord's right to limit access
thereto for security purposes. Freight elevator service, in
common with other tenants, shall be provided as prescribed by
Landlord, and subject to Landlord's rules and regulations as
promulgated from time to time.
(g) Electric energy up to 11,500 kilowatt hours per month for
operations of Tenant's office equipment including typewriters,
calculators, personal computers and printer and other machines
of a similar low electrical consumption, and lighting in the
Premises. Excess usage above the 11,500 kilowatt hours will be
charged to Tenant at Landlord's then prevailing total rate
(including taxes) being charged by the utility company.
(h) Building monitoring to limit after-hour access to the Building
including 24 hour cardkey access system, patrolling
surveillance personnel, closed circuit television at Building
entrance and exit doors. It is understood that above such
systems may change with advances in technology; provided,
however, Landlord shall have no responsibility to prevent, and
shall not be liable to Tenant for, and shall be indemnified by
Tenant
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against, liability or loss to Tenant, its agents, employees
and visitors arising out of losses due to theft, burglary, or
damage or injury to persons or property caused by persons
gaining access to the Building or the Premises, and Tenant
hereby releases Landlord and Landlord's employees and agents
from all liability relating thereto. Tenant agrees that such
release and indemnity in favor of Landlord and Landlord's
employees and agents extends to and covers Landlord's alleged
negligence or negligent entrustment.
(i) Window washing services for the outside portions of the
Building at least one (1) time per calendar year.
(j) Replacement of fluorescent light bulbs in any fluorescent
light fixtures in the Premises which contain the building
standard light fixture.
Section 5.02. Additional Service Cost. Tenant shall pay Landlord such
additional costs incurred by Landlord in performing or providing any additional
janitorial, maintenance, building monitoring, or other services or requirements
of if requested by Tenant or Tenant's representatives not specified above, or in
connection with any non-building standard installations in the Premises, and any
additional taxes attributable to any non-building standard installations to the
Premises. At Tenant's request for services. Tenant shall pay Landlord charges
for providing off-hour and nonstandard air conditioning through the Building's
system, heating or electricity at Landlord's then standard hourly rate
applicable to the period when such services are provided (which rate may be
changed by Landlord at any time and from time to time). All such additional
charges and costs shall be payable to Landlord upon demand or monthly as billed
and all such amounts shall constitute Rent under this Lease. Nothing herein
shall impose any duty upon Landlord to provide any additional services to
Tenant. Notwithstanding any of the foregoing, Tenant's excessive use or
consumption of heating, air conditioning and/or electrical services in violation
of Section 5.01 hereof, without Landlord's prior written consent, shall
constitute a default under this Lease.
Section 5.03. Service Interruption. To the extent any of the services
described above require electricity, gas, water or other services supplied by
public utilities, Landlord's covenants hereunder shall impose on Landlord only
the obligation to use its good faith efforts to cause the applicable public
utilities to furnish the same. Landlord shall use reasonable diligence to
restore any failure or defect in the supply or character of services furnished
or to be furnished by Landlord under this Article 5, but Landlord shall not
otherwise be liable to Tenant for any such failure or defect and such shall not
be construed as an eviction of Tenant nor shall such entitle Tenant to any
reduction, abatement, offset, or refund of Base Monthly Rent, Additional Rent,
or other payments required to be paid hereunder or to any damages, actual,
punitive or consequential, from Landlord, nor shall Landlord be in breach or
default under
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this Lease if Landlord uses reasonable diligence to restore any such failure or
defect after Landlord receives written notice thereof. Tenant hereby waives and
disclaims, and agrees not to claim or assert, any and all present and future
rights Tenant may have or claim to apply any Base Rent, Additional Rent, or
other payments required to be paid by Tenant hereunder against any obligation of
Landlord, howsoever incurred, or to assert that any such obligation of Landlord
entitles Tenant to any counterclaim or any reduction, abatement, offset, or
refund of Base Rent, Additional Rent, or other payments required to be paid
hereunder. If service interruption continues for more than two (2) business days
and should Tenant not be able to use the Premises for its intended use and such
interruption cannot by cured by Landlord, then Tenant shall advise Landlord in
writing and Landlord shall abate rent after the second day and until services
are restored. Should interruption continue for more than thirty (30) days but no
longer than ninety days in the event of force majeure, then Tenant shall have
the right to cancel this Lease, upon written notice.
ARTICLE 6 - ALTERATIONS, REPAIRS AND MAINTENANCE
Section 6.01. Alterations. Except as may be set forth in the
Construction Agreement attached as Exhibit "C", Tenant shall not tear down,
demolish, remove any improvements in the Premises or make or allow to be made
any alterations, installations, additions or improvements in or to the Premises,
or place safes, vaults or other heavy furniture or equipment within the
Premises, without Landlord's prior written consent. All alterations,
installations, additions or improvements (other than movable furniture and
movable trade fixtures) made by Tenant to the Premises (if approved by Landlord
pursuant to this Section) shall remain upon and be surrendered with the Premises
and become the property of Landlord at the expiration or termination of this
Lease or the termination of Tenant's right to possession of the Premises;
provided, however, that Landlord may require Tenant, at Tenant's cost, to remove
any or all of such items that are not building standard upon the expiration or
termination of this Lease or the termination of Tenant's right to possession of
the Premises. If Tenant desires to make alterations or improvements, Tenant
shall submit to Landlord prior to the commencement of any such work, for
Landlord's written approval, not to be unreasonably withheld, details of the
proposed work and all plans and specifications to complete such work. However,
notwithstanding the foregoing, should Landlord not reply in writing to Tenant
within five (5) business days of such request, then request shall be deemed
approved. All such work shall be completed by contractors approved by Landlord
at Tenant's sole cost and expense. Any such replacements, alterations, or
improvements made by Tenant without prior written consent of Landlord, or which
are not in accordance with the drawings and specifications approved by Landlord,
shall, if requested by Landlord, be promptly removed by Tenant at its expense
and the Building and Premises restored to their previous condition.
Notwithstanding anything herein contained, no repair, alteration, addition or
improvement to the Premises by or on behalf of the Tenant shall be
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permitted which may weaken or endanger the structure or which may adversely
affect the condition or operation of the Premises or the Building.
Section 6.02. Mechanic's and Materialman's Liens. For work consented to
by Landlord under Section 6.01 above or pursuant to the Construction Agreement
attached as Exhibit "C", and for such repairs and replacements required to be
made by Tenant pursuant to Section 6.04, or otherwise required by this Lease,
Tenant will pay or cause to be paid promptly, all costs for work done for
Tenant, or caused to be done by Tenant, in or about the Premises or the
Building, of a character which will or may result in liens thereon, and Tenant
will keep the Premises and the Building free and clear of all mechanic's and
materialman's liens and other liens on account of work done for Tenant or
persons claiming under it. All liens filed arising out of any work by Tenant, or
for Tenant, shall be removed within thirty (30) days thereafter; provided,
however, if Tenant shall desire to contest any lien claim, it shall furnish
Landlord security acceptable to Landlord or a bond in an amount, in a form and
by a corporate surety acceptable to Landlord. Tenant's failure to either (i)
remove said liens within thirty (30) days of filing of same or (ii) furnish
adequate security to Landlord within said same thirty (30) day period, shall
constitute a default by Tenant of its obligations under this Lease. If Tenant
shall be in default in paying any mechanic's or materialman's lien claims, and
if Tenant shall not have given Landlord acceptable security as hereinabove
provided to protect the Premises and Landlord against such liens, or, in any
event, if so required in Landlord's sole judgment to prevent a suit for
foreclosure of any such lien, Landlord, in addition to all other remedies
available to it, may (but shall not be required to) pay said claims and costs,
and the amount so paid, together with reasonable attorney's fees incurred in
connection therewith, shall be considered as Rent hereunder and shall be
immediately due and owing by Tenant to Landlord. Should any lien be filed
against the Premises, or any action affecting the title to the Premises be
commenced, the party receiving notice of such lien or action shall forthwith
give the other party written notice thereof. Landlord has not consented to the
performance or furnishing by any person of labor or materials for any
improvements to the Premises and under no circumstances shall any lien attach to
the fee interest owned by the Landlord, it being intended that the Landlord's
fee interest shall at all times remain free and clear of liens.
Section 6.03. Removal of Fixtures. Tenant may place or install in the
Premises, Tenant's removable business fixtures and related furnishings and
equipment, including but not limited to, shelving, office furniture, office
equipment, and the like, and the same shall (provided Tenant has not defaulted
under the terms hereof) remain the property of Tenant at all times. Tenant may
remove such items from the Premises upon the termination of this Lease, but only
if Tenant is not in default and Tenant, at Tenant's own cost and expense, shall
repair and restore any and all damage to the Premises resulting from or caused
by such removal. Upon termination of this Lease Term, however brought about,
Landlord may at its sole
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option, require Tenant to remove all such fixtures (excluding sprinkler system),
at Tenant's expense. Notwithstanding however, should Tenant elect to terminate
this Lease in accordance with the Termination Option described in Section 17.18
of this Lease Agreement, Tenant agrees to pay to Landlord, at the time of
Termination Notice, the cost of removal of Tenant's additional restrooms and the
cost of restoring the corridor wall back to building standard. Should Tenant not
terminate the Lease in accordance with the Termination Option, at the expiration
of this Lease. Tenant shall pay to Landlord fifty percent (50%) of the cost of
the removal of Tenant's additional restrooms and restoration of the corridor
back to building standard. The cost of removal of such restrooms and restoration
of the restrooms and corridors shall be determined by taking the lowest of three
(3) competitive bids.
Section 6.04. Tenant Repairs. By taking possession of the Premises,
Tenant shall be deemed to have accepted the Premises as being in good, sanitary
order, condition and repair and as suitable for Tenant's intended use as stated
herein. Tenant shall, at Tenant's sole cost and expense, keep the Premises in
good condition and make all necessary repairs thereto, ordinary wear and tear
and damage by fire or other casualty excepted which shall be governed by Article
9 below. Furthermore, to comply with the Americans with Disabilities Act Tenant
shall, at Tenant's sole cost and expense, make all necessary alterations,
improvements and repairs to the Premises. To the extent that any changes may be
required to the Land or other parts of the building to accommodate the peculiar
needs of an employee or guest of Tenant, such cost shall also be paid by Tenant
(unless such changes are also necessary for an employee or guest of another
tenant of the Building, in which event such costs shall be treated as a part of
Operating Expenses). Any injury or damage to the Premises or the Project, or the
appurtenances or fixtures thereof, caused by or resulting from the act, omission
or neglect of Tenant or Tenant's employees, servants, agents, invitees,
assignees, or subtenants shall be repaired or replaced by Tenant and with
contractors approved by Landlord, or at Landlord's option by Landlord, at the
expense of Tenant. Tenant shall, upon expiration or sooner termination of this
Lease, surrender the Premises to Landlord in good condition, ordinary wear and
tear excepted. If Tenant fails to maintain the Premises or fails to repair or
replace any damage to the Premises or Project as herein required, after written
notice to Tenant, Landlord may, but shall not be obligated to, cause such
maintenance, repair or replacement to be done, as Landlord reasonably deems
necessary, and Tenant shall pay, upon demand or within thirty (30) days of
billing, to Landlord all costs related thereto plus a charge for overhead of 15%
of such costs.
Section 6.05. Landlord Repairs. Except as Specifically provided in this
Lease, Landlord shall have no obligations to alter, improve or repair the
Premises or any part thereof, and the parties hereto affirm that Landlord has
made no representations to Tenants respecting the condition of the Premises or
the Building except as specifically set forth in this Lease. Landlord shall, at
its own cost and expense, except as may be provided elsewhere herein, make all
necessary repairs of damage and
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perform all necessary maintenance of and replacements to the Building corridors,
lobby, structural members of the Building, its roof, garage and common areas and
equipment used to provide the services referred to in Article 5 of this Lease,
unless any such damage is caused by the willful misconduct or negligence of
Tenant, its agents, customers, employees, invitees or guests, in which event
Tenant will bear the cost of such repairs. Tenant will promptly give Landlord
written notice of any damage to the Premises requiring repair by Landlord, as
aforesaid.
Section 6.06. Changes by Landlord. Landlord shall have the right at any
time to change the arrangement, location and/or size of public entrances or
passageways, doors, doorways, and corridors, toilets or to do such other
alterations to the public parts of the Building, or other areas of the Project,
and, upon giving Tenant reasonable notice thereof, to change the name or number
(but in the case of the numerical street address, only as shall be required by
the United States Post Office) by which the Building is commonly known. In no
event shall Landlord be liable for any costs, expenses or damages incurred by
Tenant as a result of any such changes.
ARTICLE 7 - PARKING
Section 7.01. Basic Provisions. Tenant shall at all times during the
term of this Lease be entitled, at no additional charge, to parking rights for
up to one hundred fifty-five (155) unreserved and ten (10) reserved vehicles in
the Building parking garage. No specific spaces in the Building parking garage
are to be assigned to Tenant, except in the case of reserved parking spaces (it
is agreed that Tenant and Landlord shall mutually define the reserved spaces
from those spaces available at the time this Lease is executed). Landlord may
designate the area within which each such car occupying an unreserved parking
space may be parked (up to thirty percent (30%) of the unreserved spaces may be
assigned to park on the top roof level of the garage) and Landlord may change
such designations of areas of parking from time to time. Landlord may make,
modify and enforce uniform rules and regulations relating to the parking of
vehicles in the Building parking garage, and Tenant and its employees will abide
by such rules and regulations. Subject to the other terms hereof, Landlord may
operate or sublease operation of the garage. In no event shall Landlord have any
liability to Tenant or any of Tenant's employees, visitors, guests or invitees
by reason of any damages suffered by any such parties in connection with their
use of the Building parking garage and surface parking.
Section 7.02. Parking Information. Tenant shall provide to Landlord,
within five (5) days of written request by Landlord, license numbers and other
information requested for all Tenant's vehicles parking in the Building parking
garage, and shall notify Landlord immediately of any change in such information.
Landlord and Tenant hereby agree that: (i) all vehicles operated by Tenant, its
employees and/or other occupants of the Premises, up to the number permitted in
Section 7.01 hereinabove, shall only be parked in the Building parking garage;
(ii) all vehicles
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operated by Tenant's guests or invitees shall only be parked in marked spaces in
the visitor parking area for the Building; and (iii) Landlord shall have the
right to remove any vehicles not parked in accordance with the foregoing at the
vehicle owner's expense. Landlord shall have the right to charge for visitor
parking, and in such case Landlord shall give Tenant the right to validate its
visitor parking at no charge to Tenant (except necessary equipment i.e. stamp,
etc. needed to validate such parking tickets).
ARTICLE 8 - INSURANCE; INDEMNITY
Section 8.01. Landlord Insurance. Landlord shall insure the Project and
shall maintain liability and other insurance in such amounts and with such
deductibles as desired by Landlord or as may be required by Landlord's
mortgagee. Such insurance shall be an "Operating Expense" as defined in Section
3.04 hereof. Such insurance shall be for the sole benefit of Landlord and, if
required, Landlord's mortgagee and/or property manager.
Section 8.02. Tenant Insurance. Tenant shall, at Tenant's expense,
fully insure (i) its personal property, including removable trade fixtures,
located in the Premises, (ii) any non-building standard leasehold improvements
located within the Premises installed after the commencement of this Lease, and
(iii) all additions and improvements made by Tenant after the commencement of
this Lease to the Premises, against fire and other casualty. Furthermore, Tenant
shall, at Tenant's expense, maintain comprehensive general liability insurance
insuring Landlord and Landlord's agent and Tenant against any liability arising
out of the ownership, use, occupancy or maintenance of the Premises and all
areas appurtenant thereto, including contractual liability insurance, with
insurance companies approved by Landlord and with limits of liability of at
least $1,000,000 with respect to death of or injuries to one or more persons in
any one occurrence, and at least $500,000 with respect to loss of or damage to
property in any one occurrence. Tenant shall cause Landlord to be named as an
additional insured under such policies and shall, not less than twenty (20) days
prior to (a) the Commencement Date, and (b) the expiration of then existing
policies, furnish Landlord and Landlord's agent with certificates of insurance
with loss payable clauses satisfactory to Landlord. All such policies shall
contain an endorsement that such policies cannot be canceled or amended except
after fifteen (15) days (ten (10) days for non-payment of premium) prior written
notice to Landlord. Tenant may carry such insurance under a blanket policy,
provided such insurance has a Landlord's protective liability endorsement
attached thereto. If Tenant fails to procure and maintain any or all of said
insurance, Landlord may, but shall not be required to, procure and maintain
same, at the expense of Tenant, and any sums so expended by Landlord shall
immediately become a part of the Rent owing under this Lease and shall be paid
to Landlord upon demand.
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Section 8.03. Legal Use and Violation of Insurance Coverage. Tenant
shall not occupy or use or permit any portion of the Premises to be occupied or
used or permit anything to be done, which would in any way increase the rate of
fire insurance coverage on said Building, or the Project or their contents. In
addition to Landlord's other rights and remedies, in the event of a breach by
Tenant under this Section 8.03, Tenant shall reimburse Landlord upon demand for
any increased insurance premiums resulting from such breach. In determining
whether increased premiums are a result of Tenant's use of the Premises, a
schedule issued by the organization computing the insurance rate on the Building
or the leasehold improvements showing the various components of such rate, shall
be conclusive evidence of the several items and charges which make up such rate.
Tenant shall promptly comply with all reasonable requirements of the insurance
authority or any present or future insurer relating to the Premises. In
addition, in the event of a breach by Tenant under this Section 8.03, without
notice or demand, Landlord may enter upon the Premises and attempt to remedy
such condition, in which event Landlord shall not be Liable for any damage or
injury caused to Tenant or others located on the Premises, resulting from such
entry.
Section 8.04. Waiver of Subrogation. Whenever (a) any loss, cost,
damage or expense resulting from fire, explosion or any other casualty or
occurrence is incurred by either of the parties to this Lease in connection with
the Premises, the Building or the Project, and (b) such party is then covered
(or is required under this Lease to be covered) in whole or in part by fire and
extended coverage insurance with respect to such loss, cost, damage or expanse,
then the party so insured hereby releases the other party (and, as to Tenant,
releases Landlord's agents, officers and employees) from any liability it may
have on account of such loss, cost, damage or expense to the extent of any
amounts recovered by reason of such insurance (or which would have been
recoverable if such insurance had been maintained as required under this Lease)
regardless of cause of origin, including negligence of the indemnified party or
any of such party's agents, officers or employees, and such party hereby waives
any right of subrogation which might otherwise exist in or accrue to any person
on account thereof. Inasmuch as the above mutual waivers will preclude the
assignment of any aforesaid claim by way of subrogation (or otherwise) to an
insurance company (or any other person), each party hereto hereby agrees
immediately to give to each insurance company which has issued to it policies of
fire and extended coverage insurance, written notice of the terms of said mutual
waivers, and to have said insurance policies properly endorsed, if necessary, to
prevent the invalidation of said insurance coverages by reason of said waivers.
In the event that any applicable laws shall now be in force or hereafter be
enacted which would prevent such waiver, or in the event either party shall be
unable to secure at commercially reasonable rates the insurance referred to
herein by reason of this provision and such waiver is no longer being required
of comparable tenants in other Class A developments in the City of Houston,
then, in that event only, the denial of the right of subrogation herein provided
shall be deemed waived by Landlord and Tenant. Landlord and Tenant
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each agree to immediately notify the other of any failure to obtain or maintain
the endorsements required by this Section 8.04. Landlord and Tenant shall use
their respective best efforts to obtain endorsements recognizing these release
and waiver of subrogation provisions from their respective insurance carriers
and shall immediately notify the other of any failure to obtain or maintain such
endorsements.
Section 8.05. Indemnity. Tenant hereby covenants and agrees to
indemnify, defend and save harmless Landlord and its affiliated companies and
their agents, servants, directors, officers, and employees (collectively
referred to as "Indemnitees") from and against any and all liabilities, losses,
expenses, damages, claims, suits, costs and causes of action of any kind
whatsoever arising or alleged to arise in whole or in part by or from (i) any
act, omission or negligence on the part of Tenant, Tenant's contractors,
subcontractors, licensees, invitees, agents, servants, employees or any person
or persons on the Premises by reason of Tenant's operations, use or occupancy of
the Premises, (ii) any breach, violation, or nonperformance of any covenant of
Tenant under this Lease, or (iii) any accident, injury, death or damage
whatsoever and howsoever caused to any person, or any property, occurring in, on
or about the Premises regardless of whether or not such liabilities, damages,
claims, suits, costs, accidents, injuries or deaths are caused by or attributed
to the negligence of any Indemnitees; provided, however, the foregoing indemnity
shall not include or cover any such liabilities, damages, claims, suits, costs,
accidents, injuries or deaths to the extent that such are found by final
judgment of a court of competent jurisdiction to have been caused by or
attributed to the gross negligence or willful misconduct of any Indemnitees.
This indemnity and hold harmless agreement shall include, without limitation,
indemnity of Landlord by Tenant against all costs, expenses, attorney's fees and
liabilities incurred on or in connection with any such claim or proceeding
brought thereon, and the investigation and defense thereof. Tenant's obligations
under this Section 8.05 shall not be limited to the limits or coverage of
insurance maintained or required to be maintained by Tenant under this Lease.
Landlord hereby covenants and agrees to indemnify, defend and save harmless
Tenant and its affiliated companies and his agents, servants, directors,
officers, and employees (collectively referred to as "Indemnitees") from and
against any and all liabilities, losses, expenses, damages, claims, suits, costs
and causes of action of any kind whatsoever found by a court of competent and
final jurisdiction to have been caused by the gross negligence or willful
misconduct on the part of Landlord, Landlord's contractors, subcontractors,
agents, or employees; provided, however, the foregoing indemnity shall not
include or cover any such liabilities, damages, claims, suits, costs, accidents,
injuries or deaths which are caused by or attributed to, in whole or in part, to
the negligence or willful misconduct of any Indemnitees. This indemnity and hold
harmless agreement shall include, without limitation, indemnity of Tenant by
Landlord against all costs, expenses, attorney's fees and liabilities incurred
on or in connection with any such claim or proceeding brought thereon, and the
investigation and defense thereof.
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ARTICLE 9 - FIRE AND OTHER CASUALTY; CONDEMNATION
Section 9.01. Casualty.
A. If the Premises, Building, or Project, or any portion of the same,
shall be damaged by fire or other casualty covered by the insurance carried by
Landlord hereunder and the cost of repairing such damage shall not be greater
than 10% of the then full replacement cost thereof, then, subject to the
following provisions of this Article, Landlord shall repair the Premises,
Building and/or Project. If the Premises, Building or Project, or any portion of
the same, shall be damaged (a) by fire or other casualty not covered by
insurance carried by Landlord hereunder, (b) by fire or other casualty covered
by insurance carried by Landlord hereunder and Landlord's mortgagee requires
that such insurance proceeds be used to retire the mortgage debt, or (c) to an
extent greater than 10% of the then full replacement cost thereof, then Landlord
shall have the right (by giving Tenant written notice thereof at any time within
sixty (60) days after the occurrence of such damage) to elect to either (i)
repair or reconstruct the damaged Premises, Building, or Project to
substantially the same condition as immediately prior to such fire or other
casualty, or (ii) terminate this Lease. In addition to the other rights granted
to Landlord in this Section 9.01, in the event of any fire or other casualty
loss which results in the Premises being untenantable for a period, reasonably
estimated by a responsible contractor selected by Landlord to be one hundred
eighty (180) days or longer after the date of such fire or other casualty,
Landlord shall so notify Tenant promptly in writing and then either Landlord or
Tenant may cancel this Lease by delivering written notice thereof to the other
party. Landlord shall give to Tenant, within sixty (60) days after Landlord
learns of such fire or casualty, written notice of whether or not Landlord is
electing to terminate this Lease pursuant to the forgoing provisions of this
Section 9.01. If Landlord does not so terminate this Lease, then such written
notice shall also state whether Tenant has the right to terminate this Lease
pursuant to the forgoing provisions of this Section 9.01, and if so, Tenant must
exercise such right of termination, if at all, by giving written notice thereof
within not more than thirty (30) days after said written notice from Landlord to
Tenant.
B. Should Landlord elect to repair the damage, Landlord shall not be
required to repair or replace any furniture, furnishings, or other personal
property which Tenant may be entitled to remove from the Premises or any
property constructed or installed by Tenant or any installation or improvement
to the Premises in excess of building standard, unless or until Tenant has
provided Landlord with the proceeds of the casualty insurance required to be
maintained by Tenant on non-building standard leasehold improvements pursuant to
Section 8.02 installed after commencement of this Lease and in the amount
sufficient to make such repairs. It is agreed that Landlord's casualty insurance
shall cover the initial improvements constructed by Landlord at commencement of
Lease. In any of the aforesaid circumstances, Base Monthly Rent shall abate
proportionately during the period and
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to the extent that the Premises are unfit for use by Tenant in the ordinary
conduct of its business. If Landlord has elected to repair and restore the
Premises, this Lease shall continue in full force and effect and such repairs
and restoration shall be made within a reasonable tine thereafter, but not less
than 180 days after any such casualty, subject to delays arising from the
shortages of labor or material, acts of God, or other conditions beyond
Landlord's reasonable control. In the event that this Lease is terminated as
herein permitted, Landlord shall refund to Tenant the prepaid unaccrued Base
Monthly Rent, if any, less any sums then owing to Landlord by Tenant, or Tenant
shall pay all Base Monthly Rent and other sums owed to Landlord up to the date
of such termination, as the case may be. If Landlord has elected to repair and
reconstruct the Premises and the Building, then, at Landlord's option, the Term
may be extended by a period of time equal to the period of such repair and
reconstruction, at the rental rate required under the Lease for the repair
period. Other than such rental abatement, no damages, compensation or claims
shall be payable by Landlord for loss of the use of the whole or any part of the
Premises, Tenant's personal property, or any inconvenience, loss of business, or
annoyance arising from any such repair and reconstruction. If the damage results
from the negligence or willful misconduct of Tenant, its agents employees,
licensees or invitees, Tenant shall not be entitled to any abatement or
reduction of any Base Monthly Rent or other sums due hereunder, to the extent
such rent owed hereunder is not covered by Landlord's insurance, and such damage
shall be repaired by Tenant, or at Landlord's option by Landlord, at Tenant's
expense (except to the extent covered by Landlord's insurance in which event
this provision shall be subject to the provisions of Section 8.04).
Section 9.02. End of Term Casualty. Notwithstanding anything to the
contrary in this Article, Landlord shall not have any obligation whatsoever to
repair, reconstruct or restore the Premises, Building, or the Project when the
damage resulting from any casualty covered under this Article occurs during the
last twelve (12) months of the Term or any extension thereof and Tenant shall
have the right to terminate this Lease immediately by written notice to Landlord
should Landlord not be able to repair, reconstruct or restore the Premises
within thirty (30) days or Landlord elects not to repair, reconstruct or restore
the Premises.
Section 9.03. Condemnation. If all or substantially all of the
Premises, Building or Project shall be taken through condemnation or eminent
domain, then this Lease shall terminate as of the date possession is taken by
said public or quasi-public authority. If only a portion of the Premises,
Building or Project is taken through condemnation or eminent domain, then
Landlord shall have the option (by giving Tenant written notice of termination)
to terminate this Lease as of the date when physical possession is taken by the
condemning authority. If this Lease is not terminated upon any such taking, the
Rent payable hereunder shall be abated in proportion to the portion of the
Premises which Is rendered untenable by such condemnation, and Landlord shall,
to the extent Landlord deems feasible, restore the
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Premises to substantially its former condition, but Landlord shall not in any
event be required to spend for such work an amount in excess of the amount
received by Landlord as compensation for such taking. All amounts awarded upon
taking of any part or all of the Project, the Building or the Premises shall
belong to Landlord, and Tenant shall not be entitled to, and expressly assigns
all claims, rights and interests to, any such compensation to Landlord. In the
event of any condemnation or taking of the Leased Premises, Tenant hereby
assigns to Landlord the value of all or any portion of the unexpired term of the
Lease and all Leasehold Improvements and Tenant may not assert a claim for a
condemnation award therefor; provided, however, Tenant may pursue a separate
attempt to recover an award or compensation against or from the condemning
authority for (i) the value of any fixtures, furniture, furnishings, Tenant's
additional leasehold improvements, other personal property which were condemned
but which under the terms of this Lease Tenant is permitted to remove at the end
of the term of this Lease (if any), (ii) the unamortized cost of Tenant's
additional leasehold improvements, which are not so removable by Tenant at the
end of the term of this Lease but which were installed solely at Tenant's
expense, (iii) relocation and moving expenses, and (iv) compensation for loss to
Tenant's business; provided that Tenant's pursuit of such claim or award given
as a result thereof, does not delay the delivery of or amount of award to
Landlord. Sale in lieu of condemnation to an authority having and asserting the
power of eminent domain shall be a taking for purposes of this Lease. Tenant may
additionally pursue a separate legal remedy for loss of economic value of the
lease, so long as such award to Tenant does not diminish the Landlord's damages
awarded to Landlord by the condemning authority.
ARTICLE 10 - SUBORDINATION AND ATTORNMENT
Section 10.01. Subordination. Tenant hereby accepts this Lease and the
Premises subject and subordinate to the liens of any and all mortgages, deeds of
trust, and security agreements now or hereafter encumbering or affecting the
Project, or any interest of Landlord therein, or the contents of the Building,
and to any advances made, or to be made pursuant to said Liens, and to all
increases, renewals, modifications, consolidations, replacements and extensions
of any such mortgages, deeds of trust and/or security agreements. This clause
shall be self-operative and no further instrument of subordination on the part
of Tenant need be required by any owner or holder of such mortgage, deed of
trust or security agreement; provided, however, that at the option of any such
mortgagee, this Lease shall be superior to the mortgage of such mortgagor. This
Lease is further accepted subject and subordinate to (a) all applicable
ordinances of the city in which the Building is located relating to easements,
franchises, and other interests or rights upon, across, or appurtenant to the
Building or Project and (b) all easements, restrictive covenants, encumbrances
and other agreements now or hereafter existing and pertaining to the Project.
Any person or entity, whether one or more, that owns or holds such mortgages or
deeds of trust, net profit, partnership venture or equity interest in the
Project shall hereinafter be
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referred to as "Landlord's Mortgagee". Notwithstanding the foregoing, Tenant
covenants and agrees to execute and deliver, upon demand, such consent or
further instruments evidencing such subordination of this Lease to the liens of
any such mortgages or deeds of trust as may be required by Landlord from time to
time. In connection with any such subordinations, Tenant hereby stipulates that
it shall be reasonable for Landlord to request that the following agreements be
made if requested by Landlord's Mortgagee:
(w) That this Lease will not be modified, altered or amended in
any way without the prior written consent of each Landlord's
Mortgagee of which Tenant is aware;
(x) That Landlord and Tenant will not, without the prior written
consent of each Landlord's Mortgagee of which Tenant is aware,
agree to a cancellation of this Lease, nor will Tenant
surrender its rights hereunder to Landlord (except in
instances wherein the right to do so has been expressly
granted to Tenant under the other terms and provisions of this
Lease);
(y) That in the event Landlord's Mortgagee acquires the interest
of Landlord (whether through foreclosure, deed in lieu of
foreclosure, or otherwise), Landlord's Mortgagee shall not be
liable for any act or omission of any prior landlord, nor
shall Landlord's Mortgagee be subject to any offsets or
defenses which Tenant might have against any prior landlord,
nor shall Landlord's Mortgagee be obligated to cure any
default of any prior Landlord which occurred prior to the time
that Landlord's Mortgagee acquired the interest of the
Landlord in this Lease;
(z) That Tenant will not prepay and Landlord will not accept
prepayment of any installment or payment of Rent more than
thirty (30) days in advance of the due date thereof.
In the event that Tenant should fail or refuse to sign any instruments
evidencing the subordination of this Lease as contemplated by this Section 10.01
within fifteen (15) days following written requests by Landlord submitting one
or more counterparts thereof to Tenant, then Landlord shall have authority as
Tenant's attorney-in-fact for such limited purpose to execute such instruments,
it being stipulated by Landlord and Tenant that such power of attorney is
coupled with an interest in Landlord and is, accordingly, irrevocable.
In the event Tenant fails to execute and deliver the estoppel certificate within
fifteen (15) business days after receipt of same, Landlord shall have the right
(and Tenant hereby empowers Landlord) to execute and deliver such certificate to
and on behalf
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of Tenant, and as the binding act of Tenant; provided, such certificate only
shall bind Tenant to the extent the information contained in it is true and
correct.
Landlord will use reasonable efforts to cause the current mortgagee to provide
Tenant a non-disturbance agreement within 30 days of commencement of this Lease.
The subordination by Tenant contained herein shall only be effective upon
receipt of a Non-Disturbance and Attornment Agreement from any existing or
future mortgagee during the initial term.
Section 10.02. Notice to Landlord's Mortgagee. Upon designation by
Landlord of the name and address of Landlord's Mortgagee, Tenant shall furnish
such Landlord's Mortgagee with written notice of any default or breach by
Landlord at least sixty (60) days prior to the exercise by Tenant of any rights
and/or remedies which Tenant may have hereunder arising out of the holder
thereof, such default or breach. Any such Landlord's Mortgagee shall have the
option, but not the obligation, to cure any defaults or breaches by Landlord
under this Lease within such sixty (60) day period, or within such additional
period of time as may be reasonably required by Landlord's Mortgagee in order to
complete such cure with the exercise of due diligence.
Section 10.03. Attornment. If any mortgage, deed of trust or security
agreement is enforced by the holder thereof, Tenant shall, upon demand, attorn
to the mortgagee or purchaser at such foreclosure sale, or any person or party
succeeding to the interest of Landlord as a result of such enforcement, as the
case may be, and execute instrument(s) confirming such attornment; provided,
however, that if this Lease was approved and accepted in writing by such
mortgagee, trustee or secured party, Tenant's attornment shall be conditioned
upon the agreement by such successor to Landlord's interest not to disturb
Tenant's possession hereunder during the Term so long as Tenant performs its
obligations under this Lease. In the event of such enforcement and upon Tenant's
attornment as aforesaid, Tenant will automatically become the tenant of the
successor to Landlord's interest without change in the terms or provisions of
this Lease; provided, however, that such successor to Landlord's interest shall
not be bound by (a) the payment of any Rent for more than one month in advance,
or (b) any amendments or modifications of this Lease made without the prior
written consent of Landlord's Mortgagee.
Section 10.04. Status Statement. Upon written request by Landlord,
Tenant hereby agrees to deliver within five (5) ten (10) days after such
request, a certificate to Landlord or to any proposed mortgagee or purchaser as
designated by Landlord and in the form supplied, stating (if such be the case)
that:
(a) This Lease is unmodified and in full force and effect, or if
there have been any modifications, that this Lease is in full
force and effect as
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modified and identify the modification agreements, or if this
Lease is not in full force and effect, the certificate shall
so state;
(b) The date of the commencement of the Lease Term and the
termination date;
(c) The date to which the rent has been paid under this Lease
(d) The amount of security deposit, if any, being held by
Landlord;
(e) Whether or not there exists any default by Tenant in payment
of any rent or other sum of money under this Lease;
(f) Whether or not there exists any default by Landlord or Tenant
under this Lease with respect to which a notice of default has
been served, and if there is any such default, specifying the
nature and extent thereof; and
(g) Any other information reasonably requested by Landlord or its
mortgagee or purchaser.
Section 10.05. Quiet Enjoyment. Tenant shall and may peaceably and
quietly enjoy the Premises for the Term, subject to the aforesaid mortgages,
deeds of trust and security agreements, all applicable laws and other
governmental and legal requirements, all applicable easements, encumbrances and
restrictive covenants, applicable insurance requirements and regulations, and
the provisions of this Lease, whether now existing or hereafter arising.
ARTICLE 11 - ASSIGNMENT AND SUBLETTING
Section 11.01. Assignment and Subletting by Tenant. Tenant shall not,
voluntarily, by operation of law, or otherwise, assign, transfer, mortgage,
pledge, or encumber this Lease or sublease the Premises or any part thereof, or
suffer any person other than Tenant, its employees, agents, servants and
invitees to occupy or use the Premises or any portion thereof, without the
express prior written consent of Landlord (which may not be unreasonably
withheld or denied by Landlord in its sole discretion). Any attempt to do any of
the foregoing without such written consent shall, at the option of Landlord, be
null and void and of no effect, and shall further constitute a material default
under this Lease. If Tenant so requests Landlord's consent, said request shall
be in writing specifying the duration of said desired sublease or assignment,
the date same is to occur, the exact location of the space affected thereby and
the proposed rentals on a square foot basis chargeable thereunder, and shall be
submitted to Landlord at least sixty (60) days in advance of
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the date on which Tenant desires to make such assignment or sublease or allow
such occupancy or use. Upon such request Landlord may, in its sole discretion,
(a) grant such consent subject to Landlord's approval of the assignee,
transferee, subtenant, or mortgagee, or (b) elect to terminate this Lease with
respect to the Premises or any portion thereof to be affected by such
assignment, sublease or other event specified above, or (c) refuse to consent to
Tenant's proposed assignment or sublease and continue this Lease in full force
and effect as to the entire Premises. If Landlord should fail to notify Tenant
in writing within said sixty (60) day period, Landlord shall be deemed to have
elected option (c) above. In no event may Tenant assign this Lease or sublease
the Premises or any portion thereof to any party whose operations in the Project
would not be in keeping with the provisions of this Lease, or would detract from
the operations of other tenants in the Project. In any situation in which
Landlord consents to an assignment or sublease hereunder, Tenant shall promptly
deliver to Landlord a fully executed copy of the final sublease agreement or
assignment instrument and all ancillary agreements relating thereto. No
assignment shall be effective unless the assignee has assumed in said instrument
all the obligations of Tenant hereunder and to be personally bound by all of the
covenants, terms and conditions hereof on the part of Tenant to be performed or
observed hereunder. Notwithstanding anything in this Section 11.01 to the
contrary, Tenant shall have the right during the lease term to (a) assign and
transfer this Lease to another entity to which Tenant has sold substantially all
of its assets, or (b) to merge or consolidate with another entity with the
result that the merged or consolidated entity shall have substantially all of
the assets of Tenant (hereinafter referred to as a "Permitted Assignee"),
provided that: (1) Tenant shall not at the time to such assignment be in default
under any of the terms, covenants and conditions of this Lease, (2) such
assignee or merged entity shall have a net worth equal to or greater than the
net worth of Tenant as of the Commencement Date of Lease (and, in the event of
an assignee other that a merged entity, such assignee shall be required to
satisfy such net worth test both immediately before and after the date of
assignment), (3) such assignee or merged entity shall agree in writing to
perform all of Tenant's unperformed terms, covenants and conditions of this
Lease, (4) Tenant shall at all times remain primarily obligated for the
performance of all of the terms, covenants and conditions of this Lease, and (5)
Tenant shall give Landlord ten (10) business days prior written notice of such
assignment to a Permitted Assignee and Landlord has been provided with
satisfactory financial statements which confirm the Permitted Assignee's net
worth as being equal to or greater than Tenant's net worth; subject to the
foregoing conditions, a permitted assignment and transfer to a Permitted
Assignee may also be implemented by means of a transfer of a majority of the
Tenant's voting capital stock (as the Permitted Assignee) shall guarantee the
performance of Tenant of all the terms, covenants and conditions of this Lease
and shall provide to Landlord, prior to the effective date of such purchase, an
executed guaranty in a form reasonably required by Landlord; however, (i) such a
guaranty shall not be required in the event that following such purchase Tenant
shall have a net worth at least equal to the net worth of Tenant as of the
Commencement Date of
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Lease (provided that such net worth test must be satisfied both immediately
before and after the date of purchase of Tenant's voting capital stock), and
(ii) the Permitted Assignee has otherwise conformed with the requirement set
forth in this Section 11.01. Within twenty (20) days after the effective date of
any such assignment of transfer, Tenant shall provide Landlord with a copy of
the fully executed and dated assignment, merger or consolidation documents.
Section 11.02. Corporate Conditions.
Section 11.03. Continued Liability. Tenant shall, in the event of any
assignment or sublease (permitted or otherwise), remain directly and primarily
liable for the performance of all of the covenants, duties, and obligations of
Tenant hereunder, and Landlord shall be permitted to enforce the provisions of
this Lease against Tenant or any assignee or sublessee without demand upon or
proceeding in any way against any other person.
Section 11.04. Consent. Consent by Landlord to a particular assignment
or sublease shall not be deemed a consent to any other or subsequent
transaction. If this Lease is assigned or if the Premises are subleased without
the permission of Landlord, then Landlord may nevertheless collect Rent from the
assignee or sublessee and apply the net amount collected to the Rent payable
hereunder, but no such transaction or collection or acceptance of Rent or
application thereof by Landlord shall be deemed a waiver of any provision hereof
or a release of Tenant from the performance of the obligations of the Tenant
hereunder. In any case where Landlord consents to such assignment, sublease or
other transaction proposed by Tenant, Landlord may require that Tenant pay
Landlord's reasonable attorneys' fees and costs arising out of such transaction.
Section 11.05. Proceeds. Fifty percent (50%) of all cash or other
proceeds of any assignment, sale or sublease of Tenant's interest in this Lease,
whether consented to by Landlord or not, shall be paid to Landlord
notwithstanding the fact that such proceeds exceed the Rent called for
hereunder.
Section 11.06. Assignment by Landlord. Landlord may transfer and assign
its rights under this Lease for any purpose (including, without limitation, as
collateral security for a loan to the Landlord), and in the event of any such
assignment by the Landlord, and notification thereof is given to the Tenant by
or on behalf of the Landlord, it is expressly agreed between the Landlord and
the Tenant that this Lease shall not be canceled. The term "Landlord" as used in
this Lease, so far as covenants or agreements on the part of Landlord are
concerned, shall be limited to, mean and include only the owner or owners of
Landlord's interest in this Lease at the time in question. In the event of any
transfer or transfers of such interest, except a transfer by way of security,
the Landlord herein named (and in case of any subsequent transfer, the then
transferor) shall be automatically freed and relieved from all
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liability of any kind as respects the performance of any covenants or agreements
on the part of the Landlord contained in this Lease to be performed after the
date of such transfer; provided that any funds in the hands of the Landlord or
the then transferor at the time of such transfer, in which Tenant has an
interest, shall be turned over to the transferee and the transferee shall be
deemed to have assumed, subject to the limitations of this Section, all of the
covenants, agreements and conditions in this Lease to be performed on the part
of Landlord, it being intended hereby that the covenants and agreements
contained in this Lease on the part of Landlord (subject only as aforesaid)
shall be binding on Landlord, its successors and assigns, only during and in
respect of their respective successive periods of ownership.
ARTICLE 12 - DEFAULT AND REMEDIES
Section 12.01. Defaults by Tenant. The occurrence of any one or more of
the following events shall constitute an event of default and breach of this
Lease by Tenant:
(a) The failure by Tenant to make any payment of Base Monthly
Rent, Additional Rent, or any other payment of Rent or other
monies required to be made by Tenant to Landlord hereunder, as
and when due, if such failure continues for a period of five
(5) days after Landlord's giving of written notice that such
amount is overdue; provided further, however, that once
Landlord has given to Tenant two (2) such notices during any
twelve month period during the term of this Lease for any one
or more tines that any payments are not made when due
hereunder, Landlord shall not be required to give further
notice or any notice at all with respect to subsequent
monetary defaults, and the failure or refusal by Tenant to
timely make any payment thereafter due hereunder during the
remainder of said calendar year shall immediately constitute
an event of default entitling Landlord to pursue its remedies
without notice or demand.
(b) The failure by Tenant to observe or perform any of the
covenants, conditions or provisions of this Lease to be
observed or performed by the Tenant, other than described in
Section 12.01(a) above, where such failure is not cured as
soon as reasonably practicable and in any event within thirty
(30) days after written notice thereof by Landlord to Tenant.
(c) The Leased Premises are deserted, vacated, or not used, for a
period of thirty (30) consecutive days, and Tenant has failed
to make that portion of the Leased Premises which are visible
from the Common Areas appear occupied by having such visible
areas of the Leased Premises
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illuminated during business hours and/or Tenant has failed to
keep such portion of the Leased Premises appear occupied with
a reasonable and sufficient amount of office furniture and
such shall constitute a default even though Tenant has
continued to pay the stipulated monthly rent.
(d) The making by Tenant of a general assignment for the benefit
of creditors, or the filing by or against Tenant of a petition
to have Tenant adjudged a bankrupt, or a petition for
reorganization or arrangement under any law relating to
bankruptcy (unless, in the case of a petition filed against
Tenant, the same is dismissed within sixty (60) days
thereafter); or the appointment of a trustee or a receiver to
take possession of substantially all of Tenant's assets
located at the Premises or of Tenant's interest in this Lease,
where possession is not restored to Tenant within thirty (30)
days; or the attachment, execution or other judicial seizure
of substantially all of Tenant's assets located at the
Premises or of Tenant's interest in this Lease, where such
seizure is not discharged in thirty (30) days.
Section 12.02. Landlord's Remedies. Upon the occurrence of any event of
default specified in Section 12.01, Landlord may, at Landlord's option, in
addition to any other remedy or right given hereunder or by law or equity do any
one or more of the following:
(a) Terminate this Lease ("Lease Termination") by written notice
to Tenant, in which event, Tenant shall immediately surrender
possession of the Premises to Landlord, and if Tenant fails to
do so, Landlord may, without prejudice to any other remedy,
enter upon and take possession of the Premises and expel or
remove Tenant and any other person occupying the Premises, or
any part thereof, by master key or any peaceful means or by
other means available under applicable law, including, without
limitation, an action for forcible detainer, without being
liable for prosecution or any claim of constructive eviction
or for damages of any kind. In the case of Lease Termination,
then notwithstanding such termination, Tenant shall be liable
for and shall pay to Landlord, in addition to the amounts
required to be paid by Tenant under Section 12.03, the sum of
(i) all Rent and other indebtedness accrued to the date of
such termination (plus interest thereon at the Maximum Lawful
Rate), (ii) the cost of recovering the Premises (including
attorneys' fees and costs of suit), (iii) any other sum of
money and damages owed by Tenant to Landlord, and (iv) an
amount equal to the then present value (discounted at the rate
of eight percent (8%) per annum) of the Rent reserved
hereunder for the remaining portion of the Term of the Lease
(had such Term not been
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terminated by Landlord prior to the date of expiration stated
in Section 2.01) less the present value (discounted at the
same rate) of the fair market rental value of the Premises for
said period; because of the difficulty of ascertaining the
fair market rental value of the Premises and the costs and
time associated with reletting the Premises.
(b) Enter upon and take possession of the Premises without
terminating the Lease ("Termination of Possession"), in which
event Tenant shall immediately surrender the Premises to
Landlord, and if Tenant fails to do so, Landlord may, without
prejudice to any other remedy, enter upon and take possession
of the Premises and expel or remove Tenant and any other
person occupying the Premises, or any part thereof, by master
key or any peaceful means or by other means available under
applicable law, including, without limitation, an action for
forcible detainer, without being liable for prosecution or any
claim of constructive eviction or for damages of any kind. In
the case of Termination of Possession, such reentry shall not
release Tenant, in whole or in part, from Tenant's obligations
hereunder, and Tenant shall be liable for and shall pay to
Landlord upon demand made from time to time, in addition to
the amounts required to be paid by Tenant under Section 12.03,
the sum of (i) all Rent and other indebtedness accrued to the
date of such repossession together with interest thereon at
the Maximum Lawful Rate), plus (ii) Rent and other sums
required to be paid by Tenant to Landlord during the remainder
of the Term of this Lease until the date of expiration of the
Term as stated Section 2.01, diminished by any net sums
thereafter received by Landlord through reletting the Premises
during said period (after deducting expenses incurred by
Landlord as provided in Section 12.03). In no event shall
Tenant be entitled to any excess of any Rent obtained by
reletting over and above the Rent herein reserved. Actions to
collect amounts due Landlord by Tenant as provided in this
paragraph may be brought from time to time, on one or more
occasions, without the necessity of Landlord's waiting until
the expiration of the Term of this Lease. If Landlord elects
to terminate Tenant's right of possession without terminating
this Lease, Landlord shall have the right at any time
thereafter to terminate this Lease by written notice to Tenant
whereupon the forgoing provisions with respect to Lease
Termination will thereafter apply. Upon any Termination of
Possession, Landlord shall use reasonable efforts to relet the
Premises on such terms and conditions as Landlord in its sole
discretion may determine (including without limitation a term
different than the Term, rental concessions, alterations and
repair of the Premises); however, Landlord shall not be
obligated to relet the Premises before leasing other portions
of the Building. Such reletting shall not be construed as an
election on the part of Landlord to
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terminate this Lease unless a written notice of such attention
be given to Tenant by Landlord. Landlord shall not be liable,
nor shall Tenant's obligations hereunder be diminished because
of, Landlord's failure to relet the Premises or collect rent
due in respect of such reletting.
(c) Enter upon the Premises by use of a master key or other
peaceable means and change, alter, and/or modify the door
locks on all entry doors of the Premises, thereby excluding
Tenant, and its agents, employees, representatives and
invitees therefrom without being liable for prosecution or any
claim of constructive eviction or for damages of any kind, and
such re-entry shall not release Tenant, in whole or in part,
from Tenant's obligations under this Lease. In the event of
Lease Termination or Termination of Possession, Landlord shall
not thereafter be obligated to provide Tenant with a key to
the Premises at any time, regardless of any amounts
subsequently paid by Tenant; provided, however, at Landlord's
option, during Landlord's normal business hours and at the
convenience of Landlord, and upon receipt of written request
from Tenant accompanied by such written waivers and releases
for damage to Tenant's property and business as Landlord may
require, Landlord may either (i) escort Tenant to the Premises
to retrieve any personal belongings or other property of
Tenant not subject to the Landlord's liens described in
Article 13 below, or (ii) obtain a list from Tenant of any
personal property not covered by said Landlord's liens,
whereupon Landlord shall remove such property and make the
same available to Tenant at a time and place designated by
Landlord; however, no such property shall be removed from the
Premises until such time as Tenant furnishes to Landlord
documentary evidence satisfactory to Landlord that such
property is not subject to said Landlord's liens. Also, Tenant
shall pay to Landlord, in cash in advance, all costs and
expenses estimated by Landlord to be incurred in removing such
property and making it available to Tenant and all moving
and/or storage charges theretofore actually incurred by
Landlord with respect to such property. If Landlord elects to
exclude Tenant from the Premises without permanently
repossessing the Premises or terminating this Lease, then
Landlord shall not be obligated to provide Tenant a key to
reenter the Premises until such time as all delinquent Rent
and other amounts due under this Lease have been paid in full
and all other defaults, if any, have been completely cured to
Landlord's satisfaction (if such cure occurs prior to any
actual Lease Termination or Termination of Possession), and
Landlord has been given assurance reasonably satisfactory to
Landlord evidencing Tenant's ability to satisfy its remaining
obligations under this Lease.
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(d) Enter upon the Premises, without terminating this Lease, by
master key or other peaceful means or by other means available
under the law, without being liable for prosecution or any
claim for constructive eviction or for damages of any kind,
and Landlord may take such action and do whatever Tenant is
obligated to do but has failed to do under the terms of this
Lease; and Tenant agrees to pay Landlord, on demand, as
additional Rent, an amount equal to all expenses which
Landlord may have incurred in thus effecting compliance with
Tenant's obligations under this Lease (including reasonable
attorneys' fees and court costs). Landlord shall not be liable
for any damages suffered by Tenant from such action whether
caused by negligence of Landlord or otherwise.
Section 12.03. Landlord's Damages and Indemnification by Tenant. In
addition to Tenant's liability to pay all Rent and other sums called for in this
Lease in accordance with Section 12.02 above, the loss or damage that Landlord
may suffer (and for which Tenant shall be liable) by reason of termination of
this Lease and/or by reason of termination of Tenant's possession of the
Premises as provided for above shall include (but is not limited to) all court
costs, the expenses of repossession, storage costs and any repairs to the
Premises and, in the event Landlord relets the Premises, the expenses of any
remodeling undertaken by Landlord following possession, plus all expenses in
reletting, including, without limitation, leasing commissions, advertising
costs, buildout costs for new tenant(s), rental inducements, attorneys' fees and
architectural fees. In any event, if an event of default occurs and Landlord
takes possession of the Premises, Landlord may immediately remove all property
from the Premises and store same or dispose of such property in such a manner as
Landlord deems appropriate, without notice to and without any liability
whatsoever to Tenant, or to any lienholders or lessors having an interest in
same, and Tenant hereby indemnifies Landlord against any and all claims, losses,
damages, costs and expenses of any kind or nature arising out of Landlord's
removal of and/or disposition of such property.
Section 12.04. Controlling Provision. The provisions of this Article 12
shall control over any conflicting provisions of the Texas Property Code or any
successor statute governing the right of landlords to change the door locks of
commercial tenants and the right of landlords to remove, store and/or dispose of
property of tenants.
Section 12.05. Election of Remedies. No re-entry or taking possession
of the Premises by Landlord, no reletting of the Premises, in whole or in part,
and no remodeling or alterations of any kind to the Premises by Landlord shall
be construed as an election on its part to terminate this Lease, unless an
express written notice of such termination be given to Tenant. Notwithstanding
any such reletting or reentry to take possession, Landlord may, at any time
thereafter, elect to terminate this Lease
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for a previous default. Furthermore, no act or thing done by Landlord or its
agents shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept a surrender of the Premises shall be valid unless the same
be made in writing and signed by Landlord.
Section 12.06. Non-Waiver Provision. The pursuit of any remedy herein
provided shall not constitute a forfeiture or waiver of any Rent due to Landlord
hereunder or of any damages accruing to Landlord by reason of the violation of
any of the terms, provisions, and covenants herein contained. Landlord's
acceptance of Rent following an event of default hereunder shall not be
construed as Landlord's waiver of such event of default. No waiver by Landlord
of any violation or breach of any of the terms, provisions, and covenants herein
contained shall be deemed or construed to constitute a waiver of any other
violation or breach of any of the terms, provisions, and covenants herein
contained. Forbearance by Landlord to enforce one or more of the remedies herein
provided upon an event of default shall not be deemed or construed to constitute
a waiver of such default. The rights and remedies provided by this Lease are
cumulative and the use of any one right or remedy by Landlord shall not preclude
or waive its right to use any or all other remedies. Said rights and remedies
are given in addition to any other rights the parties may have by law, statute,
ordinance, or otherwise.
Section 12.07. Bankruptcy or Insolvency of Tenant.
A. If Tenant becomes a debtor under Chapter 7 of the federal Bankruptcy
Code, 11 U.S.C. section 101 et seq. (the "Bankruptcy Code"), and Tenant's
trustee or Tenant elects to assume this Lease for the purpose of assigning it,
or otherwise, then that election and assignment may be made only if the
provisions of subsections B and D of this Section 12.07 are satisfied. If Tenant
or Tenant's trustee fails to elect to assume this Lease within sixty (60) days
after an order for relief is entered by the court within that sixty (60) day
period, then this Lease shall be deemed to have been rejected. Immediately after
that rejection, Landlord may repossess the Premises without further obligation
to Tenant or Tenant's trustee and this Lease shall terminate, but Landlord's
right to be compensated for damages (including, without limitation, liquidated
damages provided for under this Lease) in any such proceeding shall survive.
B. If a petition for reorganization or adjustment of debts is filed
concerning Tenant under Chapter 11 of the Bankruptcy Code, or a proceeding is
filed under Chapter 7 of the Bankruptcy Code and is converted to a Chapter 11
case, then Tenant's trustee or Tenant, as debtor-in-possession, must elect to
assume this Lease within one hundred twenty (120) days after an order for relief
is entered against Tenant, or Tenant's trustee or the debtor-in-possession shall
be deemed to have rejected this Lease. If Tenant, Tenant's trustee or the
debtor-in-possession fails to perform all of Tenant's obligations under this
Lease within the time periods
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(excluding grade periods) required for that performance, then no election by
Tenant's trustee or the debtor-in-possession to assume this Lease, whether under
Chapter 7 or Chapter 11, is effective unless each of the following conditions
have been satisfied:
(i) Tenant's trustee or the debtor-in-possession cures all
defaults under the Lease, or provides Landlord with Assurance (as
defined below) that it will cure (y) all defaults that can be cured by
the payment of money within ten (10) days from the date of such
assumption, and (z) all other defaults under this Lease that can be
cured by the performance of the act needed to effect the cure promptly
after the date of assumption;
(ii) Tenant's trustee or the debtor-in-possession compensates,
or provides Landlord with Assurance that within ten (10) days from the
date of such assumption it will compensate, Landlord for any actual
pecuniary loss incurred by Landlord arising from the default of Tenant,
Tenant's trustee, or the debtor-in-possession as indicated in any
statement of actual pecuniary loss sent by Landlord to Tenant's trustee
or the debtor in possession;
(iii) Tenant's trustee or the debtor-in-possession provides
Landlord with Assurance of the future performance of the obligations of
Tenant under this Lease by Tenant's trustee or the
debtor-in-possession, and if that Assurance has been provided, Tenant's
trustee or the debtor-in-possession shall also deposit with Landlord,
as security for the timely payment of all rent under this Lease, an
amount equal to three (3) months of Base Monthly Rent plus an amount
equal to three-twelfths (3/12) of Tenant's Pro Rata share of the
Estimated Operating Expense Increase as set forth in Section 3.03
above. The obligations imposed on Tenant's trustee or the
debtor-in-possession shall continue with respect to Tenant or any
assignee of this Lease after the completion of bankruptcy proceedings;
and
(iv) The assumption will not breach or cause a default under
any provision of any mortgage, financing agreement or other agreement
by which Landlord is bound relating to the Building, the Project or the
Premises.
For purposes of this Section 12.07, Landlord and Tenant acknowledge
that "Assurance" means no less than Tenant's trustee or the debtor-in-possession
has and will continue to have sufficient unencumbered assets after the payment
of all secured obligations and administrative expenses to assure Landlord that
sufficient funds will be available to fulfill the obligations of Tenant under
this Lease and there has been deposited with Landlord or the Bankruptcy Court
has entered an order segregating, sufficient cash payable to Landlord, and/or
Tenant's trustee or the debtor-in-possession shall have granted to Landlord a
valid and perfected first lien and security interest and/or mortgage in property
of Tenant, Tenant's trustee or the debtor-in-possession, acceptable as to value
and kind to Landlord, to secure the
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obligation of Tenant, Tenant's trustee or the debtor-in-possession to cure the
defaults under this Lease, monetary and/or non-monetary, within the time periods
set forth above.
C. If this Lease is assumed in accordance with subsection B above and
thereafter Tenant is liquidated or files a petition for reorganization or
adjustment of debts under Chapter 11 of the Bankruptcy Code, Landlord may, at
Landlord's option, terminate this Lease and all rights of Tenant hereunder by
giving Tenant written notice of Landlord's election so to terminate within
thirty (30) days after the occurrence of either of such events.
D. (a) If Tenant's trustee or the debtor-in-possession assumes this
Lease pursuant to the terms and provisions of subsections A and B above for the
purpose of assigning (or otherwise elects to assign) this Lease to an assignee,
then this Lease may be so assigned only if the proposed assignee provides
adequate assurance of future performance of all of the terms, covenants and
conditions of this Lease to be performed by Tenant, including, without
limitation, the obligation to pay Base Monthly Rent, Additional Rent and any
other Rent under this Lease. As used herein, "adequate assurance of future
performance" means that no less than each of the following conditions has been
satisfied:
(i) The proposed assignee has furnished Landlord with either
(I) a current financial statement audited by a certified public
accountant indicating a net worth and working capital in amounts that
Landlord reasonably determines are sufficient to assure the future
performance by the assignee of Tenant's obligations under this Lease or
(II) a guaranty, or guaranties, in form and substance satisfactory to
Landlord from one or more persons with a net worth and working capital
in amounts that Landlord reasonably determines are sufficient to assure
the future performance of Tenant's obligations under this Lease;
(ii) Landlord has obtained from others required under any
mortgage, financing arrangement, master agreement relating to the
Premises, or other agreement by which Landlord is bound all consents or
waivers necessary to permit Landlord to consent to the assignment, such
that the assignment will not cause Landlord to be in default under any
such other agreement;
(iii) The proposed assignment will not release or impair any
guaranty of the obligations of Tenant (including the proposed assignee)
under this Lease; and
(iv) The proposed assignee and its guarantors have a
demonstrated financial condition and operating performance similar or
superior to that of Tenant at the date that Tenant became a tenant
hereunder.
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(b) Any and all monies or other considerations payable or otherwise to
be delivered in connection with the assignment referred to in this subparagraph
(D) shall be paid or delivered to Landlord, shall be and remain the exclusive
property of Landlord, and shall not constitute property of Tenant or of the
estate of Tenant within the meaning of the Bankruptcy Code. Any and all monies
or other considerations constituting Landlord's property under the preceding
sentence not paid or delivered to Landlord shall be held in trust for the
benefit of Landlord and be promptly paid to or turned over to Landlord.
(c) Any person or entity to which this Lease is assigned pursuant to
the provisions of the Bankruptcy Code shall be deemed without further act or
deed to have assumed all of the obligations arising under this Lease on and
after the date of such assignment. Any such assignee shall on demand execute and
deliver to Landlord an instrument confirming the assumption.
E. When, pursuant to the Bankruptcy Code, Tenant's trustee or the
debtor-in-possession is obligated to pay reasonable use and occupancy charges
for the use of the Premises, the charges shall not be less than the Base Monthly
Rent, Additional Rent and all other Rent payable by Tenant under this Lease.
F. Neither the whole nor any portion of Tenant's interest in this Lease
or its estate in the Premises shall pass to any trustee, receiver, assignee for
the benefit of creditors, or any other person or entity, or otherwise by
operation of law under the laws of any state having jurisdiction of the person
or property of Tenant, unless Landlord has consented to the transfer in writing.
No acceptance by Landlord of Rent or any other payments from a trustee,
receiver, assignee, person or other entity shall be deemed to constitute such
consent by Landlord, nor shall it be deemed a waiver of Landlord's right to
terminate this Lease for transfer of Tenant's interest under this Lease without
such consent.
G. Landlord and Tenant acknowledge, for themselves and for each of
their successors or assigns, the importance of the tenant mix of the Premises,
including their creditworthiness. In this regard, they acknowledge their intent
to have the applicable provisions of Section 365 of the Bankruptcy Code, or any
successor provisions, apply to this Lease.
Section 12.08. Default by Landlord. Except as provided in Section 5.03,
Landlord shall be in default under this Lease only if Landlord has failed,
within thirty (30) days from the receipt by Landlord of written notice from
Tenant of an alleged default by Landlord (specifying such default with
reasonable detail), to begin and to pursue with reasonable diligence the cure of
any alleged default of Landlord hereunder. Tenant agrees that, in addition the
notice to Landlord, Tenant shall give Landlord's Mortgagee (of which Tenant has
notice) written notice and a reasonable time to cure any default by Landlord
prior to the exercise of any right or remedy of
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Tenant. Unless or until Landlord or Landlord's Mortgagee fails to cure any
default after the receipt of such written notice and the passage of such time,
Tenant shall not have any remedy or cause of action by reason thereof. In the
event of any default by Landlord hereunder, Tenant's exclusive remedy shall be
an action for damages (Tenant hereby waiving the benefit of any laws granting it
a lien upon the property of Landlord and/or upon the Base Monthly Rent,
Additional Rent or other Rent due to Landlord or the right to terminate this
Lease). All obligations of Landlord hereunder shall be construed as covenants,
not conditions, and all such obligations shall be binding upon Landlord only
during the period of its ownership of the Building, and not thereafter. The term
"Landlord" shall mean only the owner, for the time being, of the Building, and
in the event of the transfer by such owner of its interest in the Building, such
owner shall thereupon be released and discharged from all covenants and
obligations of the Landlord thereafter accruing, but such covenants and
obligations shall be binding during the Term upon each new owner of the Building
for the duration of such owner's ownership of the Building.
Section 12.09. Liability of Landlord. Any provision of this Lease to
the contrary notwithstanding, Tenant hereby agrees that no personal or corporate
liability of any kind or character whatsoever now attaches or at any time
hereafter under any condition shall attach to Landlord or any of Landlord's
successors and assigns or any future owner of the Building for payment of any
amounts under this Lease or for the performance of any obligations of Landlord
under this Lease. The exclusive remedy of Tenant for the failure of Landlord to
perform any of its obligations under this Lease shall be to proceed against the
interest of Landlord in and to the Building, and in no event shall Landlord nor
any of its shareholders, officers, directors, agents or employees be personally
or corporately liable for any judgment or deficiency. Under no circumstances
whatsoever shall Landlord ever be liable hereunder for consequential damages or
special damages.
ARTICLE 13 - LANDLORD'S LIEN
Section 13.01. Landlord's Lien and Security Interest.
Section 13.02. Security Agreement.
ARTICLE 14 - SECURITY DEPOSIT
Section 14.01. Security Deposit. To secure the full and faithful
performance by Tenant of the covenants, conditions and agreements set forth in
this Lease to be performed by it, Tenant has simultaneous with the execution of
this Lease delivered to Landlord on the date Tenant has executed this Lease the
sum of $19,000.00 (the "Security Deposit") on the understanding: (a) that the
Security Deposit, or any portion thereof may be applied by Landlord to the
curing of any default by Tenant, without prejudice to any other remedy or
remedies which the Landlord may have on account
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thereof, and upon such application Tenant shall pay Landlord on demand the
amount so applied, such that the Security Deposit by Landlord will be restored
to its original amount; (b) that should the Premises be conveyed by Landlord,
the Security Deposit or any balance thereof may be turned over to Landlord's
grantee or assignee and, if the same be turned over as aforesaid, Tenant hereby
releases Landlord from any and all Liability with respect to the Security
Deposit and its application or return, and Tenant agrees to look solely to such
grantee or assignee for such application or return; (c) that Landlord shall not
be obligated to hold the Security Deposit as a separate fund, but may commingle
it with other funds; (d) that Landlord shall not be liable for any interest on
such sum, Tenant expressly waiving any right to interest thereon; and (e) that
if Tenant shall faithfully perform all of the covenants and agreements in this
Lease to be so performed by Tenant, the Security Deposit, or any then remaining
balance shall be returned to Tenant, without interest, within thirty (30) days
after the sixty-sixth (66th) month of the Lease, provided, that Tenant furnishes
Landlord with written notice of Tenant's forwarding address, and provided
further that Landlord shall have the right to retain and expend the Security
Deposit for cleaning and repairing the Premises if Tenant fails to deliver the
Premises at the termination of this Lease in a neat and clean condition and in
as good a condition as existed at the date of possession of same by Tenant,
ordinary wear and tear only excepted. Tenant shall not assign or encumber or
attempt to assign or encumber the Security Deposit or any part thereof and
Landlord shall not be bound by any such assignment or encumbrance.
ARTICLE 15 - ENVIRONMENTAL PROVISIONS
Section 15.01. Covenants and Agreements. Tenant covenants and agrees
from the date hereof and so long as this Lease shall remain in effect not to
cause or permit the presence, use, generation, release, discharge, storage,
disposal, or transportation of any Hazardous Materials (as hereinafter defined)
on, under, in, about, to, or from the Premises by Tenant, Tenant's agents,
representatives, employees, contractors, guest or invitees. Notwithstanding the
foregoing, Tenant hereby covenants and agrees to promptly remove from the
Premises, as required by law, any Hazardous Materials discovered thereon, and to
comply in all respects with all federal, state, and local governmental laws and
regulations governing such removal, with title to all such Hazardous Materials
to remain, and be stored or disposed of, in Tenant's name.
As used herein, the term "Hazardous Materials" shall include, without
limitation, asbestos or any substance containing asbestos and deemed hazardous
under any Hazardous Material Law (defined below), the group of organic compounds
known as polychlorinated biphenyls, flammable explosives, radioactive materials,
chemicals known to cause cancer or reproductive toxicity, pollutants, effluents,
contaminants, emissions or related materials and any items included in the
definition of hazardous or toxic waste, materials or substances under any law
relating to environmental conditions and industrial hygiene, including without
limitation, the
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Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901
et seq., the Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA"), 42 U.S.C. Section 9601-9657, as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), the Hazardous Materials
Transportation Act, 49 U.S.C. Section 6901, et seq., the Federal Water Pollution
Act, 33 U.S.C. Section 7401, et seq, the Toxic Substances Control Act, 15 U.S.C.
Section 2601-2629, the Safe Drinking Water Act, 42 U.S.C. Section 300f-300j, and
all similar federal, state and local environmental statutes, ordinances, and the
regulations, orders, decrees now or hereafter promulgated thereunder
(collectively the "Hazardous Material Law"), excluded however, are common
cleaning materials to the extent such are used, stored and handled in accordance
with applicable environmental laws.
As a material Inducement to Landlord to execute and deliver this Lease. Tenant
agrees that it will accept the Premises and leasehold improvements therein
(other than the leasehold improvements to be constructed by the Landlord) in it
AS IS condition, WITH ALL FAULTS; provided, however, no such acceptance by
Tenant shall extend to latent defects. Tenant acknowledges that neither Landlord
nor any of its purported representative or agents has made (and except as noted
above Landlord hereby specifically disclaims any and all) representations and
warranties of any kind or character as to the physical condition of the Premises
and any non-standard equipment located in the Premises (other than the leasehold
improvements to be constructed by the Landlord), either express or implied,
including without limitation, warranties of fitness for any purposes or any
particular use or commercial habitability. Tenant acknowledges that Landlord
does not warrant that the Premises or the Building are free from asbestos or
asbestos containing material or from any other hazardous materials or substances
(as defined below). Tenant acknowledges that it has been provided a copy of a
letter dated April 6, 1990, from Lay Su Associates, Inc. regarding environmental
issues on the Project. Landlord indicates that there is an environmental
engineering report on the Building which reports (the "Reports") reflect the
existence of nominal amounts of asbestos in the Building which was removed in
accordance with applicable governmental regulations. Tenant agrees that the
existence of asbestos of the type and nature of that reflected in the Reports in
its present form in the Building shall not constitute an eviction, actual or
constructive, of Tenant or entitle Tenant to offset against its obligations
hereunder; provided, however if subsequent to the date hereof (i) hazardous
materials or substances of any kind are brought into the Building through no act
or omission of Tenant, its agents, contractors or employees, or hazardous
materials or substances are found to exist in the Building or (ii) the form of
the asbestos existing in the Building as of the date hereof is changed though no
act of Tenant, its agents, contractor or employees, such that, in either case,
the same are of the nature and quantity that they constitute a present threat to
the health of Tenant's employees, as determined by or set forth in standards
promulgated or adopted by the City of Houston, State of Texas or other health or
governmental officials with jurisdiction over the same, or otherwise render the
Leased Premises unusable in substantially the same manner as prior to the
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discovery of such hazardous material or substance, then the Rent due under this
Lease shall abate commencing one (1) day after the date such materials are
determined to constitute a present threat or the Premises have been rendered
unusable to the extent and in the proportion that the Premises are unusable in
substantially the same manner prior to the discovery until they are usable.
Moreover, if Landlord is unable to remedy the same during the Environmental Cure
Period (as hereinafter defined), Tenant shall have the right (in addition to its
right to abate rent as described above), to terminate this Lease by providing
written notice to Landlord to such effect within thirty (30) days after the
expiration of the Environmental Cure Period. As used herein, the term
"Environmental Cure Period" shall mean a period of sixty (60) days commencing on
the date Landlord receives notice of such hazardous material or substance, or
such longer period (not to exceed one hundred eighty (180) days as may be
reasonably required to remedy such condition provided that Landlord commences
such remedial efforts within said sixty (60) day period and thereafter
diligently prosecutes the same to completion. Tenant and Landlord shall endeavor
in good faith to provide Tenant temporary premises until the condition is
corrected, if such interruption continues for five (5) consecutive days. In the
event Tenant elects to move out without terminating this Lease, such cost to
move out and to pay for temporary premises (to the extent reimbursable by
Tenant's business interruption insurance) shall be paid by Tenant and to the
extent such cost is not reimbursable, such cost shall be paid by Landlord
provided Tenant does not terminate the Lease following the Environmental Cure
Period.
Section 15.02. Environmental Indemnification. Tenant agrees to
exonerate, indemnify, pay and protect, defend (with counsel reasonably approved
by Landlord), and save Landlord and the directors, officers, shareholders,
employees, and agents of Landlord harmless from and against any claims
(including, without limitation, third party claims for personal injury or real
or personal property damage), actions, administrative proceedings (including
informal proceedings), judgments, damages, (including, without limitation, a
decrease in value of the Premises, damages caused by loss or restriction of
rentable or usable space, or any damages caused by adverse impact on marketing
of the Premises and Building), punitive damages, penalties, fines, costs,
liabilities (including sums paid in settlement of claims), interest, or losses,
including reasonable attorneys' fees and expenses (including, without
limitation, any such fees and expenses incurred in enforcing this Lease or
collecting any sums due hereunder), consultant fees, and expert fees, together
with all other costs and expenses of any kind or nature (collectively, the
"Costs") incurred during or after the Term of this Lease that arise directly or
indirectly from or in connection with the presence, suspected presence, release,
or suspected release of any Hazardous Materials in or into the air, soil,
groundwater, or surface water within the Premises, or any portion thereof, or
elsewhere in connection with the transportation of Hazardous Materials to or
from the Premises. The indemnification provided in this Section shall
specifically apply to and include claims or actions brought by or on behalf of
employees of Tenant or Tenant's other Parties for whom Tenant has legal
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responsibility. ln the event Landlord shall suffer or incur any such Costs,
Tenant shall pay to Landlord the total of all such Costs suffered or incurred by
Landlord upon demand by Landlord. Without limiting the generality of the
foregoing, the indemnification provided in this Section shall specifically cover
Costs, including capital, operating, and maintenance costs, incurred in
connection with any investigation or monitoring of site conditions, any
clean-up, containment, remedial, removal, or restoration work required or
performed by any federal, state, or local governmental agency or political
subdivision or performed by any nongovernmental entity or person because of the
presence, suspected presence, release, or suspected release of any Hazardous
Materials in or into the air, soil, groundwater, or surface water within the
Premises (or any portion thereof), or elsewhere in connection with the
transportation of Hazardous Materials to or from the Premises and any claims of
third parties for loss or damage due to such Hazardous Materials.
Section 15.03. Remedial Work. In the event any investigation or
monitoring of site conditions or any clean-up, containment, restoration,
removal, or other remedial work (collectively the "Remedial Work") is required
under any applicable federal, state, or local law or regulation, by any judicial
order, or by any governmental entity, or in order to comply with any agreements
affecting the Premises because of, or in connection with, any occurrence or
event described in Sections 15.01 or 15.02 or elsewhere in this Article 15,
Tenant shall perform or cause to be performed the Remedial Work in compliance
with such law, regulation, order, or agreement. All Remedial Work shall be
performed by one or more contractors, selected by Landlord and under the
supervision of a consulting engineer, selected by Landlord. All costs and
expenses of such Remedial Work shall be paid by Tenant including, without
limitation, the charges of such contractor(s) and/or the consulting engineer,
and Landlord's reasonable attorneys' fees and costs incurred in connection with
monitoring or review of such Remedial Work. In the event Tenant shall fail to
timely commence, or cause to be commenced, or fail to diligently prosecute to
completion such Remedial Work, Landlord may, but shall not be required to, cause
such Remedial Work to be performed, and all costs and expenses thereof, or
incurred in connection therewith shall be Costs within the meaning of Section
15.02 above. All such Costs shall be due and payable upon demand therefor by
Landlord.
Section 15.04. Notice of Claims. Tenant shall give notice to Landlord
of any claim, action, administrative proceeding (Including, without limitation,
informal proceedings), or other demand by any governmental agency or other third
party involving Costs or Remedial Work at the time such claim or other demand
first becomes known to Tenant. Receipt of any such notice shall not be deemed to
create any obligation on Landlord to defend or otherwise respond to any claim or
demand.
Section 15.05. Subrogation of Indemnity Rights. If Tenant fails to
perform its obligations under this Article 15 and Landlord performs in its
stead, Landlord shall be subrogated to any rights Tenant may have under any
indemnifications from any
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present, future, or former owner's, tenants, or other occupants or users of the
Premises or any portion thereof), relating to the matters covered by this
Article 15.
Section 15.06. Survival. The provisions of this Article 15 shall
expressly survive the expiration of the Lease Term.
ARTICLE 16 - NOTICE
Section 16.01. Notice. Any notice which may or shall be given under the
terms of this Lease shall be in writing and shall be either delivered by hand or
sent by United States Registered or Certified Mail, Return Receipt Requested and
postage prepaid; if for Landlord, to the Building office, located at 7322
Southwest Freeway, Suite 110, Houston, Texas 77074; or, if for Tenant, to the
Premises as defined below. Such addresses may be changed from time to time by
either party giving not less than ten (10) days prior notice as provided above.
Notice shall be deemed given when delivered (if delivered by hand) or when
postmarked (if sent by mail).
At the commencement of this Lease, operational Notices to Tenant shall be sent
to:
Name: CardMember Publishing Corporation
Address: 7324 Southwest Freeway, Suite 2000
City & State: Houston, TX 77074
Attn: Houston Office Manager
All Default and or Estoppel notices shall be sent to:
COPY TO: Name: CardMember Publishing Corporation
Address: 680 Washington Blvd.
City & State: Stamford, CT 06901
Attn: Steven H. Levenherz, Senior Vice President
Telephone: (203) 324-7635 Fax: (203) 969-0812
ARTICLE 17 - MISCELLANEOUS
Section 17.01. Financial Statements. Upon written request by Landlord
in cases of refinance of the Building Mortgage or other cases where required by
Landlord's mortgage or bank. Tenant shall deliver to Landlord current financial
statements, including, without limitation, balance sheets, profit and loss
statements, reconciliations of capital and surplus, changes in financial
condition, schedules of sources and applications of funds, and operating
statements with respect to the
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business of Tenant, all of which shall, at the request of Landlord, be certified
by a corporate officer.
Section 17.02. Corporate Authority. If Tenant executes this Lease as a
corporation, each of the persons executing this Lease on behalf of Tenant does
hereby personally covenant and warrant that Tenant is a duly authorized and
existing corporation, that Tenant is qualified to do business in Texas, that the
corporation has full right and authority to enter into this Lease, and that each
person signing on behalf of the corporation was authorized to do so. Upon
execution of this Lease, Tenant shall furnish Landlord with a current
Certificate of Existence and Good Standing issued by the applicable State of
Tenant's incorporation together with a certified copy of a corporate resolution
authorizing the execution of this Lease and authorizing the named officer(s)
executing this Lease to so execute this Lease on behalf of Tenant.
Section 17.03. Use of Name. Tenant shall not, except to designate
Tenant's business address (and then only in a conventional manner and without
emphasis or display), use the name or mark "Arena Tower" or any similar name for
any purpose whatsoever, and in no event shall Tenant acquire any rights in or to
such name.
Section 17.04. Rules and Regulations. Tenant, its servants, employees,
agents, visitors, invitees, and licensees, shall observe faithfully and comply
strictly with the Rules and Regulations set forth In Exhibit "E" hereto, and
shall abide by and conform to such further rules and regulations as Landlord may
from time to time reasonably make, amend or adopt, after Tenant receives a copy
thereof.
Section 17.05. Inability to Perform. If, by reason of inability to
obtain and utilize labor, materials, equipment, or supplies, or by reason of
circumstances directly or indirectly the result of any state of war or national
or local emergency, or by reason of any laws, rules, orders, regulations,
action, non-action, or requirements of any governmental authority now or
hereafter in force, or by reason of strikes or riots, or by reason of accidents
in, damage to, or the making of repairs, replacements, or improvements to the
Building, the Building parking garage or the Premises, or any of the equipment
of either, or by the reason of any other cause beyond the reasonable control of
Landlord, Landlord shall be unable to perform or shall be delayed in the
performance of any obligation hereunder, then this Lease and the obligation of
Tenant to pay the Base Monthly Rent or Additional Rent and to perform and comply
with all of the other covenants and agreements hereunder shall in no way be
affected or impaired, except as provided for in Section 5.03 Service
Interruption, and such nonperformance or delay in performance by Landlord shall
not constitute a breach or default by Landlord under this Lease nor give rise to
any claim against Landlord for damages or constitute a total or partial
eviction, constructive or otherwise. Landlord shall exercise reasonable
diligence in undertaking to remedy such inability to perform
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or delay in performance with all reasonable dispatch, but shall not be required
to adjust a labor dispute against its will.
Section 17.06. Broker. Tenant and Landlord both warrant and represent
that each has had no dealings with any third party real estate broker or agent
in connection with the negotiation of this Lease, excepting only Arena Tower
Management Corporation and CB Commercial Real Estate Group, Inc., and that it
knows of no other third party real estate broker(s) or agent(s) who is (are) or
might be entitled to a commission in connection with this Lease. Tenant and
Landlord each agree to indemnify and hold harmless the other from and against
any liability or claim (including the costs of defending against and
investigating such claims) arising in respect to any broker(s) not named herein
who is (are) claiming by, through or under the indemnifying party. Tenant may,
at Tenant's option, elect to compensate such named broker and in such event,
Landlord shall be relieved of any liability whatsoever for payment of any and
all brokers' compensation; otherwise, Landlord shall negotiate with and, if
applicable, compensate such broker. In the event Tenant fails to occupy the
Premises or fails to commence payment of Rent or fails to pay any Base Monthly
Rent, Additional Rent or any other Rent under the terms of the Lease or
otherwise defaults under the Lease, Tenant shall reimburse Landlord an amount
equal to all brokerage commissions paid by Landlord by virtue of execution of
this Lease and/or pursuant to any commission agreement executed by and between
broker and Landlord. All sums which become payable by Tenant to Landlord
hereunder shall be deemed Rent for purposes of this Lease.
Section 17.07. Time of Essence. Time is of the essence in this Lease
and in each and all of its provisions.
Section 17.08. Memorandum of Lease. Without the prior written consent
of Landlord (which may be granted or withheld in Landlord's sole discretion),
Tenant shall not record this Lease or a memorandum or other instrument with
respect to this Lease. Upon the date of execution of this Lease, or at any time
thereafter, and at the request of Landlord, Tenant and Landlord shall execute a
memorandum in recordable form setting forth the material terms and conditions of
this Lease.
Section 17.09. Severability. If any term or provision of this Lease
shall, to any extent, be held invalid, void, illegal, or unenforceable by a
final judgment of a court of competent jurisdiction, the remaining provisions of
this Lease and application thereof to other persons shall not be affected
thereby and shall be enforced to the greatest extent permitted by law.
Section 17.10. Parties and Successors. Subject to the limitations and
conditions set forth elsewhere herein, this Lease shall bind and inure to the
benefit of the respective heirs, legal representatives, successors, and
permitted assigns and/or sublessees of the parties hereto.
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Section 17.11. Governing Law. This Lease shall be governed by and
construed in accordance with the laws of the State of Texas. All monetary and
other obligations of Landlord and Tenant hereunder are performable in Harris
County, Texas, and venue for any action concerning this Lease shall lie in
Harris County, Texas.
Section 17.12. Number; Gender; Captions; References; Headings.
Pronouns, where used herein, of whatever gender, shall include natural persons,
corporations, and associations of every kind and character, and the singular
shall include the plural and vice versa where and as often as may be
appropriate. Article and section headings under this Lease are for convenience
of reference and shall not affect the construction or interpretation of this
Lease. Whenever the terms "hereof", "hereby", "herein", or words of similar
import are used in this Lease, they shall be construed as referring to this
Lease in its entirety rather than to a particular section or provision, unless
the context specifically indicates to the contrary. Any reference to a
particular "Article" or "Section" shall be construed as referring to the
indicated article or section of this Lease. The Table of Contents and the
descriptive headings of this Lease are inserted for convenience in reference
only and do not in any way limit or amplify the terms and provisions of this
Lease. Exhibits to this Lease arc incorporated within its terms and provisions
by this reference for all purposes.
Section 17.13. Renewal. Should this Lease be extended renewed by
written agreement of the parties, (Tenant having no such rights or option to
extend or renew this Lease unless otherwise expressly set forth elsewhere in
this Lease), any such renewal, at Landlord's request and at Landlord's option,
shall be documented on Landlord's standard lease form being used by Landlord for
leases in the Building at that time.
Section 17.14. Attorney's Fees. If on account of any breach or default
by either party hereunder it shall become necessary for the other party hereto
to employ an attorney to enforce or defend any of said parties' rights or
remedies hereunder, then the non-performing party shall reimburse the other
party for its reasonable attorneys' fees and costs incurred by reason of such
breach or default.
Section 17.15. Substitution of Premises.
Section 17.16. Additional Documents. Tenant agrees that it will from
time to time execute and deliver to Landlord such other and further instruments
and assurances as Landlord may reasonably request, approving, ratifying and
confirming this Lease and/or the obligations of either of the parties hereunder.
Section 17.17. Non-waiver. The failure of Landlord or Tenant to insist
on the strict performance of any covenant or agreement, or the failure of
Landlord to exercise any option, right or remedy contained in this Lease, shall
not be construed as a future waiver or a relinquishment thereof. Landlord shall
not be considered to
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have waived a provision of this Lease unless such waiver is
specifically expressed in a writing signed by Landlord, and only for the time
and in the manner specifically stated. Landlord's receipt of Rent with knowledge
of the breach of a covenant or agreement contained in this Lease shall not be
deemed a waiver of the breach. No acceptance by Landlord of a lesser amount than
the installment of Rent due shall be considered, nor shall any endorsement or
statement on any check or any letter accompanying any check or payment as Rent
be deemed, an accord and satisfaction. Landlord may accept a check or payment
without prejudice to Landlord's right to recover the balance of the Rent due or
to pursue any other remedy provided in this Lease.
Section 17.18. Additional Provisions.
TERMINATION OPTION: Provided Tenant is not in default of this Lease, Landlord
shall grant Tenant a one (1) time option to terminate this Lease by giving
Landlord written notice no later than the first day of the sixty-sixth (66th)
month of this Lease, that Tenant shall have the right to terminate the Lease
either at: 1) the end of the seventy-fifth (75th) month of the Lease in which
case along with such notice Tenant shall pay a termination fee in the amount of
$75,000.00; or (2) at the end of the eighty-third (83rd) month and no
termination fee shall be required. Should Tenant fail to notify Landlord of its
election to terminate in a timely manner then such option shall be null and void
and the Lease shall remain in full force and effect.
REFURBISHMENT ALLOWANCE: Provided Tenant is not in default and Tenant has waived
the Termination Option. Landlord shall provide Tenant, beginning with the 67th
month, a refurbishment allowance equal of up to $3.00 per rentable square foot
of the initial Premises and such amount shall be credited to Tenant for next
month(s) Monthly Base Rental due.
CARDKEY ACCESS: Landlord shall provide up to one hundred seventy-five (175)
cardkeys for after hour access to the Building, at no cost to Tenant. Tenant
shall pay Landlord for any additional cardkeys in excess of the 175 cardkeys
provided by Landlord. Landlord agrees that Tenant shall have the right to adapt
the Landlord's access system to incorporate access to Tenant's Leased Premises
on Tenant's floor. Such changes shall be approved by Landlord in writing prior
to any changes or installation being facilitated. The costs of such shall be
deducted from the Tenant Improvement Allowance as described in Exhibit "C" of
this Lease Agreement (approximately $12,000.00). Tenant shall waive any
liability against Landlord for use of the access system. Tenant shall be
responsible for the cost of equipment used in the Leased Premises and the repair
and maintenance of such.
SIGNAGE: Tenant shall have the right to a monument sign which will only display
Tenant's name at street level on the Fondren Street side of the property. Tenant
shall have the right to such monument when Tenant achieves two (2) full floors
of
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occupancy. Tenant will provide for costs of creation and installation of
sign. Design of signage will be mutually approved and Landlord approval shall
not be unreasonably withheld. The sign shall be of material consistent with
existing Building graphics.
EXPANSION OPTION & RECURRING PREFERENTIAL RIGHT: Subject to Tenant not being in
default, Tenant is granted the following Expansion Option & Recurring
Preferential Right.
Tenant shall have the right to expand the Leased Premises on the nineteenth
(19th) floor of the Building in the amount of no less than 10,264 square feet of
net rentable area and not more than 20,528 square feet of net rentable area
commencing on April 1, 1997. Tenant shall notify Landlord in writing not less
than three (3) months prior to April 1, 1997 of Tenant's election to expand and
such notice shall include the amount of square footage Tenant is leasing.
Commencement shall be the earlier of occupancy or April 1, 1997.
Tenant shall also be ranted a recurring preferential right and the above
Expansion Option shall be null and void and replaced by the Recurring
Preferential Right as follows:
1. Provided that there is at least one (1) full year remaining on the Term
hereof. each time during the Term, Landlord desires to enter into a lease with a
person or entity (referred to as "Third Party") covering directly or indirectly
(such as by preferential right, expansion right, option or otherwise) all or any
portion of the Preferential Right Space (the "PR Space"). Landlord shall give
written notice (the PR Notice") to Tenant of the fact that such Preferential
Right Space may be leased to a Third Party or may be made the subject of a right
or option in or to a Third Party or may be made the subject of an option to
lease to a Third Party, said PR Notice to contain the Rentable Area and location
of the Preferential Right Space [such Rentable Area to include an add-on factor
for the conversion of usable area to rentable area of eighteen percent [18%]]
and the anticipated lease commencement date applicable to such third party
lease. Tenant shall then have a period of five (5) business days from receipt of
Landlord's PR Notice to affirmatively exercise its Preferential Right to include
such Preferential Right Space under the Lease by providing written notice
(Tenant's "Acceptance Notice") of same to Landlord within such five (5) day
period.
In the event Landlord has ranted preferential. expansion or other options or
rights to other tenants with respect to PR Space prior to the Commencement Date
of this Lease, then Tenant's rights to exercise on the 19th floor, this
Preferential Right shall be subject and subordinate to such rights or options
and shall become effective only if the other tenants to whom Landlord has
previously granted such preferential, expansion or other options or rights with
respect to the PR Space decline to exercise such options or rights. All such
tenants have Landlord relocation rights, and should
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Tenant desire to have Landlord relocate such tenants prior to expiration of
their leases, Tenant shall notify Landlord of such election and the costs of
relocating such tenants shall be deducted from the Expansion Improvement
Allowance.
2. For the purposes hereof the Phrase "Preferential Right Space" or "PR Space"
shall refer to all the rentable space on the eighteenth (18th) and nineteenth
(19th) floors of the Building as indicated on the floor plan drawing attached
hereto as Exhibit "I-1".
3. In the event Tenant fails to affirmatively exercise its Preferential Right by
timely delivery to Landlord of the said Tenant's Acceptance Notice, as more
particularly specified in Section 1 hereof, then Tenant shall conclusively be
deemed to have forfeited and waived its Preferential Right to lease the
Preferential Right Space identified in Landlord's PR Notice: provided, however,
Tenant shall again have the Preferential Right herein granted with respect to
the PR Space or applicable portion thereof if (i) a lease is not executed
covering such space within six (6) months of the date Landlord provided Tenant
written notice of the availability or (ii) when the applicable lease, right or
option of a Third Party and any and all renewals and extensions thereof expire
or terminate, all subject to the Conditions set forth in Section 1 above. In the
event Tenant affirmatively exercises its Preferential Right by timely delivery
to Landlord of the said Tenant's Acceptance Notice (as more particularly
specified in Section 1 hereof), or if Tenant shall by written notice elect to
waive (or by failure to timely deliver to Landlord the said Tenant's Acceptance
Notice, waive), it's Preferential Right to lease the Preferential Right Space
identified in Landlord's PR Notice, then in either such event, Tenant shall not
thereafter be entitled to revoke either such election, or such waiver of its
right, to lease such Preferential Right Space.
4. In the event Tenant timely and affirmatively exercises its Preferential
Right, pursuant to the provisions of this Exhibit, to lease the Preferential
Right Space specified in Section 2 hereof (or in Landlord's PR Notice if less
than all of the Preferential Right Space specified in Section 2 hereof),
Landlord shall Prepare an amendment to this Lease to include such Preferential
Right Space in Tenant's Premises. Tenant agrees to execute said amendment to the
Lease and deliver the same to Landlord not later that fourteen (14) calendar
days after receipt of said amendment from Landlord in a form satisfactory to
Tenant and Landlord. Provided Landlord has not agreed in writing to extend the
Period which Tenant has to execute and deliver the amendment to Landlord, then
failure of Tenant to timely execute and deliver to Landlord the Lease amendment
aforesaid shall cause the Preferential Right of Tenant to lease such
Preferential Right Space to be null and void and of no further force and effect.
5. Upon Tenant's execution and delivery to Landlord of the Lease amendment (as
specified in Section 4 hereof), references in the Lease to the Premises shall,
except
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where the context otherwise indicates and subject to any provision of the
Lease or any exhibit thereto (including this Exhibit) that treat the Initial
Premises differently from such Preferential Right Space, include the
Preferential Right Space so leased, and, as part of the Premises, shall be
subject to and governed by the same terms, covenants and conditions of the Lease
applicable to the Initial Premises.
6. In the event delivery of any Preferential Right Space to Tenant shall be
delayed for any reason, outside the control of Landlord, Tenant's sole and
exclusive remedy for such delay shall be to postpone the commencement of its
obligation to pay Rent with respect to the Preferential Right Space only, until
such time the Preferential Right Space is tendered to Tenant, and in no event
shall Landlord be liable to Tenant for any damages whatsoever resulting from any
such delay. Landlord shall use all reasonable efforts to provide Tenant the PR
Space as soon as possible.
7. The Preferential Right granted herein is not assignable, except to Permitted
Assignees. Time is of the essence.
8. The Base Rent for the expansion premises and the Recurring Preferential shall
be the same as the rent being paid for the initial Premises. Landlord shall
provide Tenant an expansion improvement allowance equal to the initial
Improvement Allowance ($24.40) divided by the number of months in the Lease
(124) times the sum of seventy five minus the number of months from the
commencement of this initial lease to the commencement of the expansion premises
less the actual costs of relocating existing tenants from the nineteenth floor
to accommodate Tenant; if such relocation costs are not recovered from such
relocated tenants.
As an example should Tenant elect to commence the preferential right space on
April 1, 1997 - 12 months after commencement of the initial Lease, then the
calculation would be as follows: Total Improvement Allowance divided by number
of months in term (24.40 divided by 124 =.196774) .196774 x (75-12) number of
months from commencement of Lease to commencement of expansion or .196774 x 63
mo = $12.40. The Expansion Improvement Allowance would then be reduced by the
amount equal to the cost of relocating other tenant(s) to accommodate Tenant
(i.e. should the cost of relocating the other tenant(s) be equal to $2.00 the
Expansion Improvement Allowance will then equal $10.40).
SATELLITE DISH: Tenant shall have the right during the term and any renewals of
this Lease, at no cost to Tenant, to install a satellite dish on the Building
provided such satellite dish coordinates with present installations and does not
interfere with normal building operations. Tenant shall submit plans and
specifications to Landlord for Landlord's written approval prior to
installation. Any damage from installation shall be the sole responsibility of
Tenant. Tenant at Tenant's cost shall remove such equipment at the expiration of
the Lease and shall restore the roof to a secure condition.
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RISER ACCESS: Tenant shall have the right to access existing communication
risers within the Building at no cost to Tenant. Should the existing risers not
be of adequate size to accommodate Tenant's specific needs; Tenant may at
Tenant's sole cost install additional risers provided there is room for
additional installation and such does not interfere with the operations of the
Building or other equipment in Place. Tenant agrees that any operations shall be
in accordance with local fire codes or any other codes applicable.
TENANT AIR CONDITIONING EQUIPMENT: In accordance with Exhibit "C", Tenant shall
have the right through a Landlord approved contractor to install its air
conditioning condenser equipment on the roof of the Building. No rent shall be
charged to Tenant for use of such space. The location of the units shall
coordinate with existing equipment and such location shall be approved by
Landlord, such approval not to be unreasonably withheld. Any cost resulting from
any damage or repair to the Building and its roof as a result of maintenance of
such equipment shall be the responsibility of Tenant and Tenant shall pay to
Landlord such amount as invoiced.
CONSTRUCTION FEE: Landlord shall contract with the general contractor to
construct the Premises in accordance with Exhibit "C". Landlord shall not charge
Tenant a construction management fee for the construction of the Leased Premises
in accordance to Exhibit "C" for the Leased Premises.
ADA PLAN SUBMISSION: Landlord specifically agrees that Landlord shall be
responsible for the submission of the approved plans and specifications to the
applicable state and governmental agencies having jurisdiction over the review
and approval for such plans and specifications for compliance with all of the
requirements under the Americans with Disabilities Act and the Texas
Architectural Barriers Act with respect to the Tenant's Plan and restroom
facilities on the twentieth (20th) floor of the Building. The costs of
submission filing and inspection shall be the cost of Landlord.
BUSINESS DRESS: Tenant shall use its best efforts to cause all its employees to
wear proper business attire. Proper business attire shall mean a collared shirt
and slacks for men (no tee shirts, cut off shorts, athletic wear, etc.); and
dress slacks, skirts, dresses and blouses for women (no halters, cut off shorts,
house shoes, etc.). Tenant's casual dress day excluded.
Section 17.19. Entire Agreement. This written Lease, including all
Exhibits attached hereto (which Exhibits are hereby incorporated herein and
shall constitute a portion hereof), contains the entire agreement between
Landlord and Tenant with respect to the subject matter hereof. Tenant hereby
acknowledges and agrees that neither Landlord nor Landlord's agents or
representatives have made any representations, warranties, or promises with
respect to the Project, the Premises,
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Landlord's services, or any other matter or thing except as herein expressly set
forth, and no rights, easements, or licenses are acquired by Tenant by
implication or otherwise except as expressly set forth in this Lease. No prior
written or prior or contemporaneous verbal promises or representation by
Landlord or Tenant or any other party shall be binding unless same have been
reduced to writing and are expressly set forth in this Lease instrument. This
Lease may be amended or modified only by written instrument executed by both
parties hereto, and dated subsequent to the date of this Lease.
EXECUTED as of the date hereinabove first set forth.
LANDLORD:
ARENA TOWER II CORPORATION
By: /s/ Larry Wong
--------------------------
Name: Larry Wong
Title: President
TENANT:
CARDMEMBER PUBLISHING CORPORATION
By: /s/ Steven H. Levenherz
----------------------------
Name: Steven H. Levenherz
Title: Senior Vice President
and Chief Financial
Officer
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<PAGE> 59
EXHIBIT "A"
[Graphic of Arena Tower 2, Level 20]
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EXHIBIT "B"
LEGAL DESCRIPTION
TRACT A:
A METES AND BOUNDS description of a 3.2109 acre (139,867 square feet) tract of
land out of Block 1 of Sharpstown Commercial Park, as recorded in Volume 72,
Page 1 of the Harris County Map Records and being a part of a called 9.2172 acre
tract of land described in Harris County Clerk's File No. G-269960, all being in
the James Wells Survey, Abstract No. 830, in Harris County, Texas. Said 3.2109
acre tract being more particularly described as follows:
COMMENCING at a Gulf Oil Corporation brass disk found in concrete at the
easterly corner of the Gulf Oil Corporation tract as recorded in Volume 3341,
Page 544 and Volume 4880, Page 415 of the Harris County Deed Records, and said
point being the most southerly corner of the aforementioned 9.2172 acre tract
and being located on the northwesterly right-of-way line of U.S. Highway 59 (300
feet wide);
THENCE, North 44 degrees 45' 30" West, 205.00 feet leaving said northwesterly
right-of-way line to a 5/8-inch iron rod found for the POINT OF BEGINNING of the
herein described tract;
THENCE, North 45 degrees 14' 30" East, 196.80 feet to a cut "X" found in
concrete for corner;
THENCE, North 00 degrees 13' 18" West, 81.14 feet to a point for corner and
being in the arc of a non-tangent curve to the right;
THENCE, 247.68 feet along the arc of said curve to the right having a radius of
116.07 feet, a central angle of 122 degrees 15' 54", a long chord bearing
North 29 degrees 28' 28" West, 203.29 feet to a point for corner and located
in the face of an existing wall;
THENCE, West, 25.39 feet to a point for corner;
THENCE, North, 264.71 feet (called 264.67 feet) to a P.K. nail found for corner
and located in the north line of the aforementioned 9.2172 acre tract;
THENCE, North 89 degrees 58' 20" West, 186.76 feet (called East 186.72 feet)
to a 5/8-inch iron rod found for corner;
THENCE, South, 487.29 feet (called 487.39 feet) to a 5/8 inch iron rod found for
corner;
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THENCE, South 44 degrees 45' 30" East, 77.43 feet to a 5/8-inch iron rod found
for corner;
THENCE, South, 45 degrees 14' 30" West, 146.96 feet to a 5/8-inch iron rod
found for corner and located in the northeasterly right-of-way line of Fondren
Road (100 feet wide) and being in the arc of a non-tangent curve to the left;
THENCE, 60.02 feet along the arc of said curve to the left having a radius of
1810.00 feet, a central angle of 01 degrees 54' 00" a long chord bearing South
46 degrees 03' 25" East, 60.02 feet to a 5/8-inch iron rod set for corner, from
which a 5/8-inch iron rod found bears South 44 degrees 45' East, 0.33 feet;
THENCE, North 45 degrees 14' 30" East, 145.60 feet leaving said northeasterly
right-of-way line of Fondren Road to a 5/8-inch iron rod found for corner;
THENCE, South 44 degrees 45' 30" East, 107.90 feet (called 107.57 feet) to the
POINT OF BEGINNING, CONTAINING 3.2109 acres of land in Harris County, Texas.
TRACT B:
Non-exclusive easement rights created under the Reciprocal Easement Agreement
dated July 31, 1989, filed for record under Harris County Clerk's File No.
M-257152. The Easement Agreement is incorporated by reference and deemed to be a
part of this Lease. Tenant agrees to allow Landlord reasonable concessions to
comply with the substantive intent of this easement.
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EXHIBIT "C"
TENANT IMPROVEMENTS
Attached to and Made an Integral Part of
Lease Agreement dated February 12, 1996 between
ARENA TOWER II CORPORATION
Landlord
and
CARDMEMBER PUBLISHING CORPORATION
Tenant
Tenant hereby agrees to accept the Leased Premises in an "as is" condition,
except Landlord shall provide a Tenant Improvement Allowance of up to $24.40 per
rentable square foot on the initial Leased Premises.
The Tenant Improvement allowance may be applied to costs incurred by Tenant for
construction of the Premises, Tenant's additional restrooms, installation of a
sprinkler system, installation of a access control system, installation of a
supplementary air conditioning system, installation of corridor glass, related
architectural fees and construction permits and fees.
Landlord and Tenant shall mutually select a general contractor for the
construction of the Leased Premises in accordance with the Working Drawings. The
general contractor shall be responsible for the filing of all plans and securing
the permits and licenses required. All construction fees and licenses required
shall be a part of the total contract price and such shall be paid from the
Tenant Improvement Allowance. Tenant's architect and engineer shall provide
Landlord two sets of working drawings for Landlord's review and approval.
Landlord shall have five (5) days to review the plans and submit any changes
Landlord deems necessary. The architect shall make such changes as Landlord
shall reasonably request.
Tenant shall have the right to install a supplementary air conditioning system
within the Leased Premises. Such System shall be separately metered and the cost
of all electrical usage and maintenance shall be paid by Tenant as Rent. Tenant
may install the air conditioning condenser units on the roof of the Building and
condensation units shall be located in a manner so as not to be seen from street
level and to properly distribute the weight load. Said location and penetrations
of the roof area shall be approved in writing by Landlord prior to installation.
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Corridor Glass Installation: Tenant shall the right to install glass partitions
in the corridor of the 20th floor.
Once all Tenant Improvement costs has been finalized and it is determined that
there are funds remaining from the above mentioned Tenant Improvement Allowance,
then Tenant may use up to $1.50 per rentable square foot for Tenant's moving
expanses (including stationary, telephone installation, physical move, employee
relocation and hiring). Tenant shall present Landlord Tenant's paid invoices for
all such costs.
Landlord agrees that it shall not charge Tenant a Landlord construction
administration or supervision fee.
Any costs incurred in the construction of the Premises in excess of the above
mentioned allowance shall be paid to Landlord by Tenant within thirty (30) days
of Landlord's presentation of his paid invoices.
Tenant shall be responsible for any other costs associated with improvements to
the Leased Premises, which are not paid for with funds from the Tenant
Improvement Allowance.
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EXHIBIT "D"
Declaration of Commencement Date
Re: The Lease Agreement (the "Lease") entered into by and between Arena
Tower II Corporation ("Landlord") and CardMember Publishing
Corporation ("Tenant") dated February 12, 1996, covering Suite 2000
located on floor twenty of Arena Tower II, located at 7324 Southwest
Freeway, Houston, Harris County, Texas
Tenant hereby certifies to Landlord that the actual date upon which
commencement of the term of this Lease occurred was April 1, 1996.
EXECUTED on ________________________________.
"TENANT"
CARDMEMBER PUBLISHING CORPORATION
By:_______________________________
Name: STEVEN H. LEVENHERZ
Title: SENIOR VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
LANDLORD:
ARENA TOWER II CORPORATION
By:_______________________________
Name:__________________________
Title:_________________________
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EXHIBIT "E"
RULES AND REGULATIONS
Attached to and made a part of
Lease Agreement dated February 12, 1996
Landlord: ARENA TOWER II CORPORATION
Tenant: CARDMEMBER PUBLISHING CORPORATION
1. Tenant agrees to return all keys to Landlord. Landlord will refund amount
deposited on each key returned. Tenant shall not duplicate any key issued by
Landlord or alter any lock or install a new or additional lock or bolt on any
door of the Demised Premises without the prior written consent of Landlord.
2. Landlord will provide and maintain an alphabetical directory board in the
Building.
3. Tenant will refer all contractors, contractors' representatives and
installation technicians, rendering any service to Tenant, to Landlord for
Landlord's supervision, approval and control before performance of any
contractual service. This provision shall apply to all work performed in the
Building or anywhere on the project's premises including installations of
telephones, telegraph equipment, electrical devices and attachments, and
installments of any nature affecting floors, walls, woodwork, trim, windows,
ceilings, equipment or any other physical portion of the Building, and removal
of any Tenant's personal property, including vehicles. All ceiling wiring must
be plenum rated and all phone systems must be installed on phone boards. All
contractors must have insurance and must submit a copy to Landlord prior to any
work being performed with limits of liability of at least $1,000,000 with
respect to death of or injuries to one or more persons in any one occurrence,
and at least $500,000 with respect to loss of or damage to property in any one
occurrence.
4. Movement in or out of the Building of furniture or office equipment, or
dispatch or receipt by Tenant of any merchandise or material which requires use
of elevators or stairways, or movement through Building entrances or lobby shall
be restricted to hours designated by Landlord. All such movement shall be under
supervision of Landlord and in the manner agreed between Tenant and Landlord by
prearrangement before performance. Such prearrangement initiated by Tenant will
include determination by Landlord and be subject to his decision and control of
the time, method and routing of movement, and limitations imposed by safety or
other concerns which may prohibit any article, equipment or any other item from
being brought into the Building. Tenant is to assume all risk as to damage to
articles moved and injury to persons or property engaged or not engaged in such
movement,
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including equipment, property and personnel of Landlord if damaged or injured as
a result of acts in connection with carrying out this service for Tenant from
time of entering the tract on which the Building stands to completion of work;
Landlord shall not be liable for acts of any person so engaged or any damage or
loss to any of said property or persons resulting from any act in connection
with such service performed by Tenant.
5. No signs will be allowed in any form on exterior of Building or windows
inside or out, and no signs except in uniform location and uniform styles fixed
by Landlord will be permitted in public corridors or on corridor doors or
entrances to Tenant's space. All signs will be contracted for by Landlord for
Tenant at the rate fixed by Landlord from time to time, and Tenant will be
billed and pay for such service accordingly.
6. No draperies, shutters or other window covering shall be installed on
exterior windows or walls or windows and doors facing public corridors without
Landlord's prior written approval. Tenant shall not modify Landlord's building
standard window covering.
7. No portion of the Demised Premises or any other part of Building shall at any
time be used or occupied as sleeping or lodging quarters.
8. Tenant shall not place, install or operate on the Demised Premises or in any
part of the Building, any engine, stove or machinery, vending machine, or
conduct mechanical operations or cook thereon or therein, or place or use in or
about premises any explosives, gasoline, kerosene, oil, acids, caustics or any
other inflammable, explosive materials, or hazardous materials (excluded however
are common cleaning materials to the extent they are used, stored and labeled in
accordance with environmental laws) without written consent of Landlord, except
for microwave and coffee and vending machines for Tenant's use only.
9. Landlord will not be responsible for lost or stolen personal property,
equipment, money or jewelry from the Demised Premises or public rooms regardless
of whether such loss occurs when area is locked against entry or not.
10. No birds, fish or animals shall be brought into or kept in or about the
Building, except guide dogs.
11. Employees of Landlord shall not receive or carry messages for or to Tenant
or other person, nor independently contract with or render free or paid services
to Tenant or Tenant's agents, employees or invitees.
12. Landlord will not permit entrance to the Demised Premises by use of pass
keys controlled by Landlord to any person at any time without written
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permission by Tenant, except employees, contractors or service personnel
directly supervised by Landlord and employees of the United States Postal
Service.
13. Entrance to the Building after hours is by cardkey only, unless prior
authorization is received and accepted by Landlord.
14. None of the entries, passages, doors, elevator doors, hallways or stairways
shall be blocked or obstructed, or any rubbish, litter, trash or material of any
nature placed, emptied or thrown into these areas, or such areas at any time
except for ingress by Tenant, Tenant's agent, employees or invitees.
15. Tenant and its employees, agents and invitees shall observe and comply with
the driving and parking signs and markers on the premises surrounding the
Building. No overnight parking allowed, unless approved by Landlord and such
cars must be movable with reasonable notice.
16. Landlord shall have the right to prescribe the weight and position of safes,
computers and other heavy equipment which shall, in all cases, in order to
distribute their weight, stand on supporting devices approved by Landlord. All
damage done to the Building by placing in or taking out any property of Tenant
while in the Building shall be repaired promptly at the expense of Tenant.
17. To insure orderly operation of the Building, no after hour deliveries of any
kind can be made to the Demised Premises except by persons and at times approved
by Landlord in writing, after hour deliveries will be allowed and coordinated
with Building Management.
18. Should Tenant require telegraphic, telephonic, annunciator or other
communication services, Landlord shall direct where and how wires are to be
introduced and none shall be introduced or placed except as Landlord shall
direct. All ceiling wiring must be plenum rated and telephone boards must be
used, except as approved by Landlord.
19. Without Landlord's prior approval, Tenant shall not install any radio or
television antenna, loudspeaker, music system or other devise on the roof or
exterior walls of the Building or on common walls with adjacent tenants, except
as approved by Landlord.
20. No hand trucks or other vehicles of any kind shall be used in or brought
into the Building or the Demised Premises by Tenant or others unless such
vehicle shall have been inspected and approved in writing by Landlord.
21. Tenant shall store all its trash and garbage within it Demised Premises. No
materials shall be placed in the trash boxes or receptacles if such material is
of
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such nature that it may not be disposed of in the ordinary and customary manner
of removing and disposing of trash and garbage and without being in violation of
any law or ordinance governing such disposal. All garbage and refuse disposal
shall be made only through entryways and elevators provided for such purposes
and at such times as Landlord shall designate.
22. These Rules and Regulations are in addition to, and shall not be construed
in any way to modify, alter or amend, in whole or in part, the terms, covenants,
agreements and conditions of any Lease covering premises in the Building.
23. Landlord reserves the right to make such other reasonable rules and
regulations as in its judgement may from time to time be needed for the safety,
care and cleanliness of the Building, and for the preservation of good order
therein.
24. Tenant shall close and lock the doors of its Premises and entirely shut off
all water faucets or other water apparatus and electricity or gas before Tenant
and its employees leave the Premises. Tenant shall be responsible for any damage
or injuries sustained by other tenants or occupants of the Building or by
Landlord for noncompliance with this rule.
25. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not
be used for any other purpose other than that for which they were constructed,
no foreign substance of any kind whatsoever shall be thrown therein, and the
expense of any breakage, stoppage or damage resulting from the violation of this
rule shall be borne by the Tenant who, or whose employees or invitees, shall
have caused it.
26. Tenant shall not use in any space or in the public halls of the Building any
hand trucks except those equipped with the rubber tires and side guards or such
other material handling equipment as Landlord may approve. Tenant shall not
bring any other vehicles of any kind into the Building.
27. Smoking prohibited in all public areas to include corridors, lobbies,
elevators, stairwells, restrooms, etc.
28. No uncontained liquids are to be place in trash receptacles.
29. Emergency fire exits are to be used only in cases of emergency.
30. All corridor doors are to remain closed at all times.
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EXHIBIT "F"
RENEWAL OPTION
Tenant shall have the option to renew the Lease (the "Renewal Option") on
the following terms: At the then prevailing market rental rate as described in
Exhibit "G" attached hereto.
If Tenant desires to exercise the Renewal Option, Tenant shall be
required, at least nine (9) months prior to the expiration of the Term, to
notify Landlord in writing (the "Renewal Notice") that Tenant wishes to extend
the term of the Lease for an additional sixty (60) months (the "Renewal Term")
upon the terms set forth hereinabove. If Tenant does not notify Landlord in
writing at least nine (9) months prior to the expiration of the initial Term
that Tenant elects to exercise the Renewal Option, then Tenant's Renewal Option
shall automatically terminate. Furthermore, if Tenant shall commit a default
during the Term of the Lease, and such default shall not have been cured on or
before the time for Tenant's exercise of the Renewal Option, or if Tenant shall
assign to other than Permitted Assignees, sublet or sell its existing business
during the initial Term, then this Renewal Option shall be deemed automatically
null and void.
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EXHIBIT "G"
DEFINITION OF MARKET BASE RENTAL RATE
Market Base Rental Rate Definition
As used in this Lease, the term "Market Base Rental Rate" shall mean the fair
market rental rate for the space in question in effect at, or within ninety (90)
days prior to, for "arms length" leases (but not subleases) of space in the
Building, or buildings similar to the Building in quality, character, location
and other aspects, subject to adjustment for differences in all relevant
factors, including but not limited to the following described General Factors
and Economic Factors.
Determination of Market Base Rental Rate
The Market Base Rental Rate shall be determined in accordance with the following
guidelines. Each lease of space considered in determining the Market Base Rental
Rate will be compared to ascertain the actual net effective yield to the
landlord under such lease, and such net effective yield shall be adjusted for
differences, if any, in tenant concession packages under such lease, and the
Lease with Tenant, in determining the Market Base Rental Rate. After the Market
Base Rental Rate has been determined, Landlord may substitute economic
concessions for those otherwise required by this Lease so long as the net
effective yield to the Landlord is not materially altered by such substitution.
General Factors
General Factors shall mean the following:
1. The use, relative location, quality, size and/or floor levels;
2. The quality, age and location, and whether or not the building has been
upgraded;
3. Availability and convenience of parking;
4. The definition of "Net Rental Area" set forth in the lease;
5. Availability of electrical capacity for the tenant's use at the building;
6. The term of the lease;
7. The extent of services provided or to be provided by or on behalf of the
landlord under the lease;
8. The applicable distinctions between a "gross lease" and "net lease";
9. The base year or dollar amount for escalation purposes (both for operating
expenses, and ad valorem/real estate taxes);
10. The credit standing and financial stature of the tenant;
11. The occupancy level at the time the rental rate under consideration was
agreed upon and became or is to become effective;
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12. Availability of renewal terms, expansion options, or rights of first refusal
to other lease space;
13. Quality of management of the building; and
Economic Factors
1. The leasehold improvements provided or to be provided, giving full credit to
the dollar value of any existing improvements within the leased premises;
2. The extent of any leasehold improvement, architectural allowance, or
engineering allowance provided to the Tenant;
3. The inclusion or exclusion of parking charges in the rental rate;
4. Any other adjustments (including by way of indexes) to base rental;
5. Abatements (including with respect to operating expenses and ad valorem/real
estate taxes, as well as parking charges);
6. Lease takeovers/assumptions offered by the landlord in connection with the
execution of the lease;
7. Club memberships;
8. Refurbishment and repainting allowances;
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EXHIBIT "H"
CLEANING SPECIFICATIONS
FOR
ARENA TOWERS
A. CLEANING SERVICE SPECIFICATIONS FOR TENANT SUITES AND COMMON AREAS ON
TENANT OCCUPIED FLOORS.
1. Nightly Services
a. Secure all lights as soon as possible each night.
b. Vacuum all carpets.
c. Dust mop all resilient marble, and composition floors with
treated dust mops. Damp mop to remove spills and water stains
as required.
d. Dust all desks and office furniture with treated dust cloths.
Polish all glass furniture tops.
e. Papers and folders on desks are not to be moved.
f. Sanitize all telephone receivers.
g. Empty all ashtrays and ash urns. Clean and sanitize as
required.
h. Empty all waste paper baskets and other trash containers,
clean, sanitize and line as required.
i. Remove fingerpoints, dirt smudges, graffiti, etc. from all
doors, frames, glass partitions, windows, light switches,
walls, elevator door jams and elevator interiors.
j. Remove all trash from floors to the designated trash areas.
k. Return chairs and waste baskets to proper positions.
l. Clean, sanitize and polish drinking fountains.
m. Police all service stairwells.
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n. Police all interior public corridor planters.
o. Dust and remove debris from all metal door thresholds.
p. Wipe clean smudged bright work.
q. Spot clean all carpets, resilient marble, and composition
floors as required.
r. Service all walk-off mats as required.
2. Weekly Services
a. Dust all low reach areas including, but not limited to chair
rungs, structural and furniture ledges, base boards, windows
sills, door louvers and wood paneling molding, etc.
b. Dust inside all door jams.
c. Clean and policy all metal door thresholds.
d. Wipe clean and polish all bright work.
e. Sweep all service stairwells.
f. Dust all vinyl base.
g. Edge all carpeted areas.
h. Move all plastic carpet protectors and thoroughly vacuum under
and around all desks and office furniture.
i. Clean and spray buff all building standard resilient and/or
composition flooring.
3. Monthly Services
a. Dust all high reach areas including, but not limited to tops
of door frames, structural and furniture ledges, air
conditioning diffusers and return grills, tops of partitions,
picture frames, etc.
b. Vacuum upholstered furniture.
4. Quarterly Services
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<PAGE> 74
a. Machine buff or otherwise refinish all resilient marble or
composition flooring to provide a level of appearance
equivalent to a completely refinished floor.
5. Annual Services (Tenant Suites and Common Areas)
a. Vacuum perimeter building standard window coverings.
b. Clean all building standard light fixtures, annually, which
shall include:
(1) Cleaning of both sides of the fixture diffusers.
(2) Wipe down all lamps.
(3) Cleaning of visible edge of the fixture casing and
diffuser frame.
(4) Contractor will not be responsible for removal of lamps
during the cleaning operation.
B.RESTROOM SERVICE SPECIFICATIONS
1. Nightly Service
a. Provide all restrooms with supplies from stock including paper
towels, toilet tissue, and hand soap, as required.
b. Restock all sanitary napkins and tampons dispensers from
Contractor stock, as required. Supplies and proceeds from this
service are the sole responsibility of the contractor.
c. Wash and polish all mirrors, dispensers, faucets, flushmeters,
and bright work with non-scratch disinfectant cleaners.
d. Wash and sanitize all toilets, toilet seats, urinals and sinks
with non- scratch disinfectant cleaner. Wipe dry all sinks.
e. Remove stains, descale toilets, urinals and sinks as required.
f. Mop all restroom floors with disinfectant germicidal solution.
g. Empty all waste and sanitary napkin and tampon receptacles.
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h. Remove all restroom trash from building.
i. Spot clean finger prints, marks and graffiti from walls,
partitions, glass, aluminum and light switches as required.
2. Weekly Services
a. Dust all low reach and high reach areas including, but not
limited to structural ledges, mirror tops, partition tops and
edges, air conditioning diffusers and return grills.
3. Monthly Service
a. Wipe down all tile walls and metal partitions. Partitions
shall be left in an [illegible] condition after this work.
4. Annual Service
a. Thoroughly clean all ceramic tile floors.
C. ELEVATOR, LOBBY AND CORRIDOR CLEANING SPECIFICATIONS
1. Nightly Service
a. Thoroughly wash all glass doors.
b. Spot clean all glass including low partitions and the corridor
side of all windows and doors.
c. Spot clean all chrome bright work including door hardware,
kick plates, hose cabinets and visible hardware.
d. Spot clean all interior architectural aluminum finishes.
e. Spot clean interior side of aluminum framing around glass in
all elevator lobbies and stairwells.
f. Spot clean all painted marble and vinyl wall surfaces.
g. Thoroughly clean all door saddles of dirt and debris.
h. Spot clean, sweep and damp mop flooring under vending
machines.
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i. Spot clean and dust directory board glass and ledges around
the stairwell.
j. Empty, clean and sanitize as required all wastepaper baskets
and refuse receptacles.
2. Weekly Services
a. Spot clean, sweep, mop and buff all tile flooring.
b. Shampoo and hot water extract with neutralizing rinse all
elevator carpets.
3. Monthly Services
a. Thoroughly clean all architectural aluminum interior finishes.
D. CORRIDOR AND SERVICE SINK CLOSETS
1. Nightly Services
a. Remove trash from the above areas.
b. Maintain an orderly arrangements of all janitorial supplies
and products stored in the service sink closets.
c. Clean and disinfect service sinks.
E. PASSENGER ELEVATOR CLEANING SPECIFICATIONS
1. Nightly Services
a. Spot clean interior stainless steel surface of forward cab
walls and doors and glass partitions.
b. Spot clean outside painted and chrome surfaces of all elevator
door and frames.
c. Spot clean elevator cab floor carpeting.
d. Vacuum all cab floor carpeting thoroughly. Edge all carpeting
thoroughly.
2. Weekly Service
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<PAGE> 77
a. Thoroughly clean entire interior stainless steel surfaces of
all doors and frames and outside painted and chrome surfaces
of all doors and frame and glass partitions.
3. Monthly Service
a. Shampoo and/or extract all elevator cab flooring.
b. Thoroughly clean all wall surfaces in cabs.
c. Wipe clean entire cab ceiling above lighting diffusers.
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EXHIBIT I-1
1 of 2
[Graphic of Arena Tower 2, Level 18]
<PAGE> 79
EXHIBIT I-1
2 of 2
[Graphic of Arena Tower 2, Level 19]
<PAGE> 80
EXHIBIT "J"
HVAC Specifications: Landlord shall use reasonable efforts to provide Tenant
HVAC in accordance with this Exhibit "J" and made a part of this Lease. It is
understood that temperatures and fresh air supply may vary depending upon the
time and temperatures of the season, the effect of use of Tenant's supplementary
and secondary air conditioning system, and that an increase if the fresh air
supply may cause summer temperatures to increase within the Building and
Premises.
HVAC SPECIFICATIONS
a. Design Criteria
Outside Summer: 95 degrees F.DB
Inside Summer: 74 degrees F.DB
Outside Winter: 40 degrees F.DB
Inside Winter: 74 degrees F.DB
Population Design: 1 occupant per 100 RSF*
b. VAV Distribution System
Area Served: 387,035 RSF
CFM per RSF: 0.93
c. Fresh Air Supply
Design for Building: 10%
Maximum air available
for Building: 36,000 fresh air CFM
Design per floor: 895 fresh air CFM/RSF
*RSF = Net Rentable Area (Rentable Square Foot)
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<PAGE> 81
AMENDMENT
AMENDMENT TO THE LEASE AGREEMENT EXECUTED BY AND BETWEEN ARENA TOWER II
CORPORATION ("LANDLORD"), AND CARDMEMBER PUBLISHING CORPORATION ("TENANT"), FOR
LEASED PREMISES DEFINED AS SUITE 2000, ARENA TOWER II, 7324 SOUTHWEST FREEWAY,
HOUSTON, HARRIS COUNTY, TEXAS; and
WHEREAS, the original lease agreement executed February 12, 1996 (the
"Lease"), was executed by and between Arena Tower II Corporation, as Landlord
(herein referred to as "Lessor"), and CardMember Publishing Corporation, as
Tenant (herein referred to as "Lessee"), pertaining to Suite 2000 (the "Leased
Premises") consisting of approximately 21,081 rentable square feet, located at
7324 Southwest Freeway, Houston, Harris County, Texas; and
WHEREAS Landlord is the current lessor, as present owner of the
Property and Lessor and Lessee desire to amend the Lease to evidence an
expansion consisting of approximately 5,498 square feet, known as Suite 1990
located on the 9th floor of Arena Tower II.
NOW, THEREFORE, for good and valuable consideration, the parties hereto
agree that the Lease is hereby amended as follows:
Commencement Date of Expansion Premises: As used herein, "Commencement Date of
Expansion Premises" means the earlier of: (a) the date Tenant's leasehold
improvements are substantially complete (or the date certified to by Landlord
that said leasehold improvements would have been substantially completed except
for delays due on the part of Tenant, its agents or contractors, including
without limitation any delays which constitute Tenant Delays as defined in the
Lease Agreement; or (b) September 15, 1996. Notwithstanding the foregoing, if
Tenant occupies all or any part of the Premises for its intended use by Tenant's
employees (installation of furniture is not considered occupancy) prior to (a)
or (b) above, the Commencement Date shall be the date of such occupancy. Within
five (5) days after the Commencement Date and at any time thereafter upon the
request of Landlord, Tenant shall execute and deliver to Landlord a declaration
(in the form attached as Exhibit "D") specifying the actual date upon which the
commencement of the Expansion Term occurred. The Commencement Date of Expansion
Premises, Expiration Date and commencement of installments of Base Monthly Rent
or Additional Rent shall not be postponed or delayed as a result of any Tenant
Delay as defined in the Lease.
Premises & Term: Pursuant to the Lease Agreement Section 17.18, Additional
Provisions, Expansion Option, Lessee has the right to expand the Leased Premises
on the 19th floor in the amount of no less than 10,264 square feet; however
Lessor shall
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allow Lessee to expand prior to April 1, 1997, into a portion of said amount of
space equaling 5,498 square feet of Net Rentable Area.
Therefore, Section 1.01 of the Lease Agreement is hereby amended to reflect
Lessee's expansion into Suite 1990 consisting of approximately 5,498 square
feet, thus increasing the Premises from 21,081 to 26,579 square feet, per
attached Exhibit "A", commencing on or about September 15, 1996 and expiring on
the expiration date of the Lease Agreement,
The second paragraph of the Expansion Option, Section 17.18 in the Lease
Agreement shall be deleted and replaced with the following paragraph:
Tenant shall have the right to expand the Leased Premises on the nineteenth
(19th) floor of the Building in the amount of no less than 4,766 square feet of
net rentable area and not more than 15,030 square feet of net rentable area
commencing on April 1, 1997. Tenant shall notify Landlord in writing not less
than three (3) months prior to April 1, 1997 of Tenant's election to expand and
such notice shall include the amount of square footage Tenant is leasing.
Commencement shall be the earlier of occupancy or April 1, 1997.
Base Monthly Rent: The base monthly rental shall be increased to reflect a Base
Monthly Rent of $24,364.08 from Commencement Date of Expansion Premises through
March 31, 1997, then $27,686.46 for the period of April 1, 1997 through July
31, 2006.
Tenant Improvements: Lessor agrees to provide Lessee with a Tenant Improvement
Allowance in accordance with the Allowance provided in the Expansion Option,
Section 17.18 of the Lease Agreement, paragraph 8, estimated to be $13.68 based
upon the Commencement Date of the Expansion Premises being September 15, 1996.
Should the Commencement Date of Expansion Premises be other than September 15,
1996, the Allowance shall be adjusted accordingly. Lessor shall permit Lessee to
use a portion of said Allowance to be applied for the installation of a swipe
cardkey system to be located on the 20th floor Stairwell B for Lessee to use
said stairwell as a means of travel between the 19th floor to the 20th floor,
provided such does not conflict with any applicable laws or ordinances. Lessee
shall be responsible for any additional improvement costs exceeding the Tenant
Improvement Allowance provided herein. Lessor and Lessee will select a mutually
agreed upon a general contractor per the third paragraph of Exhibit "C" of the
Lease Agreement, for improvements according to approved plans. The mechanical,
electrical and plumbing contractors shall be directed by the general contractor
and such contractors shall be paid as a part of the general contractor's
contract. Lessee agrees to pay Lessor for any additional costs within thirty
(30) days of invoice receipt, provided such improvements have been determined to
be substantially complete and Tenant has
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occupied the Expansion Premises. Landlord shall provide to Tenant a correct
invoice received from the general contractor indicating the full extent of the
work performed.
Termination Option: It is expressly understood that Tenant shall have the right
to terminate this Amendment along with the Lease Agreement in accordance with
the Termination Option as identified in Section 17.18 of the Lease Agreement.
Except as amended herein, all terms and conditions shall remain in full force
and effect according to the Lease.
Executed on the 3rd day of July 1996.
TENANT:
CARDMEMBER PUBLISHING CORPORATION
BY: /s/ Steven H. Levenherz
_______________________________
STEVEN H. LEVENHERZ
LANDLORD:
ARENA TOWER II CORPORATION
BY: /s/ Larry Wong
_______________________________
LARRY WONG, PRESIDENT
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