<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 000-23747
GETTY IMAGES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 98-0177556
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
701 N. 34TH STREET
SUITE 400
SEATTLE, WASHINGTON 98103
(206) 268 2000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF PRINCIPAL EXECUTIVE OFFICES)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding twelve months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past ninety days. Yes X No
--- ---
As of April 28, 2000, there were 48,707,832 shares of the Registrant's
common stock, par value $0.01 per share, outstanding.
<PAGE> 2
GETTY IMAGES, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FOR THE
THREE MONTHS ENDED MARCH 31, 2000
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities and Use of Proceeds 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
</TABLE>
2
<PAGE> 3
GETTY IMAGES, INC.
PART I.
FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
GETTY IMAGES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-----------------------------------
MARCH 31, 2000 MARCH 31, 1999
-------------- --------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
<S> <C> <C>
Sales ................................................. $ 104,825 $ 52,150
Cost of sales ......................................... 30,518 13,841
-------------- --------------
GROSS PROFIT .......................................... 74,307 38,309
-------------- --------------
Selling, general and administrative expenses .......... 60,429 28,724
Amortization of intangibles ........................... 25,035 10,224
Depreciation .......................................... 10,202 4,606
Integration and restructuring costs ................... 4,191 --
-------------- --------------
99,857 43,554
-------------- --------------
LOSS FROM OPERATIONS .................................. (25,550) (5,245)
Interest expense, net ................................. (1,082) (811)
Debt conversion expense ............................... (6,689) --
Exchange losses, net .................................. (515) (391)
Other expense, net .................................... (19) --
-------------- --------------
LOSS BEFORE INCOME TAXES .............................. (33,855) (6,447)
Income tax expense/(benefit) .......................... (1,134) 1,435
-------------- --------------
LOSS BEFORE EXTRAORDINARY ITEM ........................ (32,721) (7,882)
Extraordinary item .................................... 384 --
-------------- --------------
NET LOSS .............................................. $ (32,337) $ (7,882)
============== ==============
Basic and diluted loss per share before
extraordinary item .................................. $ (0.69) $ (0.26)
Extraordinary item .................................... .01 --
-------------- --------------
Basic and diluted net loss per share .................. $ (0.68) $ (0.26)
============== ==============
Shares used in computing basic and diluted
loss per share ...................................... 47,569,300 30,648,000
============== ==============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE> 4
GETTY IMAGES, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31, 2000 DECEMBER 31, 1999
------------------ -----------------
(IN THOUSANDS)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents ............................. $ 105,055 $ 105,356
Accounts receivable, net .............................. 86,735 64,742
Prepaid expenses and other assets ..................... 41,781 29,054
Inventories, net ...................................... 5,868 4,970
Deferred tax assets ................................... 4,000 4,953
------------ ------------
TOTAL CURRENT ASSETS .................................. 243,439 209,075
Property and equipment, net ........................... 109,979 104,193
Intangible assets, net ................................ 801,872 608,016
Investments ........................................... 2,172 2,338
Deferred tax assets ................................... 26,492 15,947
------------ ------------
TOTAL ASSETS .......................................... $ 1,183,954 $ 939,569
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank overdraft ........................................ $ 2,568 $ --
Accounts payable ...................................... 82,778 42,915
Accrued expenses ...................................... 25,142 42,329
Income taxes payable .................................. 4,763 2,953
Current portion of long-term debt ..................... 787 3,879
------------ ------------
TOTAL CURRENT LIABILITIES ............................. 116,038 92,076
Long-term debt ........................................ 283,800 101,802
------------ ------------
TOTAL LIABILITIES ..................................... 399,838 193,878
------------ ------------
STOCKHOLDERS' EQUITY
Common stock .......................................... 479 452
Exchangeable preferred stock .......................... 15 15
Additional paid-in capital ............................ 915,031 841,320
Accumulated deficit ................................... (128,429) (96,092)
Accumulated other comprehensive loss .................. (2,980) (4)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY ............................ 784,116 745,691
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............ $ 1,183,954 $ 939,569
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE> 5
GETTY IMAGES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
NO. OF
NO. OF SHARES OF ACCUMULATED
SHARES OF EXCHANGEABLE EXCHANGEABLE ADDITIONAL OTHER
COMMON PREFERRED COMMON PREFERRED PAID-IN ACCUMULATED COMPREHENSIVE
STOCK STOCK STOCK STOCK CAPITAL DEFICIT LOSS TOTAL
--------- ------------ ------- ------------ ---------- ----------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1999 45,266 1,453 $ 452 $ 15 $ 841,320 $ (96,092) $ (4) $745,691
Exercise of stock options 504 5 6,398 6,403
Tax benefit related to stock
options exercises 4,613 4,613
Shares issued on debt conversion 2,187 21 60,400 60,421
Shares issued on acquisition of
Subsidiary 50 1 2,300 2,301
Net loss (32,337) (32,337)
Foreign currency translation
adjustments, net (2,976) (2,976)
------- -------- ------ ------ --------- --------- ------- --------
Balance at March 31, 2000 48,007 1,453 $ 479 $ 15 $ 915,031 $(128,429) $(2,980) $784,116
======= ======== ====== ====== ========= ========= ======= ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE> 6
GETTY IMAGES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------
MARCH 31, 2000 MARCH 31, 1999
--------------- ---------------
(IN THOUSANDS)
<S> <C> <C>
CASH USED IN OPERATING ACTIVITIES ................................. $ (2,604) $ (1,517)
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Business acquisitions, net of cash acquired ................. (220,716) --
Purchase of property and equipment .......................... (12,658) (7,631)
Other ....................................................... 369 --
--------------- ---------------
CASH USED IN INVESTING ACTIVITIES ................................. (233,005) (7,631)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds of debt ............................................ 250,000 --
Payment of debt issuance costs .............................. (7,908) --
Payments on principal balance of debt ....................... (2,650) (94)
Proceeds from issuance of common stock ...................... 6,338 708
Payments on debt conversion inducement ...................... (6,689) --
Other ....................................................... 100 --
--------------- ---------------
CASH PROVIDED BY FINANCING ACTIVITIES ............................. 239,191 614
--------------- ---------------
Net decrease in cash and cash equivalents
......................... (301) (8,534)
Exchange rate differences arising from translation of foreign
currency balances ............................................... (3,883) 633
Cash and cash equivalents
-- beginning of period ............................................ 105,356 16,150
--------------- ---------------
-- end of period .................................................. $ 105,055 $ 8,249
=============== ===============
Non-Cash Investing and Financing Activities:
Conversion of convertible notes to common stock, net
of debt issue costs ........................................... $ 60,421
Acquisition of subsidiary for common stock ...................... 2,300
</TABLE>
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME/(LOSS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------
MARCH 31, 2000 MARCH 31, 1999
--------------- ---------------
(IN THOUSANDS)
<S> <C> <C>
Net loss ...................................... $ (32,337) $ (7,882)
Foreign currency translation adjustments,
net of tax .................................. (2,976) (2,653)
--------------- ---------------
COMPREHENSIVE LOSS ............................ $ (35,313) $ (10,535)
=============== ===============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
6
<PAGE> 7
GETTY IMAGES, INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The unaudited condensed consolidated financial statements of Getty Images, Inc.
and its consolidated subsidiaries (collectively, the "Company") presented herein
have been prepared by the Company in accordance with the rules and regulations
of the Securities and Exchange Commission and therefore, do not include all the
information and note disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles. The
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1999 (the "Annual Report"), that was filed
with the Commission on March 30, 2000. In the opinion of management, the
accompanying condensed consolidated financial statements include all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the Company's financial position and results of operations. The results of the
operations for the three months ended March 31, 2000 and 1999 may not be
indicative of the results that may be expected or achieved for the full fiscal
year.
The year end condensed consolidated balance sheet data was derived from audited
financial statements but does not include all disclosures required by generally
accepted accounting principles.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, the Financial Accounting Standards Board issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities." The standard
requires that an entity recognize all derivatives as either assets or
liabilities and measure those instruments at fair value. The new rules will be
effective for fiscal years beginning after June 15, 2000. The Company does not
believe that the new standard will have a material impact on its financial
results.
In December 1999, SEC Staff Accounting Bulletin No. 101 ("SAB 101"), Revenue
Recognition in Financial Statements, was issued. This pronouncement summarizes
certain of the SEC staff's views in applying generally accepted accounting
principles to revenue recognition. SAB 101 is required to be adopted no later
than the second fiscal quarter of fiscal 2000. We have reviewed the impact of
this pronouncement and determined the impact to be immaterial.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION
The accompanying consolidated financial statements include Getty Images, Inc.
and its wholly owned subsidiaries from the date of acquisition. All material
intercompany accounts and transactions have been eliminated in the consolidated
financial statements.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles in the United States requires management to make
estimates that effect the reported amounts of assets and liabilities in the
financial statements and disclosure of contingent assets and liabilities at the
date of the financial statements. Examples of estimates subject to possible
revision based upon the outcome of future events include depreciation of
property and equipment, amortization of intangibles, income tax liabilities,
the valuation allowance against the deferred tax assets and the allowance for
the doubtful accounts. Actual results could differ from those estimates.
INTANGIBLE ASSETS
Goodwill and other intangibles are amortized on a straight-line basis over
their estimated lives of between 3 to 30 years. Goodwill represents the excess
of purchase price and related costs over the fair value of the net assets of
businesses acquired. The value of goodwill and other intangibles is reviewed
annually in relation to the operating performance and future undiscounted
cashflows of the underlying businesses, and a charge to the consolidated
statement of operations is made where a permanent diminution in value is
identified. Management believes that there has been no impairment in the value
of goodwill and other intangible assets as reflected in the Company's
consolidated financial statements as of March 31, 2000.
PROVISION FOR INCOME TAXES
The Company provides for income taxes on an interim basis using its estimated
effective annual income tax rate. Excluding debt conversion expense and the
amortization of intangibles, which are largely non-deductible for tax purposes,
the Company provided for income taxes at an effective annual tax rate of 39.6%
and 39.4% in 2000 and 1999, respectively.
NET LOSS PER SHARE
Basic and diluted loss per share for the three-month period ended March 31, 2000
is computed on the basis of 47,569,300 weighted average number of shares issued.
Basic and diluted loss per share for the three-month period ended March 31, 1999
is computed on the basis of 30,648,000 weighted average number of shares issued.
Options and convertible securities are excluded from the computation because of
their antidilutive effect.
3. INTEGRATION AND RESTRUCTURING CHARGES
In 1999, the Company approved and commenced a program to integrate all the
Company's businesses into four divisions to serve its four major types of
customers. As a result, incremental integration and restructuring charges were
incurred.
Integration costs incurred in the three-month period ended March 31, 2000 in
connection with the program, totalled $4.2 million. The costs were associated
with the activities of teams responsible for integrating the various businesses
of the Company for the benefit of future operations and included items such as
consulting and professional fees and systems and process integration
7
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costs. Such costs have been expensed as incurred. Integration costs incurred
during the three-month period ended March 31, 2000 were:
<TABLE>
<CAPTION>
(IN THOUSANDS)
<S> <C>
Consulting and professional services ... $ 977
Systems and process integration costs .. 2,573
Contract terminations costs ............ 641
-------
$ 4,191
=======
</TABLE>
Restructuring costs accrued at December 31, 1999 have been utilized in the
three-month period ended March 31, 2000, as follows:
<TABLE>
<CAPTION>
BEGINNING ENDING
PROVISION UTILIZED PROVISION
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Property exit costs ................. $1,155 $ 47 $1,108
Employee termination costs .......... 1,311 182 1,129
Contract termination costs .......... 466 -- 466
------ ------ ------
$2,932 $ 229 $2,703
====== ====== ======
</TABLE>
The charge for employee termination costs in the three month period ended March
31, 2000, is analyzed as follows:
<TABLE>
<CAPTION>
OPERATIONAL
MANAGEMENT STAFF TOTAL
---------- ------------ -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Employee termination costs $ 107 $ 75 $ 182
====== ====== ======
Number of employees 1 2 3
====== ====== ======
</TABLE>
The unutilized provision at March 31, 2000 related to property exit, employee
termination, and contract termination costs will be substantially utilized
during the remainder of 2000.
4. FOREIGN CURRENCY TRANSLATION
Unrealized net exchange losses of $1,337,600 and $1,850,000 for the three-month
periods ended March 31, 2000 and 1999, respectively, arose on the translation
of certain intercompany foreign currency transactions deemed to be long-term in
nature. There is no plan to settle these transactions in the foreseeable future.
Consequently, they are reported in the same manner as foreign currency
translation adjustments in accumulated other comprehensive loss in accordance
with SFAS 52 "Foreign Currency Translation."
5. SEGMENT INFORMATION
Getty Images operates in one business segment and all material intercompany
transactions are eliminated in consolidation.
6. EXTRAORDINARY ITEM
In January of 2000, the Company retired $3.3 million of debt of a subsidiary at
a discount prior to maturity. This resulted in a gain of $384,000, net of income
taxes of $251,000.
7. NOTES PAYABLE AND LONG-TERM DEBT
8
<PAGE> 9
CONVERSION OF NOTES INTO COMMON SHARES
In March of 2000, the Company induced the voluntary redemption of $75 million in
outstanding 4.75% convertible subordinated notes due in 2003. Holders of $62.3
million principal amount of the notes converted their notes into 2,187,034
shares of the Company's common stock.
Associated with the redemption, the Company paid the noteholders a cash premium
of approximately $6.7 million. This premium is included in the statement of
operations as debt conversion expenses. The carrying value of the debt, net of
issuance costs of $1.9 million, was credited to common stock and additional paid
in capital.
ISSUANCE OF 5% CONVERTIBLE SUBORDINATED NOTES
On March 13, 2000, the Company issued $250 million of 5% convertible
subordinated notes due March 15, 2007. These notes are subordinated to senior
indebtedness of the Company and to all debt and liabilities, including trade
payables and lease obligations, if any, of the Company's subsidiaries. The 5%
notes rank pari passu in right of payment to the 4.75% notes that were not
converted into common stock. Interest is payable on March 15 and September 15,
beginning on September 15, 2000.
The Notes are convertible into common stock at $61.08 per share. The Company may
redeem the notes, in whole or in part, at any time on or after March 20, 2003 at
specified redemption prices ranging from 102.857% beginning on March 20, 2003 to
100.714% beginning on March 15, 2006.
A substantial portion of the proceeds of the notes was used to fund the
acquisition of VCG.
8. ACQUISITIONS
On March 22, 2000, the Company acquired Visual Communications Group Holdings,
Ltd., VCG Holdings LLC, and Definitive Stock, Inc. from their parent, Visual
Communications Group (VCG) B.V. (a subsidiary of United News Media PLC); and VCG
Deutschland GmbH from its parent United News & Media Plc (collectively "VCG")
for $204.7 million and the assumption and payment of $18.7 million of debt. An
additional $3.5 million of costs were incurred and included in the purchase
price.
The purchase was funded principally through the issuance of $250 million of 5%
convertible subordinated notes due in 2007. The transaction was accounted for
using the purchase method of accounting. Accordingly, the results of operations
since the date of acquisition have been included with those of the Company.
On January 31, 2000, the Company issued an aggregate of 49,565 shares of its
common stock in exchange for all of the issued and outstanding capital stock of
i/us Corporation, an Ontario corporation. The transaction was accounted for
using the purchase method of accounting. Accordingly, the results of operations
since the date of acquisition have been included with those of the company.
Goodwill of $201 million arising from these acquisitions will be amortized over
ten years.
Certain of the information related to the acquisitions is based upon preliminary
data and is subject to change.
The following unaudited pro forma information shows the results of the Company
for the three-month periods ended March 31, 2000 and March 31, 1999,
respectively, on the basis that the VCG acquisition had taken place at the
beginning of each of the periods presented. The pro forma information includes
adjustments related to the financing of the acquisitions, including the issuance
of $250 million of the 5% convertible subordinated notes, the effect of
amortizing goodwill and other intangible assets acquired, as well as the related
tax effects. The pro forma results of operations are unaudited, have been
prepared for comparative purposes only, and do not purport to indicate the
results of operations which would have actually occurred had the combinations
been in effect on the dates indicated or which may occur in the future.
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED MARCH 31,
-------------------------------
2000 1999
--------- ---------
(IN THOUSANDS EXCEPT
SHARE AND PER SHARE DATA)
<S> <C> <C>
Sales $ 124,931 $ 74,055
Loss before extraordinary item (35,143) (13,001)
Extraordinary item, net of tax 384
Net Loss (34,759) (13,001)
Basic and diluted loss per share
before extraordinary item $ (0.74) $ (0.42)
Extraordinary item per share .01 --
Basic and diluted net loss
per share $ (0.73) $ (0.42)
Shares used in computing basic
and diluted loss per share 47,569,300 30,648,000
</TABLE>
9. SUBSEQUENT EVENTS
Effective May 12, 2000, Christopher Roling resigned as our Senior Vice
President of Finance, Chief Financial Officer and Secretary. Effective May 13,
2000, Steve Cristallo, the Company's current Vice President of Group Tax, will
serve as the Company's acting Chief Financial Officer until a permanent
replacement for Mr. Roling is hired.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE FOLLOWING SHOULD BE READ IN CONJUNCTION WITH OUR UNAUDITED CONSOLIDATED
FINANCIAL STATEMENTS AND THE NOTES THERETO, AND OTHER FINANCIAL INFORMATION
CONTAINED ELSEWHERE IN THIS REPORT ON FORM 10-Q. IN THE FOLLOWING DISCUSSION,
REFERENCES TO THE "COMPANY" "WE", "US" AND "OUR" ARE TO GETTY IMAGES, INC. ALL
FINANCIAL DATA REFERRED TO IN THE FOLLOWING DISCUSSION HAS BEEN PREPARED IN
ACCORDANCE WITH UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (U.S.
GAAP).
IN ADDITION TO HISTORICAL INFORMATION, THE DISCUSSION IN THIS SECTION MAY
CONTAIN CERTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES.
THE FORWARD-LOOKING STATEMENTS RELATE TO, AMONG OTHER THINGS, OPERATING RESULTS,
TRENDS IN SALES, GROSS PROFIT, OPERATING EXPENSES, EFFECTIVE TAX RATES,
ANTICIPATED EXPENSES, LIQUIDITY AND CAPITAL RESOURCES, AND THE EFFECT OF FOREIGN
CURRENCY HEDGING TRANSACTIONS. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM
THOSE ANTICIPATED BY THESE FORWARD-LOOKING STATEMENTS DUE TO FACTORS INCLUDING,
BUT NOT LIMITED TO, THOSE SET FORTH UNDER "ITEM 1 BUSINESS - G. FACTORS THAT MAY
AFFECT THE BUSINESS" IN OUR FORM 10-K.
OVERVIEW
Founded in March 1995 as Getty Communications plc, Getty Images, Inc. is a
leading global visual content provider, offering imagery and related products
over the Internet and through a diverse set of distribution channels and media
including digital downloads, CD ROMs, demonstration reels and catalogs. We
estimate we control over 70 million still images and more than 30,000 hours of
film footage. We own or control visual content across major categories of the
industry. Through our e-commerce enabled websites and our international network
of company-operated offices, as well as agents, distributors and affiliates in
51 countries, we provide both businesses and consumers with effective access to
image and footage products.
Our visual content product brands are organized into the following divisions to
serve our four major types of customers:
- Creative Professional Division ("gettyone"). Stone and PhotoDisc, leaders
in licensed and royalty-free contemporary stock photography; The Image
Bank, a leading global provider of contemporary stock photography and film
footage; Visual Communications Group, a leading global provider of stock
photography with several specialty image collections; and Energy Film
Library, a leading provider of stock film footage.
- Press and Editorial Division ("gettysource"). Allsport, a leading global
provider of sports imagery; Liaison Agency, a leading North American news
and feature agency; Hulton Getty, one of the world's largest commercially
available collections of European archival photography; Archive, one of the
world's largest commercially available collections of North American
archival photography; Online USA, a leading provider of celebrity news and
event photography over the Internet; and Newsmakers, a provider of digital
images to the press and editorial market.
- Business User Division ("gettyworks"). EyeWire, a leading provider of
royalty-free imagery, footage, audio, typefaces, illustration, clip art,
and other design products to business and small office/home office (SOHO)
users; and i/us, a provider of specialty graphics and publishing tools to
website developers, designers and graphics users.
- Consumer Division. Art.com, a leading destination for framed and unframed
art and art-related supplies for consumers on the Internet; and American
Royal Arts, a leading provider of animation art.
Our sales are primarily derived from the marketing of image reproduction and
broadcasting rights to a range of business customers. Sales generally consist of
a large number of relatively small transactions involving the sale or licensing
of single images, video and film clips or CD ROM products containing between 100
and 300 images. We use a variety of distribution platforms, including digital
distribution via the Internet and CD ROMs as well as analog distribution of 35mm
film, video and analog transparencies. Price is generally determined by
resolution size and the extent of rights granted over the use of the image or
clip and can vary significantly across geographic markets and customer groups.
We also generate sales from subscription or bulk purchase deals where customers
are provided access to imagery online. In the case of our consumer business, we
principally sell framed and unframed art products to consumers over the Internet
with payment typically made by credit card.
Revenue arises from three principal types of sales:
Fixed license sales are recognized when a license agreement has been completed
with the customer for the use of the image, and the image has been made
available for use. Fixed license pricing terms do not call for additional fees
beyond the fixed license amount, and our customer is contractually obligated to
pay the fixed license amount upon agreement of the license terms and
availability of the image for use by the customer.
Royalty-free sales, or sales in which the user pays a one-time fee for unlimited
use, are recognized upon the shipment of the CD ROM or at the time images are
downloaded by the customer.
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<PAGE> 11
Consumer sales are recognized upon shipment of the product.
Circumstances in which sales are refunded are rare, and refunds are netted in
the recognition of revenue. Sales are recorded at invoiced amounts less sales
tax, if applicable. "E-commerce" sales are defined as those sales that are
transacted on the Internet.
Our cost of sales primarily consists of commission payments to contributing
photographers and cinematographers. These suppliers are under contract with us
and receive payments of up to 50% of sales depending on the type of product and
where and how the product is sold. We own a significant number of the images in
our collections and these images do not require commission payments. Cost of
sales also includes, to the extent applicable, handling and shipping costs for
duplicate transparencies, the cost of CD ROM production and costs associated
with framing and shipping art products. As a result, our gross margin is
impacted by the mix of sales conducted digitally on the Internet, sales of
wholly-owned imagery, geographic distribution of sales and brand sales mix.
Our selling, general and administrative expenses include salaries and related
staff costs, premises and utility costs, and sales and marketing costs.
We amortize goodwill and depreciate the cost of the investment in duplicate
transparencies, digital files, archival picture collections, computer systems
and other property and equipment over their expected useful lives. The
acquisitions of Art.com in May 1999, EyeWire in August 1999, American Royal Arts
in October 1999 and The Image Bank in November 1999 generated $348.1 million in
goodwill and other intangibles, and the acquisition of Visual Communications
Group in March 2000 generated $197.6 million in goodwill and other intangibles.
Goodwill and other intangibles arising on the acquisitions of The Image Bank and
Visual Communications Group is currently based upon initial estimates of the
fair value of the assets and liabilities of those companies. Our collective
acquisitions will result in a substantial charge to be amortized against our
earnings in future periods. We are amortizing goodwill relating to recent
acquisitions over the following periods: three years for Art.com goodwill; seven
years for EyeWire goodwill; five years for American Royal Arts goodwill; and ten
years for both The Image Bank and Visual Communications Group goodwill. We
amortize other intangibles over one to four years.
As a result of our acquisitions and their financial and goodwill accounting
effects on net income, we believe that EBITDA provides stockholders, investors
and analysts with an appropriate measure of our operating performance. We define
EBITDA as earnings before interest, debt conversion expense, taxes, exchange
gains/(losses), depreciation, amortization, integration and restructuring costs,
extraordinary items and other income/expenses. EBITDA should not be considered
as an alternative to operating income as defined by generally accepted
accounting principles, as an indication of our operating performance, or to cash
flows as a measure of our liquidity.
During 1999, we approved and commenced a program to integrate all our businesses
into four divisions to serve our four major customer segments. During the first
quarter of 2000, we incurred integration costs of $4.2 million associated with
the continuation of our program to integrate our businesses into these four
customer facing divisions as well as additional costs associated with the
integration of The Image Bank. The charges included severance costs, consulting
and professional fees, and systems and process integration costs. We expect
further integration costs to be incurred for these activities as well as the
integration of Visual Communication Group into the Company.
UNAUDITED RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
2000 % of sales 1999 % of sales
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Income statement data:
Sales ................................................ $ 104,825 100.0% $ 52,150 100.0%
Gross profit ......................................... 74,307 70.9 38,309 73.5
Selling, general and administrative expenses ......... (60,429) (57.6) (28,724) (55.1)
Amortization of intangibles and depreciation ......... (35,237) (33.6) (14,830) (28.4)
Integration and restructuring costs .................. (4,191) (4.0) -- --
Operating loss ....................................... (25,550) (24.4) (5,245) (10.1)
Interest expense, net ................................ (1,082) (1.0) (811) (1.6)
Debt conversion expense .............................. (6,689) (6.4) -- --
Exchange losses, net ................................. (515) (0.5) (391) (0.7)
Other expenses, net .................................. (19) -- -- --
Income tax (expense)/benefit ......................... 1,134 1.1 (1,435) (2.8)
Extraordinary item, net of tax ....................... 384 0.4 -- --
Net loss ............................................. (32,337) (30.8) (7,882) (15.1)
Operating data:
EBITDA(1) ............................................ $ 13,878 13.2% $ 9,585 18.4%
---------- ---------- ---------- -----------
</TABLE>
11
<PAGE> 12
(1) "EBITDA" is defined as earnings before interest, debt conversion expense,
income taxes, exchange gains and losses, depreciation, amortization, integration
and restructuring costs, extraordinary items, and other income and expenses.
EBITDA should not be considered as an alternative to operating income as defined
by generally accepted accounting principles, as an indicator of our operating
performance or to cash flows as a measure of our liquidity.
SALES
Our total sales increased from $52.2 million in the three months ended March 31,
1999 to $104.8 million in the three months ended March 31, 2000, an increase of
101%. This increase was largely attributable to the continued growth of our base
businesses, consisting of those businesses acquired prior to January 1, 1999,
(we acquired Art.com in May 1999, EyeWire in August 1999, The Image Bank in
November 1999 and Visual Communications Group in March 2000), growth in
e-commerce sales and the inclusion of the acquisitions.
We experienced an increase in the rate of demand for both analog and digital,
search, selection and fulfillment of imagery during the first quarter of 2000.
E-commerce sales more than tripled from $10.3 million, or 19.8% of sales, in the
first quarter of 1999, to $31.5 million, or 30.0% of sales in the first quarter
of 2000 (37.8% of sales excluding The Image Bank and Visual Communications
Group, which are, at this time, almost entirely analog). These increases were
due principally to the growth in e-commerce sales at Allsport, Photodisc, and
Tony Stone Images, particularly in North America. The inclusion of Art.com's and
EyeWire's e-commerce sales since their acquisition in 1999 also contributed to
the increase.
12
<PAGE> 13
GROSS PROFIT
Gross profit as a percentage of sales, or gross margin, decreased from 73.5% in
the first quarter of 1999, to 70.9% in the first quarter of 2000. The margin
decrease was primarily attributable to lower margins in the Consumer Channel,
consisting of Art.com and American Royal Arts. Due to the manufacturing nature
of Art.com's supply chain and the fact that a significant amount of product is
being sourced from third parties, gross margins in Art.com of 35% to 50% are
lower than the company average. In addition, the acquisitions of The Image Bank
and Visual Communications Group also slightly diluted our first quarter gross
margin as these businesses also have lower margins than our overall base
business given the analog nature of their business models presently.
Base business gross margin for the first quarter of 2000, excluding all 1999
acquisitions, was 74.5 percent compared with 73.5 percent margin achieved in
the first quarter of 1999. The drivers of this margin improvement include the
increasing sales mix shift to e-commerce and a favorable sales mix.
OPERATING EXPENSES
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were $28.7 million and $60.4
million in the first quarter of 1999 and the first quarter of 2000,
respectively, representing 55.1% and 57.6% of sales in the respective quarters.
The principal factors contributing to increases in the dollar amounts of
selling, general and administrative expenses during the first quarter of 2000
over the first quarter of 1999 were the inclusion of acquisitions in our
consolidated financial results, continued and accelerated investment in
advertising and marketing costs, particularly in Art.com, and our new websites,
as well as increased investment in management.
We are committed to managing selling, general and administrative expenses as we
further integrate and consolidate our businesses, and implement new integrated
and standardized business systems. As customers increasingly move towards
digital image search, retrieval and payment, we plan to streamline our support
operations. We are also consolidating our offices and other premises throughout
the world as part of the reorganization of our businesses into four divisions
and the integration of our recent acquisitions.
AMORTIZATION OF INTANGIBLES AND DEPRECIATION
Amortization of intangibles increased from $10.2 million in the three months
ended March 31, 1999 to $25.0 million in the three months ended March 31, 2000,
an increase of 145%. This increase was attributable to increased goodwill and
other intangibles that arose primarily from the acquisitions of Art.com in May
1999, EyeWire in August 1999, The Image Bank in November 1999 and Visual
Communications Group in March 2000.
Depreciation increased from $4.6 million in the three months ended March 31,
1999 to $10.2 million in the three months ended March 31, 2000, an increase of
121%. This increase primarily arose from acquisitions together with increased
investment in capital expenditure related to the continued development of our
e-commerce strategy. We expect depreciation to continue to increase as a result
of this increased investment.
INTEGRATION AND RESTRUCTURING COSTS
During the quarter ended March 31, 2000 we continued a program to integrate all
our businesses into four divisions to serve our four major customer segments. In
the quarter ended March 31, 2000, we also commenced a program to integrate The
Image Bank into gettyone, our creative professional division, and Archive into
gettysource. The total integration charges in the quarter ended March 31, 2000
were $4.2 million. The charges included severance costs, consulting and
professional fees, systems and process integration costs, and costs associated
with terminations.
Integration costs of $4.2 million were associated with the activities of teams
responsible for integrating our businesses and included items such as consulting
and professional fees, and systems and process integration costs. Integration
costs were expensed as incurred.
NET EXCHANGE LOSSES
Our operating results are affected by exchange rate fluctuations to the extent
that we have receivables or payables that are denominated in a currency other
than the local currency. Exchange gains or losses arising on the translation of
these balances into local currency or on the settlement of these transactions
are recognized in our income statement.
Our policy is to hedge a substantial majority of our contracted net receivables
and payables using a combination of forward foreign exchange contracts and
foreign currency term loans. Net exchange losses were $391,000 and $515,000 in
the three months ended March 31, 1999 and March 31, 2000, respectively.
13
<PAGE> 14
INCOME TAXES
Our income tax provision for the three months ended March 31, 1999 was $1.4
million compared with a $1.1 million tax benefit for the three months ended
March 31, 2000. Excluding the effect of debt conversion expense and the
amortization of intangibles, which are largely non deductible for tax purposes,
we had an effective tax rate of 38.0% in the three months ended March 31, 1999,
as compared to 39.6% in the three months ended March 31, 2000.
Changes in the effective rate of tax are due to variations in the profit mix and
tax rates in the countries and states in which we operate.
EBITDA
EBITDA increased from $9.6 million in the three months ended March 31, 1999 to
$13.9 million in the three months ended March 31, 2000, representing an increase
of 44.8%. In our business-to-business operations we generated EBITDA of $9.6
million in the first quarter of 1999, as compared to $17.2 million in the first
quarter of 2000, an increase of 79.2%. Continued investment in Art.com resulted
in an EBITDA loss in the Consumer Channel of $3.3 million in the first quarter
of 2000. EBITDA as a percentage of sales decreased from 18.4% in the first
quarter of 1999 to 13.2% in the first quarter of 2000. This decrease in EBITDA
margin was attributable primarily to the losses in our Consumer Channel. The
growth in overall EBITDA was primarily attributable to incremental EBITDA from
our acquired businesses as well as gross margin improvement in our base
business. Our EBITDA in the first quarter of 2000, excluding Art.com, was
positively impacted by our overall growth, including growth through
acquisitions, the growth in e-commerce sales, the increasing sales mix of
wholly-owned imagery, as well as improvements in operating efficiencies. EBITDA
as a percentage of sales increased from 11.8% in the fourth quarter of 1999 to
13.2% in the first quarter of 2000.
14
<PAGE> 15
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
2000 1999
---- ----
(in thousands)
<S> <C> <C>
Net cash provided by/(used in):
Operating activities .............................. $ (2,604) $ (1,517)
Investing activities .............................. (233,005) (7,631)
Financing activities .............................. 239,191 614
Exchange differences .............................. (3,883) 633
--------- ---------
Net decrease in cash and cash
Equivalents ..................................... $ (301) $ (7,901)
========= =========
</TABLE>
Our cash resources decreased by $7.9 million in the quarter ended March 31, 1999
and by $0.3 million in the quarter ended March 31, 2000.
Net cash used in operating activities amounted to $1.5 million in the quarter
ended March 31, 1999, and $2.6 million in the quarter ended March 31, 2000. The
increased outflow was primarily due to increased spending on marketing and
advertising, particularly at Art.com, as well as payments of integration and
restructuring costs in the quarter ended March 31, 2000.
Net cash used in investing activities was $7.6 million in the quarter ended
March 31, 1999, and $233.0 million in the quarter ended March 31, 2000. In the
quarter ended March 31, 2000, we acquired Visual Communications Group and i/us
Corporation for $223.6 million, net of cash acquired. In the quarter ended March
31, 1999, we also invested $7.6 million in property and equipment, compared to
$12.7 million in the quarter ended March 31, 2000.
Net cash provided by financing activities in the quarter ended March 31, 1999
was $614,000, comprised principally of cash from the exercise of stock options,
as compared to $239.2 million in the quarter ended March 31, 2000. The principal
financing activities undertaken in the quarter ended March 31, 2000 included
inducing early conversion of $62.3 million of our $75 million 4.75% convertible
subordinated notes due 2003 by paying a premium of $6.7 million, the repayment
of $2.7 million of debt, the raising of $242.1 million in net proceeds from our
$250 million 5% convertible subordinated notes due 2007, and the receipt of $6.3
million from the exercise of stock options.
At March 31, 2000, we had outstanding long term debt of $283.8 million, and
$105.0 million of cash and cash equivalents.
As well as organic growth, we continue to seek opportunities to grow by
acquisition. Accordingly, we may be required, or we may elect, to raise
additional funds in addition to using cash from operating activities and
existing cash balances.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Instruments
and Hedging Activities". This new standard requires companies to record
derivatives on the balance sheet as assets or liabilities, measured at fair
value. Under SFAS No. 133, gains or losses resulting from changes in the values
of derivatives are to be reported in the statement of operations or as a
deferred item, depending on the use of the derivatives and whether they qualify
for hedge accounting. We are required to adopt SFAS No. 133 in the first quarter
of 2001. We do not believe that the new standard will have a material impact on
our financial results.
In December 1999, SEC Staff Accounting Bulletin No. 101 ("SAB 101"), Revenue
Recognition in Financial Statements, was issued. This pronouncement summarizes
certain of the SEC staff's views in applying generally accepted accounting
principles to revenue recognition. SAB 101 is required to be adopted no later
than the second fiscal quarter of fiscal 2000. We have reviewed the impact of
this pronouncement and determined the impact to be immaterial.
YEAR 2000 IMPACT
We have not experienced any problems with our computer systems relating to such
systems being unable to recognize appropriate dates related to the year 2000. We
are also not aware of any material problems with our customers or suppliers.
Accordingly, we do not anticipate incurring material expenses or experiencing
any material operational disruption as a result of any year 2000 issues.
SUBSEQUENT EVENT
Effective May 12, 2000, Christopher Roling resigned as our Senior Vice
President of Finance, Chief Financial Officer and Secretary. Effective May 13,
2000, Steve Cristallo, the Company's current Vice President of Group Tax, will
serve as the Company's acting Chief Financial Officer until a permanent
replacement for Mr. Roling is hired.
15
<PAGE> 16
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to a variety of risks, including changes in interest rates
affecting the return on investments and foreign currency fluctuations. In the
normal course of business, we employ established policies and procedures to
manage our exposure to fluctuations in interest rates and foreign currency
values.
Interest Rate Risk
Our exposure to market rate risk for changes in interest rates, relating
primarily to our debt instruments, the majority of which are fixed rate
borrowings, is shown in the table below.
<TABLE>
<CAPTION>
MATURITIES FAIR VALUE
MARCH 31,
DEBT 2000 2003 2007 TOTAL 2000
(IN THOUSANDS EXCEPT PERCENTAGES)
<S> <C> <C> <C> <C> <C>
Fixed rate (USD) $ 12,653 $ 250,000 $ 262,653 $ 219,099
Average interest rate 4.75% 5.00% 4.99% 4.99%
Variable rate (USD) $ 30,000 $ 30,000 $ 30,000
Average interest rate 8.65% 8.65% 8.65%
Other borrowings $ 2,568 $ 2,568 $ 2,568
Average interest rate 7.50% 7.50% 7.50%
</TABLE>
Foreign Currency Risk
We conduct our business primarily in the United States and the United Kingdom
and, therefore, our cashflows are primarily denominated in US dollars and pounds
sterling. We are exposed to foreign exchange risk related to foreign currency
denominated liabilities and cash. The introduction of the euro does not
significantly affect our foreign exchange exposure.
We normally enter into forward foreign currency exchange contracts to hedge our
contracted net receivables denominated in foreign currencies. Our functional
currency is the U.S. dollar. Forward foreign currency contracts typically have a
term of less than six months. There were no open forward foreign currency
exchange contracts at March 31, 2000.
The criteria used by us for designating a contract as a hedge include the
contract's effectiveness in risk reduction. Gains and losses on these contracts,
relating to the hedged risk, are recognized as incurred, reflecting the income
statement treatment of the hedged items.
If an underlying hedged transaction is terminated earlier than initially
anticipated, the offsetting gain or loss on the related forward foreign exchange
contract would be recognized in income in the same period. In addition, since we
enter into forward contracts only as hedges, any change in currency rates would
not result in any material gain or loss, as any gain or loss on the underlying
foreign currency denominated balances would be offset by the loss or gain on the
forward contract.
16
<PAGE> 17
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In connection with the lawsuit filed by Chanelle Desautels on September 14, 1999
against EyeWire and various other defendants, Superstock, Inc. has agreed to
fully indemnify us for all damages, fees and costs that EyeWire may incur as a
result of the suit.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On January 31, 2000, we issued an aggregate of 49,565 shares of common stock in
exchange for all of the issued and outstanding capital stock of i/us
Corporation, an Ontario corporation.
On March 13, 2000, we completed the issuance of $250 million of 5% subordinated
convertible notes due on March 15, 2007. The conversion price of these notes is
$61.08 per share. We may redeem the notes, in whole or in part, at any time on
or after March 20, 2003 at specified redemption prices.
ITEM 5. OTHER INFORMATION
On April 5, 2000, we entered into an asset purchase agreement with Mary Louise
Harris to purchase all of the assets of TIB Northwest, Inc., a licensee of The
Image Bank, Inc., for approximately $1.1 million.
Effective May 12, 2000, Christopher Roling resigned as our Senior Vice President
of Finance, Chief Financial Officer and Secretary. Effective May 13, 2000, Steve
Cristallo, the Company's current Vice President of Group Tax, will serve as the
Company's acting Chief Financial Officer until a permanent replacement for Mr.
Roling is hired.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
Reference is made to the Index of Exhibits beginning on page 17 for a list of
all exhibits filed as part of this report.
REPORTS FILED ON FORM 8-K
On March 2, 2000, the Company filed a Current Report on Form 8-K relating to the
execution of its agreement to acquire VCG Holdings LLC, Definitive Stock, Inc.,
Visual Communications Group Holdings Limited and VCG Deutschland GmbH for an
aggregate purchase price of approximately $220 million.
GETTY IMAGES, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED MARCH 31, 2000
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
-------------- ----------------------
<S> <C>
2.1* Stock Purchase Agreement, dated as of March 21, 2000, among
Getty Images, Getty Communications Limited, Visual
Communications Group B.V., United Business Information B.V.
and United News & Media Plc
3.1 Amended and Restated Certificate of Incorporation of Getty
Images (1)
3.2 Certificate of Amendment to the Certificate of Incorporation
of Getty Images (2)
3.3 Bylaws of Getty Images (1)
4.1* Indenture relating to the Company's 5.0% Subordinated
Convertible Notes due 2007, dated
</TABLE>
17
<PAGE> 18
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT
-------------- ----------------------
<S> <C>
March 13, 2000, between Getty Images and The Bank of New York
10.1* Registration Rights Agreement, dated as of March 13, 2000,
among Getty Images, Morgan Stanley & Co., Inc., Deutsche Bank
Securities, Inc., SG Cowen Securities Corp. and Hambrecht &
Quist, LLC.
10.2* Employment Agreement between the Company and Brock Bohonos,
dated March 16, 2000.
10.3* Amendment to Employment Agreement between the Company and
Jonathan Klein, dated April 1, 2000.
10.4* Amendment to Employment Agreement between the Company and
A.D. "Bud" Albers, dated April 1, 2000.
10.5* Employment Agreement between the Company and William O'Neill,
dated April 3, 2000.
10.6* Amendment to Employment Agreement between the Company and
Christopher Roling, dated February 1, 2000.
10.7* Separation Agreement between the Company and Bradley Zumwalt,
dated March 30, 2000.
10.8* Lease dated March 31, 2000 between Tri-Energy Productions,
Inc. and CST Water Garden II, LLC.
10.9* Lease dated April 1, 2000 between PhotoDisc, Inc. and The
Rector, Church-Wardens and Vestrymen of Trinity Church in the
City of New York.
10.10* Lease dated August 9, 1990 between F.P.G. International, Inc.
and 24-32 Union Square East Associates Limited Partnership.
10.11* Amendment of Lease dated October 17, 1994 between F.P.G.
International, Inc. and Estate of S. Klein.
10.12* Second Amendment of Lease dated June 1, 1995 between F.P.G.
International, Inc. and Estate of S. Klein.
10.13* Lease dated December 13, 1993 between Visual Communications
Limited and Carroll Development Corporation Limited.
10.14* Lease between Visual Communications Limited and Innovation
Land & Estates Limited.
27.1* Financial Data Schedule
</TABLE>
- -----------------
* Filed herewith.
(1) Incorporated by reference from the Exhibits to the Registrant's Form
S-4 Registration Statement, No. 333-38777.
(2) Incorporated by reference from the Exhibits to the Registrant's Form
8-K, dated November 10, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GETTY IMAGES, INC.
Date: May 15, 2000 By: /s/ Steve Cristallo
--------------------------
Name: Steve Cristallo
Title: Chief Financial Officer
18
<PAGE> 1
EXHIBIT 2.2
______________________________________________________________________
STOCK PURCHASE AGREEMENT
among
GETTY IMAGES INC.,
GETTY COMMUNICATIONS LIMITED,
VISUAL COMMUNICATIONS GROUP (VCG) B.V.,
UNITED BUSINESS INFORMATION B.V.
and
UNITED NEWS & MEDIA PLC
_______________________________________
Dated as of March 21, 2000
______________________________________________________________________
THIS AGREEMENT SHALL BE KEPT CONFIDENTIAL PURSUANT TO THE TERMS OF THE
CONFIDENTIALITY AGREEMENT BETWEEN UNITED NEWS &
MEDIA PLC AND GETTY IMAGES INC.
DATED DECEMBER 9, 1999.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY OF TRANSACTION ...................................................... 1
ARTICLE I -- CERTAIN DEFINITIONS AND TERMS ................................ 1
1.1 Specific Definitions ......................................... 1
1.2 Other Terms .................................................. 7
1.3 Other Definitional Provisions ................................ 7
ARTICLE II -- PURCHASE AND SALE OF VERMONT SHARES .......................... 8
2.1 Basic Transaction ............................................ 8
2.2 Purchase Price ............................................... 8
2.3 Cash Adjustment .............................................. 8
2.4 Closing; Deliveries; Payment ................................. 10
ARTICLE III -- REPRESENTATIONS AND WARRANTIES
CONCERNING THE TRANSACTION ................................................ 11
3.1 Representations and Warranties of Unicorn, UBIBV and VCG ..... 11
(a) Organization ............................................ 11
(b) Execution; Authorization of Transaction ................. 11
(c) Brokers' Fees ........................................... 12
(d) Vermont Shares .......................................... 12
(e) Litigation Regarding Vermont Shares ..................... 12
3.2 Representations and Warranties of the Buyer .................. 12
(a) Organization ............................................ 13
(b) Execution; Authorization of Transaction ................. 13
(c) Brokers' Fees ........................................... 13
(d) Investment .............................................. 13
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES
OF UBIBV CONCERNING THE VERMONT ENTITIES .................................. 14
ARTICLE V -- PRE-CLOSING COVENANTS ........................................ 14
5.1 General ...................................................... 14
5.2 Press Releases and Public Announcements ...................... 14
5.3 Disclosure ................................................... 15
5.4 Operation of Business ........................................ 15
5.5 Notices; HSR ................................................. 18
5.6 Assistance ................................................... 19
5.7 Issuance of Securities ....................................... 19
5.8 Other Changes ................................................ 19
5.9 Pensions ..................................................... 19
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
5.10 Bonuses............................................................ 19
ARTICLE VI -- POST-CLOSING COVENANTS......................................... 20
6.1 Further Actions Regarding Transfer................................. 20
6.2 Confidentiality.................................................... 20
6.3 Covenants.......................................................... 20
6.4 Access to Information.............................................. 21
6.5 Removal of Trademarks, Etc......................................... 22
6.6 Certain Taxes...................................................... 22
6.7 Tax Returns; Utilization of Tax Losses............................. 23
6.8 Leases............................................................. 25
6.9 Indemnifying Party................................................. 26
6.10 Andrew Nugee....................................................... 26
6.11 [Intentionally Omitted]............................................ 26
6.12 New York Lease..................................................... 26
6.13 Share Options...................................................... 27
ARTICLE VII -- CONDITIONS TO OBLIGATION TO CLOSE............................. 28
7.1 Conditions to Obligation of Buyer and Communications............... 28
(a) Performance of Obligations of UBIBV........................... 28
(b) Closing Documentation......................................... 28
(c) Approval of Legal Matters..................................... 30
(d) No Litigation................................................. 30
(e) Hart-Scott-Rodino Waiting Period.............................. 30
(f) Laws.......................................................... 30
(g) Financial Capacity............................................ 30
(h) Form 403...................................................... 30
7.2 Conditions to Obligation of Unicorn, VCG and UBIBV................. 31
(a) Performance of Obligations of Buyer and Communications........ 31
(b) Closing Documentation......................................... 31
(c) Approval of Legal Matters..................................... 32
(d) No Litigation................................................. 32
(e) Hart-Scott-Rodino Waiting Period.............................. 32
ARTICLE VIII -- REMEDIES FOR BREACHES OF THIS AGREEMENT...................... 32
8.1 Survival of Representations and Warranties......................... 32
8.2 Indemnification Provisions for Benefit of Buyer and Communications. 34
8.3 Indemnification Provisions for Benefit of UBIBV and VCG............ 35
8.4 Matters Involving Third Parties.................................... 36
8.5 Sole Remedy........................................................ 37
8.6 Unlimited Claims................................................... 37
8.7 Litigation Claim................................................... 38
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE IX - TERMINATION............................................... 38
9.1 Termination of Agreement................................... 38
9.2 Effect of Termination...................................... 38
9.3 Liquidated Damages......................................... 39
ARTICLE X - MISCELLANEOUS.............................................. 39
10.1 Entire Agreement........................................... 39
10.2 No Third-Party Beneficiaries............................... 39
10.3 Succession and Assignment.................................. 40
10.4 Counterparts............................................... 40
10.5 Headings................................................... 40
10.6 Notices.................................................... 40
10.7 Governing Law.............................................. 41
10.8 Return of Information...................................... 41
10.9 Amendments and Waivers..................................... 41
10.10 Severability............................................... 42
10.11 Expenses................................................... 42
10.12 Construction............................................... 42
10.13 Incorporation of Exhibits, Annexes and Schedules........... 42
10.14 Specific Performance....................................... 42
10.15 Submission to Jurisdiction................................. 43
10.16 Fulfillment of Obligations................................. 43
10.17 Schedules.................................................. 44
10.18 Definition of "ordinary course"............................ 44
10.19 Attorney's Fees............................................ 44
</TABLE>
iii
<PAGE> 5
DISCLOSURE SCHEDULE
<TABLE>
<CAPTION>
SCHEDULE SECTION HEADING
- -------- ---------------
<S> <C>
I Intercompany Debt
S Subsidiaries
Section 3.1 Representation and Warranties (Seller Side)
Section 3.2 Representation and Warranties (Buyer Side)
Section 5.4(g) Operation of Business
Section 4.1 Interest in Related Entities
Section 4.3 Vermont Entities Capitalization
Section 4.4 Investments
Section 4.5 No Violations
Section 4.6 Title to Assets; Encumbrances
Section 4.7 Possession
Section 4.8 Personal Property
Section 4.10(a) Intellectual Property
Section 4.10(b) Infringement by VCG
Section 4.10(d) Validity
Section 4.10(e) Claims
Section 4.10(f) Infringement against VCG
Section 4.10(m) Registered Marks
Section 4.10(n) Owned Images
Section 4.10(q) Licensed Images
Section 4.10(s) Storage/Handling Contracts
Section 4.10(v) Photographer Contracts
Section 4.11 Environmental Protection
Section 4.13 Certain Changes and Events
Section 4.14 Absence of Changes
Section 4.15 Tax Matters
Section 4.16 Compliance with Laws
Section 4.17 Litigation regarding Vermont Entities
Section 4.18 Permits
Section 4.19 Employees; Labor Relations
Section 4.20(a) Employee Benefit Plans
Section 4.20(c) Qualification; Compliance
Section 4.22 Agreements
Section 4.23 Certain Matters Concerning Pix
Section 4.24 Insurance
EXHIBITS
Exhibit A Form of Joint Press Release
</TABLE>
iv
<PAGE> 6
STOCK PURCHASE AGREEMENT
Agreement entered into as of March 21, 2000, by and among United Business
Information B.V., a corporation organized pursuant to the laws of The
Netherlands ("UBIBV"), Visual Communications Group (VCG) B.V., a corporation
organized under the laws of The Netherlands ("VCG"), United News & Media plc,
an English limited company ("Unicorn"), Getty Communications Limited, an
English limited company ("Communications"), and Getty Images Inc., a Delaware
corporation ("Buyer"). Buyer, Communications, UBIBV and Unicorn are referred to
collectively herein as the "Parties" and each individually as a "Party".
SUMMARY OF TRANSACTION
WHEREAS, UBIBV owns a majority of the issued and outstanding capital stock
and equity interests of VCG;
WHEREAS, VCG is the legal and beneficial owner of all of the issued stock
or share capital of Visual Communications Group Holdings Ltd., a company
incorporated in England and Wales ("VCG Holdings"), Definitive Stock, Inc., a
Delaware corporation ("Definitive Stock"), and VCG Holdings LLC ("VCGLLC") a
Delaware limited liability company; and
WHEREAS, Buyer desires to purchase, and VCG desires to sell all of the
Definitive Stock Shares and all of the VCGLLC Shares, upon the terms and subject
to the satisfaction of the conditions set forth in this Agreement; and
WHEREAS, Communications desires to purchase, and VCG desires to sell all
of the VCG Holdings Shares, upon the terms and subject to the satisfaction of
the conditions set forth in this Agreement; and
NOW, THEREFORE, to effect such transactions and in consideration of the
mutual covenants, representations, warranties and agreements hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged by each Party, and intending to be legally bound hereby, the
Parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS AND TERMS
1.1 SPECIFIC DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth or as referenced below:
<PAGE> 7
"Adverse Consequences" shall mean actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" shall mean with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with, such
other Person at the time at which the determination of affiliation is made. As
used in this definition, the term "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as
applied to any Person, means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or other ownership
interests, by contract or otherwise. (When used in relation to Buyer or
Communications, the term "Affiliate" shall include the Vermont Entities after
the Closing and when used in relation to a Vermont Entity the term "Affiliate"
shall include the Buyer and Communications after the Closing.)
"Agreement" shall mean this Agreement, as the same may be amended or
supplemented from time to time in accordance with the terms hereof.
"Approved Images" shall have the meaning set forth in Section 4.10.
"Authorizations" shall have the meaning set forth in Section 4.18.
"Assets" means the assets of the Vermont Entities, including all real and
personal property owned or leased by the Vermont Entities.
"Bavaria" shall mean VCG Deutschland GmbH, a corporation organized under
the laws of Germany.
"Bavaria Agreement" shall mean the Stock Purchase Agreement dated of even
date herewith among Unicorn, UBIBV, Ludgate Holdings GmbH, a corporation
organized under the laws of Germany, Tony Stone Associates GmbH, a corporation
organized under the laws of Germany, and Buyer.
"Bavaria Entities" shall mean Bavaria and each of its Subsidiaries.
"Bavaria Financial Statements" shall have the meaning set forth in Section
4.12 of the Bavaria Agreement.
"Benefit Plans" shall have the meaning set forth in Section 4.20.
"Books and Records" shall mean all books, ledgers, files, reports, plans
and operating records
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<PAGE> 8
of, or maintained by or for, the Vermont Entities.
"Business" shall mean the business of the Vermont Entities, taken together
as a group, comprised of the licensing of still photography images to persons
in the advertising, design, publishing and corporate markets.
"Business Day(s)" shall mean any day or days other than a Saturday, a
Sunday or a United States federal holiday or a state holiday in the State of
New York.
"Buyer" shall have the meaning set forth in the recitals.
"Cash Adjustment Amount" shall have the meaning set forth in Section 2.3.
"Cash Statement" shall have the meaning set forth in Section 2.3.
"Chosen Courts" shall have the meaning set forth in Section 10.15.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement.
"Closing Date" shall have the meaning set forth in Section 2.4(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Communications" shall have the meaning set forth in the recitals.
"Confidentiality Agreement" shall mean the Agreement dated December 9,
1999 between Unicorn and Buyer.
"Contracts" shall mean any agreements, contracts, leases, purchase orders,
arrangements, commitments and licenses, whether oral or written.
"Damages" shall mean any and all costs, damages, liabilities, fines, fees,
penalties, interest obligations, deficiencies, losses, Taxes and expenses
(including, without limitation, amounts paid in settlement, interest, court
costs, costs of investigation, reasonable fees and expenses of attorneys,
accountants, actuaries, and experts, and other reasonable expenses of
litigation or mediation of any claim, default, or assessment), and diminution
in value, including incidental and consequential damages, whether or not
involving a third party claim.
"Definitive Stock" shall have the meaning set forth in the recitals.
"Definitive Stock Shares" shall mean all of the issued stock and share
capital of Definitive Stock.
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<PAGE> 9
"Disclosure Schedule" shall have the meaning set forth in Article IV.
"Dispute Accountants" shall have the meaning set forth in Section 2.3.
"Employees" shall mean all current and former employees of the Vermont
Entities.
"Encumbrances" shall mean any and all mortgages, pledges, assessments,
security interests, leases, subleases, liens, adverse claims, tribal claims,
levies, charges, options, warrants, assignments, rights to possession, rights
of others or restrictions (whether on voting, sale, transfer, disposition or
otherwise) or other encumbrances of any kind, whether imposed by agreement,
understanding, law or equity, or any conditional sale contract, title retention
contract, or other contract to give or refrain from giving any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" shall have the meaning set forth in Section 2.3.
"Governmental Authority" shall mean any court (including a court of
equity), any federal, provincial, state, county, municipal or other government
or governmental department, ministry, commission, board, bureau, agency or
instrumentality, any securities commission, stock exchange or other regulatory
or self regulatory body, any arbitrator or arbitration tribunal and any other
tribunal, whether domestic or foreign.
"Governmental Authorizations" shall mean all licenses, permits,
certificates and other authorizations and approvals required (i) with respect to
Buyer, Communications, UBIBV, VCG or a Vermont Entity to perform their
respective obligations hereunder and (ii) with respect to the Vermont Entities,
to carry on its business as currently conducted or presently proposed to be
conducted under applicable laws, ordinances or regulations of any Governmental
Authority.
"Group Entities" shall mean the Vermont Entities and the Bavaria Entities,
and each such entity shall be referred to individually as a "Group Entity".
"Holdings" shall mean Ludgate Holdings GmbH, a corporation organized under
the laws of Germany.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Image" shall have the meaning set forth in Section 4.10.
"Indemnified Parties" shall have the meaning set forth in Section 8.4(a).
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<PAGE> 10
"Indemnifying Party" shall have the meaning set forth in Section 8.4(a).
"Intellectual Property" shall have the meaning set forth in Section 4.10.
"Intercompany Debt" shall mean that debt owing by any of the Group
Entities to UBIBV or any of UBIBV's Affiliates (other than the Group Entities),
or by UBIBV or any of UBIBV's Affiliates to any Group Entity as at the Closing
Date and to the extent set forth on a Schedule I, to be delivered by UBIBV to
Buyer not less than two (2) Business Days prior to the Closing Date. For
purposes of Purchase Price in Section 2.2 hereof. Intercompany Debt addressed
in the Bavaria Agreement shall be excluded.
"Knowledge of Seller" shall mean knowledge of at least one of the
directors and executive officers of UBIBV or at least one of the following
directors and executive officers of VCG: Andrew Nugee, Michael Wolfson, Leo
Shapiro, Charles Gregson, Neil Mepham (with respect only to Section 4.15) and
David Moody and Rebecca Taylor (with respect only to Section 4.10) and Craig
Baxendale (with respect only to Section 4.10). "Knowledge of Seller" shall
include the knowledge that any of such persons would have had if he or she had
made due inquiry.
"Laws" shall mean any federal, state, foreign, or local law, statute,
ordinance, rule, regulation, order, judgment or decree.
"Leases" shall have the meaning set forth in Section 4.9.
"Licensed Images" shall have the meaning set forth in Section 4.10.
"Licensed Intellectual Property" shall have the meaning set forth in
Section 4.10.
"Listed Intellectual Property" shall have the meaning set forth in Section
4.10.
"Material Adverse Effect" shall mean a material adverse effect on the
validity or enforceability of this Agreement, on the ability of a particular
Party to perform its obligations under this Agreement, or on the business,
operations, assets, liabilities, condition (financial or otherwise) or results
of operations of such Party.
"Material Agreement" shall have the meaning set forth in Section 4.22.
"Merger" shall have the meaning set forth in Section 4.23.
"Owned Images" shall have the meaning set forth in Section 4.10.
"Owned Intellectual Property" shall have the meaning set forth in Section
4.10.
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<PAGE> 11
"Person" shall mean an individual, a corporation, a partnership, an
association, a limited liability company, a trust or other entity or
organization.
"Regulatory Law" means the Sherman Act, as amended, the Clayton Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other federal, state and foreign, if any, statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are designed
or intended to prohibit, restrict or regulate (i) mergers, acquisitions or
other business combinations, (ii) foreign investment or (iii) actions having
the purpose or effect of monopolization or restraint of trade or lessening
competition.
"Returns" shall mean all information, notices, accounts, computations,
returns, declarations, reports, estimates, information returns and statements
of any nature regarding Taxes.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Software" shall have the meaning set forth in Section 4.10.
"Subsidiaries" shall mean any corporation, company, partnership or other
entity the majority of the voting equity or other ownership interests of which
is owned, directly or indirectly, by the entity in connection with which the
term is employed, and shall include, in the case of a partnership, any
partnership whose general partner is the entity in connection with which the
term is employed (when referring to VCG Holdings, Definitive Stock or VCGLLC,
"Subsidiaries" shall include without limitation each of the entities set forth
on Schedule S attached hereto).
"Taxes" shall mean all federal, state, local or foreign taxes, charges,
duties, fees, imposts, levies or other assessments, in all cases in the nature
of taxation, including, but not limited to income, gross receipts, windfall
profits, capital, net worth, profits, corporate value added, capital duty,
severance, real property, personal property, inheritance, gift, production,
sales, use, license, excise, franchise, employment, withholding, transfer, ad
valorem, inventory, capital stock, social security, national insurance,
payroll, unemployment, severance, stamp, occupation or similar taxes, customs
duties, fees, assessments and charges of any kind whatsoever, in each case: (i)
whether computed on a separate, consolidated, combined, unitary or any other
basis (including pursuant to a statutorily imposed transferee liability); and
(ii) together with any interest, additions or penalties with respect thereto
and any interest in respect of such additions or penalties.
"Taxing Authority" shall mean the Internal Revenue Service and any other
domestic or foreign governmental authority responsible for the administration
of any Taxes.
"UBIBV" shall have the meaning set forth in the recitals.
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<PAGE> 12
"UK Benefit Plans" shall mean (a) United Money Purchase Pension Scheme;
(b) Group Personal Pension Scheme for VCG employees; (c) United Magazines Final
Salary Pension Scheme; (d) the personal pension arrangement for Mr. Angeloglou
with Scottish Widows; and (e) United Pension Plan.
"Unapproved Images" shall have the meaning set forth in Section 4.10.
"Unicorn" shall have the meaning set forth in the recitals.
"VCG" shall have the meaning set forth in the recitals.
"VCG Holdings" shall have the meaning set forth in the recital.
"VCG Holdings Shares" shall mean all of the issued stock and share capital
of VCG Holdings.
"VCGLLC" shall have the meaning set forth in the recitals.
"VCGLLC Shares" shall mean all of the issued and outstanding equity or
other ownership interests in VCGLLC.
"Vermont Entities" shall mean VCG Holdings, Definitive Stock, VCGLLC and
each of their Subsidiaries.
"Vermont Shares" shall mean all of the VCG Holdings Shares, all of the
Definitive Stock Shares and all of the VCGLLC Shares.
1.2 OTHER TERMS. Other terms may be defined elsewhere in the text of this
Agreement and, unless otherwise indicated, shall have the meaning specifically
ascribed to such terms wherever such terms appear elsewhere in this Agreement.
1.3 OTHER DEFINITIONAL PROVISIONS.
(a) References in this Agreement to "Sections," "Articles,"
"Exhibits," "Annexes" and "Schedules" are to sections, articles, exhibits,
annexes and schedules herein and hereto unless otherwise indicated. Unless
otherwise set forth herein, references in this Agreement to any document,
instrument or agreement (including, without limitation, this Agreement) (i)
shall include all exhibits, annexes, schedules and other attachments thereto,
(ii) shall include all documents, instruments or agreements issued or executed
in replacement thereof and (iii) shall mean such document, instrument or
agreement, or replacement or predecessor thereto, as amended, modified or
supplemented from time to time in accordance with its terms and in effect at any
given time.
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<PAGE> 13
(b) Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular or plural.
(c) 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.
(d) References to any statute or statutory provision shall be
construed as a reference to such statute or statutory provision as in force at
the date of this Agreement and as respectively subsequently amended, re-enacted
or consolidated.
ARTICLE II
PURCHASE AND SALE OF VERMONT SHARES
2.1 BASIC TRANSACTION. On the terms and subject to the conditions of this
Agreement, and in reliance upon the representations and warranties of the
Parties herein, at the Closing, (i) Buyer agrees to purchase from VCG, and VCG
agrees to sell, transfer and convey to Buyer, or cause the sale, transfer and
conveyance to Buyer, all of the Definitive Stock Shares and VCGLLC Shares, and
(ii) Communications agrees to purchase from VCG and VCG agrees to sell,
transfer and convey to Communications, all of the VCG Holdings Shares,
collectively for the consideration specified in Section 2.2 hereof.
2.2 PURCHASE PRICE. At the Closing, as the Purchase Price to be paid by
Buyer and Communications for the Vermont Shares, Buyer and Communications shall
pay to VCG the aggregate sum of $203,000,000 less the amount of Intercompany
Debt (the "Purchase Price"), subject to post-Closing adjustment to increase or
decrease the Purchase Price by the Cash Adjustment Amount pursuant to Section
2.3.
2.3 CASH ADJUSTMENT. As soon as practicable, but in any event not later
than five (5) business days following the Closing Date, Buyer shall cause to be
delivered to UBIBV an unaudited statement of the cash, cash equivalents and bank
overdrafts of the Group Entities taken as a whole (the "Cash Statement"), as of
the close of business on the Closing Date, prepared in accordance with United
Kingdom generally accepted accounting standards applied on a basis consistent
with the prior practices of the Group Entities (hereinafter, "GAAP"), provided,
however, that cash, cash equivalents and bank overdrafts will be determined for
purposes of the Cash Statement through full application of the procedures used
in preparing the most recent balance sheet included within the Audited Vermont
Financial Statements and the Bavaria Financial Statements. For the avoidance of
doubt, in calculating the amount of cash, such amount shall be reduced by the
amount of any checks drawn prior to Closing which have not been present prior to
closing, and increased by the amount of any receipts paid-in but not yet cleared
as of the Closing. For the avoidance of doubt, the Cash Statement shall be
prepared and shall reflect the cash balances of the Group Entities immediately
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<PAGE> 14
prior to settlement of the Intercompany Debt.
UBIBV and its accountants PriceWaterhouseCoopers LLC ("UBIBV's
Accountants"), shall have the right to review the Cash Statement, and in
connection with such review, UBIBV and UBIBV's Accountants shall have the right
to examine any books and records of the Group Entities reasonably necessary to
make a complete review of the Cash Statement, and Buyer shall make available to
UBIBV and UBIBV's Accountants their working papers related to the preparation of
the Cash Statement.
Within five (5) business days after UBIBV receives the Cash Statement,
UBIBV shall give written notice to Buyer of any objections UBIBV has with
respect to the Cash Statement, which notice shall specify the basis for such
objections in reasonable detail. If UBIBV does not notify Buyer of any
objections within such five business day period, then UBIBV shall be deemed to
have accepted the Cash Statement and the amounts reflected therein shall become
final and binding on the Parties for purposes of this Section 2.3.
If UBIBV objects to the Cash Statement as provided above, then the parties
shall negotiate in good faith to resolve such objections and arrive at an
agreed upon Cash Statement. Any objections of UBIBV which have not been
resolved by the parties within 10 business days after the delivery of UBIBV's
objections to Buyer shall be presented for resolution to Arthur Andersen LLP
(the "Dispute Accountants"). The Dispute Accountants shall promptly resolve the
disputed items in accordance with the provisions of this Section 2.3 and the
determinations of the Dispute Accountants in respect thereof shall be final and
binding upon the parties for purposes of this Section 2.3. Neither party will
disclose to the Dispute Accountants, nor will the Dispute Accountants consider
for any purpose, any settlement offer made by either party.
As used in this Agreement, the term "Cash Statement" shall mean such
statement in the form which becomes final and binding upon the Parties as
hereinabove provided.
After the Cash Statement is finalized, the Purchase Price shall be
adjusted upward or downward as follows: (A) if the net amount of cash, cash
equivalents and bank overdrafts reflected on the Cash Statement exceeds Pound
Sterling 450,000, then the Purchase Price shall be increased by the amount of
such excess (the "Cash Adjustment Amount") and Buyer shall pay the Cash
Adjustment Amount to UBIBV, or (B) if the net amount of cash, cash equivalents
and bank overdrafts reflected on the Cash Statement are less than Pound
Sterling 450,000, then the Purchase Price shall be decreased by the amount of
such deficiency (the "Cash Adjustment Amount") and UBIBV shall pay the Cash
Adjustment Amount to Buyer.
The appropriate party shall, within one (1) business day after the Cash
Statement becomes final and binding, pay to the other party the Cash Adjustment
Amount, together with interest thereon at a rate of LIBOR plus one percent (1%)
calculated from the Closing Date to the date on which the Cash Adjustment
Amount is received by the party that is entitled to payment thereof.
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2.4 Closing; Deliveries; Payment.
(a) The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Carter, Ledyard & Milburn at Two
Wall Street, New York, New York, commencing at 10:00 a.m. local time on March
26, 2000, or at such other, or such additional, time and place as the Parties
hereto may mutually agree (the "Closing Date"). The Closing shall be deemed to
have occurred at 12:01 a.m. local time, on the Closing Date.
(b) The Vermont Shares shall be delivered to Buyer and Communications free
and clear of all liens, pledges, encumbrances, claims, security interests,
charges, voting trusts, voting agreements, other agreements, rights, options,
warrants or restrictions or claims of any kind, nature or description, other
than pursuant to this Agreement. At the Closing, UBIBV and VCG shall also
deliver such certificates, instruments, and documents as are required of UBIBV
and VCG under the terms and provisions of this Agreement, all of which shall be
in form and substance reasonably satisfactory to Buyer. At the Closing, VCG
shall deliver to Communications a duly executed stock transfer form in relation
to the entire issued share capital of VCG Holdings, together with a share
certificate in respect of the number of shares constituted in that stock
transfer form in favor of Communications and shall cause the name of
Communications to be entered into the register of members of VCG Holdings as the
registered holder of such shares subject to the stock transfer form being duly
stamped. At the Closing, VCG shall deliver to Buyer (on its permitted assignee)
stock powers duly endorsed in blank in respect of the Definitive Stock Shares.
(c) At the Closing, Buyer shall pay the Purchase Price to VCG for the
Vermont Shares in immediately available funds by wire transfer to such
account(s) as shall be designated by VCG in writing at least two (2) full
Business Days prior to the Closing. Buyer and VCG shall agree prior to the
Closing on the allocation of the Purchase Price among the Vermont Entities.
Buyer shall deliver such certificates, instruments and documents as are required
of Buyer and Communications under the terms and provisions of this Agreement,
all of which shall be in form and substance reasonably satisfactory to VCG.
(d) On the Closing Date, Buyer and Communications will cause the Vermont
Entities to settle all Intercompany Debt and shall put them in funds to do so in
an amount equal to the Intercompany Debt. If and to the extent that following
payment of all Intercompany Debt any amount is or may become payable by any of
the Vermont Entities to UBIBV or any Affiliate of UBIBV (other than a Vermont
Entity), the occurrence of Closing shall take effect as a waiver by UBIBV, for
itself and on behalf of each of its Affiliates, of any amount so payable, except
with respect to normal trading balances payable to OiT and Express Newspapers
Limited and receivable by FPG International, L.L.C. in respect to web hosting,
image purchasing and rent respectively, which shall survive and continue on
normal terms or as otherwise provided herein.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
CONCERNING THE TRANSACTION
------------------------------
3.1 REPRESENTATIONS AND WARRANTIES OF UNICORN, UBIBV AND VCG. Unicorn,
UBIBV and VCG jointly and severally represent and warrant to Buyer and
Communications that the statements contained in this Section 3.1 are correct
and complete with respect to itself as of February 27, 2000 and will be correct
and complete with respect to itself as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this Agreement
throughout this Section 3.1), except as set forth in Section 3.1 of the
Disclosure Schedule attached hereto.
(a) Organization. Each of Unicorn, UBIBV and VCG is a company duly
organized and validly existing under the laws of its jurisdiction of
organization and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
(b) Execution; Authorization of Transaction. Each of UBIBV, Unicorn
and VCG has all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder, subject to the receipt of
the approvals, consents and authorizations contemplated hereby. This Agreement
has been duly and validly authorized, executed and delivered by each of UBIBV,
VCG and Unicorn and constitutes a legal, valid and binding obligation of UBIBV,
VCG and Unicorn, enforceable against each of them in accordance with its terms
and conditions, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the HSR Act and as otherwise set
forth in Section 3.1 to the Disclosure Schedule, no filing with or notice to,
and no permit, authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery by each of UBIBV, VCG and
Unicorn of this Agreement or the consummation by each of them of the
transactions contemplated hereby, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings or give
such notice do not or would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect. Neither the execution, delivery
and performance of this Agreement by each of UBIBV, VCG and Unicorn nor the
consummation by them of the transactions contemplated hereby will (i) conflict
with or result in any breach of any provision of the respective articles of
association or bylaws (or similar governing documents) of UBIBV, VCG, Unicorn
or any of the Vermont Equities, or (ii) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration or lien) under, any of the terms, conditions or provisions of any
Law applicable to UBIBV, VCG and Unicorn or any of the Vermont Entities or any
note, bond, mortgage, indenture, lease, license, contract, agreement or other
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instrument or obligation to which UBIBV, VCG, Unicorn or any of the Vermont
Entities is a party or by which any of them or any of their respective
properties or assets may be bound, except in the case of violations, breaches or
defaults which do not or would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
(c) Brokers' Fees. None of UBIBV, VCG or Unicorn has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which the Vermont
Entities, Buyer or Communications could become liable or obligated.
(d) Vermont Shares VCG is the legal and beneficial owner of all of the
Vermont Shares, in each case free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act, state securities laws and
restrictions on transfer set forth in the Articles of Association of VCG),
Taxes, Encumbrances, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. Neither UBIBV nor VCG is a party to any option,
warrant, purchase right, or other contract or commitment that could require
UBIBV or VCG to sell, transfer, or otherwise dispose of any capital stock of the
Vermont Entities (other than this Agreement). Neither UBIBV nor VCG is a party
to any trust, proxy, or other agreement or understanding with respect to the
voting of any shares or capital stock of VCG Holdings, Definitive Stock or
VCGLLC. The Vermont Shares owned by VCG constitute 100% of the outstanding
voting capital of VCG Holdings, Definitive Stock and VCGLLC. No dividends or
other distributions of cash or property have been declared on the Vermont Shares
to any person which are due and/or have remained unpaid.
(e) Litigation Regarding Vermont Shares There are no actions, suits,
claims, investigations or legal or administrative or arbitration (or other
binding alternative dispute resolution) proceedings pending or, to the Knowledge
of Seller, threatened by or against: (I) UBIBV or VCG relating to the Vermont
Shares owned by VCG or (II) UBIBV or VCG relating to this Agreement and/or the
transactions contemplated hereby, before any court, governmental agency or other
body, and no judgment, order, writ, injunction, decree or other similar command
of any court or governmental agency or other body has been entered against or
served upon: (I) UBIBV or VCG relating to the Vermont Shares owned by VCG, or
(II) UBIBV or VCG relating to this Agreement and/or the transactions
contemplated hereby.
3.2 REPRESENTATIONS AND WARRANTIES OF THE BUYER. Buyer represents and
warrants to UBIBV and VCG that the statements contained in this Section 3.2 are
correct and complete as of February 27, 2000 and will be correct and complete as
of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3.2), except
as set forth in Section 3.2 of the Disclosure Schedule attached hereto.
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(a) Organization. Each of Buyer and Communications is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
(b) Execution; Authorization of Transaction. Each of Buyer and
Communications has all requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder, subject to the receipt
of the approvals, consents and authorizations contemplated hereby. This
Agreement has been duly and validly authorized, executed and delivered by Buyer
and Communications and constitutes a legal, valid and binding obligation of
Buyer and Communications, enforceable in accordance with its terms and
conditions, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the HSR Act and as otherwise set
forth in Section 3.2 to the Disclosure Schedule, no filing with or notice to,
and no permit, authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery by Buyer and
Communications of this Agreement or the consummation by Buyer and
Communications of the transactions contemplated hereby, except where the
failure to obtain such permits, authorizations, consents or approvals or to
make such filings or give such notice do not or would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Neither the execution, delivery and performance of this Agreement by Buyer and
Communications nor the consummation by Buyer and Communications of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the articles of incorporation or bylaws (or similar
governing documents) of Buyer or Communications, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, amendment, cancellation or
acceleration or lien) under, any of the terms, conditions or provisions of any
Law applicable to Buyer or Communications or any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which Buyer or Communications is a party or by which Buyer or
Communications or any of their respective properties or assets may be bound,
except in the case of violations, breaches or defaults which do not or would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(c) Brokers' Fees. Neither Buyer nor Communications has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which UBIBV, VCG
or Unicorn could become liable or obligated.
(d) Investment. Buyer is acquiring the Definitive Stock Shares and the
VCGLLC Shares, and Communications is acquiring the VCG Holdings Shares, solely
for the purpose of investment and not with a view to, or for sale in connection
with, any distribution thereof in violation of the Securities Act. Buyer and
Communications acknowledge that the Vermont Shares are not
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registered under the Securities Act or any applicable state securities law, and
that such Vermont Shares may not be transferred or sold except pursuant to the
registration provisions of the Securities Act or pursuant to an applicable
exemption therefrom and pursuant to state securities laws and regulation as
applicable.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF UBIBV CONCERNING THE VERMONT ENTITIES
UBIBV represents and warrants to Buyer and Communications, as of
February 27, 2000 and as of the Closing Date (except that representations and
warranties that are made as of a specific date need to be true only as of such
date), as provided in Annex A hereto, subject to and except as disclosed in the
Disclosure Schedule delivered by UBIBV to Buyer and Communications and initialed
by the Parties (the "Disclosure Schedule"). For purposes of this Agreement the
disclosure of any matter in any Section of the Disclosure Schedule shall serve
as sufficient disclosure for purposes of all of the representations and
warranties contained in Annex A hereto as to which the descriptive nature of the
disclosure provides sufficient notice of the materials, facts or items described
therein to indicate such disclosure's relevancy to other representations and
warranties.
ARTICLE V
PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
5.1 GENERAL. Each of the Parties will use its commercially reasonable
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions
set forth in Article VII below).
5.2 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue or
cause to be issued any press release or make or cause to be made any public
announcement relating to the subject matter of this Agreement prior to the
Closing (except for the joint press release to be made on or about the Closing
Date in the form attached hereto as Exhibit A), without the prior written
approval of the other Parties; provided, however, that any Party may make any
public disclosure it believes in good faith is required by applicable law, as a
result of being listed on an exchange or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing Party
will use its best efforts to advise the other Parties prior to making the
disclosure). The provisions of this Section 5.2 shall supersede any conflicting
provision contained in the Confidentiality Agreement.
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5.3 DISCLOSURE. All information delivered to Buyer and Communications by
UBIBV, VCG or the Vermont Entities, or to which Buyer and Communications have
been provided access by UBIBV, VCG or the Vermont Entities or in connection
with this Agreement and the transactions contemplated hereby shall be subject
to the terms of the Confidentiality Agreement, which Confidentiality Agreement
shall survive the Closing or any termination of this Agreement.
5.4 OPERATION OF BUSINESS. Except as contemplated by this Agreement,
UBIBV shall procure that each of the Vermont Entities shall conduct its
operations in the ordinary and usual course of business consistent with past
practice and to the extent consistent therewith, with no less diligence and
effort than would be applied in the absence of this Agreement, use their
commercially reasonable efforts: (i) to preserve intact its current business
organizations, and (ii) to keep available the service of its current officers
and employees and to preserve its relationships with customers, suppliers and
others having business dealings with it to the end that goodwill and ongoing
businesses shall be unimpaired at the Closing Date. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement or in the Disclosure Schedule, prior to the Closing Date no Vermont
Entity will, without the prior written consent of Buyer and Communications:
(a) amend its certificate of incorporation or bylaws (or other
similar governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
stock of any class or any other securities convertible into or exchangeable for
any stock or any equity equivalents (including, without limitation, any stock
options or stock appreciation rights);
(c) (i) split, combine or reclassify any shares of its capital
stock; (ii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock; (iii) make any other actual, constructive or deemed
distribution in respect of any shares of its capital stock or otherwise make
any payments to stockholders in their capacity as such; or (iv) redeem,
repurchase or otherwise acquire any of its securities or any securities of any
of its subsidiaries;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of itself or any of its subsidiaries;
(e) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any subsidiary;
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(f) (i) incur or assume any long-term or short-term debt or issue any
debt securities, except for borrowings under existing lines of credit in the
ordinary and usual course of business consistent with past practice and in
amounts not material to the Group Entities taken as a whole; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, except in
the ordinary and usual course of business consistent with past practice and in
amounts not material to the Group Entities, taken as a whole, and except for
obligations of the wholly-owned Subsidiaries of VCG Holdings, Definitive Stock
and VCGLLC; (iii) make any loans, advances or capital contributions to, or
investments in, any other person (other than to the wholly-owned Subsidiaries of
VCG Holdings, Definitive Stock or VCGLLC or customary loans or advances to
employees in the ordinary and usual course of business consistent with past
practice and in amounts not material to the maker of such loan or advance); (iv)
pledge or otherwise encumber shares of capital stock of any of the Vermont
Entities; or (v) mortgage or pledge any of its material assets, tangible or
intangible, or create or suffer to exist any material Lien thereupon;
(g) except as may be required by Law or as contemplated by this
Agreement, enter into, adopt or amend or terminate any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation right,
restricted stock, performance unit, stock equivalent, stock purchase agreement,
pension, retirement, deferred compensation, employment, severance or other
employee benefit agreement, trust, plan, fund, award or other arrangement for
the benefit or welfare of any director, officer or employee in any manner, or
(except as set forth in Section 5.4(g) of the Disclosure Schedule, as required
under existing agreements, and hiring and compensation adjustments occurring in
the ordinary course of business consistent with past practices) increase in any
manner the compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any plan and arrangement as in effect as of
February 27, 2000 (including, without limitation, the granting of stock
appreciation rights or performance units);
(h) acquire, sell, lease or dispose of any assets outside the
ordinary and usual course of business consistent with past practice or any
assets which in the aggregate are material to the Group Entities taken as a
whole, enter into any commitment or transaction outside the ordinary and usual
course of business consistent with past practice or grant any exclusive
distribution rights;
(i) except as may be required as a result of a change in Law or in
GAAP, change any of the accounting principles or practices used by it;
(j) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary and usual course of business
consistent with past practice or as required by GAAP;
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(k) acquire (by merger, consolidation, or acquisition of stock or assets)
any corporation, partnership or other business organization or division thereof
or any equity interest therein; (ii) enter into any contract or agreement,
other than in the ordinary and usual course of business consistent with past
practice, or amend in any material respect any of the Material Agreements (iii)
authorize any new capital expenditure or expenditures which, individually, are
in excess of $60,000 or, in the aggregate, are in excess of $250,000 or (iv)
enter into or amend any contract, agreement, commitment or arrangement
providing for the taking of any action that would be prohibited hereunder;
provided that notwithstanding the foregoing each Vermont Entity shall continue
to make any capital expenditure in accordance with any capital expenditure plan
in existence at February 27, 2000;
(l) make or revoke any Tax election, or settle or compromise any Tax
liability or change (or make a request to any taxing authority to change) any
aspect of its method of accounting for Tax purposes;
(m) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction contemplated by
this agreement or in the ordinary and usual course of business consistent with
past practice of liabilities reflected or reserved against in the consolidated
financial statements of the Vermont Entities, or otherwise incurred in the
ordinary and usual course of business consistent with past practice, or waive
the benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which any of the Vermont Entities is a party;
provided that each Vermont Entity shall continue to pay its creditors as they
fall due in the period up to the Closing Date consistent with past practices;
(n) settle or compromise any pending or threatened suit, action or claim
relating to the transactions contemplated hereby;
(o) enter into any agreement or arrangement that limits or otherwise
restricts the Vermont Entities or any successor thereto or that could, after
the Closing Date, limit or restrict the Vermont Entities or any successor
thereto, from engaging or competing in any line of business or in any
geographic area;
(p) commit to any new expenditure in respect to iSwoop; or
(q) take, propose to take, or agree in writing or otherwise to take, any
of the actions described in Sections 5.4(a) through 5.4(p) or any action which
would make any of the representations or warranties of UBIBV contained in this
Agreement (i) which are qualified as to materiality untrue or incorrect or (ii)
which are not so qualified untrue or incorrect in any material respect.
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5.5 NOTICES; HSR. (a) Each of the Parties will give any notices to, make
any filings with, and use its reasonable commercial efforts (in the case of
Buyer, subject to the provisions of Section 5.5(c) below) to obtain any
authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in Section 3.1(b) and
Section 3.2(b) above. Without limiting the generality of the foregoing, each of
the Parties (or appropriate Affiliates) have filed the Notification and Report
Forms and related material were required to be filed with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice (the "DOJ") under the HSR Act, and each of the Parties
will make (and UBIBV will cause its appropriate Affiliate to make) any further
filings pursuant thereto that may be necessary, proper, or advisable in
connection therewith. Any filing fees required in connection with filings under
the HSR Act shall be borne by Buyer.
(b) Each of UBIBV, VCG, VCG Holdings, Definitive Stock, VCGLLC and Buyer
shall use its reasonable efforts to (i) cooperate in all respects with each
other in connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party, (ii) promptly inform the other party of any communication received by
such party from, or given by such party to the DOJ, the FTC or any other
Governmental Authority and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding any
of the transactions contemplated hereby, and (iii) consult with each other in
advance to the extent practicable of any meeting or conference with the DOJ,
the FTC or any such other Governmental Authority or, in connection with any
proceeding by a private party, with any other Person, and to the extent
permitted by the DOJ, the FTC or such other applicable Governmental Authority
or other Person, give the other party the opportunity to attend and participate
in such meetings and conferences.
(c) In furtherance and not in limitation of the covenant of Buyer set
forth in Sections 5.5(a) and (b) above, if any administrative or judicial
action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law, or if any
statute, rule, regulation, executive order, decree, injunction or
administrative order is enacted, entered, promulgated or enforced by a
Governmental Authority which would make this Agreement or the other
transactions contemplated hereby illegal or would otherwise prohibit or
materially impair or delay the consummation of this Agreement or the other
transactions contemplated hereby, Buyer shall use its best efforts, including
without limitation, selling, holding separate or otherwise disposing of or
conducting its business in a specified manner, or agreeing to sell, hold
separate or otherwise dispose of or conduct its business in a specified manner
or permitting the sale, holding separate or other disposition of, any assets of
Buyer or its Subsidiaries or Affiliates or the conducting of their business in
a specified manner, to vigorously contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
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the consummation of this Agreement or the other transactions contemplated
hereby and to have such statute, rule, regulation, executive order, decree,
injunction or administrative order repealed, rescinded or made inapplicable so
as to permit the consummation of the transactions contemplated by this
Agreement.
5.6 ASSISTANCE. Subject to Section 5.3 hereof, UBIBV and VCG shall
provide Buyer and Communications with such assistance as they may reasonably
request and shall generally assist Buyer and Communications with respect to the
introduction of Buyer, Communications and their representatives and agents, to
appropriate governmental agencies or officials having regulatory jurisdiction
over the Business and shall cooperate generally with Buyer and Communications
in all reasonable respects, including, with limitation, communications with
employees, customers and suppliers.
5.7 ISSUANCE OF SECURITIES. Except as otherwise contemplated hereby UBIBV
shall not permit any of the Vermont Entities to (i) issue any debt or equity
security or any options or warrants, (ii) enter into any subscriptions,
agreements, plans or other commitments pursuant to which any of the Vermont
Entities is or may become obligated to issue any shares of its capital stock or
any securities convertible into shares of its capital stock, (iii) otherwise
change or modify its capital structure, (iv) make interim distributions, (v)
engage in any reorganization or similar transaction, or (vi) agree to take any
of the foregoing actions.
5.8 OTHER CHANGES. VCG and/or the Vermont Entities may (i) make capital
expenditures of an emergency nature required to avoid imminent material damage
to or shutdown of the Business, or reasonably necessary for safety reasons,
(ii) take such actions as may be required by law, (iii) change, for any
Employee who is not exempt from the overtime provisions of the Fair Labor
Standards Act, the method of calculating the regular rate of pay for overtime
pay calculation purposes to using a weighted average of the different rates
earned by the Employee during the workweek.
5.9 PENSIONS. The provisions of the Pension Schedule shall have effect in
respect of the UK Benefit Plans.
5.10 BONUSES. At the Closing Date, VCG shall procure that no amounts in
the nature of bonus payments will remain payable by any Vermont Entity to any
of its employees or former employees (i) for the calendar year ended December
31, 1999, or (ii) in the nature of "stay or loyalty bonuses" payable to any
employee of a Vermont Entity in connection with the transactions contemplated
by this Agreement.
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ARTICLE VI
POST-CLOSING COVENANTS
The Parties agree as follows with respect to the period following the Closing:
6.1 FURTHER ACTIONS REGARDING TRANSFER. From and after the Closing, each
Party hereto shall, if reasonably requested by any other Party, execute and
deliver such further instruments of conveyance and transfer and take such other
reasonable action as may be necessary or desirable to provide more effectively
the sale and transfer of the Vermont Shares to Buyer and Communications.
6.2 CONFIDENTIALITY. For a period of three years after the Closing, UBIBV,
VCG, Unicorn and their Affiliates shall not divulge, furnish or make available,
to anyone (other than Buyer, Communications, UBIBV, VCG, Unicorn and their
respective Affiliates) any knowledge or information with respect to any
proprietary information of the Vermont Entities. This Section 6.2 shall not
apply to any such proprietary information which (i) shall have entered the
public domain or become available to the public through no act or omission of
UBIBV, VCG, Unicorn or any Affiliate of the foregoing, (ii) shall have become
available to UBIBV, VCG, Unicorn or any Affiliate of the foregoing from a third
party whom UBIBV, VCG, Unicorn or such Affiliate of the foregoing reasonably
believes is not obligated to the Vermont Entities, Buyer or Communications to
keep such proprietary information confidential, or (iii) shall be required by
law to be disclosed.
6.3 COVENANTS. Each of UBIBV, VCG, Unicorn and their Affiliates undertakes
with the Buyer and Communications that, without the prior written consent of
Buyer it will not and it will procure that none of their respective Affiliates
will:
(a) for the period of 3 years after the date of this Agreement, either
on its own account or in conjunction with or on behalf of any person carry on or
be engaged, concerned or interested (directly or indirectly and whether as
principal, shareholder, agent, consultant, partner or otherwise) in carrying on
the Business, provided, however, that the provisions of this Section 6.3(a)
shall in no way be construed to restrict UBIBV, VCG, Unicorn and their
Affiliates that are currently engaged in an activity that competes with the
Business from continuing to engage in such activity at levels which are not
materially greater than the levels at which such activity is currently
conducted; or
(b) for the period of 3 years after the date of this Agreement, either
on its own account or in conjunction with or on behalf of any other person,
solicit or endeavor to entice away from any Vermont Entity, with a view to
obtaining its business in relation to the business, any person who is (and was
at the Closing Date) a customer of a Vermont Entity; or
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(c) for the period of 3 years after the date of this Agreement,
either on its own account or in conjunction with or on behalf of any person,
employ, solicit or endeavor to entice away from any Vermont Entity any person
employed or engaged by any Vermont Entity in an executive or managerial
capacity, whether or not such person would commit a breach of contract by
reason of leaving service or office, except for Leo Shapiro and Andrew Nugee.
For purposes of this section 6.3(c), bona fide public advertisements shall not
be deemed to constitute "solicitation" or "enticement" in violation of the
provisions hereof; or
(d) Notwithstanding the foregoing, none of UBIBV, VCG, Unicorn and
their Affiliates shall, either on its own account or in conjunction with or on
behalf of any person, employ solicit or endeavor to entice Michael Wolfson away
from Buyer or Buyer's Affiliates for so long as Mr Wolfson is employed by Buyer
or one of Buyer's Affiliates, provided, however, that the foregoing restriction
shall not apply in the event that, by the Closing Date, Mr Wolfson has not
agreed to become an employee of Buyer or one of Buyer's Affiliates following
the Closing Date.
6.4 ACCESS TO INFORMATION.
(a) In order to facilitate the resolution of any third-party claims
made by or against or incurred by or indemnified by UBIBV prior to or after the
Closing, upon reasonable notice, Buyer and Communications shall, after the
Closing: (i) afford the officers, employees and authorized agents and
representatives of UBIBV reasonable access, during normal business hours, to
the offices, properties, books and records of Buyer, Communications and the
Vermont Entities with respect to the Business for the period prior to the
Closing; (ii) furnish to the officers, employees and authorized agents and
representatives of UBIBV such additional financial and other information
regarding the Business for the period prior to the Closing as Buyer,
Communications or any Vermont Entity has in its possession and UBIBV may from
time to time reasonably request; and (iii) make available to UBIBV, the
employees of Buyer, Communications and the Vermont Entities whose assistance,
testimony or presence is necessary to assist UBIBV in evaluating any such
claims and in defending such claims, including the presence of such persons as
witnesses in hearings on trials for such purposes; provided, however, that
such investigation shall not unreasonably interfere with the businesses or
operations of Buyer, Communications or any of their Affiliates; and provided,
however, that Buyer and Communications shall not be obligated to disclose any
information which they or any of their Affiliates holds under a legally binding
obligation of confidentiality or which is protected by any privilege.
(b) In order to facilitate the resolution of any third-party claims
made by or against or incurred by Buyer or Communications after the Closing,
upon reasonable notice, UBIBV, VCG and, with respect to Taxes, Unicorn shall,
after the Closing: (i) afford the officers, employees and authorized agents and
representatives of Buyer and Communications reasonable access, during normal
business hours, to the offices, properties, books and records of UBIBV and VCG
(and, as regards Taxes, of Unicorn) with respect to the Business and the Assets
for the period prior to the Closing; (ii) furnish to the officers, employees
and authorized agents and representatives of Buyer
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and Communications such additional financial and other information regarding
the Business and the Assets for the period prior to the Closing as Buyer and
Communications may from time to time reasonably request; and (iii) make
available to Buyer and Communications, the employees of UBIBV and VCG (and, as
regards Taxes of any Vermont Entity, of Unicorn) whose assistance, testimony or
presence is necessary to assist Buyer and Communications in evaluating any such
claims and in defending such claims, including the presence of such persons as
witnesses in hearings or trials for such purposes; provided, however, that such
investigation shall not unreasonably interfere with the businesses or
operations of UBIBV, VCG, Unicorn or any of their Affiliates; and provided,
however, that neither UBIBV nor Unicorn shall be obligated to disclose any
information which it or any of its Affiliates holds under a legally binding
obligation of confidentiality or which is protected by any privilege.
6.5 REMOVAL OF TRADEMARKS, ETC. As promptly as practicable after the
Closing, and in no event later than ninety (90) days after the Closing Date,
Buyer and Communications agree to (and will cause the Vermont Entities to)
cease use of and to delete, remove or otherwise obliterate from the Assets, and
from all packaging, advertisements, marketing and promotional materials and
other materials used by the Vermont Entities, all trade names and trademarks of
UBIBV, VCG and their Affiliates, including, but not limited to, references to
"United News & Media" "UNM" and derivatives thereof, and logos associated
therewith, provided, however, that for a period of six months following the
Closing Date, Buyer, Communications and their Affiliates shall be permitted to
dispose of inventory included in the Assets on the Closing Date which bears the
trade names or trade-marks of UBIBV, VCG and their Affiliates, and provided
further that Buyer, Communications and their Affiliates may, following the
Closing Date, ship, deliver and display catalogs bearing such trade names or
trademarks which have been produced prior to the Closing Date.
6.6 CERTAIN TAXES. All transfer, documentary, sales, use, stamp,
registration and other similar taxes and fees (including any penalties and
interest, but excluding taxes imposed on income) incurred in connection with
this Agreement, shall, whether imposed upon UBIBV, VCG, Buyer, Communications or
any Vermont Entity, be borne by Buyer or Communications. VCG will file all
necessary Returns and other documentation with respect to all such taxes, and,
if required by applicable law, Buyer and Communications will, and will cause
the Vermont Entities to, joint in the execution of any such Returns and other
documentation. All costs and expenses incurred in connection with VCG's filing
of Returns hereunder shall be borne by Buyer or Communications. Buyer and VCG
further agree (and each shall cause the Vermont Entities to), upon request, to
use their best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to mitigate,
reduce or eliminate any such tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).
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6.7 TAX RETURNS; UTILIZATION OF TAX LOSSES.
(a) In respect of any Tax accounting period of any Vermont Entity
ending on or before the Closing Date, VCG and such of VCG's Affiliates as are
legally competent to do so ("the Surrendering Companies") shall be entitled
(but not required) to surrender and Buyer and Communications shall procure that
the relevant Vermont Entity shall cooperate with the Surrendering Companies to
accept, receive or utilize some or all Tax losses of the relevant Surrendering
Company so as to reduce or extinguish any pre-Closing Tax liability of the
Vermont Entity.
(b) To the extent that a Tax loss surrendered in accordance with
paragraph (a) above reduces or eliminates a Tax liability for any 1999 Tax
accounting period that was provided for in the Audited Vermont Financial
Statements, Buyer and Communications shall cause the relevant Vermont Entity to
pay as consideration to the relevant Surrendering Company an amount certified
by VCG's auditors to be equal to the difference between (i) the Tax otherwise
due and payable absent such surrender and (ii) the Tax due and payable taking
into account such surrender. Any payments that are due to be made by the
relevant Vermont Entity hereunder shall be made on the date on which the Tax
that is saved by virtue of such surrender would otherwise first have been due
and payable. To the extent that a Tax liability for any 1999 Tax accounting
period is either paid to the relevant Taxing Authority or reduced by reasons of
a Tax loss surrendered by a Surrendering Company that is reimbursed pursuant to
this Section 6.7(b), the accrual or reserve for Taxes in the Audited Vermont
Financial Statements shall be reduced for purposes of Section 8.2(c) hereof.
(c) To the extent that a Tax loss surrendered in accordance with
Section 6.7(a) reduces or eliminates a Tax liability that was not provided for
in the Audited Vermont Financial Statements in respect of a 1999 Tax accounting
period, no payment shall be made therefor by the relevant Vermont Entity but
the full value or benefit of such surrender to the relevant Vermont Entity
shall be taken into account when computing the amount of any Adverse
Consequences suffered by any relevant Vermont Entity.
(d)(i) Except as provided in Section 6.7(d)(iii), VCG, or its duly
authorized agents, shall be responsible for and have the conduct of preparing,
submitting and agreeing all Returns of the Vermont Entities (and
correspondence and other documentation relating thereto) with respect to Tax
accounting periods ending on or before the December 31, 1999, subject to all
such Returns being submitted in draft form to Buyer or to Buyer's duly
authorized agent for comment at least 42 days before the same are due to be
submitted to the relevant Taxing Authority. Buyer or Buyer's agents shall
within 21 days of such submission provide written comments thereon to VCG and
if VCG shall not have received comments within that period, Buyer shall be
deemed to have approved such draft Returns. Such deemed approval shall not by
itself constitute a waiver of Buyer's or Communications' other rights, if any,
under this Agreement. If Buyer or Buyer's agents shall have made any written
comments in accordance with the provisions of this Section, VCG shall not
unreasonably refuse to adopt such comments provided that VCG and VCG's agents
shall not be
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obliged to submit any Return to any relevant Taxing Authority unless reasonably
satisfied that it is accurate and complete in all material respects. VCG and
Buyer shall respectively afford (or procure to be afforded) to the other or to
the other's agents such information and assistance as may reasonably be required
to prepare, submit and agree all relevant Returns.
(ii) For Vermont Entities which are tax resident in the Netherlands and
Germany, UBIBV, VCG, and their duly authorized agents, shall be responsible for
and have the conduct of preparing, submitting and agreeing to the relevant
fiscal unity Returns for Tax accounting periods beginning prior to the Closing
Date (and correspondence and other documentation relating thereto) subject to
all such returns being submitted in draft form to Buyer or to Buyer's duly
authorized agent for comment at least 42 days before the same are due to be
submitted to the relevant Taxing Authority. Buyer or Buyer's agents shall within
21 days of such submission provide written comments thereon to VCG and if VCG
shall not have received comments within that period, Buyer shall be deemed to
have approved such draft Returns. Such deemed approval shall not by itself
constitute a waiver of Buyer's other rights, if any, under this Agreement. If
Buyer or Buyer's agents shall have made any written comments in accordance with
the provisions of this Section, VCG shall not unreasonably refuse to adopt such
comments provided that VCG and VCG's agents shall not be obliged to submit any
Return to any relevant Taxing Authority unless reasonably satisfied that it is
accurate and complete in all material respects. VCG and Buyer shall respectively
afford (or procure to be afforded) to the other or to the other's agents such
information and assistance as may reasonably be required to prepare, submit and
agree all relevant Returns.
(iii) Buyer, or its duly authorized agents, shall be responsible for and
have the conduct of preparing, submitting and agreeing (x) all 1999 United
States Federal, state and local income tax returns (and correspondence and other
documentation relating thereto) of Vermont Entities which are organized in the
United States and (y) 1999 Irish income tax returns of iSwoop Limited and iSwoop
International Limited, subject to all such Returns being submitted in draft form
to VCG or to VCG's duly authorized agent for comment at least 42 days before the
same are due to be submitted to the relevant Taxing Authority. VCG or VCG's
agents shall within 21 days of such submission provide written comments thereon
to Buyer and if Buyer shall not have received comments within that period, VCG
shall be deemed to have approved such draft Returns. Such deemed approval shall
not by itself constitute a waiver of VCG's other rights, if any, under this
Agreement. If VCG or VCG's agents shall have made any written comments in
accordance with the provisions of this Section, Buyer shall not unreasonably
refuse to adopt such comments provided that Buyer and Buyer's agents shall not
be obliged to submit any Return to any relevant Taxing Authority unless
reasonably satisfied that it is accurate and complete in all material respects.
VCG and Buyer shall respectively afford (or procure to be afforded) to the other
or to the other's agents such information and assistance as may reasonably be
required to prepare, submit and agree all relevant Returns.
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(iv) Except as provided in Section 6.7(d)(ii), Buyer, or its
duly authorized agents, shall be responsible for and have the conduct of
preparing, submitting and agreeing all Returns (and correspondence and other
documentation relating thereto) of Vermont Entities for Tax accounting periods
beginning on or after January 1, 2000, subject to all such Returns for which
Buyer and Communications will seek indemnification under Section 8.2(c) hereof
being submitted in draft form to VCG or to VCG's duly authorized agent for
comment at least 42 days before the same are due to be submitted to the
relevant Taxing Authority. VCG or VCG's agents shall within 21 days of such
submission provide written comments thereon to Buyer and if Buyer shall not
have received comments within that period, VCG shall be deemed to have approved
such draft Returns. Such deemed approval shall not by itself constitute a
waiver of VCG's other rights, if any, under this Agreement. If VCG or VCG's
agents shall have made any written comments in accordance with the provisions
of this Section, Buyer shall not unreasonably refuse to adopt such comments
provided that Buyer and Buyer's agents shall not be obliged to submit any
Return to any relevant Taxing Authority unless reasonably satisfied that it is
accurate and complete in all material respects. VCG and Buyer shall
respectively afford (or procure to be afforded) to the other or to the other's
agents such information and assistance as may reasonably be required to prepare,
submit and agree all relevant Returns.
(e) (i) To the extent that it does not result in more than nominal
Adverse Consequences to any of them, Buyer shall procure that all Vermont
Entities shall cause the agreed Returns referred to in Section 6.7(d) and,
subject to Section 6.7(a) above, all such claims, disclaimers, surrenders and
elections as may be directed by UBIBV relating to all such Returns of all
Vermont Entities with respect to Tax accounting periods ending on or before the
Closing Date to be authorized, signed and returned to UBIBV for submission to
the Taxing Authority as soon as is reasonably practicable. VCG shall submit
such claims, disclaimers, surrenders and elections to the relevant Vermont
Entity for such signature sufficiently in advance of the required filing date
for the relevant Vermont Entity to adequately review such claim, disclaimer,
surrender or election.
(ii) Buyer shall, and shall procure that all Vermont Entities,
cooperate with VCG and its agents as and to the extent reasonably requested by
VCG, in connection with VCG's exercise of their rights and responsibilities
under this Section 6.7. Such cooperation shall include retention and (upon VCG
request) the provision of records and information which are reasonably relevant
to such exercise, and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder. VCG shall reimburse Buyer and the Vermont Entities for any
reasonable out of pocket expenditures incurred by them by reason of such
cooperation.
6.8 LEASES. Buyer shall indemnify VCG and its Affiliates, in the manner
and subject to the limitations set forth in Article VIII, from and against any
and all claims and Adverse Consequences arising from the Leases for all periods
after the Closing Date.
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6.9 INDEMNIFYING PARTY In the event that the net worth of UBIBV shall, at
any time during the period for which UBIBV is obligated to indemnify Buyer
pursuant to Section 8.1 and 8.2 hereof, be less than $650,000,000, Unicorn shall
cause one of its Affiliates having a net worth of not less than $650,000,000
execute such agreement(s) as may be reasonably requested by Buyer including
legal opinions or other assurances as to the enforceability of such agreements
to provide for the assignment by UBIBV and the assumption by such Affiliate of
UBIBV's indemnification obligations pursuant to such Section, provided that in
no event shall such indemnification obligations be expanded or increased beyond
the limitations set forth in such Section.
6.10 ANDREW NUGEE UBIBV shall use its commercially reasonable efforts to
cause Andrew Nugee to voluntarily resign his employment by the Vermont Entity
by which he is currently employed on the third business day following the
Closing, and Buyer and Communications will cause such Vermont Entity to waive
in writing its right to notice of termination of Mr Nugee's employment with
such Vermont Entity.
6.11 [INTENTIONALLY OMITTED]
6.12 NEW YORK LEASE The Parties hereby covenant and agree that, for a
period of 6 months following the Closing Date, Unicorn shall be permitted to
continue its occupation of such portion of the office space located on the 5th
floor at 32 Union Square East, New York, New York as it presently occupies
pursuant to an oral sublease from FPG International, LLC (successor-in-interest
to FPG International Group, Inc., the lessee thereof pursuant to the Lease
dated August 9, 1990 with 24-32 Union Square East Associates, Limited
Partnership (the "Landlord"), as amended), on the same terms, including without
limitation, rental rate, as Unicorn presently occupies such space. The Parties
hereby agree that Unicorn's sublease shall require 6 months prior written
notice for termination by FPG International, LLC. Buyer hereby covenants and
agrees that neither it nor its Affiliates will serve any such termination
notice prior to the six month anniversary of the Closing Date. During the
initial 12 month period, Buyer shall use its commercially reasonable efforts to
assist Unicorn in (i) securing the Landlord's consent to and approval of this
Section 6.12 (with respect to Unicorn's continued occupation, and (ii) securing
a direct lease of such space from the Landlord. On furtherance of the
foregoing, the Parties hereby agree that FPG International LLC and Unicorn
shall be permitted to enter into a written sublease reflecting the terms of the
existing sublease described above, in a form reasonably acceptable to Buyer.
6.13 SHARE OPTIONS
(a) Definitions
the "SCHEMES" the Sharesave Plan, the 1994 International Scheme,
the 1994 UK Scheme and the 1994 SAYE and any other
share option schemes adopted and operated by
UBIBV;
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the "THE 1994
INTERNATIONAL SCHEME" the Unapproved 1994 International Executive
Share Option Scheme;
the "1994 SAYE" the Approved 1994 UK Executive Share Option
Scheme;
the "SHARESAVE PLAN" the 1997 Unapproved United News & Media plc
International Sharesave Plan;
the "OPTION" an option over shares in the issued ordinary
share capital of Unicorn Plc, the terms of
which are as determined by the applicable
Scheme;
"RELEVANT EMPLOYEE" a person who is an employee of any one or
more Vermont Entities on or after Closing and
who currently has or may in the future have
any rights under any of the Schemes, which
expression shall include the personal
representatives of such individual and any
other person deriving rights under any such
Scheme from such individual;
"RETAINED GROUP" UBIBV and any subsidiary or subsidiary
undertaking or any holding company for the
time being of UBIBV, or any subsidiary or
subsidiary undertaking of such holding
company other than the Vermont Entities;
"SCHEME RIGHTS" the right of a Relevant Employee under the
Schemes to exercise any Option under the
Schemes on or in consequence of Closing in
favour of such Relevant Employee.
(b) UBIBV's Obligations
Where Scheme Rights confer upon any Relevant Employee any legal or
contractual right to exercise any outstanding Option under any Scheme and any
Relevant Employee elects to exercise any outstanding Option under any Scheme in
accordance with such legal or contractual right, then UBIBV shall or shall
procure that all relevant shares or securities are issued to the Relevant
Employee in satisfaction of such exercise.
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(c) Buyer's Obligations
Buyer shall co-operate with VCG to ensure that, following Closing,
it shall, at the request of VCG, take such steps as shall be reasonably
necessary or desirable to enable the Retained Group to efficiently administer
the Schemes in an effective and timely manner in relation to the Relevant
Employees (including enabling the Retained Group to utilize the payroll
services of the Vermont Entities to effect any payment and any consequential
deductions therefrom in respect of income tax, social security or the like
required to be made as a result of UBIBV acquitting its responsibilities under
paragraph 2 above.). In particular, and without prejudice to the generality of
the foregoing, Buyer and Communications shall procure that neither they nor any
of the Vermont Entities grant or purport to grant any rights or entitlements
under any Scheme nor does nor purports to do anything pursuant to any Scheme.
For the avoidance of doubt, as between the Parties, Buyer shall be responsible
for any relevant Taxes occurring upon exercise of Scheme Rights as employer of
the Relevant Employees.
ARTICLE VII
CONDITIONS TO OBLIGATION TO CLOSE
7.1 CONDITIONS TO OBLIGATIONS OF BUYER AND COMMUNICATIONS. The
obligations of Buyer and Communications under this Agreement and the
consummation by Buyer and Communications of the transactions contemplated
hereby are subject to the satisfaction at or prior to the Closing of the
following conditions, unless waived by Buyer and Communications in writing:
(a) Performance of Obligations of UBIBV. UBIBV shall have materially
performed all obligations required to be performed by it under this Agreement,
and materially complied with all covenants for which compliance by it is
required under this Agreement, prior to or at the Closing.
(b) Closing Documentation. Buyer and Communications shall have
received the following documents, agreements and instruments from UBIBV and VCG:
(i) Duly executed stock powers and stock transfer forms,
together with share certificates, if applicable, for the Vermont Shares
described in Section 2.4(b) hereof in forms mutually agreeable to the parties;
(ii) Certificates signed by an officer or director of UBIBV
certifying as to the matters set forth in Section 7.1(a) above with respect to
UBIBV;
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(iii) An opinion of Carter, Ledyard & Milburn, U.S. counsel for
Unicorn, UBIBV and VCG, dated the date of the Closing and addressed to Buyer and
Communications, in form and substance reasonably acceptable to Buyer and
Communications, together with such opinions of Baker & McKenzie, PWC Landwell,
or other counsel reasonably acceptable to Buyer and Communications, as shall be
required;
(iv) The Shareholders Registers of VCG Holdings, Definitive Stock
and VCGLLC (which shall be updated at Closing) and statutory company books,
including the minute books and stock record books, of the Vermont Entities to
the extent required to be maintained or actually maintained;
(v) A certificate of a member of the Management Board of each of
UBIBV and VCG dated the Closing Date certifying (A) that attached thereto are
true, complete and correct copies of the Articles of Association of each of
UBIBV, VCG, VCGLLC, VCG Holdings and Definitive Stock as in effect on the date
of such certification, (B) that the Articles of Association or other
organizational document of each of the foregoing entities have not been amended
since the date of the last amendment referred to in the certificate, (C) that
attached thereto are true, complete and correct copies of resolutions, as in
effect on the date of such certification, duly adopted by the Board of Directors
of UBIBV and VCG or a duly authorized committee thereof, approving the
transactions contemplated hereby and authorizing the execution, delivery and
performance by UBIBV and VCG of this Agreement and the sale and transfer of the
Vermont Shares owned by VCG in accordance herewith, and (D) as to the incumbency
and signatures of the officers of UBIBV and VCG executing this Agreement and all
instruments or other documents delivered in connection with this Agreement;
(vi) [Intentionally omitted]
(vii) Signed resignation letters of all directors and officers of
the Vermont Entities requested by Buyer prior to Closing (or actions of the
Shareholders or Board of Directors of VCG removing such persons as directors and
officers); and
(viii) All other instruments and documents required by this
Agreement to be delivered by UBIBV and VCG to Buyer and Communications on or
before the Closing, including execution and delivery of the Bavaria Agreement.
(c) Approval of Legal Matters. The form of all instruments, certificates
and documents to be executed and delivered by UBIBV and VCG to Buyer and
Communications pursuant to this Agreement shall be reasonably satisfactory to
Buyer and its counsel, none of whose approval shall be unreasonably withheld or
delayed.
(d) No Litigation. Except with respect to matters relating to antitrust
laws including the HSR Act which, for purposes of this Section 7.1 are addressed
exclusively in Section
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7.1(e) below:
(i) No action, suit or other proceeding shall be pending or
threatened before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated by this Agreement or seeking to obtain substantial damages in
respect thereof, or involving a claim that consummation thereof would result in
the violation of any law, decree or regulation of any governmental authority
having appropriate jurisdiction; provided, however, that no such action, suit or
proceeding commenced or threatened by a private person or entity shall
constitute failure of a condition to Buyer's obligations under this Agreement;
and
(ii) No order, decree or ruling of any governmental authority or
court shall have been entered prohibiting, restraining or otherwise preventing
the consummation of the transactions contemplated hereby.
(e) Hart-Scott-Rodino Waiting Period. All applicable waiting periods
under the HSR Act shall have expired without any indication by the Department
of Justice or the Federal Trade Commission that either of them intends to
challenge the transactions contemplated hereby, provided, however, that nothing
in this Section 7.1(e) shall be construed to constitute a modification of
Buyer's obligations as set forth in Section 5.5 hereof.
(f) Laws. No statute, rule, regulation or order shall have been
adopted or promulgated which materially adversely affects the Business, the
Assets of the Group Entities taken together as a whole.
(g) Financial Capacity. Buyer shall have obtained sufficient funds to
purchase the Vermont Shares on the terms and conditions contemplated by this
Agreement after using its reasonable commercial efforts to obtain such funds.
(h) Form 403. UBIBV shall have provided the filing by The Telegraph
Colour Library Limited at the Companies Registry of a duly executed and
completed Form 403 in respect of the charge in favour of Hambros Bank Limited.
7.2 CONDITIONS TO OBLIGATIONS OF UNICORN, VCG AND UBIBV. The obligations
of Unicorn and UBIBV under this Agreement and the consummation by Unicorn, VCG
and UBIBV of the transactions contemplated hereby are subject to the
satisfaction at or prior to the Closing of the following conditions, unless
waived by Unicorn, VCG and UBIBV in writing:
(a) Performance of Obligations of Buyer and Communications. Each of
Buyer and Communications shall have performed all obligations required to be
performed by it under this Agreement, and complied with all covenants for which
compliance by it is required under this Agreement, prior to or at the Closing.
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(b) Closing Documentation. UBIBV and VCG shall have received the following
documents, agreements and instruments from Buyer and Communications:
(i) Payment of the Purchase Price pursuant to Section 2.2 hereof;
(ii) A certificate signed by an officer of each of Buyer and
Communications certifying as to the matters set forth in Section 7.2(a) above;
(iii) An opinion of Weil, Gotshal & Manges, LLP, counsel for Buyer and
Communications, dated the date of the Closing and addressed to UBIBV and VCG,
in form and substance reasonably acceptable to UBIBV and VCG;
(iv) Copies of all consents, approvals and notices referred to in
Section 3.2(b) hereof;
(v) A certificate of the Secretary or an Assistant Secretary of each
of Buyer and Communications dated the Closing Date certifying (A) that attached
thereto are true, complete and correct copies of resolutions, as in effect on
the date of such certification, duly adopted by the Board of Directors of Buyer
and Communications, or a duly authorized committee thereof, approving the
transactions contemplated hereby and authorizing the execution, delivery and
performance by Buyer and Communications of this Agreement and the purchase and
acquisition by Buyer and Communications of the Vermont Shares in accordance
herewith, and (B) as to the incumbency and signatures of the officers of Buyer
and Communications executing this Agreement and all instruments or other
documents delivered in connection with this Agreement; and
(vi) All other instruments and documents required by this Agreement
to be delivered by Buyer and Communications to UBIBV and VCG on or before the
Closing, including execution and delivery of the Bavaria Agreement.
(c) Approval of Legal Matters. The form of all instruments, certificates
and documents to be executed and delivered by Buyer and Communications to UBIBV
and VCG pursuant to this Agreement shall be reasonably satisfactory to UBIBV
and its counsel, none of whose approval shall be unreasonably withheld or
delayed.
(d) No Litigation
(i) No action, suit or other proceeding shall be pending or
threatened before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated by this Agreement or seeking to obtain substantial damages in
respect thereof, or involving a claim that consummation thereof would result
in the violation of any law, decree or regulation of any governmental authority
having appropriate jurisdiction; provided, however, that no such action, suit
or proceeding commenced or threatened
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by a private person or entity shall constitute failure of a condition to
UBIBV's or VCG's obligations under this Agreement; and
(ii) No order, decree or ruling of any governmental authority or
court shall have been entered prohibiting, restraining or otherwise preventing
the consummation of the transactions contemplated hereby.
(e) Hart-Scott-Rodino Waiting Period. All applicable waiting periods
under the HSR Act, shall have expired without any indication by the Department
of Justice or the Federal Trade Commission that either of them intends to
challenge the transactions contemplated hereby.
ARTICLE VIII
REMEDIES FOR BREACHES OF THIS AGREEMENT
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding any
otherwise applicable statute of limitations, all of the representations and
warranties of Unicorn, VCG and UBIBV contained in Section 3.1 and all of the
representations and warranties of UBIBV contained in Sections 4.1 - 4.24 of
Annex A hereto, or in any certificate, annex or Schedule to this Agreement or
prepared by UBIBV in connection with this Agreement (including the Disclosure
Schedule) shall survive the Closing hereunder and continue in full force and
effect for the period specified below:
(a) for the representations and warranties contained in
Sections 4.6-4.14 and 4.16 - 4.24 of Annex A, until the 18 month anniversary of
the Closing Date;
(b) notwithstanding Section 8.1(a) above, for claims in relation to
the lost Licensed Images or model consents with releases (or lack thereof)
within the Knowledge of Seller prior to February 27, 2000 (including, for
purposes of this Article VIII, claims in relation to lost Licensed Images or
model consents with arising under the Bavaria Agreement) ("Media Claims"),
until the 5 year anniversary of the Closing Date; and
(c) for all other representations, warranties and covenants of the
parties, until the expiration of the applicable statute of limitations,
including extensions thereof.
Any Party entitled to receive indemnification pursuant to this Article
VIII shall use commercially reasonable efforts to seek recovery (including both
cost of defense and indemnity) under applicable insurance policies with respect
to any Adverse Consequences. In determining the amount payable hereunder there
shall be taken into account the dollar amount of any insurance as other net
proceeds actually received by (or paid for the benefit of) the party claiming
indemnification hereunder with respect to the events giving rise to a claim
hereunder. In the event that a Party (a "Collecting Party") receives payment
under this Article VIII from another Party (a "Paying Party"),
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and then subsequently receives insurance proceeds with respect to the matter
for which such Collecting Party received indemnification payment from Paying
Party, Collecting Party shall, within two (2) business days of the receipt of
such insurance proceeds, remit such proceeds to Paying Party up to the amount
previously paid by Paying Party.
Except as provided in the immediately following paragraph, no Party shall
be entitled to indemnification hereunder for any Adverse Consequences for which
indemnification is sought under the Bavaria Agreement, and no Party shall be
entitled to indemnification for any Adverse Consequences under the Bavaria
Agreement for which indemnification is sought hereunder.
UBIBV and Buyer hereby agree that to the extent that indemnification
claims pursuant to Section 8.2(a), 8.2(c) and 8.3 of the Bavaria Agreement
exceed the aggregate maximum amount set forth in such Sections, Buyer and UBIBV
shall be entitled to raise such claims hereunder as if the indemnities and
warranties contained in this Agreement relating to the Vermont Entities (or any
of them) were warranties and indemnities relating to the Bavaria Entities, to
the extent such claims (together with indemnification claims hereunder) do not
exceed the aggregate maximum amounts set forth in Sections 8.2(a), 8.2(c) and
8.3 hereof. Similarly UBIBV and Buyer hereby agree that to the extent that
indemnification claims pursuant to Sections 8.2(a) and 8.3 hereof exceed the
aggregate maximum amount set forth in such Sections, Buyer and UBIBV shall be
entitled to raise such claims under the comparable provisions of the Bavaria
Agreement as if the indemnities and warranties contained in the Bavaria
Agreement relating to the Bavaria Entities (or any of them) were warranties and
indemnities relating to the Vermont Entities, to the extent such claims
(together with indemnification claims thereunder) do not exceed the aggregate
maximum amounts set forth in Sections 8.2(a), 8.2(c) and 8.3 of the Bavaria
Agreement.
The Parties hereby acknowledge and agree that any item disclosed in
Section 4.10 of the Disclosure Schedule hereto shall be deemed to constitute
disclosure of such item in the comparable section of the Disclosure Schedule to
the Bavaria Agreement for purposes thereof.
8.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF BUYER AND COMMUNICATIONS
(a) In the event that any of Unicorn, VCG or UBIBV breach (or in the
event any third party alleges facts that, if true, would mean that any of
Unicorn, VCG or UBIBV has breached) any of their representations, warranties,
and covenants contained herein, or in any certificate, annex or Schedule
delivered pursuant hereto (except with respect to Media Claims, which are the
subject of Section 8.2(b) below), and, if there is an applicable survival
period pursuant to Section 8.1 above, provided that Buyer or Communications, as
the case may be, makes a written claim for indemnification against UBIBV
pursuant to Section 10.6 below within such survival period, then UBIBV agrees
to indemnify Buyer, Communications, VCGLLC, Definitive Stock and VCG Holdings
from and against the entirety of any Adverse Consequences any of the foregoing
entities may suffer resulting from, arising out of, relating to, in the nature
of, or caused by the breach (or the alleged breach), up to, together with
Adverse Consequences under Section 8.2(c), an aggregate
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maximum amount equal to one-half of the Purchase Price; provided, however, that
UBIBV shall have no obligation to indemnify Buyer, Communications, VCGLLC,
Definitive Stock or VCG Holdings from and against any Adverse Consequence
(treating as a single Adverse Consequence related Adverse Consequences arising
out of a single fact situation) that does not equal or exceed $25,000 ("De
Minimis Claims"); and provided, further, that UBIBV shall have no obligation to
indemnify Buyer, Communications, VCGLLC, Definitive Stock or VCG Holdings until
all such Adverse Consequences shall exceed $2,000,000 in aggregate amount (taken
together with any Adverse Consequences pursuant to the Bavaria Agreement, and
not including, in either case, any Adverse Consequences that are De Minimis
Claims) at which time UBIBV shall be liable to Buyer, Communications, Definitive
Stock, VCGLLC and VCG Holdings for all Adverse Consequences from the first $1 of
such Adverse Consequences.
(b) In the event Buyer or Communications makes a written claim for
indemnification against UBIBV pursuant to Section 10.6 below within the survival
period set forth in Section 8.1(b) above with respect to Adverse Consequence
suffered by Buyer, Communications, VCGLLC, Definitive Stock or VCG Holdings as a
result of Media Claims, UBIBV agrees to indemnify the foregoing entities from
and against all such Adverse Consequences any of the foregoing entities may
suffer resulting from, arising out of or relating to such lost Licensed Images
or model releases, up to an aggregate maximum amount equal to $2,000,000,
provided, however, that UBIBV shall have no obligation to indemnify Buyer,
Communications, VCGLLC, Definitive Stock or VCG Holdings from and against any
Adverse Consequences until all such Adverse Consequences shall exceed $500,000
in aggregate amount (taken together with any such Adverse Consequences pursuant
to the Bavaria Agreement), and provided, further that UBIBV shall have no
obligation to indemnify Buyer, Communications, VCGLLC, Definitive Stock or VCG
Holdings from and against that first $500,000 in aggregate amount of any such
Adverse Consequences.
(c) Without duplication of any indemnification payments pursuant to
Section 8.2(a), UBIBV agrees to indemnify Buyer and Communications from and
against (i) the Adverse Consequences of any Taxes payable by any Vermont Entity
for any Tax accounting period ending prior to January 1, 2000 (or, in the case
of a period that begins before December 31, 1999 and ends after such date, the
portion thereof through December 31, 1999), and (ii) one-half of the Adverse
Consequences of any income Taxes payable by any Vermont Entity for the period
beginning January 1, 2000 and ending on the Closing Date (the "Stub Period"),
up to, together with Adverse Consequences under Section 8.2(a), an aggregate
maximum amount equal to one-half of the Purchase Price. Whether or not an
income Tax accounting period ends on the Closing Date, income Taxes for the
Stub Period for the purposes of this Section 8.2(c) shall be determined based
upon a closing of the books on the Closing Date; provided, however that income
Taxes for the Stub Period shall exclude any Tax attributable to any
extraordinary income or gain that would not be recognized but for an action of
the Buyer or Communications after the Closing Date (including, without
limitation, an election under Code Section 338). With respect to any Taxes
payable for the fiscal year ending December 31, 1999 (or any portion thereof),
UBIBV shall be liable under the first sentence of this Section 8.2(c) only to
the extent that such Taxes are, in the aggregate, in excess of the accrual
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or reserve for Taxes as of December 31, 1999 in the Audited Vermont Financial
Statements. No claim may be brought under this Section 8.2(c) for any single
Tax item (or related series of items) which does not exceed $10,000. Any claim
hereunder must be brought within the time limit specified in Section 8.1(c).
8.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF UBIBV AND VCG. In the event
Buyer or Communications breaches (or in the event any third party alleges facts
that, if true, would mean Buyer of Communications has breached) any of its
representations, warranties, and covenants contained herein, or in any
certificate, annex or Schedule delivered pursuant hereto, and, if there is an
applicable survival period pursuant to Section 8.1 above, provided that UBIBV or
VCG makes a written claim for indemnification against Buyer and Communications
pursuant to Section 10.6 below within such survival period, then Buyer and
Communications agree, jointly and severally, to indemnify UBIBV and VCG from
and against any Adverse Consequences any of the foregoing entities may suffer
(including any Adverse Consequences UBIBV and VCG may suffer after the end of
any applicable survival period) resulting from, arising out of, relating to, in
the nature of, or caused by the breach (or the alleged breach), up to an
aggregate maximum amount equal to one-half of the Purchase Price, provided,
however, that Buyer and Communications shall not have any obligation to
indemnify UBIBV and VCG from and against any Adverse Consequence (treating as a
single Adverse Consequence related Adverse Consequences arising out of a single
fact situation) that does not equal or exceed $25,000 ("De Minimis Claims");
and provided, further, that Buyer and Communications shall not have any
obligation to indemnify UBIBV or VCG until all such Adverse Consequences shall
exceed $2,000,000 in aggregate amount (taken together with any Adverse
Consequences pursuant to the Bavaria Agreement, and not including, in either
case, any Adverse Consequences that are De Minimis Claims) at which time Buyer
and Communications shall, jointly and severally, be liable to UBIBV and VCG for
all Adverse Consequences from the first $1 of such Adverse Consequences.
8.4 MATTERS INVOLVING THIRD PARTIES.
(a) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other Party (the "Indemnifying
Party") under this Article VIII, then the Indemnified Party shall promptly
notify the Indemnifying Party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying the Indemnifying Party
shall relieve the Indemnifying Party from any obligation hereunder unless (and
then solely to the extent) the Indemnifying Party thereby is prejudiced.
(b) The Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
satisfactory to the Indemnified Party so long as (i) the Indemnifying Party
notifies the Indemnified Party in writing within 15 days after the Indemnified
Party has given notice of the Third Party Claim that the Indemnifying Party
will indemnify the Indemnified Party from and against the entirety of any
Adverse Consequences the
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Indemnified Party may suffer resulting from, arising out of, relating to, in
the nature of, or caused by the Third Party Claim, (ii) the Indemnifying Party
provides the Indemnified Party with evidence acceptable to the Indemnified
Party that the Indemnifying Party will have the financial resources to defend
against the Third Party Claim and fulfill its indemnification obligations
hereunder, (iii) the Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief, (iv) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good faith
judgment of the Indemnified Party, likely to establish a precedential custom or
practice adverse to the continuing business interests of the Indemnified Party,
and (v) the Indemnifying Party conducts the defense of the Third Party Claim
actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 8.4(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim, (ii) the Indemnified
Party will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be withheld unreasonably), and (iii)
the Indemnifying Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 8.4(b) above is or
becomes unsatisfied, however, (i) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying Party will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys' fees
and expenses), and (iii) the Indemnifying Party will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to
the fullest extent provided in this Article VIII.
(e) The Indemnified Party shall (and, in the case of Buyer and
Communications, shall cause the Vermont Entities to) cooperate fully, as and to
the extent reasonably requested by the other Party, in connection with any
Third Party Claim. Such cooperation shall include the retention and (upon the
other Party's request) the provision of records and information which are
reasonably relevant to any such Third Party Claim and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Parties agree (i) to
retain, and (in the case of Buyer and Communications) to cause the Vermont
Entities to retain, all books and records with respect to Tax matters pertinent
to the Vermont Entities relating to any taxable period beginning before the
Closing Date until six months after the expiration of the statute of
limitations (and, to the extent notified by Buyer, Communications or UBIBV, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention obligations imposed by law or pursuant to agreements entered
into with any Taxing Authority, and (ii) to give
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the other Party reasonable written notice prior to transferring, destroying or
discarding any such books and records and, if the other Party so requests,
Buyer or Communications or UBIBV, as the case may be, shall allow the other
Party to take possession of such books and records.
8.5 SOLE REMEDY. Each Party acknowledges and agrees that the
foregoing indemnification provisions of this Article VIII (including the
limitations set forth herein) are such Party's sole and exclusive remedy
against the other Parties and their Affiliates for any claim with respect to
the transactions contemplated hereby or otherwise relating to any Vermont
Entity, or the Assets or the Business, and each Party hereby waives and
releases any statutory, equitable or common law remedies which might otherwise
be available against the other Parties and their Affiliates. All
indemnification payments under this Article VIII shall be deemed adjustments to
the Purchase Price.
8.6 UNLIMITED CLAIMS.
(a) The proviso contained in Section 8.2 shall not apply to
UBIBV's liability in respect of any breach of the representations and
warranties contained in Section 3.1 or in Sections 4.1, 4.2, 4.3, 4.4 or 4.5 or
the final sentence of Section 4.6 of Annex A, with respect to which such
Party's liability shall not exceed the Purchase Price hereunder.
(b) The proviso contained in Section 8.3 shall not apply to
Buyer's liability in respect of any breach of the representations and
warranties contained in Section 3.2 with respect to which such Party's
liability shall not exceed the Purchase Price hereunder.
8.7 LITIGATION CLAIM. Notwithstanding the foregoing provisions of
this Article VIII, UBIBV agrees to provide to Buyer and Communications (and the
appropriate Vermont Entities following the Closing) with the benefit of UBIBV's
insurance coverage to the extent that it exists with respect to any Adverse
Consequences Buyer, Communications or any of the Vermont Entities may suffer in
respect of the Latina claim identified and described in Section 4.17 of the
Disclosure Schedule. UBIBV hereby represents and warrants that the Latina claim
has been submitted to its insurance company and has not, as of February 27,
2000, received any notice of rejection or non-coverage.
ARTICLE IX
TERMINATION
9.1 TERMINATION OF AGREEMENT. This Agreement may be terminated by
the Parties as provided below:
(a) The Parties may terminate this Agreement by mutual written
consent at any time prior to the Closing:
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<PAGE> 43
(b) Either of Buyer or Communications may terminate this Agreement by
giving written notice to each of UBIBV, VCG and Unicorn at any time prior to
the Closing if the Closing shall not have occurred on or before March 26, 2000,
by reason of the failure of any condition precedent under Section 7.1(a)-(d)
and 7.1(f) or (g) hereof (unless the failure results primarily from Buyer or
Communications themselves breaching any representation, warranty, or covenant
contained in this Agreement, including, without limitation, Buyer's covenant
set forth in Section 5.5 hereof, or unless the failure otherwise relates to the
HSR Act);
(c) Either of UBIBV, VCG or Unicorn may terminate this Agreement by
giving written notice to each of Buyer and Communications at any time prior to
the Closing if the Closing shall not have occurred on or before March 26, 2000,
by reason of the failure of any condition precedent under Section 7.2 hereof
(unless the failure results primarily from UBIBV, VCG or Unicorn themselves
breaching any representation, warranty, or covenant contained in this
Agreement).
9.2 EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 9.1 above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
or their respective Affiliates, directors, officers or employees, except for
the obligations of the Parties hereto contained in this Section 9.2, Section
9.3 (if applicable) and in all other provisions which are stated to survive any
termination of this Agreement, including, without limitation, Sections 5.2,
5.3, 10.6, 10.7, 10.8, 10.9, 10.12, 10.16 and 10.20.
9.3 LIQUIDATED DAMAGES. Notwithstanding any other provision hereof, the
Parties hereby agree that, in the event that the transactions contemplated
hereby are not consummated by March 26, 2000 Buyer shall pay to UBIBV as
liquidated damages and a break-up fee, and not as a penalty, the aggregate
amount of $2,000,000 (subject to a dollar-for-dollar reduction for any payment
made pursuant to Section 9.3 of the Bavaria Agreement), except in the event
that the transactions contemplated are not consummated as a result of the
failure of the conditions to Closing set forth in Sections 7.1(a), (b), (c)
(unless Buyer unreasonably withholds or delays with respect to Section 7.1(c))
or (d) (with respect to Section 7.1(d) to the extent such litigation does not
arise out of the action of Buyer.)
ARTICLE X
MISCELLANEOUS
10.1 ENTIRE AGREEMENT. This Agreement (including the Annexes, Exhibits,
Schedules and documents attached hereto or referred to herein) constitutes the
entire agreement among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written or oral, to the
extent they related in any way to the subject matter hereof, except for the
Confidentiality Agreement which will remain in full force and effect for the
term provided for therein.
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10.2 NO THIRD-PARTY BENEFICIARIES.
(a) Except as otherwise expressly provided for in this
Agreement, nothing in this Agreement, express or implied, is intended or shall
be construed to confer upon or give to any employee of UBIBV, VCG, VCGLLC,
Buyer, Communications, Definitive Stock, VCG Holdings, or any Subsidiary of the
foregoing, or any other Person, other than the Parties hereto (and their
successors and permitted assigns), any rights, remedies or other benefits under
or by reason of this Agreement.
(b) The Parties hereto agree and acknowledge that after the
Closing Date: (i) VCGLLC, Definitive Stock and VCG Holdings are intended third
party beneficiaries under this Agreement and are independently entitled to
avail themselves of all the rights and remedies of Buyer and Communications
hereunder and all benefits related thereto.
10.3 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of the other Parties, provided, however, that Buyer may
assign, without the approval of the other parties, all or any portion of its
rights hereunder to any entity directly or indirectly owned wholly by Buyer, in
which extent Buyer shall, notwithstanding such assignment, remain wholly and
solely liable for the obligations, representations, warranties and covenants of
Buyer hereunder and under any certificate, schedule, annex or other agreement
delivered pursuant hereto.
10.4 COUNTERPARTS. This Agreement may be executed by exchanging
executed copies or facsimile signatures and in any number of counterparts, and
by any Party on separate counterparts, each of which as so executed and
delivered shall be deemed an original, but all of which together shall
constitute one and the same instrument, and it shall not be necessary in making
proof of this Agreement as to any Party hereto to produce or account for more
than one such counterpart executed and delivered by such Party.
10.5 HEADINGS. The Article and Section headings, and the table of
contents, contained in this Agreement are inserted for convenience only and
shall not affect in any way the meaning or interpretation of this Agreement.
10.6 NOTICES. All notices, certificates, requests, demands, claims,
and other communications hereunder shall be given in writing and shall be
delivered personally (including by personal courier or delivery service) or
sent by facsimile, telex or telegram or by the registered or certified mail
(return receipt requested), postage prepaid, to the Parties at the following
address (or at such other addresses as the shall be specified by like notice):
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IF TO UNICORN, VCG OR UBIBV: COPY TO:
c/o United News & Media plc Carter, Ledyard & Milburn
Ludgate House Two Wall Street
245 Blackfriars Road New York, New York 10005
London SE1 9UY, England
Fax No.: 011-44-171-928-2728 Fax No.: 212-732-3232
Attention: Company Secretary Attention: James E. Abbott
IF TO THE BUYER
OR COMMUNICATIONS: COPY TO:
Getty Images Inc. Weil, Gotshal & Manges, LLP
701 North 34th Street 767 Fifth Avenue
Suite 4000 New York, New York 10153
Seattle, Washington 98103
Fax No.: 206-268-1201 Fax No.: 212-310-8007
Attention: Suzanne Page Attention: Stephen Besen
GETTY IMAGES INC.
c/o PhotoDisc Inc.
475 Park Avenue South
31st Floor
New York, New York 10016
Fax No.: 212-471-5299
Attention: General Counsel
Any notice given personally or by mail or telegram shall be effective when
received. Any notice given by telex or facsimile shall be effective when the
appropriate telex or facsimile answerback is received.
10.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York as to all matters,
including but not limited to matters of validity, construction, effect,
performance and remedies (without giving effect to any choice or conflict of law
provision or rule, whether of the State of New York or any other jurisdiction,
that would cause the application of the laws of any jurisdiction other than the
State of New York).
10.8 RETURN OF INFORMATION. If for any reason whatsoever the sale and
purchase of the Vermont Shares pursuant to this Agreement is not consummated,
Buyer shall promptly return to UBIBV and VCG all books, records and documents of
UBIBV, VCG and the Vermont Entities (including all copies, if any, thereof)
furnished by UBIBV, VCG or any of their Affiliates, agents,
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<PAGE> 46
employees, or representatives, and shall not use or disclose the information
contained in such books, records or documents for any purpose or make such
information available to any other entity or person, except that one copy of
all such information may be retained in the files of Buyer's legal department.
10.9 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Buyer, Communications, Unicorn, VCG and UBIBV. Any Party hereto may, by written
notice to the other Parties, waive any provision of this Agreement. No waiver
by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
10.10 SEVERABILITY. The provisions of this Agreement shall be deemed
severable and any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is invalid or unenforceable, (i) a suitable provision
shall be substituted therefor in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or unenforceable provision,
and (ii) the remainder of this Agreement and the application of such provision
to other persons, entities or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
10.11 EXPENSES. Except as otherwise expressly provided in this Agreement,
whether or not the transactions contemplated by this Agreement are consummated,
each of the Parties will bear its own costs and expenses (including, but not
limited to, all compensation and expenses of counsel, financial advisors,
consultants, actuaries and independent accountants) incurred in connection with
this Agreement and the transactions contemplated hereby.
10.12 CONSTRUCTION. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including" shall
mean including without limitation. The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
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10.13 INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof. References herein to "Section 4".x shall
refer to Section 4.x of Annex A.
10.14 SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches, or threatened breaches, of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the Parties and the matter (subject
to the provisions set forth in Section 10.15 below), in addition to any other
remedy to which they may be entitled, at law or in equity.
10.15 SUBMISSION TO JURISDICTION. IF ANY PARTY SHALL HAVE THE RIGHT TO
SEEK RECOURSE TO A COURT WITH RESPECT TO ANY DISPUTE ARISING OUT OF OR RELATED
TO THIS AGREEMENT OR THE TRANSACTIONS CONTAINED IN OR CONTEMPLATED BY THIS
AGREEMENT, WHETHER IN TORT OR CONTRACT OR AT LAW OR IN EQUITY, THEN ANY ACTION
OR PROCEEDING IN RESPECT OF ANY SUCH DISPUTE SHALL BE BROUGHT EXCLUSIVELY IN
THE SUPREME COURT OF THE STATE OF NEW YORK FOR THE COUNTY OF NEW YORK (THE
"CHOSEN COURTS") AND (I) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
THE CHOSEN COURTS FOR SUCH PURPOSES, (II) WAIVES ANY OBJECTION TO LAYING VENUE
IN ANY SUCH ACTION OR PROCEEDING IN THE CHOSEN COURTS, (III) WAIVES ANY
OBJECTION THAT THE CHOSEN COURTS ARE AN INCONVENIENT FORUM OR DO NOT HAVE
JURISDICTION OVER ANY PARTY HERETO AND (IV) AGREES THAT SERVICE OF PROCESS UPON
SUCH PARTY IN ANY SUCH ACTION OR PROCEEDING SHALL BE EFFECTIVE IF NOTICE IS
GIVEN IN ACCORDANCE WITH SECTION 10.6 OF THIS AGREEMENT. EACH PARTY AGREES THAT
A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING SO BROUGHT SHALL BE CONCLUSIVE AND
MAY BE ENFORCED BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW
OR AT EQUITY. EACH PARTY ALSO AGREES NOT TO BRING ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY OTHER COURT. EACH OF BUYER
AND COMMUNICATIONS IRREVOCABLY DESIGNATES GETTY IMAGES INC.'S NEW YORK OFFICE
AS ITS AGENT AND ATTORNEY-IN-FACT FOR THE ACCEPTANCE OF SERVICE OF PROCESS ON
ITS BEHALF IN ANY SUCH CLAIM OR PROCEEDING AND TAKING ALL SUCH ACTS AS MAY BE
NECESSARY OR APPROPRIATE IN ORDER TO CONFER JURISDICTION OVER IT UPON THE
CHOSEN COURTS AND EACH OF BUYER AND COMMUNICATIONS STIPULATES THAT SUCH CONSENT
AND APPOINTMENT IS IRREVOCABLE AND COUPLED WITH AN INTEREST. EACH OF UBIBV,
VCG AND UNICORN IRREVOCABLY DESIGNATES CT CORPORATION AS ITS AGENT AND
ATTORNEY-IN-FACT FOR THE ACCEPTANCE OF SERVICE OF
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PROCESS AND MAKING AN APPEARANCE ON ITS BEHALF IN ANY SUCH CLAIM OR PROCEEDING
AND TAKING ALL SUCH ACTS AS MAY BE NECESSARY OR APPROPRIATE IN ORDER TO CONFER
JURISDICTION OVER IT UPON THE CHOSEN COURTS AND EACH OF UBIBV, VCG AND UNICORN
STIPULATES THAT SUCH CONSENT AND APPOINTMENT IS IRREVOCABLE AND COUPLED WITH AN
INTEREST.
10.16 FULFILLMENT OF OBLIGATIONS. Any obligation of any Party to any
other Party under this Agreement, which obligation is performed, satisfied or
fulfilled by an Affiliate of such Party, shall be deemed to have been
performed, satisfied or fulfilled by such Party.
10.17 SCHEDULES. The inclusion of any matter in any schedule to this
Agreement shall be deemed to be an inclusion for all purposes of this
Agreement, including each representation and warranty to which it may relate,
but inclusion thereon shall expressly not be deemed to constitute admission by
either Party, or otherwise imply, that any such matter is material or create a
measure for materiality for the purposes of this Agreement.
10.18 DEFINITION OF "ORDINARY COURSE". For purposes of this Agreement,
the term "ordinary course" as it relates to the Business prior to the Closing
means in a manner substantially the same as that normally employed by VCG in
the ordinary course with respect to businesses it holds with a view towards
operating and maintaining such businesses rather than a view towards the sale
of such businesses to a third party.
10.19 ATTORNEY'S FEES. In any proceeding brought by any Party hereto
to enforce this Agreement, the prevailing Party shall be entitled to reasonable
attorneys' fees incurred by the prevailing Party in connection therewith, plus
court costs and experts' fees.
***************
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, UBIBV, VCG, Unicorn, Buyer and Communications have each
executed or caused this Agreement to be executed by their duly authorized
officers, as the case may be, each as of the date first above written.
GETTY IMAGES INC.
By: /s/ Jonathan D. Klein
----------------------
Name: Jonathan D. Klein
Title: CEO
GETTY COMMUNICATIONS LIMITED
By: /s/ Jonathan D. Klein
----------------------
Name: Jonathan D. Klein
Title: Director
UNITED BUSINESS INFORMATION B.V.
By:
----------------------
Name:
Title:
VISUAL COMMUNICATIONS GROUP (VCG)
B.V.
By:
----------------------
Name:
Title:
UNITED NEWS & MEDIA PLC
By:
----------------------
Name:
Title:
<PAGE> 50
IN WITNESS WHEREOF, UBIBV, VCG, Unicorn, Buyer and Communications have each
executed or caused this Agreement to be executed by their duly authorized
officers, as the case may be, each as of the date first above written.
GETTY IMAGES INC.
By:
------------------------
Name:
Title:
GETTY COMMUNICATIONS LIMITED
By:
------------------------
Name:
Title:
UNITED BUSINESS INFORMATION B.V.
By: /s/ illegible signature
------------------------
Name:
Title:
VISUAL COMMUNICATIONS GROUP (VCG)
B.V.
By: /s/ illegible signature
------------------------
Name:
Title:
UNITED NEWS & MEDIA PLC
By: /s/ illegible signature
------------------------
Name:
Title:
<PAGE> 51
Title:
ANNEX A
4.1 INTEREST IN RELATED ENTITIES. Except as set forth in Section 4.1 of
the Disclosure Schedule, neither nor any Affiliate of VCG (i) has any direct or
indirect interest in any person or entity which is a lessor of assets or
properties to, material supplier of, or provider of services to any Vermont
Entity, (ii) has a direct or indirect interest in or is a party to any contract
or agreement to which any Vermont Entity is a party, or (iii) owns directly or,
to the Knowledge of Seller, indirectly, any tangible or intangible property
which any Vermont Entity uses in the conduct of the Business, or (iv) has any
outstanding indebtedness to any Vermont Entity. For purposes of this Section,
any investment by VCG or any Affiliate of VCG in any company whose stock is
listed on a national securities exchange or actively traded in the
over-the-counter market, which investment represents no more than 5% of the
outstanding voting power of such company, shall be deemed not to constitute a
direct or indirect interest in such company.
4.2 ORGANIZATION; QUALIFICATION; POWER. VCG Holdings is a corporation
duly organized and validly existing and in good standing under the laws of
England and Wales. Definitive Stock is a corporation duly organized, validly
existing and in good standing under the laws of Delaware. VCGLLC is a limited
liability company duly organized, validly existing and in good standing under
the laws of Delaware. Each of the Subsidiaries of VCG Holdings, Definitive
Stock and VCGLLC is duly organized, validly existing and in good standing (with
respect to jurisdictions that recognize such concept) under the laws of its
jurisdiction of domicile. The Vermont Entities have all requisite corporate
power and authority to own, lease and operate the Assets and to carry on the
Business as it is now being conducted, except to the extent any failure to be
so empowered or authorized does not have a Material Adverse Effect. Prior to
the Closing, VCG shall have delivered to Buyer and Communications true,
complete and correct copies of the Articles of Association or other
organizational document (including all amendments thereto) and the By-Laws, as
currently in effect, of each of the Vermont Entities. Each of the Vermont
Entities is duly qualified or licensed and in good standing (with respect to
jurisdictions that recognize such a concept) to do business in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary.
VCG represents and warrants that the records and minutes of the
meetings of the shareholders and the board of directors as well as the reports
of the statutory auditors of Pix SA and, where applicable, iSwoop EURL, have
been maintained in accordance with French law since the respective dates of
incorporation thereof.
Any shares of Pix SA held by Pix SA as a result of the Merger have
been acquired, held and recorded in accordance with French law governing the
merger by absorption of a company by the subsidiary thereof.
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4.3 CAPITALIZATION. All of the Vermont Shares are duly authorized,
validly issued, fully paid and non-assessable. No depository certificates of
shares in the share capital of VCG have been issued. Section 4.3 of the
Disclosure Schedule sets forth a list of all of the Vermont Entities, the
number of shares of each such entities' authorized capital stock and the number
and class of shares thereof duly issued and outstanding or, if the entity is a
limited partnership, the partnership's capital and the capital contributions
including their respective amounts. Each outstanding share of capital stock of
each of the Vermont Entities is duly authorized, validly issued fully paid and
non-assessable. The capital contributions of Vermont Entities being limited
partnerships have been duly taken over, fully paid and are non-assessable. VCG
owns all of the outstanding shares of capital stock or other equity interests
of VCG Holdings, Definitive Stock and VCGLLC, in each case free and clean of
all encumbrances. There are no pre-emptive rights, whether at law or otherwise,
to purchase any of the securities of VCG and there are no outstanding options,
warrants, subscriptions, agreements, plans or other commitments pursuant to
which any Vermont Entity is or may become obligated to sell or issue any
security.
4.4 INVESTMENTS. Except as set forth in Section 4.4 of the Disclosure
Schedule, as of the Closing Date, no Vermont Entity owns or maintains, directly
or indirectly, any capital stock or other equity or ownership or proprietary
interest in any corporation, partnership, association, trust, joint venture or
other entity.
4.5 NO VIOLATIONS. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the performance by
UBIBV and VCG of its obligations hereunder and under the agreements to be
executed and delivered pursuant hereto, do not and will not conflict with or
violate any of the terms of the Articles of Association, By-Laws or other
organizational documents of UBIBV, VCG or any Vermont Entity.
4.6 TITLE TO ASSETS; ENCUMBRANCES; DEBT. The Vermont Entities own, lease
or have the legal right to use all of the material Assets, including, without
limitation, real and personal property, presently used in the conduct of the
Business of the Vermont Entities, or which is otherwise owned, leased or used
by the Vermont Entities and, with respect to contract rights, enjoys the right
to the benefits of all material Contracts. The Vermont Entities have good and
marketable title to the Assets (except with respect to the Intellectual
Property included in such Assets, with respect to which, to the Knowledge of
Seller, the Vermont Entities have good and marketable title), free and clear of
all Encumbrances, except those specified in Section 4.6 of the Disclosure
Schedule, liens for taxes not yet due and payable, and Encumbrances that do not
in the aggregate have a Material Adverse Effect on the value or use by the
Vermont Entities of the Assets and the Intellectual Property, as currently
used. At the Closing, and following repayment of all Intercompany Debt, the
Vermont Entities shall be free of all debt of whatever kind or nature, except
for debts between the Vermont Entities, accounts payable and other liabilities
arising in the ordinary course of business.
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4.7 POSSESSION. Except as set forth in Section 4.7 of the Disclosure
Schedule, no other Person has a right of possession or, to the Knowledge of
Seller, claims possession of any material part of the Assets, except for the
rights of lessors over (a) the leased Personal Property identified in Section
4.8 of the Disclosure Schedule and (b) the leased Real Property identified in
Section 4.9 of the Disclosure Schedule.
4.8 PERSONAL PROPERTY.
(a) Set forth in Section 4.8(a) of the Disclosure Schedule is a list
of all material machinery and equipment, apparatus, motor vehicles, furniture,
furnishings and fixtures owned or leased by the Vermont Entities (the "Personal
Property").
(b) Each lease of Personal Property is valid and in full force and
effect, and none of the Vermont Entities is in default on any of their material
obligations under such leases and there is no event or condition that with the
giving of notice or the passage of time, or both, would create such a default
other than defaults that in the aggregate would not result in a Material Adverse
Effect. To the Knowledge of Seller, (i) no lessor under any of such leases is in
default of any of its obligations thereunder and (ii) there is no event or
condition that with the giving of notice or the passage of time, or both, would
create a default by any such lessor under any such lease. The Personal Property
has been maintained in good operating condition (in each case taking into
account the age of such Personal Property) a manner consistent with the ordinary
course of the Business.
4.9 REAL PROPERTY.
(a) No Owned Real Property. The Vermont Entities do not own any real
property.
(b) Leased Real Property. Section 4.9 of the Disclosure Schedule sets
forth all leases, subleases and other agreements under which any Vermont Entity
uses or occupies or has the legal right to use of occupy, now or in the future,
any real property (the "Leases").
(c) Compliance with Leases. Each of the Leases and each lease of real
property identified in Section 4.22 of the Disclosure Schedule is valid and in
full force and effect, and the Vermont Entities are not in default on any of
their obligations under such Leases and, to the Knowledge of Seller, there is no
event or condition that the giving of notice or the passage of time, or both,
would create such a default other than, in each case, defaults that in the
aggregate would not have a Material Adverse Effect. To the Knowledge of Seller,
(i) no lessor under any of such leases is in default of any of its obligations
thereunder and (ii) there is no event or condition that with the giving of
notice or the passage of time, or both, would create a default by any such
lessor under any such lease.
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(d) Pix Lease. To the extent required, the principal lessor consented
to the sublease entered into between Photographie Giraudon SA, as sub-lessee,
and Agence Generale d'Image, AGI SA, as sub-lessor, dated 1 October, 1994.
4.10 INTELLECTUAL PROPERTY.
(a) Section 4.10(a) of the Disclosure Schedule sets forth a true and
complete list of all (i) patents and patent applications, trademark and service
mark registrations, trademark and service mark applications and, to the
Knowledge of Seller, all material common law trademarks and service marks,
registered copyrights and copyright applications, and Internet domain names, in
each case owned by a Vermont Entity and material to the business of the Vermont
Entities ("Listed Intellectual Property"), (ii) Software (as defined herein),
and (iii) licenses, sublicenses, and other agreements pertaining to Intellectual
Property, Software or Images (as defined herein) to which a Vermont Entity is a
party, including agreements with major Internet service providers and major
Internet portals, in each case that are material to the business of the Vermont
Entities ("Licensed Intellectual Property"). For purposes hereof, "Intellectual
Property" means any and all of the following, but excluding Images: (i) United
States, international, and foreign patents, patent applications and statutory
invention registrations, (ii) trademarks, service marks, intent to use
registrations, trade names, trade dress, slogans, logos, and Internet domain
names, including registrations and applications for registration thereof, (iii)
copyrights, including registrations and applications for registration thereof
and (iv) confidential and proprietary information. For purposes hereof, "Owned
Intellectual Property" means Listed Intellectual Property and any copyright,
confidential proprietary information including trade secrets and knowhow, owned
by a Vermont Entity and, to the Knowledge of Seller, material to the business of
the Vermont Entity, "Image" means a reproduction of any artwork, photograph,
illustration, font, video, clip art, map art, film, animation or any other type
of image. For purposes hereof, "Software" means all material computer software
developed by or on behalf of a Vermont Entity, or used by a Vermont Entity,
including all material computer software and databases operated or used by
Vermont or Bavaria on their web sites or used by Vermont or Bavaria in
connection with processing customer orders, storing customer information,
storing Image related vendor information, or storing and archiving Images. For
purposes hereof, "Approved Images" means Images used or held for use by the
Vermont Entities in connection with their business for which a Vermont Entity
has the right to grant licenses or sublicenses in writing to third parties. For
purposes hereof, "Unapproved Images" means Images used or held for use by the
Vermont Entities in connection with their business which are not Approved Images
(the Approved Images and Unapproved Images collectively being "Licensed
Images").
(b) To the Knowledge of Seller, the use of the Owned Intellectual
Property, Software, Licensed Images, and Licensed Intellectual Property by the
Vermont Entities in the ordinary course of business does not infringe upon or
misappropriate the valid Intellectual Property rights of any third party. Except
as set forth in section 4.10(b) of the Disclosure Schedule, no claim
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has been received that the use of the Owned Intellectual property, Software,
Licensed Images, or Licensed Intellectual Property in the ordinary course of
business does or may infringe upon or misappropriate the Intellectual Property
rights, right of privacy or right of publicity of any third party.
(c) The Vermont Entities are the owner of the entire and unencumbered
right, title and interest in and to each item of Owned Intellectual Property,
and the Vermont Entities are entitled to use the Owned Intellectual Property in
the ordinary day-to-day conduct of business.
(d) The Owned Intellectual Property and the Licensed Intellectual Property
include all of the material Intellectual Property and Software used in the
ordinary day-to-day conduct of the business of the Vermont Entities, and there
are no other items of Intellectual Property or Software that are material to
such ordinary day-to-day conduct of such business. Except as set forth in
Section 4.10(d) of the Disclosure Schedule, to the Knowledge of Seller, the
Owned Intellectual Property and Licensed Intellectual Property, is not subject
to any claim or challenge in relation to subsistence, validity or
enforceability and has not been adjudged invalid or unenforceable in whole or
part and, to the actual knowledge of VCG, the Listed Intellectual Property is
subsisting, valid and enforceable.
(e) Except as set forth in Section 4.10(e) of the Disclosure Schedule, no
claims have been made, asserted, are pending, or, to the Knowledge of Seller,
threatened against a Vermont Entity, and no international agent licensee of the
Owned Intellectual Property or end user of the Owned or Licensed Intellectual
Property has informed VCG that any claims have been made, asserted, are pending
or threatened against a Vermont Entity, (i) based upon or challenging or
seeking to deny or restrict the use, license, sublicense, distribution,
display, copying, performance, marketing or creation of derivative works by a
Vermont Entity of any of the Owned Intellectual Property or Licensed
Intellectual property, (ii) alleging that any services provided by, processes
used by, licenses by, sublicenses by, distribution by, display by, copying by,
performances by, marketing by or creation of derivative works by or products
manufactured or sold by a Vermont Entity infringe upon or misappropriate any
Intellectual Property right, right of privacy or right of publicity of any
third party, or (iii) alleging that any Intellectual Property licensed under
the Licensed Intellectual property infringes upon any Intellectual Property
right of any third party or is being licensed or sublicensed in conflict with
the terms of any license or other agreement and to the Knowledge of Seller no
such claims have been made, asserted, are pending, or threatened against any
third party licensor, any licensee, or end user of the Owned Intellectual
Property.
(f) Except as set forth in Section 4.10(f) of the Disclosure Schedule, to
the Knowledge of Seller no person is engaging in any activity that infringes
upon the Owned Intellectual Property or any Intellectual Property Licensed to
the Vermont Entities under the Licensed Intellectual Property. No Vermont
Entity has granted any license or other right to any third party with respect
to the Owned Intellectual Property or Licensed Intellectual Property on a free
or 'pro
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bono' basis without the consent of or a license from the owner of such
Intellectual Property. The consummation of the transactions contemplated by
this Agreement will not result in the termination or material impairment of any
of the Owned Intellectual Property.
(g) VCG has delivered or made available to the Buyer correct and
complete copies of all the material licenses and sublicenses of the Licensed
Intellectual Property (excluding for such purposes all Images included therein)
including all amendments thereto, and all current standard forms of all model
and property releases which are in the custody, or under the control, of VCG
and the Vermont Entities. With respect to each such material license and
sublicense:
(i) such license or sublicense is valid and binding and in
full force and effect with respect to the Vermont Entities and, to the knowledge
of VCG, with respect to the relevant counterparty and represents the entire
agreement between the respective licensor and licensee with respect to the
subject matter of such license or sublicense;
(ii) such license or sublicense will not cease to be valid
and binding and in full force and effect on terms identical to those currently
in effect as a result of the consummation of the transaction contemplated by
this Agreement, nor will the consummation of the transactions contemplated by
this Agreement constitute a breach or default under such license or sublicense
or otherwise give the licensor or sublicensor other than a Vermont Entity a
right to terminate such license or sublicense;
(iii) Except as set forth in Section 4.10 of the Disclosure
Schedule, (A) no Vermont Entity has received any notice of termination or
cancellation under such license or sublicense, (B) no Vermont Entity has
received any notice of a breach or default under such license or sublicense,
which breach has not been cured, and (C) to the Knowledge of Seller no Vermont
Entity has granted to any other third party any rights, adverse or otherwise,
under such license or sublicense that would constitute a breach of such license
or sublicense; and
(iv) no Vermont Entity, nor, to the Knowledge of Seller, any
other party to such license or sublicense is in breach or default in any
material respect, and, to the Knowledge of Seller, no event has occurred that,
with notice or lapse of time would constitute such a breach or default or
permit termination, modification or acceleration under such license or
sublicense.
(h) To the Knowledge of Seller, the Software is as of the Closing
Date free of all viruses, worms, trojan horses and other material known
contaminants, and does not contain any bugs, errors, or problems in each case
which is of a material nature that disrupts its operation or have
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an adverse impact on the operation of other software programs or operating
systems. The Vermont Entities do not import or export from the United States any
Software. No rights in the Software have been transferred to any third party
except to the customers of a Vermont Entity to whom a Vermont Entity licensed
such Software in the ordinary course of business.
(i) The Vermont Entities have the right to use all software
development tools, library functions, compilers, and other third party software
that is material to the business of the Vermont Entities, or that is required to
operate or modify the Software in a manner necessary for the ongoing operation
of the business. The Software which the Vermont Entities purport to own was
either developed (i) by employees of the Vermont Entities within the scope of
their employment; (ii) by independent contractors who have assigned their
rights to the Vermont Entities pursuant to enforceable written agreements; or
(iii) has otherwise been rightfully assigned. The source code for such Software
is maintained on the premises of the Vermont Entities and can be compiled from
the associated source code without undue burden. The Vermont Entities have
copies of all material documentation which exists relating to use, maintenance
and operation of such Software used in the conduct of the Business.
(j) The Vermont Entities have taken reasonable steps in accordance
with normal industry practice to maintain the confidentiality of their trade
secrets and other confidential Intellectual Property. To the Knowledge of
Seller: (i) there has been no misappropriation of any material trade secrets or
other material confidential Intellectual Property of any Vermont Entity by any
person, (ii) no employee, independent contractor or agent of any Vermont Entity
has misappropriated any material trade secrets of any other person in the course
of such performance as any employee, independent contractor or agent and (iii)
no Employee, independent contractor or agent of any Vermont Entity is in
material default or breach of any term of any employment agreement,
non-disclosure agreement, assignment of proprietary rights agreement or similar
agreement or contract relating in any way to the protection, ownership,
development, use or transfer of Owned or Licensed Intellectual Property.
(k) To the Knowledge of Seller, the Internal MIS Systems are Euro
Compliant. For purposes hereof, "Internal MIS Systems" means any computer
software and systems (including hardware, firmware, operating system software,
utilities and applications software) used in the ordinary course of the Business
that process financial information and that are material to the operation of the
Business, including, where applicable, payroll, accounting, billing/receivables,
purchasing payables, inventory, asset tracking, customer service, and human
resources. For purposes hereof, "Euro Compliant" means that the Internal MIS
Systems will record, store, process and present currency denominated in Euros,
in the same manner, and with the same functionality, as the Internal MIS Systems
record, store, process and present currencies denominated in U.S. Dollars and
major European currencies.
(l) The Vermont Entities have obtained the necessary permissions from
the
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appropriate parties for links on its web sites to third party web sites and to
use third party marks in association with those links.
(m) To the Knowledge of the Seller, the Vermont Entities have obtained
all necessary releases and permissions in writing for the use of any artists'
name, biography, likeness, and Image used in marketing and advertising materials
distributed by the Vermont Entities. Except as set forth in Section 4.10(m) of
the Disclosure Schedule, the Vermont Entities' registered trademarks and service
marks as listed at Section 4.10(a) of the Disclosure Schedule have been duly
registered with, filed in or issued by, as the case may be, the United States
Patent and Tradesman Office or such other domestic or foreign office of
appropriate jurisdiction, and such registrations, filings, issuances and other
actions remain in full force and effect, are current and unexpired.
(n) Except for public domain imagery as set forth in Section 4.10(n)
of the Disclosure Schedule, the Vermont Entities validly own or license all
Images used or held for use by a Vermont Entity which are material to the
operation of the business of any Vermont Entity as currently conducted. With
respect to each Image owned by a Vermont Entity ("Owned Images"), the Vermont
Entity, as applicable, has the right to display, reproduce, distribute, sell,
market, perform, advertise, bundle with other derivative works, create
derivative works, license and sublicense the use of such Image to the extent
required for the continued day-to-day operation of the business in a manner
consistent with past practices. The Owned Images and Licensed Images include all
of the Images used or held for use by the Vermont Entities which are material to
the day-to-day operation of the business as currently conducted. With respect to
the public domain Images offered by the Vermont Entities, each Image, to the
Knowledge of Seller, does not require a license or the payment of a fee for the
Vermont Entities' use in a manner consistent with past practice. Without
prejudice to the generality of the foregoing, nothing in this Section shall be
deemed to be construed as a representation or warranty with respect to the
Licensor's ownership or license of Images.
(o) To the Knowledge of Seller, (a) no Vermont Entity has granted any
license, sublicense or other right to any other person with respect to any
Unapproved Images (b) no Vermont Entity has granted any license, sublicense or
other right to any other person with respect to any Approved Image that would
constitute a breach of any agreement or license pertaining to such Approved
Image, and (c) except as disclosed at Section 4.10 of the Disclosure Schedule no
Vermont Entity has granted any license, sublicense or other right to any other
person with respect to any Approved Image for which such Vermont Entity has no
model or property release where such license, sub-license or other right would
constitute a breach of a third party's rights without such model or property
release.
(p) To the Knowledge of Seller, (a) the display, sale, marketing,
distribution, bundling with other works, creation of derivative works, copying,
marketing, performance and advertising of the Licensed Images, and the licensing
and sublicensing of Approved Images as done, authorized or agreed to by the
Vermont Entities does not infringe upon the Intellectual Property
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right, right of publicity, or right of privacy of any third party, and (b) the
display, sale marketing, performance, distribution, bundling with other works,
creation of derivative works, copying and advertising of the Licensed Images,
and the licensing and sublicensing of Approved Images, as done, authorized or
agreed to by the Vermont Entities does not constitute a breach of any agreement
or license to which a Vermont Entity is a party.
(q) Except as set forth in Section 4.10(q) of the Disclosure Schedule, no
claims have been made, asserted, are pending, or to the Knowledge of Seller
threatened, against any Vermont Entity, and no international agent licensee of
the Licensed Images or end user of the Licensed Images has informed VCG that any
claims have been made, asserted, are pending or threatened against a Vermont
Entity, (i) based upon or challenging or seeking to deny or restrict the
display, sale, marketing, performance, distribution, bundling with other works,
creation of derivative works, copying, advertising, licensing or sublicensing by
any Vermont Entity of any of the Licensed Images, (ii) alleging that the sale,
reproduction, distribution, bundling with other derivative works, creation of
derivative works, copying, advertising, licensing or sublicensing of the
Licensed Images by any Vermont Entity or in accordance with the terms granted by
any Vermont Entity does or may infringe upon the Intellectual Property rights,
right of publicity, right of privacy of any third party, (iii) claiming in
respect of loss or damage to Licensed Images, (iv) claiming in respect of model
or property releases (or lack thereof) in respect of the Licensed Images, (v)
challenging the ownership of the Owned Images or the Vermont Entities' rights to
the Licensed Images, and to the Knowledge of Seller, no such claims have been
made, asserted, are pending, or threatened against any third party licensor, any
licensee, or any end user of a Licensed Images or an international agent for a
Vermont Entity. Except as set forth in Schedule 4.10(q) of the Disclosure
Schedule, no person has requested indemnification from any Vermont Entity based
on the proper use of an Owned Image or Licensed Image within the last 24 months.
(r) To the Knowledge of Seller, no person is engaging in any activity that
infringes upon the Licensed Images or upon the rights of any Vermont Entity
therein. The consummation of the transactions contemplated by this Agreement
will not result in the termination or impairment of any right of a Vermont
Entity to sell, copy, market, advertise, perform, bundle with other works,
create derivative works of, distribute or sublicense any of the Licensed Images.
(s) To the Knowledge of Seller, except as set forth in Section 4.10(s) of
the Disclosure Schedule, each of the Vermont Entities has, prior to any
display, bundling, marketing, performance, advertisement, sale, reproduction,
distribution or sublicensing of any Licensed Image, obtained in writing all
such releases and/or other third party consents or authorizations required by
law for such display, bundling, marketing, performance, advertisement, sale,
reproduction, distribution or sublicensing, or taken reasonable steps to ensure
that such releases, consents or authorizations have been given. Except as set
forth in Schedule 4.10(s) of the Disclosure Schedule the Vermont Entities have
not entered into any contract under which a Vermont Entity has assumed any
obligation for the storage and handling of Images outside of the ordinary
course of business.
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(t) With respect to each material license or agreement by which Vermont or
Bavaria has obtained the right to display, perform, advertise, market, sell,
reproduce, distribute, bundle with other derivative works, create derivative
works, market copy, license or sublicense the Licensed Images or by which
Vermont or Bavaria has granted to any third party the right to display, sell,
reproduce, perform or distribute any Licensed Images:
(i) such license or agreement is legal, valid, binding and
enforceable and in full force and effect with respect to the Vermont
Entities and, to the Knowledge of Seller, with respect to the relevant
counterparty and represents the entire agreement between the parties
thereto with respect to the subject matter thereof;
(ii) such license or agreement will not cease to be legal, valid,
binding and enforceable and in full force and effect on terms identical to
those currently in effect as a result of the consummation of the
transactions contemplated by this Agreement, nor will the consummation of
the transactions contemplated by this Agreement constitute a breach or
default under such license or agreement, or otherwise give any party
thereto a right to terminate such license or agreement;
(iii) except as set out in Section 4.10 of the Disclosure Schedule,
with respect to each such license or agreement, (A) no Vermont Entity has
received any notice of termination or cancellation under such license or
agreement, and no party thereto has any right of termination or
cancellation thereunder except in accordance with its terms (B) no Vermont
Entity has received any notice of a breach or default under such license or
agreement which breach or default has not been cured, and (C) to the
Knowledge of Seller no Vermont Entity has granted to any other person any
rights, adverse or otherwise, under such license or agreement that would
constitute a breach of such licence or agreement; and
(iv) none of the Vermont Entities nor, to the Knowledge of Seller,
any other party to such license or agreement, is in breach or default
thereof in any material respect, and, to the Knowledge of Seller, no event
has occurred that, with notice or lapse of time would constitute such a
breach or default or permit termination, modification or acceleration under
such license or agreement.
(u) No Vermont Entity has granted to any Person the right to distribute or
sell the Licensed Images except in the ordinary course of business.
(v) Section 4.10(v) of the Disclosure Schedule identifies each material
contract between a Vermont Entity and a photographer or other content provider
to a Vermont Entity that has been terminated or revoked since January 1, 1998
that involves the display, reproduction, distribution, creation of derivative
works, bundling with other works, licensing or sublicensing the use of any Image
owned or controlled by such third party.
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(w) All publicly and freely available electronic versions of Owned
Images and Licensed Images with a resolution level at or above "comping
resolution" distributed or made available by the Vermont Entities on a web
site, contain watermarks or similar protection mechanisms advertising or
marketing material.
4.11 ENVIRONMENTAL PROTECTION.
(a) Except as set forth in Section 4.11 of the Disclosure Schedule:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received by, no complaint has been
filed against, no penalty has been assessed against, and no investigation,
action, claim, suit, proceeding or review is pending or, to the Knowledge
of Seller, threatened, by any person or Governmental Authority against, any
Vermont Entity with respect to any matters relating to or arising out of
any Environmental Law which, individually or in the aggregate, would have a
Material Adverse Effect;
(ii) to the Knowledge of Seller, no Hazardous Substance has been
discharged, disposed of, dumped, injected, pumped, deposited, spilled,
leaked, emitted or released at, on or under any property now or previously
owned, leased or operated by any Vermont Entity which circumstance,
individually or in the aggregate, would have a Material Adverse Effect; and
(iii) there are no Environmental Liabilities that, individually or
in the aggregate, have had or would have a Material Adverse Effect.
(b) For purposes of this Section, the following terms shall have the
meanings set forth below:
(i) "Vermont Entity" shall include any entity which is, in whole
or in part, a predecessor of any Vermont Entity;
(ii) "Environmental Laws" means any and all federal, state, local
and foreign law (including common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit, or
governmental restrictions or any agreement with any Governmental Authority
or other third party, relating to human health and safety, the environment
or to pollutants, contaminants, wastes or chemicals or toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substances, wastes or
materials, in each case to the extent in effect on February 27, 2000;
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(iii) "Environmental Liabilities" means any and all liabilities of or
relating to the Vermont Entities of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, which (A) have
arisen under or relate to matters covered by Environmental Laws and (B)
have arisen from actions occurring or conditions existing on or prior to
the Closing; and
(iv) "Hazardous Substances" means any pollutant, contaminant, waste or
chemical or any toxic, radioactive, corrosive, reactive or otherwise
hazardous substance, waste or material, or any substance having any
constituent elements displaying any of the foregoing characteristics,
including, without limitation, petroleum, its derivatives, by-products and
other hydrocarbons, or any substance, waste or material regulated under any
Environmental Laws.
4.12 FINANCIAL STATEMENTS. VCG has previously furnished Buyer with a true
and complete copy of the audited consolidated balance sheets of VCG as of
December 31, 1999 and the related audited statements of income for the fiscal
year then ended including the notes thereto (the "Audited Vermont Financial
Statements"). Subject to the elimination of transactions and balances between
the Vermont Entities, the Audited Vermont Financial Statements present fairly in
all material respects the financial position of the Vermont Entities results of
operations and changes in financial position and the income of the Business for
the period ended on the date thereof in conformity with generally accepted
accounting principles in the United Kingdom, applied on a consistent basis.
There are no debts, liabilities or obligations of any kind, whether accrued or
fixed, absolute or contingent, matured or unmatured or determined or
determinable, to the extent required by GAAP to be reflected on financial
statements ("Liabilities") of any Vermont Entity, other than Liabilities (i)
reflected or reserved against on the Audited Vermont Financial Statements or
(ii) incurred in the ordinary course of business, consistent with the past
practices of the Vermont Entities, since December 31, 1999, provided, however,
that to the extent any such Liabilities exist, they shall be offset against any
assets reflected on the Audited Vermont Financial Statements which are later
determined to have a greater value than as reflected thereon.
4.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in Section
4.13 of the Disclosure Schedule, since the date of the Audited Vermont Financial
Statements there has not been any event, change or effect which has had or would
reasonably be expected to have a Material Adverse Effect in the financial
condition, properties, business, results of operations or, to the Knowledge of
Seller, prospects of the Vermont Entities taken as a whole. None of the Vermont
Entities are currently in default on any installment or installments on
indebtedness for borrowed money, or on any rental payment on any long-term
lease.
4.14 ABSENCE OF CHANGES. Except as set forth in Section 4.14 of the
Disclosure Schedule, since the date of the Audited Vermont Financial Statements,
the Business has been operated in the ordinary course, and there has not been
incurred, nor has there occurred:
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(a) Any material damage, destruction or loss (whether or not covered by
insurance), adversely affecting the Business or any of the material Assets;
(b) Any issuance, declaration, setting aside or payment of any dividend or
other distribution of cash or property on any of the capital stock of any
Vermont Entity, or any direct or indirect redemption, purchase or other
acquisition of any shares of capital stock of any Vermont Entity or any
agreement or commitment by any Vermont Entity to do so;
(c) Any strikes, work stoppages or other material labor disputes involving
any Employees;
(d) Any sale, transfer or other disposition of any of the Assets, except
for sales made in the ordinary course of business;
(e) Any amendment, termination, waiver or cancellation of any Material
Agreement included in the Assets, or of any right or claim thereunder;
(f) Any (i) general uniform increase in the compensation of the Employees
of the Vermont Entities (including, without limitation, any increase pursuant to
any bonus, pension, profit sharing or other plan or commitment), other than in
the ordinary course of business and consistent with past practice, (ii) increase
in any compensation payable by any Vermont Entity to any officer, director,
Employee, consultant or agent of any Vermont Entity, other than in the ordinary
course of business and consistent with past practice, (iii) loan or commitment
therefor made by any Vermont Entity to any officer, director, stockholder,
Employee, consultant or agent of a Vermont Entity, (iv) grant of any severance
or termination pay to any director, officer or Employee of any Vermont Entity,
or (v) entering into any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or Employee or any Vermont Entity.
(g) Any change in the accounting methods, procedures or practices followed
by the Vermont Entities;
(h) Any material change in policies, operations or practices of the Vermont
Entities, including, without limitation, with respect to selling methods,
returns, discounts or other terms of sale, as well as payments of liabilities;
(i) Any sales contracts or commitments which will be materially in excess
of the capacity of the Vermont Entities as of the Closing Date;
(j) Any purchase contracts or commitments materially in excess of the
requirements of the Business in the ordinary course;
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(k) Except as contemplated by clause (i) of Section 5.8 hereof, any
capital appropriation, expenditure or commitment therefor by the Vermont
Entities;
(l) Except as contemplated by clauses (ii) and (iii) of Section 5.8
hereof and except with respect to the Severance Plans, any material change in
policies, operations or practices of the Vermont Entities concerning the
Employees thereof, including, without limitation, with respect to any Employee
fringe Benefit Plans;
(m) Any event, occurrence or development within the control of VCG
and the Vermont Entities which has, or would reasonably be expected to have a
Material Adverse Effect;
(n) Any creation or assumption by any Vermont Entity of any
Encumbrance on any Asset other than in the ordinary course of business,
consistent with past practice;
(o) Any making of any loan, advance or capital contribution to or
investment in any person by any Vermont Entity, involving an amount in excess of
Two Hundred Thousand Dollars ($200,000);
(p) Any making or rescission of any material express or deemed
election relating to Taxes, settlement or compromise of any material claim,
action, suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes, or except as may be required by applicable law,
made any change to any of its material methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of its most recently filed federal and foreign income tax returns;
and
(q) Any agreement, whether in writing or otherwise, for any Vermont
Entity to take any of the actions enumerated in this Section 4.14 or any other
material action outside of the ordinary course of business.
4.15 TAX MATTERS. Except as will be disclosed not later than March 26,
2000 in a Schedule 4.15:
(a)(i) each U.S. Vermont Entity (as defined below) utilizes the
accrual method of accounting for computing its federal income Tax liability;
(ii) to the Knowledge of Seller, all Returns required to be filed by or on
behalf of any Vermont Entity have been timely filed in accordance with all
applicable laws (including allowance for extension of time to file); (iii) to
the Knowledge of Seller, such Returns are true, correct and complete in all
material respects (excluding, however, any inaccuracy the correction of which
would not cause a net Tax deficiency on such Returns); (iv) all Taxes shown on
such Returns as due and payable have been paid; (v) each Vermont Entity has
maintained with respect to transfer pricing proper intercompany agreements and
concurrent and supporting documentation as required under OECD guidelines, such
that no transfer pricing amounts will be denied as deductions in any
jurisdiction by reason of a lack of proper agreements or
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supporting documentation; (vi) there are no agreements or consents currently in
effect with any Taxing Authority for the extension or waiver of the time (A) to
file any Return or (B) for assessment or collection of any Taxes relating to the
income, properties, employees or operations of the Vermont Entities, or (C) for
the retention of records, documents or Returns; (vii) to the Knowledge of
Seller, all Taxes which the Vermont Entities are required by law to withhold or
collect have been duly withheld or collected, and have been timely paid over to
the appropriate Taxing Authority to the extent due and payable; and (viii) to
the Knowledge of the Seller, no power of attorney with respect to any Tax matter
of any Vermont Entity is currently in force.
(b) Each Vermont Entity that is a U.S. corporation (a "U.S. Vermont
Entity"), or is a non-U.S. corporation but is engaged in trade or business in
the United States, has filed all reports and has created and/or retained all
records required under Code Section 6038A with respect to its ownership by and
transactions with related parties. Each related foreign person required to
maintain records under Code Section 6038A with respect to transactions between
such Vermont Entity and the related foreign person has maintained such records.
All documents that are required to be created and/or preserved by the related
foreign person with respect to transactions with any such Vermont Entity are
either maintained in the United States, or such Vermont Entity is exempt from
the record maintenance requirements of Code Section 6038A with respect to such
transactions under Treasury Regulation Section 1.6038A-1. No such Vermont Entity
is a party to any record maintenance agreement with the Internal Revenue Service
with respect to Code Section 6038A.
(c) There is no action, suit, proceeding, investigation, audit or claim
currently pending or, to the Knowledge of Seller, threatened, regarding any
Taxes relating to the income, properties or operations of the Vermont Entities.
(d) No U.S. Vermont Entity (i) nor any Person on behalf of any U.S. Vermont
Entity has (A) executed or entered into a closing agreement pursuant to Code
Section 7121 (or any similar provision of U.S. state or local law) that is
currently in force and determines the Tax liabilities of the U.S. Vermont
Entities or (B) agreed to or is required to make any adjustments pursuant to
Code Section 481(a) by reason of a change in accounting method initiated by (or
on behalf of) any U.S. Vermont Entity, nor does VCG have knowledge that any
Taxing Authority has proposed any such adjustment or change in accounting
method, nor does any U.S. Vermont Entity have any application pending with any
Taxing Authority requesting permission for any changes in accounting methods
that relate to the business or operations of any of the U.S. Vermont Entities or
(ii) is subject to any private letter ruling of the Internal Revenue Service nor
is any request for such a ruling pending with the Internal Revenue Service.
(e)(i) No Vermont Entity has executed or entered into a binding agreement
with a non-U.S. Taxing Authority, similar to a Closing Agreement pursuant to US
Code Section 7121, that is currently in force and will determine the Tax
Liability of such Vermont Entity for any period ending after the Closing Date;
and (ii) to the Knowledge of Seller, no Vermont Entity is subject to any written
ruling addressed to it by a non-U.S. Taxing Authority, comparable to a private
letter
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ruling of the Internal Revenue Service, nor has any such ruling been requested.
(f) No Vermont Entity (i) is treated for any taxation purpose as
resident in a country other than the country of its incorporation or (ii) has
been subject to a claim by a Taxing Authority in a jurisdiction where a Vermont
Entity does not file Returns that it is or may be subject to taxation by that
jurisdiction.
(g) None of the Vermont Entities (i) has entered into any tax
sharing or similar agreement or arrangement (whether or not written and
including without limitation any arrangement under which tax losses or tax
reliefs are surrendered or claimed or agreed to be surrendered or claimed)
pursuant to which it will have any obligation to make any payments after the
Closing with respect to any period commencing after December 31, 1999, or (ii)
is liable to taxation chargeable primarily on any other company which is not a
Vermont Entity.
(h) There are no liens for any Tax on the assets of the Vermont
Entities except for taxes not yet due and payable.
(i) No Vermont Entity will be subject to a clawback of any Irish
stamp duty relief claimed under the Irish stamp duty legislation nor any
capital gains tax deferred under the Irish Taxes Acts by virtue of the entering
into and/or completion of this Agreement. To the Knowledge of Seller (limited,
however, to actual knowledge), no charge to taxation will arise on, nor will
any gain or loss otherwise be recognized by, any Vermont Entity by virtue of
the entering into and/or completion of this Agreement (excluding any charge to
taxation that would not arise, and gain or loss that would not be recognized,
but for an action of the Buyer after the Closing Date, including, without
limitation, an election under Code Section 338).
(j) To the Knowledge of Seller, each Vermont Entity is duly
registered in any country or jurisdiction where it could legally be subject to
the collection or payment of value added Tax ("VAT").
(k) Complete and correct copies of the Returns set forth in Schedule
4.15 (to be provided not later than March 26, 2000) were made available to the
Buyer and Communications prior to the date of this Agreement.
(l) There is no contract, agreement, plan or arrangement of any
Vermont Entity covering any person that, individually or collectively, will
give rise to the payment of any amount that would not be deductible by Buyer or
its Affiliates by reason of Code Sections 280G or 162(m).
(m) None of the U.S. Vermont Entities (i) is required to treat any
of their assets as owned by another person pursuant to the "safe harbor"
leasing provisions of the Code, (ii) owns assets that are "tax-exempt use
property" within the meaning of Code Section 168(h), "tax-exempt
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bond financed property" within the meaning of Code Section 168(g), "limited use
property" (as that term is defined in Rev. Proc. 76-30) or security for debt
the interest on which is tax-exempt under Code Section 103(a) or (iii) is
required to apply any of the foregoing rules under any comparable U.S. state or
local Tax provision.
(n) No (i) U.S. Vermont Entity nor any other Person on behalf of any U.S.
Vermont Entity has filed a consent pursuant to Code Section 341(f) or any
comparable foreign, state or local Tax provision or agreed to have Code Section
341(f)(2) or any comparable foreign, state or local Tax provision apply to any
disposition of a subsection (f) asset (as such term is defined in Code Section
341(f)(4)) owned by a Vermont Entity and (ii) UK Vermont Entity has acquired
any of its assets by virtue of a transfer from a group company under Section
171 of the UK Taxation of Chargeable Gains Act 1992.
(o) No claim has been made under Section 152 of the UK Taxation of
Chargeable Gains Act 1992 that affects the amount of the consideration which
would be allowable under Section 8 of such Act on a disposal of an asset by a
Vermont Entity.
(p) No Vermont Entity has at any time after April 6, 1965 repaid, redeemed
or purchased or agreed to repay, redeem or purchase, or granted an option under
which it may become liable to purchase, any shares of any class of its share
capital nor has any Vermont Entity after that date capitalized or agreed to
capitalize in the form of shares or debentures any profits or reserves of any
class or description or otherwise issued or agreed to issue any share capital
other than for the receipt of a new consideration (within the meaning of Part VI
of the UK Income and Corporation Taxes act 1988) or passed or agreed to pass any
resolution to do so.
(q) No indebtedness of any U.S. Vermont Entity is "corporate acquisition
indebtedness" within the meaning of Code Section 279(b), an "applicable high
yield discount obligation" within the meaning of Code Section 163(i) or debt on
which any portion of the interest thereon is "disqualified interest" within the
meaning of Code Section 163(h).
(r) None of the Vermont Entities is or has ever been a "United States
real property holding corporation," a "controlled foreign corporation," a
"personal holding company," a "foreign personal holding company," a "foreign
investment company," or a "passive foreign investment company," as each of
those terms is defined in the U.S. Code. None of the Vermont Entities would,
for 1999, have constituted a foreign investment company or a passive foreign
investment company had it had U.S. shareholders.
(s) None of the U.S. Vermont Entities has participated in, or cooperated
with, an "international boycott" within the meaning of Code Section 999.
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(t) Each Vermont Entity that is incorporated in Ireland or is engaged
in a trade or business in Ireland (an "Irish Vermont Entity") has (a) delivered
a notice of particulars to the Irish Revenue pursuant to Section 882 of the
Taxes Consolidation Act 1997 and (b) complied with the provisions of Chapter 8A
of the Taxes Consolidation Act 1997 in respect of all dividends paid and
distributions made.
(u) No Irish Vermont Entity (a) will be required to make any payment
under Section 411 of the Taxes Consolidation Act 1997 for the trading losses
surrendered in excess of the amount surrendered or (b) has made any disposals of
capital assets which would require Irish Revenue clearance under Section 980 of
the Taxes Consolidation Act 1997.
4.16 COMPLIANCE WITH LAWS, ETC. To the Knowledge of Seller, except with
respect to Environmental Laws, compliance with which is the subject of Section
4.11 hereof: (i) the Vermont Entities are in compliance with (A) all applicable
Laws and (B) all applicable orders, writs, judgments, injunctions, decrees and
similar commands of Governmental Authorities and all decisions and awards of any
arbitration panel or tribunal, except in each case where noncompliance would
have a Material Adverse Effect; and (ii) except as set forth in Section 4.16 of
the Disclosure Schedule, since the date of the Audited Vermont Financial
Statements, the Vermont Entities have not received any notification of any
asserted present or past failure by it to comply with such Laws or such orders,
writs, judgments, injunctions or decrees.
4.17 LITIGATION REGARDING THE VERMONT ENTITIES. Except as set forth in
Section 4.17 of the Disclosure Schedule, there are no (i) civil or criminal
actions, suits, claims, investigations or legal or administrative or
arbitration (or other binding alternative dispute resolution) proceedings
pending or, to the Knowledge of Seller, threatened against any Vermont Entity or
any of the Assets that seek damages in excess of $25,000 or which seek equitable
relief, or (ii) orders, writs, judgments, injunctions, decrees, awards or
similar commands of any Governmental Authority, or any arbitration tribunal or
panel, applicable to any Vermont Entity, except, in each case in this Section
4.17(ii), for those orders, writs, judgments, injunctions, decrees, awards or
similar commands which would not have Material Adverse Effect.
4.18 PERMITS, ETC. Set forth in Section 4.18 of the Disclosure Schedule is
a list of all material governmental licenses, permits, certificates or
inspection, other authorizations, filings and registrations which are necessary
for the Vermont Entities to own and operate the Business and Assets as presently
operated in all material respects (collectively, the "Authorizations"). All the
Authorizations have been duly and lawfully secured or made by UBIBV and are in
full force and effect and the Vermont Entities are in material compliance with
all such Authorizations. There are no proceedings pending or, to the Knowledge
of Seller, threatened to revoke or limit any Authorization. None of VCG or the
Vermont Entities have received notice of any violation of any Authorization.
Except as set forth in Section 4.18 of the Disclosure Schedule, none of the
transactions contemplated by this Agreement will terminate, violate or limit the
effectiveness of any of the Authorizations. The Vermont Entities have made, in a
timely manner, all material filings,
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reports, notices and other communications with the appropriate Governmental
Authority, and have otherwise taken, in a timely manner, all other action
required to be taken by them, reasonably necessary to secure the renewal of the
Authorizations prior to the dates of their respective expirations.
4.19 EMPLOYEES; LABOR RELATIONS. (a) Except as set forth in Section 4.19
of the Disclosure Schedule (i) the Vermont Entities (A) are not delinquent in
the payment to or on behalf of any past or present Employees of the Vermont
Entities of any wages, salaries, social security premiums, commissions,
bonuses, benefit plan contributions or other compensation (including without
limitation disability compensation) for all periods prior to February 27, 2000
and (B) are not delinquent in the payment of any amount which is due and
payable to any state or state fund pursuant to any workers' compensation
statute, rules or regulations or any amount which is due and payable to any
workers' compensation claimant or any other party arising under or with respect
to a claim that has been filed under state workers' compensation statutes and
approved in the ordinary course in accordance with the policies of the Vermont
Entities regarding workers' compensation and/or any applicable state statute or
administrative procedure; (ii) there is no labor strike, slowdown or work
stoppage in progress against any Vermont Entity; (iii) no collective bargaining
agreement currently exists or is currently being negotiated by any Vermont
Entity; (iv) to the Knowledge of Seller, there has been no request to any
Vermont Entity for collective bargaining on behalf of any Employees not
represented currently by a union or from the National Labor Relations Board in
respect of any Employees of any Vermont Entity; (v) to the Knowledge of Seller,
no union representation or jurisdictional dispute or question exists respecting
any Employees of any Vermont Entity; (vi) no material dispute exists between
any Vermont Entity and any of their respective sales representatives or, to the
Knowledge of Seller, between any such sales representatives with respect to
territory, commissions, products or any other terms of their representation;
and (vii) to the Knowledge of Seller, there has been no "mass layoff" or "plant
closing" as defined by WARN with respect to any of the Vermont Entities within
the six (6) months prior to Closing.
(b) With respect to Pix SA and iSwoop EURL, and since the respective
dates of incorporation thereof, all employer contributions payable to any state
social security agency (including, without limitation, L'Union pour le
Recouvrement des cotisations de Securite Sociale et d'Allocations Familiales)
have been paid in a timely manner.
4.20 EMPLOYEE BENEFITS.
(a) Benefits Plans. Section 4.20(a) of the Disclosure Schedule lists each
employee benefit plan (within the meaning of Section 3(3) of ERISA) consulting
or other compensation agreements, incentive, equity or equity-based
compensation, severance pay, sick leave, vacation pay, salary continuation for
disability, retirement benefits scheme (within the meaning of Section 611 of
the UK Income and Corporation Taxes Act 1988 (the "Taxes Act") personal pension
scheme (within the meaning of Section 630 of the Taxes Act) pension or
superannuation arrangement stock purchase plan, stock option plan, fringe
benefit plan, bonus plan and any other deferred compensation
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agreement or plan or funding arrangement which covers any Employee immediately
prior to Closing and which is sponsored or maintained or to which contributions
are required to be made by (i) UBIBV or VCG or (ii) any other organization which
is a member of a controlled group of organizations (within the meanings of
Sections 414(b), (c), (m) or (o) of the Code) or an associated employer (within
the meaning of Section 590A(3) or (4) of the Texas Act) of which VCG is a member
(the "Controlled Group"), such plans described in this sentence being referred
to collectively as the "Benefit Plans." Except as set forth on Section 4.20(a)
of the Disclosure Schedule, there are no material employee plans, arrangements,
benefit programs or similar plans which cover Employees immediately prior to
Closing. Schedule 4.20(a) separately set forth each Benefit Plan which is a
multiemployer plan, as defined in Section 3(37) of ERISA ("Multiemployer Plan"),
or is or has been subject to Sections 4063 or 4064 of ERISA ("Multiple Employer
Plans").
(b) Documents Furnished. VCG has made available to Buyer and Communications
a current, accurate and complete copy of each Benefit Plan specified in Section
4.20(a) of the Disclosure Schedule and, to the extent applicable, copies of the
most recent:
(i) determination letter or outstanding request for a determination
letter with respect to Benefit Plans intended to be qualified under Section
401(a) of the Code or, as the case may be, Chapters I or IV Part XIV or the
Taxes Act; and
(ii) Form 5500 with respect to all Benefit Plans, as applicable, for
which separate Form 5500's are filed, with all attachments and schedules
thereto.
(c) VCG has made available to Buyer and Communications copies of all
agreements, trust deeds and rules currently governing the UK Benefit Plans
together with copies of explanatory literature issued to members of the UK
Benefit Plans and a list of the Employees who are members of the UK Benefit
Plans with all details relevant to their membership including the basis upon
which their entitlements to benefits are calculated.
(d) Except as set forth on Section 4.20(c) of the Disclosure Schedule, for
each Benefit Plan specified below, the following is true:
(i) each such Benefit Plan which is intended to qualify under Section
401(a) of the Code as the case may be, Chapters I or IV Part XIV or the
Taxes Act has received a favorable determination letter as to its
qualification under the Code or the Taxes Act, and to the Knowledge of
Seller nothing has occurred, whether by action or failure to act, which
would cause the loss of such qualification;
(ii) with respect to all Benefit Plans, there are no actions, suits or
claims (other than routine claims for benefits in the ordinary course)
pending, and to the Knowledge of Seller there are no threatened actions,
suits or claims (other than routine claims for benefits in the ordinary
course);
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(iii) each of the Benefit Plans is, and its administration is and has
been since inception, in compliance with ERISA and the Code or equivalent UK
laws and regulation, except for such failures to comply which could not
reasonably be expected to have a Material Adverse Effect on the Business;
(iv) all contributions and other payments required to be made by
UBIBV, VCG or any Vermont Entity to any Benefit Plan under the terms of such
Benefit Plan in respect of Employees for any period ending on the Closing have
been made;
(v) no employer securities, employer real property or other employer
property is included in the assets of any Benefit Plan;
(vi) no assurance, promise or guarantee (oral or written) has been
made or given to an employee who is a member of a UK Benefit Plan of any
particular kind or amount of benefits (other than insured death in service
benefits) to be provided for or in respect of him on retirement, death or
leaving service;
(vii) Buyer will not have (x) any obligation to make any contribution
to any Multiemployer Plan under which VCG or the Controlled Group had
contribution obligations prior to the Closing Date or (y) any withdrawal
liability from any such Multiemployer Plan under Section 4201 of ERISA;
(viii) there has been no "reportable event" as that term is defined
in Section 4043 of ERISA and the regulations thereunder with respect to the
Benefit Plans which would require the giving of notice or any event requiring
disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA;
(ix) none of the VCG nor the Controlled Group has terminated any
Benefit Plan, or incurred any outstanding liability under Section 4062 of ERISA
to the PBGC, or to a trustee appointed under Section 4042 of ERISA. All
premiums due to the PBGC with respect to the Benefit Plans have been paid;
(x) neither VCG nor the Controlled Group or any organization to which
UBIBV is a successor parent corporation, within the meaning of Section 4069(b)
of ERISA, has engaged in any transaction, within the meaning of Section 4069 of
ERISA; and
(xi) none of the Benefit Plans which are "welfare benefit plans"
within the meaning of Section 3(1) of ERISA provide for continuing benefits or
coverage for any participant or any beneficiary or a participant
post-termination of employment, except as may be required under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") or
benefits at the expense of the participant or the participant's beneficiary and
each of UBIBV and the Controlled Group which maintains a "group health plan"
within the meaning of Section 5000(b)(1)
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of the Code has complied with the notice and continuation requirements of
Section 4980B of the Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and
the regulations thereunder, except for such failures to comply which could not
reasonably be expected to have a Material Adverse Effect on the Business.
(e) No Changes. Except as set forth in Section 4.20 of the
Disclosure Schedule, on or after February 27, 2000 and before the Closing, no
Benefit Plan as it affects the Employees has been, or will be (i) amended in
any manner which would materially increase the benefits accrued, or which may
be accrued, by any participating or sponsoring employer thereunder or (ii)
amended in any manner which would increase the cost to UBIBV, VCG or any
Vermont Entity, or Buyer or Communications of maintaining such Benefit Plan
except to the extent required by law.
4.21 POWERS OF ATTORNEY. On the Closing Date, there will be no persons,
firms, associations, corporations or business organizations or entities holding
general or special powers of attorney from any Vermont Entity.
4.22 AGREEMENTS, ETC. Set forth in Section 4.22 of the Disclosure Schedule
is a list of all of the following contracts, agreements, documents,
instruments, understandings or arrangements, written or oral, included in the
Assets (collectively, the "Material Agreements"):
(a) Contracts involving the expenditure of more than Two Hundred
Thousand Dollars ($200,000) in any instance for the purchase of materials,
supplies, equipment or services, specifying those which are not cancelable on
thirty (30) days notice without penalty;
(b) Collective Bargaining Agreements with labor unions;
(c) Contracts and agreements relating to the leasing (as lessor or
lessee) or to the conditional purchase or sale of any property, real, personal
or mixed in excess of Two Hundred Thousand Dollars ($200,000) per year;
(d) Indentures, mortgages, promissory notes, loan agreements,
capital leases, security agreements, or other agreements or commitments for the
borrowing of money, or the purchase of assets involving deferred payments (in
the latter case, involving payments in excess of Two Hundred Thousand Dollars
per year), or which otherwise evidence indebtedness for borrowing or which
create an Encumbrance on any of the Assets;
(e) Guarantees of the obligations of a third party or agreements to
indemnify third parties;
(f) Individual employment, severance or consulting agreements or
arrangements under which payments were in excess of Two Hundred Thousand Dollars
($200,000) during 1999 or are reasonably projected to exceed Two Hundred
Thousand Dollars ($200,000) in 2000;
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(g) Distributor, dealer, sales, advertising, agency, manufacturer's
representative, franchise or similar contracts or any other contract relating to
the payment of a commission under which payments were in excess of Two Hundred
Thousand Dollars ($200,000) during 1999 or are reasonably projected to exceed
Two Hundred Thousand Dollars ($200,000) in 2000;
(h) contracts granting a right of first refusal or first negotiation
with respect to the capital stock of any Vermont Entity;
(i) partnership or joint venture agreements with unaffiliated third
parties;
(j) agreements for the acquisition, sale or lease of material
properties or assets of any Vermont Entity since December 31, 1996 which involve
payments in excess of Two Hundred Thousand Dollars ($200,000) per year;
(k) agreements that purport to limit, curtail or restrict the ability
of any Vermont Entity to compete in any geographic area or line of business,
except for exclusive distributor or agency agreements pursuant to which a
Vermont Entity is not the distributor or agent;
(l) agreements between any Vermont Entity, on the one hand, and UBIBV
or Affiliate of UBIBV, or any officer, director or Employee of any Vermont
Entity, on the other hand;
(m) contracts or agreements with any Governmental Authority which
involve payments in excess of Two Hundred Thousand Dollars ($200,000) per year;
and
(n) agreements relating to the license, purchase, right to use or
other supply of still photographic images to any Vermont Entity which involve
payments in excess of Two Hundred Thousand Dollars ($200,000) per year.
True copies of all written Material Agreements, described on Section 4.22
of the Disclosure Schedule have been furnished to the Buyer and Communications.
Each of the Material Agreements constitutes a valid and binding obligation of
the Vermont Entity party thereto, enforceable in accordance with its terms and
is valid and in full force and effect and, except as set forth in Section 4.22
of the Disclosure Schedule, the transactions contemplated hereby will not
require the consent of any party thereto or otherwise adversely affect the
validity and effectiveness thereof. The Vermont Entities are not in default in
any material respect or alleged to be in default in any material respect under
any Material Agreement nor, to the Knowledge of Seller, is any other party to
any of the Material Agreements in default of any of its obligations thereunder.
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4.23 CERTAIN MATTERS CONCERNING PIX.
(a) Pix SA is the resultant company from the merger by absorption of
Photographie Giraudon SA by Pix SA having as its effective date January 1, 1999
(the "Merger"). VCG further represents that the Merger (in particular, any and
all assessments or valuations made in connection therewith) was effected in
compliance with applicable French law and that the Merger has been duly
consummated, with retroactive effect to January 1, 1999, and is therefore valid
and opposable to third parties. Without in any way limiting the generality of
the foregoing, prior to the Merger, the share transfer agreement between Visual
Communications Group Limited and Photographie Giraudon SA dated 30 November,
1999, was validly made and duly filed with the clerk's office of the relevant
Commercial Court in a timely manner and that, with respect to the Merger, the
following formalities were duly complied with in a timely matter:
(i) consultation of workers' councils;
(ii) draft merger agreement approved by the boards;
(iii) appointment by the Court of a merger auditor;
(iv) filing of draft merger agreement with the Commercial Court;
(v) publication in a legal newspaper;
(vi) appropriate notice to shareholders;
(vii) appropriate notice to creditors;
(viii) special report of the boards; and
(ix) special report of the merger auditor.
(b) The actual net value of the assets of Photographie Giraudon SA
transferred to Pix SA pursuant to the Merger as compared to the net value of
said assets as valued in the Merger does not require adjustment or correction
to Pix SA's share capital as presently stated.
(c) Subsequent to the Merger, Pix SA had no off-balance sheet
liabilities other than those disclosed in Section 4.23 of the Disclosure
Schedule.
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4.24 INSURANCE. Section 4.24 of the Disclosure Schedule sets forth a list
of insurance policies (including information on the premiums payable in
connection therewith and the scope and amount of the coverage provided
thereunder) maintained by any Vermont Entity, which policies have been issued
by insurers which, to the Knowledge of Seller, are reputable and financially
sound and provide coverage for the operations conducted by the Vermont Entities
of a scope and coverage consistent with customary industry practice.
4.25 ADDITIONAL REPRESENTATIONS OR WARRANTIES. Except as expressly set
forth in Section 3.1 and in Sections 4.1 through 4.24 hereof or in the
certificates, annexes, Exhibits and Schedules hereto, VCG makes no
representations or warranties to Buyer or Communications (including, without
limitation, no representations or warranties with respect to financial
projections), express or implied, and no representations or warranties by
UBIBV, VCG or Unicorn to Buyer and Communications shall be deemed to arise
hereafter except as set forth (i) in this Agreement and the documents
contemplated hereby including any certificates, annexes or schedules executed
and/or delivered at the Closing by UBIBV and VCG or (ii) in documents otherwise
delivered by UBIBV and VCG to Buyer or Communications on or after the date of
this Agreement that have been executed by UBIBV and VCG and which expressly
makes representations and warranties to Buyer and Communications.
**************
[Remainder of Page Intentionally Left Blank]
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PENSION SCHEDULE
1. In this Schedule the following words shall, unless the context otherwise
requires, have the following meanings:
"APPROVAL" approval by the Board of Inland Revenue as
an exempt approved scheme for the purposes
of Chapter 1 of Part XIV of the Income and
Corporation Taxes Act 1988;
"THE EMPLOYEE MEMBERS" those employees and directors of the
Vermont Entities who are active members of
the UNM Plans at Closing (with the
exception of those Employees who are
members of the UNM Plans for life assurance
benefits only);
"THE PENSION TRANSFER DATE" 1 June 2000 or such other date as is
agreed in writing by UBIBV and Buyer;
"THE TRANSITIONAL PERIOD" the period commencing on the day
immediately following Closing and ending
on the day immediately preceding the
Pension Transfer Date; and
"THE UNM PLANS" each of:
(a) the United Money Purchase Pension
Plan;
(b) the United Pension Plan; and
(c) the United Magazines Final Salary
Pension Scheme.
2. UBIBV and Buyer shall use their reasonable endeavors to procure the
continued participation of the Vermont Entities in the UNM Plans during
the Transitional Period for the purpose of the continued membership of
the Employee Members.
3. Buyer undertakes that during the Transitional Period the relevant
Vermont Entities will:
3.1 pay contributions determined in accordance with the Rules of the UNM
Plans to the Trustees of the UNM Plans by no later than the 14th day of
the month following that in which the relevant contributions are due;
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3.2 in respect of life assurance benefits for Employee Members of the United
Money Purchase Pension Plan and the United Pension Plan, pay contributions
equal to 0.5% of pensionable pay to the Trustees of those Plans;
3.3 in respect of Mr C Baxendale, pay to the trustees of the United Magazines
Final Salary Pension Scheme employer contributions at the rate of 13.1% and
employee contributions at the rate of 5% of his pensionable pay;
3.4 not do or omit to do any act or thing which would or might prejudice the
Approval of the UNM Plans or the contracted-out status of the United
Magazines Final Salary Pension Scheme;
3.5 cooperate with UBIBV to ensure that Mr C Baxendale continues to be in
contracted out employment in respect of the United Magazines Final Salary
Pension Scheme.
4. UBIBV undertakes that during the Transitional Period it will take no
voluntary action and shall use its reasonable endeavours to procure that no
action is taken to wind-up the UNM Plans or alter the provisions of the UNM
Plans to the detriment of the Employee Members or Buyer or the Vermont
Entities without the prior written consent of Buyer which will not be
withheld unreasonably.
5. Buyer shall arrange for those of the Employee Members who are still in the
employment of the Vermont Entities on the Pension Transfer Date to be
offered membership of a group personal pension arrangement with effect from
the Pension Transfer Date.
6. Notwithstanding that an Employee Member may not have been a member of a UNM
Plan for two years and therefore have no legal entitlement to preserved
benefits under Chapter IV of the Pension Schemes Act 1993, the UBIBV shall
use its reasonable endeavours to procure that the trustees of the relevant
UNM Plan will treat such an Employee Member as being so entitled.
7. UBIBV hereby agrees with Buyer (contracting for itself and as trustee for
the Vermont Entities) to indemnify Buyer and the Vermont Entities against
all losses, costs, expenses, damages, liabilities, demands, claims, actions
and proceedings which may be suffered or incurred by or made or brought
against Buyer or the Vermont Entities directly or indirectly in connection
with or as a consequence of the application of section 75 of the Pensions
Act 1995 and any regulations made thereunder in relation to the United
Magazines Final Salary Pension Scheme.
71
<PAGE> 1
EXHIBIT 2.2
______________________________________________________________________
STOCK PURCHASE AGREEMENT
among
GETTY IMAGES INC.,
GETTY COMMUNICATIONS LIMITED,
VISUAL COMMUNICATIONS GROUP (VCG) B.V.,
UNITED BUSINESS INFORMATION B.V.
and
UNITED NEWS & MEDIA PLC
_______________________________________
Dated as of March 21, 2000
______________________________________________________________________
THIS AGREEMENT SHALL BE KEPT CONFIDENTIAL PURSUANT TO THE TERMS OF THE
CONFIDENTIALITY AGREEMENT BETWEEN UNITED NEWS &
MEDIA PLC AND GETTY IMAGES INC.
DATED DECEMBER 9, 1999.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY OF TRANSACTION ...................................................... 1
ARTICLE I -- CERTAIN DEFINITIONS AND TERMS ................................ 1
1.1 Specific Definitions ......................................... 1
1.2 Other Terms .................................................. 7
1.3 Other Definitional Provisions ................................ 7
ARTICLE II -- PURCHASE AND SALE OF VERMONT SHARES .......................... 8
2.1 Basic Transaction ............................................ 8
2.2 Purchase Price ............................................... 8
2.3 Cash Adjustment .............................................. 8
2.4 Closing; Deliveries; Payment ................................. 10
ARTICLE III -- REPRESENTATIONS AND WARRANTIES
CONCERNING THE TRANSACTION ................................................ 11
3.1 Representations and Warranties of Unicorn, UBIBV and VCG ..... 11
(a) Organization ............................................ 11
(b) Execution; Authorization of Transaction ................. 11
(c) Brokers' Fees ........................................... 12
(d) Vermont Shares .......................................... 12
(e) Litigation Regarding Vermont Shares ..................... 12
3.2 Representations and Warranties of the Buyer .................. 12
(a) Organization ............................................ 13
(b) Execution; Authorization of Transaction ................. 13
(c) Brokers' Fees ........................................... 13
(d) Investment .............................................. 13
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES
OF UBIBV CONCERNING THE VERMONT ENTITIES .................................. 14
ARTICLE V -- PRE-CLOSING COVENANTS ........................................ 14
5.1 General ...................................................... 14
5.2 Press Releases and Public Announcements ...................... 14
5.3 Disclosure ................................................... 15
5.4 Operation of Business ........................................ 15
5.5 Notices; HSR ................................................. 18
5.6 Assistance ................................................... 19
5.7 Issuance of Securities ....................................... 19
5.8 Other Changes ................................................ 19
5.9 Pensions ..................................................... 19
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
5.10 Bonuses............................................................ 19
ARTICLE VI -- POST-CLOSING COVENANTS......................................... 20
6.1 Further Actions Regarding Transfer................................. 20
6.2 Confidentiality.................................................... 20
6.3 Covenants.......................................................... 20
6.4 Access to Information.............................................. 21
6.5 Removal of Trademarks, Etc......................................... 22
6.6 Certain Taxes...................................................... 22
6.7 Tax Returns; Utilization of Tax Losses............................. 23
6.8 Leases............................................................. 25
6.9 Indemnifying Party................................................. 26
6.10 Andrew Nugee....................................................... 26
6.11 [Intentionally Omitted]............................................ 26
6.12 New York Lease..................................................... 26
6.13 Share Options...................................................... 27
ARTICLE VII -- CONDITIONS TO OBLIGATION TO CLOSE............................. 28
7.1 Conditions to Obligation of Buyer and Communications............... 28
(a) Performance of Obligations of UBIBV........................... 28
(b) Closing Documentation......................................... 28
(c) Approval of Legal Matters..................................... 30
(d) No Litigation................................................. 30
(e) Hart-Scott-Rodino Waiting Period.............................. 30
(f) Laws.......................................................... 30
(g) Financial Capacity............................................ 30
(h) Form 403...................................................... 30
7.2 Conditions to Obligation of Unicorn, VCG and UBIBV................. 31
(a) Performance of Obligations of Buyer and Communications........ 31
(b) Closing Documentation......................................... 31
(c) Approval of Legal Matters..................................... 32
(d) No Litigation................................................. 32
(e) Hart-Scott-Rodino Waiting Period.............................. 32
ARTICLE VIII -- REMEDIES FOR BREACHES OF THIS AGREEMENT...................... 32
8.1 Survival of Representations and Warranties......................... 32
8.2 Indemnification Provisions for Benefit of Buyer and Communications. 34
8.3 Indemnification Provisions for Benefit of UBIBV and VCG............ 35
8.4 Matters Involving Third Parties.................................... 36
8.5 Sole Remedy........................................................ 37
8.6 Unlimited Claims................................................... 37
8.7 Litigation Claim................................................... 38
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE IX - TERMINATION............................................... 38
9.1 Termination of Agreement................................... 38
9.2 Effect of Termination...................................... 38
9.3 Liquidated Damages......................................... 39
ARTICLE X - MISCELLANEOUS.............................................. 39
10.1 Entire Agreement........................................... 39
10.2 No Third-Party Beneficiaries............................... 39
10.3 Succession and Assignment.................................. 40
10.4 Counterparts............................................... 40
10.5 Headings................................................... 40
10.6 Notices.................................................... 40
10.7 Governing Law.............................................. 41
10.8 Return of Information...................................... 41
10.9 Amendments and Waivers..................................... 41
10.10 Severability............................................... 42
10.11 Expenses................................................... 42
10.12 Construction............................................... 42
10.13 Incorporation of Exhibits, Annexes and Schedules........... 42
10.14 Specific Performance....................................... 42
10.15 Submission to Jurisdiction................................. 43
10.16 Fulfillment of Obligations................................. 43
10.17 Schedules.................................................. 44
10.18 Definition of "ordinary course"............................ 44
10.19 Attorney's Fees............................................ 44
</TABLE>
iii
<PAGE> 5
DISCLOSURE SCHEDULE
<TABLE>
<CAPTION>
SCHEDULE SECTION HEADING
- -------- ---------------
<S> <C>
I Intercompany Debt
S Subsidiaries
Section 3.1 Representation and Warranties (Seller Side)
Section 3.2 Representation and Warranties (Buyer Side)
Section 5.4(g) Operation of Business
Section 4.1 Interest in Related Entities
Section 4.3 Vermont Entities Capitalization
Section 4.4 Investments
Section 4.5 No Violations
Section 4.6 Title to Assets; Encumbrances
Section 4.7 Possession
Section 4.8 Personal Property
Section 4.10(a) Intellectual Property
Section 4.10(b) Infringement by VCG
Section 4.10(d) Validity
Section 4.10(e) Claims
Section 4.10(f) Infringement against VCG
Section 4.10(m) Registered Marks
Section 4.10(n) Owned Images
Section 4.10(q) Licensed Images
Section 4.10(s) Storage/Handling Contracts
Section 4.10(v) Photographer Contracts
Section 4.11 Environmental Protection
Section 4.13 Certain Changes and Events
Section 4.14 Absence of Changes
Section 4.15 Tax Matters
Section 4.16 Compliance with Laws
Section 4.17 Litigation regarding Vermont Entities
Section 4.18 Permits
Section 4.19 Employees; Labor Relations
Section 4.20(a) Employee Benefit Plans
Section 4.20(c) Qualification; Compliance
Section 4.22 Agreements
Section 4.23 Certain Matters Concerning Pix
Section 4.24 Insurance
EXHIBITS
Exhibit A Form of Joint Press Release
</TABLE>
iv
<PAGE> 6
STOCK PURCHASE AGREEMENT
Agreement entered into as of March 21, 2000, by and among United Business
Information B.V., a corporation organized pursuant to the laws of The
Netherlands ("UBIBV"), Visual Communications Group (VCG) B.V., a corporation
organized under the laws of The Netherlands ("VCG"), United News & Media plc,
an English limited company ("Unicorn"), Getty Communications Limited, an
English limited company ("Communications"), and Getty Images Inc., a Delaware
corporation ("Buyer"). Buyer, Communications, UBIBV and Unicorn are referred to
collectively herein as the "Parties" and each individually as a "Party".
SUMMARY OF TRANSACTION
WHEREAS, UBIBV owns a majority of the issued and outstanding capital stock
and equity interests of VCG;
WHEREAS, VCG is the legal and beneficial owner of all of the issued stock
or share capital of Visual Communications Group Holdings Ltd., a company
incorporated in England and Wales ("VCG Holdings"), Definitive Stock, Inc., a
Delaware corporation ("Definitive Stock"), and VCG Holdings LLC ("VCGLLC") a
Delaware limited liability company; and
WHEREAS, Buyer desires to purchase, and VCG desires to sell all of the
Definitive Stock Shares and all of the VCGLLC Shares, upon the terms and subject
to the satisfaction of the conditions set forth in this Agreement; and
WHEREAS, Communications desires to purchase, and VCG desires to sell all
of the VCG Holdings Shares, upon the terms and subject to the satisfaction of
the conditions set forth in this Agreement; and
NOW, THEREFORE, to effect such transactions and in consideration of the
mutual covenants, representations, warranties and agreements hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged by each Party, and intending to be legally bound hereby, the
Parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS AND TERMS
1.1 SPECIFIC DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth or as referenced below:
<PAGE> 7
"Adverse Consequences" shall mean actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" shall mean with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with, such
other Person at the time at which the determination of affiliation is made. As
used in this definition, the term "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as
applied to any Person, means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or other ownership
interests, by contract or otherwise. (When used in relation to Buyer or
Communications, the term "Affiliate" shall include the Vermont Entities after
the Closing and when used in relation to a Vermont Entity the term "Affiliate"
shall include the Buyer and Communications after the Closing.)
"Agreement" shall mean this Agreement, as the same may be amended or
supplemented from time to time in accordance with the terms hereof.
"Approved Images" shall have the meaning set forth in Section 4.10.
"Authorizations" shall have the meaning set forth in Section 4.18.
"Assets" means the assets of the Vermont Entities, including all real and
personal property owned or leased by the Vermont Entities.
"Bavaria" shall mean VCG Deutschland GmbH, a corporation organized under
the laws of Germany.
"Bavaria Agreement" shall mean the Stock Purchase Agreement dated of even
date herewith among Unicorn, UBIBV, Ludgate Holdings GmbH, a corporation
organized under the laws of Germany, Tony Stone Associates GmbH, a corporation
organized under the laws of Germany, and Buyer.
"Bavaria Entities" shall mean Bavaria and each of its Subsidiaries.
"Bavaria Financial Statements" shall have the meaning set forth in Section
4.12 of the Bavaria Agreement.
"Benefit Plans" shall have the meaning set forth in Section 4.20.
"Books and Records" shall mean all books, ledgers, files, reports, plans
and operating records
2
<PAGE> 8
of, or maintained by or for, the Vermont Entities.
"Business" shall mean the business of the Vermont Entities, taken together
as a group, comprised of the licensing of still photography images to persons
in the advertising, design, publishing and corporate markets.
"Business Day(s)" shall mean any day or days other than a Saturday, a
Sunday or a United States federal holiday or a state holiday in the State of
New York.
"Buyer" shall have the meaning set forth in the recitals.
"Cash Adjustment Amount" shall have the meaning set forth in Section 2.3.
"Cash Statement" shall have the meaning set forth in Section 2.3.
"Chosen Courts" shall have the meaning set forth in Section 10.15.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement.
"Closing Date" shall have the meaning set forth in Section 2.4(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Communications" shall have the meaning set forth in the recitals.
"Confidentiality Agreement" shall mean the Agreement dated December 9,
1999 between Unicorn and Buyer.
"Contracts" shall mean any agreements, contracts, leases, purchase orders,
arrangements, commitments and licenses, whether oral or written.
"Damages" shall mean any and all costs, damages, liabilities, fines, fees,
penalties, interest obligations, deficiencies, losses, Taxes and expenses
(including, without limitation, amounts paid in settlement, interest, court
costs, costs of investigation, reasonable fees and expenses of attorneys,
accountants, actuaries, and experts, and other reasonable expenses of
litigation or mediation of any claim, default, or assessment), and diminution
in value, including incidental and consequential damages, whether or not
involving a third party claim.
"Definitive Stock" shall have the meaning set forth in the recitals.
"Definitive Stock Shares" shall mean all of the issued stock and share
capital of Definitive Stock.
3
<PAGE> 9
"Disclosure Schedule" shall have the meaning set forth in Article IV.
"Dispute Accountants" shall have the meaning set forth in Section 2.3.
"Employees" shall mean all current and former employees of the Vermont
Entities.
"Encumbrances" shall mean any and all mortgages, pledges, assessments,
security interests, leases, subleases, liens, adverse claims, tribal claims,
levies, charges, options, warrants, assignments, rights to possession, rights
of others or restrictions (whether on voting, sale, transfer, disposition or
otherwise) or other encumbrances of any kind, whether imposed by agreement,
understanding, law or equity, or any conditional sale contract, title retention
contract, or other contract to give or refrain from giving any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" shall have the meaning set forth in Section 2.3.
"Governmental Authority" shall mean any court (including a court of
equity), any federal, provincial, state, county, municipal or other government
or governmental department, ministry, commission, board, bureau, agency or
instrumentality, any securities commission, stock exchange or other regulatory
or self regulatory body, any arbitrator or arbitration tribunal and any other
tribunal, whether domestic or foreign.
"Governmental Authorizations" shall mean all licenses, permits,
certificates and other authorizations and approvals required (i) with respect to
Buyer, Communications, UBIBV, VCG or a Vermont Entity to perform their
respective obligations hereunder and (ii) with respect to the Vermont Entities,
to carry on its business as currently conducted or presently proposed to be
conducted under applicable laws, ordinances or regulations of any Governmental
Authority.
"Group Entities" shall mean the Vermont Entities and the Bavaria Entities,
and each such entity shall be referred to individually as a "Group Entity".
"Holdings" shall mean Ludgate Holdings GmbH, a corporation organized under
the laws of Germany.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Image" shall have the meaning set forth in Section 4.10.
"Indemnified Parties" shall have the meaning set forth in Section 8.4(a).
4
<PAGE> 10
"Indemnifying Party" shall have the meaning set forth in Section 8.4(a).
"Intellectual Property" shall have the meaning set forth in Section 4.10.
"Intercompany Debt" shall mean that debt owing by any of the Group
Entities to UBIBV or any of UBIBV's Affiliates (other than the Group Entities),
or by UBIBV or any of UBIBV's Affiliates to any Group Entity as at the Closing
Date and to the extent set forth on a Schedule I, to be delivered by UBIBV to
Buyer not less than two (2) Business Days prior to the Closing Date. For
purposes of Purchase Price in Section 2.2 hereof. Intercompany Debt addressed
in the Bavaria Agreement shall be excluded.
"Knowledge of Seller" shall mean knowledge of at least one of the
directors and executive officers of UBIBV or at least one of the following
directors and executive officers of VCG: Andrew Nugee, Michael Wolfson, Leo
Shapiro, Charles Gregson, Neil Mepham (with respect only to Section 4.15) and
David Moody and Rebecca Taylor (with respect only to Section 4.10) and Craig
Baxendale (with respect only to Section 4.10). "Knowledge of Seller" shall
include the knowledge that any of such persons would have had if he or she had
made due inquiry.
"Laws" shall mean any federal, state, foreign, or local law, statute,
ordinance, rule, regulation, order, judgment or decree.
"Leases" shall have the meaning set forth in Section 4.9.
"Licensed Images" shall have the meaning set forth in Section 4.10.
"Licensed Intellectual Property" shall have the meaning set forth in
Section 4.10.
"Listed Intellectual Property" shall have the meaning set forth in Section
4.10.
"Material Adverse Effect" shall mean a material adverse effect on the
validity or enforceability of this Agreement, on the ability of a particular
Party to perform its obligations under this Agreement, or on the business,
operations, assets, liabilities, condition (financial or otherwise) or results
of operations of such Party.
"Material Agreement" shall have the meaning set forth in Section 4.22.
"Merger" shall have the meaning set forth in Section 4.23.
"Owned Images" shall have the meaning set forth in Section 4.10.
"Owned Intellectual Property" shall have the meaning set forth in Section
4.10.
5
<PAGE> 11
"Person" shall mean an individual, a corporation, a partnership, an
association, a limited liability company, a trust or other entity or
organization.
"Regulatory Law" means the Sherman Act, as amended, the Clayton Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other federal, state and foreign, if any, statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are designed
or intended to prohibit, restrict or regulate (i) mergers, acquisitions or
other business combinations, (ii) foreign investment or (iii) actions having
the purpose or effect of monopolization or restraint of trade or lessening
competition.
"Returns" shall mean all information, notices, accounts, computations,
returns, declarations, reports, estimates, information returns and statements
of any nature regarding Taxes.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Software" shall have the meaning set forth in Section 4.10.
"Subsidiaries" shall mean any corporation, company, partnership or other
entity the majority of the voting equity or other ownership interests of which
is owned, directly or indirectly, by the entity in connection with which the
term is employed, and shall include, in the case of a partnership, any
partnership whose general partner is the entity in connection with which the
term is employed (when referring to VCG Holdings, Definitive Stock or VCGLLC,
"Subsidiaries" shall include without limitation each of the entities set forth
on Schedule S attached hereto).
"Taxes" shall mean all federal, state, local or foreign taxes, charges,
duties, fees, imposts, levies or other assessments, in all cases in the nature
of taxation, including, but not limited to income, gross receipts, windfall
profits, capital, net worth, profits, corporate value added, capital duty,
severance, real property, personal property, inheritance, gift, production,
sales, use, license, excise, franchise, employment, withholding, transfer, ad
valorem, inventory, capital stock, social security, national insurance,
payroll, unemployment, severance, stamp, occupation or similar taxes, customs
duties, fees, assessments and charges of any kind whatsoever, in each case: (i)
whether computed on a separate, consolidated, combined, unitary or any other
basis (including pursuant to a statutorily imposed transferee liability); and
(ii) together with any interest, additions or penalties with respect thereto
and any interest in respect of such additions or penalties.
"Taxing Authority" shall mean the Internal Revenue Service and any other
domestic or foreign governmental authority responsible for the administration
of any Taxes.
"UBIBV" shall have the meaning set forth in the recitals.
6
<PAGE> 12
"UK Benefit Plans" shall mean (a) United Money Purchase Pension Scheme;
(b) Group Personal Pension Scheme for VCG employees; (c) United Magazines Final
Salary Pension Scheme; (d) the personal pension arrangement for Mr. Angeloglou
with Scottish Widows; and (e) United Pension Plan.
"Unapproved Images" shall have the meaning set forth in Section 4.10.
"Unicorn" shall have the meaning set forth in the recitals.
"VCG" shall have the meaning set forth in the recitals.
"VCG Holdings" shall have the meaning set forth in the recital.
"VCG Holdings Shares" shall mean all of the issued stock and share capital
of VCG Holdings.
"VCGLLC" shall have the meaning set forth in the recitals.
"VCGLLC Shares" shall mean all of the issued and outstanding equity or
other ownership interests in VCGLLC.
"Vermont Entities" shall mean VCG Holdings, Definitive Stock, VCGLLC and
each of their Subsidiaries.
"Vermont Shares" shall mean all of the VCG Holdings Shares, all of the
Definitive Stock Shares and all of the VCGLLC Shares.
1.2 OTHER TERMS. Other terms may be defined elsewhere in the text of this
Agreement and, unless otherwise indicated, shall have the meaning specifically
ascribed to such terms wherever such terms appear elsewhere in this Agreement.
1.3 OTHER DEFINITIONAL PROVISIONS.
(a) References in this Agreement to "Sections," "Articles,"
"Exhibits," "Annexes" and "Schedules" are to sections, articles, exhibits,
annexes and schedules herein and hereto unless otherwise indicated. Unless
otherwise set forth herein, references in this Agreement to any document,
instrument or agreement (including, without limitation, this Agreement) (i)
shall include all exhibits, annexes, schedules and other attachments thereto,
(ii) shall include all documents, instruments or agreements issued or executed
in replacement thereof and (iii) shall mean such document, instrument or
agreement, or replacement or predecessor thereto, as amended, modified or
supplemented from time to time in accordance with its terms and in effect at any
given time.
7
<PAGE> 13
(b) Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular or plural.
(c) 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.
(d) References to any statute or statutory provision shall be
construed as a reference to such statute or statutory provision as in force at
the date of this Agreement and as respectively subsequently amended, re-enacted
or consolidated.
ARTICLE II
PURCHASE AND SALE OF VERMONT SHARES
2.1 BASIC TRANSACTION. On the terms and subject to the conditions of this
Agreement, and in reliance upon the representations and warranties of the
Parties herein, at the Closing, (i) Buyer agrees to purchase from VCG, and VCG
agrees to sell, transfer and convey to Buyer, or cause the sale, transfer and
conveyance to Buyer, all of the Definitive Stock Shares and VCGLLC Shares, and
(ii) Communications agrees to purchase from VCG and VCG agrees to sell,
transfer and convey to Communications, all of the VCG Holdings Shares,
collectively for the consideration specified in Section 2.2 hereof.
2.2 PURCHASE PRICE. At the Closing, as the Purchase Price to be paid by
Buyer and Communications for the Vermont Shares, Buyer and Communications shall
pay to VCG the aggregate sum of $203,000,000 less the amount of Intercompany
Debt (the "Purchase Price"), subject to post-Closing adjustment to increase or
decrease the Purchase Price by the Cash Adjustment Amount pursuant to Section
2.3.
2.3 CASH ADJUSTMENT. As soon as practicable, but in any event not later
than five (5) business days following the Closing Date, Buyer shall cause to be
delivered to UBIBV an unaudited statement of the cash, cash equivalents and bank
overdrafts of the Group Entities taken as a whole (the "Cash Statement"), as of
the close of business on the Closing Date, prepared in accordance with United
Kingdom generally accepted accounting standards applied on a basis consistent
with the prior practices of the Group Entities (hereinafter, "GAAP"), provided,
however, that cash, cash equivalents and bank overdrafts will be determined for
purposes of the Cash Statement through full application of the procedures used
in preparing the most recent balance sheet included within the Audited Vermont
Financial Statements and the Bavaria Financial Statements. For the avoidance of
doubt, in calculating the amount of cash, such amount shall be reduced by the
amount of any checks drawn prior to Closing which have not been present prior to
closing, and increased by the amount of any receipts paid-in but not yet cleared
as of the Closing. For the avoidance of doubt, the Cash Statement shall be
prepared and shall reflect the cash balances of the Group Entities immediately
8
<PAGE> 14
prior to settlement of the Intercompany Debt.
UBIBV and its accountants PriceWaterhouseCoopers LLC ("UBIBV's
Accountants"), shall have the right to review the Cash Statement, and in
connection with such review, UBIBV and UBIBV's Accountants shall have the right
to examine any books and records of the Group Entities reasonably necessary to
make a complete review of the Cash Statement, and Buyer shall make available to
UBIBV and UBIBV's Accountants their working papers related to the preparation of
the Cash Statement.
Within five (5) business days after UBIBV receives the Cash Statement,
UBIBV shall give written notice to Buyer of any objections UBIBV has with
respect to the Cash Statement, which notice shall specify the basis for such
objections in reasonable detail. If UBIBV does not notify Buyer of any
objections within such five business day period, then UBIBV shall be deemed to
have accepted the Cash Statement and the amounts reflected therein shall become
final and binding on the Parties for purposes of this Section 2.3.
If UBIBV objects to the Cash Statement as provided above, then the parties
shall negotiate in good faith to resolve such objections and arrive at an
agreed upon Cash Statement. Any objections of UBIBV which have not been
resolved by the parties within 10 business days after the delivery of UBIBV's
objections to Buyer shall be presented for resolution to Arthur Andersen LLP
(the "Dispute Accountants"). The Dispute Accountants shall promptly resolve the
disputed items in accordance with the provisions of this Section 2.3 and the
determinations of the Dispute Accountants in respect thereof shall be final and
binding upon the parties for purposes of this Section 2.3. Neither party will
disclose to the Dispute Accountants, nor will the Dispute Accountants consider
for any purpose, any settlement offer made by either party.
As used in this Agreement, the term "Cash Statement" shall mean such
statement in the form which becomes final and binding upon the Parties as
hereinabove provided.
After the Cash Statement is finalized, the Purchase Price shall be
adjusted upward or downward as follows: (A) if the net amount of cash, cash
equivalents and bank overdrafts reflected on the Cash Statement exceeds Pound
Sterling 450,000, then the Purchase Price shall be increased by the amount of
such excess (the "Cash Adjustment Amount") and Buyer shall pay the Cash
Adjustment Amount to UBIBV, or (B) if the net amount of cash, cash equivalents
and bank overdrafts reflected on the Cash Statement are less than Pound
Sterling 450,000, then the Purchase Price shall be decreased by the amount of
such deficiency (the "Cash Adjustment Amount") and UBIBV shall pay the Cash
Adjustment Amount to Buyer.
The appropriate party shall, within one (1) business day after the Cash
Statement becomes final and binding, pay to the other party the Cash Adjustment
Amount, together with interest thereon at a rate of LIBOR plus one percent (1%)
calculated from the Closing Date to the date on which the Cash Adjustment
Amount is received by the party that is entitled to payment thereof.
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2.4 Closing; Deliveries; Payment.
(a) The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Carter, Ledyard & Milburn at Two
Wall Street, New York, New York, commencing at 10:00 a.m. local time on March
26, 2000, or at such other, or such additional, time and place as the Parties
hereto may mutually agree (the "Closing Date"). The Closing shall be deemed to
have occurred at 12:01 a.m. local time, on the Closing Date.
(b) The Vermont Shares shall be delivered to Buyer and Communications free
and clear of all liens, pledges, encumbrances, claims, security interests,
charges, voting trusts, voting agreements, other agreements, rights, options,
warrants or restrictions or claims of any kind, nature or description, other
than pursuant to this Agreement. At the Closing, UBIBV and VCG shall also
deliver such certificates, instruments, and documents as are required of UBIBV
and VCG under the terms and provisions of this Agreement, all of which shall be
in form and substance reasonably satisfactory to Buyer. At the Closing, VCG
shall deliver to Communications a duly executed stock transfer form in relation
to the entire issued share capital of VCG Holdings, together with a share
certificate in respect of the number of shares constituted in that stock
transfer form in favor of Communications and shall cause the name of
Communications to be entered into the register of members of VCG Holdings as the
registered holder of such shares subject to the stock transfer form being duly
stamped. At the Closing, VCG shall deliver to Buyer (on its permitted assignee)
stock powers duly endorsed in blank in respect of the Definitive Stock Shares.
(c) At the Closing, Buyer shall pay the Purchase Price to VCG for the
Vermont Shares in immediately available funds by wire transfer to such
account(s) as shall be designated by VCG in writing at least two (2) full
Business Days prior to the Closing. Buyer and VCG shall agree prior to the
Closing on the allocation of the Purchase Price among the Vermont Entities.
Buyer shall deliver such certificates, instruments and documents as are required
of Buyer and Communications under the terms and provisions of this Agreement,
all of which shall be in form and substance reasonably satisfactory to VCG.
(d) On the Closing Date, Buyer and Communications will cause the Vermont
Entities to settle all Intercompany Debt and shall put them in funds to do so in
an amount equal to the Intercompany Debt. If and to the extent that following
payment of all Intercompany Debt any amount is or may become payable by any of
the Vermont Entities to UBIBV or any Affiliate of UBIBV (other than a Vermont
Entity), the occurrence of Closing shall take effect as a waiver by UBIBV, for
itself and on behalf of each of its Affiliates, of any amount so payable, except
with respect to normal trading balances payable to OiT and Express Newspapers
Limited and receivable by FPG International, L.L.C. in respect to web hosting,
image purchasing and rent respectively, which shall survive and continue on
normal terms or as otherwise provided herein.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
CONCERNING THE TRANSACTION
------------------------------
3.1 REPRESENTATIONS AND WARRANTIES OF UNICORN, UBIBV AND VCG. Unicorn,
UBIBV and VCG jointly and severally represent and warrant to Buyer and
Communications that the statements contained in this Section 3.1 are correct
and complete with respect to itself as of February 27, 2000 and will be correct
and complete with respect to itself as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this Agreement
throughout this Section 3.1), except as set forth in Section 3.1 of the
Disclosure Schedule attached hereto.
(a) Organization. Each of Unicorn, UBIBV and VCG is a company duly
organized and validly existing under the laws of its jurisdiction of
organization and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
(b) Execution; Authorization of Transaction. Each of UBIBV, Unicorn
and VCG has all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder, subject to the receipt of
the approvals, consents and authorizations contemplated hereby. This Agreement
has been duly and validly authorized, executed and delivered by each of UBIBV,
VCG and Unicorn and constitutes a legal, valid and binding obligation of UBIBV,
VCG and Unicorn, enforceable against each of them in accordance with its terms
and conditions, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the HSR Act and as otherwise set
forth in Section 3.1 to the Disclosure Schedule, no filing with or notice to,
and no permit, authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery by each of UBIBV, VCG and
Unicorn of this Agreement or the consummation by each of them of the
transactions contemplated hereby, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings or give
such notice do not or would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect. Neither the execution, delivery
and performance of this Agreement by each of UBIBV, VCG and Unicorn nor the
consummation by them of the transactions contemplated hereby will (i) conflict
with or result in any breach of any provision of the respective articles of
association or bylaws (or similar governing documents) of UBIBV, VCG, Unicorn
or any of the Vermont Equities, or (ii) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration or lien) under, any of the terms, conditions or provisions of any
Law applicable to UBIBV, VCG and Unicorn or any of the Vermont Entities or any
note, bond, mortgage, indenture, lease, license, contract, agreement or other
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instrument or obligation to which UBIBV, VCG, Unicorn or any of the Vermont
Entities is a party or by which any of them or any of their respective
properties or assets may be bound, except in the case of violations, breaches or
defaults which do not or would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
(c) Brokers' Fees. None of UBIBV, VCG or Unicorn has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which the Vermont
Entities, Buyer or Communications could become liable or obligated.
(d) Vermont Shares VCG is the legal and beneficial owner of all of the
Vermont Shares, in each case free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act, state securities laws and
restrictions on transfer set forth in the Articles of Association of VCG),
Taxes, Encumbrances, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. Neither UBIBV nor VCG is a party to any option,
warrant, purchase right, or other contract or commitment that could require
UBIBV or VCG to sell, transfer, or otherwise dispose of any capital stock of the
Vermont Entities (other than this Agreement). Neither UBIBV nor VCG is a party
to any trust, proxy, or other agreement or understanding with respect to the
voting of any shares or capital stock of VCG Holdings, Definitive Stock or
VCGLLC. The Vermont Shares owned by VCG constitute 100% of the outstanding
voting capital of VCG Holdings, Definitive Stock and VCGLLC. No dividends or
other distributions of cash or property have been declared on the Vermont Shares
to any person which are due and/or have remained unpaid.
(e) Litigation Regarding Vermont Shares There are no actions, suits,
claims, investigations or legal or administrative or arbitration (or other
binding alternative dispute resolution) proceedings pending or, to the Knowledge
of Seller, threatened by or against: (I) UBIBV or VCG relating to the Vermont
Shares owned by VCG or (II) UBIBV or VCG relating to this Agreement and/or the
transactions contemplated hereby, before any court, governmental agency or other
body, and no judgment, order, writ, injunction, decree or other similar command
of any court or governmental agency or other body has been entered against or
served upon: (I) UBIBV or VCG relating to the Vermont Shares owned by VCG, or
(II) UBIBV or VCG relating to this Agreement and/or the transactions
contemplated hereby.
3.2 REPRESENTATIONS AND WARRANTIES OF THE BUYER. Buyer represents and
warrants to UBIBV and VCG that the statements contained in this Section 3.2 are
correct and complete as of February 27, 2000 and will be correct and complete as
of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3.2), except
as set forth in Section 3.2 of the Disclosure Schedule attached hereto.
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(a) Organization. Each of Buyer and Communications is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
(b) Execution; Authorization of Transaction. Each of Buyer and
Communications has all requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder, subject to the receipt
of the approvals, consents and authorizations contemplated hereby. This
Agreement has been duly and validly authorized, executed and delivered by Buyer
and Communications and constitutes a legal, valid and binding obligation of
Buyer and Communications, enforceable in accordance with its terms and
conditions, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the HSR Act and as otherwise set
forth in Section 3.2 to the Disclosure Schedule, no filing with or notice to,
and no permit, authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery by Buyer and
Communications of this Agreement or the consummation by Buyer and
Communications of the transactions contemplated hereby, except where the
failure to obtain such permits, authorizations, consents or approvals or to
make such filings or give such notice do not or would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Neither the execution, delivery and performance of this Agreement by Buyer and
Communications nor the consummation by Buyer and Communications of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the articles of incorporation or bylaws (or similar
governing documents) of Buyer or Communications, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, amendment, cancellation or
acceleration or lien) under, any of the terms, conditions or provisions of any
Law applicable to Buyer or Communications or any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which Buyer or Communications is a party or by which Buyer or
Communications or any of their respective properties or assets may be bound,
except in the case of violations, breaches or defaults which do not or would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(c) Brokers' Fees. Neither Buyer nor Communications has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which UBIBV, VCG
or Unicorn could become liable or obligated.
(d) Investment. Buyer is acquiring the Definitive Stock Shares and the
VCGLLC Shares, and Communications is acquiring the VCG Holdings Shares, solely
for the purpose of investment and not with a view to, or for sale in connection
with, any distribution thereof in violation of the Securities Act. Buyer and
Communications acknowledge that the Vermont Shares are not
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registered under the Securities Act or any applicable state securities law, and
that such Vermont Shares may not be transferred or sold except pursuant to the
registration provisions of the Securities Act or pursuant to an applicable
exemption therefrom and pursuant to state securities laws and regulation as
applicable.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF UBIBV CONCERNING THE VERMONT ENTITIES
UBIBV represents and warrants to Buyer and Communications, as of
February 27, 2000 and as of the Closing Date (except that representations and
warranties that are made as of a specific date need to be true only as of such
date), as provided in Annex A hereto, subject to and except as disclosed in the
Disclosure Schedule delivered by UBIBV to Buyer and Communications and initialed
by the Parties (the "Disclosure Schedule"). For purposes of this Agreement the
disclosure of any matter in any Section of the Disclosure Schedule shall serve
as sufficient disclosure for purposes of all of the representations and
warranties contained in Annex A hereto as to which the descriptive nature of the
disclosure provides sufficient notice of the materials, facts or items described
therein to indicate such disclosure's relevancy to other representations and
warranties.
ARTICLE V
PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
5.1 GENERAL. Each of the Parties will use its commercially reasonable
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions
set forth in Article VII below).
5.2 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue or
cause to be issued any press release or make or cause to be made any public
announcement relating to the subject matter of this Agreement prior to the
Closing (except for the joint press release to be made on or about the Closing
Date in the form attached hereto as Exhibit A), without the prior written
approval of the other Parties; provided, however, that any Party may make any
public disclosure it believes in good faith is required by applicable law, as a
result of being listed on an exchange or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing Party
will use its best efforts to advise the other Parties prior to making the
disclosure). The provisions of this Section 5.2 shall supersede any conflicting
provision contained in the Confidentiality Agreement.
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5.3 DISCLOSURE. All information delivered to Buyer and Communications by
UBIBV, VCG or the Vermont Entities, or to which Buyer and Communications have
been provided access by UBIBV, VCG or the Vermont Entities or in connection
with this Agreement and the transactions contemplated hereby shall be subject
to the terms of the Confidentiality Agreement, which Confidentiality Agreement
shall survive the Closing or any termination of this Agreement.
5.4 OPERATION OF BUSINESS. Except as contemplated by this Agreement,
UBIBV shall procure that each of the Vermont Entities shall conduct its
operations in the ordinary and usual course of business consistent with past
practice and to the extent consistent therewith, with no less diligence and
effort than would be applied in the absence of this Agreement, use their
commercially reasonable efforts: (i) to preserve intact its current business
organizations, and (ii) to keep available the service of its current officers
and employees and to preserve its relationships with customers, suppliers and
others having business dealings with it to the end that goodwill and ongoing
businesses shall be unimpaired at the Closing Date. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement or in the Disclosure Schedule, prior to the Closing Date no Vermont
Entity will, without the prior written consent of Buyer and Communications:
(a) amend its certificate of incorporation or bylaws (or other
similar governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
stock of any class or any other securities convertible into or exchangeable for
any stock or any equity equivalents (including, without limitation, any stock
options or stock appreciation rights);
(c) (i) split, combine or reclassify any shares of its capital
stock; (ii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock; (iii) make any other actual, constructive or deemed
distribution in respect of any shares of its capital stock or otherwise make
any payments to stockholders in their capacity as such; or (iv) redeem,
repurchase or otherwise acquire any of its securities or any securities of any
of its subsidiaries;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of itself or any of its subsidiaries;
(e) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any subsidiary;
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(f) (i) incur or assume any long-term or short-term debt or issue any
debt securities, except for borrowings under existing lines of credit in the
ordinary and usual course of business consistent with past practice and in
amounts not material to the Group Entities taken as a whole; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, except in
the ordinary and usual course of business consistent with past practice and in
amounts not material to the Group Entities, taken as a whole, and except for
obligations of the wholly-owned Subsidiaries of VCG Holdings, Definitive Stock
and VCGLLC; (iii) make any loans, advances or capital contributions to, or
investments in, any other person (other than to the wholly-owned Subsidiaries of
VCG Holdings, Definitive Stock or VCGLLC or customary loans or advances to
employees in the ordinary and usual course of business consistent with past
practice and in amounts not material to the maker of such loan or advance); (iv)
pledge or otherwise encumber shares of capital stock of any of the Vermont
Entities; or (v) mortgage or pledge any of its material assets, tangible or
intangible, or create or suffer to exist any material Lien thereupon;
(g) except as may be required by Law or as contemplated by this
Agreement, enter into, adopt or amend or terminate any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation right,
restricted stock, performance unit, stock equivalent, stock purchase agreement,
pension, retirement, deferred compensation, employment, severance or other
employee benefit agreement, trust, plan, fund, award or other arrangement for
the benefit or welfare of any director, officer or employee in any manner, or
(except as set forth in Section 5.4(g) of the Disclosure Schedule, as required
under existing agreements, and hiring and compensation adjustments occurring in
the ordinary course of business consistent with past practices) increase in any
manner the compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any plan and arrangement as in effect as of
February 27, 2000 (including, without limitation, the granting of stock
appreciation rights or performance units);
(h) acquire, sell, lease or dispose of any assets outside the
ordinary and usual course of business consistent with past practice or any
assets which in the aggregate are material to the Group Entities taken as a
whole, enter into any commitment or transaction outside the ordinary and usual
course of business consistent with past practice or grant any exclusive
distribution rights;
(i) except as may be required as a result of a change in Law or in
GAAP, change any of the accounting principles or practices used by it;
(j) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary and usual course of business
consistent with past practice or as required by GAAP;
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(k) acquire (by merger, consolidation, or acquisition of stock or assets)
any corporation, partnership or other business organization or division thereof
or any equity interest therein; (ii) enter into any contract or agreement,
other than in the ordinary and usual course of business consistent with past
practice, or amend in any material respect any of the Material Agreements (iii)
authorize any new capital expenditure or expenditures which, individually, are
in excess of $60,000 or, in the aggregate, are in excess of $250,000 or (iv)
enter into or amend any contract, agreement, commitment or arrangement
providing for the taking of any action that would be prohibited hereunder;
provided that notwithstanding the foregoing each Vermont Entity shall continue
to make any capital expenditure in accordance with any capital expenditure plan
in existence at February 27, 2000;
(l) make or revoke any Tax election, or settle or compromise any Tax
liability or change (or make a request to any taxing authority to change) any
aspect of its method of accounting for Tax purposes;
(m) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction contemplated by
this agreement or in the ordinary and usual course of business consistent with
past practice of liabilities reflected or reserved against in the consolidated
financial statements of the Vermont Entities, or otherwise incurred in the
ordinary and usual course of business consistent with past practice, or waive
the benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which any of the Vermont Entities is a party;
provided that each Vermont Entity shall continue to pay its creditors as they
fall due in the period up to the Closing Date consistent with past practices;
(n) settle or compromise any pending or threatened suit, action or claim
relating to the transactions contemplated hereby;
(o) enter into any agreement or arrangement that limits or otherwise
restricts the Vermont Entities or any successor thereto or that could, after
the Closing Date, limit or restrict the Vermont Entities or any successor
thereto, from engaging or competing in any line of business or in any
geographic area;
(p) commit to any new expenditure in respect to iSwoop; or
(q) take, propose to take, or agree in writing or otherwise to take, any
of the actions described in Sections 5.4(a) through 5.4(p) or any action which
would make any of the representations or warranties of UBIBV contained in this
Agreement (i) which are qualified as to materiality untrue or incorrect or (ii)
which are not so qualified untrue or incorrect in any material respect.
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5.5 NOTICES; HSR. (a) Each of the Parties will give any notices to, make
any filings with, and use its reasonable commercial efforts (in the case of
Buyer, subject to the provisions of Section 5.5(c) below) to obtain any
authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in Section 3.1(b) and
Section 3.2(b) above. Without limiting the generality of the foregoing, each of
the Parties (or appropriate Affiliates) have filed the Notification and Report
Forms and related material were required to be filed with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice (the "DOJ") under the HSR Act, and each of the Parties
will make (and UBIBV will cause its appropriate Affiliate to make) any further
filings pursuant thereto that may be necessary, proper, or advisable in
connection therewith. Any filing fees required in connection with filings under
the HSR Act shall be borne by Buyer.
(b) Each of UBIBV, VCG, VCG Holdings, Definitive Stock, VCGLLC and Buyer
shall use its reasonable efforts to (i) cooperate in all respects with each
other in connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party, (ii) promptly inform the other party of any communication received by
such party from, or given by such party to the DOJ, the FTC or any other
Governmental Authority and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding any
of the transactions contemplated hereby, and (iii) consult with each other in
advance to the extent practicable of any meeting or conference with the DOJ,
the FTC or any such other Governmental Authority or, in connection with any
proceeding by a private party, with any other Person, and to the extent
permitted by the DOJ, the FTC or such other applicable Governmental Authority
or other Person, give the other party the opportunity to attend and participate
in such meetings and conferences.
(c) In furtherance and not in limitation of the covenant of Buyer set
forth in Sections 5.5(a) and (b) above, if any administrative or judicial
action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law, or if any
statute, rule, regulation, executive order, decree, injunction or
administrative order is enacted, entered, promulgated or enforced by a
Governmental Authority which would make this Agreement or the other
transactions contemplated hereby illegal or would otherwise prohibit or
materially impair or delay the consummation of this Agreement or the other
transactions contemplated hereby, Buyer shall use its best efforts, including
without limitation, selling, holding separate or otherwise disposing of or
conducting its business in a specified manner, or agreeing to sell, hold
separate or otherwise dispose of or conduct its business in a specified manner
or permitting the sale, holding separate or other disposition of, any assets of
Buyer or its Subsidiaries or Affiliates or the conducting of their business in
a specified manner, to vigorously contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
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the consummation of this Agreement or the other transactions contemplated
hereby and to have such statute, rule, regulation, executive order, decree,
injunction or administrative order repealed, rescinded or made inapplicable so
as to permit the consummation of the transactions contemplated by this
Agreement.
5.6 ASSISTANCE. Subject to Section 5.3 hereof, UBIBV and VCG shall
provide Buyer and Communications with such assistance as they may reasonably
request and shall generally assist Buyer and Communications with respect to the
introduction of Buyer, Communications and their representatives and agents, to
appropriate governmental agencies or officials having regulatory jurisdiction
over the Business and shall cooperate generally with Buyer and Communications
in all reasonable respects, including, with limitation, communications with
employees, customers and suppliers.
5.7 ISSUANCE OF SECURITIES. Except as otherwise contemplated hereby UBIBV
shall not permit any of the Vermont Entities to (i) issue any debt or equity
security or any options or warrants, (ii) enter into any subscriptions,
agreements, plans or other commitments pursuant to which any of the Vermont
Entities is or may become obligated to issue any shares of its capital stock or
any securities convertible into shares of its capital stock, (iii) otherwise
change or modify its capital structure, (iv) make interim distributions, (v)
engage in any reorganization or similar transaction, or (vi) agree to take any
of the foregoing actions.
5.8 OTHER CHANGES. VCG and/or the Vermont Entities may (i) make capital
expenditures of an emergency nature required to avoid imminent material damage
to or shutdown of the Business, or reasonably necessary for safety reasons,
(ii) take such actions as may be required by law, (iii) change, for any
Employee who is not exempt from the overtime provisions of the Fair Labor
Standards Act, the method of calculating the regular rate of pay for overtime
pay calculation purposes to using a weighted average of the different rates
earned by the Employee during the workweek.
5.9 PENSIONS. The provisions of the Pension Schedule shall have effect in
respect of the UK Benefit Plans.
5.10 BONUSES. At the Closing Date, VCG shall procure that no amounts in
the nature of bonus payments will remain payable by any Vermont Entity to any
of its employees or former employees (i) for the calendar year ended December
31, 1999, or (ii) in the nature of "stay or loyalty bonuses" payable to any
employee of a Vermont Entity in connection with the transactions contemplated
by this Agreement.
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ARTICLE VI
POST-CLOSING COVENANTS
The Parties agree as follows with respect to the period following the Closing:
6.1 FURTHER ACTIONS REGARDING TRANSFER. From and after the Closing, each
Party hereto shall, if reasonably requested by any other Party, execute and
deliver such further instruments of conveyance and transfer and take such other
reasonable action as may be necessary or desirable to provide more effectively
the sale and transfer of the Vermont Shares to Buyer and Communications.
6.2 CONFIDENTIALITY. For a period of three years after the Closing, UBIBV,
VCG, Unicorn and their Affiliates shall not divulge, furnish or make available,
to anyone (other than Buyer, Communications, UBIBV, VCG, Unicorn and their
respective Affiliates) any knowledge or information with respect to any
proprietary information of the Vermont Entities. This Section 6.2 shall not
apply to any such proprietary information which (i) shall have entered the
public domain or become available to the public through no act or omission of
UBIBV, VCG, Unicorn or any Affiliate of the foregoing, (ii) shall have become
available to UBIBV, VCG, Unicorn or any Affiliate of the foregoing from a third
party whom UBIBV, VCG, Unicorn or such Affiliate of the foregoing reasonably
believes is not obligated to the Vermont Entities, Buyer or Communications to
keep such proprietary information confidential, or (iii) shall be required by
law to be disclosed.
6.3 COVENANTS. Each of UBIBV, VCG, Unicorn and their Affiliates undertakes
with the Buyer and Communications that, without the prior written consent of
Buyer it will not and it will procure that none of their respective Affiliates
will:
(a) for the period of 3 years after the date of this Agreement, either
on its own account or in conjunction with or on behalf of any person carry on or
be engaged, concerned or interested (directly or indirectly and whether as
principal, shareholder, agent, consultant, partner or otherwise) in carrying on
the Business, provided, however, that the provisions of this Section 6.3(a)
shall in no way be construed to restrict UBIBV, VCG, Unicorn and their
Affiliates that are currently engaged in an activity that competes with the
Business from continuing to engage in such activity at levels which are not
materially greater than the levels at which such activity is currently
conducted; or
(b) for the period of 3 years after the date of this Agreement, either
on its own account or in conjunction with or on behalf of any other person,
solicit or endeavor to entice away from any Vermont Entity, with a view to
obtaining its business in relation to the business, any person who is (and was
at the Closing Date) a customer of a Vermont Entity; or
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(c) for the period of 3 years after the date of this Agreement,
either on its own account or in conjunction with or on behalf of any person,
employ, solicit or endeavor to entice away from any Vermont Entity any person
employed or engaged by any Vermont Entity in an executive or managerial
capacity, whether or not such person would commit a breach of contract by
reason of leaving service or office, except for Leo Shapiro and Andrew Nugee.
For purposes of this section 6.3(c), bona fide public advertisements shall not
be deemed to constitute "solicitation" or "enticement" in violation of the
provisions hereof; or
(d) Notwithstanding the foregoing, none of UBIBV, VCG, Unicorn and
their Affiliates shall, either on its own account or in conjunction with or on
behalf of any person, employ solicit or endeavor to entice Michael Wolfson away
from Buyer or Buyer's Affiliates for so long as Mr Wolfson is employed by Buyer
or one of Buyer's Affiliates, provided, however, that the foregoing restriction
shall not apply in the event that, by the Closing Date, Mr Wolfson has not
agreed to become an employee of Buyer or one of Buyer's Affiliates following
the Closing Date.
6.4 ACCESS TO INFORMATION.
(a) In order to facilitate the resolution of any third-party claims
made by or against or incurred by or indemnified by UBIBV prior to or after the
Closing, upon reasonable notice, Buyer and Communications shall, after the
Closing: (i) afford the officers, employees and authorized agents and
representatives of UBIBV reasonable access, during normal business hours, to
the offices, properties, books and records of Buyer, Communications and the
Vermont Entities with respect to the Business for the period prior to the
Closing; (ii) furnish to the officers, employees and authorized agents and
representatives of UBIBV such additional financial and other information
regarding the Business for the period prior to the Closing as Buyer,
Communications or any Vermont Entity has in its possession and UBIBV may from
time to time reasonably request; and (iii) make available to UBIBV, the
employees of Buyer, Communications and the Vermont Entities whose assistance,
testimony or presence is necessary to assist UBIBV in evaluating any such
claims and in defending such claims, including the presence of such persons as
witnesses in hearings on trials for such purposes; provided, however, that
such investigation shall not unreasonably interfere with the businesses or
operations of Buyer, Communications or any of their Affiliates; and provided,
however, that Buyer and Communications shall not be obligated to disclose any
information which they or any of their Affiliates holds under a legally binding
obligation of confidentiality or which is protected by any privilege.
(b) In order to facilitate the resolution of any third-party claims
made by or against or incurred by Buyer or Communications after the Closing,
upon reasonable notice, UBIBV, VCG and, with respect to Taxes, Unicorn shall,
after the Closing: (i) afford the officers, employees and authorized agents and
representatives of Buyer and Communications reasonable access, during normal
business hours, to the offices, properties, books and records of UBIBV and VCG
(and, as regards Taxes, of Unicorn) with respect to the Business and the Assets
for the period prior to the Closing; (ii) furnish to the officers, employees
and authorized agents and representatives of Buyer
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and Communications such additional financial and other information regarding
the Business and the Assets for the period prior to the Closing as Buyer and
Communications may from time to time reasonably request; and (iii) make
available to Buyer and Communications, the employees of UBIBV and VCG (and, as
regards Taxes of any Vermont Entity, of Unicorn) whose assistance, testimony or
presence is necessary to assist Buyer and Communications in evaluating any such
claims and in defending such claims, including the presence of such persons as
witnesses in hearings or trials for such purposes; provided, however, that such
investigation shall not unreasonably interfere with the businesses or
operations of UBIBV, VCG, Unicorn or any of their Affiliates; and provided,
however, that neither UBIBV nor Unicorn shall be obligated to disclose any
information which it or any of its Affiliates holds under a legally binding
obligation of confidentiality or which is protected by any privilege.
6.5 REMOVAL OF TRADEMARKS, ETC. As promptly as practicable after the
Closing, and in no event later than ninety (90) days after the Closing Date,
Buyer and Communications agree to (and will cause the Vermont Entities to)
cease use of and to delete, remove or otherwise obliterate from the Assets, and
from all packaging, advertisements, marketing and promotional materials and
other materials used by the Vermont Entities, all trade names and trademarks of
UBIBV, VCG and their Affiliates, including, but not limited to, references to
"United News & Media" "UNM" and derivatives thereof, and logos associated
therewith, provided, however, that for a period of six months following the
Closing Date, Buyer, Communications and their Affiliates shall be permitted to
dispose of inventory included in the Assets on the Closing Date which bears the
trade names or trade-marks of UBIBV, VCG and their Affiliates, and provided
further that Buyer, Communications and their Affiliates may, following the
Closing Date, ship, deliver and display catalogs bearing such trade names or
trademarks which have been produced prior to the Closing Date.
6.6 CERTAIN TAXES. All transfer, documentary, sales, use, stamp,
registration and other similar taxes and fees (including any penalties and
interest, but excluding taxes imposed on income) incurred in connection with
this Agreement, shall, whether imposed upon UBIBV, VCG, Buyer, Communications or
any Vermont Entity, be borne by Buyer or Communications. VCG will file all
necessary Returns and other documentation with respect to all such taxes, and,
if required by applicable law, Buyer and Communications will, and will cause
the Vermont Entities to, joint in the execution of any such Returns and other
documentation. All costs and expenses incurred in connection with VCG's filing
of Returns hereunder shall be borne by Buyer or Communications. Buyer and VCG
further agree (and each shall cause the Vermont Entities to), upon request, to
use their best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to mitigate,
reduce or eliminate any such tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).
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6.7 TAX RETURNS; UTILIZATION OF TAX LOSSES.
(a) In respect of any Tax accounting period of any Vermont Entity
ending on or before the Closing Date, VCG and such of VCG's Affiliates as are
legally competent to do so ("the Surrendering Companies") shall be entitled
(but not required) to surrender and Buyer and Communications shall procure that
the relevant Vermont Entity shall cooperate with the Surrendering Companies to
accept, receive or utilize some or all Tax losses of the relevant Surrendering
Company so as to reduce or extinguish any pre-Closing Tax liability of the
Vermont Entity.
(b) To the extent that a Tax loss surrendered in accordance with
paragraph (a) above reduces or eliminates a Tax liability for any 1999 Tax
accounting period that was provided for in the Audited Vermont Financial
Statements, Buyer and Communications shall cause the relevant Vermont Entity to
pay as consideration to the relevant Surrendering Company an amount certified
by VCG's auditors to be equal to the difference between (i) the Tax otherwise
due and payable absent such surrender and (ii) the Tax due and payable taking
into account such surrender. Any payments that are due to be made by the
relevant Vermont Entity hereunder shall be made on the date on which the Tax
that is saved by virtue of such surrender would otherwise first have been due
and payable. To the extent that a Tax liability for any 1999 Tax accounting
period is either paid to the relevant Taxing Authority or reduced by reasons of
a Tax loss surrendered by a Surrendering Company that is reimbursed pursuant to
this Section 6.7(b), the accrual or reserve for Taxes in the Audited Vermont
Financial Statements shall be reduced for purposes of Section 8.2(c) hereof.
(c) To the extent that a Tax loss surrendered in accordance with
Section 6.7(a) reduces or eliminates a Tax liability that was not provided for
in the Audited Vermont Financial Statements in respect of a 1999 Tax accounting
period, no payment shall be made therefor by the relevant Vermont Entity but
the full value or benefit of such surrender to the relevant Vermont Entity
shall be taken into account when computing the amount of any Adverse
Consequences suffered by any relevant Vermont Entity.
(d)(i) Except as provided in Section 6.7(d)(iii), VCG, or its duly
authorized agents, shall be responsible for and have the conduct of preparing,
submitting and agreeing all Returns of the Vermont Entities (and
correspondence and other documentation relating thereto) with respect to Tax
accounting periods ending on or before the December 31, 1999, subject to all
such Returns being submitted in draft form to Buyer or to Buyer's duly
authorized agent for comment at least 42 days before the same are due to be
submitted to the relevant Taxing Authority. Buyer or Buyer's agents shall
within 21 days of such submission provide written comments thereon to VCG and
if VCG shall not have received comments within that period, Buyer shall be
deemed to have approved such draft Returns. Such deemed approval shall not by
itself constitute a waiver of Buyer's or Communications' other rights, if any,
under this Agreement. If Buyer or Buyer's agents shall have made any written
comments in accordance with the provisions of this Section, VCG shall not
unreasonably refuse to adopt such comments provided that VCG and VCG's agents
shall not be
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obliged to submit any Return to any relevant Taxing Authority unless reasonably
satisfied that it is accurate and complete in all material respects. VCG and
Buyer shall respectively afford (or procure to be afforded) to the other or to
the other's agents such information and assistance as may reasonably be required
to prepare, submit and agree all relevant Returns.
(ii) For Vermont Entities which are tax resident in the Netherlands and
Germany, UBIBV, VCG, and their duly authorized agents, shall be responsible for
and have the conduct of preparing, submitting and agreeing to the relevant
fiscal unity Returns for Tax accounting periods beginning prior to the Closing
Date (and correspondence and other documentation relating thereto) subject to
all such returns being submitted in draft form to Buyer or to Buyer's duly
authorized agent for comment at least 42 days before the same are due to be
submitted to the relevant Taxing Authority. Buyer or Buyer's agents shall within
21 days of such submission provide written comments thereon to VCG and if VCG
shall not have received comments within that period, Buyer shall be deemed to
have approved such draft Returns. Such deemed approval shall not by itself
constitute a waiver of Buyer's other rights, if any, under this Agreement. If
Buyer or Buyer's agents shall have made any written comments in accordance with
the provisions of this Section, VCG shall not unreasonably refuse to adopt such
comments provided that VCG and VCG's agents shall not be obliged to submit any
Return to any relevant Taxing Authority unless reasonably satisfied that it is
accurate and complete in all material respects. VCG and Buyer shall respectively
afford (or procure to be afforded) to the other or to the other's agents such
information and assistance as may reasonably be required to prepare, submit and
agree all relevant Returns.
(iii) Buyer, or its duly authorized agents, shall be responsible for and
have the conduct of preparing, submitting and agreeing (x) all 1999 United
States Federal, state and local income tax returns (and correspondence and other
documentation relating thereto) of Vermont Entities which are organized in the
United States and (y) 1999 Irish income tax returns of iSwoop Limited and iSwoop
International Limited, subject to all such Returns being submitted in draft form
to VCG or to VCG's duly authorized agent for comment at least 42 days before the
same are due to be submitted to the relevant Taxing Authority. VCG or VCG's
agents shall within 21 days of such submission provide written comments thereon
to Buyer and if Buyer shall not have received comments within that period, VCG
shall be deemed to have approved such draft Returns. Such deemed approval shall
not by itself constitute a waiver of VCG's other rights, if any, under this
Agreement. If VCG or VCG's agents shall have made any written comments in
accordance with the provisions of this Section, Buyer shall not unreasonably
refuse to adopt such comments provided that Buyer and Buyer's agents shall not
be obliged to submit any Return to any relevant Taxing Authority unless
reasonably satisfied that it is accurate and complete in all material respects.
VCG and Buyer shall respectively afford (or procure to be afforded) to the other
or to the other's agents such information and assistance as may reasonably be
required to prepare, submit and agree all relevant Returns.
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(iv) Except as provided in Section 6.7(d)(ii), Buyer, or its
duly authorized agents, shall be responsible for and have the conduct of
preparing, submitting and agreeing all Returns (and correspondence and other
documentation relating thereto) of Vermont Entities for Tax accounting periods
beginning on or after January 1, 2000, subject to all such Returns for which
Buyer and Communications will seek indemnification under Section 8.2(c) hereof
being submitted in draft form to VCG or to VCG's duly authorized agent for
comment at least 42 days before the same are due to be submitted to the
relevant Taxing Authority. VCG or VCG's agents shall within 21 days of such
submission provide written comments thereon to Buyer and if Buyer shall not
have received comments within that period, VCG shall be deemed to have approved
such draft Returns. Such deemed approval shall not by itself constitute a
waiver of VCG's other rights, if any, under this Agreement. If VCG or VCG's
agents shall have made any written comments in accordance with the provisions
of this Section, Buyer shall not unreasonably refuse to adopt such comments
provided that Buyer and Buyer's agents shall not be obliged to submit any
Return to any relevant Taxing Authority unless reasonably satisfied that it is
accurate and complete in all material respects. VCG and Buyer shall
respectively afford (or procure to be afforded) to the other or to the other's
agents such information and assistance as may reasonably be required to prepare,
submit and agree all relevant Returns.
(e) (i) To the extent that it does not result in more than nominal
Adverse Consequences to any of them, Buyer shall procure that all Vermont
Entities shall cause the agreed Returns referred to in Section 6.7(d) and,
subject to Section 6.7(a) above, all such claims, disclaimers, surrenders and
elections as may be directed by UBIBV relating to all such Returns of all
Vermont Entities with respect to Tax accounting periods ending on or before the
Closing Date to be authorized, signed and returned to UBIBV for submission to
the Taxing Authority as soon as is reasonably practicable. VCG shall submit
such claims, disclaimers, surrenders and elections to the relevant Vermont
Entity for such signature sufficiently in advance of the required filing date
for the relevant Vermont Entity to adequately review such claim, disclaimer,
surrender or election.
(ii) Buyer shall, and shall procure that all Vermont Entities,
cooperate with VCG and its agents as and to the extent reasonably requested by
VCG, in connection with VCG's exercise of their rights and responsibilities
under this Section 6.7. Such cooperation shall include retention and (upon VCG
request) the provision of records and information which are reasonably relevant
to such exercise, and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder. VCG shall reimburse Buyer and the Vermont Entities for any
reasonable out of pocket expenditures incurred by them by reason of such
cooperation.
6.8 LEASES. Buyer shall indemnify VCG and its Affiliates, in the manner
and subject to the limitations set forth in Article VIII, from and against any
and all claims and Adverse Consequences arising from the Leases for all periods
after the Closing Date.
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6.9 INDEMNIFYING PARTY In the event that the net worth of UBIBV shall, at
any time during the period for which UBIBV is obligated to indemnify Buyer
pursuant to Section 8.1 and 8.2 hereof, be less than $650,000,000, Unicorn shall
cause one of its Affiliates having a net worth of not less than $650,000,000
execute such agreement(s) as may be reasonably requested by Buyer including
legal opinions or other assurances as to the enforceability of such agreements
to provide for the assignment by UBIBV and the assumption by such Affiliate of
UBIBV's indemnification obligations pursuant to such Section, provided that in
no event shall such indemnification obligations be expanded or increased beyond
the limitations set forth in such Section.
6.10 ANDREW NUGEE UBIBV shall use its commercially reasonable efforts to
cause Andrew Nugee to voluntarily resign his employment by the Vermont Entity
by which he is currently employed on the third business day following the
Closing, and Buyer and Communications will cause such Vermont Entity to waive
in writing its right to notice of termination of Mr Nugee's employment with
such Vermont Entity.
6.11 [INTENTIONALLY OMITTED]
6.12 NEW YORK LEASE The Parties hereby covenant and agree that, for a
period of 6 months following the Closing Date, Unicorn shall be permitted to
continue its occupation of such portion of the office space located on the 5th
floor at 32 Union Square East, New York, New York as it presently occupies
pursuant to an oral sublease from FPG International, LLC (successor-in-interest
to FPG International Group, Inc., the lessee thereof pursuant to the Lease
dated August 9, 1990 with 24-32 Union Square East Associates, Limited
Partnership (the "Landlord"), as amended), on the same terms, including without
limitation, rental rate, as Unicorn presently occupies such space. The Parties
hereby agree that Unicorn's sublease shall require 6 months prior written
notice for termination by FPG International, LLC. Buyer hereby covenants and
agrees that neither it nor its Affiliates will serve any such termination
notice prior to the six month anniversary of the Closing Date. During the
initial 12 month period, Buyer shall use its commercially reasonable efforts to
assist Unicorn in (i) securing the Landlord's consent to and approval of this
Section 6.12 (with respect to Unicorn's continued occupation, and (ii) securing
a direct lease of such space from the Landlord. On furtherance of the
foregoing, the Parties hereby agree that FPG International LLC and Unicorn
shall be permitted to enter into a written sublease reflecting the terms of the
existing sublease described above, in a form reasonably acceptable to Buyer.
6.13 SHARE OPTIONS
(a) Definitions
the "SCHEMES" the Sharesave Plan, the 1994 International Scheme,
the 1994 UK Scheme and the 1994 SAYE and any other
share option schemes adopted and operated by
UBIBV;
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the "THE 1994
INTERNATIONAL SCHEME" the Unapproved 1994 International Executive
Share Option Scheme;
the "1994 SAYE" the Approved 1994 UK Executive Share Option
Scheme;
the "SHARESAVE PLAN" the 1997 Unapproved United News & Media plc
International Sharesave Plan;
the "OPTION" an option over shares in the issued ordinary
share capital of Unicorn Plc, the terms of
which are as determined by the applicable
Scheme;
"RELEVANT EMPLOYEE" a person who is an employee of any one or
more Vermont Entities on or after Closing and
who currently has or may in the future have
any rights under any of the Schemes, which
expression shall include the personal
representatives of such individual and any
other person deriving rights under any such
Scheme from such individual;
"RETAINED GROUP" UBIBV and any subsidiary or subsidiary
undertaking or any holding company for the
time being of UBIBV, or any subsidiary or
subsidiary undertaking of such holding
company other than the Vermont Entities;
"SCHEME RIGHTS" the right of a Relevant Employee under the
Schemes to exercise any Option under the
Schemes on or in consequence of Closing in
favour of such Relevant Employee.
(b) UBIBV's Obligations
Where Scheme Rights confer upon any Relevant Employee any legal or
contractual right to exercise any outstanding Option under any Scheme and any
Relevant Employee elects to exercise any outstanding Option under any Scheme in
accordance with such legal or contractual right, then UBIBV shall or shall
procure that all relevant shares or securities are issued to the Relevant
Employee in satisfaction of such exercise.
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(c) Buyer's Obligations
Buyer shall co-operate with VCG to ensure that, following Closing,
it shall, at the request of VCG, take such steps as shall be reasonably
necessary or desirable to enable the Retained Group to efficiently administer
the Schemes in an effective and timely manner in relation to the Relevant
Employees (including enabling the Retained Group to utilize the payroll
services of the Vermont Entities to effect any payment and any consequential
deductions therefrom in respect of income tax, social security or the like
required to be made as a result of UBIBV acquitting its responsibilities under
paragraph 2 above.). In particular, and without prejudice to the generality of
the foregoing, Buyer and Communications shall procure that neither they nor any
of the Vermont Entities grant or purport to grant any rights or entitlements
under any Scheme nor does nor purports to do anything pursuant to any Scheme.
For the avoidance of doubt, as between the Parties, Buyer shall be responsible
for any relevant Taxes occurring upon exercise of Scheme Rights as employer of
the Relevant Employees.
ARTICLE VII
CONDITIONS TO OBLIGATION TO CLOSE
7.1 CONDITIONS TO OBLIGATIONS OF BUYER AND COMMUNICATIONS. The
obligations of Buyer and Communications under this Agreement and the
consummation by Buyer and Communications of the transactions contemplated
hereby are subject to the satisfaction at or prior to the Closing of the
following conditions, unless waived by Buyer and Communications in writing:
(a) Performance of Obligations of UBIBV. UBIBV shall have materially
performed all obligations required to be performed by it under this Agreement,
and materially complied with all covenants for which compliance by it is
required under this Agreement, prior to or at the Closing.
(b) Closing Documentation. Buyer and Communications shall have
received the following documents, agreements and instruments from UBIBV and VCG:
(i) Duly executed stock powers and stock transfer forms,
together with share certificates, if applicable, for the Vermont Shares
described in Section 2.4(b) hereof in forms mutually agreeable to the parties;
(ii) Certificates signed by an officer or director of UBIBV
certifying as to the matters set forth in Section 7.1(a) above with respect to
UBIBV;
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(iii) An opinion of Carter, Ledyard & Milburn, U.S. counsel for
Unicorn, UBIBV and VCG, dated the date of the Closing and addressed to Buyer and
Communications, in form and substance reasonably acceptable to Buyer and
Communications, together with such opinions of Baker & McKenzie, PWC Landwell,
or other counsel reasonably acceptable to Buyer and Communications, as shall be
required;
(iv) The Shareholders Registers of VCG Holdings, Definitive Stock
and VCGLLC (which shall be updated at Closing) and statutory company books,
including the minute books and stock record books, of the Vermont Entities to
the extent required to be maintained or actually maintained;
(v) A certificate of a member of the Management Board of each of
UBIBV and VCG dated the Closing Date certifying (A) that attached thereto are
true, complete and correct copies of the Articles of Association of each of
UBIBV, VCG, VCGLLC, VCG Holdings and Definitive Stock as in effect on the date
of such certification, (B) that the Articles of Association or other
organizational document of each of the foregoing entities have not been amended
since the date of the last amendment referred to in the certificate, (C) that
attached thereto are true, complete and correct copies of resolutions, as in
effect on the date of such certification, duly adopted by the Board of Directors
of UBIBV and VCG or a duly authorized committee thereof, approving the
transactions contemplated hereby and authorizing the execution, delivery and
performance by UBIBV and VCG of this Agreement and the sale and transfer of the
Vermont Shares owned by VCG in accordance herewith, and (D) as to the incumbency
and signatures of the officers of UBIBV and VCG executing this Agreement and all
instruments or other documents delivered in connection with this Agreement;
(vi) [Intentionally omitted]
(vii) Signed resignation letters of all directors and officers of
the Vermont Entities requested by Buyer prior to Closing (or actions of the
Shareholders or Board of Directors of VCG removing such persons as directors and
officers); and
(viii) All other instruments and documents required by this
Agreement to be delivered by UBIBV and VCG to Buyer and Communications on or
before the Closing, including execution and delivery of the Bavaria Agreement.
(c) Approval of Legal Matters. The form of all instruments, certificates
and documents to be executed and delivered by UBIBV and VCG to Buyer and
Communications pursuant to this Agreement shall be reasonably satisfactory to
Buyer and its counsel, none of whose approval shall be unreasonably withheld or
delayed.
(d) No Litigation. Except with respect to matters relating to antitrust
laws including the HSR Act which, for purposes of this Section 7.1 are addressed
exclusively in Section
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7.1(e) below:
(i) No action, suit or other proceeding shall be pending or
threatened before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated by this Agreement or seeking to obtain substantial damages in
respect thereof, or involving a claim that consummation thereof would result in
the violation of any law, decree or regulation of any governmental authority
having appropriate jurisdiction; provided, however, that no such action, suit or
proceeding commenced or threatened by a private person or entity shall
constitute failure of a condition to Buyer's obligations under this Agreement;
and
(ii) No order, decree or ruling of any governmental authority or
court shall have been entered prohibiting, restraining or otherwise preventing
the consummation of the transactions contemplated hereby.
(e) Hart-Scott-Rodino Waiting Period. All applicable waiting periods
under the HSR Act shall have expired without any indication by the Department
of Justice or the Federal Trade Commission that either of them intends to
challenge the transactions contemplated hereby, provided, however, that nothing
in this Section 7.1(e) shall be construed to constitute a modification of
Buyer's obligations as set forth in Section 5.5 hereof.
(f) Laws. No statute, rule, regulation or order shall have been
adopted or promulgated which materially adversely affects the Business, the
Assets of the Group Entities taken together as a whole.
(g) Financial Capacity. Buyer shall have obtained sufficient funds to
purchase the Vermont Shares on the terms and conditions contemplated by this
Agreement after using its reasonable commercial efforts to obtain such funds.
(h) Form 403. UBIBV shall have provided the filing by The Telegraph
Colour Library Limited at the Companies Registry of a duly executed and
completed Form 403 in respect of the charge in favour of Hambros Bank Limited.
7.2 CONDITIONS TO OBLIGATIONS OF UNICORN, VCG AND UBIBV. The obligations
of Unicorn and UBIBV under this Agreement and the consummation by Unicorn, VCG
and UBIBV of the transactions contemplated hereby are subject to the
satisfaction at or prior to the Closing of the following conditions, unless
waived by Unicorn, VCG and UBIBV in writing:
(a) Performance of Obligations of Buyer and Communications. Each of
Buyer and Communications shall have performed all obligations required to be
performed by it under this Agreement, and complied with all covenants for which
compliance by it is required under this Agreement, prior to or at the Closing.
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(b) Closing Documentation. UBIBV and VCG shall have received the following
documents, agreements and instruments from Buyer and Communications:
(i) Payment of the Purchase Price pursuant to Section 2.2 hereof;
(ii) A certificate signed by an officer of each of Buyer and
Communications certifying as to the matters set forth in Section 7.2(a) above;
(iii) An opinion of Weil, Gotshal & Manges, LLP, counsel for Buyer and
Communications, dated the date of the Closing and addressed to UBIBV and VCG,
in form and substance reasonably acceptable to UBIBV and VCG;
(iv) Copies of all consents, approvals and notices referred to in
Section 3.2(b) hereof;
(v) A certificate of the Secretary or an Assistant Secretary of each
of Buyer and Communications dated the Closing Date certifying (A) that attached
thereto are true, complete and correct copies of resolutions, as in effect on
the date of such certification, duly adopted by the Board of Directors of Buyer
and Communications, or a duly authorized committee thereof, approving the
transactions contemplated hereby and authorizing the execution, delivery and
performance by Buyer and Communications of this Agreement and the purchase and
acquisition by Buyer and Communications of the Vermont Shares in accordance
herewith, and (B) as to the incumbency and signatures of the officers of Buyer
and Communications executing this Agreement and all instruments or other
documents delivered in connection with this Agreement; and
(vi) All other instruments and documents required by this Agreement
to be delivered by Buyer and Communications to UBIBV and VCG on or before the
Closing, including execution and delivery of the Bavaria Agreement.
(c) Approval of Legal Matters. The form of all instruments, certificates
and documents to be executed and delivered by Buyer and Communications to UBIBV
and VCG pursuant to this Agreement shall be reasonably satisfactory to UBIBV
and its counsel, none of whose approval shall be unreasonably withheld or
delayed.
(d) No Litigation
(i) No action, suit or other proceeding shall be pending or
threatened before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated by this Agreement or seeking to obtain substantial damages in
respect thereof, or involving a claim that consummation thereof would result
in the violation of any law, decree or regulation of any governmental authority
having appropriate jurisdiction; provided, however, that no such action, suit
or proceeding commenced or threatened
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by a private person or entity shall constitute failure of a condition to
UBIBV's or VCG's obligations under this Agreement; and
(ii) No order, decree or ruling of any governmental authority or
court shall have been entered prohibiting, restraining or otherwise preventing
the consummation of the transactions contemplated hereby.
(e) Hart-Scott-Rodino Waiting Period. All applicable waiting periods
under the HSR Act, shall have expired without any indication by the Department
of Justice or the Federal Trade Commission that either of them intends to
challenge the transactions contemplated hereby.
ARTICLE VIII
REMEDIES FOR BREACHES OF THIS AGREEMENT
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding any
otherwise applicable statute of limitations, all of the representations and
warranties of Unicorn, VCG and UBIBV contained in Section 3.1 and all of the
representations and warranties of UBIBV contained in Sections 4.1 - 4.24 of
Annex A hereto, or in any certificate, annex or Schedule to this Agreement or
prepared by UBIBV in connection with this Agreement (including the Disclosure
Schedule) shall survive the Closing hereunder and continue in full force and
effect for the period specified below:
(a) for the representations and warranties contained in
Sections 4.6-4.14 and 4.16 - 4.24 of Annex A, until the 18 month anniversary of
the Closing Date;
(b) notwithstanding Section 8.1(a) above, for claims in relation to
the lost Licensed Images or model consents with releases (or lack thereof)
within the Knowledge of Seller prior to February 27, 2000 (including, for
purposes of this Article VIII, claims in relation to lost Licensed Images or
model consents with arising under the Bavaria Agreement) ("Media Claims"),
until the 5 year anniversary of the Closing Date; and
(c) for all other representations, warranties and covenants of the
parties, until the expiration of the applicable statute of limitations,
including extensions thereof.
Any Party entitled to receive indemnification pursuant to this Article
VIII shall use commercially reasonable efforts to seek recovery (including both
cost of defense and indemnity) under applicable insurance policies with respect
to any Adverse Consequences. In determining the amount payable hereunder there
shall be taken into account the dollar amount of any insurance as other net
proceeds actually received by (or paid for the benefit of) the party claiming
indemnification hereunder with respect to the events giving rise to a claim
hereunder. In the event that a Party (a "Collecting Party") receives payment
under this Article VIII from another Party (a "Paying Party"),
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and then subsequently receives insurance proceeds with respect to the matter
for which such Collecting Party received indemnification payment from Paying
Party, Collecting Party shall, within two (2) business days of the receipt of
such insurance proceeds, remit such proceeds to Paying Party up to the amount
previously paid by Paying Party.
Except as provided in the immediately following paragraph, no Party shall
be entitled to indemnification hereunder for any Adverse Consequences for which
indemnification is sought under the Bavaria Agreement, and no Party shall be
entitled to indemnification for any Adverse Consequences under the Bavaria
Agreement for which indemnification is sought hereunder.
UBIBV and Buyer hereby agree that to the extent that indemnification
claims pursuant to Section 8.2(a), 8.2(c) and 8.3 of the Bavaria Agreement
exceed the aggregate maximum amount set forth in such Sections, Buyer and UBIBV
shall be entitled to raise such claims hereunder as if the indemnities and
warranties contained in this Agreement relating to the Vermont Entities (or any
of them) were warranties and indemnities relating to the Bavaria Entities, to
the extent such claims (together with indemnification claims hereunder) do not
exceed the aggregate maximum amounts set forth in Sections 8.2(a), 8.2(c) and
8.3 hereof. Similarly UBIBV and Buyer hereby agree that to the extent that
indemnification claims pursuant to Sections 8.2(a) and 8.3 hereof exceed the
aggregate maximum amount set forth in such Sections, Buyer and UBIBV shall be
entitled to raise such claims under the comparable provisions of the Bavaria
Agreement as if the indemnities and warranties contained in the Bavaria
Agreement relating to the Bavaria Entities (or any of them) were warranties and
indemnities relating to the Vermont Entities, to the extent such claims
(together with indemnification claims thereunder) do not exceed the aggregate
maximum amounts set forth in Sections 8.2(a), 8.2(c) and 8.3 of the Bavaria
Agreement.
The Parties hereby acknowledge and agree that any item disclosed in
Section 4.10 of the Disclosure Schedule hereto shall be deemed to constitute
disclosure of such item in the comparable section of the Disclosure Schedule to
the Bavaria Agreement for purposes thereof.
8.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF BUYER AND COMMUNICATIONS
(a) In the event that any of Unicorn, VCG or UBIBV breach (or in the
event any third party alleges facts that, if true, would mean that any of
Unicorn, VCG or UBIBV has breached) any of their representations, warranties,
and covenants contained herein, or in any certificate, annex or Schedule
delivered pursuant hereto (except with respect to Media Claims, which are the
subject of Section 8.2(b) below), and, if there is an applicable survival
period pursuant to Section 8.1 above, provided that Buyer or Communications, as
the case may be, makes a written claim for indemnification against UBIBV
pursuant to Section 10.6 below within such survival period, then UBIBV agrees
to indemnify Buyer, Communications, VCGLLC, Definitive Stock and VCG Holdings
from and against the entirety of any Adverse Consequences any of the foregoing
entities may suffer resulting from, arising out of, relating to, in the nature
of, or caused by the breach (or the alleged breach), up to, together with
Adverse Consequences under Section 8.2(c), an aggregate
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maximum amount equal to one-half of the Purchase Price; provided, however, that
UBIBV shall have no obligation to indemnify Buyer, Communications, VCGLLC,
Definitive Stock or VCG Holdings from and against any Adverse Consequence
(treating as a single Adverse Consequence related Adverse Consequences arising
out of a single fact situation) that does not equal or exceed $25,000 ("De
Minimis Claims"); and provided, further, that UBIBV shall have no obligation to
indemnify Buyer, Communications, VCGLLC, Definitive Stock or VCG Holdings until
all such Adverse Consequences shall exceed $2,000,000 in aggregate amount (taken
together with any Adverse Consequences pursuant to the Bavaria Agreement, and
not including, in either case, any Adverse Consequences that are De Minimis
Claims) at which time UBIBV shall be liable to Buyer, Communications, Definitive
Stock, VCGLLC and VCG Holdings for all Adverse Consequences from the first $1 of
such Adverse Consequences.
(b) In the event Buyer or Communications makes a written claim for
indemnification against UBIBV pursuant to Section 10.6 below within the survival
period set forth in Section 8.1(b) above with respect to Adverse Consequence
suffered by Buyer, Communications, VCGLLC, Definitive Stock or VCG Holdings as a
result of Media Claims, UBIBV agrees to indemnify the foregoing entities from
and against all such Adverse Consequences any of the foregoing entities may
suffer resulting from, arising out of or relating to such lost Licensed Images
or model releases, up to an aggregate maximum amount equal to $2,000,000,
provided, however, that UBIBV shall have no obligation to indemnify Buyer,
Communications, VCGLLC, Definitive Stock or VCG Holdings from and against any
Adverse Consequences until all such Adverse Consequences shall exceed $500,000
in aggregate amount (taken together with any such Adverse Consequences pursuant
to the Bavaria Agreement), and provided, further that UBIBV shall have no
obligation to indemnify Buyer, Communications, VCGLLC, Definitive Stock or VCG
Holdings from and against that first $500,000 in aggregate amount of any such
Adverse Consequences.
(c) Without duplication of any indemnification payments pursuant to
Section 8.2(a), UBIBV agrees to indemnify Buyer and Communications from and
against (i) the Adverse Consequences of any Taxes payable by any Vermont Entity
for any Tax accounting period ending prior to January 1, 2000 (or, in the case
of a period that begins before December 31, 1999 and ends after such date, the
portion thereof through December 31, 1999), and (ii) one-half of the Adverse
Consequences of any income Taxes payable by any Vermont Entity for the period
beginning January 1, 2000 and ending on the Closing Date (the "Stub Period"),
up to, together with Adverse Consequences under Section 8.2(a), an aggregate
maximum amount equal to one-half of the Purchase Price. Whether or not an
income Tax accounting period ends on the Closing Date, income Taxes for the
Stub Period for the purposes of this Section 8.2(c) shall be determined based
upon a closing of the books on the Closing Date; provided, however that income
Taxes for the Stub Period shall exclude any Tax attributable to any
extraordinary income or gain that would not be recognized but for an action of
the Buyer or Communications after the Closing Date (including, without
limitation, an election under Code Section 338). With respect to any Taxes
payable for the fiscal year ending December 31, 1999 (or any portion thereof),
UBIBV shall be liable under the first sentence of this Section 8.2(c) only to
the extent that such Taxes are, in the aggregate, in excess of the accrual
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or reserve for Taxes as of December 31, 1999 in the Audited Vermont Financial
Statements. No claim may be brought under this Section 8.2(c) for any single
Tax item (or related series of items) which does not exceed $10,000. Any claim
hereunder must be brought within the time limit specified in Section 8.1(c).
8.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF UBIBV AND VCG. In the event
Buyer or Communications breaches (or in the event any third party alleges facts
that, if true, would mean Buyer of Communications has breached) any of its
representations, warranties, and covenants contained herein, or in any
certificate, annex or Schedule delivered pursuant hereto, and, if there is an
applicable survival period pursuant to Section 8.1 above, provided that UBIBV or
VCG makes a written claim for indemnification against Buyer and Communications
pursuant to Section 10.6 below within such survival period, then Buyer and
Communications agree, jointly and severally, to indemnify UBIBV and VCG from
and against any Adverse Consequences any of the foregoing entities may suffer
(including any Adverse Consequences UBIBV and VCG may suffer after the end of
any applicable survival period) resulting from, arising out of, relating to, in
the nature of, or caused by the breach (or the alleged breach), up to an
aggregate maximum amount equal to one-half of the Purchase Price, provided,
however, that Buyer and Communications shall not have any obligation to
indemnify UBIBV and VCG from and against any Adverse Consequence (treating as a
single Adverse Consequence related Adverse Consequences arising out of a single
fact situation) that does not equal or exceed $25,000 ("De Minimis Claims");
and provided, further, that Buyer and Communications shall not have any
obligation to indemnify UBIBV or VCG until all such Adverse Consequences shall
exceed $2,000,000 in aggregate amount (taken together with any Adverse
Consequences pursuant to the Bavaria Agreement, and not including, in either
case, any Adverse Consequences that are De Minimis Claims) at which time Buyer
and Communications shall, jointly and severally, be liable to UBIBV and VCG for
all Adverse Consequences from the first $1 of such Adverse Consequences.
8.4 MATTERS INVOLVING THIRD PARTIES.
(a) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other Party (the "Indemnifying
Party") under this Article VIII, then the Indemnified Party shall promptly
notify the Indemnifying Party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying the Indemnifying Party
shall relieve the Indemnifying Party from any obligation hereunder unless (and
then solely to the extent) the Indemnifying Party thereby is prejudiced.
(b) The Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
satisfactory to the Indemnified Party so long as (i) the Indemnifying Party
notifies the Indemnified Party in writing within 15 days after the Indemnified
Party has given notice of the Third Party Claim that the Indemnifying Party
will indemnify the Indemnified Party from and against the entirety of any
Adverse Consequences the
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Indemnified Party may suffer resulting from, arising out of, relating to, in
the nature of, or caused by the Third Party Claim, (ii) the Indemnifying Party
provides the Indemnified Party with evidence acceptable to the Indemnified
Party that the Indemnifying Party will have the financial resources to defend
against the Third Party Claim and fulfill its indemnification obligations
hereunder, (iii) the Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief, (iv) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good faith
judgment of the Indemnified Party, likely to establish a precedential custom or
practice adverse to the continuing business interests of the Indemnified Party,
and (v) the Indemnifying Party conducts the defense of the Third Party Claim
actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 8.4(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim, (ii) the Indemnified
Party will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be withheld unreasonably), and (iii)
the Indemnifying Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 8.4(b) above is or
becomes unsatisfied, however, (i) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying Party will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys' fees
and expenses), and (iii) the Indemnifying Party will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to
the fullest extent provided in this Article VIII.
(e) The Indemnified Party shall (and, in the case of Buyer and
Communications, shall cause the Vermont Entities to) cooperate fully, as and to
the extent reasonably requested by the other Party, in connection with any
Third Party Claim. Such cooperation shall include the retention and (upon the
other Party's request) the provision of records and information which are
reasonably relevant to any such Third Party Claim and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Parties agree (i) to
retain, and (in the case of Buyer and Communications) to cause the Vermont
Entities to retain, all books and records with respect to Tax matters pertinent
to the Vermont Entities relating to any taxable period beginning before the
Closing Date until six months after the expiration of the statute of
limitations (and, to the extent notified by Buyer, Communications or UBIBV, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention obligations imposed by law or pursuant to agreements entered
into with any Taxing Authority, and (ii) to give
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the other Party reasonable written notice prior to transferring, destroying or
discarding any such books and records and, if the other Party so requests,
Buyer or Communications or UBIBV, as the case may be, shall allow the other
Party to take possession of such books and records.
8.5 SOLE REMEDY. Each Party acknowledges and agrees that the
foregoing indemnification provisions of this Article VIII (including the
limitations set forth herein) are such Party's sole and exclusive remedy
against the other Parties and their Affiliates for any claim with respect to
the transactions contemplated hereby or otherwise relating to any Vermont
Entity, or the Assets or the Business, and each Party hereby waives and
releases any statutory, equitable or common law remedies which might otherwise
be available against the other Parties and their Affiliates. All
indemnification payments under this Article VIII shall be deemed adjustments to
the Purchase Price.
8.6 UNLIMITED CLAIMS.
(a) The proviso contained in Section 8.2 shall not apply to
UBIBV's liability in respect of any breach of the representations and
warranties contained in Section 3.1 or in Sections 4.1, 4.2, 4.3, 4.4 or 4.5 or
the final sentence of Section 4.6 of Annex A, with respect to which such
Party's liability shall not exceed the Purchase Price hereunder.
(b) The proviso contained in Section 8.3 shall not apply to
Buyer's liability in respect of any breach of the representations and
warranties contained in Section 3.2 with respect to which such Party's
liability shall not exceed the Purchase Price hereunder.
8.7 LITIGATION CLAIM. Notwithstanding the foregoing provisions of
this Article VIII, UBIBV agrees to provide to Buyer and Communications (and the
appropriate Vermont Entities following the Closing) with the benefit of UBIBV's
insurance coverage to the extent that it exists with respect to any Adverse
Consequences Buyer, Communications or any of the Vermont Entities may suffer in
respect of the Latina claim identified and described in Section 4.17 of the
Disclosure Schedule. UBIBV hereby represents and warrants that the Latina claim
has been submitted to its insurance company and has not, as of February 27,
2000, received any notice of rejection or non-coverage.
ARTICLE IX
TERMINATION
9.1 TERMINATION OF AGREEMENT. This Agreement may be terminated by
the Parties as provided below:
(a) The Parties may terminate this Agreement by mutual written
consent at any time prior to the Closing:
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(b) Either of Buyer or Communications may terminate this Agreement by
giving written notice to each of UBIBV, VCG and Unicorn at any time prior to
the Closing if the Closing shall not have occurred on or before March 26, 2000,
by reason of the failure of any condition precedent under Section 7.1(a)-(d)
and 7.1(f) or (g) hereof (unless the failure results primarily from Buyer or
Communications themselves breaching any representation, warranty, or covenant
contained in this Agreement, including, without limitation, Buyer's covenant
set forth in Section 5.5 hereof, or unless the failure otherwise relates to the
HSR Act);
(c) Either of UBIBV, VCG or Unicorn may terminate this Agreement by
giving written notice to each of Buyer and Communications at any time prior to
the Closing if the Closing shall not have occurred on or before March 26, 2000,
by reason of the failure of any condition precedent under Section 7.2 hereof
(unless the failure results primarily from UBIBV, VCG or Unicorn themselves
breaching any representation, warranty, or covenant contained in this
Agreement).
9.2 EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 9.1 above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
or their respective Affiliates, directors, officers or employees, except for
the obligations of the Parties hereto contained in this Section 9.2, Section
9.3 (if applicable) and in all other provisions which are stated to survive any
termination of this Agreement, including, without limitation, Sections 5.2,
5.3, 10.6, 10.7, 10.8, 10.9, 10.12, 10.16 and 10.20.
9.3 LIQUIDATED DAMAGES. Notwithstanding any other provision hereof, the
Parties hereby agree that, in the event that the transactions contemplated
hereby are not consummated by March 26, 2000 Buyer shall pay to UBIBV as
liquidated damages and a break-up fee, and not as a penalty, the aggregate
amount of $2,000,000 (subject to a dollar-for-dollar reduction for any payment
made pursuant to Section 9.3 of the Bavaria Agreement), except in the event
that the transactions contemplated are not consummated as a result of the
failure of the conditions to Closing set forth in Sections 7.1(a), (b), (c)
(unless Buyer unreasonably withholds or delays with respect to Section 7.1(c))
or (d) (with respect to Section 7.1(d) to the extent such litigation does not
arise out of the action of Buyer.)
ARTICLE X
MISCELLANEOUS
10.1 ENTIRE AGREEMENT. This Agreement (including the Annexes, Exhibits,
Schedules and documents attached hereto or referred to herein) constitutes the
entire agreement among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written or oral, to the
extent they related in any way to the subject matter hereof, except for the
Confidentiality Agreement which will remain in full force and effect for the
term provided for therein.
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10.2 NO THIRD-PARTY BENEFICIARIES.
(a) Except as otherwise expressly provided for in this
Agreement, nothing in this Agreement, express or implied, is intended or shall
be construed to confer upon or give to any employee of UBIBV, VCG, VCGLLC,
Buyer, Communications, Definitive Stock, VCG Holdings, or any Subsidiary of the
foregoing, or any other Person, other than the Parties hereto (and their
successors and permitted assigns), any rights, remedies or other benefits under
or by reason of this Agreement.
(b) The Parties hereto agree and acknowledge that after the
Closing Date: (i) VCGLLC, Definitive Stock and VCG Holdings are intended third
party beneficiaries under this Agreement and are independently entitled to
avail themselves of all the rights and remedies of Buyer and Communications
hereunder and all benefits related thereto.
10.3 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of the other Parties, provided, however, that Buyer may
assign, without the approval of the other parties, all or any portion of its
rights hereunder to any entity directly or indirectly owned wholly by Buyer, in
which extent Buyer shall, notwithstanding such assignment, remain wholly and
solely liable for the obligations, representations, warranties and covenants of
Buyer hereunder and under any certificate, schedule, annex or other agreement
delivered pursuant hereto.
10.4 COUNTERPARTS. This Agreement may be executed by exchanging
executed copies or facsimile signatures and in any number of counterparts, and
by any Party on separate counterparts, each of which as so executed and
delivered shall be deemed an original, but all of which together shall
constitute one and the same instrument, and it shall not be necessary in making
proof of this Agreement as to any Party hereto to produce or account for more
than one such counterpart executed and delivered by such Party.
10.5 HEADINGS. The Article and Section headings, and the table of
contents, contained in this Agreement are inserted for convenience only and
shall not affect in any way the meaning or interpretation of this Agreement.
10.6 NOTICES. All notices, certificates, requests, demands, claims,
and other communications hereunder shall be given in writing and shall be
delivered personally (including by personal courier or delivery service) or
sent by facsimile, telex or telegram or by the registered or certified mail
(return receipt requested), postage prepaid, to the Parties at the following
address (or at such other addresses as the shall be specified by like notice):
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IF TO UNICORN, VCG OR UBIBV: COPY TO:
c/o United News & Media plc Carter, Ledyard & Milburn
Ludgate House Two Wall Street
245 Blackfriars Road New York, New York 10005
London SE1 9UY, England
Fax No.: 011-44-171-928-2728 Fax No.: 212-732-3232
Attention: Company Secretary Attention: James E. Abbott
IF TO THE BUYER
OR COMMUNICATIONS: COPY TO:
Getty Images Inc. Weil, Gotshal & Manges, LLP
701 North 34th Street 767 Fifth Avenue
Suite 4000 New York, New York 10153
Seattle, Washington 98103
Fax No.: 206-268-1201 Fax No.: 212-310-8007
Attention: Suzanne Page Attention: Stephen Besen
GETTY IMAGES INC.
c/o PhotoDisc Inc.
475 Park Avenue South
31st Floor
New York, New York 10016
Fax No.: 212-471-5299
Attention: General Counsel
Any notice given personally or by mail or telegram shall be effective when
received. Any notice given by telex or facsimile shall be effective when the
appropriate telex or facsimile answerback is received.
10.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York as to all matters,
including but not limited to matters of validity, construction, effect,
performance and remedies (without giving effect to any choice or conflict of law
provision or rule, whether of the State of New York or any other jurisdiction,
that would cause the application of the laws of any jurisdiction other than the
State of New York).
10.8 RETURN OF INFORMATION. If for any reason whatsoever the sale and
purchase of the Vermont Shares pursuant to this Agreement is not consummated,
Buyer shall promptly return to UBIBV and VCG all books, records and documents of
UBIBV, VCG and the Vermont Entities (including all copies, if any, thereof)
furnished by UBIBV, VCG or any of their Affiliates, agents,
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employees, or representatives, and shall not use or disclose the information
contained in such books, records or documents for any purpose or make such
information available to any other entity or person, except that one copy of
all such information may be retained in the files of Buyer's legal department.
10.9 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Buyer, Communications, Unicorn, VCG and UBIBV. Any Party hereto may, by written
notice to the other Parties, waive any provision of this Agreement. No waiver
by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
10.10 SEVERABILITY. The provisions of this Agreement shall be deemed
severable and any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is invalid or unenforceable, (i) a suitable provision
shall be substituted therefor in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or unenforceable provision,
and (ii) the remainder of this Agreement and the application of such provision
to other persons, entities or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
10.11 EXPENSES. Except as otherwise expressly provided in this Agreement,
whether or not the transactions contemplated by this Agreement are consummated,
each of the Parties will bear its own costs and expenses (including, but not
limited to, all compensation and expenses of counsel, financial advisors,
consultants, actuaries and independent accountants) incurred in connection with
this Agreement and the transactions contemplated hereby.
10.12 CONSTRUCTION. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including" shall
mean including without limitation. The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
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10.13 INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof. References herein to "Section 4".x shall
refer to Section 4.x of Annex A.
10.14 SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches, or threatened breaches, of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the Parties and the matter (subject
to the provisions set forth in Section 10.15 below), in addition to any other
remedy to which they may be entitled, at law or in equity.
10.15 SUBMISSION TO JURISDICTION. IF ANY PARTY SHALL HAVE THE RIGHT TO
SEEK RECOURSE TO A COURT WITH RESPECT TO ANY DISPUTE ARISING OUT OF OR RELATED
TO THIS AGREEMENT OR THE TRANSACTIONS CONTAINED IN OR CONTEMPLATED BY THIS
AGREEMENT, WHETHER IN TORT OR CONTRACT OR AT LAW OR IN EQUITY, THEN ANY ACTION
OR PROCEEDING IN RESPECT OF ANY SUCH DISPUTE SHALL BE BROUGHT EXCLUSIVELY IN
THE SUPREME COURT OF THE STATE OF NEW YORK FOR THE COUNTY OF NEW YORK (THE
"CHOSEN COURTS") AND (I) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
THE CHOSEN COURTS FOR SUCH PURPOSES, (II) WAIVES ANY OBJECTION TO LAYING VENUE
IN ANY SUCH ACTION OR PROCEEDING IN THE CHOSEN COURTS, (III) WAIVES ANY
OBJECTION THAT THE CHOSEN COURTS ARE AN INCONVENIENT FORUM OR DO NOT HAVE
JURISDICTION OVER ANY PARTY HERETO AND (IV) AGREES THAT SERVICE OF PROCESS UPON
SUCH PARTY IN ANY SUCH ACTION OR PROCEEDING SHALL BE EFFECTIVE IF NOTICE IS
GIVEN IN ACCORDANCE WITH SECTION 10.6 OF THIS AGREEMENT. EACH PARTY AGREES THAT
A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING SO BROUGHT SHALL BE CONCLUSIVE AND
MAY BE ENFORCED BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW
OR AT EQUITY. EACH PARTY ALSO AGREES NOT TO BRING ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY OTHER COURT. EACH OF BUYER
AND COMMUNICATIONS IRREVOCABLY DESIGNATES GETTY IMAGES INC.'S NEW YORK OFFICE
AS ITS AGENT AND ATTORNEY-IN-FACT FOR THE ACCEPTANCE OF SERVICE OF PROCESS ON
ITS BEHALF IN ANY SUCH CLAIM OR PROCEEDING AND TAKING ALL SUCH ACTS AS MAY BE
NECESSARY OR APPROPRIATE IN ORDER TO CONFER JURISDICTION OVER IT UPON THE
CHOSEN COURTS AND EACH OF BUYER AND COMMUNICATIONS STIPULATES THAT SUCH CONSENT
AND APPOINTMENT IS IRREVOCABLE AND COUPLED WITH AN INTEREST. EACH OF UBIBV,
VCG AND UNICORN IRREVOCABLY DESIGNATES CT CORPORATION AS ITS AGENT AND
ATTORNEY-IN-FACT FOR THE ACCEPTANCE OF SERVICE OF
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PROCESS AND MAKING AN APPEARANCE ON ITS BEHALF IN ANY SUCH CLAIM OR PROCEEDING
AND TAKING ALL SUCH ACTS AS MAY BE NECESSARY OR APPROPRIATE IN ORDER TO CONFER
JURISDICTION OVER IT UPON THE CHOSEN COURTS AND EACH OF UBIBV, VCG AND UNICORN
STIPULATES THAT SUCH CONSENT AND APPOINTMENT IS IRREVOCABLE AND COUPLED WITH AN
INTEREST.
10.16 FULFILLMENT OF OBLIGATIONS. Any obligation of any Party to any
other Party under this Agreement, which obligation is performed, satisfied or
fulfilled by an Affiliate of such Party, shall be deemed to have been
performed, satisfied or fulfilled by such Party.
10.17 SCHEDULES. The inclusion of any matter in any schedule to this
Agreement shall be deemed to be an inclusion for all purposes of this
Agreement, including each representation and warranty to which it may relate,
but inclusion thereon shall expressly not be deemed to constitute admission by
either Party, or otherwise imply, that any such matter is material or create a
measure for materiality for the purposes of this Agreement.
10.18 DEFINITION OF "ORDINARY COURSE". For purposes of this Agreement,
the term "ordinary course" as it relates to the Business prior to the Closing
means in a manner substantially the same as that normally employed by VCG in
the ordinary course with respect to businesses it holds with a view towards
operating and maintaining such businesses rather than a view towards the sale
of such businesses to a third party.
10.19 ATTORNEY'S FEES. In any proceeding brought by any Party hereto
to enforce this Agreement, the prevailing Party shall be entitled to reasonable
attorneys' fees incurred by the prevailing Party in connection therewith, plus
court costs and experts' fees.
***************
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, UBIBV, VCG, Unicorn, Buyer and Communications have each
executed or caused this Agreement to be executed by their duly authorized
officers, as the case may be, each as of the date first above written.
GETTY IMAGES INC.
By: /s/ Jonathan D. Klein
----------------------
Name: Jonathan D. Klein
Title: CEO
GETTY COMMUNICATIONS LIMITED
By: /s/ Jonathan D. Klein
----------------------
Name: Jonathan D. Klein
Title: Director
UNITED BUSINESS INFORMATION B.V.
By:
----------------------
Name:
Title:
VISUAL COMMUNICATIONS GROUP (VCG)
B.V.
By:
----------------------
Name:
Title:
UNITED NEWS & MEDIA PLC
By:
----------------------
Name:
Title:
<PAGE> 50
IN WITNESS WHEREOF, UBIBV, VCG, Unicorn, Buyer and Communications have each
executed or caused this Agreement to be executed by their duly authorized
officers, as the case may be, each as of the date first above written.
GETTY IMAGES INC.
By:
------------------------
Name:
Title:
GETTY COMMUNICATIONS LIMITED
By:
------------------------
Name:
Title:
UNITED BUSINESS INFORMATION B.V.
By: /s/ illegible signature
------------------------
Name:
Title:
VISUAL COMMUNICATIONS GROUP (VCG)
B.V.
By: /s/ illegible signature
------------------------
Name:
Title:
UNITED NEWS & MEDIA PLC
By: /s/ illegible signature
------------------------
Name:
Title:
<PAGE> 51
Title:
ANNEX A
4.1 INTEREST IN RELATED ENTITIES. Except as set forth in Section 4.1 of
the Disclosure Schedule, neither nor any Affiliate of VCG (i) has any direct or
indirect interest in any person or entity which is a lessor of assets or
properties to, material supplier of, or provider of services to any Vermont
Entity, (ii) has a direct or indirect interest in or is a party to any contract
or agreement to which any Vermont Entity is a party, or (iii) owns directly or,
to the Knowledge of Seller, indirectly, any tangible or intangible property
which any Vermont Entity uses in the conduct of the Business, or (iv) has any
outstanding indebtedness to any Vermont Entity. For purposes of this Section,
any investment by VCG or any Affiliate of VCG in any company whose stock is
listed on a national securities exchange or actively traded in the
over-the-counter market, which investment represents no more than 5% of the
outstanding voting power of such company, shall be deemed not to constitute a
direct or indirect interest in such company.
4.2 ORGANIZATION; QUALIFICATION; POWER. VCG Holdings is a corporation
duly organized and validly existing and in good standing under the laws of
England and Wales. Definitive Stock is a corporation duly organized, validly
existing and in good standing under the laws of Delaware. VCGLLC is a limited
liability company duly organized, validly existing and in good standing under
the laws of Delaware. Each of the Subsidiaries of VCG Holdings, Definitive
Stock and VCGLLC is duly organized, validly existing and in good standing (with
respect to jurisdictions that recognize such concept) under the laws of its
jurisdiction of domicile. The Vermont Entities have all requisite corporate
power and authority to own, lease and operate the Assets and to carry on the
Business as it is now being conducted, except to the extent any failure to be
so empowered or authorized does not have a Material Adverse Effect. Prior to
the Closing, VCG shall have delivered to Buyer and Communications true,
complete and correct copies of the Articles of Association or other
organizational document (including all amendments thereto) and the By-Laws, as
currently in effect, of each of the Vermont Entities. Each of the Vermont
Entities is duly qualified or licensed and in good standing (with respect to
jurisdictions that recognize such a concept) to do business in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary.
VCG represents and warrants that the records and minutes of the
meetings of the shareholders and the board of directors as well as the reports
of the statutory auditors of Pix SA and, where applicable, iSwoop EURL, have
been maintained in accordance with French law since the respective dates of
incorporation thereof.
Any shares of Pix SA held by Pix SA as a result of the Merger have
been acquired, held and recorded in accordance with French law governing the
merger by absorption of a company by the subsidiary thereof.
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4.3 CAPITALIZATION. All of the Vermont Shares are duly authorized,
validly issued, fully paid and non-assessable. No depository certificates of
shares in the share capital of VCG have been issued. Section 4.3 of the
Disclosure Schedule sets forth a list of all of the Vermont Entities, the
number of shares of each such entities' authorized capital stock and the number
and class of shares thereof duly issued and outstanding or, if the entity is a
limited partnership, the partnership's capital and the capital contributions
including their respective amounts. Each outstanding share of capital stock of
each of the Vermont Entities is duly authorized, validly issued fully paid and
non-assessable. The capital contributions of Vermont Entities being limited
partnerships have been duly taken over, fully paid and are non-assessable. VCG
owns all of the outstanding shares of capital stock or other equity interests
of VCG Holdings, Definitive Stock and VCGLLC, in each case free and clean of
all encumbrances. There are no pre-emptive rights, whether at law or otherwise,
to purchase any of the securities of VCG and there are no outstanding options,
warrants, subscriptions, agreements, plans or other commitments pursuant to
which any Vermont Entity is or may become obligated to sell or issue any
security.
4.4 INVESTMENTS. Except as set forth in Section 4.4 of the Disclosure
Schedule, as of the Closing Date, no Vermont Entity owns or maintains, directly
or indirectly, any capital stock or other equity or ownership or proprietary
interest in any corporation, partnership, association, trust, joint venture or
other entity.
4.5 NO VIOLATIONS. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the performance by
UBIBV and VCG of its obligations hereunder and under the agreements to be
executed and delivered pursuant hereto, do not and will not conflict with or
violate any of the terms of the Articles of Association, By-Laws or other
organizational documents of UBIBV, VCG or any Vermont Entity.
4.6 TITLE TO ASSETS; ENCUMBRANCES; DEBT. The Vermont Entities own, lease
or have the legal right to use all of the material Assets, including, without
limitation, real and personal property, presently used in the conduct of the
Business of the Vermont Entities, or which is otherwise owned, leased or used
by the Vermont Entities and, with respect to contract rights, enjoys the right
to the benefits of all material Contracts. The Vermont Entities have good and
marketable title to the Assets (except with respect to the Intellectual
Property included in such Assets, with respect to which, to the Knowledge of
Seller, the Vermont Entities have good and marketable title), free and clear of
all Encumbrances, except those specified in Section 4.6 of the Disclosure
Schedule, liens for taxes not yet due and payable, and Encumbrances that do not
in the aggregate have a Material Adverse Effect on the value or use by the
Vermont Entities of the Assets and the Intellectual Property, as currently
used. At the Closing, and following repayment of all Intercompany Debt, the
Vermont Entities shall be free of all debt of whatever kind or nature, except
for debts between the Vermont Entities, accounts payable and other liabilities
arising in the ordinary course of business.
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4.7 POSSESSION. Except as set forth in Section 4.7 of the Disclosure
Schedule, no other Person has a right of possession or, to the Knowledge of
Seller, claims possession of any material part of the Assets, except for the
rights of lessors over (a) the leased Personal Property identified in Section
4.8 of the Disclosure Schedule and (b) the leased Real Property identified in
Section 4.9 of the Disclosure Schedule.
4.8 PERSONAL PROPERTY.
(a) Set forth in Section 4.8(a) of the Disclosure Schedule is a list
of all material machinery and equipment, apparatus, motor vehicles, furniture,
furnishings and fixtures owned or leased by the Vermont Entities (the "Personal
Property").
(b) Each lease of Personal Property is valid and in full force and
effect, and none of the Vermont Entities is in default on any of their material
obligations under such leases and there is no event or condition that with the
giving of notice or the passage of time, or both, would create such a default
other than defaults that in the aggregate would not result in a Material Adverse
Effect. To the Knowledge of Seller, (i) no lessor under any of such leases is in
default of any of its obligations thereunder and (ii) there is no event or
condition that with the giving of notice or the passage of time, or both, would
create a default by any such lessor under any such lease. The Personal Property
has been maintained in good operating condition (in each case taking into
account the age of such Personal Property) a manner consistent with the ordinary
course of the Business.
4.9 REAL PROPERTY.
(a) No Owned Real Property. The Vermont Entities do not own any real
property.
(b) Leased Real Property. Section 4.9 of the Disclosure Schedule sets
forth all leases, subleases and other agreements under which any Vermont Entity
uses or occupies or has the legal right to use of occupy, now or in the future,
any real property (the "Leases").
(c) Compliance with Leases. Each of the Leases and each lease of real
property identified in Section 4.22 of the Disclosure Schedule is valid and in
full force and effect, and the Vermont Entities are not in default on any of
their obligations under such Leases and, to the Knowledge of Seller, there is no
event or condition that the giving of notice or the passage of time, or both,
would create such a default other than, in each case, defaults that in the
aggregate would not have a Material Adverse Effect. To the Knowledge of Seller,
(i) no lessor under any of such leases is in default of any of its obligations
thereunder and (ii) there is no event or condition that with the giving of
notice or the passage of time, or both, would create a default by any such
lessor under any such lease.
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(d) Pix Lease. To the extent required, the principal lessor consented
to the sublease entered into between Photographie Giraudon SA, as sub-lessee,
and Agence Generale d'Image, AGI SA, as sub-lessor, dated 1 October, 1994.
4.10 INTELLECTUAL PROPERTY.
(a) Section 4.10(a) of the Disclosure Schedule sets forth a true and
complete list of all (i) patents and patent applications, trademark and service
mark registrations, trademark and service mark applications and, to the
Knowledge of Seller, all material common law trademarks and service marks,
registered copyrights and copyright applications, and Internet domain names, in
each case owned by a Vermont Entity and material to the business of the Vermont
Entities ("Listed Intellectual Property"), (ii) Software (as defined herein),
and (iii) licenses, sublicenses, and other agreements pertaining to Intellectual
Property, Software or Images (as defined herein) to which a Vermont Entity is a
party, including agreements with major Internet service providers and major
Internet portals, in each case that are material to the business of the Vermont
Entities ("Licensed Intellectual Property"). For purposes hereof, "Intellectual
Property" means any and all of the following, but excluding Images: (i) United
States, international, and foreign patents, patent applications and statutory
invention registrations, (ii) trademarks, service marks, intent to use
registrations, trade names, trade dress, slogans, logos, and Internet domain
names, including registrations and applications for registration thereof, (iii)
copyrights, including registrations and applications for registration thereof
and (iv) confidential and proprietary information. For purposes hereof, "Owned
Intellectual Property" means Listed Intellectual Property and any copyright,
confidential proprietary information including trade secrets and knowhow, owned
by a Vermont Entity and, to the Knowledge of Seller, material to the business of
the Vermont Entity, "Image" means a reproduction of any artwork, photograph,
illustration, font, video, clip art, map art, film, animation or any other type
of image. For purposes hereof, "Software" means all material computer software
developed by or on behalf of a Vermont Entity, or used by a Vermont Entity,
including all material computer software and databases operated or used by
Vermont or Bavaria on their web sites or used by Vermont or Bavaria in
connection with processing customer orders, storing customer information,
storing Image related vendor information, or storing and archiving Images. For
purposes hereof, "Approved Images" means Images used or held for use by the
Vermont Entities in connection with their business for which a Vermont Entity
has the right to grant licenses or sublicenses in writing to third parties. For
purposes hereof, "Unapproved Images" means Images used or held for use by the
Vermont Entities in connection with their business which are not Approved Images
(the Approved Images and Unapproved Images collectively being "Licensed
Images").
(b) To the Knowledge of Seller, the use of the Owned Intellectual
Property, Software, Licensed Images, and Licensed Intellectual Property by the
Vermont Entities in the ordinary course of business does not infringe upon or
misappropriate the valid Intellectual Property rights of any third party. Except
as set forth in section 4.10(b) of the Disclosure Schedule, no claim
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has been received that the use of the Owned Intellectual property, Software,
Licensed Images, or Licensed Intellectual Property in the ordinary course of
business does or may infringe upon or misappropriate the Intellectual Property
rights, right of privacy or right of publicity of any third party.
(c) The Vermont Entities are the owner of the entire and unencumbered
right, title and interest in and to each item of Owned Intellectual Property,
and the Vermont Entities are entitled to use the Owned Intellectual Property in
the ordinary day-to-day conduct of business.
(d) The Owned Intellectual Property and the Licensed Intellectual Property
include all of the material Intellectual Property and Software used in the
ordinary day-to-day conduct of the business of the Vermont Entities, and there
are no other items of Intellectual Property or Software that are material to
such ordinary day-to-day conduct of such business. Except as set forth in
Section 4.10(d) of the Disclosure Schedule, to the Knowledge of Seller, the
Owned Intellectual Property and Licensed Intellectual Property, is not subject
to any claim or challenge in relation to subsistence, validity or
enforceability and has not been adjudged invalid or unenforceable in whole or
part and, to the actual knowledge of VCG, the Listed Intellectual Property is
subsisting, valid and enforceable.
(e) Except as set forth in Section 4.10(e) of the Disclosure Schedule, no
claims have been made, asserted, are pending, or, to the Knowledge of Seller,
threatened against a Vermont Entity, and no international agent licensee of the
Owned Intellectual Property or end user of the Owned or Licensed Intellectual
Property has informed VCG that any claims have been made, asserted, are pending
or threatened against a Vermont Entity, (i) based upon or challenging or
seeking to deny or restrict the use, license, sublicense, distribution,
display, copying, performance, marketing or creation of derivative works by a
Vermont Entity of any of the Owned Intellectual Property or Licensed
Intellectual property, (ii) alleging that any services provided by, processes
used by, licenses by, sublicenses by, distribution by, display by, copying by,
performances by, marketing by or creation of derivative works by or products
manufactured or sold by a Vermont Entity infringe upon or misappropriate any
Intellectual Property right, right of privacy or right of publicity of any
third party, or (iii) alleging that any Intellectual Property licensed under
the Licensed Intellectual property infringes upon any Intellectual Property
right of any third party or is being licensed or sublicensed in conflict with
the terms of any license or other agreement and to the Knowledge of Seller no
such claims have been made, asserted, are pending, or threatened against any
third party licensor, any licensee, or end user of the Owned Intellectual
Property.
(f) Except as set forth in Section 4.10(f) of the Disclosure Schedule, to
the Knowledge of Seller no person is engaging in any activity that infringes
upon the Owned Intellectual Property or any Intellectual Property Licensed to
the Vermont Entities under the Licensed Intellectual Property. No Vermont
Entity has granted any license or other right to any third party with respect
to the Owned Intellectual Property or Licensed Intellectual Property on a free
or 'pro
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bono' basis without the consent of or a license from the owner of such
Intellectual Property. The consummation of the transactions contemplated by
this Agreement will not result in the termination or material impairment of any
of the Owned Intellectual Property.
(g) VCG has delivered or made available to the Buyer correct and
complete copies of all the material licenses and sublicenses of the Licensed
Intellectual Property (excluding for such purposes all Images included therein)
including all amendments thereto, and all current standard forms of all model
and property releases which are in the custody, or under the control, of VCG
and the Vermont Entities. With respect to each such material license and
sublicense:
(i) such license or sublicense is valid and binding and in
full force and effect with respect to the Vermont Entities and, to the knowledge
of VCG, with respect to the relevant counterparty and represents the entire
agreement between the respective licensor and licensee with respect to the
subject matter of such license or sublicense;
(ii) such license or sublicense will not cease to be valid
and binding and in full force and effect on terms identical to those currently
in effect as a result of the consummation of the transaction contemplated by
this Agreement, nor will the consummation of the transactions contemplated by
this Agreement constitute a breach or default under such license or sublicense
or otherwise give the licensor or sublicensor other than a Vermont Entity a
right to terminate such license or sublicense;
(iii) Except as set forth in Section 4.10 of the Disclosure
Schedule, (A) no Vermont Entity has received any notice of termination or
cancellation under such license or sublicense, (B) no Vermont Entity has
received any notice of a breach or default under such license or sublicense,
which breach has not been cured, and (C) to the Knowledge of Seller no Vermont
Entity has granted to any other third party any rights, adverse or otherwise,
under such license or sublicense that would constitute a breach of such license
or sublicense; and
(iv) no Vermont Entity, nor, to the Knowledge of Seller, any
other party to such license or sublicense is in breach or default in any
material respect, and, to the Knowledge of Seller, no event has occurred that,
with notice or lapse of time would constitute such a breach or default or
permit termination, modification or acceleration under such license or
sublicense.
(h) To the Knowledge of Seller, the Software is as of the Closing
Date free of all viruses, worms, trojan horses and other material known
contaminants, and does not contain any bugs, errors, or problems in each case
which is of a material nature that disrupts its operation or have
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an adverse impact on the operation of other software programs or operating
systems. The Vermont Entities do not import or export from the United States any
Software. No rights in the Software have been transferred to any third party
except to the customers of a Vermont Entity to whom a Vermont Entity licensed
such Software in the ordinary course of business.
(i) The Vermont Entities have the right to use all software
development tools, library functions, compilers, and other third party software
that is material to the business of the Vermont Entities, or that is required to
operate or modify the Software in a manner necessary for the ongoing operation
of the business. The Software which the Vermont Entities purport to own was
either developed (i) by employees of the Vermont Entities within the scope of
their employment; (ii) by independent contractors who have assigned their
rights to the Vermont Entities pursuant to enforceable written agreements; or
(iii) has otherwise been rightfully assigned. The source code for such Software
is maintained on the premises of the Vermont Entities and can be compiled from
the associated source code without undue burden. The Vermont Entities have
copies of all material documentation which exists relating to use, maintenance
and operation of such Software used in the conduct of the Business.
(j) The Vermont Entities have taken reasonable steps in accordance
with normal industry practice to maintain the confidentiality of their trade
secrets and other confidential Intellectual Property. To the Knowledge of
Seller: (i) there has been no misappropriation of any material trade secrets or
other material confidential Intellectual Property of any Vermont Entity by any
person, (ii) no employee, independent contractor or agent of any Vermont Entity
has misappropriated any material trade secrets of any other person in the course
of such performance as any employee, independent contractor or agent and (iii)
no Employee, independent contractor or agent of any Vermont Entity is in
material default or breach of any term of any employment agreement,
non-disclosure agreement, assignment of proprietary rights agreement or similar
agreement or contract relating in any way to the protection, ownership,
development, use or transfer of Owned or Licensed Intellectual Property.
(k) To the Knowledge of Seller, the Internal MIS Systems are Euro
Compliant. For purposes hereof, "Internal MIS Systems" means any computer
software and systems (including hardware, firmware, operating system software,
utilities and applications software) used in the ordinary course of the Business
that process financial information and that are material to the operation of the
Business, including, where applicable, payroll, accounting, billing/receivables,
purchasing payables, inventory, asset tracking, customer service, and human
resources. For purposes hereof, "Euro Compliant" means that the Internal MIS
Systems will record, store, process and present currency denominated in Euros,
in the same manner, and with the same functionality, as the Internal MIS Systems
record, store, process and present currencies denominated in U.S. Dollars and
major European currencies.
(l) The Vermont Entities have obtained the necessary permissions from
the
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appropriate parties for links on its web sites to third party web sites and to
use third party marks in association with those links.
(m) To the Knowledge of the Seller, the Vermont Entities have obtained
all necessary releases and permissions in writing for the use of any artists'
name, biography, likeness, and Image used in marketing and advertising materials
distributed by the Vermont Entities. Except as set forth in Section 4.10(m) of
the Disclosure Schedule, the Vermont Entities' registered trademarks and service
marks as listed at Section 4.10(a) of the Disclosure Schedule have been duly
registered with, filed in or issued by, as the case may be, the United States
Patent and Tradesman Office or such other domestic or foreign office of
appropriate jurisdiction, and such registrations, filings, issuances and other
actions remain in full force and effect, are current and unexpired.
(n) Except for public domain imagery as set forth in Section 4.10(n)
of the Disclosure Schedule, the Vermont Entities validly own or license all
Images used or held for use by a Vermont Entity which are material to the
operation of the business of any Vermont Entity as currently conducted. With
respect to each Image owned by a Vermont Entity ("Owned Images"), the Vermont
Entity, as applicable, has the right to display, reproduce, distribute, sell,
market, perform, advertise, bundle with other derivative works, create
derivative works, license and sublicense the use of such Image to the extent
required for the continued day-to-day operation of the business in a manner
consistent with past practices. The Owned Images and Licensed Images include all
of the Images used or held for use by the Vermont Entities which are material to
the day-to-day operation of the business as currently conducted. With respect to
the public domain Images offered by the Vermont Entities, each Image, to the
Knowledge of Seller, does not require a license or the payment of a fee for the
Vermont Entities' use in a manner consistent with past practice. Without
prejudice to the generality of the foregoing, nothing in this Section shall be
deemed to be construed as a representation or warranty with respect to the
Licensor's ownership or license of Images.
(o) To the Knowledge of Seller, (a) no Vermont Entity has granted any
license, sublicense or other right to any other person with respect to any
Unapproved Images (b) no Vermont Entity has granted any license, sublicense or
other right to any other person with respect to any Approved Image that would
constitute a breach of any agreement or license pertaining to such Approved
Image, and (c) except as disclosed at Section 4.10 of the Disclosure Schedule no
Vermont Entity has granted any license, sublicense or other right to any other
person with respect to any Approved Image for which such Vermont Entity has no
model or property release where such license, sub-license or other right would
constitute a breach of a third party's rights without such model or property
release.
(p) To the Knowledge of Seller, (a) the display, sale, marketing,
distribution, bundling with other works, creation of derivative works, copying,
marketing, performance and advertising of the Licensed Images, and the licensing
and sublicensing of Approved Images as done, authorized or agreed to by the
Vermont Entities does not infringe upon the Intellectual Property
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right, right of publicity, or right of privacy of any third party, and (b) the
display, sale marketing, performance, distribution, bundling with other works,
creation of derivative works, copying and advertising of the Licensed Images,
and the licensing and sublicensing of Approved Images, as done, authorized or
agreed to by the Vermont Entities does not constitute a breach of any agreement
or license to which a Vermont Entity is a party.
(q) Except as set forth in Section 4.10(q) of the Disclosure Schedule, no
claims have been made, asserted, are pending, or to the Knowledge of Seller
threatened, against any Vermont Entity, and no international agent licensee of
the Licensed Images or end user of the Licensed Images has informed VCG that any
claims have been made, asserted, are pending or threatened against a Vermont
Entity, (i) based upon or challenging or seeking to deny or restrict the
display, sale, marketing, performance, distribution, bundling with other works,
creation of derivative works, copying, advertising, licensing or sublicensing by
any Vermont Entity of any of the Licensed Images, (ii) alleging that the sale,
reproduction, distribution, bundling with other derivative works, creation of
derivative works, copying, advertising, licensing or sublicensing of the
Licensed Images by any Vermont Entity or in accordance with the terms granted by
any Vermont Entity does or may infringe upon the Intellectual Property rights,
right of publicity, right of privacy of any third party, (iii) claiming in
respect of loss or damage to Licensed Images, (iv) claiming in respect of model
or property releases (or lack thereof) in respect of the Licensed Images, (v)
challenging the ownership of the Owned Images or the Vermont Entities' rights to
the Licensed Images, and to the Knowledge of Seller, no such claims have been
made, asserted, are pending, or threatened against any third party licensor, any
licensee, or any end user of a Licensed Images or an international agent for a
Vermont Entity. Except as set forth in Schedule 4.10(q) of the Disclosure
Schedule, no person has requested indemnification from any Vermont Entity based
on the proper use of an Owned Image or Licensed Image within the last 24 months.
(r) To the Knowledge of Seller, no person is engaging in any activity that
infringes upon the Licensed Images or upon the rights of any Vermont Entity
therein. The consummation of the transactions contemplated by this Agreement
will not result in the termination or impairment of any right of a Vermont
Entity to sell, copy, market, advertise, perform, bundle with other works,
create derivative works of, distribute or sublicense any of the Licensed Images.
(s) To the Knowledge of Seller, except as set forth in Section 4.10(s) of
the Disclosure Schedule, each of the Vermont Entities has, prior to any
display, bundling, marketing, performance, advertisement, sale, reproduction,
distribution or sublicensing of any Licensed Image, obtained in writing all
such releases and/or other third party consents or authorizations required by
law for such display, bundling, marketing, performance, advertisement, sale,
reproduction, distribution or sublicensing, or taken reasonable steps to ensure
that such releases, consents or authorizations have been given. Except as set
forth in Schedule 4.10(s) of the Disclosure Schedule the Vermont Entities have
not entered into any contract under which a Vermont Entity has assumed any
obligation for the storage and handling of Images outside of the ordinary
course of business.
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(t) With respect to each material license or agreement by which Vermont or
Bavaria has obtained the right to display, perform, advertise, market, sell,
reproduce, distribute, bundle with other derivative works, create derivative
works, market copy, license or sublicense the Licensed Images or by which
Vermont or Bavaria has granted to any third party the right to display, sell,
reproduce, perform or distribute any Licensed Images:
(i) such license or agreement is legal, valid, binding and
enforceable and in full force and effect with respect to the Vermont
Entities and, to the Knowledge of Seller, with respect to the relevant
counterparty and represents the entire agreement between the parties
thereto with respect to the subject matter thereof;
(ii) such license or agreement will not cease to be legal, valid,
binding and enforceable and in full force and effect on terms identical to
those currently in effect as a result of the consummation of the
transactions contemplated by this Agreement, nor will the consummation of
the transactions contemplated by this Agreement constitute a breach or
default under such license or agreement, or otherwise give any party
thereto a right to terminate such license or agreement;
(iii) except as set out in Section 4.10 of the Disclosure Schedule,
with respect to each such license or agreement, (A) no Vermont Entity has
received any notice of termination or cancellation under such license or
agreement, and no party thereto has any right of termination or
cancellation thereunder except in accordance with its terms (B) no Vermont
Entity has received any notice of a breach or default under such license or
agreement which breach or default has not been cured, and (C) to the
Knowledge of Seller no Vermont Entity has granted to any other person any
rights, adverse or otherwise, under such license or agreement that would
constitute a breach of such licence or agreement; and
(iv) none of the Vermont Entities nor, to the Knowledge of Seller,
any other party to such license or agreement, is in breach or default
thereof in any material respect, and, to the Knowledge of Seller, no event
has occurred that, with notice or lapse of time would constitute such a
breach or default or permit termination, modification or acceleration under
such license or agreement.
(u) No Vermont Entity has granted to any Person the right to distribute or
sell the Licensed Images except in the ordinary course of business.
(v) Section 4.10(v) of the Disclosure Schedule identifies each material
contract between a Vermont Entity and a photographer or other content provider
to a Vermont Entity that has been terminated or revoked since January 1, 1998
that involves the display, reproduction, distribution, creation of derivative
works, bundling with other works, licensing or sublicensing the use of any Image
owned or controlled by such third party.
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(w) All publicly and freely available electronic versions of Owned
Images and Licensed Images with a resolution level at or above "comping
resolution" distributed or made available by the Vermont Entities on a web
site, contain watermarks or similar protection mechanisms advertising or
marketing material.
4.11 ENVIRONMENTAL PROTECTION.
(a) Except as set forth in Section 4.11 of the Disclosure Schedule:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received by, no complaint has been
filed against, no penalty has been assessed against, and no investigation,
action, claim, suit, proceeding or review is pending or, to the Knowledge
of Seller, threatened, by any person or Governmental Authority against, any
Vermont Entity with respect to any matters relating to or arising out of
any Environmental Law which, individually or in the aggregate, would have a
Material Adverse Effect;
(ii) to the Knowledge of Seller, no Hazardous Substance has been
discharged, disposed of, dumped, injected, pumped, deposited, spilled,
leaked, emitted or released at, on or under any property now or previously
owned, leased or operated by any Vermont Entity which circumstance,
individually or in the aggregate, would have a Material Adverse Effect; and
(iii) there are no Environmental Liabilities that, individually or
in the aggregate, have had or would have a Material Adverse Effect.
(b) For purposes of this Section, the following terms shall have the
meanings set forth below:
(i) "Vermont Entity" shall include any entity which is, in whole
or in part, a predecessor of any Vermont Entity;
(ii) "Environmental Laws" means any and all federal, state, local
and foreign law (including common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit, or
governmental restrictions or any agreement with any Governmental Authority
or other third party, relating to human health and safety, the environment
or to pollutants, contaminants, wastes or chemicals or toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substances, wastes or
materials, in each case to the extent in effect on February 27, 2000;
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(iii) "Environmental Liabilities" means any and all liabilities of or
relating to the Vermont Entities of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, which (A) have
arisen under or relate to matters covered by Environmental Laws and (B)
have arisen from actions occurring or conditions existing on or prior to
the Closing; and
(iv) "Hazardous Substances" means any pollutant, contaminant, waste or
chemical or any toxic, radioactive, corrosive, reactive or otherwise
hazardous substance, waste or material, or any substance having any
constituent elements displaying any of the foregoing characteristics,
including, without limitation, petroleum, its derivatives, by-products and
other hydrocarbons, or any substance, waste or material regulated under any
Environmental Laws.
4.12 FINANCIAL STATEMENTS. VCG has previously furnished Buyer with a true
and complete copy of the audited consolidated balance sheets of VCG as of
December 31, 1999 and the related audited statements of income for the fiscal
year then ended including the notes thereto (the "Audited Vermont Financial
Statements"). Subject to the elimination of transactions and balances between
the Vermont Entities, the Audited Vermont Financial Statements present fairly in
all material respects the financial position of the Vermont Entities results of
operations and changes in financial position and the income of the Business for
the period ended on the date thereof in conformity with generally accepted
accounting principles in the United Kingdom, applied on a consistent basis.
There are no debts, liabilities or obligations of any kind, whether accrued or
fixed, absolute or contingent, matured or unmatured or determined or
determinable, to the extent required by GAAP to be reflected on financial
statements ("Liabilities") of any Vermont Entity, other than Liabilities (i)
reflected or reserved against on the Audited Vermont Financial Statements or
(ii) incurred in the ordinary course of business, consistent with the past
practices of the Vermont Entities, since December 31, 1999, provided, however,
that to the extent any such Liabilities exist, they shall be offset against any
assets reflected on the Audited Vermont Financial Statements which are later
determined to have a greater value than as reflected thereon.
4.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in Section
4.13 of the Disclosure Schedule, since the date of the Audited Vermont Financial
Statements there has not been any event, change or effect which has had or would
reasonably be expected to have a Material Adverse Effect in the financial
condition, properties, business, results of operations or, to the Knowledge of
Seller, prospects of the Vermont Entities taken as a whole. None of the Vermont
Entities are currently in default on any installment or installments on
indebtedness for borrowed money, or on any rental payment on any long-term
lease.
4.14 ABSENCE OF CHANGES. Except as set forth in Section 4.14 of the
Disclosure Schedule, since the date of the Audited Vermont Financial Statements,
the Business has been operated in the ordinary course, and there has not been
incurred, nor has there occurred:
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(a) Any material damage, destruction or loss (whether or not covered by
insurance), adversely affecting the Business or any of the material Assets;
(b) Any issuance, declaration, setting aside or payment of any dividend or
other distribution of cash or property on any of the capital stock of any
Vermont Entity, or any direct or indirect redemption, purchase or other
acquisition of any shares of capital stock of any Vermont Entity or any
agreement or commitment by any Vermont Entity to do so;
(c) Any strikes, work stoppages or other material labor disputes involving
any Employees;
(d) Any sale, transfer or other disposition of any of the Assets, except
for sales made in the ordinary course of business;
(e) Any amendment, termination, waiver or cancellation of any Material
Agreement included in the Assets, or of any right or claim thereunder;
(f) Any (i) general uniform increase in the compensation of the Employees
of the Vermont Entities (including, without limitation, any increase pursuant to
any bonus, pension, profit sharing or other plan or commitment), other than in
the ordinary course of business and consistent with past practice, (ii) increase
in any compensation payable by any Vermont Entity to any officer, director,
Employee, consultant or agent of any Vermont Entity, other than in the ordinary
course of business and consistent with past practice, (iii) loan or commitment
therefor made by any Vermont Entity to any officer, director, stockholder,
Employee, consultant or agent of a Vermont Entity, (iv) grant of any severance
or termination pay to any director, officer or Employee of any Vermont Entity,
or (v) entering into any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or Employee or any Vermont Entity.
(g) Any change in the accounting methods, procedures or practices followed
by the Vermont Entities;
(h) Any material change in policies, operations or practices of the Vermont
Entities, including, without limitation, with respect to selling methods,
returns, discounts or other terms of sale, as well as payments of liabilities;
(i) Any sales contracts or commitments which will be materially in excess
of the capacity of the Vermont Entities as of the Closing Date;
(j) Any purchase contracts or commitments materially in excess of the
requirements of the Business in the ordinary course;
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(k) Except as contemplated by clause (i) of Section 5.8 hereof, any
capital appropriation, expenditure or commitment therefor by the Vermont
Entities;
(l) Except as contemplated by clauses (ii) and (iii) of Section 5.8
hereof and except with respect to the Severance Plans, any material change in
policies, operations or practices of the Vermont Entities concerning the
Employees thereof, including, without limitation, with respect to any Employee
fringe Benefit Plans;
(m) Any event, occurrence or development within the control of VCG
and the Vermont Entities which has, or would reasonably be expected to have a
Material Adverse Effect;
(n) Any creation or assumption by any Vermont Entity of any
Encumbrance on any Asset other than in the ordinary course of business,
consistent with past practice;
(o) Any making of any loan, advance or capital contribution to or
investment in any person by any Vermont Entity, involving an amount in excess of
Two Hundred Thousand Dollars ($200,000);
(p) Any making or rescission of any material express or deemed
election relating to Taxes, settlement or compromise of any material claim,
action, suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes, or except as may be required by applicable law,
made any change to any of its material methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of its most recently filed federal and foreign income tax returns;
and
(q) Any agreement, whether in writing or otherwise, for any Vermont
Entity to take any of the actions enumerated in this Section 4.14 or any other
material action outside of the ordinary course of business.
4.15 TAX MATTERS. Except as will be disclosed not later than March 26,
2000 in a Schedule 4.15:
(a)(i) each U.S. Vermont Entity (as defined below) utilizes the
accrual method of accounting for computing its federal income Tax liability;
(ii) to the Knowledge of Seller, all Returns required to be filed by or on
behalf of any Vermont Entity have been timely filed in accordance with all
applicable laws (including allowance for extension of time to file); (iii) to
the Knowledge of Seller, such Returns are true, correct and complete in all
material respects (excluding, however, any inaccuracy the correction of which
would not cause a net Tax deficiency on such Returns); (iv) all Taxes shown on
such Returns as due and payable have been paid; (v) each Vermont Entity has
maintained with respect to transfer pricing proper intercompany agreements and
concurrent and supporting documentation as required under OECD guidelines, such
that no transfer pricing amounts will be denied as deductions in any
jurisdiction by reason of a lack of proper agreements or
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supporting documentation; (vi) there are no agreements or consents currently in
effect with any Taxing Authority for the extension or waiver of the time (A) to
file any Return or (B) for assessment or collection of any Taxes relating to the
income, properties, employees or operations of the Vermont Entities, or (C) for
the retention of records, documents or Returns; (vii) to the Knowledge of
Seller, all Taxes which the Vermont Entities are required by law to withhold or
collect have been duly withheld or collected, and have been timely paid over to
the appropriate Taxing Authority to the extent due and payable; and (viii) to
the Knowledge of the Seller, no power of attorney with respect to any Tax matter
of any Vermont Entity is currently in force.
(b) Each Vermont Entity that is a U.S. corporation (a "U.S. Vermont
Entity"), or is a non-U.S. corporation but is engaged in trade or business in
the United States, has filed all reports and has created and/or retained all
records required under Code Section 6038A with respect to its ownership by and
transactions with related parties. Each related foreign person required to
maintain records under Code Section 6038A with respect to transactions between
such Vermont Entity and the related foreign person has maintained such records.
All documents that are required to be created and/or preserved by the related
foreign person with respect to transactions with any such Vermont Entity are
either maintained in the United States, or such Vermont Entity is exempt from
the record maintenance requirements of Code Section 6038A with respect to such
transactions under Treasury Regulation Section 1.6038A-1. No such Vermont Entity
is a party to any record maintenance agreement with the Internal Revenue Service
with respect to Code Section 6038A.
(c) There is no action, suit, proceeding, investigation, audit or claim
currently pending or, to the Knowledge of Seller, threatened, regarding any
Taxes relating to the income, properties or operations of the Vermont Entities.
(d) No U.S. Vermont Entity (i) nor any Person on behalf of any U.S. Vermont
Entity has (A) executed or entered into a closing agreement pursuant to Code
Section 7121 (or any similar provision of U.S. state or local law) that is
currently in force and determines the Tax liabilities of the U.S. Vermont
Entities or (B) agreed to or is required to make any adjustments pursuant to
Code Section 481(a) by reason of a change in accounting method initiated by (or
on behalf of) any U.S. Vermont Entity, nor does VCG have knowledge that any
Taxing Authority has proposed any such adjustment or change in accounting
method, nor does any U.S. Vermont Entity have any application pending with any
Taxing Authority requesting permission for any changes in accounting methods
that relate to the business or operations of any of the U.S. Vermont Entities or
(ii) is subject to any private letter ruling of the Internal Revenue Service nor
is any request for such a ruling pending with the Internal Revenue Service.
(e)(i) No Vermont Entity has executed or entered into a binding agreement
with a non-U.S. Taxing Authority, similar to a Closing Agreement pursuant to US
Code Section 7121, that is currently in force and will determine the Tax
Liability of such Vermont Entity for any period ending after the Closing Date;
and (ii) to the Knowledge of Seller, no Vermont Entity is subject to any written
ruling addressed to it by a non-U.S. Taxing Authority, comparable to a private
letter
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ruling of the Internal Revenue Service, nor has any such ruling been requested.
(f) No Vermont Entity (i) is treated for any taxation purpose as
resident in a country other than the country of its incorporation or (ii) has
been subject to a claim by a Taxing Authority in a jurisdiction where a Vermont
Entity does not file Returns that it is or may be subject to taxation by that
jurisdiction.
(g) None of the Vermont Entities (i) has entered into any tax
sharing or similar agreement or arrangement (whether or not written and
including without limitation any arrangement under which tax losses or tax
reliefs are surrendered or claimed or agreed to be surrendered or claimed)
pursuant to which it will have any obligation to make any payments after the
Closing with respect to any period commencing after December 31, 1999, or (ii)
is liable to taxation chargeable primarily on any other company which is not a
Vermont Entity.
(h) There are no liens for any Tax on the assets of the Vermont
Entities except for taxes not yet due and payable.
(i) No Vermont Entity will be subject to a clawback of any Irish
stamp duty relief claimed under the Irish stamp duty legislation nor any
capital gains tax deferred under the Irish Taxes Acts by virtue of the entering
into and/or completion of this Agreement. To the Knowledge of Seller (limited,
however, to actual knowledge), no charge to taxation will arise on, nor will
any gain or loss otherwise be recognized by, any Vermont Entity by virtue of
the entering into and/or completion of this Agreement (excluding any charge to
taxation that would not arise, and gain or loss that would not be recognized,
but for an action of the Buyer after the Closing Date, including, without
limitation, an election under Code Section 338).
(j) To the Knowledge of Seller, each Vermont Entity is duly
registered in any country or jurisdiction where it could legally be subject to
the collection or payment of value added Tax ("VAT").
(k) Complete and correct copies of the Returns set forth in Schedule
4.15 (to be provided not later than March 26, 2000) were made available to the
Buyer and Communications prior to the date of this Agreement.
(l) There is no contract, agreement, plan or arrangement of any
Vermont Entity covering any person that, individually or collectively, will
give rise to the payment of any amount that would not be deductible by Buyer or
its Affiliates by reason of Code Sections 280G or 162(m).
(m) None of the U.S. Vermont Entities (i) is required to treat any
of their assets as owned by another person pursuant to the "safe harbor"
leasing provisions of the Code, (ii) owns assets that are "tax-exempt use
property" within the meaning of Code Section 168(h), "tax-exempt
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bond financed property" within the meaning of Code Section 168(g), "limited use
property" (as that term is defined in Rev. Proc. 76-30) or security for debt
the interest on which is tax-exempt under Code Section 103(a) or (iii) is
required to apply any of the foregoing rules under any comparable U.S. state or
local Tax provision.
(n) No (i) U.S. Vermont Entity nor any other Person on behalf of any U.S.
Vermont Entity has filed a consent pursuant to Code Section 341(f) or any
comparable foreign, state or local Tax provision or agreed to have Code Section
341(f)(2) or any comparable foreign, state or local Tax provision apply to any
disposition of a subsection (f) asset (as such term is defined in Code Section
341(f)(4)) owned by a Vermont Entity and (ii) UK Vermont Entity has acquired
any of its assets by virtue of a transfer from a group company under Section
171 of the UK Taxation of Chargeable Gains Act 1992.
(o) No claim has been made under Section 152 of the UK Taxation of
Chargeable Gains Act 1992 that affects the amount of the consideration which
would be allowable under Section 8 of such Act on a disposal of an asset by a
Vermont Entity.
(p) No Vermont Entity has at any time after April 6, 1965 repaid, redeemed
or purchased or agreed to repay, redeem or purchase, or granted an option under
which it may become liable to purchase, any shares of any class of its share
capital nor has any Vermont Entity after that date capitalized or agreed to
capitalize in the form of shares or debentures any profits or reserves of any
class or description or otherwise issued or agreed to issue any share capital
other than for the receipt of a new consideration (within the meaning of Part VI
of the UK Income and Corporation Taxes act 1988) or passed or agreed to pass any
resolution to do so.
(q) No indebtedness of any U.S. Vermont Entity is "corporate acquisition
indebtedness" within the meaning of Code Section 279(b), an "applicable high
yield discount obligation" within the meaning of Code Section 163(i) or debt on
which any portion of the interest thereon is "disqualified interest" within the
meaning of Code Section 163(h).
(r) None of the Vermont Entities is or has ever been a "United States
real property holding corporation," a "controlled foreign corporation," a
"personal holding company," a "foreign personal holding company," a "foreign
investment company," or a "passive foreign investment company," as each of
those terms is defined in the U.S. Code. None of the Vermont Entities would,
for 1999, have constituted a foreign investment company or a passive foreign
investment company had it had U.S. shareholders.
(s) None of the U.S. Vermont Entities has participated in, or cooperated
with, an "international boycott" within the meaning of Code Section 999.
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(t) Each Vermont Entity that is incorporated in Ireland or is engaged
in a trade or business in Ireland (an "Irish Vermont Entity") has (a) delivered
a notice of particulars to the Irish Revenue pursuant to Section 882 of the
Taxes Consolidation Act 1997 and (b) complied with the provisions of Chapter 8A
of the Taxes Consolidation Act 1997 in respect of all dividends paid and
distributions made.
(u) No Irish Vermont Entity (a) will be required to make any payment
under Section 411 of the Taxes Consolidation Act 1997 for the trading losses
surrendered in excess of the amount surrendered or (b) has made any disposals of
capital assets which would require Irish Revenue clearance under Section 980 of
the Taxes Consolidation Act 1997.
4.16 COMPLIANCE WITH LAWS, ETC. To the Knowledge of Seller, except with
respect to Environmental Laws, compliance with which is the subject of Section
4.11 hereof: (i) the Vermont Entities are in compliance with (A) all applicable
Laws and (B) all applicable orders, writs, judgments, injunctions, decrees and
similar commands of Governmental Authorities and all decisions and awards of any
arbitration panel or tribunal, except in each case where noncompliance would
have a Material Adverse Effect; and (ii) except as set forth in Section 4.16 of
the Disclosure Schedule, since the date of the Audited Vermont Financial
Statements, the Vermont Entities have not received any notification of any
asserted present or past failure by it to comply with such Laws or such orders,
writs, judgments, injunctions or decrees.
4.17 LITIGATION REGARDING THE VERMONT ENTITIES. Except as set forth in
Section 4.17 of the Disclosure Schedule, there are no (i) civil or criminal
actions, suits, claims, investigations or legal or administrative or
arbitration (or other binding alternative dispute resolution) proceedings
pending or, to the Knowledge of Seller, threatened against any Vermont Entity or
any of the Assets that seek damages in excess of $25,000 or which seek equitable
relief, or (ii) orders, writs, judgments, injunctions, decrees, awards or
similar commands of any Governmental Authority, or any arbitration tribunal or
panel, applicable to any Vermont Entity, except, in each case in this Section
4.17(ii), for those orders, writs, judgments, injunctions, decrees, awards or
similar commands which would not have Material Adverse Effect.
4.18 PERMITS, ETC. Set forth in Section 4.18 of the Disclosure Schedule is
a list of all material governmental licenses, permits, certificates or
inspection, other authorizations, filings and registrations which are necessary
for the Vermont Entities to own and operate the Business and Assets as presently
operated in all material respects (collectively, the "Authorizations"). All the
Authorizations have been duly and lawfully secured or made by UBIBV and are in
full force and effect and the Vermont Entities are in material compliance with
all such Authorizations. There are no proceedings pending or, to the Knowledge
of Seller, threatened to revoke or limit any Authorization. None of VCG or the
Vermont Entities have received notice of any violation of any Authorization.
Except as set forth in Section 4.18 of the Disclosure Schedule, none of the
transactions contemplated by this Agreement will terminate, violate or limit the
effectiveness of any of the Authorizations. The Vermont Entities have made, in a
timely manner, all material filings,
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reports, notices and other communications with the appropriate Governmental
Authority, and have otherwise taken, in a timely manner, all other action
required to be taken by them, reasonably necessary to secure the renewal of the
Authorizations prior to the dates of their respective expirations.
4.19 EMPLOYEES; LABOR RELATIONS. (a) Except as set forth in Section 4.19
of the Disclosure Schedule (i) the Vermont Entities (A) are not delinquent in
the payment to or on behalf of any past or present Employees of the Vermont
Entities of any wages, salaries, social security premiums, commissions,
bonuses, benefit plan contributions or other compensation (including without
limitation disability compensation) for all periods prior to February 27, 2000
and (B) are not delinquent in the payment of any amount which is due and
payable to any state or state fund pursuant to any workers' compensation
statute, rules or regulations or any amount which is due and payable to any
workers' compensation claimant or any other party arising under or with respect
to a claim that has been filed under state workers' compensation statutes and
approved in the ordinary course in accordance with the policies of the Vermont
Entities regarding workers' compensation and/or any applicable state statute or
administrative procedure; (ii) there is no labor strike, slowdown or work
stoppage in progress against any Vermont Entity; (iii) no collective bargaining
agreement currently exists or is currently being negotiated by any Vermont
Entity; (iv) to the Knowledge of Seller, there has been no request to any
Vermont Entity for collective bargaining on behalf of any Employees not
represented currently by a union or from the National Labor Relations Board in
respect of any Employees of any Vermont Entity; (v) to the Knowledge of Seller,
no union representation or jurisdictional dispute or question exists respecting
any Employees of any Vermont Entity; (vi) no material dispute exists between
any Vermont Entity and any of their respective sales representatives or, to the
Knowledge of Seller, between any such sales representatives with respect to
territory, commissions, products or any other terms of their representation;
and (vii) to the Knowledge of Seller, there has been no "mass layoff" or "plant
closing" as defined by WARN with respect to any of the Vermont Entities within
the six (6) months prior to Closing.
(b) With respect to Pix SA and iSwoop EURL, and since the respective
dates of incorporation thereof, all employer contributions payable to any state
social security agency (including, without limitation, L'Union pour le
Recouvrement des cotisations de Securite Sociale et d'Allocations Familiales)
have been paid in a timely manner.
4.20 EMPLOYEE BENEFITS.
(a) Benefits Plans. Section 4.20(a) of the Disclosure Schedule lists each
employee benefit plan (within the meaning of Section 3(3) of ERISA) consulting
or other compensation agreements, incentive, equity or equity-based
compensation, severance pay, sick leave, vacation pay, salary continuation for
disability, retirement benefits scheme (within the meaning of Section 611 of
the UK Income and Corporation Taxes Act 1988 (the "Taxes Act") personal pension
scheme (within the meaning of Section 630 of the Taxes Act) pension or
superannuation arrangement stock purchase plan, stock option plan, fringe
benefit plan, bonus plan and any other deferred compensation
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agreement or plan or funding arrangement which covers any Employee immediately
prior to Closing and which is sponsored or maintained or to which contributions
are required to be made by (i) UBIBV or VCG or (ii) any other organization which
is a member of a controlled group of organizations (within the meanings of
Sections 414(b), (c), (m) or (o) of the Code) or an associated employer (within
the meaning of Section 590A(3) or (4) of the Texas Act) of which VCG is a member
(the "Controlled Group"), such plans described in this sentence being referred
to collectively as the "Benefit Plans." Except as set forth on Section 4.20(a)
of the Disclosure Schedule, there are no material employee plans, arrangements,
benefit programs or similar plans which cover Employees immediately prior to
Closing. Schedule 4.20(a) separately set forth each Benefit Plan which is a
multiemployer plan, as defined in Section 3(37) of ERISA ("Multiemployer Plan"),
or is or has been subject to Sections 4063 or 4064 of ERISA ("Multiple Employer
Plans").
(b) Documents Furnished. VCG has made available to Buyer and Communications
a current, accurate and complete copy of each Benefit Plan specified in Section
4.20(a) of the Disclosure Schedule and, to the extent applicable, copies of the
most recent:
(i) determination letter or outstanding request for a determination
letter with respect to Benefit Plans intended to be qualified under Section
401(a) of the Code or, as the case may be, Chapters I or IV Part XIV or the
Taxes Act; and
(ii) Form 5500 with respect to all Benefit Plans, as applicable, for
which separate Form 5500's are filed, with all attachments and schedules
thereto.
(c) VCG has made available to Buyer and Communications copies of all
agreements, trust deeds and rules currently governing the UK Benefit Plans
together with copies of explanatory literature issued to members of the UK
Benefit Plans and a list of the Employees who are members of the UK Benefit
Plans with all details relevant to their membership including the basis upon
which their entitlements to benefits are calculated.
(d) Except as set forth on Section 4.20(c) of the Disclosure Schedule, for
each Benefit Plan specified below, the following is true:
(i) each such Benefit Plan which is intended to qualify under Section
401(a) of the Code as the case may be, Chapters I or IV Part XIV or the
Taxes Act has received a favorable determination letter as to its
qualification under the Code or the Taxes Act, and to the Knowledge of
Seller nothing has occurred, whether by action or failure to act, which
would cause the loss of such qualification;
(ii) with respect to all Benefit Plans, there are no actions, suits or
claims (other than routine claims for benefits in the ordinary course)
pending, and to the Knowledge of Seller there are no threatened actions,
suits or claims (other than routine claims for benefits in the ordinary
course);
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(iii) each of the Benefit Plans is, and its administration is and has
been since inception, in compliance with ERISA and the Code or equivalent UK
laws and regulation, except for such failures to comply which could not
reasonably be expected to have a Material Adverse Effect on the Business;
(iv) all contributions and other payments required to be made by
UBIBV, VCG or any Vermont Entity to any Benefit Plan under the terms of such
Benefit Plan in respect of Employees for any period ending on the Closing have
been made;
(v) no employer securities, employer real property or other employer
property is included in the assets of any Benefit Plan;
(vi) no assurance, promise or guarantee (oral or written) has been
made or given to an employee who is a member of a UK Benefit Plan of any
particular kind or amount of benefits (other than insured death in service
benefits) to be provided for or in respect of him on retirement, death or
leaving service;
(vii) Buyer will not have (x) any obligation to make any contribution
to any Multiemployer Plan under which VCG or the Controlled Group had
contribution obligations prior to the Closing Date or (y) any withdrawal
liability from any such Multiemployer Plan under Section 4201 of ERISA;
(viii) there has been no "reportable event" as that term is defined
in Section 4043 of ERISA and the regulations thereunder with respect to the
Benefit Plans which would require the giving of notice or any event requiring
disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA;
(ix) none of the VCG nor the Controlled Group has terminated any
Benefit Plan, or incurred any outstanding liability under Section 4062 of ERISA
to the PBGC, or to a trustee appointed under Section 4042 of ERISA. All
premiums due to the PBGC with respect to the Benefit Plans have been paid;
(x) neither VCG nor the Controlled Group or any organization to which
UBIBV is a successor parent corporation, within the meaning of Section 4069(b)
of ERISA, has engaged in any transaction, within the meaning of Section 4069 of
ERISA; and
(xi) none of the Benefit Plans which are "welfare benefit plans"
within the meaning of Section 3(1) of ERISA provide for continuing benefits or
coverage for any participant or any beneficiary or a participant
post-termination of employment, except as may be required under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") or
benefits at the expense of the participant or the participant's beneficiary and
each of UBIBV and the Controlled Group which maintains a "group health plan"
within the meaning of Section 5000(b)(1)
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of the Code has complied with the notice and continuation requirements of
Section 4980B of the Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and
the regulations thereunder, except for such failures to comply which could not
reasonably be expected to have a Material Adverse Effect on the Business.
(e) No Changes. Except as set forth in Section 4.20 of the
Disclosure Schedule, on or after February 27, 2000 and before the Closing, no
Benefit Plan as it affects the Employees has been, or will be (i) amended in
any manner which would materially increase the benefits accrued, or which may
be accrued, by any participating or sponsoring employer thereunder or (ii)
amended in any manner which would increase the cost to UBIBV, VCG or any
Vermont Entity, or Buyer or Communications of maintaining such Benefit Plan
except to the extent required by law.
4.21 POWERS OF ATTORNEY. On the Closing Date, there will be no persons,
firms, associations, corporations or business organizations or entities holding
general or special powers of attorney from any Vermont Entity.
4.22 AGREEMENTS, ETC. Set forth in Section 4.22 of the Disclosure Schedule
is a list of all of the following contracts, agreements, documents,
instruments, understandings or arrangements, written or oral, included in the
Assets (collectively, the "Material Agreements"):
(a) Contracts involving the expenditure of more than Two Hundred
Thousand Dollars ($200,000) in any instance for the purchase of materials,
supplies, equipment or services, specifying those which are not cancelable on
thirty (30) days notice without penalty;
(b) Collective Bargaining Agreements with labor unions;
(c) Contracts and agreements relating to the leasing (as lessor or
lessee) or to the conditional purchase or sale of any property, real, personal
or mixed in excess of Two Hundred Thousand Dollars ($200,000) per year;
(d) Indentures, mortgages, promissory notes, loan agreements,
capital leases, security agreements, or other agreements or commitments for the
borrowing of money, or the purchase of assets involving deferred payments (in
the latter case, involving payments in excess of Two Hundred Thousand Dollars
per year), or which otherwise evidence indebtedness for borrowing or which
create an Encumbrance on any of the Assets;
(e) Guarantees of the obligations of a third party or agreements to
indemnify third parties;
(f) Individual employment, severance or consulting agreements or
arrangements under which payments were in excess of Two Hundred Thousand Dollars
($200,000) during 1999 or are reasonably projected to exceed Two Hundred
Thousand Dollars ($200,000) in 2000;
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<PAGE> 73
(g) Distributor, dealer, sales, advertising, agency, manufacturer's
representative, franchise or similar contracts or any other contract relating to
the payment of a commission under which payments were in excess of Two Hundred
Thousand Dollars ($200,000) during 1999 or are reasonably projected to exceed
Two Hundred Thousand Dollars ($200,000) in 2000;
(h) contracts granting a right of first refusal or first negotiation
with respect to the capital stock of any Vermont Entity;
(i) partnership or joint venture agreements with unaffiliated third
parties;
(j) agreements for the acquisition, sale or lease of material
properties or assets of any Vermont Entity since December 31, 1996 which involve
payments in excess of Two Hundred Thousand Dollars ($200,000) per year;
(k) agreements that purport to limit, curtail or restrict the ability
of any Vermont Entity to compete in any geographic area or line of business,
except for exclusive distributor or agency agreements pursuant to which a
Vermont Entity is not the distributor or agent;
(l) agreements between any Vermont Entity, on the one hand, and UBIBV
or Affiliate of UBIBV, or any officer, director or Employee of any Vermont
Entity, on the other hand;
(m) contracts or agreements with any Governmental Authority which
involve payments in excess of Two Hundred Thousand Dollars ($200,000) per year;
and
(n) agreements relating to the license, purchase, right to use or
other supply of still photographic images to any Vermont Entity which involve
payments in excess of Two Hundred Thousand Dollars ($200,000) per year.
True copies of all written Material Agreements, described on Section 4.22
of the Disclosure Schedule have been furnished to the Buyer and Communications.
Each of the Material Agreements constitutes a valid and binding obligation of
the Vermont Entity party thereto, enforceable in accordance with its terms and
is valid and in full force and effect and, except as set forth in Section 4.22
of the Disclosure Schedule, the transactions contemplated hereby will not
require the consent of any party thereto or otherwise adversely affect the
validity and effectiveness thereof. The Vermont Entities are not in default in
any material respect or alleged to be in default in any material respect under
any Material Agreement nor, to the Knowledge of Seller, is any other party to
any of the Material Agreements in default of any of its obligations thereunder.
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4.23 CERTAIN MATTERS CONCERNING PIX.
(a) Pix SA is the resultant company from the merger by absorption of
Photographie Giraudon SA by Pix SA having as its effective date January 1, 1999
(the "Merger"). VCG further represents that the Merger (in particular, any and
all assessments or valuations made in connection therewith) was effected in
compliance with applicable French law and that the Merger has been duly
consummated, with retroactive effect to January 1, 1999, and is therefore valid
and opposable to third parties. Without in any way limiting the generality of
the foregoing, prior to the Merger, the share transfer agreement between Visual
Communications Group Limited and Photographie Giraudon SA dated 30 November,
1999, was validly made and duly filed with the clerk's office of the relevant
Commercial Court in a timely manner and that, with respect to the Merger, the
following formalities were duly complied with in a timely matter:
(i) consultation of workers' councils;
(ii) draft merger agreement approved by the boards;
(iii) appointment by the Court of a merger auditor;
(iv) filing of draft merger agreement with the Commercial Court;
(v) publication in a legal newspaper;
(vi) appropriate notice to shareholders;
(vii) appropriate notice to creditors;
(viii) special report of the boards; and
(ix) special report of the merger auditor.
(b) The actual net value of the assets of Photographie Giraudon SA
transferred to Pix SA pursuant to the Merger as compared to the net value of
said assets as valued in the Merger does not require adjustment or correction
to Pix SA's share capital as presently stated.
(c) Subsequent to the Merger, Pix SA had no off-balance sheet
liabilities other than those disclosed in Section 4.23 of the Disclosure
Schedule.
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4.24 INSURANCE. Section 4.24 of the Disclosure Schedule sets forth a list
of insurance policies (including information on the premiums payable in
connection therewith and the scope and amount of the coverage provided
thereunder) maintained by any Vermont Entity, which policies have been issued
by insurers which, to the Knowledge of Seller, are reputable and financially
sound and provide coverage for the operations conducted by the Vermont Entities
of a scope and coverage consistent with customary industry practice.
4.25 ADDITIONAL REPRESENTATIONS OR WARRANTIES. Except as expressly set
forth in Section 3.1 and in Sections 4.1 through 4.24 hereof or in the
certificates, annexes, Exhibits and Schedules hereto, VCG makes no
representations or warranties to Buyer or Communications (including, without
limitation, no representations or warranties with respect to financial
projections), express or implied, and no representations or warranties by
UBIBV, VCG or Unicorn to Buyer and Communications shall be deemed to arise
hereafter except as set forth (i) in this Agreement and the documents
contemplated hereby including any certificates, annexes or schedules executed
and/or delivered at the Closing by UBIBV and VCG or (ii) in documents otherwise
delivered by UBIBV and VCG to Buyer or Communications on or after the date of
this Agreement that have been executed by UBIBV and VCG and which expressly
makes representations and warranties to Buyer and Communications.
**************
[Remainder of Page Intentionally Left Blank]
69
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PENSION SCHEDULE
1. In this Schedule the following words shall, unless the context otherwise
requires, have the following meanings:
"APPROVAL" approval by the Board of Inland Revenue as
an exempt approved scheme for the purposes
of Chapter 1 of Part XIV of the Income and
Corporation Taxes Act 1988;
"THE EMPLOYEE MEMBERS" those employees and directors of the
Vermont Entities who are active members of
the UNM Plans at Closing (with the
exception of those Employees who are
members of the UNM Plans for life assurance
benefits only);
"THE PENSION TRANSFER DATE" 1 June 2000 or such other date as is
agreed in writing by UBIBV and Buyer;
"THE TRANSITIONAL PERIOD" the period commencing on the day
immediately following Closing and ending
on the day immediately preceding the
Pension Transfer Date; and
"THE UNM PLANS" each of:
(a) the United Money Purchase Pension
Plan;
(b) the United Pension Plan; and
(c) the United Magazines Final Salary
Pension Scheme.
2. UBIBV and Buyer shall use their reasonable endeavors to procure the
continued participation of the Vermont Entities in the UNM Plans during
the Transitional Period for the purpose of the continued membership of
the Employee Members.
3. Buyer undertakes that during the Transitional Period the relevant
Vermont Entities will:
3.1 pay contributions determined in accordance with the Rules of the UNM
Plans to the Trustees of the UNM Plans by no later than the 14th day of
the month following that in which the relevant contributions are due;
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<PAGE> 77
3.2 in respect of life assurance benefits for Employee Members of the United
Money Purchase Pension Plan and the United Pension Plan, pay contributions
equal to 0.5% of pensionable pay to the Trustees of those Plans;
3.3 in respect of Mr C Baxendale, pay to the trustees of the United Magazines
Final Salary Pension Scheme employer contributions at the rate of 13.1% and
employee contributions at the rate of 5% of his pensionable pay;
3.4 not do or omit to do any act or thing which would or might prejudice the
Approval of the UNM Plans or the contracted-out status of the United
Magazines Final Salary Pension Scheme;
3.5 cooperate with UBIBV to ensure that Mr C Baxendale continues to be in
contracted out employment in respect of the United Magazines Final Salary
Pension Scheme.
4. UBIBV undertakes that during the Transitional Period it will take no
voluntary action and shall use its reasonable endeavours to procure that no
action is taken to wind-up the UNM Plans or alter the provisions of the UNM
Plans to the detriment of the Employee Members or Buyer or the Vermont
Entities without the prior written consent of Buyer which will not be
withheld unreasonably.
5. Buyer shall arrange for those of the Employee Members who are still in the
employment of the Vermont Entities on the Pension Transfer Date to be
offered membership of a group personal pension arrangement with effect from
the Pension Transfer Date.
6. Notwithstanding that an Employee Member may not have been a member of a UNM
Plan for two years and therefore have no legal entitlement to preserved
benefits under Chapter IV of the Pension Schemes Act 1993, the UBIBV shall
use its reasonable endeavours to procure that the trustees of the relevant
UNM Plan will treat such an Employee Member as being so entitled.
7. UBIBV hereby agrees with Buyer (contracting for itself and as trustee for
the Vermont Entities) to indemnify Buyer and the Vermont Entities against
all losses, costs, expenses, damages, liabilities, demands, claims, actions
and proceedings which may be suffered or incurred by or made or brought
against Buyer or the Vermont Entities directly or indirectly in connection
with or as a consequence of the application of section 75 of the Pensions
Act 1995 and any regulations made thereunder in relation to the United
Magazines Final Salary Pension Scheme.
71
<PAGE> 1
EXHIBIT 4.1
-----------------------------------------------
GETTY IMAGES, INC.
To
THE BANK OF NEW YORK,
as Trustee
---------------------------
INDENTURE
Dated as of
March 13, 2000
---------------------------
5% CONVERTIBLE SUBORDINATED NOTES DUE 2007
-----------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE 1. DEFINITIONS .................................................................... 1
Section 1.1. Definitions ....................................................... 1
ARTICLE 2. ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES .............. 8
Section 2.1. Designation, Amount And Issue Of Notes ............................ 8
Section 2.2. Form Of Notes ..................................................... 8
Section 2.3. Date And Denomination Of Notes; Payments Of Interest .............. 9
Section 2.4. Execution Of Notes ................................................10
Section 2.5. Exchange And Registration Of Transfer Of Notes; Restrictions
On Transfer; Depositary ...........................................11
Section 2.6. Mutilated, Destroyed, Lost Or Stolen Notes ........................18
Section 2.7. Temporary Notes ...................................................19
Section 2.8. Cancellation Of Notes Paid, Etc ...................................19
Section 2.9. CUSIP Numbers .....................................................19
ARTICLE 3. REDEMPTION OF NOTES ............................................................19
Section 3.1. Initial Prohibition On Redemption .................................19
Section 3.2. Notice Of Redemptions; Selection Of Notes .........................20
Section 3.3. Payment Of Notes Called For Redemption ............................22
Section 3.4. Conversion Arrangement On Call For Redemption .....................22
Section 3.5. Redemption At Option Of Holders ...................................23
ARTICLE 4. SUBORDINATION OF NOTES .........................................................25
Section 4.1. Agreement Of Subordination ........................................25
Section 4.2. Payments To Noteholders ...........................................25
Section 4.3. Subrogation Of Notes ..............................................28
Section 4.4. Authorization To Effect Subordination .............................29
Section 4.5. Notice To Trustee .................................................29
Section 4.6. Trustee's Relation To Senior Indebtedness .........................30
Section 4.7. No Impairment Of Subordination ....................................30
Section 4.8. Certain Conversions Not Deemed Payment ............................31
Section 4.9. Article Applicable To Paying Agents ...............................31
Section 4.10. Senior Indebtedness Entitled To Rely ..............................31
Section 4.11. Reliance On Judicial Order Or Certificate Of Liquidating Agent ....31
ARTICLE 5. PARTICULAR COVENANTS OF THE COMPANY ............................................32
Section 5.1. Payment Of Principal, Premium And Interest ........................32
</TABLE>
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<TABLE>
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Section 5.2. Maintenance Of Office Or Agency ..................................32
Section 5.3. Appointments To Fill Vacancies In Trustee's Office ...............33
Section 5.4. Provisions As To Paying Agent ....................................33
Section 5.5. Existence ........................................................34
Section 5.6. Maintenance Of Properties ........................................34
Section 5.7. Payment Of Taxes And Other Claims ................................34
Section 5.8. Rule 144A Information Requirement ................................34
Section 5.9. Stay, Extension And Usury Laws ...................................35
Section 5.10. Compliance Certificate ...........................................35
Section 5.11. Liquidated Damages Notice ........................................36
ARTICLE 6. NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE .................36
Section 6.1. Noteholders' Lists ...............................................36
Section 6.2. Preservation And Disclosure Of Lists .............................36
Section 6.3. Reports By Trustee ...............................................37
Section 6.4. Reports By Company ...............................................37
ARTICLE 7. REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT ................37
Section 7.1. Events Of Default ................................................37
Section 7.2. Payments Of Notes On Default; Suit Therefor ......................39
Section 7.3. Application Of Monies Collected By Trustee .......................41
Section 7.4. Proceedings By Noteholder ........................................41
Section 7.5. Proceedings By Trustee ...........................................42
Section 7.6. Remedies Cumulative And Continuing ...............................42
Section 7.7. Direction Of Proceedings And Waiver Of Defaults By Majority
Of Noteholders ...................................................42
Section 7.8. Notice Of Defaults ...............................................43
Section 7.9. Undertaking To Pay Costs .........................................43
ARTICLE 8. THE TRUSTEE ...................................................................44
Section 8.1. Duties And Responsibilities Of Trustee ...........................44
Section 8.2. Reliance On Documents, Opinions, Etc .............................45
Section 8.3. No Responsibility For Recitals, Etc ..............................46
Section 8.4. Trustee, Paying Agents, Conversion Agents Or Registrar May
Own Notes ........................................................46
Section 8.5. Monies To Be Held In Trust .......................................46
Section 8.6. Compensation And Expenses Of Trustee .............................46
Section 8.7. Officers' Certificate As Evidence ................................47
Section 8.8. Conflicting Interests Of Trustee .................................47
Section 8.9. Eligibility Of Trustee ...........................................47
Section 8.10. Resignation or Removal Of Trustee ................................48
Section 8.11. Acceptance By Successor Trustee ..................................49
</TABLE>
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<TABLE>
<S> <C>
Section 8.12. Succession By Merger, Etc ..........................................49
Section 8.13. Preferential Collection Of Claims ..................................50
Section 8.14. Trustee's Application For Instructions From The Company ............50
ARTICLE 9. THE NOTEHOLDERS .................................................................50
Section 9.1. Action By Noteholders ..............................................50
Section 9.2. Proof Of Execution By Noteholders ..................................51
Section 9.3. Who Are Deemed Absolute Owners .....................................51
Section 9.4. Company-Owned Notes Disregarded ....................................51
Section 9.5. Revocation Of Consents; Future Holders Bound .......................52
ARTICLE 10. MEETINGS OF NOTEHOLDERS ........................................................52
Section 10.1. Purpose Of Meetings ................................................52
Section 10.2. Call Of Meetings By Trustee ........................................52
Section 10.3. Call Of Meetings By Company Or Noteholders .........................53
Section 10.4. Qualifications For Voting ..........................................53
Section 10.5. Regulations ........................................................54
Section 10.6. Voting .............................................................54
Section 10.7. No Delay Of Rights By Meeting ......................................54
ARTICLE 11. SUPPLEMENTAL INDENTURES ........................................................54
Section 11.1. Supplemental Indentures Without Consent Of Noteholders .............54
Section 11.2. Supplemental Indenture With Consent Of Noteholders .................55
Section 11.3. Effect Of Supplemental Indenture ...................................56
Section 11.4. Notation On Notes ..................................................57
Section 11.5. Evidence Of Compliance Of Supplemental Indenture To Be
Furnished To Trustee ...............................................57
ARTICLE 12. CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE ..............................57
Section 12.1. Company May Consolidate, Etc. On Certain Terms .....................57
Section 12.2. Successor Corporation To Be Substituted ............................57
Section 12.3. Opinion Of Counsel To Be Given Trustee .............................58
ARTICLE 13. SATISFACTION AND DISCHARGE OF INDENTURE ........................................58
Section 13.1. Discharge Of Indenture .............................................58
Section 13.2. Deposited Monies To Be Held In Trust By Trustee ....................59
Section 13.3. Paying Agent To Repay Monies Held ..................................59
Section 13.4. Return Of Unclaimed Monies .........................................59
Section 13.5. Reinstatement ......................................................59
ARTICLE 14. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS ................60
</TABLE>
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<TABLE>
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Section 14.1. Indenture And Notes Solely Corporate Obligations ...................60
ARTICLE 15. CONVERSION OF NOTES ............................................................60
Section 15.1. Right To Convert ...................................................60
Section 15.2. Exercise Of Conversion Privilege; Issuance Of Common Stock On
Conversion; No Adjustment For Interest Or Dividends ................60
Section 15.3. Cash Payments In Lieu Of Fractional Shares .........................62
Section 15.4. Conversion Price ...................................................62
Section 15.5. Adjustment Of Conversion Price .....................................62
Section 15.6. Effect Of Reclassification, Consolidation, Merger Or Sale ..........71
Section 15.7. Taxes On Shares Issued .............................................72
Section 15.8. Reservation Of Shares; Shares To Be Fully Paid; Compliance
With Governmental Requirements; Listing Of Common Stock ............72
Section 15.9. Responsibility Of Trustee ..........................................73
Section 15.10. Notice To Holders Prior To Certain Actions .........................73
ARTICLE 16. MISCELLANEOUS PROVISIONS .......................................................74
Section 16.1. Provisions Binding On Company's Successors .........................74
Section 16.2. Official Acts By Successor Corporation .............................74
Section 16.3. Addresses For Notices, Etc .........................................74
Section 16.4. Governing Law ......................................................75
Section 16.5. Evidence Of Compliance With Conditions Precedent;
Certificates To Trustee ............................................75
Section 16.6. Legal Holidays .....................................................75
Section 16.7. Trust Indenture Act ................................................75
Section 16.8. No Security Interest Created .......................................76
Section 16.9. Benefits Of Indenture ..............................................76
Section 16.10. Table Of Contents, Headings, Etc ...................................76
Section 16.11. Authenticating Agent ...............................................76
Section 16.12. Execution In Counterparts ..........................................77
Section 16.13. Severability .......................................................77
</TABLE>
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Reconciliation and Tie Between the Trust Indenture Act of 1939, as amended, and
Indenture, dated as of March 13, 2000, between Getty Images, Inc. and The Bank
of New York, as Trustee.
<TABLE>
<CAPTION>
TRUST INDENTURE ACT SECTION INDENTURE SECTION
<S> <C>
Section 310(a)(1) ............................................................. 8.9
(a)(2) ................................................................ 8.9
(a)(3) ................................................................N.A.
(a)(4) ................................................................N.A.
(a)(5) ................................................................ 8.9
(b) ...................................................8.8; 8.9; 8.10; 8.11
Section 311(a) ................................................................8.13
(b) ...................................................................8.13
(b)(2) ................................................................8.13
Section 312(a) .........................................................6.1; 6.2(a)
(b) .................................................................6.2(b)
(c) .................................................................6.2(c)
Section 313(a) ..............................................................6.3(a)
(b) .................................................................6.3(a)
(c) .................................................................6.3(a)
(d) .................................................................6.3(b)
Section 314(a) .................................................................6.4
(b) .................................................................. N.A.
(c)(1) ............................................................... 16.5
(c)(2) ............................................................... 16.5
(c)(3) ............................................................... N.A.
(d) .................................................................. N.A.
(e) .................................................................. 16.5
Section 315(a) ........................................................ 8.1
(b) ................................................................... 7.8
(c) ................................................................... 8.1
(d) ................................................................... 8.1
(d)(1) ..............................................................8.1(a)
(d)(2) ..............................................................8.1(b)
(d)(3) ..............................................................8.1(c)
(e) ................................................................... 7.9
Section 316(a) ................................................................ 7.7
(a)(1)(A) ............................................................. 7.7
(a)(1)(B) ............................................................. 7.7
(a)(2) ................................................................N.A.
(b) ................................................................... 7.4
Section 317(a)(1) ............................................................. 7.5
(a)(2) ................................................................ 7.5
(b) ................................................................... 5.4
Section 318(a) ............................................................... 16.7
</TABLE>
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* Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
** Note: N.A. means Not Applicable.
<PAGE> 7
INDENTURE
INDENTURE, dated as of March 13, 2000, between Getty Images,
Inc., a Delaware corporation (hereinafter called the "Company"), having its
principal office at 701 N. 34th Street, Suite 400, Seattle, Washington 98103,
and The Bank of New York, a New York banking corporation, as trustee hereunder
(hereinafter called the "Trustee"), having its principal corporate trust office
at 101 Barclay Street, Floor 21 West, New York, New York 10286.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue of its 5% Convertible Subordinated Notes due 2007
(hereinafter called the "Notes"), in an aggregate principal amount not to exceed
$250,000,000 and, to provide the terms and conditions upon which the Notes are
to be authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture;
WHEREAS, the Notes, the certificate of authentication to be borne
by the Notes, a form of assignment, a form of option to elect repayment upon a
Fundamental Change, and a form of conversion notice to be borne by the Notes are
to be substantially in the forms hereinafter provided for; and
WHEREAS, all acts and things necessary to make the Notes, when
executed by the Company and authenticated and delivered by the Trustee or a duly
authorized authenticating agent, as in this Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute this Indenture a
valid agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the
Notes are, and are to be, authenticated, issued and delivered, and in
consideration of the premises and of the purchase and acceptance of the Notes by
the holders thereof, the Company covenants and agrees with the Trustee for the
equal and proportionate benefit of the respective holders from time to time of
the Notes (except as otherwise provided below), as follows:
ARTICLE 1.
DEFINITIONS
Section 1.1. Definitions. The terms defined in this Section 1.1
(except as herein otherwise expressly provided or unless the context otherwise
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section 1.1. All
other terms used in this Indenture that are defined in the Trust Indenture Act
or which are by reference therein defined in the Securities Act (except as
herein otherwise expressly provided or unless the context otherwise requires)
shall have the meanings assigned to such terms in said Trust Indenture Act and
in said Securities Act as in force at the date of the execution of this
Indenture. The words "herein", "hereof", "hereunder", and words of similar
<PAGE> 8
import refer to this Indenture as a whole and not to any particular Article,
Section or other Subdivision. The terms defined in this Article include the
plural as well as the singular.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person means the power to
direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Board of Directors" means the Board of Directors of the Company
or a committee of such Board duly authorized to act for it hereunder.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which the banking institutions in New York City
or the city in which the Corporate Trust Office is located are authorized or
obligated by law or executive order to close or be closed.
"Closing Price" has the meaning specified in Section 15.5(h)(1).
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" means any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Company and which is not subject to redemption by the Company. Subject to the
provisions of Section 15.6, however, shares issuable on conversion of Notes
shall include only shares of the class designated as common stock of the Company
at the date of this Indenture (namely, the Common Stock, par value $.01 per
share) or shares of any class or classes resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which are not subject to redemption
by the Company; provided, however, that if at any time there shall be more than
one such resulting class, the shares of each such class then so issuable shall
be substantially in the proportion which the total number of shares of such
class resulting from all such reclassifications bears to the total number of
shares of all such classes resulting from all such reclassifications.
"Company" means the corporation named as the "Company" in the
first paragraph of this Indenture, and, subject to the provisions of Article
Twelve, shall include its successors and assigns.
"Company Notice" has the meaning specified in Section 3.5(b).
"Conversion Price" has the meaning specified in Section 15.4.
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"Corporate Trust Office" or other similar term, means the
designated office of the Trustee at which at any particular time its corporate
trust business shall be principally administered, which office is, as of the
date of this Indenture, located at 101 Barclay Street, Floor 21 West, New York,
New York 10286, Attention: Corporate Trust Administration.
"Credit Agreement" means that certain Credit Agreement, dated as
of October 25, 1999 and as amended on December 3, 1999, among the Company,
certain of its subsidiaries, HSBC Investment Bank plc, as arranger, facility
agent and security agent, the financial institutions named therein and HSBC Bank
plc, as over-draft bank (including all deferrals, renewals, extensions or
refundings of, or amendments, modifications or supplements to, the foregoing).
"Custodian" means The Bank of New York, as custodian with respect
to the Notes in global form, or any successor entity thereto.
"Default" means any event that is, or after notice or passage of
time, or both, would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 2.3.
"Depositary" means, with respect to the Notes issuable or issued
in whole or in part in global form, the Person specified in Section 2.5(d) as
the Depositary with respect to such Notes, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depositary" shall mean or include such successor.
"Designated Senior Indebtedness" means Senior Indebtedness under
the Credit Agreement and the Company's obligations under any other particular
Senior Indebtedness in which the instrument creating or evidencing the same or
the assumption or guarantee thereof (or related agreements or documents to which
the Company is a party) expressly provides that such Senior Indebtedness shall
be "Designated Senior Indebtedness" for purposes of this Indenture (provided
that such instrument, agreement or other document may place limitations and
conditions on the right of such Senior Indebtedness to exercise the rights of
Designated Senior Indebtedness); provided that while the Credit Agreement shall
be outstanding, "Designated Senior Indebtedness" shall not include any Senior
Indebtedness other than Senior Indebtedness incurred in connection with the
Credit Agreement and Senior Indebtedness incurred in connection with the
Indebtedness described in clause (c) of the definition of "Indebtedness." If any
payment made to any holder of any Designated Senior Indebtedness or its
Representative with respect to such Designated Senior Indebtedness is rescinded
or must otherwise be returned by such holder or Representative upon the
insolvency, bankruptcy or reorganization of the Company or otherwise, the
reinstated Indebtedness of the Company arising as a result of such rescission or
return shall constitute Designated Senior Indebtedness effective as of the date
of such rescission or return.
"Event of Default" means any event specified in Section 7.1(a),
(b), (c), (d) or (e).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as in effect from
time to time.
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"Fundamental Change" means the occurrence of any transaction or
event in connection with which all or substantially all of the Common Stock
shall be exchanged for, converted into, acquired for or constitute solely the
right to receive consideration (whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) which is not all or substantially all common
stock listed (or, upon consummation of or immediately following such transaction
or event, which will be listed) on a United States national securities exchange
or approved for quotation on the Nasdaq National Market or any similar United
States system of automated dissemination of quotations of securities prices.
"Global Note" has the meaning set forth in Section 2.5(b).
"Indebtedness" means, with respect to any Person, and without
duplication, (a) all indebtedness, obligations and other liabilities (contingent
or otherwise) of such Person for borrowed money (including obligations of the
Company in respect of overdrafts, foreign exchange contracts, currency exchange
agreements, interest rate protection agreements, and any loans or advances from
banks, whether or not evidenced by notes or similar instruments) or evidenced by
bonds, debentures, notes or similar instruments (whether or not the recourse of
the lender is to the whole of the assets of such Person or to only a portion
thereof), other than any account payable or other accrued current liability or
obligation incurred in the ordinary course of business in connection with the
obtaining of materials or services; (b) all reimbursement obligations and other
liabilities (contingent or otherwise) of such Person with respect to letters of
credit, bank guarantees or bankers' acceptances; (c) all obligations and
liabilities (contingent or otherwise) in respect of leases of such Person
required, in conformity with generally accepted accounting principles, to be
accounted for as capitalized lease obligations on the balance sheet of such
Person and all obligations and other liabilities (contingent or otherwise) under
any lease or related document (including a purchase agreement) in connection
with the lease of real property which provides that such Person is contractually
obligated to purchase or cause a third party to purchase the leased property and
thereby guarantee a minimum residual value of the leased property to the lessor
and the obligations of such Person under such lease or related document to
purchase or to cause a third party to purchase such leased property; (d) all
obligations of such Person (contingent or otherwise) with respect to an interest
rate or other swap, cap or collar agreement or other similar instrument or
agreement or foreign currency hedge, exchange, purchase or similar instrument or
agreement; (e) all direct or indirect guaranties or similar agreements by such
Person in respect of, and obligations or liabilities (contingent or otherwise)
of such Person to purchase or otherwise acquire or otherwise assure a creditor
against loss in respect of, indebtedness, obligations or liabilities of another
Person of the kind described in clauses (a) through (d); (f) any indebtedness or
other obligations described in clauses (a) through (e) secured by any mortgage,
pledge, lien or other encumbrance existing on property which is owned or held by
such Person, regardless of whether the indebtedness or other obligation secured
thereby shall have been assumed by such Person; and (g) any and all deferrals,
renewals, extensions and refundings of, or amendments, modifications or
supplements to, any indebtedness, obligation or liability of the kind described
in clauses (a) through (f).
"Indenture" means this instrument as originally executed or, if
amended or supplemented as herein provided, as so amended or supplemented.
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"Initial Purchasers" means Morgan Stanley & Co. Incorporated,
Deutsche Bank Securities Inc., SG Cowen Securities Corporation and Hambrecht &
Quist LLC.
"Institutional Accredited Investor" means an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Liquidated Damages" has the meaning specified for "Liquidated
Damages Amount" in Section 2(e) of the Registration Rights Agreement.
"Non-Payment Default" has the meaning specified in Section
4.2(ii).
"Note" or "Notes" means any Note or Notes, as the case may be,
authenticated and delivered under this Indenture, including the Global Note.
"Note Register" has the meaning specified in Section 2.5(a).
"Note Registrar" has the meaning specified in Section 2.5(a).
"Noteholder" or "Holder" as applied to any Note, or other similar
terms (but excluding the term "beneficial holder"), means any Person in whose
name at the time a particular Note is registered on the Note registrar's books.
"Officers' Certificate", when used with respect to the Company,
means a certificate signed by both (a) the Chairman of the Board, the Chief
Executive Officer, the President or any Vice President (whether or not
designated by a number or numbers or word or words added before or after the
title "Vice President") and (b) the Treasurer or any Assistant Treasurer, the
Controller or any Assistant Controller, or the Secretary or any Assistant
Secretary of the Company.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company, or other counsel
reasonably acceptable to the Trustee.
"Outstanding", when used with reference to Notes and subject to
the provisions of Section 9.4, means, as of any particular time, all Notes
authenticated and delivered by the Trustee under this Indenture, except:
(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes, or portions thereof, (i) for the redemption of
which monies in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or (ii) which shall
have been otherwise defeased in accordance with Article Thirteen;
(c) Notes paid pursuant to Section 2.6 or Notes in lieu of
which, or in substitution for which, other Notes shall have been authenticated
and delivered pursuant to the terms of Section 2.6; and
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(d) Notes converted into Common Stock pursuant to Article
Fifteen and Notes deemed not outstanding pursuant to Article Three.
"Payment Blockage Notice" has the meaning specified in Section
4.2(ii).
"Person" means a corporation, an association, a partnership, a
limited liability company, an individual, a joint venture, a joint stock
company, a trust, an unincorporated organization or a government or an agency or
a political subdivision thereof.
"Portal Market" means The Portal Market operated by the National
Association of Securities Dealers, Inc. or any successor thereto.
"Predecessor Note" of any particular Note means every previous
Note evidencing all or a portion of the same debt as that evidenced by such
particular Note, and, for the purposes of this definition, any Note
authenticated and delivered under Section 2.6 in lieu of a lost, destroyed or
stolen Note shall be deemed to evidence the same debt as the lost, destroyed or
stolen Note that it replaces.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Registration Rights Agreement" means that certain Registration
Rights Agreement, dated as of March 13, 2000, among the Company and the Initial
Purchasers, as amended from time to time in accordance with its terms.
"Representative" means (a) the indenture trustee or other
trustee, agent or representative for holders of Senior Indebtedness or (b) with
respect to any Senior Indebtedness that does not have any such trustee, agent or
other representative, (i) in the case of such Senior Indebtedness issued
pursuant to an agreement providing for voting arrangements as among the holders
or owners of such Senior Indebtedness, any holder or owner of such Senior
Indebtedness acting with the consent of the required persons necessary to bind
such holders or owners of such Senior Indebtedness and (ii) in the case of all
other such Senior Indebtedness, the holder or owner of such Senior Indebtedness.
"Responsible Officer", when used with respect to the Trustee,
means an officer of the Trustee in the Corporate Trust Office assigned and duly
authorized by the Trustee to administer this Indenture.
"Restricted Securities" has the meaning specified in Section
2.5(d).
"Rule 144A" means Rule 144A as promulgated under the Securities
Act.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, as in effect from time to
time.
"Senior Indebtedness" means the principal of, premium, if any,
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and rent payable on or
in connection with, and all fees, costs, expenses and other amounts
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accrued or due on or in connection with, Indebtedness of the Company, whether
outstanding on the date of this Indenture or thereafter created, incurred,
assumed, guaranteed or in effect guaranteed by the Company (including all
deferrals, renewals, extensions or refundings of, or amendments, modifications
or supplements to, the foregoing), unless in the case of any particular
Indebtedness the instrument creating or evidencing the same or the assumption or
guarantee thereof expressly provides that such Indebtedness shall not be senior
in right of payment to the Notes or expressly provides that such Indebtedness is
"pari passu" or "junior" to the Notes. Notwithstanding the foregoing, the term
Senior Indebtedness shall not include any Indebtedness of the Company to any
subsidiary of the Company, a majority of the voting stock of which is owned,
directly or indirectly, by the Company or the Company's 4.75% Convertible
Subordinated Notes due 2003. If any payment made to any holder of any Senior
Indebtedness or its Representative with respect to such Senior Indebtedness is
rescinded or must otherwise be returned by such holder or Representative upon
the insolvency, bankruptcy or reorganization of the Company or otherwise, the
reinstated Indebtedness of the Company arising as a result of such rescission or
return shall constitute Senior Indebtedness effective as of the date of such
rescission or return.
"Significant Subsidiary" means, as of any date of determination,
a Subsidiary of the Company, if as of such date of determination either (a) the
assets of such subsidiary equal 10% or more of the Company's total consolidated
assets or (b) the total revenue of which represented 10% or more of the
Company's consolidated total revenue for the most recently completed fiscal
year.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of capital stock or other equity interest entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other subsidiaries
of that Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or managing general partner of which is such Person or a
subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more subsidiaries of such Person (or any combination
thereof).
"Trading Day" has the meaning specified in Section 15.5(h)(5).
"Trigger Event" has the meaning specified in Section 15.5(d).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, as it was in force at the date of this Indenture, except as provided in
Sections 11.3 and 15.6; provided, however, that, in the event the Trust
Indenture Act of 1939 is amended after the date hereof, the term "Trust
Indenture Act" shall mean, to the extent required by such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means The Bank of New York and its successors and any
corporation resulting from or surviving any consolidation or merger to which it
or its successors may be a party and any successor trustee at the time serving
as successor trustee hereunder.
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The definitions of certain other terms are as specified in
Sections 2.5 and 3.5 and Article Fifteen.
ARTICLE 2.
ISSUE, DESCRIPTION, EXECUTION,
REGISTRATION AND EXCHANGE OF NOTES
Section 2.1. Designation, Amount And Issue Of Notes. The Notes shall be
designated as "5% Convertible Subordinated Notes due 2007." Notes not to exceed
the aggregate principal amount of $250,000,000 (except pursuant to Sections 2.5,
2.6, 3.3, 3.5 and 15.2 hereof) upon the execution of this Indenture, or from
time to time thereafter, may be executed by the Company and delivered to the
Trustee for authentication, and the Trustee shall thereupon authenticate and
deliver said Notes to or upon the written order of the Company, signed by (a)
its Chairman of the Board, Chief Executive Officer, President or any Vice
President (whether or not designated by a number or numbers or word or words
added before or after the title "Vice President") and (b) its Treasurer or any
Assistant Treasurer, its Controller or any Assistant Controller or its Secretary
or any Assistant Secretary, without any further action by the Company hereunder.
Section 2.2. Form Of Notes. The Notes and the Trustee's certificate of
authentication to be borne by such Notes shall be substantially in the form set
forth in Exhibit A, which is incorporated in and made a part of this Indenture.
Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, 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
securities exchange or automated quotation system on which the Notes may be
listed, or to conform to usage.
Any Global Note shall represent such of the outstanding Notes as
shall be specified therein and shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be increased or reduced to reflect transfers or exchanges permitted
hereby. Any endorsement of a Global Note to reflect the amount of any increase
or decrease in the amount of outstanding Notes represented thereby shall be made
by the Trustee or the Custodian, at the direction of the Trustee, in such manner
and upon instructions given by the holder of such Notes in accordance with this
Indenture. Payment of principal of and interest and premium, if any, on any
Global Note shall be made to the holder of such Note.
The terms and provisions contained in the form of Note attached
as Exhibit A hereto shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Section 2.3. Date And Denomination Of Notes; Payments Of Interest. The
Notes shall be issuable in registered form without coupons in denominations of
$1,000 principal amount and
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integral multiples thereof. Every Note shall be dated the date of its
authentication and shall bear interest from the applicable date in each case as
specified on the face of the form of Note attached as Exhibit A hereto. Interest
on the Notes shall be computed on the basis of a 360-day year comprised of
twelve (12) 30-day months.
The Person in whose name any Note (or its Predecessor Note) is
registered on the Note register at the close of business on any record date with
respect to any interest payment date shall be entitled to receive the interest
payable on such interest payment date, except (i) that the interest payable upon
redemption (unless the date of redemption is an interest payment date) will be
payable to the Person to whom principal is payable and (ii) as set forth in the
next succeeding sentence. In the case of any Note (or portion thereof) that is
converted into Common Stock during the period from (but excluding) a record date
to (but excluding) the next succeeding interest payment date either (x) if such
Note (or portion thereof) has been called for redemption on a redemption date
which occurs during such period, or is to be redeemed in connection with a
Fundamental Change on a Repurchase Date (as defined in Section 3.5) that occurs
during such period, the Company shall not be required to pay interest on such
interest payment date in respect of any such Note (or portion thereof) except to
the extent required to be paid upon redemption of such Note or portion thereof
pursuant to Section 3.3 or 3.5 hereof or (y) if such Note (or portion thereof)
has not been called for redemption on a redemption date that occurs during such
period and is not to be redeemed in connection with a Fundamental Change on a
Repurchase Date that occurs during such period, such Note (or portion thereof)
that is submitted for conversion during such period shall be accompanied by
funds equal to the interest payable on such succeeding interest payment date on
the principal amount so converted, as provided in the penultimate paragraph of
Section 15.2 hereof. Interest shall be payable at the office of the Company
maintained by the Company for such purposes in the Borough of Manhattan, City of
New York, which shall initially be an office or agency of the Trustee and may,
as the Company shall specify to the paying agent in writing by each record date,
be paid either (i) by check mailed to the address of the Person entitled thereto
as it appears in the Note register (provided that the holder of Notes with an
aggregate principal amount in excess of $2,000,000 shall, at the written
election of such holder, be paid by wire transfer in immediately available
funds) or (ii) by transfer to an account maintained by such Person located in
the United States; provided, however, that payments to the Depositary will be
made by wire transfer of immediately available funds to the account of the
Depositary or its nominee. The term "record date" with respect to any interest
payment date shall mean the March 1 or September 1 preceding the relevant March
15 or September 15, respectively.
Any interest on any Note which is payable, but is not punctually
paid or duly provided for, on any March 15 or September 15 (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Noteholder on
the relevant record date by virtue of his having been such Noteholder, and such
Defaulted Interest shall be paid by the Company, at its election in each case,
as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Notes (or their respective
Predecessor Notes) are registered at the close of business on a special record
date for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the amount
of Defaulted Interest to be paid on each Note and the date of the payment
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(which shall be not less than twenty-five (25) days after the receipt by the
Trustee of such notice, unless the Trustee shall consent to an earlier date),
and at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be held
in trust for the benefit of the Person entitled to such Defaulted Interest as in
this clause provided. Thereupon the Trustee shall fix a special record date for
the payment of such Defaulted Interest which shall be not more than fifteen (15)
days and not less than ten (10) days prior to the date of the proposed payment,
and not less than ten (10) days after the receipt by the Trustee of the notice
of the proposed payment, the Trustee shall promptly notify the Company of such
special record date and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted Interest and the special
record date therefor to be mailed, first-class postage prepaid, to each
Noteholder at his address as it appears in the Note register, not less than ten
(10) days prior to such special record date. Notice of the proposed payment of
such Defaulted Interest and the special record date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names the
Notes (or their respective Predecessor Notes) were registered at the close of
business on such special record date and shall no longer be payable pursuant to
the following clause (2) of this Section 2.3.
(2) The Company may make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the requirements of any
securities exchange or automated quotation system on which the Notes may be
listed or designated for issuance, and upon such notice as may be required by
such exchange or automated quotation system, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.
Section 2.4. Execution Of Notes. The Notes shall be signed in the name
and on behalf of the Company by the manual or facsimile signature of its
Chairman of the Board, Chief Executive Officer, President or any Vice President
(whether or not designated by a number or numbers or word or words added before
or after the title "Vice President") and attested by the manual or facsimile
signature of its Secretary or any of its Assistant Secretaries or its Treasurer
or any of its Assistant Treasurers (which may be printed, engraved or otherwise
reproduced thereon, by facsimile or otherwise). Only such Notes as shall bear
thereon a certificate of authentication substantially in the form set forth on
the form of Note attached as Exhibit A hereto, manually executed by the Trustee
(or an authenticating agent appointed by the Trustee as provided by Section
16.11), shall be entitled to the benefits of this Indenture or be valid or
obligatory for any purpose. Such certificate by the Trustee (or such an
authenticating agent) upon any Note executed by the Company shall be conclusive
evidence that the Note so authenticated has been duly authenticated and
delivered hereunder and that the holder is entitled to the benefits of this
Indenture.
In case any officer of the Company who shall have signed any of
the Notes shall cease to be such officer before the Notes so signed shall have
been authenticated and delivered by the Trustee, or disposed of by the Company,
such Notes nevertheless may be authenticated and delivered or disposed of as
though the person who signed such Notes had not ceased to be such officer of the
Company, and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the
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<PAGE> 17
Company, although at the date of the execution of this Indenture any such
person was not such an officer.
Section 2.5. Exchange And Registration Of Transfer Of Notes;
Restrictions On Transfer; Depositary.
(a) The Company shall cause to be kept at the Corporate Trust
Office a register (the register maintained in such office and in any other
office or agency of the Company designated pursuant to Section 5.2 being herein
sometimes collectively referred to as the "Note register") in which, subject to
such reasonable regulations as it may prescribe, the Company shall provide for
the registration of Notes and of transfers of Notes. The Note register shall be
in written form or in any form capable of being converted into written form
within a reasonably prompt period of time. The Trustee is hereby appointed "Note
registrar" for the purpose of registering Notes and transfers of Notes as herein
provided. The Company may appoint one or more co-registrars in accordance with
Section 5.2.
Upon surrender for registration of transfer of any Note to the
Note registrar or any co-registrar, and satisfaction of the requirements for
such transfer set forth in this Section 2.5, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Notes of any authorized denominations and of a
like aggregate principal amount and bearing such restrictive legends as may be
required by this Indenture.
Notes may be exchanged for other Notes of any authorized
denominations and of a like aggregate principal amount, upon surrender of the
Notes to be exchanged at any such office or agency maintained by the Company
pursuant to Section 5.2. Whenever any Notes are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the Notes
which the Noteholder making the exchange is entitled to receive bearing
registration numbers not contemporaneously outstanding.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
All Notes presented or surrendered for registration of transfer
or for exchange, redemption or conversion shall (if so required by the Company
or the Note registrar) be duly endorsed, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company, and
the Notes shall be duly executed by the Noteholder thereof or his attorney duly
authorized in writing.
No service charge shall be made to any holder for any
registration of transfer or exchange of Notes, but the Company may require
payment by the holder of a sum sufficient to cover any tax, assessment or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Notes.
Neither the Company nor the Trustee nor any Note registrar shall
be required to exchange or register a transfer of (a) any Notes for a period of
fifteen (15) days next preceding the mailing of a notice of redemption of Notes
to be redeemed, (b) any Notes or portions thereof
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called for redemption pursuant to Section 3.2, (c) any Notes or portions thereof
surrendered for conversion pursuant to Article Fifteen or (d) any Notes or
portions thereof tendered for redemption (and not withdrawn) pursuant to Section
3.5.
(b) So long as the Notes are eligible for book-entry
settlement with the Depositary, or unless otherwise required by law, all Notes
that, upon initial issuance are beneficially owned by QIBs or as a result of a
sale or transfer after initial issuance are beneficially owned by QIBs, will be
represented by one or more Notes in global form registered in the name of the
Depositary or the nominee of the Depositary (the "Global Note"), except as
otherwise specified below. The transfer and exchange of beneficial interests in
any such Global Note shall be effected through the Depositary in accordance with
this Indenture and the procedures of the Depositary therefor. The Trustee shall
make appropriate endorsements to reflect increases or decreases in the principal
amounts of any such Global Note as set forth on the face of the Note ("Principal
Amount") to reflect any such transfers. Except as provided below, beneficial
owners of a Global Note shall not be entitled to have certificates registered in
their names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered holders of such
Global Note.
(c) So long as the Notes are eligible for book-entry
settlement with the Depositary, or unless otherwise required by law, upon any
transfer of a definitive Note to a QIB in accordance with Rule 144A, and upon
receipt of the definitive Note or Notes being so transferred, together with a
certification, substantially in the form on the reverse of the Note, from the
transferor that the transfer is being made in compliance with Rule 144A (or
other evidence satisfactory to the Trustee), the Trustee shall make an
endorsement on the Global Note to reflect an increase in the aggregate Principal
Amount of the Notes represented by such Global Note, and the Trustee shall
cancel such definitive Note or Notes in accordance with the standing
instructions and procedures of the Depositary, the aggregate Principal Amount of
the Notes represented by such Global Note to be increased accordingly; provided,
however, that no definitive Note, or portion thereof, in respect of which the
Company or an Affiliate of the Company held any beneficial interest shall be
included in such Global Note until such definitive Note is freely tradable in
accordance with Rule 144(k) under the Securities Act, provided further that the
Trustee shall issue Notes in definitive form upon any transfer of a beneficial
interest in the Global Note to the Company or any Affiliate of the Company.
Upon any sale or transfer of a Note to an Institutional
Accredited Investor (other than pursuant to a registration statement that has
been declared effective under the Securities Act), such Institutional Accredited
Investor shall, prior to such sale or transfer, furnish to the Company and/or
the Trustee a signed letter containing representations and agreements relating
to restrictions on transfer substantially in the form set forth in Exhibit B to
this Indenture. Upon any transfer of a beneficial interest in the Global Note to
an Institutional Accredited Investor, the Trustee shall make an endorsement on
the Global Note to reflect a decrease in the aggregate Principal Amount of the
Notes represented by such Global Note, and the Company shall execute a
definitive Note or Notes in exchange therefor, and the Trustee, upon receipt of
such definitive Note or Notes and the written order of the Company, shall
authenticate and deliver such, definitive Note or Notes.
12
<PAGE> 19
Any Global Note may be endorsed with or have incorporated in the
text thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Custodian, the Depositary
or by the National Association of Securities Dealers, Inc. in order for the
Notes to be tradeable on the Portal Market or as may be required for the Notes
to be tradeable on any other market developed for trading of securities pursuant
to Rule 144A or required to comply with any applicable law or any regulation
thereunder or with the rules and regulations of any securities exchange or
automated quotation system upon which the Notes may be listed or traded or to
conform with any usage with respect thereto, or to indicate any special
limitations or restrictions to which any particular Notes are subject.
(d) Every Note that bears or is required under this Section
2.5(d) to bear the legend set forth in this Section 2.5(d) (together with any
Common Stock issued upon conversion of the Notes and required to bear the legend
set forth in Section 2.5(e), collectively, the "Restricted Securities") shall be
subject to the restrictions on transfer set forth in this Section 2.5(d)
(including those set forth in the legend set forth below) unless such
restrictions on transfer shall be waived by written consent of the Company, and
the holder of each such Restricted Security, by such Noteholder's acceptance
thereof, agrees to be bound by all such restrictions on transfer. As used in
Sections 2.5(d) and 2.5(e), the term "transfer" encompasses any sale, pledge,
loan, transfer or other disposition whatsoever of any Restricted Security.
Until the expiration of the holding period applicable to sales
thereof under Rule 144(k) under the Securities Act (or any successor provision),
any certificate evidencing such Note (and all securities issued in exchange
therefor or substitution thereof, other than Common Stock, if any, issued upon
conversion thereof, which shall bear the legend set forth in Section 2.5(e), if
applicable) shall bear a legend in substantially the following form, unless such
Note has been sold pursuant to a registration statement that has been declared
effective under the Securities Act (and which continues to be effective at the
time of such transfer), or unless otherwise agreed by the Company in writing,
with written notice thereof to the Trustee:
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, UNITED
STATES PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT)
("INSTITUTIONAL ACCREDITED INVESTOR"); (2) AGREES THAT IT WILL NOT,
PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED
HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT
(A) TO GETTY IMAGES, INC. OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) TO AN
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<PAGE> 20
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE BANK OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE,
AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE
EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH
TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE) OR (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO
BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER
(OTHER THAN A TRANSFER PURSUANT TO CLAUSE (2)(E) ABOVE), IT WILL FURNISH
TO THE BANK OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS
THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (4)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED
HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY
PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE BANK OF NEW YORK, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A UNITED
STATES PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
BANK OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE),
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUCH TRUSTEE
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE
REMOVED UPON THE EARLIER OF THE TRANSFER OF THE NOTE EVIDENCED HEREBY
PURSUANT TO CLAUSE (2)(E) ABOVE OR UPON ANY TRANSFER OF THE NOTE
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT.
Any Note (or security issued in exchange or substitution
therefor) as to which such restrictions on transfer shall have expired in
accordance with their terms or as to conditions for removal of the foregoing
legend set forth therein have been satisfied may, upon surrender of
14
<PAGE> 21
such Note for exchange to the Note registrar in accordance with the provisions
of this Section 2.5, be exchanged for a new Note or Notes, of like tenor and
aggregate principal amount, which shall not bear the restrictive legend required
by this Section 2.5(d).
Notwithstanding any other provisions of this Indenture (other
than the provisions set forth in the second paragraph of Section 2.5(c) and in
this Section 2.5(d)), a Global Note may not be transferred as a whole or in part
except by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.
The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints The Depository Trust Company to act
as Depositary with respect to the Notes in global form. Initially, the Global
Note shall be issued to the Depositary, registered in the name of Cede & Co., as
the nominee of the Depositary, and deposited with the Custodian for Cede & Co.
If at any time the Depositary for a Global Note notifies the
Company that it is unwilling or unable to continue as Depositary for such Note,
the Company may appoint a successor Depositary with respect to such Note. If a
successor Depositary is not appointed by the Company within ninety (90) days
after the Company receives such notice, the Company will execute, and the
Trustee, upon receipt of an Officers' Certificate for the authentication and
delivery of Notes, will authenticate and deliver, Notes in certificated form, in
aggregate principal amount equal to the principal amount of such Global Note, in
exchange for such Global Note.
If a Note in certificated form is issued in exchange for any
portion of a Global Note after the close of business at the office or agency
where such exchange occurs on any record date and before the opening of business
at such office or agency on the next succeeding interest payment date, interest
will not be payable on such interest payment date in respect of such
certificated Note, but will be payable on such interest payment date, subject to
the provisions of Section 2.3, only to the Person to whom interest in respect of
such portion of such Global Note is payable in accordance with the provisions of
this Indenture.
Notes in certificated form issued in exchange for all or a part
of a Global Note pursuant to this Section 2.5 shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Trustee. Upon execution and authentication, the Trustee shall deliver such Notes
in certificated form to the Persons in whose names such Notes in certificated
form are so registered.
At such time as all interests in a Global Note have been
redeemed, converted, canceled, exchanged for Notes in certificated form, or
transferred to a transferee who receives Notes in certificated form thereof,
such Global Note shall, upon receipt thereof, be canceled by the Trustee in
accordance with standing procedures and instructions existing between the
Depositary and the Custodian. At any time prior to such cancellation, if any
interest in a Global Note is exchanged for Notes in certificated form, redeemed,
converted, repurchased or canceled, or transferred to a transferee who receives
Notes in certificated form therefor or any Note in
15
<PAGE> 22
certificated form is exchanged or transferred for part of a Global Note, the
principal amount of such Global Note shall, in accordance with the standing
procedures and instructions existing between the Depositary and the Custodian,
be appropriately reduced or increased, as the case may be, and an endorsement
shall be made on such Global Note, by the Trustee or the Custodian, at the
direction of the Trustee, to reflect such reduction or increase.
(e) Until the expiration of the holding period applicable to
sales thereof under Rule 144(k) under the Securities Act (or any successor
provision), any stock certificate representing Common Stock issued upon
conversion of any Note shall bear a legend in substantially the following form,
unless such Common Stock has been sold pursuant to a registration statement that
has been declared effective under the Securities Act (and which continues to be
effective at the time of such transfer) or such Common Stock has been issued
upon conversion of Notes that have been transferred pursuant to a registration
statement that has been declared effective under the Securities Act, or unless
otherwise agreed by the Company in writing with written notice thereof to the
transfer agent:
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
UNITED STATES PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. THE
HOLDER HEREOF AGREES THAT UNTIL THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K)
UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), (1) IT WILL NOT
RESELL OR OTHERWISE TRANSFER THE COMMON STOCK EVIDENCED HEREBY EXCEPT
(A) TO GETTY IMAGES, INC. OR TO ANY SUBSIDIARY THEREOF, (B) TO A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN COMPLIANCE WITH RULE 144A, (C) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT) THAT PRIOR TO SUCH TRANSFER, FURNISHES TO THE
BANK OF NEW YORK, AS TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, AS
APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE COMMON STOCK
EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH
TRANSFER AGENT OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), (D)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), OR (E) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT
(AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (2)
PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (1)(E)
ABOVE), IT WILL FURNISH TO THE BANK OF NEW YORK, AS TRANSFER AGENT (OR
SUCCESSOR TRANSFER AGENT, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY
16
<PAGE> 23
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT; AND (3) IT WILL DELIVER TO EACH
PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED (OTHER
THAN A TRANSFER PURSUANT TO CLAUSE 1(E) ABOVE) A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A UNITED
STATES PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
BANK OF NEW YORK (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE
EARLIER OF THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY PURSUANT TO
CLAUSE (1)(E) ABOVE OR UPON ANY TRANSFER OF THE COMMON STOCK EVIDENCED
HEREBY AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF
THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT
(OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "UNITED STATES"
AND "UNITED STATES PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION
S UNDER THE SECURITIES ACT.
Any such Common Stock as to which such restrictions on transfer
shall have expired in accordance with their terms or as to which the conditions
for removal of the foregoing legend set forth therein have been satisfied may,
upon surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 2.5(e).
(f) Any Note or Common Stock issued upon the conversion or
exchange of a Note that, prior to the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act (or any
successor provision), is purchased or owned by the Company or any Affiliate
thereof may not be resold by the Company or such Affiliate unless registered
under the Securities Act or resold pursuant to an exemption from the
registration requirements of the Securities Act in a transaction which results
in such Notes or Common Stock, as the case may be, no longer being "restricted
securities" (as defined under Rule 144).
The Trustee shall have no additional obligation or duty to
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Note (including any transfers between or among Depositary
participants or beneficial owners of interests in any Global Note), other than
to require delivery of such certificates and other documentation or evidence as
are expressly required by, and to do so if and when expressly required by the
terms of, this Indenture, and to
17
<PAGE> 24
examine the same to determine substantial compliance as to form with the express
requirements hereof.
Section 2.6. Mutilated, Destroyed, Lost Or Stolen Notes. In case any
Note shall become mutilated or be destroyed, lost or stolen, the Company in its
discretion may execute, and upon its written request the Trustee or an
authenticating agent appointed by the Trustee shall authenticate and make
available for delivery, a new Note, bearing a number not contemporaneously
outstanding, in exchange and substitution for the mutilated Note, or in lieu of
and in substitution for the Note so destroyed, lost or stolen. In every case the
applicant for a substituted Note shall furnish to the Company, to the Trustee
and, if applicable, to such authenticating agent such security or indemnity as
may be required by them to save each of them harmless for any loss, liability,
cost or expense caused by or connected with such substitution, and, in every
case of destruction, loss or theft, the applicant shall also furnish to the
Company, to the Trustee and, if applicable, to such authenticating agent
evidence to their satisfaction of the destruction, loss or theft of such Note
and of the ownership thereof.
Following receipt by the Trustee or such authenticating agent, as
the case may be, of satisfactory security or indemnity and evidence, as
described in the preceding paragraph, the Trustee or such authenticating agent
may authenticate any such substituted Note and make available for delivery such
Note. Upon the issuance of any substituted Note, the Company may require the
payment by the holder of a sum sufficient to cover any tax, assessment or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. In case any Note which has matured or is about to
mature or has been called for redemption or has been tendered for redemption
(and not withdrawn) or is to be converted into Common Stock shall become
mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a
substitute Note, pay or authorize the payment of or convert or authorize the
conversion of the same (without surrender thereof except in the case of a
mutilated Note), as the case may be, if the applicant for such payment or
conversion shall furnish to the Company, to the Trustee and, if applicable, to
such authenticating agent such security or indemnity as may be required by them
to save each of them harmless for any loss, liability, cost or expense caused by
or connected with such substitution, and, in every case of destruction, loss or
theft, the applicant shall also furnish to the Company, the Trustee and, if
applicable, any paying agent or conversion agent evidence to their satisfaction
of the destruction, loss or theft of such Note and of the ownership thereof.
Every substitute Note issued pursuant to the provisions of this
Section 2.6 by virtue of the fact that any Note is destroyed, lost or stolen
shall constitute an additional contractual obligation of the Company, whether or
not the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment or conversion of mutilated,
destroyed, lost or stolen Notes and shall preclude any and all other rights or
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment or conversion of negotiable
instruments or other securities without their surrender.
18
<PAGE> 25
Section 2.7. Temporary Notes. Pending the preparation of Notes in
certificated form, the Company may execute and the Trustee or an authenticating
agent appointed by the Trustee shall, upon the written request of the Company,
authenticate and deliver temporary Notes (printed or lithographed). Temporary
Notes shall be issuable in any authorized denomination, and substantially in the
form of the Notes in certificated form, but with such omissions, insertions and
variations as may be appropriate for temporary Notes, all as may be determined
by the Company. Every such temporary Note shall be executed by the Company and
authenticated by the Trustee or such authenticating agent upon the same
conditions and in substantially the same manner, and with the same effect, as
the Notes in certificated form. Without unreasonable delay the Company will
execute and deliver to the Trustee or such authenticating agent Notes in
certificated form (other than in the case of Notes in global form) and thereupon
any or all temporary Notes (other than any such Global Note) may be surrendered
in exchange therefor, at each office or agency maintained by the Company
pursuant to Section 5.2 and the Trustee or such authenticating agent shall
authenticate and make available for delivery in exchange for such temporary
Notes an equal aggregate principal amount of Notes in certificated form. Such
exchange shall be made by the Company at its own expense and without any charge
therefor. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits and subject to the same limitations under this
Indenture as Notes in certificated form authenticated and delivered hereunder.
Section 2.8. Cancellation Of Notes Paid, Etc. All Notes surrendered for
the purpose of payment, redemption, conversion, exchange or registration of
transfer shall, if surrendered to the Company or any paying agent or any Note
registrar or any conversion agent, be surrendered to the Trustee and promptly
canceled by it, or, if surrendered to the Trustee, shall be promptly canceled by
it, and no Notes shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Indenture. The Trustee shall dispose of such
canceled Notes in accordance with its customary procedures. If the Company shall
acquire any of the Notes, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Notes unless and until the
same are delivered to the Trustee for cancellation.
Section 2.9. CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Noteholders;
provided, however, that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Notes or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Notes, and any such redemption
shall not be affected by any defect in or omission of such numbers. The Company
will promptly notify the Trustee of any change in the "CUSIP" numbers.
ARTICLE 3.
REDEMPTION OF NOTES
Section 3.1. Initial Prohibition On Redemption.
(a) Except as otherwise provided in Section 3.5, the Notes may
not be redeemed by the Company, in whole or in part, at any time prior to March
20, 2003.
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<PAGE> 26
(b) Optional Redemption By The Company. At any time on or
after March 20, 2003, and prior to maturity, the Notes may be redeemed at the
option of the Company, in whole or in part, upon notice as set forth in Section
3.2, at the following redemption prices (expressed as percentages of the
principal amount), together in each case with accrued and unpaid interest, if
any (including Liquidated Damages, if any) to, but excluding, the date fixed for
redemption:
<TABLE>
<CAPTION>
Period Redemption Price
------ ----------------
<S> <C>
Beginning on March 20, 2003 and ending on March 14, 2004 ...... 102.857%
Beginning on March 15, 2004 and ending on March 14, 2005 ...... 102.143%
Beginning on March 15, 2005 and ending on March 14, 2006 ...... 101.429%
Beginning on March 15, 2006 and ending on March 14, 2007 ...... 100.714%
</TABLE>
and 100% on March 15, 2007; provided, however, that if the date fixed for
redemption is on a March 15 or September 15, then the interest payable on such
date shall be paid to the holder of record on the preceding March 1 or September
1, respectively.
Section 3.2. Notice Of Redemptions; Selection Of Notes. In case the
Company shall desire to exercise the right to redeem all or, as the case may be,
any part of the Notes pursuant to Section 3.1, it shall fix a date for
redemption and it or, at its written request received by the Trustee not fewer
than forty-five (45) days prior (or such shorter period of time as may be
acceptable to the Trustee) to the date fixed for redemption, the Trustee in the
name of and at the expense of the Company, shall mail or cause to be mailed a
notice of such redemption not fewer than thirty (30) nor more than sixty (60)
days prior to the date fixed for redemption to the holders of Notes so to be
redeemed as a whole or in part at their last addresses as the same appear on the
Note register; provided, however, that if the Company shall give such notice, it
shall also give written notice, and written notice of the Notes to be redeemed,
to the Trustee. Such mailing shall be by first class mail. The notice if mailed
in the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the holder receives such notice. In any case, failure to
give such notice by mail or any defect in the notice to the holder of any Note
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Note. Concurrently with the
mailing of any such notice of redemption, the Company shall issue a press
release announcing such redemption, the form and content of which press release
shall be determined by the Company in its sole discretion. The failure to issue
any such press release or any defect therein shall not affect the validity of
the redemption notice or any of the proceedings for the redemption of any Note
called for redemption.
Each such notice of redemption shall specify the aggregate
principal amount of Notes to be redeemed, the CUSIP number or numbers of the
Notes being redeemed, the date fixed for redemption (which shall be a Business
Day), the redemption price at which Notes are to be redeemed, the place or
places of payment, that payment will be made upon presentation and surrender of
such Notes, that interest accrued to the date fixed for redemption will be paid
as specified in said notice, and that on and after said date interest thereon or
on the portion thereof to be redeemed will cease to accrue. Such notice shall
also state the current Conversion Price and the date on which the right to
convert such Notes or portions thereof into Common Stock
20
<PAGE> 27
will expire. If fewer than all the Notes are to be redeemed, the notice of
redemption shall identify the Notes to be redeemed (including CUSIP numbers, if
any). In case any Note is to be redeemed in part only, the notice of redemption
shall state the portion of the principal amount thereof to be redeemed and shall
state that, on and after the date fixed for redemption, upon surrender of such
Note, a new Note or Notes in principal amount equal to the unredeemed portion
thereof will be issued.
On or prior to the redemption date specified in the notice of
redemption given as provided in this Section 3.2, the Company will deposit with
the Trustee or with one or more paying agents (or, if the Company is acting as
its own paying agent, set aside, segregate and hold in trust as provided in
Section 5.4) an amount of money in immediately available funds sufficient to
redeem on the redemption date all the Notes (or portions thereof) so called for
redemption (other than those theretofore surrendered for conversion into Common
Stock) at the appropriate redemption price, together with accrued interest to,
but excluding, the date fixed for redemption; provided, however, that if such
payment is made on the redemption date it must be received by the Trustee or
paying agent, as the case may be, by 10:00 a.m., New York City time, on such
date. The Company shall be entitled to retain any interest, yield or gain on
amounts deposited with the Trustee or any paying agent pursuant to this Section
3.2 in excess of amounts required hereunder to pay the redemption price together
with accrued interest to, but excluding, the date fixed for redemption. If any
Note called for redemption is converted pursuant hereto prior to such
redemption, any money deposited with the Trustee or any paying agent or so
segregated and held in trust for the redemption of such Note shall be paid to
the Company upon its written request, or, if then held by the Company, shall be
discharged from such trust. Whenever any Notes are to be redeemed, the Company
will give the Trustee written notice in the form of an Officers' Certificate not
fewer than forty-five (45) days (or such shorter period of time as may be
acceptable to the Trustee) prior to the redemption date as to the aggregate
principal amount of Notes to be redeemed.
If less than all of the outstanding Notes are to be redeemed, the
Trustee shall select the Notes or portions thereof of the Global Note or the
Notes in certificated form to be redeemed (in principal amounts of $1,000 or
integral multiples thereof) by lot, on a pro rata basis or by another method the
Trustee deems fair and appropriate. If any Note selected for partial redemption
is submitted for conversion in part after such selection, the portion of such
Note submitted for conversion shall be deemed (so far as may be) to be the
portion to be selected for redemption. The Notes (or portions thereof) so
selected shall be deemed duly selected for redemption for all purposes hereof,
notwithstanding that any such Note is submitted for conversion in part before
the mailing of the notice of redemption.
Upon any redemption of less than all of the outstanding Notes,
the Company and the Trustee may (but need not), solely for purposes of
determining the pro rata allocation among such Notes as are unconverted and
outstanding at the time of redemption, treat as outstanding any Notes
surrendered for conversion during the period of fifteen (15) days next preceding
the mailing of a notice of redemption and may (but need not) treat as
outstanding any Note authenticated and delivered during such period in exchange
for the unconverted portion of any Note converted in part during such period.
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Section 3.3. Payment Of Notes Called For Redemption. If notice of
redemption has been given as above provided, the Notes or portion of Notes with
respect to which such notice has been given shall, unless converted into Common
Stock pursuant to the terms hereof, become due and payable on the date fixed for
redemption and at the place or places stated in such notice at the applicable
redemption price, together with interest accrued to (but excluding) the date
fixed for redemption, and on and after said date (unless the Company shall
default in the payment of such Notes at the redemption price, together with
interest accrued to said date) interest on the Notes or portion of Notes so
called for redemption shall cease to accrue and, after the close of business on
the Business Day next preceding the date fixed for redemption, such Notes shall
cease to be convertible into Common Stock and, except as provided in Sections
8.5 and 13.4, to be entitled to any benefit or security under this Indenture,
and the holders thereof shall have no right in respect of such Notes except the
right to receive the redemption price thereof and unpaid interest to (but
excluding) the date fixed for redemption. On presentation and surrender of such
Notes at a place of payment in said notice specified, the said Notes or the
specified portions thereof shall be paid and redeemed by the Company at the
applicable redemption price, together with interest accrued thereon to (but
excluding) the date fixed for redemption; provided, however, that if the
applicable redemption date is an interest payment date, the semi-annual payment
of interest becoming due on such date shall be payable to the holders of such
Notes registered as such on the relevant record date instead of the holders
surrendering such Notes for redemption on such date.
Upon presentation of any Note redeemed in part only, the Company
shall execute and the Trustee shall authenticate and make available for delivery
to the holder thereof, at the expense of the Company, a new Note or Notes, of
authorized denominations, in principal amount equal to the unredeemed portion of
the Notes so presented.
Notwithstanding the foregoing, the Trustee shall not redeem any
Notes or mail any notice of redemption during the continuance of a default in
payment of interest or premium, if any, on the Notes. If any Note called for
redemption shall not be so paid upon surrender thereof for redemption, the
principal and premium, if any, shall, until paid or duly provided for, bear
interest from the date fixed for redemption at the rate borne by the Note and
such Note shall remain convertible into Common Stock until the principal and
premium, if any, and interest shall have been paid or duly provided for.
Section 3.4. Conversion Arrangement On Call For Redemption. In
connection with any redemption of Notes, the Company may arrange for the
purchase and conversion of any Notes by an agreement with one or more investment
bankers or other purchasers to purchase such Notes by paying to the Trustee in
trust for the Noteholders, on or before the date fixed for redemption, an amount
not less than the applicable redemption price, together with interest accrued to
(but excluding) the date fixed for redemption, of such Notes. Notwithstanding
anything to the contrary contained in this Article Three, the obligation of the
Company to pay the redemption price of such Notes, together with interest
accrued to (but excluding) the date fixed for redemption, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into, a copy of which will be filed
with the Trustee prior to the date fixed for redemption, any Notes not duly
surrendered for conversion by the holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such holders and (notwithstanding anything
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to the contrary contained in Article Fifteen) surrendered by such purchasers for
conversion, all as of immediately prior to the close of business on the date
fixed for redemption (and the right to convert any such Notes shall be extended
through such time), subject to payment of the above amount as aforesaid. At the
direction of the Company, the Trustee shall hold and dispose of any such amount
paid to it in the same manner as it would monies deposited with it by the
Company for the redemption of Notes. Without the Trustee's prior written
consent, no arrangement between the Company and such purchasers for the purchase
and conversion of any Notes shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Trustee as set forth in
this Indenture.
Section 3.5. Redemption At Option Of Holders.
(a) If there shall occur a Fundamental Change at any time prior
to maturity of the Notes, then each Noteholder shall have the right, at such
holder's option, to require the Company to redeem all of such holder's Notes, or
any portion thereof that is an integral multiple of $1,000 principal amount, on
the date (the "Repurchase Date") that is thirty (30) days after the date of the
Company Notice (as defined in Section 3.5(b) below) of such Fundamental Change
(or, if such 30th day is not a Business Day, the next succeeding Business Day)
at a redemption price equal to 100% of the principal amount thereof, together
with accrued interest to (but excluding) the Repurchase Date; provided, however,
that, if such Repurchase Date is a March 15 or September 15, then the interest
payable on such date shall be paid to the holders of record of the Notes on the
next preceding March 1 or September 1, respectively.
Upon presentation of any Note redeemed in part only, the Company
shall execute and, upon the Company's written direction to the Trustee, the
Trustee shall authenticate and deliver to the holder thereof, at the expense of
the Company, a new Note or Notes, of authorized denominations, in principal
amount equal to the unredeemed portion of the Notes so presented.
(b) On or before the tenth day after the occurrence of a
Fundamental Change, the Company or at its written request (which must be
received by the Trustee at least five (5) Business Days prior to the date the
Trustee is requested to give notice as described below, unless the Trustee shall
agree in writing to a shorter period), the Trustee, in the name of and at the
expense of the Company, shall mail or cause to be mailed to all holders of
record on the date of the Fundamental Change a notice (the "Company Notice") of
the occurrence of such Fundamental Change and of the redemption right at the
option of the holders arising as a result thereof. Such notice shall be mailed
in the manner and with the effect set forth in the first paragraph of Section
3.2 (without regard for the time limits set forth therein). If the Company shall
give such notice, the Company shall also deliver a copy of the Company Notice to
the Trustee at such time as it is mailed to Noteholders. Concurrently with the
mailing of any Company Notice, the Company shall issue a press release
announcing such Fundamental Change referred to in the Company Notice, the form
and content of which press release shall be determined by the Company in its
sole discretion. The failure to issue any such press release or any defect
therein shall not affect the validity of the Company Notice or any proceedings
for the redemption of any Note which any Noteholder may elect to have the
Company redeem as provided in this Section 3.5.
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Each Company Notice shall specify the circumstances constituting
the Fundamental Change, the Repurchase Date, the price at which the Company
shall be obligated to redeem Notes, that the holder must exercise the redemption
right on or prior to the close of business on the Repurchase Date (the
"Fundamental Change Expiration Time"), that the holder shall have the right to
withdraw any Notes surrendered prior to the Fundamental Change Expiration Time,
a description of the procedure which a Noteholder must follow to exercise such
redemption right and to withdraw any surrendered Notes, the place or places
where the holder is to surrender such holder's Notes, the amount of interest
accrued on each Note to the Repurchase Date and the "CUSIP" number or numbers of
the Notes (if then generally in use).
No failure of the Company to give the foregoing notices and no
defect therein shall limit the Noteholders' redemption rights or affect the
validity of the proceedings for the redemption of the Notes pursuant to this
Section 3.5.
(c) For a Note to be so redeemed at the option of the holder, the
Company must receive at the office or agency of the Company maintained for that
purpose or, at the option of such holder, the Corporate Trust Office, such Note
with the form entitled "Option to Elect Repayment Upon A Fundamental Change" on
the reverse thereof duly completed, together with such Notes duly endorsed for
transfer, on or before the Fundamental Change Expiration Time. All questions as
to the validity, eligibility (including time of receipt) and acceptance of any
Note for repayment shall be determined by the Company, whose determination shall
be final and binding absent manifest error.
(d) On or prior to the Repurchase Date, the Company will deposit
with the Trustee or with one or more paying agents (or, if the Company is acting
as its own paying agent, set aside, segregate and hold in trust as provided in
Section 5.4) an amount of money sufficient to redeem on the Repurchase Date all
the Notes to be redeemed on such date at the appropriate redemption price,
together with accrued interest to (but excluding) the Repurchase Date; provided,
however, that if such payment is made on the Repurchase Date it must be received
by the Trustee or paying agent, as the case may be, by 10:00 a.m., New York City
time, on such date. Payment for Notes surrendered for redemption (and not
withdrawn) prior to the Fundamental Change Expiration Time will be made promptly
(but in no event more than five (5) Business Days) following the Repurchase Date
by mailing checks for the amount payable to the holders of such Notes entitled
thereto as they shall appear on the registry books of the Company.
(e) In the case of a reclassification, change, consolidation,
merger, combination, sale or conveyance to which Section 15.6 applies, in which
the Common Stock of the Company is changed or exchanged as a result into the
right to receive stock, securities or other property or assets (including cash),
which includes shares of Common Stock of the Company or shares of common stock
of another Person that are, or upon issuance will be, traded on a United States
national securities exchange or approved for trading on an established automated
over-the-counter trading market in the United States and such shares constitute
at the time such change or exchange becomes effective in excess of 50% of the
aggregate fair market value of such stock, securities or other property or
assets (including cash) (as determined by the Company, which determination shall
be conclusive and binding), then the Person formed by such consolidation or
resulting from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Trustee a supplemental indenture (accompanied
by an Opinion of
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Counsel that such supplemental indenture complies with the Trust Indenture Act
as in force at the date of execution of such supplemental indenture) modifying
the provisions of this Indenture relating to the right of holders of the Notes
to cause the Company to repurchase the Notes following a Fundamental Change,
including without limitation the applicable provisions of this Section 3.5 and
the definitions of Common Stock and Fundamental Change, as appropriate, as
determined in good faith by the Company (which determination shall be conclusive
and binding), to make such provisions apply to such other Person if different
from the Company and the common stock issued by such Person (in lieu of the
Company and the Common Stock of the Company).
(f) The Company will comply with the provisions of Rule 13e-4 and
any other tender offer rules under the Exchange Act to the extent then
applicable in connection with the redemption rights of the holders of Notes in
the event of a Fundamental Change.
ARTICLE 4.
SUBORDINATION OF NOTES
Section 4.1. Agreement Of Subordination. The Company covenants and
agrees, and each holder of Notes issued hereunder by its acceptance thereof
likewise covenants and agrees, that all Notes shall be issued subject to the
provisions of this Article Four, and each Person holding any Note, whether upon
original issue or upon registration of transfer, assignment or exchange thereof,
accepts and agrees to be bound by such provisions.
The payment of the principal of, premium, if any, and interest
(including Liquidated Damages, if any) on all Notes (including, but not limited
to, the redemption price with respect to the Notes called for redemption in
accordance with Section 3.2 or submitted for redemption in accordance with
Section 3.5, as the case may be, as provided in this Indenture) issued hereunder
shall, to the extent and in the manner hereinafter set forth, be subordinated
and subject in right of payment to the prior payment in full of all Senior
Indebtedness, whether outstanding at the date of this Indenture or thereafter
incurred.
No provision of this Article Four shall prevent the occurrence of
any default or Event of Default hereunder.
Section 4.2. Payments To Noteholders. No payment shall be made with
respect to the principal of, premium, if any, or interest (including Liquidated
Damages, if any) on the Notes (including, but not limited to, the redemption
price with respect to the Notes to be called for redemption in accordance with
Section 3.2 or submitted for redemption in accordance with Section 3.5, as the
case may be, as provided in this Indenture), except payments and distributions
made by the Trustee as permitted by the first or second paragraph of Section
4.5, if:
(i) a default in the payment of principal, premium, if any,
interest, rent or other obligations in respect of Designated Senior Indebtedness
occurs and is continuing (or, in the case of Designated Senior Indebtedness for
which there is a period of grace, in the event of such a default that continues
beyond the period of grace, if any, specified in the instrument or
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lease evidencing such Designated Senior Indebtedness) (a "Payment Default"),
unless and until such Payment Default shall have been cured or waived or shall
have ceased to exist; or
(ii) a default, other than a Payment Default, on any Designated
Senior Indebtedness occurs and is continuing that then permits holders of such
Designated Senior Indebtedness to accelerate its maturity (or in the case of any
lease, a default occurs and is continuing that permits the lessor to either
terminate the lease or require the Company to make an irrevocable offer to
terminate the lease following an event of default thereunder) and the Trustee
receives a notice of the default (a "Payment Blockage Notice") from a holder of
Designated Senior Indebtedness, a Representative of Designated Senior
Indebtedness or the Company (a "Non-Payment Default").
If the Trustee receives any Payment Blockage Notice pursuant to
clause (ii) above, no subsequent Payment Blockage Notice shall be effective for
purposes of this Section 4.2 unless and until at least 365 days shall have
elapsed since the initial effectiveness of the immediately prior Payment
Blockage Notice. No Non-Payment Default that existed or was continuing on the
date of delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice.
The Company may and shall resume payments on and distributions in
respect of the Notes upon the earlier of:
(1) the date upon which any such Payment Default is cured
or waived or ceases to exist, or
(2) in the case of a Non-Payment Default, the earlier of
(a) the date upon which such default is cured or waived or ceases to exist or
(b) 179 days after the applicable Payment Blockage Notice is received by the
Trustee if the maturity of such Designated Senior Indebtedness has not been
accelerated (or in the case of any lease, 179 days after notice is received if
the Company has not received notice that the lessor under such lease has
exercised its right to terminate the lease or require the Company to make an
irrevocable offer to terminate the lease following an event of default
thereunder), unless this Article Four otherwise prohibits the payment or
distribution at the time of such payment or distribution.
Upon any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding up or liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full in cash or other payment
satisfactory to the holders of such Senior Indebtedness (and satisfactory to the
holders of Senior Indebtedness in the case such Senior Indebtedness includes
Designated Senior Indebtedness), or payment thereof in accordance with its terms
provided for in cash or other payment satisfactory to the holders of such Senior
Indebtedness (and satisfactory to the holders of Senior Indebtedness in the case
such Senior Indebtedness includes Designated Senior Indebtedness) before any
payment is made on account of the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Notes (except payments made
pursuant to Article Thirteen from monies deposited with the Trustee pursuant
thereto prior to commencement of proceedings for such dissolution,
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winding up, liquidation or reorganization), and upon any such dissolution or
winding up or liquidation or reorganization of the Company or bankruptcy,
insolvency, receivership or other similar proceeding, any payment by the
Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the holders of the Notes or
the Trustee would be entitled, except for the provisions of this Article Four,
shall (except as aforesaid) be paid by the Company or by any receiver, trustee
in bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the holders of the Notes or by the Trustee under this
Indenture if received by them or it, directly to the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders, or as otherwise required by law or a
court order) or their Representative or Representatives, as their respective
interests may appear, to the extent necessary to pay all Senior Indebtedness in
full, in cash or other payment satisfactory to the holders of such Senior
Indebtedness (and satisfactory to the holders of Senior Indebtedness in the case
such Senior Indebtedness includes Designated Senior Indebtedness), after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Indebtedness, before any payment or distribution is made to the holders of the
Notes or to the Trustee.
For purposes of this Article Four, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article Four with
respect to the Notes to the payment of all Senior Indebtedness which may at the
time be outstanding, provided that (i) the Senior Indebtedness is assumed by the
new corporation, if any, resulting from any reorganization or readjustment, and
(ii) the rights of the holders of Senior Indebtedness (other than leases which
are not assumed by the Company or the new corporation, as the case may be) are
not, without the consent of such holders, altered by such reorganization as the
case may be) are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of the Company with, or the
merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another Person upon the
terms and conditions provided for in Article Twelve shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 4.2 if such other Person shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article Twelve.
In the event of the acceleration of the Notes because of an Event
of Default, no payment or distribution shall be made to the Trustee or any
holder of Notes in respect of the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Notes (including, but not limited
to, the redemption price with respect to the Notes called for redemption in
accordance with Section 3.2 or submitted for redemption in accordance with
Section 3.5, as the case may be, as provided in this Indenture), except payments
and distributions made by the Trustee as permitted by the first or second
paragraph of Section 4.5, until all Senior Indebtedness has been paid in full in
cash or other payment satisfactory to the holders of Senior Indebtedness (and
satisfactory to the holders of Designated Senior Indebtedness in the case such
Senior Indebtedness includes Designated Senior Indebtedness) or such
acceleration is rescinded in accordance with the terms of this Indenture. If
payment of the Notes is accelerated because of
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an Event of Default, the Company or the Trustee shall promptly notify holders of
Senior Indebtedness (including the agent under the Credit Agreement) of the
acceleration.
In the event that, notwithstanding the foregoing provisions, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities (including, without limitation, by way
of setoff or otherwise), prohibited by the foregoing provisions in this Section
4.2, shall be received by the Trustee or the holders of the Notes before all
Senior Indebtedness is paid in full in cash or other payment satisfactory to the
holders of such Senior Indebtedness (and satisfactory to the holders of Senior
Indebtedness in the case such Senior Indebtedness includes Designated Senior
Indebtedness), or provision is made for such payment thereof in accordance with
its terms in cash or other payment satisfactory to the holders of such Senior
Indebtedness (and satisfactory to the holders of Senior Indebtedness in the case
such Senior Indebtedness includes Designated Senior Indebtedness), such payment
or distribution shall be held in trust for the benefit of and shall be paid over
or delivered to the holders of Senior Indebtedness or their Representative or
Representatives, as their respective interests may appear, as calculated by the
Company, for application to the payment of any Senior Indebtedness remaining
unpaid to the extent necessary to pay all Senior Indebtedness in full in cash or
other payment satisfactory to the holders of such Senior Indebtedness (and
satisfactory to the holders of Senior Indebtedness in the case such Senior
Indebtedness includes Designated Senior Indebtedness), after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Indebtedness.
Nothing in this Section 4.2 shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 8.6. This Section 4.2 shall be
subject to the further provisions of Section 4.5.
Section 4.3. Subrogation Of Notes. Subject to the payment in full of all
Senior Indebtedness, the rights of the holders of the Notes shall be subrogated
to the extent of the payments or distributions made to the holders of such
Senior Indebtedness pursuant to the provisions of this Article Four (equally and
ratably with the holders of all indebtedness of the Company which by its express
terms is subordinated to other indebtedness of the Company to substantially the
same extent as the Notes are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company
applicable to the Senior Indebtedness until the principal, premium, if any, and
interest (including Liquidated Damages, if any) on the Notes shall be paid in
full, and, for the purposes of such subrogation, no payments or distributions to
the holders of the Senior Indebtedness of any cash, property or securities to
which the holders of the Notes or the Trustee would be entitled except for the
provisions of this Article Four, and no payment pursuant to the provisions of
this Article Four, to or for the benefit of the holders of Senior Indebtedness
by holders of the Notes or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Indebtedness, and the holders of the
Notes, be deemed to be a payment by the Company to or on account of the Senior
Indebtedness, and no payments or distributions of cash, property or securities
to or for the benefit of the holders of the Notes pursuant to the subrogation
provisions of this Article Four, which would otherwise have been paid to the
holders of Senior Indebtedness, shall be deemed to be a payment by the Company
to or for the account of the Notes. It is understood that the provisions of this
Article
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Four are intended solely for the purposes of defining the relative
rights of the holders of the Notes, on the one hand, and the holders of the
Senior Indebtedness, on the other hand.
Nothing contained in this Article Four or elsewhere in this
Indenture or in the Notes is intended to or shall impair, as among the Company,
its creditors other than the holders of Senior Indebtedness, and the holders of
the Notes, the obligation of the Company, which is absolute and unconditional,
to pay to the holders of the Notes the principal of, premium, if any, and
interest (including Liquidated Damages, if any) on the Notes as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the holders of the Notes and creditors
of the Company other than the holders of the Senior Indebtedness, nor shall
anything herein or therein prevent the Trustee or the holder of any Note from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article Four of the
holders of Senior Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article Four, the Trustee, subject to the provisions of
Section 8.1, and the holders of the Notes shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
bankruptcy, dissolution, winding up, liquidation or reorganization proceedings
are pending, or a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
delivered to the Trustee or to the holders of the Notes, for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon and all other facts pertinent thereto or to
this Article Four.
Section 4.4. Authorization To Effect Subordination. Each holder of a
Note by the holder's acceptance thereof authorizes and directs the Trustee on
the holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article Four and appoints the
Trustee to act as the holder's attorney-in-fact for any and all such purposes.
If the Trustee does not file a proper proof of claim or proof of debt in the
form required in any proceeding referred to in the third paragraph of Section
7.2 hereof at least thirty (30) days before the expiration of the time to file
such claim, the holders of any Senior Indebtedness or their Representatives are
hereby authorized to file an appropriate claim for and on behalf of the holders
of the Notes.
Section 4.5. Notice To Trustee. The Company shall give prompt written
notice in the form of an Officers' Certificate to a Responsible Officer of the
Trustee and to any paying agent of any fact known to the Company that would
prohibit the making of any payment of monies to or by the Trustee or any paying
agent in respect of the Notes pursuant to the provisions of this Article Four.
Notwithstanding the provisions of this Article Four or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment of monies to or by
the Trustee in respect of the Notes pursuant to the provisions of this Article
Four, unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office from the Company (in the
form of an Officers' Certificate) or a Representative or a holder or holders of
Senior Indebtedness, and before the receipt of any such written notice, the
Trustee, subject to the
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provisions of Section 8.1, shall be entitled in all respects to assume that no
such facts exist; provided, however, that if on a date not less than one
Business Day prior to the date upon which by the terms hereof any such monies
may become payable for any purpose (including, without limitation, the payment
of the principal of, or premium, if any, or interest (including Liquidated
Damages, if any) on any Note) the Trustee shall not have received, with respect
to such monies, the notice provided for in this Section 4.5, then, anything
herein contained to the contrary notwithstanding, the Trustee shall have full
power and authority to apply monies received to the purpose for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it on or after such prior date.
Notwithstanding anything in this Article Four to the contrary,
nothing shall prevent any payment by the Trustee to the Noteholders of monies
deposited with it pursuant to Section 13.1, if a Responsible Officer of the
Trustee shall not have received written notice at the Corporate Trust Office on
or before one Business Day prior to the date such payment is due that such
payment is not permitted under Section 4.1 or 4.2.
The Trustee, subject to the provisions of Section 8.1, shall be
entitled to rely on the delivery to it of a written notice by a Representative
or a person representing himself to be a holder of Senior Indebtedness (or a
trustee on behalf of such holder) to establish that such notice has been given
by a Representative or a holder of Senior Indebtedness or a trustee on behalf of
any such holder or holders. The Trustee shall not be required to make any
payment or distribution to or on behalf of a holder of Senior Indebtedness
pursuant to this Article Four unless it has received satisfactory evidence as to
the amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article Four.
Section 4.6. Trustee's Relation To Senior Indebtedness. The Trustee, in
its individual capacity, shall be entitled to all the rights set forth in this
Article Four in respect of any Senior Indebtedness at any time held by it, to
the same extent as any other holder of Senior Indebtedness, and nothing in
Section 8.13 or elsewhere in this Indenture shall deprive the Trustee of any of
its rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Four, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 8.1, the Trustee shall not be liable to any holder of
Senior Indebtedness (i) for any failure to make any payments or distributions to
such holder or (ii) if it shall pay over or deliver to holders of Notes, the
Company or any other Person money in compliance with this Article Four.
Section 4.7. No Impairment Of Subordination. No right of any present or
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof
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which any such holder may have or otherwise be charged with. Senior Indebtedness
may be created, renewed or extended and holders of Senior Indebtedness may
exercise any rights under any instrument creating or evidencing such Senior
Indebtedness, including, without limitation, any waiver of default thereunder,
without any notice to or consent from the holders of the Notes or the Trustee.
No compromise, alteration, amendment, modification, extension, renewal or other
change of, or waiver, consent or other action in respect of, any liability or
obligation under or in respect of the Senior Indebtedness or any terms or
conditions of any instrument creating or evidencing such Senior Indebtedness
shall in any way alter or affect any of the provisions of this Article Four or
the subordination of the Notes provided thereby.
Section 4.8. Certain Conversions Not Deemed Payment. For the purposes of
this Article Four only, (1) the issuance and delivery of junior securities upon
conversion of Notes in accordance with Article Fifteen shall not be deemed to
constitute a payment or distribution on account of the principal of, premium, if
any, or interest (including Liquidated Damages, if any) on Notes or on account
of the purchase or other acquisition of Notes, and (2) the payment, issuance or
delivery of cash (except in satisfaction of fractional shares pursuant to
Section 15.3), property or securities (other than junior securities) upon
conversion of a Note shall be deemed to constitute payment on account of the
principal of, premium, if any, or interest (including Liquidated Damages, if
any) on such Note. For the purposes of this Section 4.8, the term "junior
securities" means (a) shares of any stock of any class of the Company or (b)
securities of the Company that are subordinated in right of payment to all
Senior Indebtedness that may be outstanding at the time of issuance or delivery
of such securities to substantially the same extent as, or to a greater extent
than, the Notes are so subordinated as provided in this Article Four. Nothing
contained in this Article Four or elsewhere in this Indenture or in the Notes is
intended to or shall impair, as among the Company, its creditors (other than
holders of Senior Indebtedness) and the Noteholders, the right, which is
absolute and unconditional, of the Holder of any Note to convert such Note in
accordance with Article Fifteen.
Section 4.9. Article Applicable To Paying Agents. If at any time any
paying agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term "Trustee" as used in this Article Four shall
(unless the context otherwise requires) be construed as extending to and
including such paying agent within its meaning as fully for all intents and
purposes as if such paying agent were named in this Article Four in addition to
or in place of the Trustee; provided, however, that the first paragraph of
Section 4.5 shall not apply to the Company or any Affiliate of the Company if it
or such Affiliate acts as paying agent.
The Trustee shall not be responsible for the actions or inactions
of any other paying agents (including the Company if acting as its own paying
agent) and shall have no control of any funds held by such other paying agents.
Section 4.10. Senior Indebtedness Entitled To Rely. The holders of
Senior Indebtedness (including, without limitation, Designated Senior
Indebtedness) shall have the right to rely upon this Article Four, and no
amendment or modification of the provisions contained herein shall diminish the
rights of such holders unless such holders shall have agreed in writing thereto.
Section 4.11. Reliance On Judicial Order Or Certificate Of Liquidating
Agent. Upon any payment or distribution of assets of the Company referred to in
this Article Four, the Trustee
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and the Noteholders shall be entitled to rely upon any order or decree entered
by any court of competent jurisdiction in which such insolvency, bankruptcy,
receivership, liquidation, reorganization, dissolution, winding up or similar
case or proceeding is pending, or a certificate of the trustee in bankruptcy,
liquidating trustee, custodian, receiver, assignee for the benefit of creditors,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Noteholders, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article Four.
ARTICLE 5.
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1. Payment Of Principal, Premium And Interest. The Company
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and premium, if any (including the redemption price upon
redemption pursuant to Article Three), and interest (including Liquidated
Damages, if any), on each of the Notes at the places, at the respective times
and in the manner provided herein and in the Notes.
Section 5.2. Maintenance Of Office Or Agency. The Company will maintain
an office or agency in the Borough of Manhattan, the City of New York, where the
Notes may be surrendered for registration of transfer or exchange or for
presentation for payment or for conversion or redemption and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company will give prompt written notice to the Trustee of the
location and any change in the location of such office or agency not designated
or appointed by the Trustee. If at any time the Company shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office or the office of agency of the Trustee
in The Borough of Manhattan, The City of New York (which shall initially be
located at The Bank of New York, 101 Barclay Street, Floor 21 West, New York,
New York 10286, Attention: Corporate Trust Administration.
The Company may also from time to time designate co-registrars
and one or more offices or agencies where the Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations. The Company will give prompt written notice of any such
designation or rescission and of any change in the location of any such other
office or agency.
The Company hereby initially designates the Trustee as paying
agent, Note registrar, Custodian and conversion agent and each of the Corporate
Trust Office and the office of agency of the Trustee in The Borough of
Manhattan, The City of New York (which shall initially be located at The Bank of
New York, 101 Barclay Street, Floor 21 West, New York, New York 10286,
Attention: Corporate Trust Administration, shall be considered as one such
office or agency of the Company for each of the aforesaid purposes.
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So long as the Trustee is the Note registrar, the Trustee agrees
to mail, or cause to be mailed, the notices set forth in Section 8.10(a) and the
third paragraph of Section 8.11. If co-registrars have been appointed in
accordance with this Section, the Trustee shall mail such notices only to the
Company and the holders of Notes it can identify from its records.
Section 5.3. Appointments To Fill Vacancies In Trustee's Office. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 8.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
Section 5.4. Provisions As To Paying Agent.
(a) If the Company shall appoint a paying agent other than the
Trustee, or if the Trustee shall appoint such a paying agent, the Company will
cause such paying agent to execute and deliver to the Trustee an instrument in
which such agent shall agree with the Trustee, subject to the provisions of this
Section 5.4:
(1) that it will hold all sums held by it as such agent
for the payment of the principal of and premium, if any, or interest (including
Liquidated Damages, if any) on the Notes (whether such sums have been paid to it
by the Company or by any other obligor on the Notes) in trust for the benefit of
the holders of the Notes;
(2) that it will give the Trustee notice of any failure by
the Company (or by any other obligor on the Notes) to make any payment of the
principal of and premium, if any, or interest on the Notes when the same shall
be due and payable; and
(3) that at any time during the continuance of an Event of
Default, upon request of the Trustee, it will forthwith pay to the Trustee all
sums so held in trust.
The Company shall, on or before each due date of the principal
of, premium, if any, or interest on the Notes, deposit with the paying agent a
sum (in funds which are immediately available on the due date for such payment)
sufficient to pay such principal, premium, if any, or interest, and (unless such
paying agent is the Trustee) the Company will promptly notify the Trustee of any
failure to take such action; provided, however, that if such deposit is made on
the due date, such deposit shall be received by the paying agent by 10:00 a.m.,
New York City time, on such date.
(b) If the Company shall act as its own paying agent, it will, on
or before each due date of the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Notes, set aside, segregate and
hold in trust for the benefit of the holders of the Notes a sum sufficient to
pay such principal, premium, if any, or interest (including Liquidated Damages,
if any) so becoming due and will promptly notify the Trustee of any failure to
take such action and of any failure by the Company (or any other obligor under
the Notes) to make any payment of the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Notes when the same shall become
due and payable.
(c) Anything in this Section 5.4 to the contrary notwithstanding,
the Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by the Company
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or any paying agent hereunder as required by this Section 5.4, such sums to be
held by the Trustee upon the trusts herein contained and upon such payment by
the Company or any paying agent to the Trustee, the Company or such paying agent
shall be released from all further liability with respect to such sums.
(d) Anything in this Section 5.4 to the contrary notwithstanding,
the agreement to hold sums in trust as provided in this Section 5.4 is subject
to Sections 13.3 and 13.4.
The Trustee shall not be responsible for the actions of any other
paying agents (including the Company if acting as its own paying agent) and
shall have no control of any funds held by such other paying agents.
Section 5.5. Existence. Subject to Article Twelve, the Company will do
or cause to be done all things necessary to preserve and keep in full force and
effect its existence and rights (charter and statutory); provided, however, that
the Company shall not be required to preserve any such right if the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Noteholders.
Section 5.6. Maintenance Of Properties. The Company will cause all
properties used or useful in the conduct of its business or the business of any
Significant Subsidiary to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section 5.6
shall prevent the Company from discontinuing the operation or maintenance of any
of such properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any subsidiary and
not disadvantageous in any material respect to the Noteholders.
Section 5.7. Payment Of Taxes And Other Claims. The Company will pay or
discharge, or cause to be paid or discharged, before the same may become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Significant Subsidiary or upon the income,
profits or property of the Company or any Significant Subsidiary, (ii) all
claims for labor, materials and supplies which, if unpaid, might by law become a
lien or charge upon the property of the Company or any Significant Subsidiary
and (iii) all stamps and other duties, if any, which may be imposed by the
United States or any political subdivision thereof or therein in connection with
the issuance, transfer, exchange or conversion of any Notes or with respect to
this Indenture; provided, however, that, in the case of clauses (i) and (ii),
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim (A) if the failure to do so
will not, in the aggregate, have a material adverse impact on the Company or (B)
if the amount, applicability or validity is being contested in good faith by
appropriate proceedings.
Section 5.8. Rule 144A Information Requirement. Within the period prior
to the expiration of the holding period applicable to sales thereof under Rule
144(k) under the
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Securities Act (or any successor provision), the Company covenants and agrees
that it shall, during any period in which it is not subject to Section 13 or
15(d) under the Exchange Act, make available to any holder or beneficial holder
of Notes or any Common Stock issued upon conversion thereof which continue to be
Restricted Securities in connection with any sale thereof and any prospective
purchaser of Notes or such Common Stock designated by such holder or beneficial
holder, the information required pursuant to Rule 144A(d)(4) under the
Securities Act upon the request of any holder or beneficial holder of the Notes
or such Common Stock and it will take such further action as any holder or
beneficial holder of such Notes or such Common Stock may reasonably request, all
to the extent required from time to time to enable such holder or beneficial
holder to sell its Notes or Common Stock without registration under the
Securities Act within the limitation of the exemption provided by Rule 144A, as
such Rule may be amended from time to time. Upon the request of any holder or
any beneficial holder of the Notes or such Common Stock, the Company will
deliver to such holder a written statement as to whether it has complied with
such requirements.
Section 5.9. Stay, Extension And Usury Laws. The Company covenants (to
the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or
forgive the Company from paying all or any portion of the principal of, premium,
if any, or interest (including Liquidated Damages, if any) on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture and the
Company (to the extent it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not, by resort
to any such law, hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 5.10. Compliance Certificate. The Company shall deliver to the
Trustee, within one hundred twenty (120) days after the end of each fiscal year
of the Company, a certificate signed by either the principal executive officer,
principal financial officer or principal accounting officer of the Company,
stating whether or not, to the best knowledge of the signer thereof, the Company
is in default in the performance and observance of any of the terms, provisions
and conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and the status thereof of
which the signer may have knowledge.
The Company will deliver to the Trustee, forthwith upon becoming
aware of (i) any default in the performance or observance of any covenant,
agreement or condition contained in this Indenture or (ii) any Event of Default,
an Officers' Certificate specifying with particularity such default or Event of
Default and further stating what action the Company has taken, is taking or
proposes to take with respect thereto.
Any notice required to be given under this Section 5.10 or
Section 4.5 shall be delivered to a Responsible Officer of the Trustee at its
Corporate Trust Office. In the event that the payment of the Notes is
accelerated because of an Event of Default, the Company shall promptly provide
written notice to the Trustee specifying the names and addresses of the holders
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of Senior Indebtedness if the Trustee (and not the Company) is to provide
holders of Senior Indebtedness notice of such acceleration under Section 4.5 of
the Indenture.
Section 5.11. Liquidated Damages Notice. In the event that the Company
is required to pay Liquidated Damages to holders of Notes pursuant to the
Registration Rights Agreement, the Company will provide written notice
("Liquidated Damages Notice") to the Trustee of its obligation to pay Liquidated
Damages no later than fifteen (15) days prior to the proposed payment date for
the Liquidated Damages, and the Liquidated Damages Notice shall set forth the
amount of Liquidated Damages to be paid by the Company on such payment date. The
Trustee shall not at any time be under any duty to responsibility to any holder
of Notes to determine the Liquidated Damages, or with respect to the nature,
extent or calculation of the amount of Liquidated Damages when made, or with
respect to the method employed in such calculation of the Liquidated Damages.
ARTICLE 6.
NOTEHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
Section 6.1. Noteholders' Lists. The Company covenants and agrees that
it will furnish or cause to be furnished to the Trustee, semiannually, not more
than fifteen (15) days after each March 1 and September 1 in each year beginning
with September 1, 2000, and at such other times as the Trustee may request in
writing, within thirty (30) days after receipt by the Company of any such
request (or such lesser time as the Trustee may reasonably request in order to
enable it to timely provide any notice to be provided by it hereunder), a list
in such form as the Trustee may reasonably require of the names and addresses of
the holders of Notes as of a date not more than fifteen (15) days (or such other
date as the Trustee may reasonably request in order to so provide any such
notices) prior to the time such information is furnished, except that no such
list need be furnished by the Company to the Trustee so long as the Trustee is
acting as the sole Note registrar.
Section 6.2. Preservation And Disclosure Of Lists.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Notes contained in the most recent list furnished to it as provided
in Section 6.1 or maintained by the Trustee in its capacity as Note registrar or
co-registrar in respect of the Notes, if so acting. The Trustee may destroy any
list furnished to it as provided in Section 6.1 upon receipt of a new list so
furnished.
(b) The rights of Noteholders to communicate with other holders
of Notes with respect to their rights under this Indenture or under the Notes,
and the corresponding rights and duties of the Trustee, shall be as provided by
the Trust Indenture Act.
(c) Every Noteholder, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of holders of Notes made
pursuant to the Trust Indenture Act.
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Section 6.3. Reports By Trustee.
(a) Within sixty (60) days after May 15 of each year commencing
with the year 2000, the Trustee shall transmit to holders of Notes such reports
dated as of May 15 of the year in which such reports are made concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
(b) A copy of such report shall, at the time of such transmission
to holders of Notes, be filed by the Trustee with each stock exchange and
automated quotation system upon which the Notes are listed and with the Company.
The Company will promptly notify the Trustee in writing when the Notes are
listed on any stock exchange or automated quotation system or delisted
therefrom.
Section 6.4. Reports By Company. The Company shall file with the Trustee
(and the Commission if at any time the Indenture becomes qualified under the
Trust Indenture Act), and transmit to holders of Notes, such information,
documents and other reports and such summaries thereof, as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant to such Act, whether or not the Notes are governed by such Act;
provided, however, that any such information, documents or reports required to
be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
shall be filed with the Trustee within fifteen (15) days after the same is so
required to be filed with the Commission. Delivery of such reports, information
and documents to the Trustee is for informational purposes only and the
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
ARTICLE 7.
REMEDIES OF THE TRUSTEE AND
NOTEHOLDERS ON AN EVENT OF DEFAULT
Section 7.1. Events Of Default. In case one or more of the following
Events of Default (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) shall have occurred and be
continuing:
(a) default in the payment of any installment of interest
(including Liquidated Damages, if any) upon any of the Notes as and when the
same shall become due and payable, and continuance of such default for a period
of thirty (30) days, whether or not such payment is permitted under Article Four
hereof; or
(b) default in the payment of the principal of or premium, if
any, on any of the Notes as and when the same shall become due and payable
either at maturity or in connection
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with any redemption pursuant to Article Three, by acceleration or otherwise,
whether or not such payment is permitted under Article Four hereof; or
(c) failure on the part of the Company duly to observe or perform
any other of the covenants or agreements on the part of the Company in the Notes
or in this Indenture (other than a covenant or agreement a default in whose
performance or whose breach is elsewhere in this Section 7.1 specifically dealt
with) continued for a period of sixty (60) days after the date on which written
notice of such failure, requiring the Company to remedy the same, shall have
been given to the Company by the Trustee, or the Company and a Responsible
Officer of the Trustee by the holders of at least twenty-five percent (25%) in
aggregate principal amount of the Notes at the time outstanding determined in
accordance with Section 9.4; or
(d) the Company shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
the Company or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of the Company or any
substantial part of the property of the Company, or shall consent to any such
relief or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against the Company, or shall
make a general assignment for the benefit of creditors, or shall fail generally
to pay its debts as they become due; or
(e) an involuntary case or other proceeding shall be commenced
against the Company seeking liquidation, reorganization or other relief with
respect to the Company or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of the Company or any
substantial part of the property of the Company, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a period of ninety
(90) consecutive days;
then, and in each and every such case (other than an Event of Default specified
in Section 7.1(d) or (e)), unless the principal of all of the Notes shall have
already become due and payable, either the Trustee or the holders of not less
than twenty-five percent (25%) in aggregate principal amount of the Notes then
outstanding hereunder determined in accordance with Section 9.4, by notice in
writing to the Company (and to the Trustee if given by Noteholders), may declare
the principal of and premium, if any, on all the Notes and the interest accrued
thereon (including Liquidated Damages, if any) to be immediately due and
payable, and upon any such declaration the same shall become and shall be
immediately due and payable, anything in this Indenture or in the Notes
contained to the contrary notwithstanding. If an Event of Default specified in
Section 7.1(d) or (e) occurs, the principal of all the Notes and the interest
accrued thereon shall (including Liquidated Damages, if any) be immediately and
automatically due and payable without necessity of further action. This
provision, however, is subject to the conditions that if, at any time after the
principal of the Notes shall have been so declared due and payable, and before
any judgment or decree for the payment of the monies due shall have been
obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
interest upon (including Liquidated Damages, if any) all Notes and the principal
of and premium, if any, on any and all Notes which shall have become due
otherwise than by acceleration (with interest on overdue installments of
interest
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(including Liquidated Damages, if any) (to the extent that payment of such
interest is enforceable under applicable law) and on such principal and premium,
if any, at the rate borne by the Notes, to the date of such payment or deposit)
and amounts due to the Trustee pursuant to Section 8.6, and if any and all
defaults under this Indenture, other than the nonpayment of principal of and
premium, if any, and accrued interest on (including Liquidated Damages, if any)
Notes which shall have become due by acceleration, shall have been cured or
waived pursuant to Section 7.7, then and in every such case the holders of a
majority in aggregate principal amount of the Notes then outstanding, by written
notice to the Company and to the Trustee, may waive all defaults or Events of
Default and rescind and annul such declaration and its consequences; but no such
waiver or rescission and annulment shall extend to or shall affect any
subsequent default or Event of Default, or shall impair any right consequent
thereon. The Company shall notify a Responsible Officer of the Trustee, promptly
upon becoming aware thereof, of any Event of Default.
In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such waiver or rescission and annulment or for any other
reason or shall have been determined adversely to the Trustee, then and in every
such case the Company, the holders of Notes, and the Trustee shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the holders of Notes, and the Trustee shall
continue as though no such proceeding had been taken.
Section 7.2. Payments Of Notes On Default; Suit Therefor. The Company
covenants that (a) in case default shall be made in the payment of any
installment of interest upon (including Liquidated Damages, if any) any of the
Notes as and when the same shall become due and payable, and such default shall
have continued for a period of thirty (30) days or (b) in case default shall be
made in the payment of the principal of or premium, if any, on any of the Notes
as and when the same shall have become due and payable, whether at maturity of
the Notes or in connection with any redemption, by or under this Indenture by
declaration or otherwise, then, upon demand of the Trustee, the Company will pay
to the Trustee, for the benefit of the holders of the Notes, the whole amount
that then shall have become due and payable on all such Notes for principal and
premium, if any, or interest (including Liquidated Damages, if any), as the case
may be, with interest upon the overdue principal and premium, if any, and (to
the extent that payment of such interest is enforceable under applicable law)
upon the overdue installments of interest (including Liquidated Damages, if any)
at the rate borne by the Notes, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
all other amounts due the Trustee under Section 8.6. Until such demand by the
Trustee, the Company may pay the principal of and premium, if any, and interest
on (including Liquidated Damages, if any) the Notes to the registered holders,
whether or not the Notes are overdue.
In case the Company shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any actions or proceedings at law
or in equity for the collection of the sums so due and unpaid, and may prosecute
any such action or proceeding to judgment or final decree, and may enforce any
such judgment or final decree against the Company or any other obligor on the
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Notes and collect in the manner provided by law out of the property of the
Company or any other obligor on the Notes wherever situated the monies adjudged
or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company or any other obligor on the Notes under
Title 11 of the United States Code, or any other applicable law, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for, or taken
possession of, the Company or such other obligor, the property of the Company or
such other obligor, or in the case of any other judicial proceedings relative to
the Company or such other obligor upon the Notes, or to the creditors or
property of the Company or such other obligor, the Trustee, irrespective of
whether the principal of the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section 7.2, shall
be entitled and empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount of principal, premium, if
any, and interest (including Liquidated Damages, if any) owing and unpaid in
respect of the Notes, and, in case of any judicial proceedings, to file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and of the Noteholders allowed in
such judicial proceedings relative to the Company or any other obligor on the
Notes, its or their creditors, or its or their property, and to collect and
receive any monies or other property payable or deliverable on any such claims,
and to distribute the same after the deduction of any amounts due the Trustee
under Section 8.6, and any receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, custodian or similar official is hereby authorized
by each of the Noteholders to make such payments to the Trustee, and, in the
event that the Trustee shall consent to the making of such payments directly to
the Noteholders, to pay to the Trustee any amount due it for reasonable
compensation, expenses, advances and disbursements, including counsel fees
incurred by it up to the date of such distribution. To the extent that such
payment of reasonable compensation, expenses, advances and disbursements out of
the estate in any such proceedings shall be denied for any reason, payment of
the same shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, monies, securities and other property which the
holders of the Notes may be entitled to receive in such proceedings, whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Trustee without the
possession of any of the Notes, or the production thereof at any trial or other
proceeding relative thereto, and any such suit or proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel, be for the ratable benefit of the holders of the Notes.
In any proceedings brought by the Trustee (and in any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Notes, and it shall not be necessary to make any holders of the Notes
parties to any such proceedings.
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Section 7.3. Application Of Monies Collected By Trustee. Any monies
collected by the Trustee pursuant to this Article Seven shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes, and stamping thereon the
payment, if only partially paid, and upon surrender thereof, if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 8.6;
SECOND: Subject to the provisions of Article Four, in case the
principal of the outstanding Notes shall not have become due and be unpaid, to
the payment of interest on (including Liquidated Damages, if any) the Notes in
default in the order of the maturity of the installments of such interest, with
interest (to the extent that such interest has been collected by the Trustee)
upon the overdue installments of interest (including Liquidated Damages, if any)
at the rate borne by the Notes, such payments to be made ratably to the Persons
entitled thereto;
THIRD: Subject to the provisions of Article Four, in case the
principal of the outstanding Notes shall have become due, by declaration or
otherwise, and be unpaid to the payment of the whole amount then owing and
unpaid upon the Notes for principal and premium, if any, and interest (including
Liquidated Damages, if any), with interest on the overdue principal and premium,
if any, and (to the extent that such interest has been collected by the Trustee)
upon overdue installments of interest (including Liquidated Damages, if any) at
the rate borne by the Notes, and in case such monies shall be insufficient to
pay in full the whole amounts so due and unpaid upon the Notes, then to the
payment of such principal and premium, if any, and interest (including
Liquidated Damages, if any) without preference or priority of principal and
premium, if any, over interest (including Liquidated Damages, if any), or of
interest (including Liquidated Damages, if any) over principal and premium, if
any, or of any installment of interest over any other installment of interest,
or of any Note over any other Note, ratably to the aggregate of such principal
and premium, if any, and accrued and unpaid interest; and
FOURTH: Subject to the provisions of Article Four, to the payment
of the remainder, if any, to the Company or any other Person lawfully entitled
thereto.
Section 7.4. Proceedings By Noteholder. No holder of any Note shall have
any right by virtue of or by reference to any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture, or for the appointment of a receiver, trustee,
liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the holders of not less than twenty-five percent (25%)
in aggregate principal amount of the Notes then outstanding shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for sixty (60)
days after its receipt of such notice, request and offer of indemnity, shall
have neglected or refused to institute any such action, suit or proceeding and
no direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 7.7; it being understood and intended, and being
expressly covenanted by the taker and holder of every Note with every other
taker and holder and the Trustee, that no one or
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more holders of Notes shall have any right in any manner whatever by virtue of
or by reference to any provision of this Indenture to affect, disturb or
prejudice the rights of any other holder of Notes, or to obtain or seek to
obtain priority over or preference to any other such holder, or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal, ratable and common benefit of all holders of Notes (except as otherwise
provided herein). For the protection and enforcement of this Section 7.4, each
and every Noteholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Notwithstanding any other provision of this Indenture and any
provision of any Note, the right of any holder of any Note to receive payment of
the principal of and premium, if any (including the redemption price upon
redemption pursuant to Article Three), and accrued interest on (including
Liquidated Damages, if any) such Note, on or after the respective due dates
expressed in such Note or in the event of redemption, or to institute suit for
the enforcement of any such payment on or after such respective dates against
the Company shall not be impaired or affected without the consent of such
holder.
Anything in this Indenture or the Notes to the contrary
notwithstanding, the holder of any Note, without the consent of either the
Trustee or the holder of any other Note, in its own behalf and for its own
benefit, may enforce, and may institute and maintain any proceeding suitable to
enforce, its rights of conversion as provided herein.
Section 7.5. Proceedings By Trustee. In case of an Event of Default
known to a Responsible Officer of the Trustee, the Trustee may, in its
discretion, proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as are necessary to protect
and enforce any of such rights, either by suit in equity or by action at law or
by proceeding in bankruptcy or otherwise, whether for the specific enforcement
of any covenant or agreement contained in this Indenture or in aid of the
exercise of any power granted in this Indenture, or to enforce any other legal
or equitable right vested in the Trustee by this Indenture or by law.
Section 7.6. Remedies Cumulative And Continuing. Except as provided in
Section 2.6, all powers and remedies given by this Article Seven to the Trustee
or to the Noteholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any thereof or of any other powers and remedies
available to the Trustee or the holders of the Notes, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the Trustee
or of any holder of any of the Notes to exercise any right or power accruing
upon any default or Event of Default occurring and continuing as aforesaid shall
impair any such right or power, or shall be construed to be a waiver of any such
default or any acquiescence therein, and, subject to the provisions of Section
7.4, every power and remedy given by this Article Seven or by law to the Trustee
or to the Noteholders may be exercised from time to time, and as often as shall
be deemed expedient, by the Trustee or by the Noteholders.
Section 7.7. Direction Of Proceedings And Waiver Of Defaults By Majority
Of Noteholders. The holders of a majority in aggregate principal amount of the
Notes at the time outstanding determined in accordance with Section 9.4 shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or
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exercising any trust or power conferred on the Trustee; provided, however, that
(a) such direction shall not be in conflict with any rule of law or with this
Indenture, (b) the Trustee may take any other action which is not inconsistent
with such direction and (c) the Trustee may decline to take any action that
would benefit some Noteholders to the detriment of other Noteholders. The
holders of a majority in aggregate principal amount of the Notes at the time
outstanding determined in accordance with Section 9.4 may, on behalf of the
holders of all of the Notes, waive any past default or Event of Default
hereunder and its consequences except (i) a default in the payment of interest
(including Liquidated Damages, if any) or premium, if any, on, or the principal
of, the Notes, (ii) a failure by the Company to convert any Notes into Common
Stock, (iii) a default in the payment of the redemption price pursuant to
Article Three or (iv) a default in respect of a covenant or provisions hereof
which under Article Eleven cannot be modified or amended without the consent of
the holders of each or all Notes then outstanding or affected thereby. Upon any
such waiver, the Company, the Trustee and the holders of the Notes shall be
restored to their former positions and rights hereunder; but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon. Whenever any default or Event of Default hereunder
shall have been waived as permitted by this Section 7.7, said default or Event
of Default shall for all purposes of the Notes and this Indenture be deemed to
have been cured and to be not continuing; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
Section 7.8. Notice Of Defaults. The Trustee shall, within ninety (90)
days after a Responsible Officer of the Trustee has knowledge of the occurrence
of a default, mail to all Noteholders, as the names and addresses of such
holders appear upon the Note register, notice of all defaults known to a
Responsible Officer, unless such defaults shall have been cured or waived before
the giving of such notice; provided, however, that except in the case of default
in the payment of the principal of, or premium, if any, or interest (including
Liquidated Damages, if any) on any of the Notes, the Trustee shall be protected
in withholding such notice if and so long as a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Noteholders.
Section 7.9. Undertaking To Pay Costs. All parties to this Indenture
agree, and each holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may, in its discretion, require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; provided, however, that the provisions of this
Section 7.9 (to the extent permitted by law) shall not apply to any suit
instituted by the Trustee, any suit instituted by any Noteholder, or group of
Noteholders, holding in the aggregate more than ten percent (10%) in principal
amount of the Notes at the time outstanding determined in accordance with
Section 9.4, any suit instituted by any Noteholder for the enforcement of the
payment of the principal of or premium, if any, or interest on any Note on or
after the due date expressed in such Note or any suit for the enforcement of the
right to convert any Note in accordance with the provisions of Article Fifteen.
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ARTICLE 8.
THE TRUSTEE
Section 8.1. Duties And Responsibilities Of Trustee. The Trustee, prior
to the occurrence of an Event of Default and after the curing of all Events of
Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Event of
Default has occurred (which has not been cured or waived), the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default which may have occurred:
(1) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture and the Trust
Indenture Act, and the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Indenture and
no implied covenants or obligations shall be read into this Indenture and the
Trust Indenture Act against the Trustee; and
(2) in the absence of bad faith and willful misconduct on
the part of the Trustee, the Trustee may conclusively rely as to the truth of
the statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but, in the case of any such certificates or
opinions which by any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Officers of the Trustee, unless
the Trustee was negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the written
direction of the holders of not less than a majority in principal amount of the
Notes at the time outstanding determined as provided in Section 9.4 relating to
the time, method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture;
(d) whether or not therein provided, every provision of this
Indenture relating to the conduct or affecting the liability of, or affording
protection to, the Trustee shall be subject to the provisions of this Section
8.1;
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(e) the Trustee shall not be liable in respect of any payment (as
to the correctness of amount, entitlement to receive or any other matters
relating to payment) or notice effected by the Company or any paying agent or
any records maintained by any co-registrar with respect to the Notes; and
(f) if any party fails to deliver a notice relating to an event
the fact of which, pursuant to this Indenture, requires notice to be sent to the
Trustee, the Trustee may conclusively rely on its failure to receive such notice
as reason to act as if no such event occurred.
None of the provisions contained in this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
Section 8.2. Reliance On Documents, Opinions, Etc. Except as otherwise
provided in Section 8.1:
(a) the Trustee may conclusively rely and shall be protected in
acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, debenture, note, coupon or other paper or
document (whether in its original or facsimile form) believed by it in good
faith to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof be herein specifically prescribed);
and any resolution of the Board of Directors may be evidenced to the Trustee by
a copy thereof certified by the Secretary or an Assistant Secretary of the
Company;
(c) the Trustee may consult with counsel of its own selection and
any advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or omitted by it hereunder in good
faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Noteholders pursuant to the provisions of this
Indenture, unless such Noteholders shall have offered to the Trustee security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which may be incurred therein or thereby;
(e) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney;
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(f) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder;
(g) the Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights or powers conferred upon
it by this Indenture; provided, however, that the Trustee's conduct does not
constitute willful misconduct or negligence;
(h) the Trustee shall not be deemed to have notice of any Default
or Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Notes and this Indenture;
(i) the rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder; and
(j) the Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.
Section 8.3. No Responsibility For Recitals, Etc. The recitals contained
herein and in the Notes (except in the Trustee's certificate of authentication)
shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with the provisions of this Indenture.
Section 8.4. Trustee, Paying Agents, Conversion Agents Or Registrar May
Own Notes. The Trustee, any paying agent, any conversion agent or Note
registrar, in its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights it would have if it were not Trustee,
paying agent, conversion agent or Note registrar.
Section 8.5. Monies To Be Held In Trust. Subject to the provisions of
Section 13.4 and Section 4.2, all monies received by the Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received. Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as may be agreed in writing from time to time by the Company and the
Trustee.
Section 8.6. Compensation And Expenses Of Trustee. The Company covenants
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, such compensation for all services rendered by it hereunder in any
capacity (which shall not be
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limited by any provision of law in regard to the compensation of a trustee of an
express trust) as mutually agreed to from time to time in writing between the
Company and the Trustee, and the Company will pay or reimburse the Trustee upon
its request for all reasonable expenses, disbursements and advances reasonably
incurred or made by the Trustee in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel) except any such expense, disbursement or advance
as may arise from its negligence, willful misconduct, recklessness or bad faith.
The Company also covenants to indemnify the Trustee (or any officer, director or
employee of the Trustee), in any capacity under this Indenture and its agents
and any authenticating agent for, and to hold them harmless against, any and all
loss, liability, damage, claim or expense incurred without negligence, willful
misconduct, recklessness or bad faith on the part of the Trustee or such
officers, directors, employees and agent or authenticating agent, as the case
may be, and arising out of or in connection with the acceptance or
administration of this trust or in any other capacity hereunder, including the
costs and expenses of defending themselves against any claim (whether asserted
by the Company, a holder of Notes or any other Person) of liability in the
premises. The obligations of the Company under this Section 8.6 to compensate or
indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall be secured by a lien prior to that of the Notes
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the benefit of the holders of particular Notes. The
obligation of the Company under this Section shall survive the satisfaction and
discharge of this Indenture.
When the Trustee and its agents and any authenticating agent
incur expenses or render services after an Event of Default specified in Section
7.1(d) or (e) with respect to the Company occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any bankruptcy, insolvency or similar laws.
The provisions of this Section 8.6 shall not be subject to the
subordination provisions of Article Four.
Section 8.7. Officers' Certificate As Evidence. Except as otherwise
provided in Section 8.1, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or willful misconduct on the part
of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee.
Section 8.8. Conflicting Interests Of Trustee. If the Trustee has or
shall acquire a conflicting interest within the meaning of the Trust Indenture
Act, the Trustee shall either eliminate such interest or resign, to the extent
and in the manner provided by, and subject to the provisions of, the Trust
Indenture Act and this Indenture.
Section 8.9. Eligibility Of Trustee. There shall at all times be a
Trustee hereunder which shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000 (or if such Person is a member of a bank holding company system, its
bank holding company shall have a combined capital and surplus of at least
$50,000,000). If such Person publishes reports of condition at least annually,
pursuant to
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law or to the requirements of any supervising or examining authority, then for
the purposes of this Section 8.9 the combined capital and surplus of such Person
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 8.9, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article Eight.
Section 8.10. Resignation or Removal Of Trustee.
(a) The Trustee may at any time resign by giving written notice
of such resignation to the Company and to the holders of Notes. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
trustee by written instrument, in duplicate, executed by order of the Board of
Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment sixty (60) days after the
mailing of such notice of resignation to the Noteholders, the resigning Trustee
may petition, at the expense of the Company, any court of competent jurisdiction
for the appointment of a successor trustee, or, if any Noteholder who has been a
bona fide holder of a Note or Notes for at least six (6) months may, subject to
the provisions of Section 7.9, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with Section 8.8
after written request therefor by the Company or by any Noteholder who has been
a bona fide holder of a Note or Notes for at least six (6) months;
(2) the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.9 and shall fail to resign after written
request therefor by the Company or by any such Noteholder; or
(3) the Trustee shall become incapable of acting, or shall
be adjudged bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation;
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to the
provisions of Section 7.9, any Noteholder who has been a bona fide holder of a
Note or Notes for at least six (6) months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor trustee; provided,
however, that if no successor Trustee shall have been appointed and have
accepted appointment sixty (60) days after either the Company or the Noteholders
has removed the Trustee, the Trustee so removed may petition, at the expense of
the
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Company, any court of competent jurisdiction for an appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of
the Notes at the time outstanding may at any time remove the Trustee and
nominate a successor trustee which shall be deemed appointed as successor
trustee unless, within ten (10) days after notice to the Company of such
nomination, the Company objects thereto, in which case the Trustee so removed or
any Noteholder, or if such Trustee so removed or any Noteholder fails to act,
the Company, upon the terms and conditions and otherwise as in Section 8.10(a)
provided, may petition any court of competent jurisdiction for an appointment of
a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of
a successor trustee pursuant to any of the provisions of this Section 8.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.11.
Section 8.11. Acceptance By Successor Trustee. Any successor trustee
appointed as provided in Section 8.10 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, the trustee ceasing to act shall,
upon payment of any amount then due it pursuant to the provisions of Section
8.6, execute and deliver an instrument transferring to such successor trustee
all the rights and powers of the trustee so ceasing to act. Upon request of any
such successor trustee, the Company shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such successor
trustee all such rights and powers. Any trustee ceasing to act shall,
nevertheless, retain a lien upon all property and funds held or collected by
such trustee as such, except for funds held in trust for the benefit of holders
of particular Notes, to secure any amounts then due it pursuant to the
provisions of Section 8.6.
No successor trustee shall accept appointment as provided in this
Section 8.11 unless, at the time of such acceptance, such successor trustee
shall be qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.
Upon acceptance of appointment by a successor trustee as provided
in this Section 8.11, the Company (or the former trustee, at the written
direction of the Company) shall mail or cause to be mailed notice of the
succession of such trustee hereunder to the holders of Notes at their addresses
as they shall appear on the Note register. If the Company fails to mail such
notice within ten (10) days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Company.
Section 8.12. Succession By Merger, Etc. Any corporation into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee (including any
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trust created by this Indenture), shall be the successor to the Trustee
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that in the case of any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, such corporation shall be qualified under the provisions of Section 8.8
and eligible under the provisions of Section 8.9.
In case at the time such successor to the Trustee shall succeed
to the trusts created by this Indenture, any of the Notes shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor trustee or authenticating agent
appointed by such predecessor trustee, and deliver such Notes so authenticated;
and in case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee or any authenticating agent appointed by such successor
trustee may authenticate such Notes in the name of the successor trustee; and in
all such cases such certificates shall have the full force that is provided in
the Notes or in this Indenture; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee or authenticate Notes
in the name of any predecessor Trustee shall apply only to its successor or
successors by merger, conversion or consolidation.
Section 8.13. Preferential Collection Of Claims. If and when the Trustee
shall be or become a creditor of the Company (or any other obligor on the
Notes), the Trustee shall be subject to the provisions of the Trust Indenture
Act regarding the collection of the claims against the Company (or any such
other obligor).
Section 8.14. Trustee's Application For Instructions From The Company.
Any application by the Trustee for written instructions from the Company (other
than with regard to any action proposed to be taken or omitted to be taken by
the Trustee that affects the rights of the holders of the Notes or holders of
Senior Indebtedness under this Indenture, including, without limitation, under
Article Four hereof) may, at the option of the Trustee, set forth in writing any
action proposed to be taken or omitted by the Trustee under this Indenture and
the date on and/or after which such action shall be taken or such omission shall
be effective. The Trustee shall not be liable for any action taken by, or
omission of, the Trustee in accordance with a proposal included in such
application on or after the date specified in such application (which date shall
not be less than three (3) Business Days after the date any officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to any earlier date) unless prior to taking any such action
(or the effective date in the case of an omission), the Trustee shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
ARTICLE 9.
THE NOTEHOLDERS
Section 9.1. Action By Noteholders. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any
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number of instruments of similar tenor executed by Noteholders in person or by
agent or proxy appointed in writing, (b) by the record of the holders of Notes
voting in favor thereof at any meeting of Noteholders duly called and held in
accordance with the provisions of Article Ten, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of Noteholders.
Whenever the Company or the Trustee solicits the taking of any action by the
holders of the Notes, the Company or the Trustee may fix in advance of such
solicitation, a date as the record date for determining holders entitled to take
such action. The record date shall be not more than fifteen (15) days prior to
the date of commencement of solicitation of such action.
Section 9.2. Proof Of Execution By Noteholders. Subject to the
provisions of Sections 8.1, 8.2 and 10.5, proof of the execution of any
instrument by a Noteholder or its agent or proxy shall be sufficient if made in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Notes shall be proved by the registry of such Notes or by a
certificate of the Note registrar.
The record of any Noteholders' meeting shall be proved in the
manner provided in Section 10.6.
Section 9.3. Who Are Deemed Absolute Owners. The Company, the Trustee,
any paying agent, any conversion agent and any Note registrar may deem the
Person in whose name such Note shall be registered upon the Note register to be,
and may treat it as, the absolute owner of such Note (whether or not such Note
shall be overdue and notwithstanding any notation of ownership or other writing
thereon made by any Person other than the Company or any Note registrar) for the
purpose of receiving payment of or on account of the principal of, premium, if
any, and interest on such Note, for conversion of such Note and for all other
purposes; and neither the Company nor the Trustee nor any paying agent nor any
conversion agent nor any Note registrar shall be affected by any notice to the
contrary. All such payments so made to any holder for the time being, or upon
his order, shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for monies payable upon any
such Note.
Section 9.4. Company-Owned Notes Disregarded. In determining whether the
holders of the requisite aggregate principal amount of Notes have concurred in
any direction, consent, waiver or other action under this Indenture, Notes which
are owned by the Company or any other obligor on the Notes or any Affiliate of
the Company or any other obligor on the Notes shall be disregarded and deemed
not to be outstanding for the purpose of any such determination; provided,
however, that, for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, consent, waiver or other action,
only Notes which a Responsible Officer actually knows are so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 9.4 if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right to vote
such Notes and that the pledgee is not the Company, any other obligor on the
Notes or any Affiliate of the Company or any such other obligor. In the case of
a dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee. Upon request of the Trustee,
the Company shall furnish to the Trustee promptly an Officers' Certificate
listing and identifying all Notes, if any, known by the Company to be owned or
held by or for the account of any of the above described Persons, and, subject
to Section 8.1, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth
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and of the fact that all Notes not listed therein are outstanding for the
purpose of any such determination.
Section 9.5. Revocation Of Consents; Future Holders Bound. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
9.1, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action, any holder of a Note which is shown by the evidence to be included
in the Notes the holders of which have consented to such action may, by filing
written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 9.2, revoke such action so far as concerns such
Note. Except as aforesaid, any such action taken by the holder of any Note shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Note and of any Notes issued in exchange or substitution
therefor, irrespective of whether any notation in regard thereto is made upon
such Note or any Note issued in exchange or substitution therefor.
ARTICLE 10.
MEETINGS OF NOTEHOLDERS
Section 10.1. Purpose Of Meetings. A meeting of Noteholders may be
called at any time and from time to time pursuant to the provisions of this
Article Ten for any of the following purposes:
(1) to give any notice to the Company or to the Trustee or
to give any directions to the Trustee permitted under this Indenture, or to
consent to the waiving of any default or Event of Default hereunder and its
consequences, or to take any other action authorized to be taken by Noteholders
pursuant to any of the provisions of Article Seven;
(2) to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article Eight;
(3) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the provisions of Section 11.2; or
(4) to take any other action authorized to be taken by or
on behalf of the holders of any specified aggregate principal amount of the
Notes under any other provision of this Indenture or under applicable law.
Section 10.2. Call Of Meetings By Trustee. The Trustee may at any time
call a meeting of Noteholders to take any action specified in Section 10.1, to
be held at such time and at such place as the Trustee shall determine. Notice of
every meeting of the Noteholders, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting and
the establishment of any record date pursuant to Section 9.1, shall be mailed to
holders of Notes at their addresses as they shall appear on the Note register.
Such notice shall also be mailed to the Company. Such notices shall be mailed
not less than twenty (20) nor more than ninety (90) days prior to the date fixed
for the meeting.
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Any meeting of Noteholders shall be valid without notice if the
holders of all Notes then outstanding are present in person or by proxy or if
notice is waived before or after the meeting by the holders of all Notes
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
Section 10.3. Call Of Meetings By Company Or Noteholders. In case at any
time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least ten percent (10%) in aggregate principal amount of the Notes
then outstanding, shall have requested the Trustee to call a meeting of
Noteholders, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have mailed the
notice of such meeting within twenty (20) days after receipt of such request,
then the Company or such Noteholders may determine the time and the place for
such meeting and may call such meeting to take any action authorized in Section
10.1, by mailing notice thereof as provided in Section 10.2.
Section 10.4. Qualifications For Voting. To be entitled to vote at any
meeting of Noteholders a person shall (a) be a holder of one or more Notes on
the record date pertaining to such meeting or (b) be a person appointed by an
instrument in writing as proxy by a holder of one or more Notes on the record
date pertaining to such meeting. The only persons who shall be entitled to be
present or to speak at any meeting of Noteholders shall be the persons entitled
to vote at such meeting and their counsel and any representatives of the Trustee
and its counsel and any representatives of the Company and its counsel.
Section 10.5. Regulations. Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Noteholders as provided in Section 10.3, in which case the
Company or the Noteholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the holders of a majority
in principal amount of the Notes represented at the meeting and entitled to vote
at the meeting.
Subject to the provisions of Section 9.4, at any meeting each
Noteholder or proxyholder shall be entitled to one vote for each $1,000
principal amount of Notes held or represented by him; provided, however, that no
vote shall be cast or counted at any meeting in respect of any Note challenged
as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Notes held by him or instruments in writing as aforesaid duly
designating him as the proxy to vote on behalf of other Noteholders. Any meeting
of Noteholders duly called pursuant to the provisions of Section 10.2 or 10.3
may be adjourned from time to time by the holders of a majority of the aggregate
principal amount of Notes represented at the meeting, whether or not
constituting a quorum, and the meeting may be held as so adjourned without
further notice.
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Section 10.6. Voting. The vote upon any resolution submitted to any
meeting of Noteholders shall be by written ballot on which shall be subscribed
the signatures of the holders of Notes or of their representatives by proxy and
the outstanding principal amount of the Notes held or represented by them. The
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Noteholders shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 10.2. The record shall show the principal amount of the Notes voting in
favor of or against any resolution. The record shall be signed and verified by
the affidavits of the chairman and secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting.
Any record so signed and verified shall be conclusive evidence of
the matters therein stated.
Section 10.7. No Delay Of Rights By Meeting. Nothing contained in this
Article Ten shall be deemed or construed to authorize or permit, by reason of
any call of a meeting of Noteholders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise of
any right or rights conferred upon or reserved to the Trustee or to the
Noteholders under any of the provisions of this Indenture or of the Notes.
ARTICLE 11.
SUPPLEMENTAL INDENTURES
Section 11.1. Supplemental Indentures Without Consent Of Noteholders.
The Company, when authorized by the resolutions of the Board of Directors, and
the Trustee may, from time to time, and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) make provision with respect to the conversion rights of the
holders of Notes pursuant to the requirements of Section 15.6 and the redemption
obligations of the Company pursuant to the requirements of Section 3.5(e);
(b) subject to Article Four, to convey, transfer, assign,
mortgage or pledge to the Trustee as security for the Notes, any property or
assets;
(c) to evidence the succession of another Person to the Company,
or successive successions, and the assumption by the successor Person of the
covenants, agreements and obligations of the Company pursuant to Article Twelve;
(d) to add to the covenants of the Company such further
covenants, restrictions or conditions as the Board of Directors and the Trustee
shall consider to be for the benefit of the holders of Notes, and to make the
occurrence, or the occurrence and continuance,
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of a default in any such additional covenants, restrictions or conditions a
default or an Event of Default permitting the enforcement of all or any of the
several remedies provided in this Indenture as herein set forth; provided,
however, that in respect of any such additional covenant, restriction or
condition, such supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer than that allowed in
the case of other defaults) or may provide for an immediate enforcement upon
such default or may limit the remedies available to the Trustee upon such
default;
(e) to provide for the issuance under this Indenture of Notes in
coupon form (including Notes registrable as to principal only) and to provide
for exchangeability of such Notes with the Notes issued hereunder in fully
registered form and to make all appropriate changes for such purpose;
(f) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture that may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to matters or
questions arising under this Indenture that shall not materially adversely
affect the interests of the holders of the Notes;
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes; or
(h) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualifications of
this Indenture under the Trust Indenture Act, or under any similar federal
statute hereafter enacted.
Upon the written request of the Company, accompanied by a copy of
the resolutions of the Board of Directors certified by its Secretary or
Assistant Secretary authorizing the execution of any supplemental indenture, the
Trustee is hereby authorized to join with the Company in the execution of any
such supplemental indenture, to make any further appropriate agreements and
stipulations that may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee shall not be
obligated to, but may in its discretion, enter into any supplemental indenture
that affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise.
Any supplemental indenture authorized by the provisions of this
Section 11.1 may be executed by the Company and the Trustee without the consent
of the holders of any of the Notes at the time outstanding, notwithstanding any
of the provisions of Section 11.2.
Notwithstanding any other provision of the Indenture or the
Notes, the Registration Rights Agreement and the obligation to pay Liquidated
Damages thereunder may be amended, modified or waived in accordance with the
provisions of the Registration Rights Agreement.
Section 11.2. Supplemental Indenture With Consent Of Noteholders. With
the consent (evidenced as provided in Article Nine) of the holders of not less
than a majority in aggregate principal amount of the Notes at the time
outstanding, the Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may, from time to time and at any time,
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enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or any supplemental indenture or of modifying in
any manner the rights of the holders of the Notes; provided, however, that no
such supplemental indenture shall (i) extend the fixed maturity of any Note, or
reduce the rate or extend the time of payment of interest thereon, or reduce the
principal amount thereof or premium, if any, thereon, or reduce any amount
payable on redemption thereof, or impair the right of any Noteholder to
institute suit for the payment thereof, or make the principal thereof or
interest or premium, if any, thereon payable in any coin or currency other than
that provided in the Notes, or modify the provisions of this Indenture with
respect to the subordination of the Notes in a manner adverse to the Noteholders
in any material respect, or change the obligation of the Company to redeem any
Note upon the happening of a Fundamental Change in a manner adverse to the
holder of Notes, or impair the right to convert the Notes into Common Stock
subject to the terms set forth herein, including Section 15.6, in each case,
without the consent of the holder of each Note so affected or (ii) reduce the
aforesaid percentage of Notes, the holders of which are required to consent to
any such supplemental indenture, without the consent of the holders of all Notes
then outstanding.
Upon the written request of the Company, accompanied by a copy of
the resolutions of the Board of Directors certified by its Secretary or
Assistant Secretary authorizing the execution of any such supplemental
indenture, and upon the filing with the Trustee of evidence of the consent of
Noteholders as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Noteholders
under this Section 11.2 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall approve
the substance thereof.
Section 11.3. Effect Of Supplemental Indenture. Any supplemental
indenture executed pursuant to the provisions of this Article Eleven shall
comply with the Trust Indenture Act, as then in effect, provided that this
Section 11.3 shall not require such supplemental indenture or the Trustee to be
qualified under the Trust Indenture Act prior to the time such qualification is
in fact required under the terms of the Trust Indenture Act or the Indenture has
been qualified under the Trust Indenture Act, nor shall it constitute any
admission or acknowledgment by any party to such supplemental indenture that any
such qualification is required prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or the Indenture has been
qualified under the Trust Indenture Act. Upon the execution of any supplemental
indenture pursuant to the provisions of this Article Eleven, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the respective rights, limitation of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the holders of Notes shall
thereafter be determined, exercised and enforced hereunder, subject in all
respects to such modifications and amendments and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
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Section 11.4. Notation On Notes. Notes authenticated and delivered after
the execution of any supplemental indenture pursuant to the provisions of this
Article Eleven may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may, at the Company's expense, be
prepared and executed by the Company, authenticated by the Trustee (or an
authenticating agent duly appointed by the Trustee pursuant to Section 16.11)
and delivered in exchange for the Notes then outstanding, upon surrender of such
Notes then outstanding.
Section 11.5. Evidence Of Compliance Of Supplemental Indenture To Be
Furnished To Trustee. Prior to entering into any supplemental indenture, the
Trustee may request an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article Eleven.
ARTICLE 12.
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 12.1. Company May Consolidate, Etc. On Certain Terms. Subject to
the provisions of Section 12.2, nothing contained in this Indenture or in any of
the Notes shall prevent any consolidation or merger of the Company with or into
any other Person or Persons (whether or not affiliated with the Company), or
successive consolidations or mergers in which the Company or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance or
lease (or successive sales, conveyances or leases) of all or substantially all
of the property of the Company, to any other Person (whether or not affiliated
with the Company), authorized to acquire and operate the same and that shall be
organized under the laws of the United States of America, any state thereof or
the District of Columbia; provided, however, that upon any such consolidation,
merger, sale, conveyance or lease, the due and punctual payment of the principal
of and premium, if any, and interest (including Liquidated Damages, if any) on
all of the Notes, according to their tenor and the due and punctual performance
and observance of all of the covenants and conditions of this Indenture to be
performed by the Company, shall be expressly assumed, by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee by
the Person (if other than the Company) formed by such consolidation, or into
which the Company shall have been merged, or by the Person that shall have
acquired or leased such property, and such supplemental indenture shall provide
for the applicable conversion rights set forth in Section 15.6.
Section 12.2. Successor Corporation To Be Substituted. In case of any
such consolidation, merger, sale, conveyance or lease and upon the assumption by
the successor Person, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the due and punctual payment
of the principal of and premium, if any, and interest on all of the Notes and
the due and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Company, such successor Person shall succeed to
and be substituted for the Company, with the same effect as if it had been named
herein as the party of this first part. Such successor Person thereupon may
cause to be signed, and may issue either in its own name or in the name of Getty
Images, Inc. any or all of the Notes,
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issuable hereunder that theretofore shall not have been signed by the Company
and delivered to the Trustee; and, upon the order of such successor Person
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall deliver,
or cause to be authenticated and delivered, any Notes that previously shall have
been signed and delivered by the officers of the Company to the Trustee for
authentication, and any Notes that such successor Person thereafter shall cause
to be signed and delivered to the Trustee for that purpose. All the Notes so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Notes theretofore or thereafter issued in accordance with the
terms of this Indenture as though all of such Notes had been issued at the date
of the execution hereof. In the event of any such consolidation, merger, sale,
conveyance or lease, the Person named as the "Company" in the first paragraph of
this Indenture or any successor that shall thereafter have become such in the
manner prescribed in this Article Twelve may be dissolved, wound up and
liquidated at any time thereafter and such Person shall be released from its
liabilities as obligor and maker of the Notes and from its obligations under
this Indenture.
In case of any such consolidation, merger, sale, conveyance or
lease, such changes in phraseology and form (but not in substance) may be made
in the Notes thereafter to be issued as may be appropriate.
Section 12.3. Opinion Of Counsel To Be Given Trustee. The Trustee shall
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, sale, conveyance or lease and any
such assumption complies with the provisions of this Article Twelve.
ARTICLE 13.
SATISFACTION AND DISCHARGE OF INDENTURE
Section 13.1. Discharge Of Indenture. When (a) the Company shall deliver
to the Trustee for cancellation all Notes theretofore authenticated (other than
any Notes that have been destroyed, lost or stolen and in lieu of or in
substitution for which other Notes shall have been authenticated and delivered)
and not theretofore canceled or (b) all the Notes not theretofore canceled or
delivered to the Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within one year or are to be called
for redemption within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption, and the Company shall deposit with the
Trustee, in trust, funds sufficient to pay at maturity or upon redemption of all
of the Notes (other than any Notes that shall have been mutilated, destroyed,
lost or stolen and in lieu of or in substitution for which other Notes shall
have been authenticated and delivered) not theretofore canceled or delivered to
the Trustee for cancellation, including principal and premium, if any, and
interest due or to become due to such date of maturity or redemption date, as
the case may be, accompanied by a verification report, as to the sufficiency of
the deposited amount, from an independent certified accountant or other
financial professional satisfactory to the Trustee, and if the Company shall
also pay or cause to be paid all other sums payable hereunder by the Company,
then this Indenture shall cease to be of further effect (except as to (i)
remaining rights of registration of transfer, substitution and exchange and
conversion of Notes, (ii) rights hereunder of Noteholders to receive payments of
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principal of and premium, if any, and interest on, the Notes and the other
rights, duties and obligations of Noteholders, as beneficiaries hereof with
respect to the amounts, if any, so deposited with the Trustee and (iii) the
rights, obligations and immunities of the Trustee hereunder), and the Trustee,
on written demand of the Company accompanied by an Officers' Certificate and an
Opinion of Counsel as required by Section 16.5 and at the cost and expense of
the Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture; the Company, however, hereby agrees to reimburse the
Trustee for any costs or expenses thereafter reasonably and properly incurred by
the Trustee and to compensate the Trustee for any services thereafter reasonably
and properly rendered by the Trustee in connection with this Indenture or the
Notes.
Section 13.2. Deposited Monies To Be Held In Trust By Trustee. Subject
to Section 13.4, all monies deposited with the Trustee pursuant to Section 13.1,
provided such deposit was not in violation of Article Four, shall be held in
trust for the sole benefit of the Noteholders and not to be subject to the
subordination provisions of Article Four, and such monies shall be applied by
the Trustee to the payment, either directly or through any paying agent
(including the Company if acting as its own paying agent), to the holders of the
particular Notes for the payment or redemption of which such monies have been
deposited with the Trustee, of all sums due and to become due thereon for
principal and interest and premium, if any.
Section 13.3. Paying Agent To Repay Monies Held. Upon the satisfaction
and discharge of this Indenture, all monies then held by any paying agent of the
Notes (other than the Trustee) shall, upon written request of the Company, be
repaid to it or paid to the Trustee, and thereupon such paying agent shall be
released from all further liability with respect to such monies.
Section 13.4. Return Of Unclaimed Monies. Subject to the requirements of
applicable law, any monies deposited with or paid to the Trustee for payment of
the principal of, premium, if any, or interest on Notes and not applied but
remaining unclaimed by the holders of Notes for two years after the date upon
which the principal of, premium, if any, or interest on such Notes, as the case
may be, shall have become due and payable, shall be repaid to the Company by the
Trustee on written demand and all liability of the Trustee shall thereupon cease
with respect to such monies; and the holder of any of the Notes shall thereafter
look only to the Company for any payment that such holder may be entitled to
collect unless an applicable abandoned property law designates another Person.
Section 13.5. Reinstatement. If the Trustee or the paying agent is
unable to apply any money in accordance with Section 13.2 by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 13.1 until such time as the Trustee or the paying
agent is permitted to apply all such money in accordance with Section 13.2;
provided, however, that if the Company makes any payment of interest on or
principal of any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the holders of such Notes to
receive such payment from the money held by the Trustee or paying agent.
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ARTICLE 14.
IMMUNITY OF INCORPORATORS,
STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 14.1. Indenture And Notes Solely Corporate Obligations. No
recourse for the payment of the principal of or premium, if any, or interest on
any Note, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer, director or subsidiary, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the Notes.
ARTICLE 15.
CONVERSION OF NOTES
Section 15.1. Right To Convert. Subject to and upon compliance with the
provisions of this Indenture, including, without limitation, Article Four, the
holder of any Note shall have the right, at its option, at any time after the
original issuance of the Notes hereunder through the close of business on the
final maturity date of the Notes (except that, with respect to any Note or
portion of a Note that shall be called for redemption, such right shall
terminate, except as provided in Section 15.2, Section 3.2 or Section 3.4, at
the close of business on the Business Day next preceding the date fixed for
redemption of such Note or portion of a Note unless the Company shall default in
payment due upon redemption thereof) to convert the principal amount of any such
Note, or any portion of such principal amount which is $1,000 or an integral
multiple thereof, into that number of fully paid and non-assessable shares of
Common Stock (as such shares shall then be constituted) obtained by dividing the
principal amount of the Note or portion thereof surrendered for conversion by
the Conversion Price in effect at such time, by surrender of the Note so to be
converted in whole or in part in the manner provided, together with any required
funds, in Section 15.2. A Note in respect of which a holder is exercising its
option to require redemption upon a Fundamental Change pursuant to Section 3.5
may be converted only if such holder withdraws its election to exercise in
accordance with Section 3.5. A holder of Notes is not entitled to any rights of
a holder of Common Stock until such holder has converted his Notes to Common
Stock, and only to the extent such Notes are deemed to have been converted to
Common Stock under this Article Fifteen.
Section 15.2. Exercise Of Conversion Privilege; Issuance Of Common Stock
On Conversion; No Adjustment For Interest Or Dividends. In order to exercise the
conversion privilege with respect to any Note in certificated form, the holder
of any such Note to be converted in whole or in part shall surrender such Note,
duly endorsed, at an office or agency maintained by the Company pursuant to
Section 5.2, accompanied by the funds, if any, required by the penultimate
paragraph of this Section 15.2, and shall give written notice of conversion in
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the form provided on the Notes (or such other notice which is acceptable to the
Company) to the office or agency that the holder elects to convert such Note or
the portion thereof specified in said notice. Such notice shall also state the
name or names (with address or addresses) in which the certificate or
certificates for shares of Common Stock which shall be issuable on such
conversion shall be issued, and shall be accompanied by transfer taxes, if
required pursuant to Section 15.7. Each such Note surrendered for conversion
shall, unless the shares issuable on conversion are to be issued in the same
name as the registration of such Note, be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the holder or his duly authorized attorney.
In order to exercise the conversion privilege with respect to any
interest in a Global Note, the beneficial holder must complete, or cause to be
completed, the appropriate instruction form for conversion pursuant to the
Depository's book-entry conversion program, deliver, or cause to be delivered,
by book-entry delivery an interest in such Global Note, furnish appropriate
endorsements and transfer documents if required by the Company or the Trustee or
conversion agent, and pay the funds, if any, required by this Section 15.2 and
any transfer taxes if required pursuant to Section 15.7.
As promptly as practicable after satisfaction of the requirements
for conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Noteholder (as if such transfer were a transfer of the Note or Notes
(or portion thereof) so converted), the Company shall issue and shall deliver to
such Noteholder at the office or agency maintained by the Company for such
purpose pursuant to Section 5.2, a certificate or certificates for the number of
full shares of Common Stock issuable upon the conversion of such Note or portion
thereof as determined by the Company in accordance with the provisions of this
Article Fifteen and a check or cash in respect of any fractional interest in
respect of a share of Common Stock arising upon such conversion, calculated by
the Company as provided in Section 15.3. In case any Note of a denomination
greater than $1,000 shall be surrendered for partial conversion, and subject to
Section 2.3, the Company shall execute and the Trustee shall authenticate and
deliver to the holder of the Note so surrendered, without charge to him, a new
Note or Notes in authorized denominations in an aggregate principal amount equal
to the unconverted portion of the surrendered Note.
Each conversion shall be deemed to have been effected as to any
such Note (or portion thereof) on the date on which the requirements set forth
above in this Section 15.2 have been satisfied as to such Note (or portion
thereof), and the Person in whose name any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become on said date the holder of record of the shares represented thereby;
provided, however, that any such surrender on any date when the stock transfer
books of the Company shall be closed shall constitute the Person in whose name
the certificates are to be issued as the record holder thereof for all purposes
on the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon which
such Note shall be surrendered.
No adjustment in respect of interest on any Note converted or
dividends on any shares issued upon conversion of such Note will be made upon
any conversion except as set forth
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in the next sentence. If this Note (or portion hereof) is surrendered for
conversion during the period from the close of business on any record date for
the payment of interest to the close of business on the Business Day preceding
the following interest payment date and either (x) has not been called for
redemption on a redemption date that occurs during such period or (y) is not to
be redeemed in connection with a Fundamental Change on a Repurchase Date that
occurs during such period, this Note (or portion hereof being converted) must be
accompanied by an amount, in New York Clearing House funds or other funds
acceptable to the Company, equal to the interest payable on such interest
payment date on the principal amount being converted; provided, however, that no
such payment shall be required if there shall exist at the time of conversion a
default in the payment of interest on the Notes.
Upon the conversion of an interest in a Global Note, the Trustee
(or other conversion agent appointed by the Company), or the Custodian at the
direction of the Trustee (or other conversion agent appointed by the Company),
shall make a notation on such Global Note as to the reduction in the principal
amount represented thereby. The Company shall notify the Trustee in writing of
any conversions of Notes effected through any conversion agent other than the
Trustee.
Section 15.3. Cash Payments In Lieu Of Fractional Shares. No fractional
shares of Common Stock or scrip representing fractional shares shall be issued
upon conversion of Notes. If more than one Note shall be surrendered for
conversion at one time by the same holder, the number of full shares that shall
be issuable upon conversion shall be computed on the basis of the aggregate
principal amount of the Notes (or specified portions thereof to the extent
permitted hereby) so surrendered. If any fractional share of stock would be
issuable upon the conversion of any Note or Notes, the Company shall make an
adjustment and payment therefor in cash at the current market price thereof to
the holder of Notes. The current market price of a share of Common Stock shall
be the Closing Price on the last Business Day immediately preceding the day on
which the Notes (or specified portions thereof) are deemed to have been
converted.
Section 15.4. Conversion Price. The conversion price shall be as
specified in the form of Note (herein called the "Conversion Price") attached as
Exhibit A hereto, subject to adjustment as provided in this Article Fifteen.
Section 15.5. Adjustment Of Conversion Price. The Conversion Price shall
be adjusted from time to time by the Company as follows:
(a) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect at the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution by a
fraction, the numerator of which shall be the number of shares of the Common
Stock outstanding at the close of business on the date fixed for such
determination, and the denominator of which shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed for such determination. For the
purpose of this paragraph (a), the number of shares of Common Stock at any time
outstanding shall not include shares held in
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the treasury of the Company. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the Company. If
any dividend or distribution of the type described in this Section 15.5(a) is
declared but not so paid or made, the Conversion Price shall again be adjusted
to the Conversion Price that would then be in effect if such dividend or
distribution had not been declared.
(b) In case the Company shall issue rights or warrants to all
holders of its outstanding shares of Common Stock entitling them (for a period
expiring within forty-five (45) days after the date fixed for determination of
stockholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price (as defined below) on the date fixed for determination of
stockholders entitled to receive such rights or warrants, the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the date fixed
for determination of stockholders entitled to receive such rights or warrants by
a fraction, the numerator of which shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for determination of
stockholders entitled to receive such rights or warrants plus the number of
shares that the aggregate offering price of the total number of shares so
offered would purchase at such Current Market Price, and the denominator of
which shall be the number of shares of Common Stock outstanding on the date
fixed for determination of stockholders entitled to receive such rights or
warrants plus the total number of additional shares of Common Stock offered for
subscription or purchase. Such adjustment shall be successively made whenever
any such rights or warrants are issued, and shall become effective immediately
after the opening of business on the day following the date fixed for
determination of stockholders entitled to receive such rights or warrants. To
the extent that shares of Common Stock are not delivered after the expiration of
such rights or warrants, the Conversion Price shall be readjusted to the
Conversion Price that would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made on the basis of delivery of only
the number of shares of Common Stock actually delivered. In the event that such
rights or warrants are not so issued, the Conversion Price shall again be
adjusted to be the Conversion Price that would then be in effect if such date
fixed for the determination of stockholders entitled to receive such rights or
warrants had not been fixed. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares of Common Stock at less
than such Current Market Price, and in determining the aggregate offering price
of such shares of Common Stock, there shall be taken into account any
consideration received by the Company for such rights or warrants and any amount
payable on exercise or conversion thereof, the value of such consideration, if
other than cash, to be determined by the Board of Directors.
(c) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion Price
in effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately reduced, and
conversely, in case outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, the Conversion Price in effect at the
opening of business on the day following the day upon which such combination
becomes effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision or
combination becomes effective.
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(d) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of any class of capital
stock of the Company (other than any dividends or distributions to which Section
15.5(a) applies) or evidences of its indebtedness or assets (including
securities, but excluding any rights or warrants referred to in Section 15.5(b),
and excluding any dividend or distribution (x) paid exclusively in cash or (y)
referred to in Section 15.5(a) (any of the foregoing hereinafter in this Section
15.5(d) called the "Securities")), then, in each such case (unless the Company
elects to reserve such Securities for distribution to the Noteholders upon the
conversion of the Notes so that any such holder converting Notes will receive
upon such conversion, in addition to the shares of Common Stock to which such
holder is entitled, the amount and kind of such Securities which such holder
would have received if such holder had converted its Notes into Common Stock
immediately prior to the Record Date (as defined in Section 15.5(h)(4) for such
distribution of the Securities)), the Conversion Price shall be reduced so that
the same shall be equal to the price determined by multiplying the Conversion
Price in effect on the Record Date with respect to such distribution by a
fraction, the numerator of which shall be the Current Market Price per share of
the Common Stock on such Record Date less the fair market value (as determined
by the Board of Directors, whose determination shall be conclusive, and
described in a resolution of the Board of Directors) on the Record Date of the
portion of the Securities so distributed applicable to one share of Common Stock
and the denominator of which shall be the Current Market Price per share of the
Common Stock, such reduction to become effective immediately prior to the
opening of business on the day following such Record Date; provided, however,
that in the event the then fair market value (as so determined) of the portion
of the Securities so distributed applicable to one share of Common Stock is
equal to or greater than the Current Market Price of the Common Stock on the
Record Date, in lieu of the foregoing adjustment, adequate provision shall be
made so that each Noteholder shall have the right to receive upon conversion the
amount of Securities such holder would have received had such holder converted
each Note on the Record Date. In the event that such dividend or distribution is
not so paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price that would then be in effect if such dividend or distribution
had not been declared. If the Board of Directors determines the fair market
value of any distribution for purposes of this Section 15.5(d) by reference to
the actual or when issued trading market for any securities, it must in doing so
consider the prices in such market over the same period used in computing the
Current Market Price of the Common Stock.
In the event that the Company implements a rights agreement, such
rights agreement will provide that upon conversion of the notes into common
stock, the holders will receive, in addition to the common stock, the rights
under the rights agreement, whether or not the rights have separated from the
common stock at the time of conversion, subject to certain limited customary
exceptions.
Rights or warrants distributed by the Company to all holders of
Common Stock entitling the holders thereof to subscribe for or purchase shares
of the Company's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a specified
event or events ("Trigger Event"): (i) are deemed to be transferred with such
shares of Common Stock; (ii) are not exercisable; and (iii) are also issued in
respect of future issuances of Common Stock, shall be deemed not to have been
distributed for purposes of this Section 15.5 (and no adjustment to the
Conversion Price under this Section 15.5 will be required) until the occurrence
of the earliest Trigger Event, whereupon such rights and warrants shall be
deemed to
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have been distributed and an appropriate adjustment (if any is required) to the
Conversion Price shall be made under this Section 15.5(d). If any such right or
warrant, including any such existing rights or warrants distributed prior to the
date of this Indenture, are subject to events, upon the occurrence of which such
rights or warrants become exercisable to purchase different securities,
evidences of indebtedness or other assets, then the date of the occurrence of
any and each such event shall be deemed to be the date of distribution and
record date with respect to new rights or warrants with such rights (and a
termination or expiration of the existing rights or warrants without exercise by
any of the holders thereof). In addition, in the event of any distribution (or
deemed distribution) of rights or warrants, or any Trigger Event or other event
(of the type described in the preceding sentence) with respect thereto that was
counted for purposes of calculating a distribution amount for which an
adjustment to the Conversion Price under this Section 15.5 was made, (1) in the
case of any such rights or warrants that shall all have been redeemed or
repurchased without exercise by any holders thereof, the Conversion Price shall
be readjusted upon such final redemption r repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or repurchase price received by
a holder or holders of Common Stock with respect to such rights or warrants
(assuming such holder had retained such rights or warrants), made to all holders
of Common Stock as of the date of such redemption or repurchase, and (2) in the
case of such rights or warrants that shall have expired or been terminated
without exercise by any holders thereof, the Conversion Price shall be
readjusted as if such rights and warrants had not been issued.
No adjustment of the Conversion Price shall be made pursuant to
this Section 15.5(d) in respect of rights or warrants distributed or deemed
distributed on any Trigger Event to the extent that such rights or warrants are
actually distributed, or reserved by the Company for distribution to holders of
Notes upon conversion by such holders of Notes to Common Stock.
For purposes of this Section 15.5(d) and Sections 15.5(a) and
(b), any dividend or distribution to which this Section 15.5(d) is applicable
that also includes shares of Common Stock, or rights or warrants to subscribe
for or purchase shares of Common Stock (or both), shall be deemed instead to be
(1) a dividend or distribution of the evidences of indebtedness, assets or
shares of capital stock other than such shares of Common Stock or rights or
warrants (and any Conversion Price reduction required by this Section 15.5(d)
with respect to such dividend or distribution shall then be made) immediately
followed by (2) a dividend or distribution of such shares of Common Stock or
such rights or warrants (and any further Conversion Price reduction required by
Sections 15.5(a) and (b) with respect to such dividend or distribution shall
then be made), except (A) the Record Date of such dividend or distribution shall
be substituted as "the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution", "the date fixed for the
determination of stockholders entitled to receive such rights or warrants" and
"the date fixed for such determination" within the meaning of Sections 15.5(a)
and (b), and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of Section 15.5(a).
(e) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding (x) any quarterly
cash dividend on the Common
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Stock to the extent the aggregate cash dividend per share of Common Stock in any
fiscal quarter does not exceed the greater of (A) the amount per share of Common
Stock of the next preceding quarterly cash dividend on the Common Stock to the
extent that such preceding quarterly dividend did not require any adjustment of
the Conversion Price pursuant to this Section 15.5(e) (as adjusted to reflect
subdivisions, or combinations of the Common Stock), and (B) 3.75% of the
arithmetic average of the Closing Price (determined as set forth in Section
15.5(h)) during the ten (10) Trading Days (as defined in Section 15.5(h))
immediately prior to the date of declaration of such dividend, and (y) any
dividend or distribution in connection with the liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary), then, in such
case, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the close of business on such record date by a fraction, the numerator of
which shall be the Current Market Price of the Common Stock on the record date
less the amount of cash so distributed (and not excluded as provided above)
applicable to one share of Common Stock, and the denominator of which shall be
such Current Market Price of the Common Stock, such reduction to be effective
immediately prior to the opening of business on the day following the record
date; provided, however, that in the event the portion of the cash so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price of the Common Stock on the record date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each Noteholder
shall have the right to receive upon conversion the amount of cash such holder
would have received had such holder converted each Note on the record date. In
the event that such dividend or distribution is not so paid or made, the
Conversion Price shall again be adjusted to be the Conversion Price that would
then be in effect if such dividend or distribution had not been declared. If any
adjustment is required to be made as set forth in this Section 15.5(e) as a
result of a distribution that is a quarterly dividend, such adjustment shall be
based upon the amount by which such distribution exceeds the amount of the
quarterly cash dividend permitted to be excluded pursuant hereto. If an
adjustment is required to be made as set forth in this Section 15.5(e) above as
a result of a distribution that is not a quarterly dividend, such adjustment
shall be based upon the full amount of the distribution.
(f) In case a tender or exchange offer made by the Company or any
Subsidiary for all or any portion of the Common Stock shall expire and such
tender or exchange offer (as amended upon the expiration thereof) shall require
the payment to stockholders of consideration per share of Common Stock having a
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors)
that as of the last time (the "Expiration Time") tenders or exchanges may be
made pursuant to such tender or exchange offer (as it may be amended) exceeds
the Current Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time, the Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to the Expiration Time by a fraction the numerator of which
shall be the number of shares of Common Stock outstanding (including any
tendered or exchanged shares) at the Expiration Time multiplied by the Current
Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator of which shall be the sum of (x) the fair
market value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged and
not withdrawn as of the Expiration Time (the shares deemed so accepted, up to
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any such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares) at the Expiration Time and the Current Market Price of the Common Stock
on the Trading Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the Trading Day
following the Expiration Time. In the event that the Company is obligated to
purchase shares pursuant to any such tender or exchange offer, but the Company
is permanently prevented by applicable law from effecting any such purchases or
all such purchases are rescinded, the Conversion Price shall again be adjusted
to be the Conversion Price that would then be in effect if such tender or
exchange offer had not been made.
(g) In case of a tender or exchange offer made by a Person other
than the Company or any Subsidiary for an amount that increases the offeror's
ownership of Common Stock to more than twenty-five percent (25%) of the Common
Stock outstanding and shall involve the payment by such Person of consideration
per share of Common Stock having a fair market value (as determined by the Board
of Directors, whose determination shall be conclusive, and described in a
resolution of the Board of Directors) that as of the last time (the "Offer
Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it shall have been amended) that exceeds the Current Market
Price of the Common Stock on the Trading Day next succeeding the Offer
Expiration Time, and in which, as of the Offer Expiration Time the Board of
Directors is not recommending rejection of the offer, the Conversion Price shall
be reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the Offer Expiration Time by a
fraction the numerator of which shall be the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) at the Offer Expiration
Time multiplied by the Current Market Price of the Common Stock on the Trading
Day next succeeding the Offer Expiration Time and the denominator of which shall
be the sum of (x) the fair market value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Offer
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Accepted Purchased Shares") and (y) the product of the
number of shares of Common Stock outstanding (less any Accepted Purchased
Shares) at the Offer Expiration Time and the Current Market Price of the Common
Stock on the Trading Day next succeeding the Offer Expiration Time, such
reduction to become effective immediately prior to the opening of business on
the Trading Day following the Offer Expiration Time. In the event that such
Person is obligated to purchase shares pursuant to any such tender or exchange
offer, but such Person is permanently prevented by applicable law from effecting
any such purchases or all such purchases are rescinded, the Conversion Price
shall again be adjusted to be the Conversion Price that would then be in effect
if such tender or exchange offer had not been made. Notwithstanding the
foregoing, the adjustment described in this Section 15.5(g) shall not be made
if, as of the Offer Expiration Time, the offering documents with respect to such
offer disclose a plan or intention to cause the Company to engage in any
transaction described in Article Twelve.
(h) For purposes of this Section 15.5, the following terms shall
have the meaning indicated:
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(1) "Closing Price" with respect to any security on any
day shall mean the closing sale price, regular way, on such day or, in case no
such sale takes place on such day, the average of the reported closing bid and
asked prices, regular way, in each case as quoted on the Nasdaq National Market
or, if such security is not quoted or listed or admitted to trading on such
Nasdaq National Market, on the principal national securities exchange or
quotation system on which such security is quoted or listed or admitted to
trading or, if not quoted or listed or admitted to trading on any national
securities exchange or quotation system, the average of the closing bid and
asked prices of such security on the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or if not so available, in such manner as
furnished by any New York Stock Exchange member firm selected from time to time
by the Board of Directors for that purpose, or a price determined in good faith
by the Board of Directors or, to the extent permitted by applicable law, a duly
authorized committee thereof, whose determination shall be conclusive.
(2) "Current Market Price" shall mean the average of the
daily Closing Prices per share of Common Stock for the ten (10) consecutive
Trading Days immediately prior to the date in question except as hereinafter
provided for purposes of any computation under Section 15.5(f) or (g); provided,
however, that (1) if the "ex" date (as hereinafter defined) for any event (other
than the issuance or distribution requiring such computation and other than the
tender or exchange offer requiring such computation under Section 15.5(f) or
(g)) that requires an adjustment to the Conversion Price pursuant to Section
15.5(a), (b), (c), (d), (e), (f) or (g) occurs during such ten (10) consecutive
Trading Days, the Closing Price for each Trading Day prior to the "ex" date for
such other event shall be adjusted by multiplying such Closing Price by the same
fraction by which the Conversion Price is so required to be adjusted as a result
of such other event, (2) if the "ex" date for any event (other than the issuance
or distribution requiring such computation and other than the tender or exchange
offer requiring such computation under Section 15.5(f) or (g)) that requires an
adjustment to the Conversion Price pursuant to Section 15.5(a), (b), (c), (d),
(e), (f) or (g) occurs on or after the "ex" date for the issuance or
distribution requiring such computation and prior to the day in question, the
Closing Price for each Trading Day on and after the "ex" date for such other
event shall be adjusted by multiplying such Closing Price by the reciprocal of
the fraction by which the Conversion Price is so required to be adjusted as a
result of such other event, and (3) if the "ex" date for the issuance or
distribution requiring such computation is prior to the day in question, after
taking into account any adjustment required pursuant to clause (1) or (2) of
this proviso, the Closing Price for each Trading Day on or after such "ex" date
shall be adjusted by adding thereto the amount of any cash and the fair market
value (as determined by the Board of Directors or, to the extent permitted by
applicable law, a duly authorized committee thereof in a manner consistent with
any determination of such value for purposes of Section 15.5(d), (f) or (g),
whose determination shall be conclusive and described in a resolution of the
Board of Directors or such duly authorized committee thereof, as the case may
be) of the evidences of indebtedness, shares of capital stock or assets being
distributed applicable to one share of Common Stock as of the close of business
on the day before such "ex" date. For purposes of any computation under Section
15.5(f) or (g), the "Current Market Price" of the Common Stock on any date shall
be deemed to be the average of the daily Closing Prices per share of Common
Stock for such day and the next two (2) succeeding Trading Days; provided,
however, that if the "ex" date for any event (other than the tender or exchange
offer requiring such computation under Section 15.5(f)
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or (g)) that requires an adjustment to the Conversion Price pursuant to Section
15.5(a), (b), (c), (d), (e), (f) or (g) occurs on or after the Expiration Time
or Offer Expiration Time, as the case may be, for the tender or exchange offer
requiring such computation and prior to the day in question, the Closing Price
for each Trading Day on and after the "ex" date for such other event shall be
adjusted as provided in clauses (1), (2) and (3) of the proviso contained in the
first sentence of this Section 15.5(h)(2). For purpose of this paragraph, the
term "ex" date, (1) when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades, regular way, on the
relevant exchange or in the relevant market from which the Closing Price was
obtained without the right to receive such issuance or distribution, (2) when
used with respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades, regular way, on such
exchange or in such market after the time at which such subdivision or
combination becomes effective, and (3) when used with respect to any tender or
exchange offer means the first date on which the Common Stock trades, regular
way, on such exchange or in such market after the Expiration Time or the Offer
Expiration Time of such offer.
(3) "Fair Market Value" shall mean the amount which a
willing buyer would pay a willing seller in an arm's-length transaction.
(4) "Record Date" shall mean, with respect to any
dividend, distribution or other transaction or event in which the holders of
Common Stock have the right to receive any cash, securities or other property or
in which the Common Stock (or other applicable security) is exchanged for or
converted into any combination of cash, securities or other property, the date
fixed for determination of stockholders entitled to receive such cash,
securities or other property (whether such date is fixed by the Board of
Directors or by statute, contract or otherwise).
(5) "Trading Day" shall mean (x) if the applicable
security is quoted on the Nasdaq National Market, a day on which trades may be
made thereon, (y) if the applicable security is listed or admitted for trading
on the New York Stock Exchange or another national securities exchange, a day on
which the New York Stock Exchange or another national securities exchange is
open for business or (z) if the applicable security is not so listed, admitted
for trading or quoted, any day other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
(i) The Company may make such reductions in the Conversion Price,
in addition to those required by Sections 15.5(a), (b), (c), (d), (e), (f) or
(g) as the Board of Directors considers to be advisable to avoid or diminish any
income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time
to time may reduce the Conversion Price by any amount for any period of time if
the period is at least twenty (20) days, the reduction is irrevocable during the
period and the Board of Directors shall have made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive. Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Company shall mail to holders of record of the Notes a
notice of the
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reduction at least fifteen (15) days prior to the date the reduced Conversion
Price takes effect, and such notice shall state the reduced Conversion Price and
the period during which it will be in effect.
(j) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least one
percent (1%) in such price; provided, however, that any adjustments that by
reason of this Section 15.5(j) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Article Fifteen shall be made by the Company and shall be made to the
nearest cent or to the nearest one-hundredth (1/100) of a share, as the case may
be. No adjustment need be made for rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest. To the extent the Notes
become convertible into cash, assets, property or securities (other than capital
stock of the Company), no adjustment need be made thereafter as to the cash,
assets, property or such securities. Interest will not accrue on the cash.
(k) Whenever the Conversion Price is adjusted as herein provided,
the Company shall promptly file with the Trustee and any conversion agent other
than the Trustee an Officers' Certificate setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment. Unless and until a Responsible Officer of the Trustee shall
have received such Officers' Certificate, the Trustee shall not be deemed to
have knowledge of any adjustment of the Conversion Price and may assume that the
last Conversion Price of which it has knowledge is still in effect. Promptly
after delivery of such certificate, the Company shall prepare a notice of such
adjustment of the Conversion Price setting forth the adjusted Conversion Price
and the date on which each adjustment becomes effective and shall mail such
notice of such adjustment of the Conversion Price to the holder of each Note at
his last address appearing on the Note register provided for in Section 2.5 of
this Indenture, within twenty (20) days after execution thereof. Failure to
deliver such notice shall not affect the legality or validity of any such
adjustment.
(l) In any case in which this Section 15.5 provides that an
adjustment shall become effective immediately after (1) a record date or Record
Date for an event, (2) the date fixed for the determination of stockholders
entitled to receive a dividend or distribution pursuant to Section 15.5(a), (3)
a date fixed for the determination of stockholders entitled to receive rights or
warrants pursuant to Section 15.5(b), (4) the Expiration Time for any tender or
exchange offer pursuant to Section 15.5(f), or (5) the Offer Expiration Time for
a tender or exchange offer pursuant to Section 15.5(g) (each a "Determination
Date"), the Company may elect to defer until the occurrence of the relevant
Adjustment Event (as hereinafter defined) (x) issuing to the holder of any Note
converted after such Determination Date and before the occurrence of such
Adjustment Event, the additional shares of Common Stock or other securities
issuable upon such conversion by reason of the adjustment required by such
Adjustment Event over and above the Common Stock issuable upon such conversion
before giving effect to such adjustment and (y) paying to such holder any amount
in cash in lieu of any fraction pursuant to Section 15.3. For purposes of this
Section 15.5(l), the term "Adjustment Event" shall mean:
(a) in any case referred to in clause (1) hereof, the
occurrence of such event,
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(b) in any case referred to in clause (2) hereof, the date
any such dividend or distribution is paid or made,
(c) in any case referred to in clause (3) hereof, the date
of expiration of such rights or warrants, and
(d) in any case referred to in clause (4) or clause (5)
hereof, the date a sale or exchange of Common Stock pursuant to
such tender or exchange offer is consummated and becomes
irrevocable.
(m) For purposes of this Section 15.5, the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
will not pay any dividend or make any distribution on shares of Common Stock
held in the treasury of the Company.
Section 15.6. Effect Of Reclassification, Consolidation, Merger Or Sale.
If any of the following events occur, namely (i) any reclassification or change
of the outstanding shares of Common Stock (other than a subdivision or
combination to which Section 15.5(c) applies), (ii) any consolidation, merger or
combination of the Company with another Person as a result of which holders of
Common Stock shall be entitled to receive stock, other securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock or (iii) any sale or conveyance of all or substantially all of the
properties and assets of the Company to any other Person as a result of which
holders of Common Stock shall be entitled to receive stock, other securities or
other property or assets (including cash) with respect to or in exchange for
such Common Stock, then the Company or the successor or purchasing Person, as
the case may be, shall execute with the Trustee a supplemental indenture (which
shall comply with the Trust Indenture Act as in force at the date of execution
of such supplemental indenture) providing that such Note shall be convertible
into the kind and amount of shares of stock, other securities or other property
or assets (including cash) receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance by a holder of a number
of shares of Common Stock issuable upon conversion of such Notes (assuming, for
such purposes, a sufficient number of authorized shares of Common Stock are
available to convert all such Notes) immediately prior to such reclassification,
change, consolidation, merger, combination, sale or conveyance assuming such
holder of Common Stock did not exercise his rights of election, if any, as to
the kind or amount of stock, other securities or other property or assets
(including cash) receivable upon such reclassification, change, consolidation,
merger, combination, sale or conveyance (provided that, if the kind or amount of
stock, other securities or other property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance is not the same for each share of Common Stock in respect of which
such rights of election shall not have been exercised ("non-electing share"),
then for the purposes of this Section 15.6 the kind and amount of stock, other
securities or other property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
for each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
Fifteen.
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The Company shall cause notice of the execution of such
supplemental indenture to be mailed to each holder of Notes, at its address
appearing on the Note register provided for in Section 2.5 of this Indenture,
within twenty (20) days after execution thereof. Failure to deliver such notice
shall not affect the legality or validity of such supplemental indenture.
The above provisions of this Section 15.6 shall similarly apply
to successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
If this Section 15.6 applies to any event or occurrence, Section
15.5 shall not apply.
Section 15.7. Taxes On Shares Issued. The issue of stock certificates on
conversions of Notes shall be made without charge to the converting Noteholder
for any tax in respect of the issue thereof. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of stock in any name other than that of the holder of
any Note converted, and the Company shall not be required to issue or deliver
any such stock certificate unless and until the Person or Persons requesting the
issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
Section 15.8. Reservation Of Shares; Shares To Be Fully Paid; Compliance
With Governmental Requirements; Listing Of Common Stock. The Company shall
provide, free from preemptive rights, out of its authorized but unissued shares
or shares held in treasury, sufficient shares of Common Stock to provide for the
conversion of the Notes from time to time as such Notes are presented for
conversion.
Before taking any action which would cause an adjustment reducing
the Conversion Price below the then par value, if any, of the shares of Common
Stock issuable upon conversion of the Notes, the Company will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may
be issued upon conversion of Notes will upon issue be fully paid and
non-assessable by the Company and free from all taxes, liens and charges with
respect to the issue thereof.
The Company covenants that, if any shares of Common Stock to be
provided for the purpose of conversion of Notes hereunder require registration
with or approval of any governmental authority under any federal or state law
before such shares may be validly issued upon conversion, the Company will in
good faith and as expeditiously as possible, to the extent then permitted by the
rules and interpretations of the Securities and Exchange Commission (or any
successor thereto), endeavor to secure such registration or approval, as the
case may be.
The Company further covenants that, if at any time the Common
Stock shall be listed on the Nasdaq National Market or any other national
securities exchange or automated quotation system, the Company will, if
permitted by the rules of such exchange or automated quotation system, list and
keep listed, so long as the Common Stock shall be so listed on such exchange or
automated quotation system, all Common Stock issuable upon conversion of the
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Note; provided, however, that, if the rules of such exchange or automated
quotation system permit the Company to defer the listing of such Common Stock
until the first conversion of the Notes into Common Stock in accordance with the
provisions of this Indenture, the Company covenants to list such Common Stock
issuable upon conversion of the Notes in accordance with the requirements of
such exchange or automated quotation system at such time.
Section 15.9. Responsibility Of Trustee. The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine the Conversion Price or whether any facts exist
which may require any adjustment of the Conversion Price, or with respect to the
nature or extent or calculation of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. The Trustee and any other
conversion agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any shares of Common Stock, or of any securities or
property, which may at any time be issued or delivered upon the conversion of
any Note; and the Trustee and any other conversion agent make no representations
with respect thereto. Neither the Trustee nor any conversion agent shall be
responsible for any failure of the Company to issue, transfer or deliver any
shares of Common Stock or stock certificates or other securities or property or
cash upon the surrender of any Note for the purpose of conversion or to comply
with any of the duties, responsibilities or covenants of the Company contained
in this Article Fifteen. Without limiting the generality of the foregoing,
neither the Trustee nor any conversion agent shall be under any responsibility
to determine the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 15.6 relating either to the kind or
amount of shares of stock or securities or property (including cash) receivable
by Noteholders upon the conversion of their Notes after any event referred to in
such Section 15.6 or to any adjustment to be made with respect thereto, but,
subject to the provisions of Section 8.1, may accept as conclusive evidence of
the correctness of any such provisions, and shall be protected in relying upon,
the Officers' Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.
Section 15.10. Notice To Holders Prior To Certain Actions. In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock that would require an adjustment in the
Conversion Price pursuant to Section 15.5; or
(b) the Company shall authorize the granting to the holders of
all or substantially all of its Common Stock of rights or warrants to subscribe
for or purchase any share of any class or any other rights or warrants; or
(c) of any reclassification or reorganization of the Common Stock
of the Company (other than a subdivision or combination of its outstanding
Common Stock, or a change in par value, or from par value to no par value, or
from no par value to par value), or of any consolidation or merger to which the
Company is a party and for which approval of any stockholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company or any Significant Subsidiary; or
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(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company or any Significant Subsidiary;
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register provided for in
Section 2.5 of this Indenture, as promptly as possible but in any event at least
ten (10) days prior to the applicable date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective or occur, and the date
as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of such dividend,
distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up.
ARTICLE 16.
MISCELLANEOUS PROVISIONS
Section 16.1. Provisions Binding On Company's Successors. All the
covenants, stipulations, promises and agreements by the Company contained in
this Indenture shall bind its successors and assigns whether so expressed or
not.
Section 16.2. Official Acts By Successor Corporation. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any Person that shall at the time be the lawful sole successor of the
Company.
Section 16.3. Addresses For Notices, Etc. Any notice or demand which by
any provision of this Indenture is required or permitted to be given or served
by the Trustee or by the holders of Notes on the Company shall be deemed to have
been sufficiently given or made, for all purposes, if given or served by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee) to Getty Images, Inc., 701 N. 34th Street, Suite 400, Seattle,
Washington 98103, Attention: Chief Financial Officer. Any notice, direction,
request or demand hereunder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or served by being
deposited, postage prepaid, by registered or certified mail in a post office
letter box addressed to the Corporate Trust Office, which office is, at the date
as of which this Indenture is dated, located at 101 Barclay Street, Floor 21
West, New York, New York 10286, Attention: Corporate Trust Administration.
The Trustee, by notice to the Company, may designate additional
or different addresses for subsequent notices or communications.
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Any notice or communication mailed to a Noteholder shall be
mailed to him by first class mail, postage prepaid, at his address as it appears
on the Note register and shall be sufficiently given to him if so mailed within
the time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Section 16.4. Governing Law. This Indenture and each Note shall be
deemed to be a contract made under the laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of the State of New
York, without regard to the conflict of laws provisions thereof.
Section 16.5. Evidence Of Compliance With Conditions Precedent;
Certificates To Trustee. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with, provided that such Opinion of Counsel shall not be required in connection
with the initial issuance of the Notes.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include: (1) a statement that the person
making such certificate or opinion has read such covenant or condition; (2) a
brief statement as to the nature and scope of the examination or investigation
upon which the statement or opinion contained in such certificate or opinion is
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Section 16.6. Legal Holidays. In any case in which the date of maturity
of interest on or principal of the Notes or the date fixed for redemption of any
Note will not be a Business Day, then payment of such interest on or principal
of the Notes need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period from and after such date.
Section 16.7. Trust Indenture Act. This Indenture is hereby made subject
to, and shall be governed by, the provisions of the Trust Indenture Act required
to be part of and to govern indentures qualified under the Trust Indenture Act;
provided, however, that, unless otherwise required by law, notwithstanding the
foregoing, this Indenture and the Notes issued hereunder shall not be subject to
the provisions of subsections (a)(1), (a)(2), and (a)(3) of Section 314 of the
Trust Indenture Act as now in effect or as hereafter amended or modified;
provided further that this Section 16.7 shall not require this Indenture or the
Trustee to be qualified under the Trust Indenture Act prior to the time such
qualification is in fact required under the terms of the Trust
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Indenture Act, nor shall it constitute any admission or acknowledgment by any
party to the Indenture that any such qualification is required prior to the time
such qualification is in fact required under the terms of the Trust Indenture
Act. If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in an indenture qualified
under the Trust Indenture Act, such required provision shall control.
Section 16.8. No Security Interest Created. Nothing in this Indenture or
in the Notes, expressed or implied, shall be construed to constitute a security
interest under the Uniform Commercial Code or similar legislation, as now or
hereafter enacted and in effect, in any jurisdiction in which property of the
Company or its subsidiaries is located.
Section 16.9. Benefits Of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto, any paying agent, any authenticating agent, any Note registrar and their
successors hereunder, the holders of Notes and the holders of Senior
Indebtedness, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
Section 16.10. Table Of Contents, Headings, Etc. The table of contents
and the titles and headings of the articles and Sections of this Indenture have
been inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 16.11. Authenticating Agent. The Trustee may appoint an
authenticating agent that shall be authorized to act on its behalf, and subject
to its direction, in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.4, 2.5, 2.6, 2.7, 3.3 and 3.5, as fully to all
intents and purposes as though the authenticating agent had been expressly
authorized by this Indenture and those Sections to authenticate and deliver
Notes. For all purposes of this Indenture, the authentication and delivery of
Notes by the authenticating agent shall be deemed to be authentication and
delivery of such Notes "by the Trustee" and a certificate of authentication
executed on behalf of the Trustee by an authenticating agent shall be deemed to
satisfy any requirement hereunder or in the Notes for the Trustee's certificate
of authentication. Such authenticating agent shall at all times be a Person
eligible to serve as trustee hereunder pursuant to Section 8.9.
Any corporation into which any authenticating agent may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to all or substantially all the
corporate trust business of any authenticating agent, shall be the successor of
the authenticating agent hereunder, if such successor corporation is otherwise
eligible under this Section 16.11, without the execution or filing of any paper
or any further act on the part of the parties hereto or the authenticating agent
or such successor corporation.
Any authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any authenticating agent by giving written notice
of termination to such authenticating
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agent and to the Company. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time any authenticating agent shall cease
to be eligible under this Section, the Trustee shall either promptly appoint a
successor authenticating agent or itself assume the duties and obligations of
the former authenticating agent under this Indenture and, upon such appointment
of a successor authenticating agent, if made, shall give written notice of such
appointment of a successor authenticating agent to the Company and shall mail
notice of such appointment of a successor authenticating agent to all holders of
Notes as the names and addresses of such holders appear on the Note register.
The Company agrees to pay to the authenticating agent from time
to time such reasonable compensation for its services as shall be agreed upon in
writing between the Company and the authenticating agent.
The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section
16.11 shall be applicable to any authenticating agent.
Section 16.12. Execution In Counterparts. This Indenture may be executed
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 16.13. Severability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, then (to the extent
permitted by law) the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Bank of New York hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions herein above set forth.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed.
GETTY IMAGES, INC.
By:
--------------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By:
--------------------------------------
Name:
Title:
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EXHIBIT A
For Global Note only: UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW
YORK, NEW YORK) (THE "DEPOSITARY", WHICH TERM INCLUDES ANY SUCCESSOR DEPOSITARY
FOR THE CERTIFICATES) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY (AND ANY PAYMENT HEREIN IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, UNITED STATES PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR"); (2) AGREES THAT IT WILL
NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE NOTE
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION), RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON
STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO GETTY IMAGES, INC. OR
ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE BANK OF NEW YORK, AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH
TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF
SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE (2)(E) ABOVE), IT WILL FURNISH TO THE BANK OF NEW YORK, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
<PAGE> 86
INFORMATION AS THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (4) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THE NOTE EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE BANK OF NEW YORK, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A UNITED STATES
PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE BANK OF NEW
YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS SUCH TRUSTEE MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE NOTE
EVIDENCED HEREBY PURSUANT TO CLAUSE (2)(E) ABOVE OR UPON ANY TRANSFER OF THE
NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.
A-2
<PAGE> 87
GETTY IMAGES, INC.
5% CONVERTIBLE SUBORDINATED NOTES DUE 2007
CUSIP:_____________________
No. __________ $____________________
Getty Images, Inc., a corporation duly organized and validly
existing under the laws of the State of Delaware (herein called the "Company",
which term includes any successor corporation under the Indenture referred to on
the reverse hereof), for value received hereby promises to pay to Cede & Co., or
its registered assigns, the principal sum of _______________ ($__________) on
March 15, 2007, at the office or agency of the Company maintained for that
purpose in accordance with the terms of the Indenture, in such coin or currency
of the United States of America as at the time of payment shall be legal tender
for the payment of public and private debts, and to pay interest, semi-annually
on March 15 and September 15 of each year, commencing September 15, 2000, on
said principal sum at said office or agency, in like coin or currency, at the
rate per annum of 5%, from the next preceding date to which interest has been
paid or duly provided for, unless no interest has been paid or duly provided for
on the Notes, in which case from March 13, 2000, until payment of said principal
sum has been made or duly provided for. Except as otherwise provided in the
Indenture, the interest payable on the Note pursuant to the Indenture on any
March 15 or September 15 will be paid to the Person entitled thereto as it
appears in the Note register at the close of business on the record date, which
shall be the March 1 or September 1 (whether or not a Business Day) next
preceding such March 15 or September 15, as provided in the Indenture; provided,
however, that any such interest not punctually paid or duly provided for shall
be payable as provided in the Indenture. Interest may, at the option of the
Company, be paid either (i) by check mailed to the registered address of such
Person (provided that the holder of Notes with an aggregate principal amount in
excess of $2,000,000 shall, at the written election of such holder, be paid by
wire transfer of immediately available funds) or (ii) by transfer to an account
maintained by such Person located in the United States; provided, however, that
payments to the Depositary will be made by wire transfer of immediately
available funds to the account of the Depositary or its nominee.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, including, without limitation, provisions
subordinating the payment of principal of and premium, if any, and interest on
the Notes to the prior payment in full of all Senior Indebtedness, as defined in
the Indenture, and provisions giving the holder of this Note the right to
convert this Note into Common Stock of the Company on the terms and subject to
the limitations referred to on the reverse hereof and as more fully specified in
the Indenture. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This Note shall be deemed to be a contract made under the laws of
the State of New York, and for all purposes shall be construed in accordance
with and governed by the laws of the State of New York, without regard to
principles of conflicts of laws.
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<PAGE> 88
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by the Trustee or a duly authorized authenticating agent under the Indenture.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed.
GETTY IMAGES, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Attest:
----------------------
Name:
----------------------
Title:
----------------------
Dated:
----------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the within-named Indenture.
THE BANK OF NEW YORK, as Trustee
By:
---------------------------
Name:
Title:
A-4
<PAGE> 89
FORM OF REVERSE OF NOTE
GETTY IMAGES, INC.
5% CONVERTIBLE SUBORDINATED NOTES DUE 2007
1. General.
This Note is one of a duly authorized issue of Notes of the
Company, designated as its 5% Convertible Subordinated Notes due 2007 (herein
called the "Notes"), limited to the aggregate principal amount of $250,000,000
all issued or to be issued under and pursuant to an Indenture dated as of March
13, 2000 (herein called the "Indenture"), between the Company and The Bank of
New York, as trustee (herein called the "Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Company and the holders of the Notes.
In case an Event of Default (as defined in the Indenture) shall
have occurred and be continuing, the principal of, premium, if any, and accrued
interest (including Liquidated Damages (as defined in the Registration Rights
Agreement), if any) on all Notes may be declared by either the Trustee or the
holders of not less than twenty-five percent (25%) in aggregate principal amount
of the Notes then outstanding, and upon said declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions provided
in the Indenture.
2. Amendment; Supplement; Waiver.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the holders of the Notes;
provided, however, that no such supplemental indenture shall (i) extend the
fixed maturity of any Note, or reduce the rate or extend the time of payment of
interest thereon, or reduce the principal amount thereof or premium, if any,
thereon, or reduce any amount payable upon redemption thereof, or impair the
right of any Noteholder to institute suit for the payment thereof, or make the
principal thereof or interest or premium, if any, thereon payable in any coin or
currency other than that provided in the Notes, or modify the provisions of the
Indenture with respect to the subordination of the Notes in a manner adverse to
the Noteholders in any material respect, or change the obligation of the Company
to redeem any Note upon the happening of a Fundamental Change (as defined in the
Indenture) in a manner adverse to the holder of the Notes, or impair the right
to convert the Notes into Common Stock subject to the terms set forth in the
Indenture, including Section 15.6 thereof, without the consent of the holder of
each Note so affected or (ii) reduce the aforesaid percentage of Notes, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of all Notes then outstanding. Subject to the
provisions of the Indenture, the holders of a majority in aggregate principal
amount of the Notes at the time outstanding may on behalf of the holders of all
of the Notes waive any past default or Event of Default under the Indenture and
its consequences except a default in the payment of
A-5
<PAGE> 90
interest (including Liquidated Damages, if any) or any premium on, or the
principal of, any of the Notes, or a failure by the Company to convert any Notes
into Common Stock of the Company, or a default in the payment of the redemption
price pursuant to Article Three of the Indenture, or a default in respect of a
covenant or provisions of the Indenture which under Article Eleven of the
Indenture cannot be modified without the consent of the holders of each or all
Notes then outstanding or affected thereby. Any such consent or waiver by the
holder of this Note (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such holder and upon all future holders and owners
of this Note and any Notes which may be issued in exchange or substitution
hereof, irrespective of whether or not any notation thereof is made upon this
Note or such other Notes.
3. Subordination.
The indebtedness evidenced by the Notes is, to the extent and in
the manner provided in the Indenture, expressly subordinated and subject in
right of payment to the prior payment in full of all Senior Indebtedness of the
Company, whether outstanding at the date of the Indenture or thereafter
incurred, and this Note is issued subject to the provisions of the Indenture
with respect to such subordination. Each holder of this Note, by accepting the
same, agrees to and shall be bound by such provisions and authorizes the Trustee
on its behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and appoints the Trustee his
attorney-in-fact for such purpose.
4. Payment; Denominations; Exchange.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and any premium and
interest (including Liquidated Damages, if any) on this Note at the place, at
the respective times, at the rate and in the coin or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a 360-day
year of twelve 30-day months.
The Notes are issuable in fully registered form, without coupons,
in denominations of $1,000 principal amount and any integral multiple of $1,000.
At the office or agency of the Company referred to on the face hereof, and in
the manner and subject to the limitations provided in the Indenture, without
payment of any service charge but with payment of a sum sufficient to cover any
tax, assessment or other governmental charge that may be imposed in connection
with any registration or exchange of Notes, Notes may be exchanged for a like
aggregate principal amount of Notes of any other authorized denominations.
5. Redemption.
The Notes will not be redeemable at the option of the Company
prior to March 20, 2003. At any time on or after March 20, 2003, and prior to
maturity, the Notes may be redeemed at the option of the Company, in whole or in
part, upon notice as set forth in Section 3.2, at the following redemption
prices (expressed as percentages of the principal
A-6
<PAGE> 91
amount), together in each case with accrued and unpaid interest, if any
(including Liquidated Damages, if any) to, but excluding, the date fixed for
redemption:
<TABLE>
<CAPTION>
Period Redemption Price
------ ----------------
<S> <C>
Beginning on March 20, 2003 and ending on March 14, 2004 ....... 102.857%
Beginning on March 15, 2004 and ending on March 14, 2005 ....... 102.143%
Beginning on March 15, 2005 and ending on March 14, 2006 ....... 101.429%
Beginning on March 15, 2006 and ending on March 14, 2007 ....... 100.714%
</TABLE>
and 100% on March 15, 2007; provided, however, that if the date fixed for
redemption is on a March 15 or September 15, then the interest payable on such
date shall be paid to the holder of record on the preceding March 1 or September
1, respectively.
The Company may not give notice of any redemption of the Notes if
a default in the payment of interest or premium, if any, on the Notes has
occurred and is continuing.
The Notes are not subject to redemption through the operation of
any sinking fund.
6. Fundamental Change.
If a Fundamental Change occurs at any time prior to maturity of
the Notes, the Notes will be redeemable on the 30th day after notice thereof
(the "Repurchase Date") at the option of the holder of the Notes at a redemption
price equal to 100% of the principal amount thereof, together with accrued
interest to (but excluding) the date of redemption; provided, however, that, if
such Repurchase Date is a March 15 or September 15, the interest payable on such
date shall be paid to the holder of record of the Notes on the preceding March 1
or September 1, respectively. The Notes will be redeemable in multiples of
$1,000 principal amount. The Company shall mail to all holders of record of the
Notes a notice of the occurrence of a Fundamental Change and of the redemption
right arising as a result thereof on or before the 10th day after the occurrence
of such Fundamental Change. For a Note to be so redeemed at the option of the
holder, the Company must receive at the office or agency of the Company
maintained for that purpose in accordance with the terms of the Indenture, such
Note with the form entitled "Option to Elect Repayment Upon a Fundamental
Change" on the reverse thereof duly completed, together with such Note, duly
endorsed for transfer, on or before the 30th day after the date of such notice
of a Fundamental Change (or if such 30th day is not a Business Day, the
immediately succeeding Business Day).
7. Conversion.
Subject to the provisions of the Indenture, the holder hereof has
the right, at its option, at any time after the original issuance of any Notes
through the close of business on the final maturity date of the Notes, or, as to
all or any portion hereof called for redemption, prior to the close of business
on the Business Day immediately preceding the date fixed for redemption (unless
the Company shall default in payment due upon redemption thereof), to convert
the principal hereof or any portion of such principal which is $1,000 or an
integral multiple thereof into that number of shares of the Company's Common
Stock (as such shares shall be constituted
A-7
<PAGE> 92
at the date of conversion) obtained by dividing the principal amount of this
Note or portion thereof to be converted by the Conversion Price of $61.08, as
may adjusted from time to time as provided in the Indenture, upon surrender of
this Note, together with a conversion notice as provided in the Indenture (the
form entitled "Conversion Notice" on the reverse hereof), to the Company at the
office or agency of the Company maintained for that purpose in accordance with
the terms of the Indenture, or at the option of such holder, the Corporate Trust
Office, and, unless the shares issuable on conversion are to be issued in the
same name as this Note, duly endorsed by, or accompanied by instruments of
transfer in form satisfactory to the Company duly executed by, the holder or by
his duly authorized attorney. No adjustment in respect of interest on any Note
converted or dividends on any shares issued upon conversion of such Note will be
made upon any conversion except as set forth in the next sentence. If this Note
(or portion hereof) is surrendered for conversion during the period from the
close of business on any record date for the payment of interest to the close of
business on the Business Day preceding the following interest payment date and
either (x) has not been called for redemption on a redemption date that occurs
during such period or (y) is not to be redeemed in connection with a Fundamental
Change on a Repurchase Date that occurs during such period, this Note (or
portion hereof being converted) must be accompanied by an amount, in New York
Clearing House funds or other funds acceptable to the Company, equal to the
interest payable on such interest payment date on the principal amount being
converted; provided, however, that no such payment shall be required if there
shall exist at the time of conversion a default in the payment of interest on
the Notes. No fractional shares will be issued upon any conversion, but an
adjustment and payment in cash will be made, as provided in the Indenture, in
respect of any fraction of a share which would otherwise be issuable upon the
surrender of any Note or Notes for conversion. A Note in respect of which a
holder is exercising its right to require redemption upon a Fundamental Change
may be converted only if such holder withdraws its election to exercise such
right in accordance with the terms of the Indenture. Any Notes called for
redemption, unless surrendered for conversion by the holders thereof on or
before the close of business on the Business Day preceding the date fixed for
redemption, may be deemed to be redeemed from the holders of such Notes for an
amount equal to the applicable redemption price, together with accrued but
unpaid interest (including Liquidated Damages, if any) to (but excluding) the
date fixed for redemption, by one or more investment banks or other purchasers
who may agree with the Company (i) to purchase such Notes from the holders
thereof and convert them into shares of the Company's Common Stock and (ii) to
make payment for such Notes as aforesaid to the Trustee in trust for the
holders.
8. Transfer.
Upon due presentment for registration of transfer of this Note at
the office or agency of the Company maintained for that purpose in accordance
with the terms of the Indenture, a new Note or Notes of authorized denominations
for an equal aggregate principal amount will be issued to the transferee in
exchange thereof; subject to the limitations provided in the Indenture, without
charge except for any tax, assessment or other governmental charge imposed in
connection therewith.
9. Persons Deemed Owners.
The Company, the Trustee, any authenticating agent, any paying
agent, any conversion agent and any Note registrar may deem and treat the
registered holder hereof as the
A-8
<PAGE> 93
absolute owner of this Note (whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Company or any Note registrar) for the purpose of receiving
payment hereof, or on account hereof, for the conversion hereof and for all
other purposes, and neither the Company nor the Trustee nor any other
authenticating agent nor any paying agent nor other conversion agent nor any
Note registrar shall be affected by any notice to the contrary. All payments
made to or upon the order of such registered holder shall, to the extent of the
sum or sums paid, satisfy and discharge liability for monies payable on this
Note.
10. No Recourse.
No recourse for the payment of the principal of or any premium or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any supplemental indenture or in any Note, or
because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, employee, agent, officer or director or
subsidiary, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
This Note shall be deemed to be a contract made under the laws of
New York, and for all purposes shall be construed in accordance with the laws of
New York, without regard to principles of conflicts of laws.
11. Defined Terms.
Terms used in this Note and defined in the Indenture are used
herein as therein defined.
12. Abbreviations.
The following abbreviations, when used in the inscription of the
face of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM tenants in common
UNIF GIFT MIN ACT Uniform Gift to Minors Act
TEN ENT tenants by the entireties
CUST custodian
JT TEN joint tenants with right of survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the above
list.
A-9
<PAGE> 94
CONVERSION NOTICE
TO: GETTY IMAGES, INC.
THE BANK OF NEW YORK
The undersigned registered owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion thereof (which is
$1,000 or an integral multiple thereof) below designated, into shares of Common
Stock of Getty Images, Inc. in accordance with the terms of the Indenture
referred to in this Note, and directs that the shares issuable and deliverable
upon such conversion, together with any check in payment for fractional shares
and any Notes representing any unconverted principal amount hereof, be issued
and delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
provide the appropriate information below and pay all transfer taxes payable
with respect thereto. Any amount required to be paid by the undersigned on
account of interest accompanies this Note.
Dated:
------------------------
- -----------------------------
- -----------------------------
Signature(s)
Signature(s) must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note registrar, which requirements
include membership or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.
-------------------------------
Signature Guarantee
A-10
<PAGE> 95
Fill in the registration of shares of Common Stock if to be
issued, and Notes if to be delivered, other than to and in the name of the
registered holder:
- -------------------------------------
(Name)
- -------------------------------------
(Street Address)
- -------------------------------------
(City, State and Zip Code)
- -------------------------------------
Please print name and address
Principal amount to be converted
(if less than all):
$------------------------------------
Social Security or Other Taxpayer
Identification Number:
- -------------------------------------
A-11
<PAGE> 96
OPTION TO ELECT REPAYMENT
UPON A FUNDAMENTAL CHANGE
TO: GETTY IMAGES, INC.
THE BANK OF NEW YORK
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from Getty Images, Inc. (the "Company") as to
the occurrence of a Fundamental Change with respect to the Company and requests
and instructs the Company to repay the entire principal amount of this Note, or
the portion thereof (which is $1,000 or an integral multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this
Note at the price of 100% of such entire principal amount or portion thereof,
together with accrued interest to, but excluding, such repayment date, to the
registered holder hereof.
Dated:
---------------------
- ---------------------------
- ---------------------------
Signature(s)
NOTICE: The above signatures of the
holder(s) hereof must correspond
with the name as written upon the
face of the Note in every particular
without alteration or enlargement or
any change whatever. Principal
amount to be repaid (if less than
all):
$
----------------------------------
----------------------------------
Social Security or Other Taxpayer
Identification Number
A-12
<PAGE> 97
ASSIGNMENT
For value received __________________________________________
hereby sell(s) assign(s) and transfer(s) unto__________________________________
(Please insert social security or other
Taxpayer Identification Number of assignee) the within Note, and hereby
irrevocably constitutes and appoints ____________________________________
attorney to transfer said Note on the books of the Company, with full power of
substitution in the premises.
In connection with any transfer of the Note prior to the
expiration of the holding period applicable to sales thereof under Rule 144(k)
under the Securities Act (or any successor provision) (other than any transfer
pursuant to a registration statement that has been declared effective under the
Securities Act), the undersigned confirms that such Note is being transferred
within the United States only or to, or for the account or benefit of, U.S.
persons only:
[ ] To Getty Images, Inc. or a subsidiary thereof;
[ ] To and in compliance with Rule 144A under the Securities Act of
1933, as amended;
[ ] To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended, in a
minimum denomination of $100,000; or
[ ] Pursuant to and in compliance with Rule 144 under the Securities
Act of 1933, as amended;
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate").
[ ] The transferee is an Affiliate of the Company.
Dated:
-------------------- ------------------------------------
Signature(s)
Signature(s) must be guaranteed by
an "eligible guarantor institution"
meeting the requirements of the Note
registrar, which requirements
include membership or participation
in the Security Transfer Agent
Medallion Program ("STAMP") or such
other "signature guarantee program"
as may be determined by the Note
registrar in addition to, or in
substitution for, STAMP, all in
accordance with the Securities
Exchange Act of 1934, as amended.
-----------------------------------
Signature Guarantee
A-13
<PAGE> 98
NOTICE: The signature of the conversion notice, the option to elect repayment
upon a Fundamental Change or the assignment must correspond with the name as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.
A-14
<PAGE> 99
EXHIBIT B
Getty Images, Inc.
701 N 34th Street
Suite 400
Seattle, Washington 98103
The Bank of New York
as Trustee
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Ladies and Gentlemen:
In connection with our proposed purchase of 5% Convertible
Subordinated Notes due 2007 (the "Notes") of Getty Images, Inc., a Delaware
corporation (the "Company") we confirm that:
(i) we are an "accredited investor" within the meaning of Rule
501(a)(1), (2) or (3) under the Securities Act of 1933, as amended (the
"Securities Act"), or an entity in which all of the equity owners are accredited
investors within the meaning of Rule 501(a)(1), (2) or (3) under the Securities
Act (an "Institutional Accredited Investor");
(ii) (A) any purchase of Notes by us will be for our own account
or for the account of one or more other Institutional Accredited Investors or as
fiduciary for the account of one or more trusts, each of which is an "accredited
investor" within the meaning of Rule 501(a)(7) under the Securities Act and for
each of which we exercise sole investment discretion or (B) we are a "bank,"
within the meaning of Section 3(a)(2) of the Securities Act, or a "savings and
loan association" or other institution described in Section 3(a)(5)(A) of the
Securities Act that is acquiring Notes as fiduciary for the account of one or
more institutions for which we exercise sole investment discretion;
(iii) the event that we purchase any Notes, we will acquire Notes
having a minimum purchase price of not less than $100,000 for our own account or
for any separate account for which we are acting;
(iv) we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks of
purchasing Notes; and
(v) we are not acquiring Notes with a view to distribution
thereof or with any present intention of offering or selling Notes or the Common
Stock of the Company issuable upon conversion thereof, except as permitted
below; provided that the disposition of our property and property of any
accounts for which we are acting as fiduciary shall remain at all times within
our control.
<PAGE> 100
We understand that the Notes are being offered in a transaction
not involving any public offering within the United States within the meaning of
the Securities Act and that the Notes and the Common Stock of the Company
issuable upon conversion thereof have not been registered under the Securities
Act, and we agree, on our own behalf and on behalf of each account for which we
acquire any Notes, that if in the future we decide to resell or otherwise
transfer such Notes or the Common Stock of the Company issuable upon conversion
thereof, such Notes or Common Stock of the Company may be resold or otherwise
transferred only (i) to the Company or any subsidiary thereof, (ii) to a person
who is a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in a transaction meeting the requirements of Rule 144A, (iii) to
an Institutional Accredited Investor that, prior to such transfer, furnishes to
the Trustee for the Notes (or in the case of Common Stock of the Company, the
transfer agent therefor) a signed letter containing certain representations and
agreements relating to the restrictions on transfer of such securities (the form
of which letter can be obtained from the Trustee or the transfer agent, as the
case may be), (iv) pursuant to the exemption from registration provided by Rule
144 under the Securities Act (if applicable), or (v) pursuant to a registration
statement that has been declared effective under the Securities Act (and which
continues to be effective at the time of such transfer), and in each case, in
accordance with any applicable securities law of any state of the United States
and in accordance with the legends set forth on the Notes or the Common Stock of
the Company issuable upon conversion thereof. We further agree to provide any
person purchasing any of the Notes or the Common Stock of the Company issuable
upon conversion thereof (other than pursuant to clause (iv) or (v) above) from
us a notice advising such purchaser that resales of such securities are
restricted as stated herein. We understand that the Trustee and transfer agent
for the Notes and the Common Stock of the Company will not be required to accept
for registration of transfer any Notes or any Common Stock of the Company issued
upon conversion of the Notes, except upon presentation of evidence satisfactory
to the Company that the foregoing restrictions on transfer have been complied
with. We further understand that any Notes and any Common Stock of the Company
issued upon conversion of the Notes will be in the form of definitive physical
certificates and that such certificates will bear a legend reflecting the
substance of this paragraph other than certificates transferred pursuant to (iv)
or (v) above.
The Company and the Trustee and their respective counsel are
entitled to rely upon this letter and are irrevocably authorized to produce this
letter or a copy hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
(Name of Purchaser)
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address:
---------------------------------
-----------------------------------------
B-2
<PAGE> 1
EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
GETTY IMAGES, INC.
AS ISSUER,
AND
THE INITIAL PURCHASERS
DATED AS OF MARCH 13, 2000
<PAGE> 2
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into as of March 13, 2000 by and among Getty Images, Inc., a Delaware
corporation (the "COMPANY"), and Morgan Stanley & Co. Incorporated, Deutsche
Bank Securities Inc. and SG Cowen Securities Corporation, as representatives of
the Initial Purchasers (as defined herein) pursuant to the Purchase Agreement,
dated March 6, 2000 (the "PURCHASE AGREEMENT"), among the Company and the
Initial Purchasers. In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide the registration rights
set forth in this Agreement. The execution of this Agreement is a condition to
the closing under the Purchase Agreement.
The Company agrees with the Initial Purchasers (i) for their
benefit as Initial Purchasers and (ii) for the benefit of the beneficial owners
(including the Initial Purchasers) from time to time of the Notes (as defined
herein) and the beneficial owners from time to time of the Underlying Common
Stock (as defined herein) issued upon conversion of the Notes (each of the
foregoing a "HOLDER" and together the "HOLDERS"), as follows:
SECTION 1. DEFINITIONS. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
"AFFILIATE" means with respect to any specified person, an
"affiliate," as defined in Rule 144, of such person.
"AMENDMENT EFFECTIVENESS DEADLINE DATE" has the meaning set forth
in Section 2(d) hereof.
"APPLICABLE CONVERSION PRICE" means, as of any date of
determination, the Conversion Price in effect as of such date of determination
or, if no Notes are then outstanding, the Conversion Price that would be in
effect were Notes then outstanding.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in New York City are
authorized or obligated by law or executive order to close.
"COMMON STOCK" means the shares of common stock, par value $.01
per share, of the Company and any other shares of common stock as may constitute
"Common Stock" for purposes of the Indenture, including the Underlying Common
Stock.
"CONVERSION PRICE" has the meaning assigned such term in the
Indenture.
"DAMAGES ACCRUAL PERIOD" has the meaning set forth in Section
2(e) hereof.
"DAMAGES PAYMENT DATE" means each interest payment date under the
Indenture in the case of Notes, and each March 15 and September 15 in the case
of the Underlying Common Stock.
"DEFERRAL NOTICE" has the meaning set forth in Section 3(i)
hereof.
"DEFERRAL PERIOD" has the meaning set forth in Section 3(i)
hereof.
<PAGE> 3
"EFFECTIVENESS DEADLINE DATE" has the meaning set forth in
Section 2(a) hereof.
"EFFECTIVENESS PERIOD" means the period commencing on the date
hereof and ending on the date that all Registrable Securities have ceased to be
Registrable Securities.
"EVENT" has the meaning set forth in Section 2(e) hereof.
"EVENT DATE" has the meaning set forth in Section 2(e) hereof.
"EVENT TERMINATION DATE" has the meaning set forth in Section
2(e) hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"FILING DEADLINE DATE" has the meaning set forth in Section 2(a)
hereof.
"HOLDER" has the meaning set forth in the second paragraph of
this Agreement.
"INDENTURE" means the Indenture, dated as of March 13, 2000,
between the Company and The Bank of New York, as trustee, pursuant to which the
Notes are being issued.
"INITIAL PURCHASERS" means Morgan Stanley & Co. Incorporated,
Deutsche Bank Securities Inc., SG Cowen Securities Corporation and Hambrecht &
Quist LLC.
"INITIAL SHELF REGISTRATION STATEMENT" has the meaning set forth
in Section 2(a) hereof.
"ISSUE DATE" means the first date of original issuance of the
Notes.
"LIQUIDATED DAMAGES AMOUNT" has the meaning set forth in Section
2(e) hereof.
"LOSSES" has the meaning set forth in Section 6 hereof.
"MATERIAL EVENT" has the meaning set forth in Section 3(i)
hereof.
"NOTES" means the 5% Convertible Subordinated Notes due 2007 of
the Company to be purchased pursuant to the Purchase Agreement.
"NOTICE AND QUESTIONNAIRE" means a written notice delivered to
the Company containing substantially the information called for by the Selling
Securityholder Notice and Questionnaire attached as Annex A to the Offering
Memorandum of the Company issued March 6, 2000 relating to the Notes.
"NOTICE HOLDER" means, on any date, any Holder that has delivered
a Notice and Questionnaire to the Company on or prior to such date.
"PURCHASE AGREEMENT" has the meaning set forth in the preamble
hereof.
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<PAGE> 4
"PROSPECTUS" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any amendment or prospectus
supplement, including post-effective amendments, and all materials incorporated
by reference or explicitly deemed to be incorporated by reference in such
Prospectus.
"RECORD HOLDER" means (i) with respect to any Damages Payment
Date relating to any Notes as to which any such Liquidated Damages Amount has
accrued, the holder of record of such Note on the record date with respect to
the interest payment date under the Indenture on which such Damages Payment Date
shall occur and (ii) with respect to any Damages Payment Date relating to the
Underlying Common Stock as to which any such Liquidated Damages Amount has
accrued, the registered holder of such Underlying Common Stock fifteen (15) days
prior to such Damages Payment Date.
"REGISTRABLE SECURITIES" means the Notes until such Notes have
been converted into or exchanged for the Underlying Common Stock and, at all
times subsequent to any such conversion or exchange, the Underlying Common Stock
and any securities into or for which such Underlying Common Stock has been
converted or exchanged, and any security issued with respect thereto upon any
stock dividend, split or similar event until, in the case of any such security,
(A) the earliest of (i) its effective registration under the Securities Act and
resale in accordance with the Registration Statement covering it, (ii)
expiration of the holding period that would be applicable thereto under Rule
144(k) or (iii) its sale to the public pursuant to Rule 144 (or any similar
provision then in force, but not Rule 144A) under the Securities Act, and (B) as
a result of the event or circumstance described in any of the foregoing clauses
(i) through (iii), the legend with respect to transfer restrictions required
under the Indenture are removed or removable in accordance with the terms of the
Indenture or such legend, as the case may be.
"REGISTRATION EXPENSES" has the meaning set forth in Section 5
hereof.
"REGISTRATION STATEMENT" means any registration statement of the
Company that covers any of the Registrable Securities pursuant to the provisions
of this Agreement including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all materials incorporated by reference or explicitly deemed to be incorporated
by reference in such registration statement.
"RESTRICTED SECURITIES" means "Restricted Securities" as defined
in Rule 144.
"RULE 144" means Rule 144 promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
"RULE 144A" means Rule 144A promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the SEC thereunder.
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<PAGE> 5
"SHELF REGISTRATION STATEMENT" has the meaning set forth in
Section 2(a) hereof.
"SPECIAL COUNSEL" means Latham & Watkins or such other successor
counsel as shall be specified by the Holders of a majority of the Registrable
Securities, but which may, with the written consent of the Initial Purchasers
(which shall not be unreasonably withheld), be another nationally recognized law
firm experienced in securities law matters designated by the Company, the
reasonable fees and expenses of which will be paid by the Company pursuant to
Section 5 hereof.
"SUBSEQUENT SHELF REGISTRATION STATEMENT" has the meaning set
forth in Section 2(b) hereof.
"TIA" means the Trust Indenture Act of 1939, as amended.
"TRUSTEE" means The Bank of New York, the Trustee under the
Indenture.
"UNDERLYING COMMON STOCK" means the Common Stock into which the
Notes are convertible or issued upon any such conversion.
SECTION 2. SHELF REGISTRATION. (a) The Company shall use its best
efforts to prepare and file or cause to be prepared and filed with the SEC, as
soon as practicable but in any event by the date (the "FILING DEADLINE DATE")
ninety (90) days after the Issue Date, a Registration Statement for an offering
to be made on a delayed or continuous basis pursuant to Rule 415 of the
Securities Act (a "SHELF REGISTRATION STATEMENT") registering the resale from
time to time by Holders thereof of all of the Registrable Securities (the
"INITIAL SHELF REGISTRATION STATEMENT"). The Initial Shelf Registration
Statement shall be on Form S-3 or another appropriate form permitting
registration of such Registrable Securities for resale by such Holders in
accordance with the methods of distribution elected by the Holders and set forth
in the Initial Shelf Registration Statement. The Company shall use its
reasonable efforts to cause the Initial Shelf Registration Statement to be
declared effective under the Securities Act as promptly as practicable but in
any event by the date (the "EFFECTIVENESS DEADLINE DATE") that is one hundred
eighty (180) days after the Issue Date, and to keep the Initial Shelf
Registration Statement (or any Subsequent Shelf Registration Statement)
continuously effective under the Securities Act until the expiration of the
Effectiveness Period. At the time the Initial Shelf Registration Statement is
declared effective, each Holder that became a Notice Holder on or prior to the
date ten (10) Business Days prior to such time of effectiveness shall be named
as a selling securityholder in the Initial Shelf Registration Statement and the
related Prospectus in such a manner as to permit such Holder to deliver such
Prospectus to purchasers of Registrable Securities in accordance with applicable
law. None of the Company's security holders (other than the Holders of
Registrable Securities) shall have the right to include any of the Company's
securities in the Shelf Registration Statement.
(b) If the Initial Shelf Registration Statement or any
Subsequent Shelf Registration Statement ceases to be effective for any reason at
any time during the Effectiveness Period (other than because all Registrable
Securities registered thereunder shall have been resold pursuant thereto or
shall have otherwise ceased to be Registrable Securities), the Company shall use
its reasonable efforts to obtain the prompt withdrawal of any order suspending
the effectiveness thereof, and in any event shall within thirty (30) days of
such cessation of effectiveness amend the Shelf Registration Statement in a
manner reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional Shelf
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<PAGE> 6
Registration Statement covering all of the securities that as of the date of
such filing are Registrable Securities (a "SUBSEQUENT SHELF REGISTRATION
STATEMENT"). If a Subsequent Shelf Registration Statement is filed, the Company
shall use its reasonable efforts to cause the Subsequent Shelf Registration
Statement to become effective as promptly as practicable after such filing and
to keep such Registration Statement (or subsequent Shelf Registration Statement)
continuously effective until the end of the Effectiveness Period.
(c) The Company shall supplement and amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration Statement,
if required by the Securities Act or as reasonably requested by the Initial
Purchasers or by the Trustee on behalf of the Holders of the Registrable
Securities covered by such Shelf Registration Statement.
(d) Each Holder of Registrable Securities agrees that if such
Holder wishes to sell Registrable Securities pursuant to a Shelf Registration
Statement and related Prospectus, it will do so only in accordance with this
Section 2(d) and Section 3(i). Each Holder of Registrable Securities wishing to
sell Registrable Securities pursuant to a Shelf Registration Statement and
related Prospectus agrees to deliver a Notice and Questionnaire to the Company
at least three (3) Business Days prior to any intended distribution of
Registrable Securities under the Shelf Registration Statement. From and after
the date the Initial Shelf Registration Statement is declared effective, the
Company shall, as promptly as practicable after the date a Notice and
Questionnaire is delivered, and in any event upon the later of (x) five (5)
Business Days after such date or (y) five (5) Business Days after the expiration
of any Deferral Period in effect when the Notice and Questionnaire is delivered
or put into effect within five (5) Business Days of such delivery date, (i) if
required by applicable law, file with the SEC a post-effective amendment to the
Shelf Registration Statement or prepare and, if required by applicable law, file
a supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that the Holder delivering such Notice and Questionnaire is named as a
selling securityholder in the Shelf Registration Statement and the related
Prospectus in such a manner as to permit such Holder to deliver such Prospectus
to purchasers of the Registrable Securities in accordance with applicable law
and, if the Company shall file a post-effective amendment to the Shelf
Registration Statement, use its reasonable efforts to cause such post-effective
amendment to be declared effective under the Securities Act as promptly as
practicable, but in any event by the date (the "AMENDMENT EFFECTIVENESS DEADLINE
DATE") that is forty-five (45) days after the date such post-effective amendment
is required by this clause to be filed; (ii) provide such Holder copies of any
documents filed pursuant to Section 2(d)(i); and (iii) notify such Holder as
promptly as practicable after the effectiveness under the Securities Act of any
post-effective amendment filed pursuant to Section 2(d)(i); PROVIDED, that if
such Notice and Questionnaire is delivered during a Deferral Period, the Company
shall so inform the Holder delivering such Notice and Questionnaire and shall
take the actions set forth in clauses (i), (ii) and (iii) above upon expiration
of the Deferral Period in accordance with Section 3(i). Notwithstanding anything
contained herein to the contrary, (i) the Company shall be under no obligation
to name any Holder that is not a Notice Holder as a selling securityholder in
any Registration Statement or related Prospectus and (ii) the Amendment
Effectiveness Deadline Date shall be extended by up to ten (10) Business Days
from the expiration of a Deferral Period (and the Company shall incur no
obligation to pay Liquidated Damages during such extension) if such Deferral
Period shall be in effect on the Amendment Effectiveness Deadline Date.
(e) The parties hereto agree that the Holders of Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with
5
<PAGE> 7
precision, if (i) the Initial Shelf Registration Statement has not been filed on
or prior to the Filing Deadline Date, (ii) the Initial Shelf Registration
Statement has not been declared effective under the Securities Act on or prior
to the Effectiveness Deadline Date, (iii) the Company has failed to perform its
obligations set forth in Section 2(d) within the time period required therein,
(iv) the aggregate duration of Deferral Periods in any period exceeds the number
of days permitted in respect of such period pursuant to Section 3(i) hereof or
(v) the number of Deferral Periods in any period exceeds the number permitted in
respect of such period pursuant to Section 3(i) hereof (each of the events of a
type described in any of the foregoing clauses (i) through (v) are individually
referred to herein as an "EVENT," and the Filing Deadline Date in the case of
clause (i), the Effectiveness Deadline Date in the case of clause (ii), the date
by which the Company is required to perform its obligations set forth in Section
2(d) in the case of clause (iii) (including the filing of any post-effective
amendment prior to the Amendment Effectiveness Deadline Date), the date on which
the aggregate duration of Deferral Periods in any period exceeds the number of
days permitted by Section 3(i) hereof in the case of clause (iv), and the date
of the commencement of a Deferral Period that causes the limit on the number of
Deferral Periods in any period under Section 3(i) hereof to be exceeded in the
case of clause (v), being referred to herein as an "EVENT DATE"). Events shall
be deemed to continue until the "EVENT TERMINATION DATE," which shall be the
following dates with respect to the respective types of Events: the date the
Initial Shelf Registration Statement is filed in the case of an Event of the
type described in clause (i), the date the Initial Shelf Registration Statement
is declared effective under the Securities Act in the case of an Event of the
type described in clause (ii), the date the Company performs its obligations set
forth in Section 2(d) in the case of an Event of the type described in clause
(iii) (including, without limitation, the date the relevant post-effective
amendment to the Shelf Registration Statement is declared effective under the
Securities Act), termination of the Deferral Period that caused the limit on the
aggregate duration of Deferral Periods in a period set forth in Section 3(i) to
be exceeded in the case of the commencement of an Event of the type described in
clause (iv), and termination of the Deferral Period the commencement of which
caused the number of Deferral Periods in a period permitted by Section 3(i) to
be exceeded in the case of an Event of the type described in clause (v).
Accordingly, commencing on (and including) any Event Date and
ending on (but excluding) the next date on which there are no Events that have
occurred and are continuing (a "DAMAGES ACCRUAL PERIOD"), the Company agrees to
pay, as liquidated damages and not as a penalty, an amount (the "LIQUIDATED
DAMAGES AMOUNT"), payable on the Damages Payment Dates to Record Holders of
Notes that are Registrable Securities and of shares of Underlying Common Stock
issued upon conversion of Notes that are Registrable Securities, as the case may
be, accruing, for each portion of such Damages Accrual Period beginning on and
including a Damages Payment Date (or, in respect of the first time that the
Liquidated Damages Amount is to be paid to Holders on a Damages Payment Date as
a result of the occurrence of any particular Event, from the Event Date) and
ending on but excluding the first to occur of (A) the date of the end of the
Damages Accrual Period or (B) the next Damages Payment Date, at a rate per annum
equal to one-half of one percent (0.5%) of the aggregate principal amount of
such Notes or, in the case of Notes that have been converted into or exchanged
for Underlying Common Stock, at a rate per annum equal to one-half of one
percent (0.5%) of the Applicable Conversion Price of such shares of Underlying
Common Stock, as the case may be, in each case determined as of the Business Day
immediately preceding the next Damages Payment Date; PROVIDED, that in the case
of a Damages Accrual Period that is in effect solely as a result of an Event of
the type described in clause (iii) of the immediately preceding paragraph, such
Liquidated Damages Amount shall be paid only to the Notice Holders that caused
the Company to incur the obligations set forth in Section 2(d), the
non-performance of which is the basis of such Event; PROVIDED FURTHER, that any
Liquidated Damages Amount accrued with respect
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<PAGE> 8
to any Note or portion thereof called for redemption on a redemption date or
converted into Underlying Common Stock on a conversion date prior to the Damages
Payment Date, shall, in any such event, be paid instead to the Holder who
submitted such Note or portion thereof for redemption or conversion on the
applicable redemption date or conversion date, as the case may be, on such date
(or promptly as practicable following the conversion date, in the case of
conversion). Notwithstanding the foregoing, no Liquidated Damages Amounts shall
accrue as to any Registrable Security from and after the earlier of (x) the date
such security is no longer a Registrable Security and (y) expiration of the
Effectiveness Period. The rate of accrual of the Liquidated Damages Amount with
respect to any period shall not exceed the rate provided for in this paragraph
notwithstanding the occurrence of multiple concurrent Events. Following the cure
of all Events requiring the payment by the Company of Liquidated Damages Amounts
to the Holders of Registrable Securities pursuant to this Section, the accrual
of Liquidated Damages Amounts will cease (without in any way limiting the effect
of any subsequent Event requiring the payment of Liquidated Damages Amount by
the Company).
The Trustee shall be entitled, on behalf of Holders of Notes or
Underlying Common Stock, to seek any available remedy for the enforcement of
this Agreement, including for the payment of any Liquidated Damages Amount.
Notwithstanding the foregoing, the parties agree that the sole damages payable
for a violation of the terms of this Agreement with respect to which liquidated
damages are expressly provided shall be such liquidated damages. Nothing shall
preclude a Notice Holder or Holder of Registrable Securities from pursuing or
obtaining specific performance or other equitable relief with respect to this
Agreement.
All of the Company's obligations set forth in this Section 2(e)
that are outstanding with respect to any Registrable Security at the time such
security ceases to be a Registrable Security shall survive until such time as
all such obligations with respect to such security have been satisfied in full
(notwithstanding termination of this Agreement pursuant to Section 8(k)).
The parties hereto agree that the liquidated damages provided for
in this Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of the
Shelf Registration Statement to be filed or declared effective or available for
effecting resales of Registrable Securities in accordance with the provisions
hereof.
SECTION 3. REGISTRATION PROCEDURES. In connection with the
registration obligations of the Company under Section 2 hereof, the Company
shall:
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on any appropriate form under the Securities Act
available for the sale of the Registrable Securities by the Holders thereof in
accordance with the intended method or methods of distribution thereof, and use
its reasonable efforts to cause each such Registration Statement to become
effective and remain effective as provided herein; PROVIDED, that before filing
any Registration Statement or Prospectus or any amendments or supplements
thereto with the SEC, furnish to the Initial Purchasers and the Special Counsel
copies of all such documents proposed to be filed and use its best efforts to
reflect in each such document when so filed with the SEC such comments as the
Special Counsel reasonably shall propose within four (4) Business Days of the
delivery of such copies to the Initial Purchasers and the Special Counsel.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration
7
<PAGE> 9
Statement continuously effective for the applicable period specified in Section
2(a); cause the related Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) under the Securities Act; and use its best
efforts to comply with the provisions of the Securities Act applicable to it
with respect to the disposition of all securities covered by such Registration
Statement during the Effectiveness Period in accordance with the intended
methods of disposition by the sellers thereof set forth in such Registration
Statement as so amended or such Prospectus as so supplemented.
(c) As promptly as practicable give notice to the Notice Holders,
the Initial Purchasers and the Special Counsel (i) when any Prospectus,
Prospectus supplement, Registration Statement or post-effective amendment to a
Registration Statement has been filed with the SEC and, with respect to a
Registration Statement or any post-effective amendment, when the same has been
declared effective, (ii) of any request, following the effectiveness of the
Initial Shelf Registration Statement under the Securities Act, by the SEC or any
other federal or state governmental authority for amendments or supplements to
any Registration Statement or related Prospectus or for additional information,
(iii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of any Registration
Statement or the initiation or threatening of any proceedings for that purpose,
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (v) of the occurrence of (but
not the nature of or details concerning) a Material Event (as defined herein)
and (vi) of the determination by the Company that a post-effective amendment to
a Registration Statement will be filed with the SEC, which notice may, at the
discretion of the Company (or as required pursuant to Section 3 (i)), state that
it constitutes a Deferral Notice, in which event the provisions of Section 3(i)
shall apply.
(d) Use its reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement or the lifting of
any suspension of the qualification (or exemption from qualification) of any of
the Registrable Securities for sale in any jurisdiction in which they have been
qualified for sale, in either case at the earliest possible moment, and provide
prompt notice to each Notice Holder and the Initial Purchasers of the withdrawal
of any such order.
(e) If reasonably requested by the Initial Purchasers or any
Notice Holder, as promptly as practicable incorporate in a Prospectus supplement
or post-effective amendment to a Registration Statement such information as the
Initial Purchasers, the Special Counsel or such Notice Holder shall, on the
basis of a written opinion of nationally-recognized counsel experienced in such
matters, determine to be required to be included therein by applicable law and
make any required filings of such Prospectus supplement or such post-effective
amendment.
(f) As promptly as practicable furnish to each Notice Holder, the
Special Counsel and the Initial Purchasers, without charge, at least one (1)
conformed copy of the Registration Statement and any amendment thereto,
including financial statements but excluding schedules, all documents
incorporated or deemed to be incorporated therein by reference and all exhibits
(unless requested in writing to the Company by such Notice Holder, Special
Counsel, counsel or Initial Purchasers).
(g) During the Effectiveness Period, deliver to each Notice
Holder, the Special Counsel and the Initial Purchasers, in connection with any
sale of Registrable Securities
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<PAGE> 10
pursuant to a Registration Statement, without charge, as many copies of the
Prospectus or Prospectuses relating to such Registrable Securities (including
each preliminary prospectus) and any amendment or supplement thereto as such
Notice Holder may reasonably request; and the Company hereby consents (except
during such periods that a Deferral Notice is outstanding and has not been
revoked) to the use of such Prospectus or each amendment or supplement thereto
by each Notice Holder, in connection with any offering and sale of the
Registrable Securities covered by such Prospectus or any amendment or supplement
thereto in the manner set forth therein.
(h) Prior to any public offering of the Registrable Securities
pursuant to the Shelf Registration Statement, register or qualify or cooperate
with the Notice Holders in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Notice Holder reasonably requests
in writing (which request may be included in the Notice and Questionnaire);
prior to any public offering of the Registrable Securities pursuant to the Shelf
Registration Statement, keep each such registration or qualification (or
exemption therefrom) effective during the Effectiveness Period in connection
with such Notice Holder's offer and sale of Registrable Securities pursuant to
such registration or qualification (or exemption therefrom) and do any and all
other acts or things reasonably necessary or advisable to enable the disposition
in such jurisdictions of such Registrable Securities in the manner set forth in
the relevant Registration Statement and the related Prospectus; PROVIDED, that
the Company will not be required to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Agreement or (ii) take any action that would
subject it to general service of process in suits or to taxation in any such
jurisdiction where it is not then so subject.
(i) Upon (A) the issuance by the SEC of a stop order suspending
the effectiveness of the Shelf Registration Statement or the initiation of
proceedings with respect to the Shelf Registration Statement under Section 8(d)
or 8(e) of the Securities Act, (B) the occurrence of any event or the existence
of any fact (a "MATERIAL EVENT") as a result of which any Registration Statement
shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any Prospectus shall contain any untrue statement of
a material fact or omit 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, or (C) the occurrence or existence
of any pending corporate development that, in the reasonable discretion of the
Company, makes it appropriate to suspend the availability of the Shelf
Registration Statement and the related Prospectus, (i) in the case of clause (B)
above, subject to the next sentence, as promptly as practicable prepare and
file, if necessary pursuant to applicable law, a post-effective amendment to
such Registration Statement or a supplement to the related Prospectus or any
document incorporated therein by reference or file any other required document
that would be incorporated by reference into such Registration Statement and
Prospectus so that such Registration Statement does not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
such Prospectus does not contain any untrue statement of a material fact or omit
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, as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, and, in the case of a
post-effective amendment to a Registration Statement, subject to the next
sentence, use its reasonable efforts to cause it to be declared effective as
promptly as practicable, and (ii) give notice to the Notice Holders and the
Special Counsel that the availability of the Shelf Registration
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<PAGE> 11
Statement is suspended (a "DEFERRAL NOTICE") and, upon receipt of any Deferral
Notice, each Notice Holder agrees not to sell any Registrable Securities
pursuant to the Registration Statement until such Notice Holder's receipt of
copies of the supplemented or amended Prospectus provided for in clause (i)
above, or until it is advised in writing by the Company that the Prospectus may
be used, and has received copies of any additional or supplemental filings that
are incorporated or deemed incorporated by reference in such Prospectus. The
Company will use all reasonable efforts to ensure that the use of the Prospectus
may be resumed (x) in the case of clause (A) above, as promptly as practicable,
(y) in the case of clause (B) above, as soon as, in the sole judgment of the
Company, public disclosure of such Material Event would not be prejudicial to or
contrary to the interests of the Company or, if necessary to avoid unreasonable
burden or expense, as soon as practicable thereafter and (z) in the case of
clause (C) above, as soon as, in the discretion of the Company, such suspension
is no longer appropriate. The Company shall be entitled to exercise its right
under this Section 3(i) to suspend the availability of the Shelf Registration
Statement or any Prospectus, without incurring or accruing any obligation to pay
liquidated damages pursuant to Section 2(e), no more than one (1) time in any
three (3) month period or four (4) times in any twelve (12) month period, and
any such period during which the availability of the Registration Statement and
any Prospectus is suspended (the "DEFERRAL PERIOD") shall, without incurring any
obligation to pay liquidated damages pursuant to Section 2(e), not exceed thirty
(30) days; PROVIDED, that in the case of a Material Event relating to an
acquisition or a probable acquisition or financing, recapitalization, business
combination or other similar transaction, the Company may, without incurring any
obligation to pay liquidated damages pursuant to Section 2(e), deliver to Notice
Holders a second notice to the effect set forth above, which shall have the
effect of extending the Deferral Period by up to an additional thirty (30) days,
or such shorter period of time as is specified in such second notice, PROVIDED,
that the aggregate duration of any Deferral Periods shall not, without incurring
any obligation to pay liquidated damages pursuant to Section 2(e), exceed thirty
(30) days in any three (3) month period (or sixty (60) days in any three (3)
month period in the event of a Material Event pursuant to which the Company has
delivered a second notice as required above) or ninety (90) days in any twelve
(12) month period.
(j) If requested in writing by the Notice Holders in connection
with a disposition of Registrable Securities pursuant to a Registration
Statement, make reasonably available for inspection during normal business hours
by a representative for the Notice Holders of such Registrable Securities, and
any broker-dealers, attorneys and accountants retained by such Notice Holders,
all relevant financial and other records and pertinent corporate documents and
properties of the Company and its subsidiaries, and cause the appropriate
officers, directors and employees of the Company and its subsidiaries to make
reasonably available for inspection during normal business hours on reasonable
notice all relevant information reasonably requested by such representative for
the Notice Holders, managing underwriter, or any such broker-dealers, attorneys
or accountants in connection with such disposition, in each case as is customary
for similar due diligence examinations; PROVIDED, HOWEVER, that such persons
shall first agree in writing with the Company that any information that is
reasonably and in good faith designated by the Company in writing as
confidential at the time of delivery of such information shall be kept
confidential by such persons and shall be used solely for the purposes of
exercising rights under this Agreement, unless (i) disclosure of such
information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any disclosure requirements pursuant
to federal securities laws in connection with the filing of any Registration
Statement or the use of any Prospectus referred to in this Agreement), (iii)
such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by any such person or (iv) such
information becomes available to any such person from a source other than the
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<PAGE> 12
Company and such source is not bound by a confidentiality agreement, and
PROVIDED, that the foregoing inspection and information gathering shall be
coordinated on behalf of all the Notice Holders and the other parties entitled
thereto by the counsel referred to in Section 5, and PROVIDED FURTHER, that the
Company shall not be required to disclose any information subject to the
attorney-client or attorney work product privilege if and to the extent such
disclosure would constitute a waiver of such privilege.
(k) Use all reasonable efforts to comply with all applicable
rules and regulations of the SEC and make generally available to its
securityholders earning statements (which need not be audited) satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 3-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) commencing on the first day of the first
fiscal quarter of the Company commencing after the effective date of a
Registration Statement, which statements shall cover said periods.
(l) Cooperate with each Notice Holder to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
sold or to be sold pursuant to a Registration Statement, which certificates
shall not bear any restrictive legends, and cause such Registrable Securities to
be in such denominations as are permitted by the Indenture and registered in
such names as such Notice Holder may request in writing at least two (2)
Business Days prior to any sale of such Registrable Securities.
(m) Provide a CUSIP number for all Registrable Securities covered
by each Registration Statement not later than the effective date of such
Registration Statement and provide the Trustee and the transfer agent for the
Common Stock with printed certificates for the Registrable Securities that are
in a form eligible for deposit with The Depository Trust Company.
(n) Cooperate and assist in any filings required to be made with
the National Association of Securities Dealers, Inc.
(o) Upon (i) the filing of the Initial Registration Statement and
(ii) the effectiveness of the Initial Registration Statement, announce the same,
in each case by release to Reuters Economic Services and Bloomberg Business
News.
SECTION 4. HOLDER'S OBLIGATIONS. Each Holder agrees, by
acquisition of the Registrable Securities, that no Holder of Registrable
Securities shall be entitled to sell any of such Registrable Securities pursuant
to a Registration Statement or to receive a Prospectus relating thereto, unless
such Holder has furnished the Company with a Notice and Questionnaire as
required pursuant to Section 2(d) hereof (including the information required to
be included in such Notice and Questionnaire) and the information set forth in
the next sentence. Each Notice Holder agrees promptly to furnish to the Company
all information required to be disclosed in order to make the information
previously furnished to the Company by such Notice Holder not misleading and any
other information regarding such Notice Holder and the distribution of such
Registrable Securities as the Company may from time to time reasonably request.
Any sale of any Registrable Securities by any Holder shall constitute a
representation and warranty by such Holder that the information relating to such
Holder and its plan of distribution is as set forth in the Prospectus delivered
by such Holder in connection with such disposition, that such Prospectus does
not as of the time of such sale contain any untrue statement of a material fact
relating to or provided by such Holder or its plan of distribution and that such
Prospectus does not as of the time of such sale omit to state any material fact
relating to or
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<PAGE> 13
provided by such Holder or its plan of distribution necessary to make the
statements in such Prospectus, in the light of the circumstances under which
they were made, not misleading.
SECTION 5. REGISTRATION EXPENSES. The Company shall bear all fees
and expenses incurred in connection with the performance by the Company of its
obligations under Sections 2 and 3 of this Agreement whether or not any of the
Registration Statements are declared effective. Such fees and expenses shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (x) with respect to filings required to be
made with the National Association of Securities Dealers, Inc. and (y) of
compliance with federal and state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of the Special Counsel in
connection with Blue Sky qualifications of the Registrable Securities under the
laws of such jurisdictions as the Notice Holders of a majority of the
Registrable Securities being sold pursuant to a Registration Statement may
designate), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities in a form eligible for deposit
with The Depository Trust Company, (iii) duplication expenses relating to copies
of any Registration Statement or Prospectus delivered to any Holders hereunder,
(iv) fees and disbursements of counsel for the Company, (v) reasonable fees and
disbursements of the Special Counsel in connection with the Shelf Registration
Statement (provided that the Company shall not be liable for the fees and
expenses of more than one separate firm for all parties participating in any
transaction hereunder), (vi) reasonable fees and disbursements of the Trustee
and its counsel and of the registrar and transfer agent for the Common Stock and
(vii) Securities Act liability insurance obtained by the Company in its sole
discretion. In addition, the Company shall pay the internal expenses of the
Company (including, without limitation, all salaries and expenses of officers
and employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing by the
Company of the Registrable Securities on any securities exchange on which
similar securities of the Company are then listed and the fees and expenses of
any person, including special experts, retained by the Company. Notwithstanding
the provisions of this Section 5, each seller of Registrable Securities shall
pay selling expenses and all registration expenses to the extent required by
applicable law.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company shall indemnify
and hold harmless each Notice Holder and each person, if any, who controls any
Notice Holder (within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act) from and against any losses, liabilities,
claims, damages and expenses (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) (collectively, "LOSSES"), arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or based upon 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, PROVIDED,
HOWEVER, that the Company shall not be liable in any such case to the extent
that any such Losses arise out of or are based upon an untrue statement or
alleged untrue statement contained in or omission or alleged omission from any
of such documents in reliance upon and conformity with any of the information
relating to the Holders furnished to the Company in writing by a Holder
expressly for use therein; PROVIDED FURTHER, that the indemnification contained
in this paragraph shall not inure to the benefit of any Holder of Registrable
Securities (or to the benefit of any person controlling such Holder) on account
of any such Losses arising out of or based upon an untrue statement or alleged
untrue statement or
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<PAGE> 14
omission or alleged omission made in any preliminary prospectus provided in each
case the Company has performed its obligations under Section 3(a) hereof if
either (A) (i) such Holder failed to send or deliver a copy of the Prospectus
with or prior to the delivery of written confirmation of the sale by such Holder
to the person asserting the claim from which such Losses arise and (ii) the
Prospectus would have corrected such untrue statement or alleged untrue
statement or such omission or alleged omission, or (B) (x) such untrue statement
or alleged untrue statement, omission or alleged omission is corrected in an
amendment or supplement to the Prospectus and (y) having previously been
furnished by or on behalf of the Company with copies of the Prospectus as so
amended or supplemented, such Holder thereafter fails to deliver such Prospectus
as so amended or supplemented, with or prior to the delivery of written
confirmation of the sale of a Registrable Security to the person asserting the
claim from which such Losses arise.
(b) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. Each
Holder agrees severally and not jointly to indemnify and hold harmless the
Company and its directors and officers, and each person, if any, who controls
the Company (within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act) or any other Holder, from and against all Losses
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement or Prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or based upon 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, to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with information furnished to the Company by
such Holder expressly for use in such Registration Statement or Prospectus or
amendment or supplement thereto. In no event shall the liability of any selling
Holder of Registrable Securities hereunder be greater in amount than the dollar
amount of the proceeds received by such Holder upon the sale of the Registrable
Securities pursuant to the Registration Statement giving rise to such
indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
either of the two preceding paragraphs, such person (the "INDEMNIFIED PARTY")
shall promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the reasonable
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all indemnified parties, and that all such fees and
expenses shall be reimbursed as they are incurred. Such separate firm shall be
designated in writing by, in the case of parties indemnified pursuant to Section
6(a), the Holders of a majority (with Holders of Notes deemed to be the Holders,
for purposes of determining such majority, of
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<PAGE> 15
the number of shares of Underlying Common Stock into which such Notes are or
would be convertible or exchangeable as of the date on which such designation is
made) of the Registrable Securities covered by the Registration Statement held
by Holders that are indemnified parties pursuant to Section 6(a) and, in the
case of parties indemnified pursuant to Section 6(b), the Company. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) CONTRIBUTION. To the extent that the indemnification provided
for in this Section 6 is unavailable to an indemnified party under Section 6(a)
or 6(b) hereof in respect of any Losses or is insufficient to hold such
indemnified party harmless, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Losses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party or parties on the one hand and the indemnified party or
parties on the other hand or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the indemnifying party or parties on the one hand and of
the indemnified party or parties on the other hand in connection with the
statements or omissions that resulted in such Losses, as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the initial placement pursuant
to the Purchase Agreement (before deducting expenses) of the Registrable
Securities to which such Losses relate. The relative fault of the Holders on the
one hand and the Company on the other hand 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 Holders or by the Company, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Holders' respective obligations to contribute
pursuant to this paragraph are several in proportion to the respective number of
Registrable Securities they have sold pursuant to a Registration Statement, and
not joint.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method or allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the Losses
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding this Section 6(d), an
indemnifying party that is a selling Holder of Registrable Securities shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities sold by such indemnifying party and
distributed to the public were offered to the public exceeds the amount of any
damages that such indemnifying party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
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<PAGE> 16
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The indemnity, contribution and expense reimbursement
obligations of the parties hereunder shall be in addition to any liability any
indemnified party may otherwise have hereunder, under the Purchase Agreement or
otherwise.
(f) The indemnity and contribution provisions contained in this
Section 6 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Holder or any person controlling any Holder, or the Company, or the
Company's officers or directors or any person controlling the Company and (iii)
the sale of any Registrable Securities by any Holder.
SECTION 7. INFORMATION REQUIREMENTS. (a) The Company covenants
that, if at any time before the end of the Effectiveness Period the Company is
not subject to the reporting requirements of the Exchange Act, it will cooperate
with any Holder of Registrable Securities and take such further reasonable
action as any Holder of Registrable Securities may reasonably request in writing
(including, without limitation, making such reasonable representations as any
such Holder may reasonably request), all to the extent required from time to
time to enable such Holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144 and Rule 144A promulgated under the Securities Act and customarily
taken in connection with sales pursuant to such exemptions. Upon the written
request of any Holder of Registrable Securities, the Company shall deliver to
such Holder a written statement as to whether it has complied with such filing
requirements, unless such a statement has been included in the Company's most
recent report filed pursuant to Section 13 or Section 15(d) of Exchange Act.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Company to register any of its securities (other than the Common
Stock) under any section of the Exchange Act.
(b) The Company shall file the reports required to be filed
by it under the Exchange Act and shall comply with all other requirements set
forth in the instructions to Form S-3 in order to allow the Company to be
eligible to file registration statements on Form S-3.
SECTION 8. MISCELLANEOUS.
(a) NO CONFLICTING AGREEMENTS. The Company is not, as of the date
hereof, a party to, nor shall it, on or after the date of this Agreement, enter
into, any agreement with respect to its securities that conflicts with the
rights granted to the Holders of Registrable Securities in this Agreement. The
Company represents and warrants that the rights granted to the Holders of
Registrable Securities hereunder do not in any way conflict with the rights
granted to the holders of the Company's securities under any other agreements.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of a majority of the then outstanding Underlying Common Stock constituting
Registrable Securities (with Holders of Notes deemed to be the Holders, for
purposes of this Section, of the number of outstanding shares of Underlying
Common Stock into which such Notes are or would be convertible or exchangeable
as of the date on which such consent is requested). Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of
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<PAGE> 17
Holders of Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders of Registrable Securities may be given by Holders of at
least a majority of the Registrable Securities being sold by such Holders
pursuant to such Registration Statement; PROVIDED, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence. Each Holder of Registrable
Securities outstanding at the time of any such amendment, modification,
supplement, waiver or consent or thereafter shall be bound by any such
amendment, modification, supplement, waiver or consent effected pursuant to this
Section 8(b), whether or not any notice, writing or marking indicating such
amendment, modification, supplement, waiver or consent appears on the
Registrable Securities or is delivered to such Holder.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, by telecopier, by
courier guaranteeing overnight delivery or by first-class mail, return receipt
requested, and shall be deemed given (i) when made, if made by hand delivery,
(ii) upon confirmation, if made by telecopier, (iii) one (1) Business Day after
being deposited with such courier, if made by overnight courier or (iv) on the
date indicated on the notice of receipt, if made by first-class mail, to the
parties as follows:
(w) if to a Holder of Registrable Securities, at the most current
address given by such Holder to the Company in a Notice and Questionnaire or any
amendment thereto;
(x) if to the Company, to: Getty Images, Inc.
701 N. 34th Street, Suite 400
Seattle, WA 98103
Attention: Suzanne L. Page
Telecopy No.: (206) 268-1202
and
Weil Gotshal & Manges LLP
2882 Sand Hill Road, Suite 280
Menlo Park, CA 94025
Attention: Richard Millard
Telecopy No.: (650) 854-3713
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<PAGE> 18
(y) if to the Initial
Purchasers, to: Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York
Attention: Equity Capital Markets
Telecopy No.: (212) 761-0538
and
Latham & Watkins
135 Commonwealth Drive
Menlo Park, CA 94025
Attention: Christopher L. Kaufman
Telecopy No.: (650) 463-2600
or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.
(d) APPROVAL OF HOLDERS. Whenever the consent or approval of
Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company or its affiliates (as such
term is defined in Rule 405 under the Securities Act) (other than the Initial
Purchasers or subsequent Holders of Registrable Securities if such subsequent
Holders are deemed to be such affiliates solely by reason of their holdings of
such Registrable Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
(e) SUCCESSORS AND ASSIGNS. Any person who purchases any
Registrable Securities from the Initial Purchasers shall be deemed, for purposes
of this Agreement, to be an assignee of the Initial Purchasers. This Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties and shall inure to the benefit of and be binding upon each
Holder of any Registrable Securities.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be original and all of which taken together
shall constitute one and the same agreement.
(g) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
(i) SEVERABILITY. If any term provision, covenant or restriction
of this Agreement is held to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated thereby, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction, it being intended that all of the rights and privileges of the
parties shall be enforceable to the fullest extent permitted by law.
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<PAGE> 19
(j) ENTIRE AGREEMENT. This Agreement is intended by the parties
hereto as a final expression of their agreement and is intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and the registration rights
granted by the Company with respect to the Registrable Securities. Except as
provided in the Purchase Agreement, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the Registrable Securities. This Agreement supersedes all prior agreements and
undertakings among the parties hereto with respect to such registration rights.
No party hereto shall have any rights, duties or obligations other than those
specifically set forth in this Agreement. In no event will such methods of
distribution take the form of an underwritten offering of the Registrable
Securities without the prior agreement of the Company.
(k) TERMINATION. This Agreement and the obligations of the
parties hereunder shall terminate upon the end of the Effectiveness Period,
except for any liabilities or obligations under Section 4, 5 or 6 hereof and the
obligations to make payments of and provide for liquidated damages under Section
2(e) hereof to the extent such damages accrue prior to the end of the
Effectiveness Period, each of which shall remain in effect in accordance with
its terms.
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<PAGE> 20
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
GETTY IMAGES, INC.
By:
-----------------------------------------
Name:
Title:
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
DEUTSCHE BANK SECURITIES INC.
SG COWEN SECURITIES CORPORATION
HAMBRECHT & QUIST LLC
By: Morgan Stanley & Co. Incorporated
By:
---------------------------------
Name:
Title:
<PAGE> 1
EXHIBIT 10.2
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of this 16th day of March, 2000 by and
between GETTY IMAGES, INC., a Delaware corporation (the "Company"), and Brock
Bohonos, an individual residing at 516 Sunderland Avenue SW Calgary, AB T3C2K4
(the "Employee").
W I T N E S S E T H:
WHEREAS, both parties desire that the terms and conditions of the
Employee's employment with the Company be governed by the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. EMPLOYMENT AND DUTIES.
(a) General. The Company hereby employs the Employee, effective
as of the date hereof (the "Effective Date"), and the Employee agrees upon the
terms and conditions herein set forth to serve, effective as of the Effective
Date, as President of EyeWire and SVP of gettyworks of the Company and shall
perform all duties customarily appurtenant to such position. In such capacity,
the Employee shall report directly to Jonathan Klein, Chief Executive Officer of
the Company, or to such other person designated by the Board of Directors of the
Company. The Employee's principal place of business shall be Calgary, Alberta.
(b) Services and Duties. For so long as the Employee is employed
by the Company, the Employee shall devote his full business time to the
performance of his duties hereunder; shall faithfully serve the Company; shall
in all respects conform to and comply with the lawful and good faith directions
and instructions given to him by Jonathan Klein, or such other person designated
by the Board of Directors of the Company; and shall use his best efforts to
promote and serve the interests of the Company.
(c) No Other Employment. For so long as the Employee is employed
by the Company, he shall not, directly or indirectly, render services to any
other person or organization for which he receives compensation without the
prior approval of Jonathan Klein, or such other person designated by the Board
of Directors of the Company. No such approval will be required if the Employee
seeks to perform inconsequential services without direct compensation therefor
in connection with the management of personal investments or in connection with
the performance of charitable and civic activities, provided that such
activities do not contravene the provisions of Section 6 hereof.
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<PAGE> 2
2. TERM OF EMPLOYMENT. The term of the Employee's employment
under this Agreement (the "Term") shall commence on the Effective Date and
continue until it is terminated by either party giving the other at least one
month written notice; provided, however, that in no event may a non-renewal
notice be given prior to February 16, 2001; and provided further, however, that,
in any event, the Term shall not extend beyond the last day of the month in
which the Employee attains age 65.
3. COMPENSATION AND OTHER BENEFITS. Subject to the provisions of
this Agreement, the Company shall pay and provide the following compensation and
other benefits to the Employee during the Term as compensation for all services
rendered hereunder and the covenants contained in Section 6 hereof:
(a) Salary. The Company shall pay to the Employee an annual
salary (the "Salary") at the initial rate of $235,536 Canadian dollars, payable
to the Employee in accordance with the normal payroll practices of the Company
for its employees as are in effect from time to time. The amount of the
Employee's Salary shall be reviewed annually by the Company in April of each
year during the Term beginning in the 2001 calendar year.
(b) Annual Bonus. The Employee shall be eligible for 2000 and
each calendar year thereafter that begins during his employment to participate
in an annual incentive bonus program established by the Company, in accordance
with the policies of the Company, its subsidiaries and affiliates (hereinafter,
collectively the "Group") and subject to such terms and conditions as may be
approved annually by the Company. Under the terms of the annual incentive bonus
program, the Employee will be afforded the opportunity to earn up to 30% of his
Salary (the "Bonus") in effect for the applicable calendar year, subject to the
achievement of the performance targets established by the Company for that year,
to be paid on a pro-rata basis in the event that the Employee is employed for
less than a full calendar year (for purposes of determining the 2000 bonus, the
Employee shall be deemed to have commenced employment as of March 1, 2000).
(c) Stock Options. Effective as of the Effective Date, the Company
shall grant the Employee an option (the "Option") to purchase 60,000 shares of
the common stock of the Company pursuant to the terms the Company's 1998 Stock
Option Plan (the "Option Plan"). The per share exercise price of the Option
shall equal the fair market value of a share of Common Stock on the Effective
Date, as determined in accordance with the terms of the Option Plan. The Option
shall vest and become exercisable as to 25% on March 16, 2001; the remainder of
the Option shall vest ratably on the first day of each month over the following
three years. Except as otherwise specified herein, the Option shall be subject
to the terms of the Option Plan and to such other terms and conditions as may be
specified by the Compensation Committee of the Company in the form of a standard
option agreement between the Company and the Employee.
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<PAGE> 3
(ii) In the event the Company requires the Employee to relocate
more than 30 miles outside of Calgary and the Employee elects not to do so and
gives the Company 30 days notice pursuant to Section 2, the 60,000 stock options
granted under the terms of this Employment Agreement will become fully vested
and exercisable as of the end of the 30 day notice period and will expire per
the terms of the Option Grant Agreement. This section 3(c)(ii) is pending
approval by the Compensation Sub-Committee of the Board of Directors.
(iii) In the event there is a Change in Control (defined as it is
for purposes of the Option Plan), the 60,000 stock options granted under the
terms of this Employment Agreement shall become fully vested and exercisable as
of the date of Change in Control and will expire per the terms of the Option
Grant Agreement. This section 3(c)(iii) is pending approval by the Compensation
Sub-Committee of the Board of Directors.
(d) Expenses. The Company shall pay or reimburse the Employee for
all reasonable out-of-pocket expenses incurred by the Employee in connection
with his employment hereunder in accordance with Group. Such expenses shall be
paid upon the periodic submission of invoices and shall be paid reasonably
promptly after the date of such invoice. The reimbursement of expenses under
this Section 3(d) shall be subject to the Employee's providing the Company with
such documentation of the expenses as the Company may from time to time
reasonably request in accordance with the policies of the Group.
(e) Pension, Health and Fringe Benefits. During the Term, the
Employee shall be eligible to participate in the Company's Pension, medical,
disability and life insurance plans applicable to executives of the Company in
accordance with the terms of such plans as in effect from time to time.
(f) Long-Term Incentive Program. During the Term, the Employee
shall participate in all long-term incentive plans and programs of the Group
that are applicable to its senior executives in accordance with their terms and
in a manner consistent with his position with the Company.
(g) Holidays. In addition to the usual public and bank holidays,
the Employee shall be entitled to twenty days' paid vacation annually, which
shall be taken at such times as are approved by the Company. The Employee shall
be permitted to carry forward any portion of his vacation time for up to one
year and, upon the expiration of such one-year period, the Employee shall be
paid in lieu of such vacation days.
4. TERMINATION OF EMPLOYMENT. Subject to the notice and other
provisions of this Section 4, the Company shall have the right to terminate the
Employee's employment hereunder, and he shall have the right to resign, at any
time for any reason or for no stated reason.
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<PAGE> 4
(a) Termination for Cause; Resignation Without Good Reason. (i)
If, prior to March 16, 2001, the Employee's employment is terminated by the
Company for Cause or if the Employee resigns from his employment hereunder other
than for Good Reason, he shall be entitled to payment of the pro rata portion of
his Salary and accrued Bonus (for purposes of this Agreement, "accrued Bonus"
shall be determined using the number of days in the applicable calendar year
that the Employee was employed by the Company and the applicable performance
criteria under the bonus plan, in each case through the date of termination or
resignation) through and including the date of termination or resignation, as
well as any unreimbursed expenses. Except to the extent required by the terms of
any applicable compensation or benefit plan or program or as otherwise required
by applicable law, the Employee shall have no rights under this Agreement or
otherwise to receive any other compensation or to participate in any other plan,
program or arrangement after such termination or resignation of employment with
respect to the year of such termination or resignation and later years.
(ii) In addition, the Employee shall be entitled to retain the
then-vested portion of his options to purchase shares of the Company's common
stock until such options expire in accordance with their terms.
(iii) Termination for "Cause" shall mean termination of the
Employee's employment with the Company because of (A) willful, material or
persistently repeated non-performance of the Employee's duties to the Company
(other than by reason of the incapacity of the Employee due to physical or
mental illness) after notice by the Board of such failure and the Employee's
non-performance and continued, willful, material or persistent repeated
non-performance after such notice, (B) the indictment of the Employee for a
felony offense, (C) fraud against the Group or any willful misconduct that
brings the reputation of the Group into serious disrepute or causes the Employee
to cease to be able to perform his duties, (D) any other material breach by the
Employee of any material term of this Agreement, (E) the Employee files for
personal bankruptcy under the Canadian Bankruptcy Code, or (F) the Employee is
unable to perform his duties, by reason of disability, for a period of six (6)
months or more.
(iv) Termination of the Employee's employment for Cause shall be
communicated by delivery to the Employee of a written notice from the Company
stating that the Employee has been terminated for Cause, specifying the
particulars thereof and the effective date of such termination. The date of a
resignation by the Employee without Good Reason shall be the date specified in a
written notice of resignation from the Employee to the Company. The Employee
shall provide at least 30 days' advance written notice of resignation without
Good Reason.
(b) Involuntary Termination. (i) If, prior to March 16, 2001 the
Company terminates the Employee's employment for any reason other than
Disability or Cause or Employee resigns from his employment hereunder for Good
Reason (collectively hereinafter referred to as an "Involuntary Termination"),
the Company shall pay to the Employee his Salary and accrued Bonus up to and
including the date of such
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<PAGE> 5
Involuntary Termination, as well as any unreimbursed expenses. In addition, the
Company shall continue to pay to the Employee as severance (the "Severance
Payments") in accordance with the Company's normal payroll practices, his
Salary, at the rate in effect immediately prior to such Involuntary Termination,
through and including March 16, 2001.
(ii) In addition, in the event of the Employee's Involuntary
Termination prior to March 16, 2001, all of the Employee's then-outstanding
options to purchase shares of the Company's common stock shall continue to vest
until March 16, 2001. The Employee shall be entitled to retain the vested
portion of his options as if he had remained an Employee until March 16, 2001.
(iii) Resignation for "Good Reason" shall mean resignation by
Employee because of (A) an adverse and material change in the Employee's duties,
titles or reporting responsibilities, (B) a material breach by the Company of
any term of the Agreement, (C) a reduction in the Employee's Salary or bonus
opportunity or the failure of the Company to pay the Employee any material
amount of compensation when due, (D) the assignment to Employee of any material
duties that are inconsistent with those described in Section 1 of this Agreement
without the Employee's consent, or (E) the Company's requirement that Employee
perform a substantial portion of his duties outside the Calgary, Alberta
metropolitan area, except for travel in furtherance of the Company's business.
The Company shall have 30 business days from the date of receipt of such notice
to effect a cure of the material breach described therein and, upon cure thereof
by the Company to the reasonable satisfaction of the Employee, such material
breach shall no longer constitute Good Reason for purposes of this Agreement.
(iv) The date of termination of employment without Cause shall be
the date specified in a written notice of termination to the Employee. The date
of resignation for Good Reason shall be the date specified in a written notice
of resignation from the Employee to the Company; provided, however, that no such
written notice shall be effective unless the cure period specified in Section
4(b)(iii) above has expired without the Company having corrected, to the
reasonable satisfaction of the Employee, the event or events subject to cure.
(v) Anything in this Agreement to the contrary notwithstanding,
no amounts shall be payable under this Section 4(b) if the Employee's employment
with the Company ends, for any reason, on or after March 16, 2001.
(c) Termination Due to Disability. (i) In the event of the
Employee's Disability (as hereinafter defined), the Company shall be entitled to
terminate his employment upon providing the Employee with six months' prior
written notice. In the case that the Company terminates the Employee's
employment due to Disability, the Employee shall be entitled to receive, for one
year, his Salary at the rate in effect immediately prior to the Disability, plus
his maximum Bonus as described in Section 3(b), less any amounts paid to the
Employee under any disability plan of the Company.
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<PAGE> 6
In addition, the Employee shall continue to be covered by the Company's health
and medical benefit plans as described in Section 3(e) for the remainder of the
Term.
(ii) In addition, in the event of the Employee's Disability, all
of the Employee's then-outstanding options to purchase shares of Getty's common
stock shall continue to vest for a period of twelve months following the
termination. The Employee shall be entitled to retain the vested portion of his
options as if he had remained an Employee until such options otherwise expire in
accordance with their terms.
(iii) As used in this Section 4(c), the term "Disability" shall
mean a physical or mental incapacity that substantially prevents the Employee
from performing his duties hereunder and that has continued for at least six of
the last twelve months and that can reasonably be expected to continue
indefinitely. Any dispute as to whether or not the Employee is disabled within
the meaning of the preceding sentence shall be resolved by a physician
reasonably satisfactory to the Employee and the Company, and the determination
of such physician shall be final and binding upon both the Employee and the
Company.
(d) Death. In the event of the Employee's death, the Employee's
Beneficiary shall be entitled to receive, for the remainder of the Term, his
Salary at the rate in effect immediately prior to his death, plus his maximum
Bonus described in Section 3(b), less any death benefits which are provided
under the terms of any plan, program or arrangement referred to in Section 3(e)
applicable to the Employee at the time of death. In addition, the Employee's
spouse and then-eligible dependents shall continue to be covered by the
Company's health and medical and dental benefit plans as described in Section
3(e) for a period of one year following the Employee's death. In addition, in
the event of the Employee's death, all of the Employee's then-outstanding
options to purchase shares of Getty's common stock shall continue to vest for a
period of twelve months. The Employee's estate shall be entitled to retain the
vested portion of his options as if he had remained an Employee until such
options otherwise expire in accordance with their terms.
(e) Beneficiary. For purposes of this Agreement, except as
provided in Section 3(e), "Beneficiary" shall mean the person or persons
designated as the beneficiary of the Employee's account under the Company's
pension plan or if the Employee does not participate in the Company's pension
plan, the person designated in writing by the Employee to the Company as his
beneficiary for the purposes of this Agreement, or, if no such person or persons
are designated by the Employee, the Employee's estate. No Beneficiary
designation shall be effective unless it is in writing and received by the
Company prior to the date of the Employee's death. Until further notice, the
Beneficiary is Michelle Juliette Williams.
5. LIMITATION ON PAYMENTS.
Notwithstanding anything herein to the contrary, if any of the
payments made hereunder would constitute a "parachute payment" (as defined in
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<PAGE> 7
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the net after-tax amount of the parachute payment is less than the
net after-tax amount if the aggregate payments to be made to the Employee were
three times his "base amount" (as defined in Section 280G(b)(3) of the Code),
less $1.00, then the aggregate of the amounts constituting the parachute payment
shall be reduced to an amount that will equal three times the base amount, less
$1.00. The determinations to be made with respect to this Section 5 shall be
made by an independent accounting firm of national standing (other than the
Company's regular auditors). The accounting firm shall be paid by the Company
for its services performed hereunder.
6. PROTECTION OF THE COMPANY'S INTERESTS.
(a) No Competing Employment. For so long as the Employee is
employed by the Company or in one of the Restricted Period circumstances listed
below in Sections (i), (ii) or (iii) the Employee shall not, without the prior
written consent of the Board, directly or indirectly, own an interest in,
manage, operate, join, control, lend money or render financial or other
assistance to or participate in or be connected with, as an officer, employee,
partner, stockholder, consultant or otherwise, any individual, partnership,
firm, corporation or other business organization or entity that competes with
the Group by providing any goods or services provided or under development by
the Group at the effective date of the Employee's termination of employment
under this Agreement; provided, however, that this Section 6(a) shall not
proscribe the Employee's ownership, either directly or indirectly, of either
less than five percent of any class of securities which are listed on a national
securities exchange or quoted on the automated quotation system of the National
Association of Securities Dealers, Inc..
(i) The Employee receives a payment pursuant to Section 4(b)(i),
continuing for the longer of a one year period following his termination or the
remainder of the Term or
(ii) The Employee's employment is terminated for Cause or
Disability pursuant respectively to Sections 4(a) and 4(c), for the one year
period following his termination or
(iii) The Employee's employment terminates due to a notice of
termination pursuant to Section 2 or without good Reason, for one year at the
Company's option, this must be exercised within 10 business days of the
termination (such notice shall bind the Company to continue to pay the
Employee's Salary and maximum Bonus during such year, (such periods in Sections
(i), (ii) and (iii) being referred to hereinafter as the "Restricted Period")).
(b) No Interference. During the Restricted Period, the Employee
shall not, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization (other
than the Company), intentionally solicit, endeavor to entice away from the Group
or otherwise
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interfere with the relationship of the Group with, any key person or team who is
employed by or otherwise engaged to perform services for the Group or any key
person or team or entity who is, or was within the then most recent twelve-month
period, a customer, client or supplier of the Group.
(c) Secrecy. The Employee recognizes that the services to be
performed by him hereunder are special, unique and extraordinary in that, by
reason of his employment hereunder, he may acquire confidential information and
trade secrets concerning the operation of the Group, the use or disclosure of
which could cause the Group substantial losses and damages which could not be
readily calculated and for which no remedy at law would be adequate.
Accordingly, the Employee covenants and agrees with the Company that he will not
at any time, except in performance of the Employee's obligations to the Company
hereunder or with the prior written consent of the Board, directly or indirectly
disclose to any person any confidential information that he may learn or has
learned by reason of his association with the Group. The term "confidential
information" means any information not previously disclosed to the public or to
the trade by the Group with respect to the Company's, or any of its affiliates'
or subsidiaries', products, facilities and methods, trade secrets and other
intellectual property, systems, procedures, manuals, confidential reports,
product price lists, customer lists, financial information (including the
revenues, costs or profits associated with any of the Group's products),
business plans, prospects or opportunities.
(d) Exclusive Property. The Employee confirms that all
confidential information is and shall remain the exclusive property of the
Group. All business records, papers and documents kept or made by the Employee
relating to the business of the Group shall be and remain the property of the
Group. Upon the termination of his employment with the Company or upon the
request of the Company at any time, the Employee shall promptly deliver to the
Company, and shall not without the consent of the Board retain copies of, any
written materials not previously made available to the public, or records and
documents made by the Employee or coming into his possession concerning the
business or affairs of the Group; provided, however, that subsequent to any such
termination, the Company shall provide the Employee with copies (the cost of
which shall be borne by the Employee) of any documents which are requested by
the Employee and which the Employee has determined in good faith are (i)
required to establish a defense to a claim that the Employee has not complied
with his duties hereunder or (ii) necessary to the Employee in order to comply
with applicable law.
(e) Assignment of Developments. All "Developments" (as defined
below) that were or are at any time made, conceived or suggested by Employee,
whether acting alone or in conjunction with others, during Employee's employment
with the Group shall be the sole and absolute property of the Group, free of any
reserved or other rights of any kind on the part of Employee. During Employee's
employment and, if such Developments were made, conceived or suggested by
Employee during his employment with the Group, thereafter, Employee shall
promptly make full disclosure of any such Developments to the Group and, at the
Group's cost and expense, do all acts and things (including, among others, the
execution and delivery under oath of patent and copyright applications and
instruments of assignment) deemed by the Group to be
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<PAGE> 9
necessary or desirable at any time in order to effect the full assignment to the
Group of Employee's right and title, if any, to such Developments. For purposes
of this Agreement, the term "Developments" shall mean all data, discoveries,
findings, reports, designs, inventions, improvements, methods, practices,
techniques, developments, programs, concepts, and ideas, whether or not
patentable, relating to the activities of the Group of which Employee is as of
the date of this Agreement aware or of which Employee becomes aware at any time
during the Term, excluding any Development for which no equipment, supplies,
facilities or confidential information of the Group was used and which was
developed entirely on Employee's own time, unless (i) the Development relates
directly to the business of the Group, (ii) the Development relates to actual or
demonstrably anticipated research or development of the Group, or (iii) the
Development results from any work performed by Employee for the Group (the
foregoing is agreed to satisfy the written notice and other requirements of
Section 49.44.140 of the Revised Code of Washington).
(f) Injunctive Relief. Without intending to limit the remedies
available to the Company, the Employee acknowledges that a breach of any of the
covenants contained in this Section 6 may result in material irreparable injury
to the Group for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach or threat thereof, the Company shall be entitled to obtain a
temporary restraining order and/or a preliminary or permanent injunction
restraining the Employee from engaging in activities prohibited by this Section
6 or such other relief as may be required to specifically enforce any of the
covenants in this Section 6. Without intending to limit the remedies available
to the Employee, the Employee shall be entitled to seek specific performance of
the Company's obligations under this Agreement.
7. GENERAL PROVISIONS.
(a) Source of Payments. All payments provided under this
Agreement, other than payments made pursuant to a plan which provides otherwise,
shall be paid in cash from the general funds of the Company, and no special or
separate fund shall be established, and no other segregation of assets made, to
assure payment. The Employee shall have no right, title or interest whatever in
or to any investments which the Company may make to aid the Company in meeting
its obligations hereunder. To the extent that any person acquires a right to
receive payments from the Company hereunder, such right shall be no greater than
the right of an unsecured creditor of the Company; provided, however, that this
provision shall not be deemed to waive or abrogate any preferential or other
rights to payment accruing to the Employee under applicable bankruptcy laws by
virtue of the Employee's status as an employee of the Company.
(b) No Other Severance Benefits. Except as specifically set forth
in this Agreement, the Employee covenants and agrees that he shall not be
entitled to any other form of severance benefits from the Company, including,
without limitation, benefits otherwise payable under any of the Company's
regular severance policies, in the event his employment hereunder ends for any
reason and, except with respect to
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obligations of the Company expressly provided for herein, the Employee
unconditionally releases the Company and its subsidiaries and affiliates, and
their respective directors, officers, employees and stockholders, or any of
them, from any and all claims, liabilities or obligations under this Agreement
or under any severance or termination arrangements of the Company or any of its
subsidiaries or affiliates for compensation or benefits in connection with his
employment or the termination thereof.
(c) Tax Withholding. Payments to the Employee of all compensation
contemplated under this Agreement shall be subject to all applicable tax
withholding.
(d) Notices. Any notice hereunder by either party to the other
shall be given in writing by personal delivery, or certified mail, return
receipt requested, or (if to the Company) by telex or facsimile, in any case
delivered to the applicable address set forth below:
(i) To the Company: Getty Images
701 N. 34th Street,
Suite 400
Seattle, WA 98103
(ii) To the Employee: Brock Bohonos
or to such other persons or other addresses as either party may specify to the
other in writing.
(e) Representation by the Employee. The Employee represents and
warrants that his entering into this Agreement does not, and that his
performance under this Agreement and consummation of the transactions
contemplated hereby will not, violate the provisions of any agreement or
instrument to which the Employee is a party, or any decree, judgment or order to
which the Employee is subject, and that this Agreement constitutes a valid and
binding obligation of the Employee in accordance with its terms. Breach of this
representation will render all of the Company's obligations under this Agreement
void ab initio.
(f) Limited Waiver. The waiver by the Company or the Employee of
a violation of any of the provisions of this Agreement, whether express or
implied, shall not operate or be construed as a waiver of any subsequent
violation of any such provision.
(g) Assignment; Assumption of Agreement. No right, benefit or
interest hereunder shall be subject to assignment, encumbrance, charge, pledge,
hypothecation or setoff by the Employee in respect of any claim, debt,
obligation or similar process. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to assume expressly
and to agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place.
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(h) Amendment; Actions by the Company. This Agreement may not be
amended, modified or canceled except by written agreement of the Employee and
the Company. Any and all determinations, judgments, reviews, verifications,
adjustments, approvals, consents, waivers or other actions of the Company
required or permitted under this Agreement shall be effective only if undertaken
by the Company pursuant to authority granted by a resolution duly adopted by the
Board; provided, however, that by resolution duly adopted in accordance with
this Section 7(h), the Board may delegate its responsibilities hereunder to one
or more of its members other than the Employee.
(i) Severability. If any term or provision hereof is determined
to be invalid or unenforceable in a final court or arbitration proceeding, (i)
the remaining terms and provisions hereof shall be unimpaired and (ii) the
invalid or unenforceable term or provision shall be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision.
(j) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (determined
without regard to the choice of law provisions thereof).
(k) Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to the matters
covered hereby and supersedes all prior agreements and understandings of the
parties with respect to the subject matter hereof.
(l) Headings. The headings and captions of the sections of this
Agreement are included solely for convenience of reference and shall not control
the meaning or interpretation of any provisions of this Agreement.
(m) Counterparts. This Agreement may be executed by the parties
hereto in counterparts, each of which shall be deemed an original, but both such
counterparts shall together constitute one and the same document.
(n) Disciplinary and Grievance Procedures. For statutory
purposes, there is no formal disciplinary procedure in relation to the
Employee's employment. The Employee shall be expected to maintain the highest
standards of integrity and behavior. If the Employee has any grievance in
relation to his employment or is not satisfied with any disciplinary procedure
taken in relation to him, he may apply in writing within 14 days of that
decision to the Board, whose decision shall be final. The foregoing shall not be
construed, however, to limit the Employee's remedies at law or otherwise.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the day and year first written above.
GETTY IMAGES, INC.
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By:
-----------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
EMPLOYEE
By:
-----------------------------------
Name:
-----------------------------------
12
<PAGE> 1
AMENDMENT TO
EMPLOYMENT AGREEMENT
--------
APRIL 1, 2000
THIS AMENDMENT is made as of April 1, 2000 ("Commencement Date") by and between
Getty Images, Inc. (the "Company") and Jonathan D. Klein (the "Executive").
Amendments to Section 3. (a) are effective as of April 1, 2000. All other
Amendment Sections are effective retroactively to the date of the Employment
Agreement, June 1, 1999.
WHEREAS the Company and the Executive desire to amend the Employment Agreement
dated June 1, 1999 (the "Agreement");
THEREFORE the Company AND the Executive agree to delete Sections 3 (a), 3(e),
3(g) and 3(j) in their entirety and replace them as follows:
3. (a) SALARY. The Company shall pay to the Executive an annual salary
(the "Salary") at the rate of Five Hundred Thousand Dollars ($500,000.00),
payable to the Executive in accordance with the normal payroll practices of the
Company for its executive officers as are in effect from time to time. In
addition, the Executive shall receive an annual foreign service premium of ten
percent of the salary (equal to Fifty Thousand Dollars ($50,000) as of the date
of this amendment) and an annual accommodation adjustment of Seventy Two
Thousand Dollars ($72,000), payable as part of the normal payroll practices,
through May 31, 2002. The foreign service premium and the accommodation
adjustment mentioned above are the net after tax amounts that will be received
by the Executive. The company will be responsible for any tax due on these
amounts. The annual foreign service premium and the accommodation allowance will
be paid at fifty percent (50%) from June 1, 2002 through May 31, 2003, and will
not be paid after June 1, 2003. The amount of the Executive's Salary shall be
reviewed annually by the Board on or about April 1 of each year during the Term
beginning in the 2000 calendar year and may be increased, but not decreased
below such amount, on the basis of such review and then-current market
practices.
3. (e) OPTIONS. In the event that the Executive ceases to be an employee
of the Company for any reason other than (i) if he is terminated for "Cause",
"Disability" or on account of his death, or (ii) if he resigns without "Good
Reason" (as each such term is defined below), the vesting of the Options shall
accelerate and the Options shall become immediately exercisable and the
Executive shall be entitled to retain such options, for the remainder of their
respective terms, as if he had remained an employee of the Company. In the event
that the Executive ceases to be an employee of the Company because he is
terminated for Cause or resigns without Good Reason, the Executive shall be
entitled to retain the then-vested portion of such options as if he had remained
an employee of the Company, but the unvested portion of such options shall
lapse. In the event of the Executive's death or Disability (as defined below),
the vesting of such Options shall accelerate and all options thereunder shall
become immediately exercisable and shall remain outstanding for a period of
twelve (12) months. In the event of a Change of Control (as defined in the Getty
Images, Inc. 1998 Stock Incentive Plan), the vesting of the Options shall
accelerate and the Options shall become immediately exercisable and the
Executive shall be entitled to retain such options, for the remainder of their
respective terms, as if he had remained an employee of the Company.
<PAGE> 2
3. (g) EXPENSES. The Company shall pay or reimburse the Executive for
all reasonable out-of-pocket expenses incurred by the Executive in connection
with his employment hereunder and expressly agrees that it will reimburse the
Executive for his business class airfare on international flights which are over
five (5) hours in duration taken in connection with Company business. The
Company also agrees that, in the event that the Executive is required to travel
abroad in connection with the performance of his duties hereunder for a period
in excess of two (2) weeks, the Company will reimburse the Executive for the
airfare, hotel and other transportation expenses of his spouse and minor
children so that they may accompany him on such trip. In addition, the Company
shall reimburse the Executive for all fees and costs incurred for services
provided by the Executive's personal tax advisor in connection with his personal
taxes. All of the above listed expenses shall be paid upon the periodic
submission of invoices and shall be paid reasonably promptly after the date of
such invoice. The reimbursement of expenses under this Section 3 (g) shall be
subject to the Executive's providing the Company with such documentation of the
expenses as the Company may from time to time reasonably request in accordance
with the policies of the Group.
3. (j) BENEFITS. During the term, the Company will provide The Executive
with two automobiles of such make and models as the Board deems appropriate and
suitable for his status with the Company for his and his spouse's sole use and
will reimburse the Executive for all costs and expenses incurred by the
Executive in connection with the use of those vehicles, or, at the Executive's
sole discretion, the Company shall pay an equivalent amount of such perquisite
to him as additional compensation. The Company shall install and pay the rental
and unit charges attributable to a dedicated business telephone and/or ISDN line
at his home. During the Term, the Company shall also pay for the Executive's
purchase, line charges, rental and unit charges for his mobile phones. The
Company shall provide the Executive with a fax machine and computer modem and
ISDN line to be installed at the Executive's home and a suitable desktop and
laptop computer, as well as all ancillary equipment and maintenance therefore.
In addition, the Company will pay for the cost of the Executive's member ship in
or subscriptions to the internet service provider of his choice, and such
professional memberships and journals as are appropriate to his duties under
this agreement. In addition, the Company will pay for any healthclub membership
fees that Jonathan and/or his family belong to.
THEREFORE the Company AND the Executive confirm and agree that the three-page
"Appendix A" attached to the Executive's original Employment Agreement dated
June 1, 1999 is a valid and approved section of the Employment Agreement. A copy
of the Appendix A is attached.
IN WITNESS WHEREOF, Getty Images, Inc. and Jonathan D. Klein have caused this
Amendment to be executed as of the Commencement Date.
GETTY IMAGES, INC. JONATHAN D. KLEIN
By:
--------------------------------- --------------------------------
Mark H. Getty Jonathan D. Klein
Executive Chairman Chief Executive Officer
Date:
--------------------------------- --------------------------------
<PAGE> 1
EXHIBIT 10.4
AMENDMENT TO
EMPLOYMENT AGREEMENT
--------
APRIL 1, 2000
THIS AMENDMENT is made as of April 1, 2000 ("Commencement Date"), and is by and
between Getty Images, Inc. (the "Company") and A.D. "Bud" Albers (the
"Employee").
WHEREAS the Company and the Employee desire to amend the Employment Agreement
dated October 11, 1999 (the "Agreement");
THEREFORE the Company AND the Employee agree to delete Section 3 (a) in its
entirety and replace it as follows:
3. (a) SALARY. The Company shall pay to the Employee an annual salary
(the "Salary") at the initial rate of Two Hundred Fifty Thousand Dollars
($250,000.00), payable to the Employee in accordance with the normal payroll
practices of the Company for its employees as are in effect from time to time.
The amount of the Employee's Salary shall be reviewed annually by the Company on
or about April 1 of each year during the Term beginning in the 2000 calendar
year.
IN WITNESS WHEREOF, Getty Images, Inc. and A.D. "Bud" Albers have caused this
Amendment to be executed as of the Commencement Date.
GETTY IMAGES, INC. A.D. ALBERS
By:
--------------------------------- --------------------------------
Jonathan Klein, CEO A.D. Albers
Date:
--------------------------------- --------------------------------
<PAGE> 1
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of this 3rd day of April, 2000, by and
between GETTY IMAGES, INC., a Delaware corporation (the "Company"), and William
O'Neill, an individual residing at 16B The Mayfair, 1 May Road, Hong Kong (the
"Employee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, both parties desire that the terms and conditions of the
Employee's employment with the Company be governed by the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. EMPLOYMENT AND DUTIES.
(a) General. The Company hereby employs the Employee, effective
as of the date hereof (the "Effective Date"), and the Employee agrees upon the
terms and conditions herein set forth to serve, effective as of the Effective
Date, as Senior Vice President of Human Resources of the Company and shall
perform all duties customarily appurtenant to such position. In such capacity,
the Employee shall report directly to Jonathan Klein, Chief Executive Officer of
the Company, or to such other person designated by the Board of Directors of the
Company. The Employee's principal place of business shall be Seattle,
Washington.
(b) Services and Duties. For so long as the Employee is employed
by the Company, the Employee shall devote his full business time to the
performance of his duties hereunder; shall faithfully serve the Company; shall
in all respects conform to and comply with the lawful and good faith directions
and instructions given to him by Jonathan Klein, or such other person designated
by the Board of Directors of the Company; and shall use his best efforts to
promote and serve the interests of the Company.
(c) No Other Employment. For so long as the Employee is employed
by the Company, he shall not, directly or indirectly, render services to any
other person or organization for which he receives compensation without the
prior approval of Jonathan Klein, or such other person designated by the Board
of Directors of the Company. No such approval will be required if the Employee
seeks to perform inconsequential services without direct compensation therefor
in connection with the management of personal investments or in connection with
the performance of charitable and civic activities, provided that such
activities do not contravene the provisions of Section 6 hereof.
2. TERM OF EMPLOYMENT. The term of the Employee's employment
under this Agreement (the "Term") shall commence on the Effective Date and
continue until it is
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<PAGE> 2
terminated by either party giving the other at least one month written notice;
provided, however, that in no event may a non-renewal notice be given prior to
March 1, 2001; and provided further, however, that, in any event, the Term shall
not extend beyond the last day of the month in which the Employee attains age
65.
3. COMPENSATION AND OTHER BENEFITS. Subject to the provisions of
this Agreement, the Company shall pay and provide the following compensation and
other benefits to the Employee during the Term as compensation for all services
rendered hereunder and the covenants contained in Section 6 hereof:
(a) Salary. The Company shall pay to the Employee an annual
salary (the "Salary") at the initial rate of $225,000, payable to the Employee
in accordance with the normal payroll practices of the Company for its employees
as are in effect from time to time. The amount of the Employee's Salary shall be
reviewed annually by the Company on or about April 1st of each year during the
Term beginning in the 2001 calendar year.
(b) Annual Bonus. The Employee shall be eligible in 2000 and each
calendar year thereafter that begins during his employment to participate in an
annual incentive bonus program established by the Company, in accordance with
the policies of the Company, its subsidiaries and affiliates (hereinafter,
collectively the "Group") and subject to such terms and conditions as may be
approved annually by the Company. Under the terms of the annual incentive bonus
program, the Employee will be afforded the opportunity to earn up to 30% of his
Salary (the "Bonus") in effect for the applicable calendar year, subject to the
achievement of the performance targets established by the Company for that year,
to be paid on a pro-rata basis in the event that the Employee is employed for
less than a full calendar year (for purposes of determining the 2000 bonus, the
Employee shall be deemed to have commenced employment as of April 1, 2000).
(c) Stock Options. Effective as of the Effective Date, the Company
shall grant the Employee an option (the "Option") to purchase 100,000 shares of
the common stock of the Company pursuant to the terms the Company's 1998 Stock
Option Plan (the "Option Plan"). The per share exercise price of the Option
shall equal the fair market value of a share of Common Stock on the Effective
Date, as determined in accordance with the terms of the Option Plan. The Option
shall vest and become exercisable as to 25% on April 3, 2001; the remainder of
the Option shall vest ratably on the first day of each month over the following
three years. Except as otherwise specified herein, the Option shall be subject
to the terms of the Option Plan and to such other terms and conditions as may be
specified by the Compensation Committee of the Company in the form of a standard
option agreement between the Company and the Employee.
(d) Expenses. The Company shall pay or reimburse the Employee for
all reasonable out-of-pocket expenses incurred by the Employee in connection
with his employment hereunder in accordance with Group Policies. Such expenses
shall be paid upon the periodic submission of invoices and shall be paid
reasonably promptly after the date of such
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<PAGE> 3
invoice. The reimbursement of expenses under this Section 3(d) shall be subject
to the Employee's providing the Company with such documentation of the expenses
as the Company may from time to time reasonably request in accordance with the
policies of the Group.
(d) 401k plan, Health and Fringe Benefits. During the Term, the
Employee shall be eligible to participate in the Company's 401k plan, medical,
disability and life insurance plans applicable to executives of the Company in
accordance with the terms of such plans as in effect from time to time. The
Employee shall also be provided with free parking at the place of employment.
(e) Long-Term Incentive Program. During the Term, the Employee
shall participate in all long-term incentive plans and programs of the Group
that are applicable to its senior executives in accordance with their terms and
in a manner consistent with his position with the Company.
(f) Holidays. In addition to the usual public and bank holidays,
the Employee shall be entitled to twenty days' paid vacation annually, which
shall be taken at such times as are approved by the Company. The Employee shall
be permitted to carry forward any portion of his vacation time for up to one
year and, upon the expiration of such one-year period, the Employee shall be
paid in lieu of such vacation days.
(g) Relocation Expenses. The Company shall pay and/or reimburse
temporary housing expenses and moving expenses as outlined in the attached
relocation agreement.
4. TERMINATION OF EMPLOYMENT. Subject to the notice and other
provisions of this Section 4, the Company shall have the right to terminate the
Employee's employment hereunder, and he shall have the right to resign, at any
time for any reason or for no stated reason.
(a) Termination for Cause; Resignation Without Good Reason. (i)
If, prior to April 1, 2001, the Employee's employment is terminated by the
Company for Cause or if the Employee resigns from his employment hereunder other
than for Good Reason, he shall be entitled to payment of the pro rata portion of
his Salary and accrued Bonus (for purposes of this Agreement, "accrued Bonus"
shall be determined using the number of days in the applicable calendar year
that the Employee was employed by the Company and the applicable performance
criteria under the bonus plan, in each case through the date of termination or
resignation) through and including the date of termination or resignation, as
well as any unreimbursed expenses. Except to the extent required by the terms of
any applicable compensation or benefit plan or program or as otherwise required
by applicable law, the Employee shall have no rights under this Agreement or
otherwise to receive any other compensation or to participate in any other plan,
program or arrangement after such termination or resignation of employment with
respect to the year of such termination or resignation and later years.
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<PAGE> 4
(ii) In addition, the Employee shall be entitled to retain the
then-vested portion of his options to purchase shares of the Company's common
stock until such options expire in accordance with their terms.
(iii) Termination for "Cause" shall mean termination of the
Employee's employment with the Company because of (A) willful, material or
persistently repeated non-performance of the Employee's duties to the Company
(other than by reason of the incapacity of the Employee due to physical or
mental illness) after notice by the Board of such failure and the Employee's
non-performance and continued, willful, material or persistent repeated
non-performance after such notice, (B) the indictment of the Employee for a
felony offense, (C) fraud against the Group or any willful misconduct that
brings the reputation of the Group into serious disrepute or causes the Employee
to cease to be able to perform his duties, (D) any other material breach by the
Employee of any material term of this Agreement, or (E) the Employee is unable
to perform his duties, by reason of disability, for a period of six (6) months
or more.
(iv) Termination of the Employee's employment for Cause shall be
communicated by delivery to the Employee of a written notice from the Company
stating that the Employee has been terminated for Cause, specifying the
particulars thereof and the effective date of such termination. The date of a
resignation by the Employee without Good Reason shall be the date specified in a
written notice of resignation from the Employee to the Company. The Employee
shall provide at least 30 days' advance written notice of resignation without
Good Reason.
(b) Involuntary Termination. (i) If, prior to April 1, 2002, the
Company terminates the Employee's employment for any reason other than Cause or
Employee resigns from his employment hereunder for Good Reason (collectively
hereinafter referred to as an "Involuntary Termination"), the Company shall pay
to the Employee his Salary and accrued Bonus up to and including the date of
such Involuntary Termination, as well as any unreimbursed expenses. In addition,
the Company shall continue to pay to the Employee as severance (the "Severance
Payments") in accordance with the Company's normal payroll practices, his
Salary, at the rate in effect immediately prior to such Involuntary Termination,
through and including April 1, 2002.
(ii) In addition, in the event of the Employee's Involuntary
Termination prior to April 1, 2002, all of the Employee's then-outstanding
options to purchase shares of the Company's common stock shall continue to vest
until April 1, 2002. The Employee shall be entitled to retain the vested portion
of his options as if he had remained an Employee until April 1, 2002.
(iii) Resignation for "Good Reason" shall mean resignation by
Employee because of (A) an adverse and material change in the Employee's duties,
titles or reporting responsibilities, (B) a material breach by the Company of
any term of the Agreement, (C) a
4
<PAGE> 5
reduction in the Employee's Salary or bonus opportunity or the failure of the
Company to pay the Employee any material amount of compensation when due, (D)
the assignment to Employee of any material duties that are inconsistent with
those described in Section 1 of this Agreement without the Employee's consent,
or (E) the Company's requirement that Employee perform a substantial portion of
his duties outside the Seattle, Washington metropolitan area, except for travel
in furtherance of the Company's business. The Company shall have 30 business
days from the date of receipt of such notice to effect a cure of the material
breach described therein and, upon cure thereof by the Company to the reasonable
satisfaction of the Employee, such material breach shall no longer constitute
Good Reason for purposes of this Agreement.
(iv) The date of termination of employment without Cause shall be
the date specified in a written notice of termination to the Employee. The date
of resignation for Good Reason shall be the date specified in a written notice
of resignation from the Employee to the Company; provided, however, that no such
written notice shall be effective unless the cure period specified in Section
4(b)(iii) above has expired without the Company having corrected, to the
reasonable satisfaction of the Employee, the event or events subject to cure.
(v) Anything in this Agreement to the contrary notwithstanding,
no amounts shall be payable under this Section 4(b) if the Employee's employment
with the Company ends, for any reason, on or after April 1, 2001.
5. LIMITATION ON PAYMENTS.
Notwithstanding anything herein to the contrary, if any of the
payments made hereunder would constitute a "parachute payment" (as defined in
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the net after-tax amount of the parachute payment is less than the
net after-tax amount if the aggregate payments to be made to the Employee were
three times his "base amount" (as defined in Section 280G(b)(3) of the Code),
less $1.00, then the aggregate of the amounts constituting the parachute payment
shall be reduced to an amount that will equal three times the base amount, less
$1.00. The determinations to be made with respect to this Section 5 shall be
made by an independent accounting firm of national standing (other than the
Company's regular auditors). The accounting firm shall be paid by the Company
for its services performed hereunder.
6. PROTECTION OF THE COMPANY'S INTERESTS.
(a) No Competing Employment. For so long as the Employee is
employed by the Company and for one (1) year thereafter (such period being
referred to hereinafter as the "Restricted Period"), the Employee shall not,
without the prior written consent of the Board, directly or indirectly, own an
interest in, manage, operate, join, control, lend money or render financial or
other assistance to or participate in or be connected with, as an officer,
employee, partner, stockholder, consultant or otherwise, any individual,
partnership, firm, corporation or other business organization or entity that
competes with the Group by providing
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<PAGE> 6
any goods or services provided or under development by the Group at the
effective date of the Employee's termination of employment under this Agreement;
provided, however, that this Section 6(a) shall not proscribe the Employee's
ownership, either directly or indirectly, of either less than five percent of
any class of securities which are listed on a national securities exchange or
quoted on the automated quotation system of the National Association of
Securities Dealers, Inc.
(b) No Interference. During the Restricted Period, the Employee
shall not, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization (other
than the Company), intentionally solicit, endeavor to entice away from the Group
or otherwise interfere with the relationship of the Group with, any key person
or team who is employed by or otherwise engaged to perform services for the
Group or any key person or team or entity who is, or was within the then most
recent twelve-month period, a customer, client or supplier of the Group.
(c) Secrecy. The Employee recognizes that the services to be
performed by him hereunder are special, unique and extraordinary in that, by
reason of his employment hereunder, he may acquire confidential information and
trade secrets concerning the operation of the Group, the use or disclosure of
which could cause the Group substantial losses and damages which could not be
readily calculated and for which no remedy at law would be adequate.
Accordingly, the Employee covenants and agrees with the Company that he will not
at any time, except in performance of the Employee's obligations to the Company
hereunder or with the prior written consent of the Board, directly or indirectly
disclose to any person any confidential information that he may learn or has
learned by reason of his association with the Group. The term "confidential
information" means any information not previously disclosed to the public or to
the trade by the Group with respect to the Company's, or any of its affiliates'
or subsidiaries', products, facilities and methods, trade secrets and other
intellectual property, systems, procedures, manuals, confidential reports,
product price lists, customer lists, financial information (including the
revenues, costs or profits associated with any of the Group's products),
business plans, prospects or opportunities.
(d) Exclusive Property. The Employee confirms that all
confidential information is and shall remain the exclusive property of the
Group. All business records, papers and documents kept or made by the Employee
relating to the business of the Group shall be and remain the property of the
Group. Upon the termination of his employment with the Company or upon the
request of the Company at any time, the Employee shall promptly deliver to the
Company, and shall not without the consent of the Board retain copies of, any
written materials not previously made available to the public, or records and
documents made by the Employee or coming into his possession concerning the
business or affairs of the Group; provided, however, that subsequent to any such
termination, the Company shall provide the Employee with copies (the cost of
which shall be borne by the Employee) of any documents which are requested by
the Employee and which the Employee has determined in good faith are (i)
required to establish a defense to a claim that the Employee has not complied
with his duties hereunder or (ii) necessary to the Employee in order to comply
with applicable law.
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(e) Assignment of Developments. All "Developments" (as defined
below) that were or are at any time made, conceived or suggested by Employee,
whether acting alone or in conjunction with others, during Employee's employment
with the Group shall be the sole and absolute property of the Group, free of any
reserved or other rights of any kind on the part of Employee. During Employee's
employment and, if such Developments were made, conceived or suggested by
Employee during his employment with the Group, thereafter, Employee shall
promptly make full disclosure of any such Developments to the Group and, at the
Group's cost and expense, do all acts and things (including, among others, the
execution and delivery under oath of patent and copyright applications and
instruments of assignment) deemed by the Group to be necessary or desirable at
any time in order to effect the full assignment to the Group of Employee's right
and title, if any, to such Developments. For purposes of this Agreement, the
term "Developments" shall mean all data, discoveries, findings, reports,
designs, inventions, improvements, methods, practices, techniques, developments,
programs, concepts, and ideas, whether or not patentable, relating to the
activities of the Group of which Employee is as of the date of this Agreement
aware or of which Employee becomes aware at any time during the Term, excluding
any Development for which no equipment, supplies, facilities or confidential
information of the Group was used and which was developed entirely on Employee's
own time, unless (i) the Development relates directly to the business of the
Group, (ii) the Development relates to actual or demonstrably anticipated
research or development of the Group, or (iii) the Development results from any
work performed by Employee for the Group (the foregoing is agreed to satisfy the
written notice and other requirements of Section 49.44.140 of the Revised Code
of Washington).
(f) Injunctive Relief. Without intending to limit the remedies
available to the Company, the Employee acknowledges that a breach of any of the
covenants contained in this Section 6 may result in material irreparable injury
to the Group for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach or threat thereof, the Company shall be entitled to obtain a
temporary restraining order and/or a preliminary or permanent injunction
restraining the Employee from engaging in activities prohibited by this Section
6 or such other relief as may be required to specifically enforce any of the
covenants in this Section 6. Without intending to limit the remedies available
to the Employee, the Employee shall be entitled to seek specific performance of
the Company's obligations under this Agreement.
7. GENERAL PROVISIONS.
(a) Source of Payments. All payments provided under this
Agreement, other than payments made pursuant to a plan which provides otherwise,
shall be paid in cash from the general funds of the Company, and no special or
separate fund shall be established, and no other segregation of assets made, to
assure payment. The Employee shall have no right, title or interest whatever in
or to any investments which the Company may make to aid the Company in meeting
its obligations hereunder. To the extent that any person acquires a right to
receive payments from the Company hereunder, such right shall be no greater than
the right
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<PAGE> 8
of an unsecured creditor of the Company; provided, however, that this provision
shall not be deemed to waive or abrogate any preferential or other rights to
payment accruing to the Employee under applicable bankruptcy laws by virtue of
the Employee's status as an employee of the Company.
(b) No Other Severance Benefits. Except as specifically set forth
in this Agreement, the Employee covenants and agrees that he shall not be
entitled to any other form of severance benefits from the Company, including,
without limitation, benefits otherwise payable under any of the Company's
regular severance policies, in the event his employment hereunder ends for any
reason and, except with respect to obligations of the Company expressly provided
for herein, the Employee unconditionally releases the Company and its
subsidiaries and affiliates, and their respective directors, officers, employees
and stockholders, or any of them, from any and all claims, liabilities or
obligations under this Agreement or under any severance or termination
arrangements of the Company or any of its subsidiaries or affiliates for
compensation or benefits in connection with his employment or the termination
thereof.
(c) Tax Withholding. Payments to the Employee of all compensation
contemplated under this Agreement shall be subject to all applicable tax
withholding.
(d) Notices. Any notice hereunder by either party to the other
shall be given in writing by personal delivery, or certified mail, return
receipt requested, or (if to the Company) by telex or facsimile, in any case
delivered to the applicable address set forth below:
(i) To the Company: Getty Images, Inc.
701 N. 34th , Suite 400
Seattle, WA 98103
(ii) To the Employee: William O'Neill
16B The Mayfair
1 May Road
Hong Kong
or to such other persons or other addresses as either party may specify to the
other in writing.
(e) Representation by the Employee. The Employee represents and
warrants that his entering into this Agreement does not, and that his
performance under this Agreement and consummation of the transactions
contemplated hereby will not, violate the provisions of any agreement or
instrument to which the Employee is a party, or any decree, judgment or order to
which the Employee is subject, and that this Agreement constitutes a valid and
binding obligation of the Employee in accordance with its terms. Breach of this
representation will render all of the Company's obligations under this Agreement
void ab initio.
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(f) Limited Waiver. The waiver by the Company or the Employee of
a violation of any of the provisions of this Agreement, whether express or
implied, shall not operate or be construed as a waiver of any subsequent
violation of any such provision.
(g) Assignment; Assumption of Agreement. No right, benefit or
interest hereunder shall be subject to assignment, encumbrance, charge, pledge,
hypothecation or setoff by the Employee in respect of any claim, debt,
obligation or similar process. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to assume expressly
and to agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place.
(h) Amendment; Actions by the Company. This Agreement may not be
amended, modified or canceled except by written agreement of the Employee and
the Company. Any and all determinations, judgments, reviews, verifications,
adjustments, approvals, consents, waivers or other actions of the Company
required or permitted under this Agreement shall be effective only if undertaken
by the Company pursuant to authority granted by a resolution duly adopted by the
Board; provided, however, that by resolution duly adopted in accordance with
this Section 7(h), the Board may delegate its responsibilities hereunder to one
or more of its members other than the Employee.
(i) Severability. If any term or provision hereof is determined
to be invalid or unenforceable in a final court or arbitration proceeding, (i)
the remaining terms and provisions hereof shall be unimpaired and (ii) the
invalid or unenforceable term or provision shall be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision.
(j) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (determined
without regard to the choice of law provisions thereof).
(k) Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to the matters
covered hereby and supersedes all prior agreements and understandings of the
parties with respect to the subject matter hereof.
(l) Headings. The headings and captions of the sections of this
Agreement are included solely for convenience of reference and shall not control
the meaning or interpretation of any provisions of this Agreement.
(m) Counterparts. This Agreement may be executed by the parties
hereto in counterparts, each of which shall be deemed an original, but both such
counterparts shall together constitute one and the same document.
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(n) Disciplinary and Grievance Procedures. For statutory
purposes, there is no formal disciplinary procedure in relation to the
Employee's employment. The Employee shall be expected to maintain the highest
standards of integrity and behavior. If the Employee has any grievance in
relation to his employment or is not satisfied with any disciplinary procedure
taken in relation to him, he may apply in writing within 14 days of that
decision to the Board, whose decision shall be final. The foregoing shall not be
construed, however, to limit the Employee's remedies at law or otherwise.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the day and year first written above.
GETTY IMAGES, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
EMPLOYEE
By:
-------------------------------------
William O'Neill
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3. (g) EXPENSES. The Company shall pay or reimburse the Executive for
all reasonable out-of-pocket expenses incurred by the Executive in connection
with his employment hereunder and expressly agrees that it will reimburse the
Executive for his business class airfare on international flights which are over
five (5) hours in duration taken in connection with Company business. The
Company also agrees that, in the event that the Executive is required to travel
abroad in connection with the performance of his duties hereunder for a period
in excess of two (2) weeks, the Company will reimburse the Executive for the
airfare, hotel and other transportation expenses of his spouse and minor
children so that they may accompany him on such trip. In addition, the Company
shall reimburse the Executive for all fees and costs incurred for services
provided by the Executive's personal tax advisor in connection with his personal
taxes. All of the above listed expenses shall be paid upon the periodic
submission of invoices and shall be paid reasonably promptly after the date of
such invoice. The reimbursement of expenses under this Section 3 (g) shall be
subject to the Executive's providing the Company with such documentation of the
expenses as the Company may from time to time reasonably request in accordance
with the policies of the Group.
3. (j) BENEFITS. During the term, the Company will provide The Executive
with two automobiles of such make and models as the Board deems appropriate and
suitable for his status with the Company for his and his spouse's sole use and
will reimburse the Executive for all costs and expenses incurred by the
Executive in connection with the use of those vehicles, or, at the Executive's
sole discretion, the Company shall pay an equivalent amount of such perquisite
to him as additional compensation. The Company shall install and pay the rental
and unit charges attributable to a dedicated business telephone and/or ISDN line
at his home. During the Term, the Company shall also pay for the Executive's
purchase, line charges, rental and unit charges for his mobile phones. The
Company shall provide the Executive with a fax machine and computer modem and
ISDN line to be installed at the Executive's home and a suitable desktop and
laptop computer, as well as all ancillary equipment and maintenance therefore.
In addition, the Company will pay for the cost of the Executive's member ship in
or subscriptions to the internet service provider of his choice, and such
professional memberships and journals as are appropriate to his duties under
this agreement. In addition, the Company will pay for any healthclub membership
fees that Jonathan and/or his family belong to.
THEREFORE the Company AND the Executive confirm and agree that the three-page
"Appendix A" attached to the Executive's original Employment Agreement dated
June 1, 1999 is a valid and approved section of the Employment Agreement. A copy
of the Appendix A is attached.
IN WITNESS WHEREOF, Getty Images, Inc. and Jonathan D. Klein have caused this
Amendment to be executed as of the Commencement Date.
GETTY IMAGES, INC. JONATHAN D. KLEIN
By:
--------------------------------- --------------------------------
Mark H. Getty Jonathan D. Klein
Executive Chairman Chief Executive Officer
Date:
--------------------------------- --------------------------------
<PAGE> 1
EXHIBIT 10.6
AMENDMENT TO
EMPLOYMENT AGREEMENT
---------------
DATED FEBRUARY 1, 2000
THIS AMENDMENT is made as of February 1, 2000 ("Commencement Date"), and is by
and between Getty Images, Inc. (the "Company") and Christopher Roling (the
"Employee").
WHEREAS the Company and the Employee desire to amend the Employment Agreement
dated July 1, 1999 (the "Agreement");
THEREFORE the Company AND the Employee agree to delete Section 3 (a) in its
entirety and replace it as follows:
3. (a) SALARY. The Company shall pay to the Employee an annual salary
(the "Salary") at the rate of Two Hundred Seventy Five Thousand Dollars
($275,000.00), payable to the Employee in accordance with the normal payroll
practices of the Company for its employees as are in effect from time to time.
In addition, the Employee shall receive an annual foreign service premium of ten
percent of the salary and an annual accommodation adjustment of Forty Eight
Thousand Dollars ($48,000.00), payable as part of the normal payroll practices.
The foreign service premium and the accommodation adjustment mentioned above are
the net amounts that will be received by the Employee. The Company will be
responsible for any tax due on these amounts. The amount of the Employee's
Salary shall be reviewed annually by the Board on or about April 1 of each year
during the Term beginning in the 2001 calendar year and may be increased on the
basis of such review and then-current market practices, but not decreased below
such amount.
IN WITNESS WHEREOF, Getty Images, Inc. and Christopher Roling have caused this
Amendment to be executed as of the Commencement Date.
GETTY IMAGES, INC. CHRISTOPHER ROLING
By:
---------------------------- ------------------------------------
Jonathan Klein, CEO Christopher Roling
Date:
-------------------------- ------------------------------------
<PAGE> 1
EXHIBIT 10.7
SEPARATION AGREEMENT
This separation agreement (the "Agreement") is entered into this 30th
day of March, 2000 (the "Effective Date"), by and between Eyewire Services, Inc.
and Getty Images, Inc. (collectively referred to as the "Company") and Bradley
E. Zumwalt ("Zumwalt").
I. RECITALS
The parties agree that it is in their mutual interest for Zumwalt to
resign from his employment with the Company.
II. AGREEMENT
In consideration of the foregoing recitals, the parties agree as
follows:
1. Separation of Employment. Zumwalt hereby resigns from his employment
with the Company effective March 23, 2000 (the "Separation Date"). Except as
provided herein, the Company hereby waives any required notices under the
Employment Agreement, dated August 5, 1999, between Zumwalt and the Company (the
"Employment Agreement"). The Company hereby pays to Zumwalt his unpaid pro rata
Salary and accrued Bonus as well as all unreimbursed expenses, all as provided
in Section 4(a) of the Employment Agreement and subject to the terms set forth
herein.
2. No Competing Employment. This Separation Agreement shall serve as
notice to Zumwalt of the Company's intent to exercise its option to bind Zumwalt
to the "No Competing Employment" provision of Section 6(a) of the Employment
Agreement for a period beginning on the Separation Date and ending one year
thereafter (the "Restricted Period"). In accordance with the provisions of such
Section 6(a), the Company and Zumwalt agree that the Company shall continue to
pay Zumwalt's current Salary and maximum Bonus, as those terms are defined in
the Employment Agreement, (the "Continuation Payments") throughout the
Restricted Period, provided that Zumwalt shall not be in breach of any provision
of the Employment Agreement or this Agreement. Continuation Payments shall be
paid, at Zumwalt's election, either by check or via direct deposit, in
twenty-four (24) equal installments consistent with the Company's normal payroll
periods. All payments made under this Agreement shall be subject to applicable
federal income tax, social security and any other required withholdings.
3. Vacation. The Company further agrees to pay Zumwalt for his accrued
but unused vacation as of the Separation Date.
4. Release of Company by Zumwalt. Zumwalt accepts the Continuation
Payments in full satisfaction of all his rights and interests relating to
Zumwalt's employment with, and separation from, the Company and in full
satisfaction of all his rights and interests arising under any pre-existing
agreement between the parties including, without limitation, the Employment
Agreement and any and all option agreements between Zumwalt and the Company
(including between Zumwalt and Getty Images and Zumwalt and Eyewire Services).
In consideration therefor, Zumwalt, including his heirs, executors, successors
and assigns, hereby releases and forever discharges the Company and its
subsidiaries, successors, past and present officers, directors, agents, and
employees from any and all claims, causes of action or liabilities, at law or in
equity, judicial or administrative, debts, sums of money, accounts, judgments or
demands, suspected or unsuspected and irrespective of any present lack of
knowledge of any possible claim or of any fact or circumstance pertaining
thereto, which have arisen or may arise related to Zumwalt's employment, or
separation from employment, with the Company on or before the date of this
Agreement. This release specifically covers, but is not limited to, any workers'
compensation
<PAGE> 2
or disability claims under state law; any claims of discrimination based on
race, color, national origin, sex, marital status, or physical or mental
disability under any United States and Canadian federal, state, provincial, or
local law, rule, or regulation; any contract or tort claims arising under United
States and Canadian federal, state, provincial, or local law; any claims arising
under United States and Canadian federal, state, provincial, or local law based
on promises made or allegedly made by the Company to Zumwalt; any claims under
any express or implied contract or legal restrictions on the Company's right to
terminate its employees; any claims of unfair dismissal pursuant to the laws of
the United States and Canada. Zumwalt hereby covenants not to assert any such
claims or causes of action.
5. Release of Zumwalt by Company. The Company accepts the obligations,
promises and covenants undertaken herein by Zumwalt, as full satisfaction of all
the Company's rights and interests relating to Zumwalt's employment with and
separation from the Company and in full satisfaction of all of Company's rights
and interests arising under any pre-existing agreement between the parties
including, without limitation, any and all option agreements between Zumwalt and
the Company (including between Zumwalt and Getty Images and Zumwalt and Eyewire
Services). In consideration therefor, the Company, including its successors and
assigns, hereby releases and forever discharges Zumwalt and his heirs,
executors, successors and assigns from any and all claims, causes of action or
liabilities, at law or in equity, judicial or administrative, debts, sums of
money, accounts, judgments or demands, suspected or unsuspected and irrespective
of any present lack of knowledge of any possible claim or of any fact or
circumstance pertaining thereto, which have arisen or may arise related to
Zumwalt's employment, or separation from employment, with the Company on or
before the date of this Agreement.
6. Non-Disparagement of Company by Zumwalt. Zumwalt agrees for himself
and all others acting on his behalf, either directly or indirectly, not to take,
support, encourage, induce or voluntarily participate in any action or attempted
action that would negatively comment on, disparage, or call into question the
business operations, policies, or conduct of the Company, or its subsidiaries,
affiliates, officers or employees, or to act in any way with respect to such
business operations, policies or conduct that would damage the Company's
reputation, business relationships, or present or future business, or the
reputation of any past or present directors, executives, officers, agents,
employees or parents, affiliates and subsidiaries of the Company. Zumwalt agrees
that he will not comment about the Company to any person or entity, including
but not limited to current or former employees, officers or customers,
concerning such business operations, policies or conduct except as required or
permitted by law or as necessary for Zumwalt to defend himself in any civil,
criminal, administrative, judicial, arbitral, or administrative proceeding.
Zumwalt further agrees that from this point forward he will not state, comment
or suggest to any persons any false reasons for his separation from his
employment with the Company. Nothing in this paragraph shall prevent Zumwalt
from commenting about his work experience at the Company in connection with any
bona fide efforts at seeking employment, but in such event, he will not
disparage the Company in any way. Nothing in this Section 6 shall prevent
Zumwalt from competing with the Company following the conclusion of the
restrictions contained in Section 6(a) of the Employment Agreement.
7. Non-Disparagement of Zumwalt by Company. The Company agrees for
itself and all others acting on its behalf, either directly or indirectly, not
to take, support, encourage, induce or voluntarily participate in any action or
attempted action that would negatively comment on, disparage, or call into
question the business conduct of Zumwalt or to act in any way with respect to
such business conduct that would damage Zumwalt's reputation, business
relationships, or present or future business, except as required or permitted by
law or as necessary for Company to defend itself in any civil, criminal,
administrative, judicial, arbitral, or administrative proceeding. The Company
further agrees that from this point forward it will not state, comment or
suggest to any persons any false reasons for Zumwalt's separation from
employment with the Company.
Page 2 of 4
<PAGE> 3
8. Confidentiality. Zumwalt agrees to keep the terms of this Agreement
confidential, except for communications about it with his immediate family,
attorney or accountants or other professional financial advisors. Zumwalt
further agrees to take all reasonable steps necessary to ensure that
confidentiality is maintained by any of the individuals referenced above to whom
disclosure is authorized, and agrees to accept responsibility for any breach of
confidentiality by any individual to whom he disclosed the terms of the
Agreement. Zumwalt agrees that damages for breach of this Confidentiality
provision would be difficult to determine and therefore agrees that this
provision may be enforced by temporary or permanent injunction. The right to
such injunctive relief shall be in addition to and not in place of any further
remedies to which the Company may be entitled.
9. Complete Agreement. This Agreement constitutes a full and final
resolution of all matters in any way related to Zumwalt's separation from the
Company. Except as provided in this Agreement, there are no other salary, wages,
bonuses or benefits of any kind owed by the Company to Zumwalt.
10. No Admission. Nothing in this Agreement shall be construed as any
indication that the Company has acted wrongfully towards Zumwalt or any other
person.
11. Voluntary Execution. Zumwalt represents that he has read,
considered, and fully understands this Agreement and all its terms, and executes
it freely and voluntarily. Zumwalt represents that in entering into this
Agreement, he does not rely and has not relied upon any representation or
statement made by the Company or any of its respective employees or agents
concerning this Agreement.
12. Construction of Agreement; Governing Law. Each party has had a full
and complete opportunity to review this Agreement, and has been given the
opportunity to have counsel review it. Accordingly, the parties agree that the
common law principles of construing ambiguities against the drafter shall have
no application to this Agreement. Interpretation of this Agreement shall be
under Delaware law.
13. Amendment. The parties agree that no modification, change or
amendment of this Agreement or any of its provisions shall be valid, unless in
writing and signed by the party against whom such claimed modification, change
or amendment is sought to be enforced.
14. Severability. If any provision of this Agreement, or portion
thereof, shall be held invalid or unenforceable by a court of competent
jurisdiction or in any arbitration proceeding, such invalidity or
unenforceability shall attach only to such provision or portion thereof, and
shall not in any way affect or render invalid or unenforceable any other
provision of this Agreement or portion thereof, and this Agreement shall be
carried out as if any such invalid or unenforceable provision or portion thereof
were not contained herein. In addition, any such invalid or unenforceable
provision shall be deemed, without further action on the part of the parties,
modified, amended or limited to the extent necessary to render the same valid
and enforceable.
Page 3 of 4
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the day and year first written above.
BRADLEY E. ZUMWALT
- -----------------------------
Bradley E. Zumwalt
EYEWIRE SERVICES, INC.
By
------------------------
Its
------------------------
GETTY IMAGES, INC.
By
------------------------
Its
------------------------
Page 4 of 4
<PAGE> 1
EXHIBIT 10.8
SUMMARY OF BASIC LEASE INFORMATION
This Summary of Basic Lease Information (the "Summary") is hereby
incorporated into and made a part of the attached Office Lease (this Summary and
the Office Lease to be known collectively as the "Lease") which pertains to the
multi-office building project described in Section 6.1 below (the "Project").
Each reference in the Office Lease to any term of this Summary shall have the
meaning as set forth in this Summary for such term. In the event of a conflict
between the terms of this Summary and the Office Lease, the terms of the Office
Lease shall prevail. Any initially capitalized terms used herein and not
otherwise defined herein shall have the meaning as set forth in the Office
Lease.
<TABLE>
<CAPTION>
TERMS OF LEASE
(References are to
the Office Lease) DESCRIPTION
------------------- -----------
<S> <C> <C>
1. Dated as of: March 31, 2000.
2. Landlord: CST WATER GARDEN II, L.L.C., a Delaware limited
liability company
3. Address of Landlord
(Section 29.14): 5757 Wilshire Boulevard
Penthouse 30
Los Angeles, California 90036
Attention: Mr. Clifford P. Goldstein
with a copy to:
Allen, Matkins, Leck, Gamble & Mallory
1999 Avenue of the Stars
Suite 1800
Los Angeles, California 90067
Attention: Anton N. Natsis, Esq.
4. Tenant: TRI-ENERGY PRODUCTIONS, INC.,
a California corporation.
</TABLE>
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<TABLE>
<S> <C> <C>
5. Address of Tenant
(Section 29.14): c/o Getty Images, Inc.
701 North 34th Street
Suite 410
Seattle, Washington 98103
Attention: Ms. Susan Page
Paul Ocampo, Esq.
with a copy to:
Greenwald, Pauly, Foster & Miller
1299 Ocean Avenue, Suite 400
Santa Monica, California 90401-1007
Attention: Richard L. Miller, Esq.
(Prior to Lease Commencement Date)
and
2450 Colorado Avenue
Suite 500 East
Santa Monica, California 90404
Attention: Mr. Adam Ainley
with a copy to:
Greenwald, Pauly, Foster & Miller
1299 Ocean Avenue, Suite 400
Santa Monica, California 90401-1007
Attention: Richard L. Miller, Esq.
(After Lease Commencement Date)
6. Premises (Article 1).
6.1 Project: As defined in Section 1.1 of the Lease.
6.2 Building: 2450 Colorado Avenue, Santa Monica, California,
consisting of approximately 260,000 rentable square
feet of office space.
6.3 Premises: Approximately 25,193 rentable (23,009 usable) square
feet of space located on the fifth (5th) floor of the
East Tower of the Building, as set forth in Exhibit A
attached hereto, known as Suite 500 East.
7. Term (Article 2).
7.1 Lease Term: Ten (10) years.
</TABLE>
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<TABLE>
<S> <C> <C>
7.2 Lease Commencement Date: The earlier of (i) the date Tenant commences to
business operation from all or a portion of the
Premises, and (ii) the date that the Premises are Ready
For Occupancy, which Lease Commencement Date
is anticipated to be October 1, 2000.
7.3 Lease Expiration Date: The last day of the month in which the 10th anniversary
of the Lease Commencement Date occurs.
</TABLE>
8. Base Rent (Article 3):
<TABLE>
<CAPTION>
Monthly Installment
Months of Lease Term Annual Base Rent of Base Rent
-------------------- ---------------- -------------------
<S> <C> <C>
1-30 $1,012,758.60 $ 84,396.55
31-60 $1,088,337.60 $ 90,694.80
61-90 $1,169,962.90 $ 97,496.91
91-120 $1,257,634.50 $104,802.88
</TABLE>
<TABLE>
<S> <C> <C>
9. Additional Rent
(Article 4).
9.1 Base Year: The calendar year of 2000.
9.2 Tenant's Share of Direct Expenses: 9.69%.
10. Security Deposit; Letter of Credit Security Deposit - $104,802.88; Letter of Credit -
(Article 21): $1,000,000.00
11. Number of Parking Passes (Article 28): Four (4) unreserved parking passes per each 1,000
rentable square feet of the Premises, of which up to
five (5) passes may be for the use of a reserved
parking space.
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
12. Brokers
(Section 29.19): JSG Realty, Inc.
5757 Wilshire Boulevard
Penthouse 30
Los Angeles, California 90036
and
Julien J. Studley, Inc.
777 South Figueroa Street, Suite 2500
Los Angeles, California 90017
13. Permitted Use General office use and uses incidental thereto,
(Section 5): including customer service phone center, and typical
office lunchroom, all consistent with a first-class
office building project.
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE 1 PREMISES, BUILDING, PROJECT, AND COMMON AREAS, AND THE ADJACENT PROJECT................... 1
ARTICLE 2 LEASE TERM; OPTION TERM................................................................... 3
ARTICLE 3 BASE RENT................................................................................. 7
ARTICLE 4 ADDITIONAL RENT........................................................................... 7
ARTICLE 5 USE OF PREMISES........................................................................... 19
ARTICLE 6 SERVICES AND UTILITIES.................................................................... 20
ARTICLE 7 REPAIRS................................................................................... 24
ARTICLE 8 ADDITIONS AND ALTERATIONS................................................................. 26
ARTICLE 9 COVENANT AGAINST LIENS.................................................................... 28
ARTICLE 10 INSURANCE................................................................................. 28
ARTICLE 11 DAMAGE AND DESTRUCTION.................................................................... 32
ARTICLE 12 NONWAIVER................................................................................. 34
ARTICLE 13 CONDEMNATION.............................................................................. 35
ARTICLE 14 ASSIGNMENT AND SUBLETTING................................................................. 36
ARTICLE 15 SURRENDER OF PREMISES; REMOVAL OF TRADE FIXTURES.......................................... 42
ARTICLE 16 HOLDING OVER.............................................................................. 43
ARTICLE 17 ESTOPPEL CERTIFICATES..................................................................... 43
ARTICLE 18 SUBORDINATION............................................................................. 44
ARTICLE 19 DEFAULTS; REMEDIES........................................................................ 45
ARTICLE 20 ATTORNEYS' FEES........................................................................... 49
ARTICLE 21 SECURITY DEPOSIT; LETTER OF CREDIT........................................................ 49
ARTICLE 22 INTENTIONALLY DELETED..................................................................... 51
ARTICLE 23 SIGNS..................................................................................... 51
ARTICLE 24 COMPLIANCE WITH LAW....................................................................... 52
ARTICLE 25 LATE CHARGES.............................................................................. 53
ARTICLE 26 LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT...................................... 53
ARTICLE 27 ENTRY BY LANDLORD......................................................................... 53
ARTICLE 28 TENANT PARKING............................................................................ 54
ARTICLE 29 MISCELLANEOUS PROVISIONS.................................................................. 55
</TABLE>
EXHIBITS
A OUTLINE OF PREMISES
B RULES AND REGULATIONS
C NOTICE OF LEASE TERM DATES
D TENANT WORK LETTER
E FORM OF TENANT'S ESTOPPEL CERTIFICATE
F FORM OF LETTER OF CREDIT
G FORM OF GUARANTY OF LEASE
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<PAGE> 6
OFFICE LEASE
This Office Lease, which includes the preceding Summary of Basic Lease
Information (the "Summary") attached hereto as pages (ii) through (iv) and
incorporated herein by this reference (the Office Lease and Summary to be known
sometimes collectively hereafter as the "Lease"), dated as of the date set forth
in Section 1 of the Summary, is made by and between "Landlord" and "Tenant" as
those terms are defined in Sections 2 and 4 of the Summary, respectively.
ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON AREAS,
AND THE ADJACENT PROJECT
1.1 Premises, Building, Project and Common Areas.
1.1.1 The Premises. Landlord hereby leases to Tenant and Tenant
hereby leases from Landlord the premises set forth in Section 6.3 of the Summary
(the "Premises"). The outline of the Premises is set forth in Exhibit A attached
hereto and each floor or floors of the Premises has the number of rentable
square feet as set forth in Section 6.3 of the Summary. Subject to Landlord's
reasonable regulations, restrictions and guidelines, Tenant may also use the
electrical and telephone rooms and the ceilings and floors above and below the
Premises to install wire, conduit and cable that service Tenant's equipment in
the Premises in accordance with, and subject to, the other terms and provisions
of this Lease and Landlord's rights hereunder with respect to such areas. The
parties hereto agree that the lease of the Premises is upon and subject to the
terms, covenants and conditions herein set forth, and Tenant covenants as a
material part of the consideration for this Lease to keep and perform each and
all of such terms, covenants and conditions by it to be kept and performed. The
parties hereto hereby acknowledge that the purpose of Exhibit A is to show the
approximate location of the Premises in the "Building," as that term is defined
in Section 1.1.2, below, only, and such Exhibit is not meant to constitute an
agreement, representation or warranty as to the construction of the Premises,
the precise area thereof or the specific location of the "Common Areas," as that
term is defined in Section 1.1.3, below, or the elements thereof or of the
accessways to the Premises or the "Project," as that term is defined in Section
1.1.2, below. Except as specifically set forth in this Lease and in the Tenant
Work Letter attached hereto as Exhibit D (the "Tenant Work Letter"), Landlord
shall not be obligated to provide or pay for any improvement work or services
related to the improvement of the Premises. Tenant also acknowledges that
neither Landlord nor any agent of Landlord has made any representation or
warranty regarding the condition of the Premises, the Building or the Project or
with respect to the suitability of any of the foregoing for the conduct of
Tenant's business, except as specifically set forth in this Lease and the Tenant
Work Letter.
1.1.2 The Building and The Project. The Premises shall be a part
of the building set forth in Section 6.2 of the Summary (the "Building"). The
Building shall be part of an office project known as "Water Garden II." The term
"Project," as used in this Lease, shall mean (i) the Building and the Common
Areas, (ii) the land (which is improved with landscaping,
<PAGE> 7
subterranean parking facilities and other improvements) upon which the Building
and the Common Areas are located, (iii) the other office building known as 1601
Cloverfield Boulevard which shall be located adjacent to the Building and the
land upon which such adjacent office building is located, and (iv) at Landlord's
discretion, any additional real property, areas, land, buildings or other
improvements added thereto outside of the Project; provided that,
notwithstanding anything to the contrary contained in this Lease, the Project
shall not be expanded to include more than the land located in Santa Monica,
California, which has Olympic Boulevard as its Southern boundary, Cloverfield
Boulevard as its Western boundary, Colorado Avenue as its Northern boundary, and
26th Street as its Eastern boundary, and subject to the restrictions in Section
1.1.3 applicable to Common Areas which shall also apply to the added space;
provided further, however, that any such additions shall not materially increase
Tenant's monetary obligations under this Lease unless such additions are
required by "Applicable Laws," as that term is defined in Article 24, or
intended to help improve the security and/or safety of the tenants of, or the
visitors to, the Project.
1.1.3 Common Areas. Tenant shall have the non-exclusive right to
use in common with other tenants in the Project, and subject to the rules and
regulations referred to in Article 5 of this Lease, those portions of the
Project which are provided, from time to time, for use in common by Landlord,
Tenant and any other tenants of the Project (such areas, together with such
other portions of the Project designated by Landlord, in its good faith
discretion, including certain areas designated for the exclusive use of certain
tenants, or to be shared by Landlord and certain tenants, are collectively
referred to herein as the "Common Areas"). The manner in which the Common Areas
are maintained and operated shall be at the sole discretion of Landlord,
provided that Landlord shall maintain and operate the same in a manner
consistent with other, first class, mid-rise office buildings, including the
"Water Garden," as that term is defined in Section 1.3, below, in the Santa
Monica, California area, which are comparable in terms of size, quality of
construction, appearance and services and amenities. The use of the Common Areas
shall be subject to such rules, regulations and restrictions as Landlord may
make from time to time. Landlord reserves the right to close temporarily, make
alterations or additions to, or change the location of elements of the Project
and the Common Areas, so long as such changes do not change the nature of the
Project to something other than a first class office building project or
materially, adversely effect Tenant's use of the Premises for the Permitted Use,
or Tenant's ingress to or egress from the Project, Building, the Premises or the
parking areas servicing the same. Except when and where Tenant's right of access
is specifically excluded as the result of (i) an emergency, (ii) a requirement
by Applicable Laws, or (iii) a specific provision set forth in this Lease,
Tenant shall have the right of access to the Premises, the Building, and the
Project parking facility twenty-four (24) hours per day, seven (7) days per week
during the "Lease Term," as that term is defined in Section 2.1 of this Lease.
1.2 The Adjacent Project. The Project is located in the same city block
with, and is adjacent to, another office project known as the "Water Garden."
All references in this Lease to the "Adjacent Project" shall be deemed to refer
to the neighboring Water Garden project.
1.3 Verification of Square Footages.
1.3.1 Rentable Square Footage of Premises. Landlord and Tenant
hereby acknowledge and agree that the rentable square footage of the Premises,
as set forth in Section
2
<PAGE> 8
6.3 of the Summary, shall be conclusive for all purposes under this Lease, and
that the same shall not be subject to remeasurement or modification.
1.3.2 Rentable Square Footage of Building. For purposes of this
Lease, "rentable square feet" and "usable square feet" of the Building shall be
calculated pursuant to Standard Method for Measuring Floor Area in Office
Buildings, ANSI Z65.1 - 1996 ("BOMA"). Within ninety (90) days after the Lease
Commencement Date, the rentable and usable square footage of the Building shall
be measured by Landlord's planner/designer in accordance with the provisions of
this Section 1.3. Tenant's architect may consult with Landlord's
planner/designer regarding such measurements. In the event that Tenant's
architect disagrees with the determination of Landlord's planner/designer with
respect to any such measurement, the question of the measurement to be used for
purposes of this Lease shall be submitted to arbitration in accordance with
Section 29.29 of this Lease. If through such process, whether by acceptance of
the measurements of Landlord's planner/designer or by arbitration, it is
determined that the amounts thereof shall be different from those used for
purposes of setting amounts, percentages and figures appearing or referred to in
this Lease based upon such incorrect amount shall be modified in accordance with
such determination retroactive to the date when such amounts, percentages and
figures commenced to be used under this Lease, and any payments and credits
previously made or given based upon the incorrect amount shall be reconciled
between the parties within thirty (30) days after the corrected measurement has
been determined. If such determination is made, it will be confirmed in writing
by Landlord and Tenant.
ARTICLE 2
LEASE TERM; OPTION TERM
2.1 In General. The terms and provisions of this Lease shall be
effective as of the date of this Lease. The term of this Lease (the "Lease
Term") shall be as set forth in Section 7.1 of the Summary and Section 5 of the
Tenant Work Letter and shall commence on the date (the "Lease Commencement
Date") set forth in Section 7.2 of the Summary, and shall terminate on the date
(the "Lease Expiration Date") set forth in Section 7.3 of the Summary, unless
this Lease is sooner terminated as hereinafter provided. For purposes of this
Lease, the term "Lease Year" shall mean each consecutive twelve (12) month
period during the Lease Term; provided, however, that the last Lease Year shall
end on the Lease Expiration Date. Within six (6) months following the Lease
Commencement Date, Landlord shall deliver to Tenant a notice (the "Notice of
Lease Term Dates") in the form as set forth in Exhibit C, attached hereto, which
Notice Tenant shall execute and return to Landlord within ten (10) business days
of receipt thereof (provided that if said notice is not factually correct, then
Tenant shall make such changes as are necessary to make the notice factually
correct and shall thereafter execute and return such notice to Landlord within
such ten (10) business day period), and thereafter the dates set forth on such
notice shall be conclusive and binding upon Tenant and Landlord, unless Landlord
within fifteen (15) business days following receipt of Tenant's changes sends a
notice to Tenant rejecting Tenant's changes, whereupon this procedure shall be
repeated until the parties either (a) mutually agree upon the contents of
Exhibit C, or (b) the contents are determined by arbitration pursuant to Section
29.29, below. In the event Landlord shall fail to send Tenant notice of the
occurrence of the Lease Commencement Date within six (6) months following the
Lease Commencement Date, Tenant may send to Landlord notice of the occurrence of
the Lease Commencement Date
3
<PAGE> 9
substantially in the form of the attached hereto as Exhibit C, which notice
Landlord shall acknowledge by executing a copy of the notice and returning it to
Tenant (provided that if said notice is not factually correct, the Landlord
shall make such changes to the notice as are necessary to make such notice
factually correct, which revised notice shall thereafter be subject to the
procedure for finalization set forth in this Article 2).
2.2 Option Term.
2.2.1 Option Right. Landlord hereby grants the Tenant named in
this Lease (the "Original Tenant") or an assignee permitted pursuant to the
terms of Section 14.6 of this Lease (a "Permitted Assignee"), one (1) option to
extend the Lease Term for a period of five (5) years (the "Option Term"), which
option shall be exercisable only by written notice delivered by Tenant to
Landlord as provided below, provided that, as of the date of delivery of such
notice, Tenant is not in default under this Lease beyond any applicable notice
and cure period set forth herein. Upon the proper exercise of such option to
extend, and provided that, at Landlord's option, as of the end of the initial
Lease Term, Tenant is not in default under this Lease beyond any applicable
notice and cure period set forth herein, the Lease Term, for the entire
Premises, shall be extended for a period of five (5) years. The rights contained
in this Section 2.2 shall be personal to the Original Tenant or a Permitted
Assignee, and may only be exercised by the Original Tenant or a Permitted
Assignee (and not any other assignee, sublessee or other transferee of the
Original Tenant's interest in this Lease) if the Original Tenant or a Permitted
Assignee, as the case may be, occupies sixty percent (60%) of the Premises.
2.2.2 Option Rent. The rent payable by Tenant during the Option
Term (the "Option Rent") shall be equal to the "Fair Market Rental Rate," as
that term is defined in Section 2.5.5, below, but the base rent component of the
Option Rent on an annual, per rentable square foot, basis shall in no event be
less than the sum of (i) $49.92, and (ii) the amount of Tenant's Share of Direct
Expenses payable by Tenant on an annual, per rentable square foot basis for the
Premises immediately prior to the commencement of the Option Term (the "Prior
Base Rent"). In the event that the base rent component for the Option Term is
the Prior Base Rent, then (A) the new Base Year for the Option Term shall be the
calendar year in which the Option Term commences, and (B) the concessions
provided to Tenant shall be equal to the "Concessions," as that term is defined
in Section 2.2.5, below.
2.2.3 Exercise of Option. The option contained in this Section
2.2 shall be exercised by Tenant, if at all, only in the following manner: (i)
Tenant shall deliver written notice to Landlord not more than sixteen (16)
months nor less than fifteen (15) months prior to the expiration of the initial
Lease Term, stating that Tenant may be interested in exercising its option; (ii)
Landlord, after receipt of Tenant's notice, shall deliver notice (the "Option
Rent Notice") to Tenant not less than thirteen (13) months prior to the
expiration of the initial Lease Term, setting forth the Option Rent; and (iii)
if Tenant wishes to exercise such option, Tenant shall, on or before the date
occurring twelve (12) months prior to the expiration of the initial Lease Term,
exercise the option by delivering written notice thereof to Landlord, and upon,
and concurrent with, such exercise, Tenant may, at its option, object to the
Option Rent contained in the Option Rent Notice, in which case the parties shall
follow the procedure, and the Option Rent shall be determined, as set forth in
Section 2.2.4 below.
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2.2.4 Determination of Option Rent. In the event Tenant timely
and appropriately objects to the Option Rent, Landlord and Tenant shall attempt
to agree upon the Fair Market Rental Rate for the Premises, using reasonable
good-faith efforts. If Landlord and Tenant fail to reach agreement within thirty
(30) days following Tenant's objection to the Option Rent (the "Outside
Agreement Date"), then each party shall make a separate determination of the
Fair Market Rental Rate, as the case may be, within ten (10) days, and such
determinations shall be submitted to arbitration in accordance with Sections
2.2.4.1 through 2.2.4.7 below.
2.2.4.1 Landlord and Tenant shall each appoint one
arbitrator who shall by profession be a real estate broker, appraiser or
attorney who shall have been active over the five (5) year period ending on the
date of such appointment in the leasing (or appraisal, as the case may be) of
first class office properties in the Los Angeles County, California area. The
determination of the arbitrators shall be limited solely to the issue area of
whether Landlord's or Tenant's submitted Fair Market Rental Rate, is the closest
to the actual Fair Market Rental Rate as determined by the arbitrators, taking
into account the requirements of Section 2.2.5 of this Lease. Each such
arbitrator shall be appointed within fifteen (15) days after the applicable
Outside Agreement Date. Landlord and Tenant may consult with their selected
arbitrators prior to appointment and may select an arbitrator who is favorable
to their respective positions. The arbitrators so selected by Landlord and
Tenant shall be deemed "Advocate Arbitrators."
2.2.4.2 The two Advocate Arbitrators so appointed shall be
specifically required pursuant to an engagement letter within ten (10) days of
the date of the appointment of the last appointed Advocate Arbitrator to agree
upon and appoint a third arbitrator ("Neutral Arbitrator") who shall be
qualified under the same criteria set forth hereinabove for qualification of the
two Advocate Arbitrators except that neither the Landlord or Tenant or either
parties Advocate Arbitrator may, directly or indirectly, consult with the
Neutral Arbitrator prior or subsequent to his or her appearance. The Neutral
Arbitrator shall be retained via an engagement letter jointly prepared by
Landlord's counsel and Tenant's counsel.
2.2.4.3 The three arbitrators shall within thirty (30)
days of the appointment of the Neutral Arbitrator reach a decision as to Fair
Market Rental Rate and determine whether the Landlord's or Tenant's
determination of Fair Market Rental Rate as submitted pursuant to Section 2.2.4,
above, is closest to Fair Market Rental Rate as determined by the arbitrators
and simultaneously publish a ruling ("Award") indicating whether Landlord's or
Tenant's submitted Fair Market Rental Rate is closest to the Fair Market Rental
Rate as determined by the arbitrators. Following notification of the Award, the
Landlord's or Tenant's submitted Fair Market Rental Rate determination,
whichever is selected by the arbitrators as being closest to Fair Market Rental
Rate, shall become the then applicable Fair Market Rental Rate.
2.2.4.4 The Award issued by the majority of the three
arbitrators shall be binding upon Landlord and Tenant.
2.2.4.5 If either Landlord or Tenant fail to appoint an
Advocate Arbitrator within fifteen (15) days after the applicable Outside
Agreement Date, either party may petition the presiding judge of the Superior
Court of Los Angeles County to appoint such Advocate Arbitrator subject to the
criteria in Section 2.2.4.1 of this Lease, or if he or she refuses to act,
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either party may petition any judge having jurisdiction over the parties to
appoint such Advocate Arbitrator.
2.2.4.6 If the two Advocate Arbitrators fail to agree upon
and appoint the Neutral Arbitrator, then either party may petition the presiding
judge of the Superior Court of Los Angeles County to appoint the Neutral
Arbitrator, subject to criteria in Section 2.2.4.1 of this Lease, or if he or
she refuses to act, either party may petition any judge having jurisdiction over
the parties to appoint such arbitrator.
2.2.4.7 The cost of arbitration shall be paid by Landlord
and Tenant equally.
2.2.5 Fair Market Rental Rate. The "Fair Market Rental Rate"
shall be equal to the rent (including additional rent and considering any "base
year" or "expense stop" applicable thereto), including all escalations, at which
tenants, pursuant to leases or related agreements (i) which are executed prior
to, but no more than nine (9) months prior to the commencement of the Option
Term, and (ii) which have a term which is anticipated to commence within the
nine (9) month period immediately preceding the commencement of the Option Term,
are leasing non-sublease, non-encumbered, non-equity space comparable in size,
location and quality to the Premises, for a similar lease term, in an arms
length transaction, which comparable space is located in the Project, or, if
there are not at least two (2) current comparable transactions ("Comparable
Transactions") in the Project, then in "Comparable Buildings," as that term is
defined, below, in either case taking into consideration the following
concessions (the "Concessions"): (a) rental abatement concessions, if any, being
granted such tenants in connection with such comparable space, (b) tenant
improvements or allowances provided or to be provided for such comparable space,
taking into account, and deducting the value of, the existing improvements in
the Premises, such value to be based upon the age, design, quality of finishes,
and layout of the improvements and the extent to which the same could be
utilized by a general office user as contrasted with this specific Tenant, and
(c) all other monetary concessions, if any, being granted such tenants in
connection with such comparable space; provided, however, that notwithstanding
anything to the contrary herein, no consideration shall be given to (1) the fact
that Landlord is or is not required to pay a real estate brokerage commission in
connection with the applicable term or the fact that the Comparable Transactions
do or do not involve the payment of real estate brokerage commissions, and (2)
any period of rental abatement, if any, granted to tenants in Comparable
Transactions in connection with the design, permitting and construction of
tenant improvements in such comparable spaces. In analyzing such comparable
spaces, the arbitrators shall give due consideration to the method by which the
square footage of such space has been calculated. The Fair Market Rental Rate
shall additionally include a determination as to whether, and if so to what
extent, Tenant must provide Landlord with financial security, such as a letter
of credit or guaranty, for Tenant's Rent obligations during the Option Term.
Such determination shall be made by reviewing the extent of financial security
then generally being imposed in Comparable Transactions from tenants of
comparable financial condition and credit history to the then existing financial
condition and credit history of Tenant (with appropriate adjustments to account
for differences in the then-existing financial condition of Tenant and such
other tenants). If in determining the Fair Market Rental Rate, Tenant is deemed
to be entitled to a tenant improvement or comparable allowance for the
improvement of the Premises (the total dollar value of such allowance, the
"Option Term
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TI Allowance"), Landlord may, at Landlord's sole option, elect any or a portion
of the following: (A) to grant some or all of the Option Term TI Allowance to
Tenant as a lump sum payment to Tenant, and/or (B) in lieu of making a lump sum
payment (or portion thereof) to Tenant, to reduce the rental rate component of
the Fair Market Rental Rate to be an effective rental rate which takes into
consideration that Tenant will not receive a payment of such Option Term TI
Allowance, or portion thereof (in which case the Option Term TI Allowance, or
portion thereof, evidenced in the effective rental rate shall not be paid to
Tenant). For purposes of this Lease, the "Comparable Buildings" shall mean
first-class, mid-rise office buildings (including the office buildings
constructed adjacent to the Project as "Phase I" of The Water Garden ("Water
Garden Phase I")), in the Santa Monica, California area, which are comparable in
terms of size, quality of construction, appearance, and services and amenities.
ARTICLE 3
BASE RENT
3.1 In General. Tenant shall pay, without notice or demand, to Landlord
at the management office of the Project, or at such other place as Landlord may
from time to time designate in writing, in the form of a check (which is drawn
upon a bank which is located in the State of California), base rent ("Base
Rent") as set forth in Section 8 of the Summary, payable in equal monthly
installments as set forth in Section 8 of the Summary in advance on or before
the first day of each and every calendar month during the Lease Term, without
any setoff or deduction whatsoever (except as specifically set forth in this
Lease). The Base Rent for the first full calendar month of the Lease Term which
occurs following the expiration of any free rent period shall be paid at the
time of Tenant's execution of this Lease. If any Rent, payment date (including
the Lease Commencement Date) falls on a day of a calendar month other than the
first day of such calendar month or if any Rent payment is for a period which is
shorter than one calendar month such as during the last month of the Lease Term,
the Rent for any fractional calendar month shall accrue on a daily basis for the
period from the date such payment is due to the end of such calendar month or to
the end of the Lease Term at a rate per day which is equal to 1/365 of the Rent.
All other payments or adjustments required to be made under the terms of this
Lease that require proration on a time basis shall be prorated on the same
basis.
3.2 Free Base Rent. Notwithstanding anything in Section 3.1 of this
Lease to the contrary, provided that Tenant is not then in default of this Lease
beyond any applicable cure period set forth herein, Tenant shall not be
obligated to pay the Base Rent attributable to the first two (2) months of the
Lease Term.
ARTICLE 4
ADDITIONAL RENT
4.1 Additional Rent. In addition to paying the Base Rent specified in
Article 3 of this Lease, at all times during the Lease term on and after first
(1st) anniversary of the Lease Commencement Date, Tenant shall pay as additional
rent "Tenant's Share" of the annual "Direct Expenses," as those terms are
defined in Sections 4.2.6 and 4.2.2 of this Lease, respectively, which are in
excess of the amount of Direct Expenses applicable to the "Base Year," as that
term
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is defined in Section 4.2.1 of this Lease. Such additional rent, together with
any and all other amounts payable by Tenant to Landlord, as additional rent or
otherwise, pursuant to the terms of this Lease, shall be hereinafter
collectively referred to as the "Additional Rent." The Base Rent and Additional
Rent are herein collectively referred to as the "Rent." All amounts due under
this Article 4 as Additional Rent shall be payable in the same manner, time and
place as the Base Rent. Without limitation on other obligations of Tenant and
Landlord which shall survive the expiration of the Lease Term, the obligations
of Tenant to pay the Additional Rent attributable to the period of time prior to
the Lease Expiration Date or earlier termination of this Lease, and Landlord's
obligation to refund to Tenant any overpayments of such Additional Rent shall
survive the expiration of the Lease Term; provided, however, that any such
payments made by Tenant of any Additional Rent or any refund to Tenant by
Landlord of any overpayments of such Additional Rent shall not constitute a
waiver by either Tenant or Landlord, as the case may be, of any amount that
Tenant or Landlord (as the case may be) contend are in dispute to the extent
that any such payments or refunds are made "under protest" and are designated as
such concurrently with any such payment and/or refund.
4.2 Definitions. As used in this Article 4, the following terms shall
have the meanings hereinafter set forth:
4.2.1 "Base Year" shall mean the period set forth in Section 9.1
of the Summary.
4.2.2 "Direct Expenses" shall mean "Operating Expenses" and "Tax
Expenses."
4.2.3 "Expense Year" shall mean each calendar year in which any
portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires.
4.2.4 "Operating Expenses" shall mean all expenses, costs and
amounts of every kind and nature which Landlord shall pay or incur during any
Expense Year because of or in connection with the ownership, management,
maintenance, repair, replacement, restoration or operation of the Project or any
portion thereof, all as determined in accordance with sound real estate
management practices consistently applied, including, without limitation, any
amounts paid or incurred for (i) the cost of supplying all utilities, the cost
of operating, maintaining, repairing, replacing, renovating, complying with
conservation measures in connection with, and managing the utility systems,
mechanical systems, plumbing, sanitary and storm drainage systems, landscaping,
communication systems, and escalator and elevator systems, and the cost of
supplies, tools, equipment, maintenance, and service contracts incurred in
connection therewith; (ii) the cost of licenses, certificates, permits and
inspections, the cost of contesting the validity or applicability of any
governmental enactments which are reasonably anticipated to reduce Operating
Expenses, the costs incurred in connection with the implementation and operation
of any governmentally mandated transportation management program or similar
program or a municipal or public shuttle service or parking program, and any
traffic or transportation-related fee imposed by any governmental authority, and
the cost of contesting any fees or other charges imposed by any governmental
authority in connection with any governmentally mandated transportation
management or similar program; (iii) the cost of all insurance carried in
connection with the Project, or any portion thereof; (iv) the cost of
landscaping, relamping, and all supplies, tools, equipment and materials used in
the operation,
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repair and maintenance of the Project, or any portion thereof; (v) the cost of
parking area operation, repair, restoration, and maintenance, including, but not
limited to, resurfacing, repainting, restriping, and cleaning; (vi) fees,
charges and other costs reasonably incurred, including management fees (or
amounts in lieu thereof), consulting fees (including but not limited to any
consulting fees incurred in connection with the procurement of insurance), legal
fees and accounting fees, for all persons, contractors and consultants engaged
by Landlord or otherwise reasonably incurred by Landlord in connection with the
management, operation, administration, maintenance and repair of the Project;
(vii) payments under any equipment rental agreements or management agreements
(including the cost of any management fee and the fair rental value of any
office space provided thereunder); (viii) wages, salaries and other compensation
and benefits of all persons to the extent that such persons are engaged in the
operation, maintenance, or security of the Project (provided that such persons
hold a title generally considered to be no higher in rank than Project manager),
or any portion thereof, including, but not limited to, employer's Social
Security taxes, unemployment taxes or insurance, and any other taxes which may
be levied on such wages, salaries, compensation and benefits; provided, that if
any employees of the Project provide services for other projects, then a
prorated portion of such employees' wages, benefits and taxes shall be included
in Operating Expenses based on the portion of their working time devoted to the
Project; (ix) payments, fees or charges under any present and future easement,
license, operating agreement, declaration, development agreement, covenants,
conditions and restrictions, restrictive covenant, Underlying Documents (as
defined in Section 5.2 hereof) or other instruments (including any amendments
and modifications to any such instruments) pertaining to the sharing of costs by
the Project(or any portion thereof) or otherwise, and any costs and expenses of
any governmentally mandated assessments, impositions or charges affecting the
Project including, but not limited to, any sewer connection and/or reconnection
fees or assessments; (x) the cost of operation, repair, maintenance and
replacement of all systems and equipment and components thereof; (xi) the cost
of janitorial services, alarm and security service, window cleaning, trash
removal, repair of wall and floor coverings, ceiling tiles and fixtures in
lobbies, corridors, restrooms and other common or public areas or facilities,
maintenance and replacement of curbs and walkways, repair to roofs and
re-roofing; (xii) amortization (including interest on the unamortized cost at a
rate equal to the "Interest Rate," as that term is defined below) of the cost of
acquiring or the rental expense of personal property used in the maintenance,
operation and repair of the Project, or any portion thereof; (xiii) the cost of
Landlord's office and office operation for the Project and all supplies and
materials used in connection therewith; (xiv) the cost of any capital repairs,
replacements or other improvements made to the Project or other costs incurred
in connection with the Project (A) which are intended to reduce Operating
Expenses in connection with the operation or maintenance of the Project, or any
portion thereof, to the extent of cost savings reasonably anticipated by
Landlord at the time of such expenditure to be incurred in connection therewith,
or (B) that are required under any governmental law or regulation except for
capital repairs, replacements or other improvements to remedy a condition
existing prior to the Lease Commencement Date which an applicable governmental
authority, if it had knowledge of such condition prior to the Lease Commencement
Date and if such condition was not subject to a variance or a
grandfathered/grandmothered code waiver exception, would have then required to
be remedied pursuant to then-current Applicable Laws, in their form existing as
of the Lease Commencement Date; provided, however, that any such permitted
capital expenditure shall be amortized (with interest at a rate equal to the
floating commercial loan rate announced from time
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to time by Bank of America, a national banking association, or its successor, as
its prime rate, plus 2% per annum (the "Interest Rate")) over its reasonable
useful life; (xv) costs, fees, charges or assessments imposed by any federal,
state or local government for fire and police protection, trash removal,
community services, or other services, or street and other traffic improvements,
which do not constitute "Tax Expenses", as that term is defined in Section
4.2.5, below; and (xvi) the cost of operations, maintenance, repairs, rent
credits, subsidies, and other expenditures (whether capital or non-capital in
nature) with respect to the "Child Care Facilities," as that term is defined in
Section 29.15 below, and any lease therefor at the Project or the Adjacent
Project. Only as provided hereinafter in this Section 4.2.4 below in items [i],
[ii] and [iii], in the event and to the extent Landlord incurs costs or expenses
associated with or relating to separate items or categories or subcategories of
Operating Expenses which were not part of Operating Expenses during the entire
Base Year, Operating Expenses for the Base Year shall be deemed increased by the
amounts Landlord would have incurred during the Base Year with respect to such
costs and expenses had such separate items or categories or subcategories of
Operating Expenses been included in Operating Expenses during the entire Base
Year. The foregoing shall only apply as follows: [i] in the event and to the
extent any portion of the Project is covered by a warranty or service agreement
which provides warranty-type protection at any time during the Base Year and is
not covered by such warranty or such warranty-type protection under such service
agreement in a subsequent Expense Year to the same extent, Operating Expenses
for the Base Year shall be deemed increased by the amount Landlord would have
incurred during the Base Year with respect to the items or matters covered by
the subject warranty or warranty-type protection, had such warranty or such
service agreement not been in effect during the Base Year; [ii] any insurance
premium resulting from any new forms of insurance, including earthquake
insurance, shall be deemed to be included in Operating Expenses for the Base
Year; and [iii] parking garage expenses relating to the operation of the Project
parking facility. If Landlord is not furnishing any particular work or service
(the cost of which, if performed by Landlord, would be included in Operating
Expenses) to a tenant who has undertaken to perform such work or service in lieu
of the performance thereof by Landlord, Operating Expenses shall be deemed to be
increased by an amount equal to the additional Operating Expenses which would
reasonably have been incurred during such period by Landlord if it had at its
own expense furnished such work or service to such tenant. If the Project is not
ninety-five percent (95%) occupied during all or a portion of the Base Year or
any Expense Year (with all tenants paying 100% of the rental due and owing by
such tenants), Landlord shall make an appropriate adjustment to the variable
components of Operating Expenses for the Base Year or such Expense Year as
reasonably determined by Landlord employing sound accounting and management
principles, to determine the amount of Operating Expenses that would have been
paid had the Project been ninety-five percent (95%) occupied, and the amount so
determined shall be deemed to have been the amount of Operating Expenses for the
Base Year or such Expense Year. Notwithstanding the foregoing, for purposes of
this Lease, Operating Expenses shall not, however, include (A) except as
otherwise set forth above in this Section 4.2.4, bad-debt expenses, rent loss,
depreciation, interest and amortization on mortgages, reserves of any kind or
ground lease payments, if any; (B) real estate brokers' leasing commissions; (C)
the cost of providing any service directly to and paid directly by any tenant;
(D) any costs expressly excluded from Operating Expenses elsewhere in this
Lease; (E) costs of any items to the extent Landlord receives reimbursement or
would have received reimbursement if Landlord had carried the insurance Landlord
is required to carry pursuant to this Lease or would have been reimbursed if
Landlord had used commercially reasonable efforts
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to collect such amounts, from insurance proceeds (such proceeds to be excluded
from Operating Expenses in the year in which received, except that any
deductible amount under any insurance policy shall be included within Operating
Expenses) or from Tenant or a third party; (F) costs of capital improvements,
except those set forth in items (xii), (xiv) and (xvi); (G) marketing costs,
including leasing commissions, space planning costs and attorneys' fees in
connection with the negotiation and preparation of letters, deal memos, letters
of intent, leases, and subleases and/or assignments incurred in connection with
present or future tenants or other occupants of the Project, including
attorneys' fees and other costs and expenditures incurred in connection with
disputes with present or prospective tenants or other occupants of the Project;
(H) costs, including permit, license and inspection costs, incurred with respect
to the installation of other tenants' or occupants' improvements made for
tenants or other occupants in the Project or incurred in renovating or otherwise
improving, decorating, painting or redecorating vacant space for tenants or
other occupants in the Project; (I) rentals and other related expenses for
leasing a heating, ventilation and air conditioning system, elevators, or other
items (except when needed in connection with normal repairs and maintenance of
the Project) which if purchased, rather than rented, would constitute a capital
improvement not included in Operating Expenses pursuant to this Lease; (J)
depreciation, amortization and interest payments, except as specifically
included in Operating Expenses pursuant to the terms of this Lease and except on
materials, tools, supplies and vendor-type equipment purchased by Landlord to
enable Landlord to supply services Landlord might otherwise contract for with a
third party, where such depreciation, amortization and interest payments would
otherwise have been included in the charge for such third party's services, all
as determined in accordance with sound real estate management principles, and
when depreciation or amortization is permitted or required, the item shall be
amortized over its reasonably anticipated useful life; (K) expenses in
connection with services or other benefits which are not offered to Tenant or
for which Tenant is charged for directly but which are provided to another
tenant or occupant of the Project, without charge; (L) overhead and profit
increment paid to Landlord or to subsidiaries or affiliates of Landlord for
goods and/or services in the Project to the extent the same exceeds the costs of
such by unaffiliated third parties on a competitive basis; (M) advertising and
promotional expenditures, and costs of signs in or on the Project identifying
the owner of the Project or other tenants' signs; (N) to the extent applicable,
electric power costs or other utility costs for which any tenant directly
contracts with the local public service company (but Landlord shall have the
right to "gross up" as if the floor was vacant); (O) tax penalties incurred as a
result of Landlord's negligence, inability or unwillingness to make payments or
file returns when due; (P) costs arising from Landlord's charitable or political
contributions; (Q) costs incurred in connection with the original construction
of the Project or in connection with any major change in the Project, such as
adding or deleting floors; (R) costs associated with the operation of the
business of the partnership or entity which constitutes the Landlord, as the
same are distinguished from the costs of operation of the Project, including
partnership accounting and legal matters, costs of defending any lawsuits with
any mortgagee (except as the actions of the Tenant may be in issue), costs of
selling, syndicating, financing, mortgaging or hypothecating any of the
Landlord's interest in the Project, and costs incurred in connection with any
disputes between Landlord and its employees, between Landlord and Project
management, or between Landlord and other tenants or occupants; (S) the wages
and benefits of any employee who does not devote substantially all of his or her
employed time to the Project unless such wages and benefits are prorated to
reflect time spent on operating and managing the Project vis-a-vis time spent on
matters unrelated to operating and
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managing the Project; provided, that in no event shall Operating Expenses for
purposes of this Lease include wages and/or benefits attributable to personnel
above the level of Project manager or Project engineer; (T) except as set forth
in items (xii) and (xiv), above, late charges, penalties, liquidated damages,
and interest and principal payments on mortgages; (U) amount paid as ground
rental or as rental for the Project by the Landlord; (V) any compensation paid
to clerks, attendants or other persons in commercial concessions (other than the
parking operations) operated by or on behalf of the Landlord; (W) costs, other
than those incurred in ordinary maintenance and repair, for sculpture,
paintings, fountains or other objects of art; (X) fees and reimbursements
payable to Landlord (including its parent organization, subsidiaries and/or
affiliates) or by Landlord for management of the Project (including the
management of the Project parking facilities) which materially exceed the amount
which would normally be paid to a company, in connection with the management of
comparable buildings and/or the parking facilities of such comparable buildings,
with a general reputation for excellence and integrity used at "arms length" and
which is not, directly or indirectly, affiliated with Landlord ("Independent
Company Test"); (Y) rent for any office space occupied by Project management
personnel to the extent the size or rental rate of such office space exceeds the
size or fair market rental value of office space occupied by management
personnel of comparable buildings in the vicinity of the Building, with
adjustment where appropriate for the size of the applicable project; (Z)
Landlord's general corporate overhead and corporate administrative expenses;
(AA) all governmental assessments which are not specifically charged to Tenant
because of what Tenant has done, which can be paid by Landlord in installments,
shall be paid by Landlord in the maximum number of installments permitted by law
(except to the extent inconsistent with the general practice of comparable
buildings) and shall be included as Operating Expenses in the year in which the
assessment installment is actually paid; (BB) costs arising from the gross
negligence or willful misconduct of Landlord or "Landlord Parties," as that term
is defined in Section 10.1 of this Lease; (CC) costs incurred to comply with
Applicable Laws with respect to "Hazardous Material," as that term is defined in
Section 29.27 of this Lease, which was in existence in the Building or on the
Project prior to the Lease Commencement Date, and was of such a nature that a
federal, state or municipal governmental or quasi-governmental authority, if it
had then had knowledge of the presence of such Hazardous Material, in the state,
and under the conditions that it then existed in the Building or on the Project,
would have then required the removal, remediation or other action with respect
to such Hazardous Material; and costs incurred with respect to Hazardous
Material, which Hazardous Material is brought into the Building or onto the
Project after the date hereof by Landlord or any other tenant of the Project or
by anyone other than Tenant or Tenant Parties and is of such a nature, at that
time, that a federal, state or municipal governmental or quasi-governmental
authority, if it had then had knowledge of the presence of such Hazardous
Material, in the state, and under the conditions, that it then exists in the
Building or on the Project, would have then required the removal, remediation or
other action with respect to such Hazardous Material; (DD) any finders fees,
brokerage commissions, job placement costs or job advertising cost, other than
with respect to a receptionist or secretary in the Project office, once per
year; (EE) any above Building standard construction cleanup; (FF) in-house legal
and/or accounting (as opposed to office building bookkeeping) fees; (GG) in the
event any facilities, services or utilities used in connection with the Project
are provided from another building owned or operated by Landlord or vice versa,
the costs incurred by Landlord in connection therewith shall be allocated to
Operating Expenses by Landlord on a reasonably equitable basis; (HH) legal fees
and costs, settlements, judgments or awards paid or incurred
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because of disputes between Landlord and Tenant, Landlord and other tenants or
prospective occupants or prospective tenants/occupants or providers of goods and
services to the Project; (II) costs associated with material portions of the
Common Areas dedicated for the exclusive use of other tenants of the Project,
except to the extent Tenant is given its pro-rata share (rentable square feet in
the Premises in relation to rentable square feet in the Project) of comparable
Common Areas; (JJ) legal fees and costs concerning the negotiation and
preparation of this Lease or any litigation between Landlord and Tenant; (KK)
costs of signs in or on the Building identifying the owner of the Building or
other tenants' signs; (LL) any entertainment, dining or travel expenses for any
purpose; (MM) costs covered by any warranties; (NN) during the initial Lease
Term only, costs of correcting defects in the initial design and construction of
the Project; (OO) costs of magazine and newspaper subscriptions to the extent
not customary purchased at buildings comparable to and in the vicinity of the
Building; and (PP) costs due to violations of the Underlying Documents.
4.2.5 "Tax Expenses" shall mean all federal, state, county, or
local governmental or municipal taxes, fees, charges or other impositions of
every kind and nature, whether general, special, ordinary or extraordinary
(including, without limitation, real estate taxes, general and special
assessments, transit taxes or charges, business or license taxes or fees, annual
or periodic license or use fees, open space charges, housing fund assessments,
leasehold taxes or taxes based upon the receipt of rent, including gross
receipts or sales taxes applicable to the receipt of rent, unless required to be
paid by Tenant, personal property taxes imposed upon the fixtures, machinery,
equipment, apparatus, systems and equipment, appurtenances, furniture and other
personal property used in connection with the Project), which Landlord shall pay
or incur during any Expense Year (without regard to any different fiscal year
used by such governmental or municipal authority) because of or in connection
with the ownership, leasing and operation of the Project.
4.2.5.1 Tax Expenses shall include, without limitation:
(i) Any assessment, tax, fee, levy or charge in
addition to, or in substitution, partially or totally, of any
assessment, tax, fee, levy or charge previously included within the
definition of real property tax, it being acknowledged by Tenant and
Landlord that Proposition 13 was adopted by the voters of the State of
California in the June 1978 election ("Proposition 13") and that
assessments, taxes, fees, levies and charges may be imposed by
governmental agencies for such services as fire protection, street,
sidewalk and road maintenance, conservation, refuse removal and for
other governmental services formerly provided without charge to property
owners or occupants, and, in further recognition of the decrease in the
level and quality of governmental services and amenities as a result of
Proposition 13, Tax Expenses shall, except as otherwise expressly
provided below, also include any governmental or private assessments or
other charges, costs or impositions or the Project's contribution
towards a governmental or private cost-sharing agreement for the purpose
of augmenting or improving the quality of services and amenities
normally provided by governmental agencies. It is the intention of
Tenant and Landlord that all such new and increased assessments, taxes,
fees, levies and charges be included within the definition of Tax
Expenses for purposes of this Lease;
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(ii) Any assessment, tax, fee, levy, or charge
allocable to or measured by the area of the Premises or the rent payable
hereunder, including, without limitation, any business or gross income
tax or excise tax with respect to the receipt of such rent, or upon or
with respect to the possession, leasing, operating, management,
maintenance, alteration, repair, use or occupancy by Tenant of the
Premises, or any portion thereof; and
(iii) Any assessment, tax, fee, levy or charge,
upon this transaction or any document to which Tenant is a party,
creating or transferring an interest or an estate in the Premises.
4.2.5.2 Subject to the terms of Section 4.2.5.3, below any
expenses incurred by Landlord in attempting to protest, reduce or minimize Tax
Expenses if Landlord has a reasonable expectation of achieving a reduction in
excess of the expenses incurred shall be included in Operating Expenses in the
Expense Year such expenses are paid. Subject to the terms of Section 4.2.5.3,
below, tax refunds shall be deducted from Tax Expenses in the Expense Year to
which the same are applicable. All special assessments which may be paid in
installments shall be paid by Landlord in the maximum number of installments
permitted by law and not included in Tax Expenses except in the year in which
the assessment is actually paid; provided, however, that if the prevailing
practice in comparable buildings located in the vicinity of the Project is to
pay such assessments on an early basis, and Landlord pays the same on such
basis, such assessments shall be included in Tax Expenses in the year paid by
Landlord. Subject to the terms of Section 4.2.5.3, below, if Tax Expenses for
the Base Year or any Expense Year are decreased or increased after payment
thereof, in either event for any reason, including, without limitation, error or
reassessment by applicable governmental or municipal authorities, Tenant shall
pay Landlord within thirty (30) days following written demand any resulting
increase and Landlord shall credit Tenant with any resulting decrease in the
amount of Tenant's Share of Direct Expenses for any Expense Year affected by
such change, as applicable.
4.2.5.3 Notwithstanding anything to the contrary set forth
in this Lease, the amount of Tax Expenses for the Base Year and any Expense Year
shall be calculated without taking into account any decreases in real estate
taxes obtained in connection with Proposition 8, and, therefore, the Tax
Expenses in the Base Year and/or an Expense Year may be greater than those
actually incurred by Landlord, but shall, nonetheless, be the Tax Expenses due
under this Lease; provided that (i) any reasonable costs and expenses incurred
by Landlord in securing any Proposition 8 reduction shall not be deducted from
Tax Expenses nor included in Direct Expenses for purposes of this Lease, and
(ii) tax refunds under Proposition 8 shall not be deducted from Tax Expenses nor
refunded to Tenant, but rather shall be the sole property of Landlord. Landlord
and Tenant acknowledge this Section 4.2.5.3 is not intended to in any way affect
(A) the inclusion in Tax Expenses of the statutory two percent (2.0%) annual
increase in Tax Expenses (as such statutory increase may be modified by
subsequent legislation) or (B) the inclusion or exclusion of Tax Expenses
pursuant to the terms of Proposition 13. Notwithstanding the foregoing, upon a
reassessment of the Building and/or Project pursuant to the terms of Proposition
13 (a "Reassessement") occurring after the Base Year which results in a decrease
in Tax Expenses, the component of Tax Expenses for the Base Year which is
attributable to the assessed value of the Building and/or Project under
Proposition 13 prior to the Reassessment (without taking into account any
Proposition 8 reductions) shall be reduced, if at
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all, for the purposes of comparison to all subsequent Expense Years (commencing
with the Expense Year in which the Reassessment takes place) to an amount equal
to the real estate taxes based upon such Reassessment.
4.2.5.4 For purposes of this Lease, Tax Expenses shall be
calculated as if the tenant improvements in the Project were fully constructed
(at a Building standard amount) and the Project (including the land upon which
the Project is located), and all tenant improvements in the Project were fully
assessed for real estate tax purposes, and accordingly, during the portion of
any Expense Year or the Base Year, Tax Expenses shall be deemed to be increased
appropriately.
4.2.5.5 Notwithstanding anything to the contrary contained
in this Section 4.2.5 (except as set forth in Section 4.2.5.1 or levied in whole
or part in lieu of Tax Expenses), there shall be excluded from Tax Expenses (i)
all excess profits taxes, franchise taxes, gift taxes, capital stock taxes,
inheritance and succession taxes, estate taxes, federal and state income taxes,
and other taxes to the extent applicable to Landlord's general or net income (as
opposed to rents, receipts or income attributable to operations at the Project),
(ii) any items included as Operating Expenses, and (iii) any items paid by
Tenant under Section 4.5 of this Lease, and (iv) any tax penalties.
4.2.6 "Tenant's Share" of the Premises shall mean the percentage
set forth in Section 9.2 of the Summary. Tenant's Share was calculated by
multiplying the number of rentable square feet of the Premises by 100 and
dividing the product by the total rentable square feet of office space in the
Building. Subject to the terms of Section 1.3 of this Lease, in the event either
the Premises and/or the Building is expanded or reduced, Tenant's Share shall be
appropriately adjusted, and, as to the Expense Year in which such change occurs,
Tenant's Share for such year shall be determined on the basis of the number of
days during such Expense Year that each such Tenant's Share was in effect.
4.3 Calculation and Payment of Additional Rent.
4.3.1 Calculation of Excess. If for any Expense Year following
the Base Year ending or commencing within the Lease Term, Tenant's Share of
Direct Expenses for such Expense Year exceeds Tenant's Share of the amount of
Direct Expenses applicable to the Base Year, then Tenant shall pay to Landlord,
in the manner set forth in Section 4.3.2, below, and as Additional Rent, an
amount equal to the excess (the "Excess"), if any.
4.3.2 Statement of Actual Direct Expenses and Payment by Tenant.
On or before the first day of April following the end of each Expense Year,
Landlord shall use commercially reasonable efforts to give to Tenant a statement
(the "Statement"), which Statement shall be derived from an audit conducted by
an independent certified public accountant (which accountant is a member of a
nationally recognized accounting firm), which shall state, on a line-item by
line-item basis, the Direct Expenses incurred or accrued for the Base Year or
such preceding Expense Year, as applicable, and which shall indicate the amount,
if any, of any Excess. Upon receipt of the Statement for each Expense Year
ending during the Lease Term, if an Excess is present, Tenant shall pay, with
its next installment of Base Rent due, but in no event longer than thirty (30)
days after receipt of such Statement, the full amount of the
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Excess for such Expense Year, less the amounts, if any, paid during such Expense
Year as "Estimated Excess," as that term is defined in Section 4.3.3, below, and
if Tenant has paid more as Estimated Excess than the Excess (an "Overage"),
Tenant shall receive a credit in the amount of the Overage against the Rent next
coming due under the Lease. The failure of Landlord to timely furnish the
Statement for any Expense Year shall not prejudice Landlord (provided that in
the event that such failure continues for a period of six (6) months following
receipt of notice from Tenant, Tenant may elect to seek specific performance)
from enforcing its rights under this Article 4. Notwithstanding anything above
to the contrary, the failure by Landlord to provide a Statement within
twenty-four (24) months after the expiration of any Expense Year for which such
Statement applies shall be deemed a waiver by Landlord of Landlord's right to
require Tenant to pay any additional Direct Expenses (except as to Tax Expenses,
utility charges, or other governmental charges) for such year to which the
Statement was to have applied. Even though the Lease Term has expired and Tenant
has vacated the Premises, when the final determination is made of Tenant's Share
of the Direct Expenses for the Expense Year in which this Lease terminates,
taking into consideration that the Lease Expiration Date may have occurred prior
to the final day of the applicable Expense Year, if an Excess is present, Tenant
shall pay to Landlord an amount as calculated pursuant to the provisions of
Section 4.3.1 of this Lease within thirty (30) days of Tenant's receipt of an
invoice therefore from Landlord, and if an Overage is present, Landlord shall
refund the amount of the Overage to Tenant within thirty (30) days following
Landlord's determination. The provisions of this Section 4.3.2 shall survive the
expiration or earlier termination of the Lease Term. Notwithstanding the
immediately preceding sentence, Tenant shall not be responsible for Tenant's
Share of any Direct Expenses attributable to any Expense Year which are first
billed to Tenant more than two (2) calendar years after the earlier of the
expiration of the applicable Expense Year or the Lease Expiration Date, provided
that in any event Tenant shall be responsible for Tenant's Share of Direct
Expenses levied by any governmental authority or by any public utility companies
at any time following the Lease Expiration Date which are attributable to any
Expense Year (provided that Landlord delivers Tenant a bill (a "Supplemental
Statement") for such amounts within two (2) years following Landlord's receipt
of the bill therefor).
4.3.3 Statement of Estimated Direct Expenses. In addition,
Landlord shall use commercially reasonable efforts to give Tenant a yearly
expense estimate statement (the "Estimate Statement") which shall, on a
line-item by line-item basis, set forth Landlord's reasonable and good faith
estimate (the "Estimate") of what the total amount of Direct Expenses for the
then-current Expense Year shall be, the amount thereof to be allocated to
tenants of the Building, and the estimated excess (the "Estimated Excess") as
calculated by comparing Direct Expenses, which shall be based upon the Estimate,
to the amount of Direct Expenses applicable to the Base Year, which Estimate
Statement may be revised and reissued by Landlord from time to time. The failure
of Landlord to timely furnish the Estimate Statement for any Expense Year shall
not preclude Landlord from enforcing its rights to collect any Estimated Excess
under this Article 4 (provided that in the event that such failure continues for
a period of six (6) months following receipt of notice from Tenant, Tenant may
elect to seek specific performance), nor shall Landlord be prohibited from
revising any Estimate Statement or Estimated Excess theretofore delivered to the
extent necessary; provided however, any such subsequent revision shall set forth
on a reasonably specific basis any particular expense increase. If pursuant to
the Estimate Statement (or a revision thereof) an Estimated Excess is calculated
for the then-current
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Expense Year, Tenant shall pay, upon the later to occur of its next installment
of Base Rent due or thirty (30) days after receipt of the Estimate Statement, a
fraction of the Estimated Excess (or the increase in the Estimated Excess if
pursuant to a revised Estimate Statement) for the then-current Expense Year
(reduced by any amounts paid pursuant to the last sentence of this Section
4.3.3). Such fraction shall have as its numerator the number of months which
have elapsed in such current Expense Year to the month of such payment, both
months inclusive, and shall have twelve (12) as its denominator. Until a new
Estimate Statement is furnished, Tenant shall pay monthly, with the monthly Base
Rent installments, an amount equal to one-twelfth (1/12) of the total Estimated
Excess set forth in the previous Estimate Statement delivered by Landlord to
Tenant.
4.4 Allocation of Direct Expenses.
4.4.1 In General. Notwithstanding anything to the contrary set
forth in this Article 4, when calculating the Direct Expenses for the Base Year,
such Direct Expenses shall include any increase in Tax Expenses attributable to
special assessments, charges, costs, or fees, or due to modifications or changes
in governmental laws or regulations, including but not limited to the
institution of a split tax roll, and Operating Expenses shall include
market-wide labor-rate increases due to extraordinary circumstances, including,
but not limited to, boycotts and strikes, and utility rate increases due to
extraordinary circumstances including, but not limited to, conservation
surcharges, boycotts, embargoes or other shortages and amortized costs relating
to capital improvements; provided however, that at such time as any such
particular assessments, charges, costs, fees or increases are not longer
included in Operating Expenses, such particular assessments, charges, costs,
fees or increases shall be excluded from the Base Year calculation of Operating
Expenses. Landlord shall (i) not make a profit by charging items to Operating
Expenses that are otherwise also charged to separately to others, and (ii)
Landlord shall not collect Operating Expenses from Tenant and all other
tenants/occupants in the Building in an amount in excess of what Landlord
incurred for the items included in Operating Expenses. Furthermore, in no event
shall the components of Direct Expenses for any Expense Year related to
electrical costs be less than the components of Direct Expenses related to
electrical costs in the Base Year. Any refunds or discounts actually received by
Landlord for any category of Operating Expenses shall reduce Operating Expenses
in the applicable Expense Year (pertaining to such category of Operating
Expenses).
4.4.2 Cost Pools. Landlord shall have the right, from time to
time, to equitably allocate some or all of the Direct Expenses for the Project
among different portions or occupants of the Project (the "Cost Pools"), in
Landlord's discretion. Such Cost Pools may include, but shall not be limited to,
the office space tenants of a building in the Project or of the Project, and the
retail space tenants of a building in the Projector of the Project. The Direct
Expenses within each such Cost Pool shall be allocated and charged to the
tenants within such Cost Pool in an equitable manner.
4.4.3 Method of Allocation. The parties acknowledge that the
Building is a part of a multi-building project and that the costs and expenses
incurred in connection with the Project (i.e. the Direct Expenses) should be
shared between the tenants of the Building and the tenants of the other
buildings in the Project. Accordingly, as set forth in Section 4.2 above, Direct
Expenses (which consists of Operating Expenses and Tax Expenses) are determined
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annually for the Project as a whole, and a portion of the Direct Expenses, which
portion shall be determined by Landlord on an equitable basis, shall be
allocated (based upon the square footage of the Building as compared to the
total square footage of the Project) to the tenants of the Building (as opposed
to the tenants of any other buildings in the Project) and such portion shall be
the Direct Expenses for purposes of this Lease. Such portion of Direct Expenses
allocated to the tenants of the Building shall only include Direct Expenses
attributable solely to the Building and an equitable portion of the Direct
Expenses attributable to the Project as a whole.
4.5 Taxes and Other Charges for Which Tenant Is Directly Responsible.
Tenant shall reimburse Landlord, as Additional Rent, upon demand for any and all
taxes required to be paid by Landlord (except to the extent included in Tax
Expenses by Landlord), excluding state, local and federal personal or corporate
income taxes measured by the net income of Landlord from all sources and estate
and inheritance taxes, whether or not now customary or within the contemplation
of the parties hereto, when:
4.5.1 Said taxes are measured by or reasonably attributable to
the cost or value of Tenant's equipment, furniture, fixtures and other personal
property located in the Premises, or by the cost or value of any leasehold
improvements made in or to the Premises by or for Tenant, to the extent the cost
or value of such leasehold improvements exceeds Thirty-Five Dollars ($35.00) per
rentable square foot of the Premises so improved;
4.5.2 Said taxes are assessed upon or with respect to the
possession, leasing, operation, management, maintenance, alteration, repair, use
or occupancy by Tenant of the Premises, or any portion of the Project
(including, but not limited to, the Project parking facility); or
4.5.3 Said taxes are assessed upon this transaction or any
document to which Tenant is a party creating or transferring an interest or an
estate in the Premises.
4.6 Landlord's Book and Records. Any objection by Tenant to any annual
Statement or Supplemental Statement, or to any information reported therein,
shall be deemed waived if not raised by notice to Landlord within two (2) years
following delivery of such annual Statement or Supplemental Statement. Following
the giving of such notice, Tenant shall have the right during Landlord's regular
business hours and on reasonable prior notice, to inspect, at the location of
Landlord's accounting records, at Tenant's sole cost, Landlord's general ledger
with respect to Direct Expenses for the Expense Year to which such annual
Statement or Supplemental Statement relates. The inspection of Landlord's
general ledger may be conducted by an employee of Tenant, or a reputable
certified public accountant (which accountant is a member of a reputable
independent nationally or regionally recognized certified public accounting
firm, who has had previous experience in reviewing financial operating records
of landlords of office buildings; provided that such accountant is not retained
by Tenant on a contingency fee basis). Any accounting firm retained by Tenant in
connection with this Section 4.6 shall not already be providing primary
accounting services to Tenant, nor shall it have provided primary accounting
services to Tenant within the three (3) calendar years prior to the date of such
audit pursuant to this Section 4.6. The inspection of Landlord's general ledger
must be completed not later than thirty (30) days after the date such general
ledger is made available to Tenant, and any audit report prepared by Tenant's
auditors shall be delivered concurrently to Landlord and Tenant
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within such thirty (30) day period. If, after such inspection of Landlord's
general ledger, Tenant disputes the amount of Direct Expenses for the Expense
Year to which such annual Statement or Supplemental Statement relates, Landlord
and Tenant shall meet and attempt in good faith to resolve the dispute. If the
parties are unable to resolve the dispute within sixty (60) days after
completion of Tenant's inspection, then Tenant shall have the right to submit
the dispute to arbitration pursuant to Section 29.29, below, which right shall
be exercised, if at all, by delivering a notice of election to arbitrate to
Landlord not later than the last day of said sixty (60) day period. The decision
of the "Arbitrator," as that term is defined in Section 29.29.2, below,
including any "Arbitration Award," as that term is defined in Section 29.29.3.2,
below, shall be delivered simultaneously to Landlord and Tenant, and shall be
final and binding upon Landlord and Tenant. If the arbitrator determines that
the amount of Direct Expenses billed to Tenant was incorrect, the appropriate
party shall pay to the other party the deficiency or overpayment, as applicable,
within thirty (30) days following delivery of the decision of the Arbitrator,
with interest at the Interest Rate. All costs and expenses of the arbitration
shall be paid by Tenant unless the final determination in such arbitration is
that Landlord overstated Direct Expenses for the applicable Expense Year by more
than four percent (4%) of the originally reported Direct Expenses, in which case
Landlord shall pay all costs and expenses of the arbitration. Tenant shall keep
any information gained from its inspection of Landlord's general ledger
confidential and shall not disclose it to any other party, except as required by
law. If requested by Landlord, Tenant shall require its employees or agents
inspecting Landlord's general ledger to sign a confidentiality agreement as a
condition of Landlord making Landlord's general ledger available to them. Tenant
understands and agrees that the confidentiality provision set forth herein is of
material importance to Landlord and that any violation thereof shall result in
immediate and irreparable harm to Landlord. Tenant's exercise of its audit
rights shall not relieve Tenant of its obligation to pay disputed amounts, and
Tenant's rights under this section may only be exercised by Tenant if Tenant is
not in default under this Lease beyond any applicable cure period set forth
herein, during the period that Tenant is exercising its rights hereunder. The
payment by Tenant of its Direct Expense payment, or any amount on account
thereof, shall not preclude Tenant from exercising its rights under this
section, but if Tenant fails to timely exercise its audit rights in accordance
with this Section 4.6 (i.e. within two (2) years of Tenant's receipt of such
Statement or Supplemental Statement (as the case may be)), such failure shall be
conclusively deemed to constitute Tenant's approval of Landlord's annual
Statement or Supplemental Statement for the Expense Year in question. There
shall be no more than one (1) audit and/or review by Tenant of Direct Expenses
for any twelve (12) month period. Landlord shall maintain its accounting records
with respect to Direct Expenses during the review period for each Expense Year
and during the pendency of any audit. In no event shall this Section 4.6 be
deemed to allow any review of any of Landlord's records by any subtenant of
Tenant. Tenant agrees that this Section 4.6 shall be the sole method to be used
by Tenant to dispute the amount of any Direct Expenses payable or not payable by
Tenant pursuant to the terms of this Lease, and Tenant hereby waives any other
rights at law or in equity relating thereto.
ARTICLE 5
USE OF PREMISES
5.1 Permitted Use. Tenant shall use the Premises solely for the
"Permitted Use," as that term is defined in Section 13 of the Summary, and
Tenant shall not use or permit the
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Premises to be used for any other purpose or purposes whatsoever without the
prior written consent of Landlord, which may be withheld in Landlord's sole
discretion.
5.2 Prohibited Uses. The uses prohibited under this Lease shall include,
without limitation, use of the Premises or a portion thereof for (i) offices of
any agency or bureau of the United States or any state or political subdivision
thereof; (ii) offices or agencies of any foreign governmental or political
subdivision thereof; (iii) offices of any health care professionals or service
organization; (iv) schools or other training facilities which are not ancillary
to corporate, executive or professional office use; (v) retail (except for
"e-commerce" retail sales) or restaurant uses; or (vi) communications firms such
as radio and/or television stations. Tenant further covenants and agrees that
Tenant shall not use, or suffer or permit any person or persons to use, the
Premises or any part thereof for any use or purpose contrary to the Rules and
Regulations, or in violation of the laws of the United States of America, the
State of California, or the ordinances, regulations or requirements of the local
municipal or county governing body or other lawful authorities having
jurisdiction over the Project. Tenant shall faithfully observe and comply with
the Rules and Regulations set forth in Exhibit B attached hereto. Landlord shall
not be responsible to Tenant for the nonperformance of any of such Rules and
Regulations by or otherwise with respect to the acts or omissions of any other
tenants or occupants of the Project; provided, however, that Landlord shall use
commercially reasonable efforts (but not including the institution of legal
proceedings) to enforce such non-performance against the other occupants and
tenants of the Project, to the extent such non-performance has a material
adverse effect on Tenant's use of or access to the Premises. Tenant shall comply
with, and this Lease shall be subject to, all recorded covenants, conditions,
and restrictions, declarations, development agreements, easements, operating
agreements or other instruments (including any amendments and modifications to
any such instruments) now or hereafter affecting the Project (collectively, the
"Underlying Documents"). Following notice to Tenant, Tenant agrees that Landlord
may, without Tenant's prior consent, modify the terms of the Underlying
Documents without affecting Tenant's subordination of this Lease thereto, so
long as such modifications do not materially, adversely affect Tenant's rights
or materially, adversely increase Tenant's obligations thereunder. Tenant shall
not use or allow another person or entity to use any part of the Premises for
the storage, use, treatment, manufacture or sale of hazardous materials or
substances as defined pursuant to any applicable federal, state or local
governmental or quasi-governmental law, code, ordinance, rule, or regulation.
Landlord acknowledges, however, that Tenant will maintain products in the
Premises which are incidental to the operation of its offices, such as photocopy
supplies, secretarial supplies and limited janitorial supplies, which products
contain chemicals which are categorized as hazardous materials. Landlord agrees
that the use of such products in the Premises in compliance with all applicable
laws and in the manner in which such products are designed to be used shall not
be a violation by Tenant of this Article 5.
ARTICLE 6
SERVICES AND UTILITIES
6.1 Standard Tenant Services. Landlord shall provide the following
services on all days at all times during the Lease Term, unless otherwise stated
below.
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6.1.1 Subject to all governmental rules, regulations and
guidelines applicable thereto, Landlord shall provide heating and air
conditioning ("HVAC") when necessary for normal comfort for normal office use in
the Premises, from Monday through Friday, during the period from 8:00 a.m. to
6:00 p.m., and on Saturdays during the period from 9:00 a.m. to 1:00 p.m.
(collectively, the "Building Hours"), except for Sundays and New Year's Day,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and
any other nationally and locally recognized holidays as designated by Landlord
(collectively, the "Holidays").
6.1.2 Landlord shall provide adequate electrical wiring and
facilities for connection to Tenant's lighting fixtures and incidental use
equipment, provided that the connected electrical load of the incidental use
equipment and lighting fixtures does not exceed an average of five (5) watts per
rentable square foot of the Premises during the Building Hours, calculated on a
monthly basis, and the electricity so furnished will be at a nominal one hundred
twenty (120) volts and no electrical circuit for the supply of such incidental
use equipment will require a current capacity exceeding twenty (20) amperes.
Tenant will design Tenant's electrical system serving any equipment producing
nonlinear electrical loads to accommodate such nonlinear electrical loads,
including, but not limited to, oversizing neutral conductors, derating
transformers and/or providing power-line filters. Engineering plans shall
include a calculation of Tenant's fully connected electrical design load with
and without demand factors and shall indicate the number of watts of unmetered
and submetered loads. Tenant shall bear the cost of replacement of lamps,
starters and ballasts for non-Building standard lighting fixtures within the
Premises.
6.1.3 Landlord shall provide city water from the regular Building
outlets for drinking, lavatory and toilet purposes.
6.1.4 Landlord shall provide janitorial services Monday through
Friday except the date of observation of the Holidays, in and about the
Premises, and window washing services, in a matter at least materially
consistent with buildings comparable to and in the vicinity of the Building.
6.1.5 Landlord shall provide nonexclusive freight elevator
service, subject to scheduling by Landlord.
6.1.6 Landlord shall provide reasonable access control services
for the Building seven (7) days per week, twenty-four (24) hours per day, in a
manner consistent with other buildings comparable to and in the vicinity of the
Building. Notwithstanding the foregoing, Landlord shall in no case be liable for
personal injury or property damage for any error with regard to the admission to
or exclusion from the Building or Project of any person. Tenant may, at its own
expense, install its own security system ("Tenant's Security System") in the
Premises; provided, however, that Tenant shall coordinate the installation and
operation of Tenant's Security System with Landlord to assure that Tenant's
Security System is compatible with Landlord's security system and the Building
systems and equipment, and to the extent that Tenant's Security System is not
compatible with Landlord's security system and the Building systems and
equipment, Tenant shall not be entitled to install or operate the Tenant's
Security System. Tenant shall be solely responsible, at Tenant's sole cost and
expense, for the
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installation, monitoring, operation and removal of Tenant's Security System.
Tenant's Security System shall be installed by Tenant in accordance with terms
of Article 8 of this Lease.
6.1.7 Landlord shall provide nonexclusive automatic elevator
service at all times.
6.2 Overstandard Tenant Use. Tenant shall not, without Landlord's prior
written consent (which consent shall not be unreasonably withheld), use
heat-generating machines, machines other than normal office machines, or
equipment or lighting other than task lighting and building standard lights in
the Premises, to the extent same may materially adversely affect the temperature
otherwise maintained by the air conditioning system or materially increase the
water (unless Tenant agrees to pay for such excess water) normally furnished for
the Premises by Landlord pursuant to the terms of Section 6.1 of this Lease. If
such consent is given, Landlord shall have the right to install supplementary
air conditioning units or other facilities in the Premises, including
supplementary or additional metering devices, and the "Actual Cost," as that
term is defined below, thereof, including the cost of installation, operation
and maintenance, increased wear and tear on existing equipment and other similar
charges, shall be paid by Tenant to Landlord within thirty (30) days following
receipt of Landlord's bill therefor. If Tenant uses water, electricity, heat or
air conditioning in excess of that supplied by Landlord pursuant to Section 6.1
of this Lease, Tenant shall pay to Landlord, within thirty (30) days following
the receipt of a bill therefore, the Actual Cost of such excess consumption
(except with respect to excess HVAC use, in connection with which Tenant shall
pay the amount determined pursuant to the remaining terms of this Section 6.2),
the Actual Cost of the installation, operation, and maintenance of equipment
which is installed in order to supply such excess consumption, and the Actual
cost of the increased wear and tear on existing equipment caused by such excess
consumption; and Landlord may install devices to separately meter any increased
use and in such event Tenant shall pay the increased Actual Cost directly to
Landlord within thirty (30) days following receipt of Landlord's bill therefor,
including, if such metering devices indicate any excess consumption, the Actual
Cost of such additional metering devices. Tenant's use of electricity shall
never exceed the capacity of the feeders to the Project or the risers or wiring
installation, and Tenant may install or use or permit the installation or use of
any computer or electronic data processing equipment in the Premises, without
the prior written consent of Landlord as long as a Design Problem is not
created. If Tenant desires to use heat, ventilation or air conditioning during
hours other than those for which Landlord is obligated to supply such utilities
pursuant to the terms of Section 6.1 of this Lease, Tenant shall give Landlord
reasonable prior notice, of Tenant's desired use and, notwithstanding anything
in this Section 6.2 to the contrary, Landlord shall supply such utilities to
Tenant at the "After Hours HVAC Charge," as that term is defined, below. As used
herein, (i) the "Actual Cost" shall mean the actual cost incurred by Landlord,
as reasonably determined by Landlord, without, however, any charge for profit,
overhead or administration, and (ii) the "After Hours HVAC Charge" shall equal
an amount equal to the sum of (i) $85.00 per hour per floor, and (ii) the amount
of any actual increase in the cost per floor per hour in Landlord providing
Tenant with after hours HVAC which occurs following the date of this Lease.
Amounts payable by Tenant to Landlord for such use of additional utilities shall
be deemed Additional Rent hereunder.
6.3 Interruption of Use. Tenant agrees that Landlord shall not be liable
for damages, by abatement of Rent (except as provided in Section 19.5.2 of this
Lease) or otherwise, for
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failure to furnish or delay in furnishing any service (including telephone and
telecommunication services), or for any diminution in the quality or quantity
thereof, when such failure or delay or diminution is occasioned, in whole or in
part, by repairs, replacements, or improvements, by any strike, lockout or other
labor trouble, by inability to secure electricity, gas, water, or other fuel at
the Project after reasonable effort to do so, by any accident or casualty
whatsoever, by act or default of Tenant or other parties; and such failures or
delays or diminution shall never be deemed to constitute an eviction or
disturbance of Tenant's use and possession of the Premises or relieve Tenant
from paying Rent (except as provided in Section 19.5.2 of this Lease) or
performing any of its obligations under this Lease. Furthermore, Landlord shall
not be liable under any circumstances for a loss of, or injury to, property or
for injury to, or interference with, Tenant's business, including, without
limitation, loss of profits, however occurring, through or in connection with or
incidental to a failure to furnish any of the services or utilities as set forth
in this Article 6. Landlord may comply with voluntary controls or guidelines
promulgated by any governmental entity relating to the use or conservation of
energy, water, gas, light or electricity or the reduction of automobile or other
emissions ("Voluntary Compliance") without creating any liability of Landlord to
Tenant under this Lease, provided that (i) the Premises are not thereby rendered
untenantable and (ii) such controls or guidelines do not materially interfere
with the conduct of Tenant's Permitted Use from the Premises and (iii)
Landlord's compliance with such controls or guidelines is generally consistent
with the practice of landlords of comparable buildings.
6.4 Tenant HVAC System. Tenant, at its sole expense, may install a
supplemental HVAC system in the Premises, for the purpose of servicing the
Premises during hours other than Building Hours or to serve any other particular
Tenant need (the "Tenant HVAC System"). Any such installation shall be in
accordance with the terms of Article 8 of this Lease. If required for such
purpose, Tenant may connect into the Building's condensor water system, if and
to the extent that (i) Tenant's use of condensor water pursuant to this Section
6.4 will not adversely affect the condensor water system or the use thereof by
other tenants of the Project, and (ii) such connection is otherwise approved by
Landlord, which approval shall not be unreasonable withheld, conditioned or
delayed unless a "Design Problem," as that term is defined in Section 8.1,
below, exists. If Tenant connects into the Building's condensor water system
pursuant to the terms of the foregoing sentence, (x) Landlord may install, at
Tenant's reasonable expense, a meter to measure Tenant's use of condensor water,
and (y) Tenant shall reimburse Landlord for Tenant's use of condensor water at
Landlord's actual cost therefor. Tenant shall coordinate the installation and
operation of Tenant's HVAC System with Landlord to ensure that Tenant's HVAC
System is compatible with the systems and equipment of the Building, and to the
extent that Tenant's HVAC System is not compatible with the systems and
equipment of the Building, Tenant shall not be entitled to install or operate
the same. Tenant shall be solely responsible, at Tenant's sole cost and expense,
for the monitoring, operation, replacement and repair of Tenant's HVAC System.
In connection with the Tenant HVAC System, (a) Landlord may, at Tenant's sole
cost and expense, separately meter the electricity utilized by the Tenant HVAC
System, and (b) Tenant shall be responsible for the cost of all electricity
utilized by the Tenant HVAC System. At Landlord's sole option, which option
shall be exercised (if at all) at the time Landlord grants its consent to
Tenant's installation of the Tenant HVAC System (provided that Tenant's request
for approval requests such a designation), Tenant shall remove the Tenant HVAC
System prior to the expiration or earlier termination of this Lease, and repair
any
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damages to the Building caused by such removal, or leave same in the Premises,
in which event the same shall become a part of the realty and belong to Landlord
and shall be surrendered with the Premises upon the expiration or earlier
termination of this Lease.
ARTICLE 7
REPAIRS
7.1 In General. Landlord shall maintain in first-class condition and
operating order and keep in good repair and condition the structural portions of
the Building, including the foundation, floor/ceiling slabs, roof, curtain wall,
exterior glass and mullions, columns, beams, shafts (including elevator shafts),
stairs, parking areas, stairwells, escalators, elevator cabs, plazas, pavement,
sidewalks, curbs, entrances, landscaping, art work, sculptures, men's and
women's public washrooms, Building mechanical, electrical and telephone closets,
and all common and public areas (collectively, "Building Structure") and the
Base Building mechanical, electrical, life safety, plumbing, sprinkler systems
and HVAC systems which were not constructed by Tenant Parties (collectively, the
"Building Systems"). Notwithstanding anything in this Lease to the contrary,
Tenant shall be required to repair the Building Structure and/or the Building
Systems to the extent required because of (i) Tenant's use of the Premises for
other than other than normal and customary business office operations, or (ii)
the negligence or willful misconduct of Tenant or the Tenant Parties, unless and
to the extent such damage is covered by insurance carried or required to be
carried by Landlord pursuant to Article 10 and to which the waiver of
subrogation is applicable (such obligation to the extent applicable to Tenant as
qualified and conditioned will hereinafter be defined as the "BS/BS Exception").
Tenant shall, at Tenant's own expense, pursuant to the terms of this Lease,
including without limitation Article 8 hereof, keep the Premises, including all
"Tenant Improvements," as that term is defined in Section 2.1 of the Tenant Work
Letter, and "Alterations," as that term is defined in Section 8.1, below,
fixtures, and the floor or floors of the Building on which the Premises are
located, in good order, repair and condition at all times during the Lease Term
(but such obligation shall not extend to the Building Structure and the Building
Systems, except pursuant to the BS/BS exception). In addition, except as
provided as part of Landlord's repair obligations set forth above or elsewhere
in this Lease, Tenant shall, at Tenant's own expense, but under the supervision
and subject to the prior approval of Landlord, and within any reasonable period
of time specified by Landlord, pursuant to the terms of this Lease, including
without limitation Article 8 hereof, promptly and adequately repair all damage
to the Premises and replace or repair all damaged, broken, or worn fixtures and
appurtenances (but such obligation shall not extend to the Building Structure
and the Building Systems, except pursuant to the BS/BS Exception); provided
however, that, at Landlord's option, but only if Tenant fails to make such
repairs and replacements, Landlord may, but need not, make such repairs and
replacements, and Tenant shall pay Landlord the cost thereof, sufficient to
reimburse Landlord for all overhead, general conditions, fees and other costs or
expenses arising from Landlord's involvement with such repairs and replacements,
to the extent not duplicative of Direct Expenses and to the extent the work is
not performed by people whose salaries are paid out of Direct Expenses,
forthwith upon being billed for same. Landlord may, but shall not be required
to, enter the Premises (but except during emergencies, Landlord may not enter
"Secured Areas," as that term is defined in Article 27 of this Lease) at all
reasonable times to make such repairs, alterations, improvements or additions to
the Premises or to the Project or to any equipment located in the Project as
Landlord
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shall desire or deem necessary or as Landlord may be required to do by
Applicable Laws; provided, however, except for emergencies, any such entry into
the Premises by Landlord shall be performed in a manner so as not to materially
or adversely interfere with Tenant's use of, or ingress or egress to, the
Premises. Tenant hereby waives any and all rights under and benefits of Section
1 of Section 1932 and Sections 1941 and 1942 of the California Civil Code or
under any similar law, statute, or ordinance now or hereafter in effect.
7.2 Tenant's Right to Make Repairs. Notwithstanding any of the terms and
conditions set forth in this Lease to the contrary, if Tenant provides notice to
Landlord of an event or circumstance which requires the action of Landlord with
respect to repair and/or maintenance of any portion of the Premises which
constitutes a full floor of the Building, including the Building Structure
and/or Building Systems on such floor, which event or circumstance with respect
to the Building Structure or Building Systems materially or adversely affects
the conduct of Tenant's business from the Premises, and Landlord fails to
commence corrective action within a reasonable period of time, given the
circumstances, after the receipt of such notice, but in any event not later than
thirty (30) days after receipt of such notice, then Tenant may proceed to take
the required action upon delivery of an additional ten (10) business days'
notice to Landlord specifying that Tenant is taking such required action, and if
such action was required under the provisions of this Lease to be taken by
Landlord and was not commenced by Landlord within such ten (10) business day
period and thereafter diligently pursued to completion, then Tenant shall be
entitled to prompt reimbursement by Landlord of Tenant's reasonable costs and
expenses in taking such action plus interest thereon at the Interest Rate. In
the event Tenant takes such action, Tenant shall use only those contractors used
by Landlord in the Building for work unless such contractors are unwilling or
unable to perform, or timely perform, such work, in which event Tenant may
utilize the services of any other qualified contractor which normally and
regularly performs similar work in buildings comparable to and in the vicinity
of the Building. Promptly following completion of any work taken by Tenant
pursuant to the provisions of this Section 7.2, Tenant shall deliver a detailed
invoice of the work completed, the materials used and the costs relating
thereto. If Landlord does not deliver a detailed written objection to Tenant
within thirty (30) days after receipt of an invoice from Tenant, then Tenant
shall be entitled to deduct from Rent payable by Tenant under this Lease, the
amount set forth in such invoice. If, however, Landlord delivers to Tenant,
within thirty (30) days after receipt of Tenant's invoice, a written objection
to the payment of such invoice, setting forth with reasonable particularity
Landlord's reasons for its claim that such action did not have to be taken by
Landlord pursuant to the provisions of this Lease or that the charges are
excessive (in which case Landlord shall pay the amount it contends would not
have been excessive), then Tenant shall not then be entitled to such deduction
from Rent and the matter shall proceed to resolution by the selection of an
arbitrator to resolve the dispute, which arbitrator shall be selected and
qualified pursuant to the procedures set forth in Section 29.29 of this Lease.
If Tenant prevails in the arbitration, the amount of the Award (which shall
include interest at the Interest Rate from the time of each expenditure by
Tenant until the date Tenant receives such amount by payment or offset and
attorneys' fees and related costs) may be deducted by Tenant from the Rent next
due and owing under this Lease if Landlord fails to pay such Award within thirty
(30) days after it is so awarded.
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ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 Landlord's Consent to Alterations. Tenant shall have the right,
without Landlord's consent but upon five (5) business days prior notice to
Landlord, to make strictly cosmetic, non-structural additions and alterations
("Cosmetic Alterations") to the Premises that do not (i) involve the expenditure
of more than Thirty-Five Thousand Dollars ($35,000.00) in the aggregate in any
Lease Year; (ii) affect the exterior appearance of the Building or (iii) affect
the Building Systems or the Building Structure. Except in connection with
Cosmetic Alterations, Tenant may make improvements, alterations, additions or
changes to the Premises (collectively, the "Alterations") only upon first
procuring the prior written consent of Landlord to such Alterations, which
consent shall be requested by Tenant not less than ten (10) business days prior
to the commencement thereof, and which consent or approval shall not be
withheld, conditioned or delayed by Landlord, unless a Design Problem exists. A
"Design Problem" is defined as, and will be deemed to exist if such Alteration
will (i) affect the exterior appearance of the Building; (ii) adversely affect
the Building Structure; (iii) adversely affect the Building Systems; (iv)
unreasonably interfere with any other occupant's normal and customary office
operation or (v) fail to comply with Applicable Laws. The construction of the
Tenant Improvements shall be governed by the terms of the Tenant Work Letter,
attached hereto as Exhibit D, and not the terms of this Article 8.
8.2 Manner of Construction. Landlord may impose, as a condition of its
consent to all Alterations or repairs of the Premises or about the Premises,
reasonable requirements (provided that the same shall in any event be consistent
with the terms and conditions of this Lease). If any Alterations will involve
the use of or disturb any Hazardous Material existing in the Premises, Tenant
shall comply with Landlord's rules and regulations concerning such Hazardous
Material; provided, however, if such Hazardous Material existed in the Premises
prior to the Lease Commencement Date, and same was not put therein by Tenant,
Landlord shall pay any incremental extra costs incurred by Tenant in connection
with the Alteration resulting from the presence of the Hazardous Materials.
Tenant shall construct such Alterations and perform such repairs (i) using
licensed and reasonably available contractors selected by Landlord and
reasonably approved by Tenant; (ii) in conformance with any Applicable Laws and
pursuant to a valid building permit, issued by the applicable governmental
authorities, and (iii) in conformance with Landlord's reasonable written
construction rules and regulations. In the event Tenant performs any Alterations
in the Premises which require or give rise to governmentally required changes to
the Base Building pursuant to the terms of Article 24 of the Lease, Landlord
shall make such changes, at Tenant's expense. The "Base Building" shall include
the Building Structure and the Building Systems (inclusive of public restrooms).
All work with respect to any Alterations must be done in a good and workmanlike
manner and diligently prosecuted to completion to the end that the Premises
shall at all times be a complete unit except during the period of work. In
performing the work of any such Alterations, Tenant shall have the work
performed in such manner as not to obstruct access to the Building, the Project,
or the Common Areas for any other tenant of the Project, and as not to obstruct
the business of Landlord or other tenants in the Building and/or the Project.
Tenant shall not use (and upon notice from Landlord shall cease using)
contractors, services, workmen, labor, materials or equipment that, in
Landlord's reasonable judgment, would disturb labor harmony with the workforce
or trades
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engaged in performing other work, labor or services in or about the Building or
the Project Common Areas. Upon completion of any Alterations, at Landlord's
request, Tenant agrees to prepare and Landlord shall execute if factually
correct, and Tenant shall cause a timely Notice of Completion to be recorded in
the office of the Recorder of the County of Los Angeles in accordance with the
terms of Section 3093 of the Civil Code of the State of California or any
successor statute, and Tenant shall deliver to the Project management office a
reproducible copy of the "as built" drawings of the Alterations as well as all
permits, approvals and other documents issued by any governmental agency in
connection with the Alterations.
8.3 Payment for Improvements. Tenant shall reimburse Landlord for
Landlord's reasonable out-of-pocket costs and expenses reasonably incurred in
connection with Landlord's review of any Alterations to the extent such
Alterations could materially adversely affect the Building Structure or the
Building Systems.
8.4 Construction Insurance. In the event that Tenant makes any
Alterations, Tenant shall provide Landlord with evidence that Tenant or Tenant's
contactor carries "Builder's All Risk" insurance in an amount reasonably
approved by Landlord covering the construction of such Alterations, and such
other insurance as Landlord may reasonably require, it being understood and
agreed that all of such Alterations shall be insured by Tenant pursuant to
Article 10 of this Lease immediately upon completion thereof. In addition, in
the event (i) a Transferee of Tenant (other than an Affiliate) makes any
Alterations, or (ii) Tenant makes any Alterations, other than Cosmetic
Alterations, which are reasonably anticipated to cost in excess of One Hundred
Thousand and No/100 Dollars ($100,000.00), Landlord may, in its reasonable
discretion, require Tenant or its Transferee, as the case may be, to obtain a
lien and completion bond or some alternate form of security satisfactory to
Landlord in an amount reasonably sufficient to ensure the lien-free completion
of such Alterations and naming Landlord as a co-obligee.
8.5 Landlord's Property. All Alterations, improvements, fixtures and/or
equipment which may be installed or placed in or about the Premises, and all
signs installed in, on or about the Premises, from time to time, shall be at the
sole cost of Tenant and shall be and become the property of Landlord, except
that Tenant may remove any Alterations, improvements, fixtures and/or equipment
which Tenant can substantiate to Landlord have not been paid for with any tenant
improvement allowance funds provided to Tenant by Landlord, provided Tenant
repairs any damage to the Premises and Building caused by such removal.
Furthermore, if Landlord, as a condition to Landlord's consent to any
Alteration, requires that Tenant remove any Alteration upon the expiration or
early termination of the Lease Term, Landlord may, by written notice to Tenant
prior to the end of the Lease Term, or given upon any earlier termination of
this Lease, require Tenant at Tenant's expense to remove such Alterations and to
repair any damage to the Premises and Building caused by such removal and to
return that portion of the Premises to a Building-standard condition as
reasonably determined by Landlord; provided, however, that Landlord may only
require the removal of any Alterations and other improvements (including the
Tenant Improvements) to the extent the same relate to a non-general office use
of space. If Tenant fails to complete such removal and/or to repair any damage
caused by the removal of any Alterations, Landlord may do so and may charge the
Actual Cost thereof to Tenant.
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ARTICLE 9
COVENANT AGAINST LIENS
Tenant has no authority or power to cause or permit any lien or
encumbrance of any kind whatsoever, whether created by act of Tenant, operation
of law or otherwise, to attach to or be placed upon the Project, Building or
Premises, and any and all liens and encumbrances created by Tenant shall attach
to Tenant's interest only. Landlord shall have the right at all times to post
and keep posted on the Premises any notice which it deems necessary for
protection from such liens. Tenant covenants and agrees not to suffer or permit
any lien of mechanics or materialmen or others to be placed against the Project,
the Building or the Premises with respect to work or services claimed to have
been performed for or materials claimed to have been furnished to Tenant or the
Premises, and, in case of any such lien attaching or notice of any lien, Tenant
reserves the right to contest such lien, provided that Tenant shall, at its sole
cost and expense, provide a bond in accordance with the California Civil Code,
Section 3143. If Tenant does not timely exercise its right to contest such lien,
Tenant covenants and agrees to cause it to be immediately released and removed
of record. Notwithstanding anything to the contrary set forth in this Lease, in
the event that such lien is not released and removed on or before the date
occurring fifteen (15) days after notice of such lien is delivered by Landlord
to Tenant, Landlord, at its sole option, may immediately take all action
necessary to release and remove such lien, without any duty to investigate the
validity thereof, and all sums, costs and expenses, including reasonable
attorneys' fees and costs, incurred by Landlord in connection with such lien
shall be deemed Additional Rent under this Lease and shall be due and payable by
Tenant within thirty (30) days following receipt of Landlord's bill therefor.
ARTICLE 10
INSURANCE
10.1 Indemnification and Waiver. Because Tenant is required to insure
all of its Tenant Improvements and Alterations and its furniture, fixtures and
equipment and because of the requirements to provide waivers of subrogation,
Tenant hereby assumes all risk of damage to property in its Premises, subject to
the provisions of the waiver of subrogation set forth below. Tenant hereby
assumes all risk of injury to persons in, upon or about the Premises from any
cause whatsoever except to the extent caused by the negligence or willful
misconduct of the Landlord Parties. To the extent not prohibited by law,
Landlord, its partners, trustees, ancillary trustees and their respective
officers, directors, shareholders, beneficiaries, agents, servants, employees,
and independent contractors (collectively, the "Landlord Parties") shall not be
liable for any damage either to person or property or resulting from the loss of
use thereof, which damage is sustained by Tenant or by other persons claiming
through Tenant, except for damage to property which Landlord insures or is
required to insure pursuant to the terms and conditions of this Lease and except
for injury to persons to the extent caused by the negligence or willful
misconduct of the Landlord Parties. Tenant shall indemnify, defend, protect, and
hold harmless Landlord Parties from any and all loss, cost, damage, expense and
liability (including without limitation court costs and reasonable attorneys'
fees) (collectively, "Claims") incurred in connection with or arising from any
cause in, on or about the Premises, any acts, omissions or negligence of Tenant
or of any person claiming by, through or under Tenant, partners,
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subpartners, parent organization, affiliate, subsidiary and their respective
officers, directors, contractors, agents, servants, employees, invitees, valets,
guests, or licensees of Tenant and each of them (collectively, "Tenant Parties")
or any such person, in or on the Project, either prior to, during, or after the
expiration of the Lease Term, provided that the terms of the foregoing indemnity
shall not apply to any Claims by any person, company or entity resulting from
the negligence or willful misconduct of the Landlord Parties in connection with
the Landlord Parties' activities in the Building or the Project (except for
damage to the Tenant Improvements, Alterations, and/or Tenant's personal
property, fixtures, furniture and equipment in the Premises, to the extent
Tenant is required to obtain the requisite insurance coverage pursuant to this
Lease for any such Tenant Improvements, Alterations or personal property,
fixtures, furniture or equipment), and Landlord hereby so indemnifies, defends,
protects and holds Tenant and Tenant Parties harmless from any such Claims;
provided further that because Landlord is required to maintain insurance on the
Building and the Project and Tenant compensates Landlord for such insurance as
part of Tenant's Share of Direct Expenses and because of the existence of
waivers of subrogation set forth in Section 10.4 of this Lease, Landlord hereby
indemnifies, defends, protects and holds Tenant harmless from any Claim to any
property to the extent such Claim is covered by such insurance (or would have
been covered if Landlord had carried the insurance required hereunder), even if
resulting from the negligent acts, omissions, or willful misconduct of the
Tenant Parties. Similarly, since Tenant must carry insurance pursuant to this
Article 10 to cover its personal property within the Premises, the Tenant
Improvements, and the Alterations, Tenant hereby indemnifies and holds Landlord
harmless from any Claim to any property within the Premises, to the extent such
Claim is covered by such insurance (or would have been covered if Tenant had
carried the insurance required hereunder), even if resulting from the negligent
acts, omissions or willful misconduct of the Landlord Parties. Pursuant to this
Article 10, Tenant's agreement to indemnify, defend, protect and hold Landlord
harmless, and Landlord's agreement to indemnify, defend, protect and hold Tenant
harmless are not intended to and shall not relieve any insurance carrier of its
obligations under policies required to be carried by Landlord or Tenant,
respectively, pursuant to this Lease to the extent such policies cover the
results of such acts, omissions or willful misconduct. The provisions of this
Section 10.1 shall survive the expiration or sooner termination of this Lease
with respect to any claims or liability occurring prior to such expiration or
termination. Notwithstanding anything in this Lease to the contrary, nothing in
this Lease shall impose any obligations upon Landlord or Tenant to be
responsible or liable for, and each hereby releases the other from all liability
for, consequential damages, other than those consequential damages incurred by
Landlord in connection with a holdover of the Premises by Tenant after the
expiration or earlier termination of this Lease or incurred by Landlord in
connection with any repair, physical construction or improvement work performed
by or on behalf of Tenant in the Project, but Tenant shall not be responsible
for any consequential damages resulting from Landlord's or its contractor's acts
in connection with the completion by Landlord of the tenant improvements in the
Premises pursuant to the Tenant Work Letter.
10.2 Landlord's Fire and Casualty Insurance. Landlord shall insure the
Building (including the Building Structure and Building Systems) and the Project
during the Lease Term against loss or damage due to fire and other casualties
covered within the classification of fire and extended coverage, vandalism
coverage and malicious mischief, sprinkler leakage, water damage and special
extended coverage. Such coverage shall be in such amounts, from such
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companies, and on such other terms and conditions, as Landlord may from time to
time reasonably determine, provided that to the extent consistent with the
practices of landlords of comparable buildings, such coverage shall (i) be for
full replacement of the Building and the Project in compliance with all then
existing Applicable Laws; (ii) provide for rent continuation insurance equal to
not less than twelve (12) months' rent; and (iii) be with companies and have
policies meeting the criteria set forth in Section 10.3.4(iii) in this Lease.
Additionally, at the sole option of Landlord, such insurance coverage may
include the risks of earthquakes and/or flood damage and additional hazards, a
rental loss endorsement and one or more loss payee endorsements in favor of the
holders of any mortgages or deeds of trust encumbering the interest of Landlord
in the Building or the ground or underlying lessors of the Building, or any
portion thereof. Notwithstanding the foregoing provisions of this Section 10.2,
the coverage and amounts of insurance carried by Landlord in connection with the
Building shall at a minimum be comparable to the coverage and amounts of
insurance which are carried by reasonably prudent landlords of comparable
buildings, and Worker's Compensation and Employee's Liability coverage as
required by Applicable Laws. Tenant shall, at Tenant's expense, comply with all
insurance company requirements pertaining to the use of the Premises. If
Tenant's conduct or use of the Premises other than for the Permitted Use causes
any increase in the premium for any insurance policies carried by Landlord, then
Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant's
expense, shall comply with all rules, orders, regulations or requirements of the
American Insurance Association (formerly the National Board of Fire
Underwriters) and with any similar body.
10.3 Tenant's Insurance. Tenant shall maintain the following coverages
in the following amounts.
10.3.1 Commercial General Liability Insurance covering the
insured against claims of bodily injury, personal injury and property damage
arising out of Tenant's operations, assumed liabilities or use of the Premises,
including a Commercial General Liability endorsement covering the insuring
provisions of this Lease and the performance by Tenant of the indemnity
agreements set forth in Section 10.1 of this Lease, for limits of liability not
less than: (i) Bodily Injury and Property Damage Liability - $3,000,000 each
occurrence and $3,000,000 annual aggregate, and (ii) Personal Injury Liability -
$3,000,000 each occurrence and $3,000,000 annual aggregate.
10.3.2 Physical Damage Insurance covering (i) all office
furniture, trade fixtures, office equipment, merchandise and all other items of
Tenant's property on the Premises installed by, for, or at the expense of
Tenant, (ii) the "Tenant Improvements," as that term is defined in the Tenant
Work Letter, and (iii) all other improvements, alterations and additions to the
Premises. Such insurance shall be written on an "all risks" of physical loss or
damage basis, for the guaranteed replacement cost value new without deduction
for depreciation of the covered items and in amounts that meet any co-insurance
clauses of the policies of insurance and shall include a vandalism and malicious
mischief endorsement, sprinkler leakage coverage and earthquake sprinkler
leakage coverage.
10.3.3 Intentionally Deleted
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10.3.4 Form of Policies. The minimum limits of policies of
insurance required of Tenant under this Lease shall in no event limit the
liability of Tenant under this Lease. Such insurance shall (i) name Landlord,
Landlord's Building manager(s) and/or the manager(s) of the Project common
areas, and any other party it so specifies, as an additional insured; (ii)
specifically cover the liability assumed by Tenant under this Lease, including,
but not limited to, Tenant's obligations under Section 10.1 of this Lease; (iii)
be issued by an insurance company having a rating of not less than A-XII in
Best's Insurance Guide or which is otherwise acceptable to Landlord and licensed
to do business in the State of California; (iv) be primary insurance as to all
claims thereunder and provide that any insurance carried by Landlord is excess
and is non-contributing with any insurance requirement of Tenant; (v) provide
that said insurance shall not be canceled or coverage changed unless thirty (30)
days' prior written notice shall have been given to Landlord and any mortgagee
of Landlord; and (vi) contain a cross-liability endorsement or severability of
interest clause acceptable to Landlord. Tenant shall deliver said policy or
policies or certificates thereof to Landlord on or before the Lease Commencement
Date and at least thirty (30) days before the expiration dates thereof.
10.4 Subrogation. Landlord and Tenant agree to have their respective
insurance companies issuing property damage insurance waive any rights of
subrogation that such companies may have against Landlord or Tenant, as the case
may be, so long as the insurance carried by Landlord and Tenant, respectively,
is not invalidated thereby. As long as such waivers of subrogation are contained
in their respective insurance policies, Landlord and Tenant hereby waive any
right that either may have against the other on account of any loss or damage to
their respective property to the extent such loss or damage is insurable under
policies of insurance for fire and all risk coverage, theft, or other similar
insurance. If either party fails to carry the amounts and types of insurance
required to be carried by it pursuant to this Article 10, in addition to any
remedies the other party may have under this Lease, such failure shall be deemed
to be a covenant and agreement by such party to self-insure with respect to the
type and amount of insurance which such party so failed to carry, with full
waiver of subrogation with respect thereto.
10.5 Additional Insurance Obligations. Tenant shall carry and maintain
during the entire Lease Term, at Tenant's sole cost and expense, increased
amounts of the insurance required to be carried by Tenant pursuant to this
Article 10, and such other reasonable types of insurance coverage and in such
reasonable amounts covering the Premises and Tenant's operations therein, as may
be reasonably requested by Landlord, but in no event shall such increased
amounts of insurance or such other reasonable types of insurance be in excess of
that required by landlords of comparable buildings located in the vicinity of
the Project from tenants comparable in size to Tenant. Notwithstanding anything
to the contrary contained in this Lease, in the event of any termination of this
Lease pursuant to Article 11 or Article 13 below, Tenant shall assign and
deliver to Landlord (or to any party designated by Landlord) all insurance
proceeds payable to Tenant under Tenant's insurance required under Section
10.3.2(ii) of this Lease for the unamortized value of the Tenant Improvements
(amortized on a straight-line basis throughout the Lease Term).
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ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 Repair of Damage to Premises by Landlord. To the extent Landlord
does not have actual knowledge of same, Tenant shall promptly notify Landlord of
any damage to the Premises resulting from fire or any other casualty or any
condition existing in the Premises as a result of a fire or other casualty that
would give rise to the terms of this Article 11. If the Premises, the Building
Structure, the Building Systems, or any Common Areas of the Project serving or
providing access to the Premises shall be damaged by fire or other casualty or
be subject to a condition existing as a result of a fire or other casualty,
Landlord shall promptly and diligently, subject to reasonable delays for
insurance adjustment or other matters beyond Landlord's reasonable control, and
subject to all other terms of this Article 11, restore the base, shell, and core
of the Premises (inclusive of the Buildings Structure and Building Systems) and
such Common Areas to substantially the same condition as existed prior to the
casualty, except for modifications required by zoning and building codes and
other Applicable Laws or by the holder of a mortgage on the Building or Project
or any other modifications to the Common Areas reasonably deemed desirable by
Landlord, provided access to the Premises, the Project parking facility, and any
common restrooms serving the Premises shall not be materially impaired.
Notwithstanding any other provision of this Lease, upon the occurrence of any
damage to the Premises, upon notice (the "Landlord Repair Notice") to Tenant
from Landlord, Tenant shall assign to Landlord (or to any party designated by
Landlord) all insurance proceeds payable to Tenant under Tenant's insurance
required under Section 10.3.2(ii) of this Lease, and Landlord shall repair any
injury or damage to the Tenant Improvements installed in the Premises and shall
return such Tenant Improvements to their original condition; provided that if
the cost of such repair by Landlord exceeds the amount of insurance proceeds
received by Landlord from Tenant's insurance carrier, as assigned by Tenant, the
cost of such repairs shall be paid by Tenant to Landlord prior to Landlord's
repair of the damage. Tenant's insurance proceeds shall be disbursed for all
costs and expenses incurred by Landlord in connection with the repair of any
such damage pursuant to a disbursement procedure mutually approved by Landlord
and Tenant. As long as the Tenant Improvements in the Premises are rebuilt,
Tenant shall be entitled to retain any portion of the proceeds of the insurance
described in Sections 10.3.2 (ii) in excess of the cost of such restoration, or
if this Lease terminates, subject to the terms of Section 10.5, above, Tenant
shall receive all such insurance proceeds. In the event that Landlord does not
deliver the Landlord Repair Notice within sixty (60) days following the date the
casualty becomes known to Landlord, Tenant shall, at its sole cost and expense,
repair any injury or damage to the Tenant Improvements installed in the Premises
and shall return such Tenant Improvements to their original condition. Whether
or not Landlord delivers a Landlord Repair Notice, prior to the commencement of
construction, if this Lease does not terminate pursuant to Section 11.2 below or
for any other reason, Tenant shall submit to Landlord, for Landlord's review and
approval, all plans, specifications and working drawings relating thereto, and
Landlord shall select, subject to Tenant's reasonable approval, non-affiliated
independent third party contractors to perform such improvement work. Such
submittal of plans and construction of improvements shall be performed in
substantial compliance with the terms of the Tenant Work Letter as though such
construction of improvements were the initial construction of the Tenant
Improvements. Landlord shall not be liable for any inconvenience or annoyance to
Tenant Parties, or injury to
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Tenant's business resulting in any way from such damage or the repair thereof;
provided however, that if such fire or other casualty shall have damaged the
Premises or Common Areas necessary for Tenant to reasonably conduct Tenant's
Permitted Use, Landlord shall allow Tenant a proportionate abatement of Rent,
during the time and to the extent the Premises are unfit for occupancy for the
Permitted Use under this Lease, and not occupied by Tenant as a result thereof;
provided, further, if the Premises is damaged such that the remaining portion
thereof is not sufficient to allow Tenant to conduct its business operations
from such remaining portion and Tenant does not conduct its business operations
therefrom, Landlord shall allow Tenant a total abatement of Rent during the time
and to the extent the Premises are unfit for occupancy for the Permitted Use,
and not occupied by Tenant as a result of the subject damage. In the event that
Landlord shall not deliver the Landlord Repair Notice, Tenant's right to rent
abatement pursuant to the preceding sentence shall terminate as of the date
Tenant should have completed repairs to the Premises assuming Tenant used
reasonable due diligence in connection therewith.
11.2 Landlord's Option to Repair. Notwithstanding the terms of Section
11.1 of this Lease, Landlord may elect not to rebuild and/or restore the
Premises, the Building and/or the Project, and instead terminate this Lease by
notifying Tenant in writing of such termination within forty-five (45) days
after Landlord's discovery of the damage, such notice to include a termination
date giving Tenant ninety (90) days to vacate the Premises which period will be
extended by any "Force Majeure," as that term is defined in Section 29.13,
below, on a day-for-day basis, but Landlord may so elect only if (a) the
Building or Project shall be damaged by fire or other casualty or cause or be
subject to a condition existing as a result of such a fire or other casualty or
cause, whether or not the Premises are affected, and (b) one or more of the
following conditions in (i), (ii), (iii) or (iv), immediately below, is present:
(i) in Landlord's reasonable judgment, repairs cannot reasonably be completed
within two hundred forty (240) days of the date of discovery of the damage (when
such repairs are made without the payment of overtime or other premiums); (ii)
the holder of any mortgage on the Building and/or the Project, or ground lessor
with respect to the Project and/or the Building shall require that the insurance
proceeds or any portion thereof in excess of the "Landlord Contribution," as
that term is defined, below, be used to retire the mortgage debt, or shall
terminate the ground lease, as the case may be, and (a) Tenant does not agree to
fund the amount in excess of Landlord's Contribution required to complete the
appropriate repairs, (b) Landlord elects not to commence rebuilding or
reconstructing within one (1) year from the date of such damage and destruction,
and (c) Landlord elects to terminate the leases of all other tenants of the
Project similarly affected by the damage and destruction; (iii) the damage is
caused by an earthquake and is not fully covered, except for the Landlord
Contribution, by Landlord's insurance policies (or by the insurance Landlord is
required to carry under this Lease) and Landlord elects not to commence
rebuilding or reconstructing within one (1) year from the date of such damage
and destruction and elects to terminate the leases of all other tenants of the
Project similarly affected by the damage and destruction; or (iv) the damage
occurs during the last twelve (12) months of the Lease Term; provided, however,
that if Landlord does not elect to terminate this Lease pursuant to Landlord's
termination right as provided above, and the repairs cannot, in the reasonable
judgment of a licensed architect or contractor mutually and reasonably agreed
upon by Landlord and Tenant, be completed within two hundred forty (240) days
after the damage or destruction is discovered (which period shall not be subject
to extension as a result of any Force Majeure), Tenant may elect, no earlier
than forty-five (45) days after the date of the damage and not later than ninety
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(90) days after the date of such damage, to terminate this Lease by written
notice to Landlord effective as of the date specified in the notice. At any
time, from time to time, after the date occurring forty-five (45) days after the
date the damage is discovered, Tenant may request that Landlord provide Tenant
with a certificate from the architect or contractor described above setting
forth such architect's or contractor's reasonable opinion of the date of
completion of the repairs and Landlord shall respond to such request within five
(5) business days. For purposes of this Section 11.2, the "Landlord
Contribution" shall initially mean Two Million Dollars ($2,000,000.00);
provided, however, that such amount shall be reduced by an amount equal to
Sixteen Thousand Six Hundred Sixty-Seven and No/100 Dollars ($16,667.00) on the
first day of each month during the Lease Term.
11.3 Waiver of Statutory Provisions. The provisions of this Lease,
including this Article 11, constitute an express agreement between Landlord and
Tenant with respect to any and all damage to, or destruction of, all or any part
of the Premises, the Building, or the Project, and any statute or regulation of
the State of California, including, without limitation, Sections 1932(2) and
1933(4) of the California Civil Code, with respect to any rights or obligations
concerning damage or destruction in the absence of an express agreement between
the parties, and any other statute or regulation, now or hereafter in effect,
shall have no application to this Lease or any damage or destruction to all or
any part of the Premises, the Building, or the Project.
11.4 Damage Near End of Term. In the event that the Premises or the
Building is destroyed or damaged to any substantial extent during the last
twelve (12) months of the Lease Term and, in the reasonable judgment of
Landlord, the damage or destruction to the Premises or Building cannot be
repaired by the date which is six (6) months prior to the Lease Expiration Date,
then notwithstanding anything contained in this Article 11, either Landlord or
Tenant shall have the option to terminate this Lease by giving written notice to
the other party of the exercise of such option within thirty (30) days after
such damage or destruction, in which event this Lease shall cease and terminate
sixty (60) days after the date of such notice, Tenant shall pay the Base Rent
and Additional Rent, properly apportioned up to such date of damage, and both
parties hereto shall thereafter be freed and discharged of all further
obligations hereunder, except as provided for in provisions of this Lease which
by their terms survive the expiration or earlier termination of the Lease Term.
ARTICLE 12
NONWAIVER
Except as otherwise provided for herein as a "deemed waiver," no
provision of this Lease shall be deemed waived by either party hereto unless
expressly waived in a writing signed by such waiving party, and no express
waiver shall affect any provision other than the one specified in such waiver
and that one only for the time and in the manner specifically stated. No receipt
of monies by Landlord from Tenant after the termination of this Lease shall in
any way alter the length of the Lease Term or of Tenant's right of possession
hereunder or after the giving of any notice shall reinstate, continue or extend
the Lease Term or affect any notice given Tenant prior to the receipt of such
monies, it being agreed that after the service of notice or the commencement of
a suit or after final judgment for possession of the Premises, Landlord may
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receive and collect any Rent due, and the payment of said Rent shall not waive
or affect said notice, suit or judgment. Tenant's payment of any Rent hereunder
shall not constitute a waiver by Tenant of any breach or default by Landlord
under this Lease nor shall Landlord's payment of monies due Tenant hereunder
constitute a waiver by Landlord of any breach or default by Tenant under this
Lease. No payment by Tenant or receipt or acceptance by Landlord of a lesser
amount than the correct Rent due 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 an accord and satisfaction, and
Landlord may accept such check or payment without prejudice to Landlord's right
to recover the balance, treat such partial payment as a default or pursue any
other remedy provided in this Lease or at law.
ARTICLE 13
CONDEMNATION
If the whole or any material portion of the Premises, Building, or
Project shall be taken by power of eminent domain or condemned by any competent
authority for any public or quasi-public use or purpose, or if Landlord shall
grant a deed or other instrument in lieu of such taking by eminent domain or
condemnation, Landlord shall have the option to terminate this Lease upon ninety
(90) days' notice, provided such notice is given no later than one hundred
eighty (180) days after the date of such taking, condemnation, reconfiguration,
vacation, deed or other instrument. If more than twenty-five percent (25%) of
the rentable square feet of the Premises is taken, or if access to the Premises
is substantially impaired, or if Tenant cannot conduct its business operations
in substantially the same manner such business operations were conducted prior
to such taking while still retaining substantially the same material rights and
benefits it bargained to receive under this Lease, then Tenant shall have the
option to terminate this Lease upon ninety (90) days' notice, provided such
notice is given no later than one hundred eighty (180) days after the date of
such taking. Landlord shall be entitled to receive the entire award or payment
in connection therewith, except that Tenant shall have the right to file any
separate claim available to Tenant for any taking of Tenant's personal property
and fixtures belonging to Tenant and removable by Tenant upon expiration of the
Lease Term pursuant to the terms of this Lease, and for moving expenses, so long
as such claim is payable separately to Tenant or is otherwise separately
identifiable. Notwithstanding anything in this Article 13 to the contrary,
Landlord and Tenant shall each be entitled to receive fifty percent (50%) of the
"bonus value" of the leasehold estate in connection therewith, which bonus value
shall be equal to the difference between the Rent payable under this Lease and
the sum established by the condemning authority as the award for compensation
for this Lease. All Rent shall be apportioned as of the date of such
termination, or the date of such taking, whichever shall first occur. If any
part of the Premises shall be taken, and this Lease shall not be so terminated,
the Rent shall be proportionately abated. Tenant hereby waives any and all
rights it might otherwise have pursuant to Section 1265.130 of the California
Code of Civil Procedure.
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ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 Transfers. Tenant shall not, without the prior written consent
(except as provided in Section 14.6, below) of Landlord, which consent shall not
be unreasonably withheld, conditioned or delayed, assign, mortgage, pledge,
hypothecate, encumber, or permit any lien to attach to, or otherwise transfer,
this Lease or any interest hereunder, permit any assignment or other such
foregoing transfer of this Lease or any interest hereunder by operation of law,
sublet the Premises or any part thereof, or permit the use of the Premises by
any persons other than Tenant and its employees and contractors other than on a
temporary, occasional basis by persons or entities having a business
relationship with Tenant (all of the foregoing are hereinafter sometimes
referred to collectively as "Transfers" and any person to whom any Transfer is
made or sought to be made is hereinafter sometimes referred to as a
"Transferee"). If Tenant shall desire Landlord's consent to any Transfer, Tenant
shall notify Landlord in writing, which notice (the "Transfer Notice") shall
include (i) the proposed effective date of the Transfer, which shall not be less
than fifteen (15) days after the date of delivery of the Transfer Notice, (ii) a
description of the portion of the Premises to be transferred (the "Subject
Space"), (iii) all of the terms of the proposed Transfer and the consideration
therefor, the name and address of the proposed Transferee, and a copy of all
existing and/or proposed documentation pertaining to the proposed Transfer (but
not any documentation relating solely to the sale (if any) of Tenant's business
to such Transferee), including all existing operative documents to be executed
to evidence such Transfer or the agreements incidental or related to such
Transfer, and, upon request from Landlord, Tenant's good faith estimated
calculation of the "Transfer Premium," if any, as that term is defined in
Section 14.3, below, in connection with such Transfer, (iv) financial
information of the proposed Transferee certified by an officer, partner or owner
thereof, reasonably necessary to determine if such Transferee is a party of
reasonable financial worth and/or financial stability in light of the
responsibilities to be undertaken in connection with the proposed Transfer on
the date consent is requested, business credit, bank and personal references and
history of the proposed Transferee, (v) information with regard to the nature of
the business such proposed Transferee intends to operate in the Subject Space
and how long the proposed Transferee has operated such business, and (vi) an
executed estoppel certificate from Tenant in the form attached hereto as Exhibit
E. Landlord shall approve or disapprove of the proposed Transfer in accordance
with Section 14.2, below, within fifteen (15) days (the "Review Period") after
Landlord's receipt of the applicable Transfer Notice. In the event that Landlord
fails to notify Tenant in writing of such approval or disapproval within such
Review Period Landlord shall be deemed to have approved such Transfer. Any
Transfer requiring Landlord's consent hereunder which is made without Landlord's
prior written consent shall, at Landlord's option, be null, void and of no
effect. Whether or not Landlord shall grant consent, Tenant shall , within
thirty (30) days after written request by Landlord, reimburse Landlord for all
reasonable and actual out-of-pocket costs and expenses incurred by Landlord in
connection with its review of a proposed Transfer, provided that such cost and
expenses shall not exceed One Thousand Five Hundred Dollars ($1,500.00) for a
Transfer in the ordinary course of business.
14.2 Landlord's Consent. Landlord shall not unreasonably withhold,
condition or delay its consent to any proposed Transfer of the Subject Space to
the Transferee on the terms specified in the Transfer Notice. The parties hereby
agree that it shall be deemed to be
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reasonable under this Lease and under any Applicable Law for Landlord to
withhold consent to any proposed Transfer where one or more of the following
apply, without limitation as to other reasonable grounds for withholding
consent:
14.2.1 The Transferee is of a character or reputation or engaged
in a business which is not consistent with the quality of the Project as
reflected by the then-existing tenants of the Project with respect to comparable
space;
14.2.2 The Transferee is either a governmental agency or
instrumentality thereof (i) which is that of a foreign country, (ii) which is of
a character or reputation, is engaged in a business, or is of, or is associated
with, a political orientation or faction, which is inconsistent with the quality
of the Project, or which would otherwise reasonably offend a landlord of a
comparable building located in the vicinity of the Project, (iii) which is
capable of exercising the power of eminent domain or condemnation, or (iv) which
would significantly increase the human traffic in the Premises, the Building,
and/or the Project;
14.2.3 The Transferee's intended use of the Premises is
inconsistent with the Permitted Use;
14.2.4 The Transfer occurs during the period from the Lease
Commencement Date until the earlier of (i) the second (2nd) anniversary of the
Lease Commencement Date or (ii) the date at least ninety percent (90%) of the
rentable square feet of the Project is leased, and the rent charged by Tenant to
such Transferee during the term of such Transfer (the "TRANSFEREE'S RENT"),
calculated using a present value analysis, is less than ninety percent (90%) of
the rent being quoted by Landlord at the time of such Transfer for comparable
space in the Project for a comparable term (the "QUOTED RENT"), calculated using
a present value analysis, provided that Landlord has space in the Project
reasonably capable of satisfying the proposed Transferee's space requirement;
14.2.5 The Transferee is not a party of reasonable financial
worth and/or financial stability in light of the responsibilities involved
pursuant to the Transfer on the date consent is requested;
14.2.6 The proposed Transfer would cause Landlord to be in
violation of an exclusive right granted by Landlord in good faith in another
lease or agreement to which Landlord is a party, or would give an occupant of
the Project a right to cancel its lease as a result of the proposed use to be
made of the space by the sublessee or assignee, provided that upon request from
Tenant, Landlord shall provide notice of all applicable exclusive rights; or
14.2.7 Either the proposed Transferee, or any person or entity
which directly or indirectly, controls, is controlled by, or is under common
control with, the proposed Transferee, (i) occupies space in the Project at the
time of the request for consent, (ii) is negotiating with Landlord to lease
space in the Project at such time, or (iii) has negotiated with Landlord during
the three (3)-month period immediately preceding the Transfer Notice.
Notwithstanding anything to the contrary in this Lease, if Tenant or any
proposed Transferee claims that Landlord has unreasonably withheld, conditioned,
or delayed its consent
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under Section 14.2 or otherwise has breached or acted unreasonably under this
Article 14, Tenant hereby waives any right and law or in equity to terminate
this Lease, on its own behalf and, to the extent permitted under all applicable
laws, on behalf of the proposed Transferee, but Tenant retains the right to sue
Landlord for any damages suffered by Tenant and/or for specific performance if
Landlord unreasonably withholds, conditions or delays it consent to a proposed
Transfer (other than damages or injury to, or interference with, Tenant's
business, including without limitation, loss of profits, however occurring, but
not excluding loss of profits Tenant would have been able to claim pursuant to
Section 14.3 of this Lease). If Landlord consents to any Transfer pursuant to
the terms of this Section 14.2 (and does not exercise any recapture rights
Landlord may have under Section 14.4 of this Lease), Tenant may within nine (9)
months after Landlord's consent, but not later than the expiration of said
nine-month period, enter into such Transfer of the Premises or portion thereof,
upon substantially the same terms and conditions as are set forth in the
Transfer Notice furnished by Tenant to Landlord pursuant to Section 14.1 of this
Lease, provided that if there are any changes in the terms and conditions from
those specified in the Transfer Notice (i) such that Landlord would initially
have been entitled to refuse its consent to such Transfer under this Section
14.2, or (ii) which would cause the proposed Transfer to be materially more
favorable to the Transferee than the terms set forth in Tenant's original
Transfer Notice, Tenant shall again submit the Transfer to Landlord for its
approval and other action under this Article 14 (including Landlord's right of
recapture, if any, under Section 14.4 of this Lease).
14.3 Transfer Premium. If Landlord consents to a Transfer, as a
condition thereto which the parties hereby agree is reasonable, Tenant shall pay
to Landlord fifty percent (50%) of any "Transfer Premium," as that term is
defined in this Section 14.3, actually received by Tenant from such Transferee.
"TRANSFER PREMIUM" shall mean all rent, additional rent or other consideration
payable (in lieu of or in addition to rent) by such Transferee in connection
with the Transfer (as opposed to the sale of Tenant's business) in excess of the
Rent and Additional Rent payable by Tenant under this Lease during the term of
the Transfer, on a per rentable square foot basis if less than all of the
Premises is transferred, after deducting the reasonable expenses incurred by
Tenant for (i) any changes, alterations and improvements to the Premises in
connection with the Transfer, (ii) any brokerage commissions in connection with
the Transfer, (iii) any costs to buy-out or takeover the previous lease of a
Transferee; (iv) any improvement allowance or other economic concessions (space
planning allowance, moving expenses, etc.) paid by Tenant to Transferee in
connection with such Transfer; (v) reasonable attorneys' fees incurred by Tenant
(including attorneys' fees paid to Landlord) in connection with the Transfer;
and (vi) the aggregate amount of Base Rent and Additional Rent paid by Tenant
during the period prior to the commencement of the term of the transfer during
which Tenant does not occupy the subject space, commencing on and after the
Downtime State Date (as defined below) (collectively, "Subleasing Costs"). The
"Downtime Start Date" shall mean the later of (A) the date which Tenant vacates
and does not reoccupy the subject space and delivers notice of the same to
Landlord, and (B) the date Tenant enters into a listing agreement for the
subject space with a reputable broker, and provides Landlord with notice
thereof; provided, however, in no event will Subleasing Costs for space not yet
occupied by Tenant (and not occupied by Tenant merely as a subterfuge of this
provision) include any Base Rent and Additional Rent paid by Tenant to Landlord
for a period of time in excess of six (6) months. "Transfer Premium" shall also
include, but not be limited to, key money and bonus money or other cash
consideration for
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rent or in lieu of rent paid by Transferee to Tenant in connection with such
Transfer, and any payment in excess of fair market value for services rendered
by Tenant to Transferee or for assets, fixtures, inventory, equipment, or
furniture transferred by Tenant to Transferee in connection with such Transfer.
In the calculations of the Rent (as it relates to the Transfer Premium
calculated under this Section 14.3), and the Transferee's Rent and Quoted Rent
under Section 14.2 of this Lease, the Rent paid during each annual period for
the Subject Space, and the Transferee's Rent and the Quoted Rent, shall be
computed after adjusting such rent to the actual effective rent to be paid,
taking into consideration any and all leasehold concessions granted in
connection therewith, including, but not limited to, any rent credit and tenant
improvement allowance. For purposes of calculating any such effective rent, all
such concessions shall be amortized on a straight-line basis over the relevant
term. Notwithstanding anything contained herein to the contrary, under no
circumstances shall Landlord be paid any Transfer Premium until Tenant has
recovered all Subleasing Costs for such Transferred Space, it being understood
that if in any year the gross revenues, less the deductions set forth and
included in Subleasing Costs, are less than any and all costs actually paid in
assigning or subletting the affected space (collectively, "Transaction Costs"),
the amount of the excess Transaction Costs shall be carried over to the next
year and then deducted from net revenues with the procedure repeated until a
Transfer Premium is achieved.
14.4 Landlord's Option as to Subject Space. Notwithstanding anything to
the contrary contained in this Article 14, in the event Tenant contemplates a
Transfer of all or a portion of the Premises, Tenant shall give Landlord notice
(the "Intention to Transfer Notice") of such contemplated Transfer (whether or
not the contemplated Transferee or the terms of such contemplated Transfer have
been determined). The Intention to Transfer Notice shall specify the portion of
and amount of rentable square feet of the Premises which Tenant intends to
Transfer (the "Contemplated Transfer Space"), the contemplated date of
commencement of the Contemplated Transfer (the "Contemplated Effective Date"),
and the contemplated length of the term of such contemplated Transfer, and shall
specify that such Intention to Transfer Notice is delivered to Landlord pursuant
to this Section 14.4 in order to allow Landlord to elect to recapture the
Contemplated Transfer Space for the term set forth in the Intention to Transfer
Notice. Thereafter, Landlord shall have the option, by giving written notice to
Tenant within fifteen (15) days after receipt of any Intention to Transfer
Notice, to recapture the Contemplated Transfer Space. Such recapture shall
cancel and terminate this Lease with respect to such Contemplated Transfer Space
as of the Contemplated Effective Date until the last day of the term of the
contemplated Transfer as set forth in the Intention to Transfer Notice. In the
event of a recapture by Landlord, if this Lease shall be canceled with respect
to less than the entire Premises, the Rent reserved herein shall be prorated on
the basis of the number of rentable square feet retained by Tenant in proportion
to the number of rentable square feet contained in the Premises, and this Lease
as so amended shall continue thereafter in full force and effect, and upon
request of either party, the parties shall execute written confirmation of the
same. If Landlord declines, or fails to elect in a timely manner, to recapture
such Contemplated Transfer Space under this Section 14.4, then, subject to the
other terms of this Article 14, for a period of nine (9) months (the "Nine Month
Period") commencing on the last day of such fifteen (15) day period, Landlord
shall not have any right to recapture the Contemplated Transfer Space with
respect to any Transfer made during the Nine Month Period, provided that any
such Transfer is substantially on the terms set forth in the Intention to
Transfer Notice; provided however, that
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any such Transfer shall be subject to the remaining terms of this Article 14. If
such a Transfer is not so consummated within the Nine Month Period (or if a
Transfer is so consummated, then upon the expiration of the term of any Transfer
of such Contemplated Transfer Space consummated within such Nine Month Period),
Tenant shall again be required to submit a new Intention to Transfer Notice to
Landlord with respect any contemplated Transfer, as provided above in this
Section 14.4. If such a Transfer is not so consummated within the Nine Month
Period (or if a Transfer is so consummated, then upon the expiration of the term
of any Transfer of such Contemplated Transfer Space consummated within such Nine
Month Period), Tenant shall again be required to submit a new Intention to
Transfer Notice to Landlord with respect any contemplated Transfer, as provided
above in this Section 14.4. If Landlord exercises its option to recapture any
such space from Tenant, (i) Landlord shall be responsible for the construction
of any partitions which Landlord reasonably deems necessary to separate such
space from the remainder of the Premises, (ii) Landlord and any transferee of
Landlord with respect to such space shall have the right to use, in common with
Tenant, all lavatories, corridors and lobbies which are within the Premises and
which are reasonably required for the use of such space, and (iii) in the case
of a recapture by Landlord with respect to less than the entire Premises for
less than the entire remaining Lease Term, Landlord shall, upon the expiration
of the term of such recapture, return such recaptured space to Tenant in
substantially the same (or better) condition as received by Landlord, reasonable
wear and tear and damage by casualty and condemnation excepted.
14.5 Effect of Transfer. If Landlord consents to a Transfer, (i) the
terms and conditions of this Lease shall in no way be deemed to have been waived
or modified, (ii) such consent shall not be deemed consent to any further
Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to
Landlord, promptly after execution, an original executed copy of all
documentation pertaining to the Transfer in form reasonably acceptable to
Landlord, (iv) Tenant shall furnish upon Landlord's request a complete
statement, certified by an independent certified public accountant, or Tenant's
chief financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlord's consent, shall relieve Tenant or any
guarantor of the Lease from liability under this Lease. Landlord or its
authorized representatives shall have the right at all reasonable times to audit
the books, records and papers of Tenant relating to any Transfer, and shall have
the right to make copies thereof. If the Transfer Premium respecting any
Transfer shall be found understated, Tenant shall, within thirty (30) days after
demand, pay the deficiency and, if understated by more than four percent (4%),
pay Landlord's costs of such audit.
14.6 Non-Transfers. Notwithstanding anything to the contrary contained
in this Article 14, an assignment or subletting of all or a portion of the
Premises to (a) an affiliate of Tenant (an entity which is controlled by,
controls or is under common control, as such term is defined in California
General Corporations Code ("CGCC") Sections 160 and 5045, with, Tenant); (b) an
entity which merges with or acquires or is acquired by, Tenant or a parent of
Tenant, as defined in CGCC Sections 175 and 5064, or a subsidiary, as defined in
CGCC Sections 189 and 5073, of Tenant's parent or Affiliate, (c) a transferee of
substantially all of the assets of Tenant , or (d) any transaction or series of
transactions in which more than 50% of the voting power of Tenant is disposed of
in connection with venture capital or similar funding arrangements (a, b c and d
to be collectively be referred to herein as an "Affiliate") along with
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any other entity which will qualify as an "affiliate" under CGCC 150 and 5031,
shall not be deemed a Transfer under this Article 14 (and shall not entitle
Landlord to any Transfer Premium), provided that at least five (5) business days
prior to such assignment or sublease (i) Tenant provides Landlord with
reasonable evidence, including a certified audit opinion of an independent
certified public accountant with a regional or national reputation, that any
such entity maintains a net worth, calculated in accordance with generally
accepted accounting principals, consistently applied ("Net Worth"), equal to or
greater than the Net Worth of Tenant either immediately prior to the time of
such assignment or sublease; or at the time this Lease is executed; (ii) Tenant
notifies Landlord of any such assignment or sublease and promptly supplies
Landlord with any documents or information requested by Landlord regarding such
assignment or sublease or such Affiliate; and (iii) such assignment or sublease
is not a subterfuge by Tenant to avoid its obligations under this Lease.
14.7 Permitted Subleases. Notwithstanding any contrary provision of this
Article 14, Tenant shall have the right without the payment of a Transfer
Premium and without the receipt of Landlord's consent, but on prior written
notice to Landlord, to sublease up to ten thousand (10,000) rentable square feet
of the Premises, in the aggregate, subject to the following conditions: (i) all
such individuals or entities shall be of a character and reputation consistent
with the quality of the Building and the Project (and shall not violate the
terms of Section 14.2.6, above); and (ii) such sublease shall not be a
subterfuge by Tenant to avoid its obligations under this Lease or the
restrictions on Transfers pursuant to this Article 14. Tenant shall promptly
supply Landlord with any documents or information reasonably requested by
Landlord regarding any such sublease. Any sublease permitted under this Section
14.8 shall not be deemed a Transfer under this Article 14. Notwithstanding the
foregoing, no such sublease shall relieve Tenant from any liability under this
Lease.
14.8 Landlord's Recognition of Transfers Upon Lease Termination. At
Tenant's request, Landlord shall, concurrently with the granting of Landlord's
consent to the Sublease, as that term is defined below, execute a commercially
reasonable recognition agreement (the "Recognition Agreement") in favor of a
Transferee who is a subtenant of Tenant for all of the Premises (the
"Subtenant"), which provides that in the event this Lease is terminated,
Landlord shall recognize the sublease between such Subtenant and Tenant (the
"Sublease") and not disturb such Subtenant's possession of the Premises or
applicable portion thereof (the "Sublease Space"), due to such termination;
provided that (i) at the time of Tenant's request for Landlord's execution of
the Recognition Agreement, such Transfer contains the same economic Rent set
forth in this Lease, or the Sublease provides that upon a default by Tenant
under this Lease which results in the termination of this Lease, the Subtenant
receiving the Recognition Agreement shall be subject to the same terms and
conditions set forth in this Lease; provided, however, the economic terms of
such Transfer may be more favorable to Landlord than those set forth in this
Lease; (ii) the Sublease Space consists of not less than the entire rentable
area of the Premises; (iii) Landlord shall not be liable for any act or omission
of Tenant; (iv) Landlord shall not be subject to any offsets or defenses which
the Subtenant might have as to Tenant or to any claims for damages against
Tenant, nor shall Landlord be obligated to fund to, or for the benefit of,
Subtenant, any undisbursed tenant improvement or refurbishment allowance or
other allowances or monetary concessions unless same has been granted to Tenant
and transferred to Subtenant; (v) Landlord shall not be required or obligated to
credit the Subtenant with any rent or additional rent paid by the Subtenant to
Tenant; (vi) Landlord shall not be bound by any provisions of the
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Sublease which are inconsistent with the terms and conditions of this Lease;
(vii) such recognition shall be effective upon, and Landlord shall be
responsible for performance of only those covenants and obligations of Tenant
pursuant to the Sublease accruing after, the termination of this Lease; (viii)
as a condition to Landlord's obligation to enter into the Recognition Agreement,
Landlord shall have the right to reasonably approve the creditworthiness and
financial strength of the Subtenant, which reasonable approval shall be based
upon the creditworthiness and financial strength then generally required by
Landlord and landlords of comparable buildings of a new tenant who is leasing
space of a rentable area comparable to the rentable area of the Sublease Space
for a term equal to the remaining Lease Term, who is granted concessions
comparable to the concessions, if any, granted to the Subtenant, and who is
assuming the monetary obligations under the Sublease; and (ix) the Subtenant
shall make full and complete attornment to Landlord, as lessor, pursuant to a
written agreement executed by Landlord and the Subtenant, so as to establish
direct privity of contract between Landlord and the Subtenant with the same
force and effect as though the Sublease was originally made directly between
Landlord and the Subtenant. Upon Landlord's written request given any time after
the termination of this Lease, the Subtenant shall execute a lease for the space
subject to the applicable Sublease upon the same terms and conditions as set
forth in the Recognition Agreement. In the event Landlord enters into a
Recognition Agreement with any particular Subtenant pursuant to the provisions
of this Section 14.8, Tenant hereby acknowledges and agrees that, for purposes
of calculating the damages due Landlord following Tenant's breach and Landlord's
termination of this Lease, with respect to any such Sublease Space, Landlord
shall be deemed to have adequately mitigated its damages in accordance with
Applicable Laws for the portion of the Premises covered by an applicable
Recognition Agreement.
ARTICLE 15
SURRENDER OF PREMISES;
REMOVAL OF TRADE FIXTURES
15.1 Surrender of Premises. No act or thing done by any Landlord Parties
or Tenant Parties during the Lease Term shall be deemed to constitute an
acceptance by Landlord of a surrender of the Premises unless such intent is
specifically acknowledged in a writing signed by Landlord. The delivery of keys
to the Premises to any Landlord Parties shall not constitute a surrender of the
Premises or effect a termination of this Lease, whether or not the keys are
thereafter retained by Landlord, and notwithstanding such delivery Tenant shall
be entitled to the return of such keys at any reasonable time upon request until
this Lease shall have been terminated. The voluntary or other surrender of this
Lease by Tenant, whether accepted by Landlord or not, or a mutual termination
hereof, shall not work a merger, and at the option of Landlord shall operate as
an assignment to Landlord of all subleases or subtenancies affecting the
Premises.
15.2 Removal of Tenant Property by Tenant. All articles of personal
property and all business and trade fixtures, machinery and equipment, furniture
and movable partitions owned by Tenant or installed by Tenant at its expense in
the Premises, which items are not a part of the tenant improvements installed in
the Premises, shall remain the property of Tenant, and may be removed by Tenant
at any time during the Lease Term as long as Tenant is not in default under this
Lease with any applicable cure period having expired. Upon the expiration of the
Lease
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Term, or upon any earlier termination of this Lease, Tenant shall, subject to
the provisions of this Article 15, quit and surrender possession of the Premises
to Landlord in as good order and condition as when Tenant took possession and as
thereafter improved by Landlord and/or Tenant, reasonable wear and tear, damage
by casualty, and repairs which are specifically made the responsibility of
Landlord hereunder excepted. Upon such expiration or termination, Tenant shall,
without expense to Landlord, remove or cause to be removed from the Premises all
debris and rubbish, and such items of furniture, equipment, free-standing
cabinet work, and other articles of personal property owned by Tenant or
installed or placed by Tenant at its expense in the Premises, and such similar
articles of any other persons claiming under Tenant, as Landlord may, in its
sole discretion, require to be removed, and Tenant shall repair at its own
expense all damage to the Premises and Building resulting from such removal.
Landlord and Tenant acknowledge and agree that nothing in this Section 15.2
shall prohibit Tenant from removing any furniture, free-standing equipment,
free-standing cabinet work and other articles of personal property owned by
Tenant or installed or placed by Tenant at its expense in the Premises, at any
time throughout the Lease Term.
ARTICLE 16
HOLDING OVER
If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, such tenancy shall be from month-to-month only, and shall
not constitute a renewal hereof or an extension for any further term, and in
such case Base Rent shall be payable at a monthly rate equal to the product of
(i) the Base Rent applicable during the last rental period of the Lease Term
under this Lease, and (ii) one hundred fifty percent (150%). Such month-to-month
tenancy shall be subject to every other term, covenant and agreement contained
herein. Nothing contained in this Article 16 shall be construed as consent by
Landlord to any holding over by Tenant, and Landlord expressly reserves the
right to require Tenant to surrender possession of the Premises to Landlord as
provided in this Lease upon the expiration or other termination of this Lease.
The provisions of this Article 16 shall not be deemed to limit or constitute a
waiver of any other rights or remedies of Landlord provided herein or at law.
Tenant acknowledges that if Tenant holds over without Landlord's consent, such
holding over may compromise or otherwise affect Landlord's ability to enter into
new leases with prospective tenants regarding the Premises. Therefore, if Tenant
fails to surrender the Premises upon the termination or expiration of this
Lease, in addition to any other liabilities to Landlord accruing therefrom,
Tenant shall protect, defend, indemnify and hold Landlord harmless from all
loss, costs (including reasonable attorneys' fees) and liability resulting from
such failure, including, without limiting the generality of the foregoing, any
claims made by any succeeding tenant founded upon such failure to surrender, and
any losses suffered by Landlord, including lost profits, resulting from such
failure to surrender.
ARTICLE 17
ESTOPPEL CERTIFICATES
Within ten (10) business days following a request in writing by Landlord
or Tenant, Tenant or Landlord, as the case may be, shall execute and deliver to
the requesting party (the
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"Requesting Party") an estoppel certificate, which shall be substantially in the
form of Exhibit E, attached hereto, (or such other commercially reasonable form
as may be required by any prospective mortgagee or purchaser of the Building,
the Project, or any portion thereof, or any assignee or sublessee), indicating
therein any exceptions thereto that may exist at that time, and shall also
contain any other information reasonably requested by the Requesting Party or
Landlord's mortgagee or prospective mortgagee or Tenant's Transferee, as the
case may be. Appropriate modification shall be made to Exhibit E when Tenant is
the Requesting Party. Landlord or Tenant shall execute and deliver whatever
other instruments may be reasonably required for such purposes. The failure of
Landlord or Tenant, as the case may be, to timely execute, acknowledge and
deliver such estoppel certificate or other instruments upon five (5) additional
business days notice from the Requesting Party advising the other party of the
consequences of a non-response, shall constitute an acceptance of the Premises
and an acknowledgment by the other party that statements included in the
estoppel certificate are true and correct, without exception. At any time during
the Lease Term, Landlord may require Tenant to provide Landlord with a current
financial statement and financial statements of the two (2) years prior to the
current financial statement year; provided, however, as a condition precedent to
Tenant's delivery, Landlord or the Landlord Party requesting such information
shall execute a commercially reasonable form of confidentiality agreement with
respect thereto. Such statements shall be prepared in accordance with generally
accepted accounting principles and, if such is the normal practice of Tenant,
shall be audited by an independent certified public accountant.
ARTICLE 18
SUBORDINATION
Subject to Tenant's receipt of an appropriate non-disturbance
agreement(s) as set forth below, this Lease is subject and subordinate to all
present and future ground or underlying leases of the Project and/or the
Building, and to the lien of any mortgages or trust deeds, now or hereafter in
force against the Project and/or the Building, if any, and to all renewals,
extensions, modifications, consolidations and replacements thereof, and to all
advances made or hereafter to be made upon the security of such mortgages or
trust deeds, unless the holders of such mortgages or trust deeds, or the lessors
under such ground lease or underlying leases, require in writing that this Lease
be superior thereto. Landlord shall use commercially reasonable efforts to
provide Tenant, within thirty (30) days after execution and delivery of this
Lease by Landlord and Tenant, a commercially reasonable non-disturbance
agreement from Landlord's presently existing lenders holding deeds of trust on
the Building and/or Project. In consideration of, and as a condition precedent
to, Tenant's agreement to permit its interest pursuant to this Lease to be
subordinated to any particular future ground or underlying lease of the Building
or the Project or to the lien of any mortgage or trust deed, hereafter enforced
against the Building or the Project and to any renewals, extensions,
modifications, consolidations and replacements thereof, Landlord shall deliver
to Tenant a commercially reasonable non-disturbance agreement executed by the
landlord under such ground lease or underlying lease or the holder of such
mortgage or trust deed. Such commercially reasonable non-disturbance
agreement(s), shall include the obligation of any such successor ground lessor,
mortgage holder or deed of trust holder to recognize Tenant's rights
specifically set forth in this Lease to offset certain amounts against Rent due
hereunder and Landlord's obligations to comply with the provisions of this
Lease, or to
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otherwise receive certain credits against Rent as set forth herein. Subject to
Tenant's receipt of the non-disturbance agreement(s) described above, Tenant
covenants and agrees in the event any proceedings are brought for the
foreclosure of any such mortgage, to attorn to the purchaser upon any such
foreclosure sale and to recognize such purchaser as the lessor under this Lease,
provided such lienholder or purchaser or ground lessor shall agree to accept
this Lease and not disturb Tenant occupancy, so long as Tenant is not in default
of this Lease. Tenant shall, within fifteen (15) days of request by Landlord,
execute such further instruments or assurances as Landlord may reasonably deem
necessary to evidence or confirm the subordination or superiority of this Lease
to any such mortgages, trust deeds, ground leases or underlying leases in
accordance with the provisions of this Article 18.
ARTICLE 19
DEFAULTS; REMEDIES
19.1 Defaults. The occurrence of any of the following shall constitute a
default of this Lease by Tenant:
19.1.1 Any failure by Tenant to pay any Rent or any other charge
required to be paid under this Lease, or any part thereof, when due unless such
failure is cured within five (5) business days after notice that the same was
not paid when due; or
19.1.2 Any failure by Tenant to observe or perform any other
provision, covenant or condition of this Lease to be observed or performed by
Tenant where such failure continues for thirty (30) days after written notice
thereof from Landlord to Tenant; provided that if the nature of such failure is
such that the same cannot reasonably be cured within a thirty (30) day period,
Tenant shall not be deemed to be in default if it diligently commences such cure
within such period and thereafter diligently proceeds to rectify and cure such
failure as soon as possible; or
19.1.3 Tenant's failure to observe or perform according to the
provisions of Articles 17 or 18 of this Lease where such failure continues for
more than five (5) business days after notice from Landlord that such failure to
so observe or perform shall constitute a default.
The notice periods provided herein are in addition to, and not in lieu
of, any notice periods provided by Applicable Laws.
19.2 Remedies Upon Default. Upon the occurrence of a default by Tenant,
Landlord shall have, in addition to any other remedies available to Landlord at
law or in equity, the option to pursue any one or more of the following
remedies, each and all of which shall be cumulative and, subject to the express
terms hereof, nonexclusive, without any notice or demand whatsoever.
19.2.1 Terminate this Lease, 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 which it may have for
possession or arrearages in rent, enter upon and take possession of the Premises
and expel or remove Tenant and any other person who may be
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occupying the Premises or any part thereof, without being liable for prosecution
or any claim or damages therefor; and Landlord may recover from Tenant the
following:
(i) The worth at the time of award of any unpaid
rent which has been earned at the time of such termination; plus
(ii) The worth at the time of award of the amount
by which the unpaid rent which would have been earned after termination
until the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; plus
(iii) The worth at the time of award of the amount
by which the unpaid rent for the balance of the Lease Term after the
time of award exceeds the amount of such rental loss that Tenant proves
could have been reasonably avoided; plus
(iv) Any other amount necessary to compensate
Landlord for all the detriment proximately caused by Tenant's failure to
perform its obligations under this Lease as allowed under all Applicable
Laws; and
(v) At Landlord's election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to
time by Applicable Law.
The term "rent" as used in this Section 19.2 shall be deemed to be and
to mean all sums of every nature required to be paid by Tenant pursuant to the
terms of this Lease, whether to Landlord or to others. As used in Paragraphs
19.2.1(i) and (ii), above, the "worth at the time of award" shall be computed by
allowing interest at the rate set forth in Article 25 of this Lease, but in no
case greater than the maximum amount of such interest permitted by law. As used
in Paragraph 19.2.1(iii) above, the "worth at the time of award" shall be
computed by discounting such amount at the discount rate of the Federal Reserve
Bank of San Francisco at the time of award plus one percent (1%).
19.2.2 In the event the Lease has not been terminated, Landlord
shall have the remedy described in California Civil Code Section 1951.4 (lessor
may continue lease in effect after lessee's breach and abandonment and recover
Rent as it becomes due, if lessee has the right to sublet or assign, subject
only to reasonable limitations). Accordingly, if Landlord does not elect to
terminate this Lease on account of any default by Tenant, Landlord may, from
time to time, without terminating this Lease, enforce all of its rights and
remedies under this Lease, including the right to recover all rent as it becomes
due.
19.3 Subleases of Tenant. If Landlord elects to terminate this Lease on
account of any default by Tenant, as set forth in this Article 19, Landlord
shall have the right to terminate any and all subleases, licenses, concessions
or other consensual arrangements for possession entered into by Tenant and
affecting the Premises or may, in Landlord's sole discretion, succeed to
Tenant's interest in such subleases, licenses, concessions or arrangements. In
the event of Landlord's election to succeed to Tenant's interest in any such
subleases, licenses, concessions or arrangements, Tenant shall, as of the date
of notice by Landlord of such election, have no further right to or interest in
the rent or other consideration receivable thereunder.
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19.4 No Waiver of Redemption by Tenant. Nothing herein shall be deemed
to constitute a waiver of Tenant's right to redeem, by order or judgment of any
court or by any legal process or writ, Tenant's right of occupancy of the
Premises after any termination of this Lease.
19.5 Landlord Default.
19.5.1 General. Notwithstanding anything to the contrary set
forth in this Lease, Landlord shall be in default in the performance of any
obligation required to be performed by Landlord pursuant to this Lease if (i) in
the event a failure by Landlord is with respect to the payment of money,
Landlord fails to pay such unpaid amounts within five (5) business days of
notice from Tenant that the same was not paid when due; (ii) the failure of
Landlord to perform according to the provisions of Article 17 of this Lease for
more than ten (10) business days after notice from Tenant or (iii) in the event
a failure by Landlord is other than (i) and (ii) above, Landlord fails to
perform such obligation within a reasonable time period with the expenditure of
diligent efforts, but in no event more than thirty (30) days after the receipt
of notice from Tenant specifying in detail Landlord's failure to perform;
provided, however, if the nature of Landlord's obligation is such that more than
thirty (30) days are required for its performance, then Landlord shall not be in
default under this Lease if Landlord commences such performance within such
thirty (30) day period and thereafter diligently pursue the same to completion.
Upon any such default by Landlord under this Lease, Tenant may, except as
otherwise specifically provided in this Lease to the contrary, exercise any of
its rights provided at law or in equity.
19.5.2 Abatement of Rent. In the event that Tenant is prevented
from using, and does not use, the Premises or any portion thereof, as a result
of (i) any repair, maintenance or alteration performed by Landlord (including
repairs, maintenance and alterations required or permitted by Landlord
hereunder), or which Landlord failed to perform, after the Lease Commencement
Date and required by this Lease, which substantially interferes with Tenant's
use of or ingress to or egress from the Building, Project, or Premises or the
parking facility; (ii) any failure to provide services, utilities or ingress to
and egress from the Building, Project, or Premises or the Project parking
facility as required by this Lease; (iii) damage and destruction of or eminent
domain proceedings in connection with the Premises, Building, the Project or the
parking facility servicing the Project, or (iv) the presence of Hazardous
Materials (not brought on the Premises by Tenant Parties) in violation of
Applicable Laws which poses a material health risk to the environment or the
Premises (any such set of circumstances as set forth in items (i) through (iv),
above, to be known as an "Abatement Event"), then Tenant shall give Landlord
notice of such Abatement Event, and if such Abatement Event continues for five
(5) consecutive business days after Landlord's receipt of any such notice, or
occurs for ten (10) non-consecutive business days in a twelve (12) month period
(provided Landlord is sent a notice pursuant to Section 29.13 of this Lease of
each of such Abatement Event) (in either of such events, the "Eligibility
Period"), then the Base Rent and Tenant's Share of Direct Expenses and Tenant's
parking charges shall be abated or reduced, as the case may be, after expiration
of the Eligibility Period for such time that Tenant continues to be so prevented
from using, and does not use, the Premises, or a portion thereof, in the
proportion that the rentable area of the portion of the Premises that Tenant is
prevented from using, and does not use ("Unusable Area"), bears to the total
rentable area of the Premises and Landlord shall pay to Tenant, to the extent
covered (except for any deductible amount) by insurance retained by Landlord,
any incremental reasonable, out of pocket expense that the Tenant incurs in
relocating the functions previously
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performed in the Unusable Area to a different location. For this purpose, an
incremental expense shall be any expense that the Tenant incurs in relocating
from the Unusable Area to a temporary location and then relocating back to the
Unusable Area (after such area has been made fit for Tenant's Permitted Use)
that Tenant would not have had to incur but for such relocation; provided,
however, in the event that Tenant is prevented from using, and does not use, the
Unusable Area for a period of time in excess of the Eligibility Period and the
remaining portion of the Premises is not sufficient to allow Tenant to
effectively conduct its business therein, and if Tenant does not conduct its
business from such remaining portion, then for such time after expiration of the
Eligibility Period during which Tenant is so prevented from effectively
conducting its business therein, the Base Rent and Tenant's Share of Direct
Expenses and Tenant's parking charges for the entire Premises shall be abated
for such time as Tenant continues to be so prevented from using, and does not
use, the Premises. If, however, Tenant reoccupies any portion of the Premises
during such period, the Rent allocable to such reoccupied portion, based on the
proportion that the rentable area of such reoccupied portion of the Premises
bears to the total rentable area of the Premises, shall be payable by Tenant
from the date Tenant reoccupies such portion of the Premises. Such right to
abate Base Rent, Tenant's Share of Direct Expenses and Tenant's parking charges
shall be Tenant's sole and exclusive remedy at law or in equity for an Abatement
Event; provided, however, that (a) nothing in this Section 19.5.2, shall impair
Tenant's rights under Section 19.5.1, above, and (b) if Landlord has not cured
such Abatement Event within two hundred ten (210) days after receipt of notice
from Tenant (or, in the event that the Premises or the Building are rendered
inaccessible to Tenant by a casualty or act of Landlord, two hundred ten (210)
days following the date of Landlord's actual knowledge of the occurrence of the
Abatement Event), Tenant shall have the right to terminate this Lease during the
first ten (10) business days of each calendar month following the end of such
210-day period until such time as Landlord has cured the Abatement Event, which
right may be exercised only by delivery of thirty (30) days' notice to Landlord
(the "Abatement Event Termination Notice") during such ten (10) business-day
period, and shall be effective as of a date set forth in the Abatement Event
Termination Notice (the "Abatement Event Termination Date"), which Abatement
Event Termination Date shall not be less than thirty (30) days, and not more
than one (1) year, following the delivery of the Abatement Event Termination
notice. Notwithstanding anything contained in this Section 19.5.2 to the
contrary, Tenant's Abatement Event Termination Notice shall be null and void
(but only in connection with the first notice sent by Tenant with respect to
each separate Abatement Event) if Landlord cures such Abatement Event within
such thirty (30) day period following receipt of the Abatement Event Termination
Notice. If Tenant's right to abatement occurs because of an eminent domain
taking, condemnation and/or because of damage or destruction to the Premises,
the Project's parking facility, and/or the Project, Tenant's abatement period
shall continue until Tenant has been given sufficient time, and sufficient
ingress to, and egress from the Premises, to rebuild such portion it is required
to rebuild, to install its property, furniture, fixtures, and equipment to the
extent the same shall have been removed as a result of such damage or
destruction or temporary taking and to move in over a weekend. To the extent
Tenant is entitled to abatement because of an event covered by Articles 11 or 13
of this Lease, then the Eligibility Period shall not be applicable.
Notwithstanding the foregoing, Tenant shall not have the right to terminate this
Lease pursuant to the terms of this Section 19.5.2, if, as of the date of
delivery by Tenant of the Abatement Event Termination Notice, (A) the first
trust deed holder of the Building (the "Bank") has recorded a notice of default
on the Building or filed a notice evidencing a legal action by the
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Bank against Landlord on the Building, and (B) the Bank diligently proceeds to
gain possession of the Premises and, to the extent Bank does gain possession of
the Premises, the Bank diligently proceeds to cure such Abatement Event. Except
as provided in this Section 19.5.2, nothing contained herein shall be
interpreted to mean that Tenant is excused from paying Rent due hereunder.
19.6 Landlord Bankruptcy Proceeding. In the event that the obligations
of Landlord under this Lease are not performed during the pendency of a
bankruptcy or insolvency proceeding involving Landlord as the debtor, or
following the rejection of this Lease in accordance with Section 365 of the
Bankruptcy Code, then notwithstanding any provision of this Lease to the
contrary, Tenant shall have the right to set off against the Rent next due and
owing under this Lease (a) any and all damages caused by such non-performance of
Landlord's obligations under this Lease by Landlord, debtor-in-possession, or
the bankruptcy trustee, and (b) any and all damages caused by the
non-performance of Landlord's obligations under this Lease following any
rejection of this Lease in accordance with Section 365 of the Bankruptcy Code.
19.7 Efforts to Relet. For the purposes of this Article 19, Tenant's
right to possession shall not be deemed to have been terminated by efforts of
Landlord to relet the Premises, by its acts of maintenance or preservation with
respect to the Premises, or by appointment of a receiver to protect Landlord's
interests hereunder. The foregoing enumeration is not exhaustive, but merely
illustrative of acts which may be performed by Landlord without terminating
Tenant's right to possession.
ARTICLE 20
ATTORNEYS' FEES
If either party commences litigation against the other for the specific
performance of this Lease, for damages for the breach hereof or otherwise for
enforcement of any remedy hereunder, the parties hereto agree to and hereby do
waive any right to a trial by jury (as set forth in Section 29.18, below) and,
in the event of any such commencement of litigation, the prevailing party shall
be entitled to recover from the other party such costs and reasonable attorneys'
fees as may have been incurred.
ARTICLE 21
SECURITY DEPOSIT; LETTER OF CREDIT
21.1 Security Deposit. Concurrent with Tenant's execution of this Lease,
Tenant shall deposit with Landlord a security deposit (the "Security Deposit")
in the amount set forth in Section 10 of the Summary. The Security Deposit shall
be held by Landlord as security for the faithful performance by Tenant of all
the terms, covenants, and conditions of this Lease to be kept and performed by
Tenant during the Lease Term. If Tenant defaults with respect to any provisions
of this Lease beyond any applicable cure period set forth herein, including, but
not limited to, the provisions relating to the payment of Rent, Landlord may,
but shall not be required to, use, apply or retain all or any part of the
Security Deposit for the payment of any
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Rent or any other sum in default, or for the payment of any amount that Landlord
may spend or become obligated to spend by reason of Tenant's default, or to
compensate Landlord for any other loss or damage that Landlord may suffer by
reason of Tenant's default. If any portion of the Security Deposit is so used or
applied, Tenant shall, within ten (10) days after written demand therefor,
deposit cash with Landlord in an amount sufficient to restore the Security
Deposit to its original amount, and Tenant's failure to do so shall be a default
under this Lease. If Tenant shall fully and faithfully perform every provision
of this Lease to be performed by it, the Security Deposit, or any balance
thereof, shall be returned to Tenant, or, at Landlord's option, to the last
assignee of Tenant's interest hereunder, within thirty (30) days following the
expiration of the Lease Term. Tenant shall not be entitled to any interest on
the Security Deposit. Tenant hereby waives the provisions of Section 1950.7 of
the California Civil Code, and all other provisions of law, now or hereafter in
force, which provide that Landlord may claim from a security deposit only those
sums reasonably necessary to remedy defaults in the payment of rent, to repair
damage caused by Tenant or to clean the Premises, it being agreed that Landlord
may, in addition, claim those sums reasonably necessary to compensate Landlord
for any other loss or damage, foreseeable or unforeseeable, caused by the act or
omission of Tenant or any officer, employee, agent or invitee of Tenant.
21.2 Letter of Credit.
21.2.1 Delivery of Letter of Credit. Tenant shall deliver to
Landlord concurrent with Tenant's execution of this Lease, an unconditional,
clean, irrevocable letter of credit (the "L-C") in the initial amount of
$1,000,000.00 (the "LC Amount"), which L-C shall be issued by a money-center
bank (a bank which accepts deposits, maintains accounts, has a local Los Angeles
office which will negotiate a letter of credit and whose deposits are insured by
the FDIC) reasonably acceptable to Landlord, and which L-C shall be in a form
and content as set forth on Exhibit-F, or otherwise reasonably acceptable to
Landlord. Tenant shall pay all expenses, points and/or fees incurred by Tenant
in obtaining the L-C. Tenant shall be permitted, at its option, from to time to
substitute a new L-C for the L-C initially provided under this Lease, provided
that such substitute L-C satisfies all of the terms and conditions of this
Section 21.2.
21.2.2 Application of Letter of Credit. The L-C shall be held by
Landlord as security for the faithful performance by Tenant of all the terms,
covenants, and conditions of this Lease to be kept and performed by Tenant
during the initial Lease Term. The L-C shall not be mortgaged, assigned or
encumbered in any manner whatsoever by Tenant without the prior written consent
of Landlord. If Tenant defaults with respect to any provisions of this Lease,
including, but not limited to, the provisions relating to the payment of Rent,
or if Tenant fails to renew the L-C at least thirty (30) days before its
expiration, Landlord may, but shall not be required to, draw upon all or any
portion of the L-C for payment of any Rent or any other sum in default, or for
the payment of any amount that Landlord may reasonably spend or may become
obligated to spend by reason of Tenant's default, or to compensate Landlord for
any other loss or damage that Landlord may suffer by reason of Tenant's default.
The use, application or retention of the L-C, or any portion thereof, by
Landlord shall not (a) prevent Landlord from exercising any other right or
remedy provided by this Lease or by law, it being intended that Landlord shall
not first be required to proceed against the L-C, nor (b) operate as a
limitation on any recovery to which Landlord may otherwise be entitled. Any
amount of the L-C which is drawn upon by Landlord, but is not used or applied by
Landlord shall be held by Landlord and deemed a
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security deposit (the "L-C Security Deposit"). If any portion of the L-C is
drawn upon, Tenant shall, within ten (10) days after written demand therefor,
either (i) deposit cash with Landlord (which cash shall be applied by Landlord
to the L-C Security Deposit) in an amount sufficient to cause the sum of the L-C
Security Deposit and the amount of the remaining L-C to be equivalent to the
amount of the L-C then required under this Lease or (ii) reinstate the L-C to
the amount then required under this Lease, and if any portion of the L-C
Security Deposit is used or applied, Tenant shall, within ten (10) days after
written demand therefor, deposit cash with Landlord (which cash shall be applied
by Landlord to the L-C Security Deposit) in an amount sufficient to restore the
L-C Security Deposit to the amount then required under this Lease, and Tenant's
failure to do so shall be a default under this Lease. Tenant acknowledges that
Landlord has the right to transfer or mortgage its interest in the Project and
the Building and in this Lease and Tenant agrees that in the event of any such
transfer or mortgage, Landlord shall have the right to transfer or assign the
L-C Security Deposit and/or the L-C to the transferee or mortgagee, and in the
event of such transfer, Tenant shall look solely to such transferee or mortgagee
for the return of the L-C Security Deposit and/or the L-C. If Tenant is not in
default as of each "Adjustment Date," as that term is defined, below, the L-C
Amount shall, as of each such Adjustment Date, be reduced by an amount equal to
$200,000.00. For purposes of this Section 21.2, an "Adjustment Date" shall mean
each anniversary of the Lease Commencement Date commencing with and following
the second (2nd) anniversary of the Lease Commencement Date. If Tenant shall
fully and faithfully perform every provision of this Lease to be performed by
it, the L-C Security Deposit and/or the L-C, or any balance thereof, shall be
returned to Tenant within thirty (30) days following the expiration of the Lease
Term.
ARTICLE 22
INTENTIONALLY DELETED
ARTICLE 23
SIGNS
23.1 Full Floor Tenants. Subject to Landlord's prior written approval,
in its reasonable discretion, and provided all signs are in keeping with the
quality, design and style of the Building and Project, Tenant, if the Premises
comprise an entire floor of the Building, at its sole cost and expense, may
install identification signage anywhere in the Premises including in the
elevator lobby of the Premises, provided that such signs must not be visible
from the exterior of the Building.
23.2 Multi-Tenant Floor Tenants. If Tenant occupies less than the entire
floor on which the Premises is located, Tenant's identifying signage shall be
provided by Landlord and such signage shall be comparable to that used by
Landlord for other similar floors in the Building and shall comply with
Landlord's Building standard signage program. Any additions, deletions or
modifications to such Building standard signage shall be at Tenant's sole
expense and subject to the prior written approval of Landlord, in its sole
discretion.
23.3 Prohibited Signage and Other Items. Any signs, notices, logos,
pictures, names or advertisements which are installed and that have not been
individually approved by Landlord
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may be removed without notice by Landlord at the sole expense of Tenant. Tenant
may not install any signs on the exterior or roof of the Project or the Common
Areas of the Project. Any signs, window coverings, or blinds (even if the same
are located behind the Landlord approved window coverings for the Building), or
other items visible from the exterior of the Premises or Building are subject to
the prior written approval of Landlord, in its sole discretion.
23.4 Building Directory. A building directory will be located in the
lobby of the Building. Tenant shall have the right to one (1) strip for each
1,000 rentable square feet of the Premises to display the names of Tenant and
its employees. Tenant's initial identifying strips on the Building directory
located in the lobby of the Building shall be provided by Landlord, at
Landlord's cost. Any identifying strips required to be provided by Landlord
after the Lease Commencement Date shall be provided by Landlord at Tenant's sole
cost and expense. Landlord acknowledges and agrees that all such identifying
strips on the Building directory shall not be personal to the tenant originally
named herein and shall be provided by Landlord, subject to the terms hereof, to
any Transferee of Tenant permitted under Article 14 of this Lease.
ARTICLE 24
COMPLIANCE WITH LAW
Tenant shall not do anything or suffer anything to be done in or about
the Premises or the Project which will in any way conflict with any law,
statute, ordinance, decrees, codes, common law, judgments, orders, rulings,
awards or other governmental or quasi-governmental rule, regulation or
requirement now in force or which may hereafter be enacted or promulgated
including any "Environmental Laws," as that term is defined in Section 29.27.1
of this Lease (collectively, "APPLICABLE LAWS"). At its sole cost and expense,
Tenant shall, except as otherwise expressly provided in this Lease, promptly
comply with all such Applicable Laws to the extent that such Applicable Laws
relate to (i) Tenant's use of the Premises, (ii) the Tenant Improvements located
in the Premises or any Alterations thereof, and (iii) the Base Building, but as
to the Base Building, only to the extent such obligations are triggered by
Alterations made by Tenant to the Premises, or the Tenant Improvements, or
Tenant's use of the Premises for a non-general office use. Tenant shall be
responsible, at its sole cost and expense, to make all alterations to the
Premises as are required to comply with the governmental rules, regulations,
requirements or standards described in this Article 24. The judgment of any
court of competent jurisdiction or the admission of either party hereto in any
judicial action, regardless of whether the other party is a party thereto, that
such party has violated any of said governmental measures, shall be conclusive
of that fact as between Landlord and Tenant. Landlord shall comply with all
Applicable Laws relating to the Project, Base Building and Building Systems,
provided that compliance with such Applicable Laws is not the responsibility of
Tenant under this Lease, and provided further that Landlord's failure to comply
therewith would prohibit Tenant from obtaining or maintaining a certificate of
occupancy for the Premises, or would unreasonably and materially affect the
safety of Tenant's Parties or create a significant health hazard for Tenant's
Parties or otherwise materially interfere with or materially affect Tenant's
Permitted Use and enjoyment of the Premises. Landlord shall be permitted to
include in Operating Expenses any costs or expenses incurred by Landlord under
this Article 24 to the extent consistent with, and amortized to the extent
required by, the provisions of Section 4.2.4 of this Lease.
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ARTICLE 25
LATE CHARGES
If any installment of Rent or any other sum due from Tenant shall not be
received by Landlord or Landlord's designee within five (5) business days after
notice that said amount was not paid when due, then Tenant shall pay to Landlord
a late charge equal to three percent (3%) of the overdue amount, plus any
reasonable attorneys' fees incurred by Landlord by reason of Tenant's failure to
pay Rent and/or other charges when due hereunder. The late charge shall be
deemed Additional Rent and the right to require it shall be in addition to all
of Landlord's other rights and remedies hereunder or at law and shall not be
construed as liquidated damages or as limiting Landlord's remedies in any
manner. In addition to the late charge described above, any Rent or other
amounts owing hereunder which are not paid on or before the date they are due
shall thereafter bear interest until paid at a rate per annum equal to the
lesser of (i) the Interest Rate or (ii) the highest rate permitted by applicable
law.
ARTICLE 26
LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
26.1 Landlord's Cure. All covenants and agreements to be kept or
performed by Tenant under this Lease shall be performed by Tenant at Tenant's
sole cost and expense and without any reduction of Rent, except to the extent
otherwise expressly provided in this Lease. If Tenant shall fail to perform any
of its obligations under this Lease, and such failure shall continue in excess
of the time allowed under Section 19.1.2, above, then upon five (5) additional
days notice from Landlord, Landlord may, but shall not be obligated to, after
reasonable prior notice to Tenant, make any such payment or perform any such act
on Tenant's part without waiving its right based upon any default of Tenant and
without releasing Tenant from any obligations hereunder.
26.2 Tenant's Reimbursement. Except as may be specifically provided to
the contrary in this Lease, Tenant shall pay to Landlord, within thirty (30)
days after delivery by Landlord to Tenant of statements therefor, sums equal to
expenditures reasonably made and obligations incurred by Landlord in connection
with the remedying by Landlord of Tenant's defaults pursuant to the provisions
of Section 26.1, above.
ARTICLE 27
ENTRY BY LANDLORD
Subject to Tenant's reasonable security requirements, Landlord reserves
the right at all reasonable times and upon reasonable notice to the Tenant to
enter the Premises to (i) inspect them; (ii) show the Premises to prospective
purchasers, mortgagees or ground or underlying lessors, or, during the last
twelve (12) months of the Lease Term, prospective tenants; (iii) post notices of
nonresponsibility; or (iv) alter, improve or repair the Premises, the Building,
or the Project if necessary to comply with current building codes or other
applicable laws, or for structural alterations, repairs or improvements to the
Building or the Project as required or
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permitted under this Lease. Notwithstanding anything to the contrary contained
in this Article 27, Landlord may enter the Premises at any time to (A) perform
services required of Landlord; (B) take possession due to any default by Tenant
in the manner provided herein; and (C) subject to the terms of Section 26.1,
above, perform any covenants of Tenant which Tenant fails to perform. Landlord
may make any such entries without the abatement of Rent, except as expressly
provided in Section 19.5.2, above, and may take such steps as required to
accomplish the stated purposes; provided, however, except for emergencies, any
such entry shall be performed in an expeditious manner so as not to unreasonably
interfere with Tenant's use of the Premises. Even in emergency situation,
Landlord shall use commercially reasonable efforts to minimize any disruption to
Tenant's business operations. Tenant hereby waives any claims for damages or for
any injuries or inconvenience to or interference with Tenant's business, lost
profits, any loss of occupancy or quiet enjoyment of the Premises, and any other
loss occasioned thereby. For each of the above purposes, Landlord shall at all
times have a key with which to unlock all the doors in the Premises, excluding
Tenant's vaults, safes and special security areas designated in advance by
Tenant. In an emergency, Landlord shall have the right to use any means that
Landlord may deem proper to open the doors in and to the Premises; provided,
however, that Landlord shall, subject to Section 10.1 of this Lease and to the
extent that such damage is not covered by insurance required to be carried by
Tenant under this Lease or caused by any governmental agencies, repair any
damage to the Premises caused by any such emergency entry into the Premises by
Landlord. Notwithstanding anything to the contrary set forth in this Article 27,
Tenant may designate certain areas of the Premises as "Secured Areas" should
Tenant require such areas for the purpose of securing certain valuable property
or confidential information. In connection with the foregoing, Landlord shall
not enter such Secured Areas except in the event of an emergency. Landlord need
not clean any area designated by Tenant as a Secured Area and shall only
maintain or repair such secured areas to the extent (i) such repair or
maintenance is required in order to maintain and repair the Building Structure
and/or the Building Systems; (ii) as required by Applicable Laws, or (iii) in
response to specific requests by Tenant and in accordance with a schedule
reasonably designated by Tenant, subject to Landlord's reasonable approval. Any
entry into the Premises by Landlord in the manner hereinbefore described shall
not be deemed to be a forcible or unlawful entry into, or a detainer of, the
Premises, or an actual or constructive eviction of Tenant from any portion of
the Premises.
ARTICLE 28
TENANT PARKING
Tenant shall rent from Landlord parking passes on a monthly basis
throughout the Lease Term in the amount set forth in Section 11 of the Summary;
provided, however, that during the first (1st) Lease Year of the initial Lease
Term, Tenant shall only be required to rent two (2) unreserved parking passes
for each 1000 rentable square feet of the Premises. All of Tenant's passes shall
be applicable to the P-2 and P-3 levels of the Project parking facility. Tenant
shall pay to Landlord for automobile parking passes on a monthly basis the
prevailing rate charged for parking passes at the location of such passes. In
addition, Tenant shall be responsible for any taxes imposed by any governmental
authority in connection with the renting of such parking passes by Tenant or the
use of the parking facility by Tenant. Tenant's continued right to use the
parking passes is conditioned upon Tenant abiding by all reasonable,
non-discriminatory rules
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and regulations which are prescribed from time to time for the orderly operation
and use of the parking facility where the passes are located and upon Tenant's
cooperation in seeing that Tenant's employees and visitors also comply with such
rules and regulations. Landlord specifically reserves the right to change the
location, size, configuration, design, layout and all other aspects of the
parking facility in question (provided that Tenant's parking rights are not
reduced or materially changed as a result thereof and so long as Tenant's
obligations are not materially or unreasonably increased as a result thereof and
such change(s) do not create a material safety risk for Tenant), including the
discontinuance of any reserved parking spaces, at any time and Tenant
acknowledges and agrees that Landlord may, without incurring any liability to
Tenant and without any abatement of Rent under this Lease (except as provided in
Section 19.5.2 of this Lease), from time to time, close-off or restrict access
to the parking facility in question for purposes of permitting or facilitating
any such construction, alteration or improvements, provided that any such
closures or restrictions are required by Applicable Laws to are reasonably
necessary on a temporary basis. Landlord shall use commercially reasonable
efforts to cause any such work to be conducted in a manner which minimizes any
inconvenience to the Tenant Parties and to provide alternative parking (if
necessary), at no cost to Tenant. Landlord may totally or partially delegate its
responsibilities hereunder to a parking operator in which case such parking
operator shall have all the rights of control delegated by Landlord. The parking
passes rented by Tenant pursuant to this Article 28 are provided to Tenant
solely for use by Tenant's own personnel (not including Tenant's invitees and
guests) and such passes may not be transferred, assigned, subleased or otherwise
alienated by Tenant, except on a pro-rata basis in connection with an assignment
or subletting of the Premises permitted or approved in accordance with the terms
of Article 14 of this Lease.
ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1 Binding Effect. Each of the provisions of this Lease shall extend
to and shall, as the case may require, bind or inure to the benefit not only of
Landlord and of Tenant, but also of their respective successors or assigns,
provided this clause shall not permit any assignment by Tenant contrary to the
provisions of Article 14 of this Lease.
29.2 No Air Rights. No rights to any view or to light or air over any
property, whether belonging to Landlord or any other person, are granted to
Tenant by this Lease. If at any time any windows of the Premises are temporarily
darkened or the light or view therefrom is obstructed by reason of any repairs,
improvements, maintenance or cleaning in or about the Project, the same shall be
without liability to Landlord and without any reduction or diminution of
Tenant's obligations under this Lease.
29.3 Modification of Lease. Should any current or prospective mortgagee
or ground lessor for the Building or Project require a modification or
modifications of this Lease, which modification or modifications will not cause
an increased cost or expense to Tenant or (other than in a de minimus manner)
adversely change the rights and obligations of Tenant hereunder, then and in
such event, Tenant agrees that this Lease may be so modified and agrees to
execute whatever documents are required therefor and deliver the same to
Landlord within twenty (20) days following the request therefor. Landlord shall
reimburse to Tenant the actual, documented
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and reasonable attorneys' fees incurred by Tenant in reviewing such documents,
not to exceed Five Hundred Dollars ($500.00). Should Landlord or any such
prospective mortgagee or ground lessor require execution of a short form of
Lease for recording, containing, among other customary provisions, the names of
the parties, a description of the Premises and the Lease Term, Tenant agrees to
execute such short form of Lease memorandum and to deliver the same to Landlord
within twenty (20) days following the request therefore, the recordation of
which shall be at the sole cost and expense of Landlord.
29.4 Transfer of Landlord's Interest. Tenant acknowledges that Landlord
has the right to transfer all or any portion of its interest in the Project
and/or the Building and in this Lease so long as such transfer is not a
subterfuge to avoid Landlord's obligations under this Lease, and Tenant agrees
that in the event of any such transfer and a transfer of the Security Deposit,
and if the transferee assumes the applicable obligations, Landlord shall
automatically be released from all liability (to the extent such obligations are
assumed by the transferee) under this Lease not accrued as of the date of the
transfer and Tenant agrees to look solely to such transferee for the performance
of Landlord's obligations hereunder after the date of transfer. Tenant further
acknowledges that Landlord may assign its interest in this Lease to a mortgage
lender as additional security. Such transfer shall not release Landlord from its
obligations hereunder and that Tenant shall continue to look to Landlord for the
performance of its obligations hereunder.
29.5 Prohibition Against Recording. Except as provided in Section 29.3
of this Lease, neither this Lease, nor any memorandum, affidavit or other
writing with respect thereto, shall be recorded by Tenant or by anyone acting
through, under or on behalf of Tenant, and the recording thereof in violation of
this provision shall make this Lease null and void at Landlord's election.
29.6 Captions. The captions of Articles and Sections are for convenience
only and shall not be deemed to limit, construe, affect or alter the meaning of
such Articles and Sections. Notwithstanding the foregoing, whenever in this
Lease a reference is made to an Article, such reference shall include all
Sections in such Article and whenever a reference is made to a Section, all such
references shall include all subsections with the same pre-numeric
identification. The term "Lease" shall include all Exhibits which are attached
to this Lease which are by this reference deemed incorporated into this Lease.
29.7 Relationship of Parties. Nothing contained in this Lease shall be
deemed or construed by the parties hereto or by any third party to create the
relationship of principal and agent, partnership, joint venturer or any
association between Landlord and Tenant, it being expressly understood and
agreed that neither the method of computation of Rent nor any act of the parties
hereto shall be deemed to create any relationship between Landlord and Tenant
other than the relationship of landlord and tenant.
29.8 Time of Essence. Time is of the essence of this Lease and each of
its provisions. Whenever in this Lease a payment is required to be made by one
party to the other, but a specific date for payment is not set forth or a
specific number of days within which payment is to be made is not set forth, or
the words "immediately," "promptly," and/or "on demand," or their equivalent,
are used to specify when such payment is due, then such payment shall be due
thirty (30) days after the date that the party which is entitled to such payment
sends notice to the other party demanding such payment.
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29.9 Partial Invalidity. If any term, provision or condition contained
in this Lease shall, to any extent, be invalid or unenforceable, the remainder
of this Lease, or the application of such term, provision or condition to
persons or circumstances other than those with respect to which it is invalid or
unenforceable, shall not be affected thereby, and each and every other term,
provision and condition of this Lease shall be valid and enforceable to the
fullest extent possible permitted by law.
29.10 Landlord Exculpation. It is expressly understood and agreed that
notwithstanding anything in this Lease to the contrary, and notwithstanding any
applicable law to the contrary, the liability of Landlord and the Landlord
Parties hereunder (including any successor landlord) and any recourse by Tenant
against Landlord or the Landlord Parties shall be limited solely and exclusively
to the interest of Landlord in and to the Building and Project (together with
any insurance proceeds and condemnation proceeds actually received by Landlord
and not subject to any rights of third parties), and neither Landlord, nor any
of its members, shall have any personal liability therefor, and Tenant, on
behalf of itself and all persons claiming by, through or under Tenant, hereby
expressly waives and releases Landlord and such members from any and all
personal liability. Landlord acknowledges and agrees that in no event shall
Tenant's obligations under this Lease constitute the personal obligations of
Tenant's officers, directors and employees and Landlord, on behalf of itself and
all persons claiming by, through or under Landlord, expressly waives and
releases such individuals from any and all personal liability for Tenant's
obligations hereunder.
29.11 Entire Agreement. It is understood and acknowledged that there are
no oral agreements between the parties hereto affecting this Lease and this
Lease supersedes and cancels any and all previous negotiations, arrangements,
brochures, agreements and understandings, if any, between the parties hereto or
displayed by Landlord to Tenant with respect to the subject matter thereof, and
none thereof shall be used to interpret or construe this Lease. This Lease, the
exhibits and schedules attached hereto, and any side letter or separate
agreement executed by Landlord and Tenant in connection with this Lease and
dated of even date herewith contain all of the terms, covenants, conditions,
warranties and agreements of the parties relating in any manner to the rental,
use and occupancy of the Premises, shall be considered to be the only agreement
between the parties hereto and their representatives and agents, and none of the
terms, covenants, conditions or provisions of this Lease can be modified,
deleted or added to except in writing signed by the parties hereto.
29.12 Right to Lease. Landlord reserves the absolute right to effect
such other tenancies in the Project and/or the Building as Landlord in the
exercise of its sole business judgment shall determine to best promote the
interests of the Project and/or the Building. Tenant does not rely on the fact,
nor does Landlord represent, that any specific tenant or type or number of
tenants shall, during the Lease Term, occupy any space in the Project and/or the
Building.
29.13 Force Majeure. Any prevention, delay or stoppage due to strikes,
lockouts, labor disputes, acts of God, inability to obtain services, labor, or
materials or reasonable substitutes therefor, governmental actions, civil
commotions, fire or other casualty, and other causes beyond the reasonable
control of the party obligated to perform (collectively, the "Force Majeure"),
except with respect to the obligations imposed upon Tenant with regard to Rent
or other charges to be paid by Tenant or Landlord pursuant to this Lease, and
except as to Tenant's obligations
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under Articles 5 and 24 of this Lease notwithstanding anything to the contrary
contained in this Lease, shall excuse the performance of such party for a period
equal to any such prevention, delay or stoppage and, therefore, if this Lease
specifies a time period for performance of an obligation of either party, that
time period shall be extended by the period of any delay in such party's
performance caused by a Force Majeure.
29.14 Notices. All notices, demands, statements, approvals or
communications (collectively, "Notices") given or required to be given by either
party to the other hereunder shall be in writing, shall be sent by United States
certified or registered mail, postage prepaid, return receipt requested, or a
reputable overnight courier service (such as Federal Express) or delivered
personally (i) to Tenant at the appropriate address set forth in Section 5 of
the Summary, or to such other place as Tenant may from time to time designate in
a Notice to Landlord; or (ii) to Landlord at the addresses set forth in Section
3 of the Summary, or to such other firm or to such other place as Landlord may
from time to time designate in a Notice to Tenant. Any Notice will be deemed
given on the date it is mailed as provided in this Section 29.14, the date
overnight courier delivers, or upon the date personal delivery is made or
attempted to be made. If Tenant is notified of the identity and address of
Landlord's mortgagee or ground or underlying lessor, Tenant shall give to such
mortgagee or ground or underlying lessor written notice of any default by
Landlord under the terms of this Lease by registered or certified mail, and such
mortgagee or ground or underlying lessor shall be given a reasonable opportunity
to cure such default prior to Tenant's exercising any remedy available to
Tenant.
29.15 Child Care Facilities. Tenant acknowledges that any child care
facilities located in the Project or the Adjacent Project (the "Child Care
Facilities") which are available to Tenant and Tenant's employees are provided
by a third party (the "Child Care Provider") which is leasing or otherwise
managing space in the Project or the Adjacent Project, as the case may be, and
not by Landlord. If Tenant or its employees choose to use the Child Care
Facilities, Tenant acknowledges that Tenant and Tenant's employees are not
relying upon any investigation which Landlord may have conducted concerning the
Child Care Provider or any warranties or representation with respect thereto, it
being the sole responsibility of Tenant and the individual user of the Child
Care Facilities to conduct any and all investigations of the Child Care
Facilities prior to making use thereof. Accordingly, Landlord shall have no
responsibility with respect to the quality or care provided by the Child Care
Facilities, or for any acts or omissions of the Child Care Provider.
Furthermore, Tenant, for Tenant and for Tenant's employees, hereby agrees that
Landlord, its members and their respective partners, subpartners, officers,
agents, servants, employees, and independent contractors shall not be liable
for, and are hereby released from any responsibility for any loss, cost, damage,
expense or liability, either to person or property, arising from the use of the
Child Care Facilities by Tenant or Tenant's employees. Tenant hereby covenants
that Tenant shall inform all of Tenant's employees of the provisions of this
Section 29.15 prior to such employees' use of the Child Care Facilities.
29.16 Joint and Several. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.
29.17 Authority. If Tenant is a corporation or partnership, each
individual executing this Lease on behalf of Tenant hereby represents and
warrants that Tenant is a duly formed and existing entity qualified to do
business in California and that Tenant has full right and authority
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to execute and deliver this Lease and that each person signing on behalf of
Tenant is authorized to do so.
29.18 Governing Law; WAIVER OF TRIAL BY JURY. This Lease shall be
construed and enforced in accordance with the laws of the State of California.
IN ANY ACTION OR PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT
TO (I) THE JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA,
(II) SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW, AND (III) IN
THE INTEREST OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE
OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S
USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY
EMERGENCY OR STATUTORY REMEDY.
29.19 Submission of Lease. Submission of this instrument for examination
or signature by Tenant does not constitute a reservation of or an option for
lease, and it is not effective as a lease or otherwise until execution and
delivery by both Landlord and Tenant.
29.20 Brokers. Landlord and Tenant hereby warrant to each other that
they have had no dealings with any real estate broker or agent in connection
with the negotiation of this Lease, excepting only the real estate brokers or
agents specified in Section 12 of the Summary and Landlord's designated
representative (the "Brokers"), and that they know of no other real estate
broker or agent who is entitled to a commission in connection with this Lease.
Landlord shall pay the brokerage commissions owing to the Brokers in connection
with the transaction contemplated by this Lease pursuant to the terms of a
separate written agreement between Landlord and the Brokers (the "Written
Agreements"). If Landlord fails to pay to Brokers their commission pursuant to
the terms of the Written Agreements, Tenant may send written notice to Landlord
of such failure and if Landlord fails to pay such amounts or object to the
payment thereof within thirty (30) days after said notice, Tenant shall be
entitled to make such payment and to then offset such payment against Tenant's
next rental obligations which may become due under this Lease. Any amounts
offset from Tenant's rental obligations hereunder shall no longer be owed from
Landlord to Brokers, but will become due from Tenant to Brokers. Each party
agrees to indemnify and defend the other party against and hold the other party
harmless from any and all claims, demands, losses, liabilities, lawsuits,
judgments, and costs and expenses (including without limitation reasonable
attorneys' fees) with respect to any leasing commission or equivalent
compensation alleged to be owing on account of the indemnifying party's dealings
with any real estate broker or agent other than the Brokers. The terms of this
Section 29.20 shall survive the expiration or earlier termination of the Lease
Term.
29.21 Independent Covenants. This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent and not dependent
and Tenant hereby expressly waives the benefit of any statute to the contrary
and agrees that if Landlord fails to perform its obligations set forth herein,
Tenant shall not be entitled to make any repairs or perform any acts hereunder
at Landlord's expense or, except as expressly provided herein, to any setoff of
the Rent or other amounts owing hereunder against Landlord; provided, however,
that
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the foregoing shall in no way impair the right of Tenant to commence a separate
action against Landlord for any violation by Landlord of the provisions hereof
so long as notice is first given to Landlord and any holder of a mortgage or
deed of trust covering the Building, the Project, or any portion thereof, of
whose address Tenant has theretofore been notified, and an opportunity is
granted to Landlord and such holder to correct such violations as provided
above.
29.22 Project or Building Name and Signage. Landlord shall have the
right at any time to change the name of the Project and/or the Building and to
install, affix and maintain any and all signs on the exterior and on the
interior of the Project and/or the Building as Landlord may, in Landlord's sole
discretion, desire. Tenant shall not use the name of the Project and/or the
Building or use pictures or illustrations of the Project and/or the Building in
advertising or other publicity, without the prior written consent of Landlord.
29.23 Transportation Management. Tenant shall fully comply with all
present or future governmentally mandated programs intended to manage parking,
transportation or traffic in and around the Project, the Building, and/or the
Adjacent Project, and in connection therewith, Tenant shall take responsible
action for the transportation planning and management of all employees located
at the Premises by working directly with Landlord, any governmental
transportation management organization or any other transportation-related
committees or entities. Such programs may include, without limitation: (i)
restrictions on the number of peak-hour vehicle trips generated by Tenant; (ii)
increased vehicle occupancy; (iii) implementation of an in-house ridesharing
program and an employee transportation coordinator; (iv) working with employees
and any Project, Building or area-wide ridesharing program manager; (v)
instituting employer-sponsored incentives (financial or in-kind) to encourage
employees to rideshare; and (vi) utilizing flexible work shifts for employees.
29.24 No Discrimination. Tenant covenants by and for itself, its heirs,
executors, administrators and assigns, and all persons claiming under or through
Tenant, and this Lease is made and accepted upon and subject to the following
conditions: that there shall be no discrimination against or segregation of any
person or group of persons, on account of race, color, creed, sex, religion,
marital status, ancestry or national origin in the leasing, subleasing,
transferring, use, or enjoyment of the Premises, nor shall Tenant itself, or any
person claiming under or through Tenant, establish or permit such practice or
practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy, of tenants, lessees, sublessees, subtenants
or vendees in the Premises.
29.25 Successors. Except as otherwise expressly provided herein, the
obligations of this Lease shall bind and benefit the successors and assigns of
the parties hereto; provided, however, that no assignment, sublease or other
transfer in violation of the provisions of Article 14 shall operate to vest any
rights in any putative assignee, subtenant or transferee of Tenant.
29.26 Landlord Renovations. It is specifically understood and agreed
that Landlord has made no representation or warranty to Tenant and has no
obligation to alter, remodel, improve, renovate, repair or decorate the
Premises, Building, Project, or any part thereof and that no representations
respecting the condition of the Premises, the Building, or the Project have been
made by Landlord to Tenant except as specifically set forth herein or in the
Tenant Work Letter. However, Tenant acknowledges that Landlord may during the
Lease Term renovate, improve,
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alter, or modify (collectively, the "Renovations") the Building, Project and/or
Premises, including without limitation the parking structure, Common Areas,
systems and equipment, roof, and structural portions of the same, which
Renovations may include, without limitation, (i) installing sprinklers in the
Common Areas and tenant spaces, (ii) modifying the Common Areas and tenant
spaces to comply with applicable laws and regulations, including regulations
relating to the physically disabled, seismic conditions, and building safety and
security, and (iii) installing new floor covering, lighting, and wall coverings
in the Common Areas, and in connection with any Renovations, Landlord may, among
other things, erect scaffolding or other necessary structures in the Project or
the Building, limit or eliminate access to portions of the Building or Project,
including portions of the Common Areas, or perform work in the Project or the
Building, which work may create noise, dust or leave debris in the Project or
the Building. Tenant hereby agrees that such Renovations and Landlord's actions
in connection with such Renovations shall in no way constitute a constructive
eviction of Tenant nor entitle Tenant to any abatement of Rent (except as
specifically set forth in Section 19.5.2 of this Lease). Landlord shall have no
responsibility or for any reason be liable to Tenant for any direct or indirect
injury to or interference with Tenant's business arising from the Renovations,
nor shall Tenant be entitled to any compensation or damages from Landlord for
loss of the use of the whole or any part of the Premises or of Tenant's personal
property or improvements resulting from the Renovations or Landlord's actions in
connection with such Renovations, or for any inconvenience or annoyance
occasioned by such Renovations or Landlord's actions in connection with such
Renovations.
29.27 Hazardous Substances.
29.27.1 Definitions. For purposes of this Lease, the following
definitions shall apply: "Hazardous Material(s)" shall mean any substance or
material that is described as a toxic or hazardous substance, waste, material,
pollutant, contaminant or infectious waste, or any matter that in certain
specified quantities would be injurious to the public health or welfare, or
words of similar import, in any of the Environmental Laws or any other words
which are intended to define, list or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity or reproductive toxicity and includes, without
limitation, asbestos, petroleum (including crude oil or any fraction thereof,
natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable
for fuel, or any mixture thereof), petroleum products, polychlorinated
biphenyls, urea formaldehyde, radon gas, radioactive matter, medical waste, and
chemicals which may cause cancer or reproductive toxicity. "Environmental Laws"
shall mean all federal, state, local and quasi-governmental laws (whether under
common law, statute or otherwise), ordinances, decrees, codes, rulings, awards,
rules, regulations and guidance documents now or hereafter be enacted or
promulgated as amended from time to time, in any way relating to or regulating
Hazardous Materials.
29.27.2 Compliance with Environmental Laws. Landlord covenants
that during the Lease Term, Landlord shall comply with all Environmental Laws in
accordance with, and as required by, the terms of Article 24 of this Lease.
29.28 Development of the Project.
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29.28.1 Subdivision. Tenant acknowledges that the Project has
been subdivided. Landlord reserves the right to further subdivide all or a
portion of the buildings and Common Areas in the Project. Tenant agrees to
execute and deliver, within twenty (20) days after Landlord's written demand and
in the form reasonably requested by Landlord, any additional documents needed to
conform this Lease to the circumstances resulting from a subdivision and any all
maps in connection therewith. Landlord shall reimburse to Tenant the actual,
documented and reasonable attorneys' fees incurred by Tenant in reviewing such
documents, not to exceed Five Hundred Dollars ($500.00). Notwithstanding
anything to the contrary set forth in this Lease, the separate ownership of any
buildings and/or Common Areas of the Project by an entity other than Landlord
shall not affect the calculation of Direct Expenses or Tenant's payment of
Tenant's Share of Direct Expenses.
29.28.2 The Other Improvements. If portions of the Project or
property adjacent to the Project (including, but not limited to, the Adjacent
Project) (collectively, the "Other Improvements") are owned by an entity other
than Landlord, Landlord, at its option, may enter into an agreement with the
owner or owners of any of the Other Improvements to provide (i) for reciprocal
rights of access, use and/or enjoyment of the Project and the Other
Improvements, (ii) for the common management, operation, maintenance,
improvement and/or repair of all or any portion of the Project and all or any
portion of the Other Improvements, (iii) for the allocation of a portion of the
Direct Expenses to the Other Improvements and the allocation of a portion of the
operating expenses and taxes for the Other Improvements to the Project, (iv) for
the use or improvement of the Other Improvements and/or the Project in
connection with the improvement, construction, and/or excavation of the Other
Improvements and/or the Project, and (v) for any other matter which Landlord
deems reasonably necessary so long as any other matter does not materially
interfere with Tenant's use of the Premises for the Permitted Use (including
Tenant's use of the project parking facilities) or materially increase Tenant's
monetary obligations under this Lease. Nothing contained herein shall be deemed
or construed to limit or otherwise affect Landlord's right to sell all or any
portion of the Project or any other of Landlord's rights described in this
Lease.
29.28.3 Construction of Project and Other Improvements. Tenant
acknowledges that portions of the Project and/or the Other Improvements may be
under construction following Tenant's occupancy of the Premises, and that such
construction may result in levels of noise, dust, obstruction of access, etc.
which are in excess of that present in a fully constructed project. Subject to
Section 19.5.2 hereof, Tenant hereby waives any and all rent offsets or claims
of constructive eviction which may arise in connection with such construction.
29.29 Arbitration.
29.29.1 General Submittals to Arbitration. The submittal of all
matters to arbitration in accordance with the provisions of this Section 29.29
is the sole and exclusive method, means and procedure to resolve any and all
claims, disputes or disagreements arising under this Lease, including, but not
limited to any matter relating to Landlord's failure to approve an assignment,
sublease or other transfer of Tenant's interest in the Lease under Article 14 of
this Lease, any other defaults by Landlord, or any Tenant default, except for
(i) all claims by either party which (A) seek anything other than enforcement of
rights under this Lease, or (B) are primarily founded upon matters of fraud,
willful misconduct, bad faith or any other allegations of
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tortious action, and seek the award of punitive or exemplary damages, and (ii)
claims relating to Landlord's exercise of any unlawful detainer rights pursuant
to California law or rights or remedies used by Landlord to gain possession of
the Premises or terminate Tenant's right of possession to the Premises, which
disputes shall be resolved by suit filed in the Superior Court of Los Angeles
County, California, the decision of which court shall be subject to appeal
pursuant to Applicable Laws. The parties hereby irrevocably waive any and all
rights to the contrary and shall at all times conduct themselves in strict,
full, complete and timely accordance with the provisions of this Section 29.29
and all attempts to circumvent the terms and conditions of this Section 29.29
shall be absolutely null and void and of no force or effect whatsoever. As to
any matter submitted to arbitration (except with respect to the payment of
money) to determine whether a matter would, with the passage of time, constitute
a default, such passage of time shall not commence to run until any such
affirmative arbitrated determination, as long as it is simultaneously determined
in such arbitration that the challenge of such matter as a potential Tenant
default or Landlord default was made in good faith. As to any matter submitted
to arbitration with respect to the payment of money, to determine whether a
matter would, with the passage of time, constitute a default, such passage of
time shall not commence to run in the event that the party which is obligated to
make the payment does in fact make the payment to the other party. Such payment
can be made "under protest," which shall occur when such payment is accompanied
by a good faith notice stating the reasons that the party has elected to make a
payment under protest. Such protest will be deemed waived unless the subject
matter identified in the protest is submitted to arbitration as set forth in
this Section 29.29.
29.29.2 JAMS. Any dispute to be arbitrated pursuant to the
provisions of this Section 29.29 shall be determined by binding arbitration
before a retired judge of the Superior Court of the State of California (the
"Arbitrator") under the auspices of Judicial Arbitration & Mediation Services,
Inc. ("JAMS"). Such arbitration shall be initiated by the parties, or either of
them, within ten (10) days after either party sends notice (the "Arbitration
Notice") of a demand to arbitrate to the other party and to JAMS. The
Arbitration Notice shall contain a description of the subject matter of the
arbitration, the dispute with respect thereto, the amount involved, if any, and
the remedy or determination sought. The parties may agree on a retired judge
from the JAMS panel. If they are unable to promptly agree, JAMS will provide a
list of three available judges who, to the extent available, have had extensive
experience in handling real estate commercial lease transactions as
practitioners and each party may strike one. The remaining judge (or if there
are two, the one selected by JAMS) will serve as the Arbitrator. In the event
that JAMS shall no longer exist or if JAMS fails or refuses to accept submission
of such dispute, then the dispute shall be resolved by binding arbitration
before the American Arbitration Association ("AAA") under the AAA's commercial
arbitration rules then in effect.
29.29.3 Arbitration Procedure.
29.29.3.1 Pre-Decision Actions. The Arbitrator shall
schedule a pre-hearing conference to resolve procedural matters, arrange for the
exchange of information, obtain stipulations, and narrow the issues. The parties
will submit proposed discovery schedules to the Arbitrator at the pre-hearing
conference. The scope and duration of discovery will be within the sole
discretion of the Arbitrator. The Arbitrator shall have the discretion to order
a pre-hearing exchange of information by the parties, including, without
limitation, production of requested documents, exchange of summaries of
testimony of proposed witnesses, and examination by
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deposition of parties and third-party witnesses. This discretion shall be
exercised in favor of discovery reasonable under the circumstances.
29.29.3.2 The Decision. The arbitration shall be conducted
in Los Angeles, California. Any party may be represented by counsel or other
authorized representative. In rendering a decision(s), the Arbitrator shall
determine the rights and obligations of the parties according to the substantive
and procedural laws of the State of California and the provisions of this Lease.
The Arbitrator's decision shall be based on the evidence introduced at the
hearing, including all logical and reasonable inferences therefrom. The
Arbitrator may make any determination, and/or grant any remedy or relief (an
"Arbitration Award") that is just and equitable. The decision must be based on,
and accompanied by, a written statement of decision explaining the factual and
legal basis for the decision as to each of the principal controverted issues.
The decision shall be conclusive and binding, and it may thereafter be confirmed
as a judgment by the Superior Court of the State of California, subject only to
challenge on the grounds set forth in the California Code of Civil Procedure
Section 1286.2. The validity and enforceability of the Arbitrator's decision is
to be determined exclusively by the California courts pursuant to the terms and
conditions of this Lease. The Arbitrator shall award costs, including without
limitation attorneys' fees, and expert and witness costs, to the prevailing
party as defined in California Code of Civil Procedure Section 1032 ("Prevailing
Party"), if any, as determined by the Arbitrator in his discretion. The
Arbitrator's fees and costs shall be paid by the non-prevailing party as
determined by the Arbitrator in his discretion. A party shall be determined by
the Arbitrator to be the prevailing party if its proposal for the resolution of
dispute is the closer to that adopted by the Arbitrator.
29.30 Calendar Days. All references made in this Lease to the word
"days," whether for notices, schedules or other miscellaneous time limits, shall
at all times herein be deemed to mean calendar days, unless specifically
references as "business" or "working" days. Business or working days shall mean
the days Monday-Friday, excluding Holidays.
29.31 Covenants and Conditions. It is agreed that each of the provisions
of this Lease shall be terms, covenants, as well as conditions, and the failure
of Tenant or Landlord to comply with any of the terms, covenants or conditions
of this Lease shall entitle Tenant or Landlord to exercise the remedies of
Tenant on default or Landlord on default as set forth in this Lease.
29.32 Survival of Provisions Upon Termination of Lease. Any term,
covenant or condition of this Lease which requires the performance of
obligations or forbearance of an act by either party hereto after the
termination of this Lease shall survive such termination of this Lease. Such
survival shall be to the extent reasonably necessary to fulfill the intent
thereof, or if specified, to the extent of such specification, as same is
reasonably necessary to perform the obligations and/or forbearance of an act set
forth in such term, covenant or condition. Notwithstanding the foregoing in the
event a specific term, covenant or condition is expressly provided for in such a
clear fashion as to indicate that such performance of an obligation or
forbearance of an act is no longer required, then the specific shall govern over
this general provision of this Lease.
29.33 Good Faith. Except (i) for matters for which there is a standard
of consent or discretion specifically set forth in this Lease; (ii) matters
which could have an adverse effect on
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the Building Structure or the Building Systems, or which could affect the
exterior appearance of the Building, or (iii) matters covered by Article 4
(Additional Rent), Article 10 (Insurance), or Article 19 (Defaults; Remedies) of
this Lease (collectively, the "Excepted Matters"), any time the consent of
Landlord or Tenant is required under this Lease, such consent shall not be
unreasonably withheld or delayed, and, except with regard to the Excepted
Matters, whenever this Lease grants Landlord or Tenant the right to take action,
exercise discretion, establish Rules and Regulations or make an allocation or
other determination, Landlord and Tenant shall act reasonably and in good faith.
29.34 Counterparts. This Lease may be executed in counterparts with the
same effect as if both parties hereto had executed the same document. Both
counterparts shall be construed together and shall constitute a single lease.
29.35 Professional Fees. The prevailing party in any action or
proceeding brought under or pursuant to this Lease shall be entitled to recover
from the losing party any costs or expenses incurred by the prevailing party in
connection with such action or proceeding, including, without limitation,
reasonable attorneys' fees.
29.36 Telecommunications Equipment. At any time during the Lease Term,
subject to the terms of this Section 29.36 and Applicable Law, Tenant may
install, at Tenant's sole cost and expense, one (1) satellite dish or antennae,
not to exceed thirty-six (36) inches in diameter (the "Telecommunications
Equipment"), upon the roof of the Building. The physical appearance and
specifications of the Telecommunications Equipment shall be subject to
Landlord's approval, the location of any such installation of the
Telecommunications Equipment shall be designated by Landlord subject to Tenant's
reasonable approval, and Landlord may require Tenant to install screening around
such Telecommunications Equipment, at Tenant's sole cost and expense, as
reasonably designated by Landlord. Tenant shall pay to Landlord, in the same
manner and pursuant to the same timing and conditions as Base Rent, the
prevailing rate charged by Landlord from time to time with respect to space
utilized by Tenant on the roof of the Building, provided that in no event shall
such rate materially exceed that charged for rooftop space by landlords of the
Comparable Buildings. Tenant shall maintain such Telecommunications Equipment,
at Tenant's sole cost and expense. In the event Tenant elects to exercise its
right to install the Telecommunication Equipment, which right must be exercised,
if at all, prior to the expiration of the expiration of the first day of the
seventh (7th) month of the second (2nd) Lease Year of the initial Lease Term,
then Tenant shall give Landlord prior written notice thereof and Landlord and
Tenant shall execute a commercially reasonable form of rooftop equipment
agreement covering Tenant's installation, maintenance, repair, and compliance
with law of such Telecommunications Equipment, Tenant's indemnification of
Landlord with respect to the Telecommunications Equipment, Tenant's obligation
to remove such Telecommunications Equipment upon the expiration or earlier
termination of this Lease and repair any resulting damage to the Building, and
other related matters.
29.37 Guaranty. This Lease is subject to and conditioned upon Tenant's
delivery to Landlord, concurrently with Tenant's execution and delivery of this
Lease, a guaranty fully executed by and binding upon Getty Images, Inc., a
Delaware corporation, as guarantor. Said guaranty shall be in the form of and
upon the terms contained in the Guaranty of Lease attached hereto as EXHIBIT G.
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IN WITNESS WHEREOF, Landlord and Tenant have caused their duly
authorized representatives to execute this Lease as of the day and date first
above written.
"Landlord":
CST WATER GARDEN II, L.L.C.,
a Delaware limited liability company
By: Snyder TAFC Development, LLC,
a California limited
liability company
Its: Manager Member
By: J.H. Snyder Company, LLC
a California limited
liability company
Its: Manager
By:
----------------------------
Its: Authorized Member
"Tenant":
TRI-ENERGY PRODUCTIONS, INC.,
a California corporation
By:
-------------------------------------
Its:
--------------------------------
By:
-------------------------------------
Its:
--------------------------------
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EXHIBIT 10.9
********************************************************************************
LEASE DATED AS OF APRIL 1, 2000
BY AND BETWEEN
THE RECTOR, CHURCH-WARDENS AND VESTRYMEN
OF TRINITY CHURCH IN THE CITY OF NEW YORK, AS LANDLORD
AND
PHOTODISC, INC., AS TENANT
88******************************************************************************
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ENTIRE 4TH AND 6TH FLOORS AND PORTION OF 5TH FLOOR
75 VARICK STREET
NEW YORK, NEW YORK
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PARISH OF TRINITY CHURCH IN THE CITY OF NEW YORK
REAL ESTATE DEPARTMENT
74 TRINITY PLACE
NEW YORK, NEW YORK 10006-2088
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TABLE OF CONTENTS
<TABLE>
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<S> <C>
ARTICLE ONE TERM; RENT; FREE RENT........................................................................2
ARTICLE TWO USE..........................................................................................3
ARTICLE THREE REPAIRS; NOISE AND VIBRATION...............................................................4
ARTICLE FOUR ALTERATIONS AND FIXTURES....................................................................5
ARTICLE FIVE COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS..........................................8
ARTICLE SIX RULES AND REGULATIONS........................................................................8
ARTICLE SEVEN PLATE GLASS................................................................................9
ARTICLE EIGHT CARE OF SIDEWALKS..........................................................................9
ARTICLE NINE LANDLORD'S ACCESS TO THE PREMISES...........................................................9
ARTICLE TEN ELECTRIC CURRENT; LIVE STEAM................................................................10
ARTICLE ELEVEN CONDEMNATION AND DEMOLITION..............................................................11
ARTICLE TWELVE MECHANIC'S LIENS.........................................................................12
ARTICLE THIRTEEN SUBORDINATION..........................................................................12
ARTICLE FOURTEEN CERTIFICATE OF OCCUPANCY...............................................................14
ARTICLE FIFTEEN VAULTS..................................................................................14
ARTICLE SIXTEEN FIRE AND OTHER CASUALTY.................................................................14
ARTICLE SEVENTEEN CHANGE IN USE OF PREMISES, SUBLETTING AND ASSIGNMENT..................................16
ARTICLE EIGHTEEN WAIVER AND SURRENDER; REMEDIES CUMULATIVE..............................................22
</TABLE>
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ARTICLE NINETEEN NO REPRESENTATIONS AS TO PREMISES, CERTIFICATE OF OCCUPANCY AND USE....................23
ARTICLE TWENTY LIMITATION OF LANDLORD'S LIABILITY.......................................................23
ARTICLE TWENTY-ONE INDEMNITY BY TENANT..................................................................24
ARTICLE TWENTY-TWO NOTICES..............................................................................25
ARTICLE TWENTY-THREE INSOLVENCY.........................................................................25
ARTICLE TWENTY-FOUR REMEDIES OF THE LANDLORD ON DEFAULT IN PERFORMANCE BY THE TENANT....................27
ARTICLE TWENTY-FIVE DEFAULT.............................................................................27
ARTICLE TWENTY-SIX REMEDIES AND DAMAGES.................................................................29
ARTICLE TWENTY-SEVEN SURRENDER AT EXPIRATION............................................................30
ARTICLE TWENTY-EIGHT QUIET ENJOYMENT....................................................................31
ARTICLE TWENTY-NINE SECURITY DEPOSIT....................................................................31
ARTICLE THIRTY REAL ESTATE TAX AND OPERATING EXPENSE ESCALATION.........................................33
ARTICLE THIRTY-ONE SERVICES.............................................................................35
ARTICLE THIRTY-TWO INSURANCE............................................................................37
ARTICLE THIRTY-THREE DEFAULT UNDER OTHER LEASES.........................................................38
ARTICLE THIRTY-FOUR WORK TO BE DONE BY LANDLORD.........................................................38
ARTICLE THIRTY-FIVE CONSENT TO JURISDICTION.............................................................38
ARTICLE THIRTY-SIX TENANT LIABILITY.....................................................................38
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ARTICLE THIRTY-SEVEN ADJACENT EXCAVATION-SHORING........................................................39
ARTICLE THIRTY-EIGHT FAILURE TO GIVE POSSESSION.........................................................39
ARTICLE THIRTY-NINE BROKER..............................................................................39
ARTICLE FORTY RENT RESTRICTIONS.........................................................................40
ARTICLE FORTY-ONE CERTIFICATES BY TENANT................................................................40
ARTICLE FORTY-TWO RESTRICTIONS ON TENANT'S USE..........................................................40
ARTICLE FORTY-THREE HAZARDOUS MATERIALS.................................................................41
ARTICLE FORTY-FOUR MISCELLANEOUS........................................................................41
ARTICLE FORTY-SIX LANDLORD'S CONTRIBUTION...............................................................43
ARTICLE FORTY-SIX GENERATOR.............................................................................47
SCHEDULE A RULES AND REGULATIONS........................................................................(i)
SCHEDULE B CLEANING SPECIFICATIONS......................................................................(v)
EXHIBIT A - FLOOR PLANS
EXHIBIT B - CERTIFICATE OF OCCUPANCY
EXHIBIT C - WORK LETTER
</TABLE>
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THIS LEASE made as of the 1st day of April, 2000 between THE RECTOR,
CHURCH-WARDENS AND VESTRYMEN OF TRINITY CHURCH IN THE CITY OF NEW YORK, a
religious corporation (hereafter referred to as "the Landlord"), having its
offices at 74 Trinity Place, Borough of Manhattan, City, County and State of New
York, and PHOTODISC, INC. (hereafter referred to as "the Tenant"), a corporation
organized under the laws of the state of Washington, having an address at 701
North 34th Street, Suite 400, Seattle, Washington 98103
W I T N E S S E T H :
That the Landlord hereby lets and leases to the Tenant, and the Tenant
hereby takes and hires from the Landlord, the following described spaces in the
building known as 1 Hudson Square, having a street address of 75 Varick Street,
in the Borough of Manhattan, City, County and State of New York (hereafter
referred to as "the building"), with the privilege to the Tenant of using
(subject to such reasonable rules and regulations as the Landlord shall from
time to time prescribe) the necessary entrances and appurtenances to the
premises, reserving to the Landlord all other portions of the building not
herein specifically demised:
<TABLE>
<CAPTION>
Shown By
Cross-Hatching
Unit of Space on Exhibit Referred to as
- -------------- -------------- --------------
<S> <C> <C>
Portion of Basement A-1 the "Basement Space"
Portion of 4th Floor A-2 the "4th Floor Initial Space"
Portion of 4th Floor A-3 the "Europadisk Space"
Portion of 4th Floor A-4 the "Dean Witter Space"
Portion of 5th Floor A-5 the "5th Floor Initial Space"
Portion of 6th Floor A-6 the "6th Floor Initial Space"
Portion of 6th Floor A-7 the "Tri-Don Space"
Portion of 6th Floor A-8 the "Astoria Space"
Portion of 6th Floor A-9 the "Power Color Space"
Portion of 5th Floor A-10 the "Mason Tender Space"
</TABLE>
The Basement Space, 4th Floor Initial Space, the 5th Floor Initial
Space, and the 6th Floor Initial Space are hereinafter collectively referred to
as the "Initial Premises"; all other spaces described above are hereinafter
collectively referred to as "Additional Space"; and all of the units of space
described above are hereinafter referred to the "Premises". At such time as
Tenant occupies the entire 4th Floor or entire 6th Floor, the Premises shall
include that portion of the 4th or 6th Floors, as the case may be, which is
presently a common corridor, so that, with respect to such floor, the Premises
shall be as shown by hatching on Exhibit A-11, which is a typical floor plan.
The several portions of the Premises shall become available at different times.
The Commencement Date and proportionate share for the Initial Premises and each
portion of Additional Space are set forth below. Other than the Initial
Premises, the Commencement Date for each portion of Additional Space is an
estimate and the Commencement Date for each such portion shall be as set forth
in Article One. Subject to paragraph (g) of Article One below, Tenant's right to
occupy the various units of space constituting the Premises, and the obligation
to pay rent, additional rent and other charges with respect to the various units
of space shall commence as of the later of (a) the Commencement Date indicated
below or (b) the date upon which possession is delivered to Tenant.
Unit of Commencement Proportionate
Space Date Share
Initial Premises April 1, 2000 8.64%
Europadisk Space July 1, 2000* 3.56%
Dean Witter Space February 1, 2002 1.14%
Tri-Don Space August 1, 2000* 2.25%
Astoria Space June 1, 2000* 1.38%
Power Color Space July 1, 2000* 1.19%
Mason Tender Space October 1, 2007 1.01%
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* Landlord is negotiating with the tenants occupying these units of
space in order to obtain early lease terminations so that Landlord may deliver
the spaces on or before the dates set forth above. Tenant has been advised of
the actual lease expiration dates applicable to each portion of space, and
Tenant acknowledges that Landlord cannot guaranty delivery of such portions of
the Premises by the estimated Commencement Date stated above. As more fully set
forth in Article Thirty-Eight hereof, Landlord shall have no liability to Tenant
if Landlord is unable to deliver one or more of such portions of the Premises to
Tenant by the dates set forth above, Tenant agreeing to accept the risk of such
non-delivery by Landlord. Landlord shall continue to negotiate in good faith
with these tenants to bring the negotiations to a successful conclusion to meet
the estimated Commencement Date.
This letting is upon the following covenants and conditions, each and
every one of which the Tenant covenants and agrees with the Landlord to keep and
perform, and the Tenant agrees that the covenants herein contained on the part
of the Tenant to be performed, shall be deemed conditional limitations, as well
as covenants and conditions.
ARTICLE ONE
TERM; RENT; FREE RENT
(a) The term shall commence (1) with respect to the Initial Premises,
April 1, 2000 (the "Initial Premises Commencement Date"), and (2) with respect
to the other portions of the Premises, upon delivery to Tenant of vacant
possession of such Premises (such delivery dates being referred to hereinafter
as the "_______ Space Commencement Date,"), and shall expire on March 31, 2015
(or until such term shall sooner cease and expire or be terminated as
hereinafter provided) (the "Expiration Date"), at an annual rent ( the "fixed
rent") of :
<TABLE>
<CAPTION>
Unit of Fixed Rent Fixed Rent Fixed Rent
Space 4/1/00-3/31/05 4/1/05-3/31/10 4/1/10-3/31/15
<S> <C> <C> <C>
Initial Premises $2,861,552 $2,944,857 $3,157,285
Europadisk Space $1,218,985 $1,255,427 $1,348,354
Dean Witter Space $ 390,261 $ 401,928 $ 431,679
Tri-Don Space $ 771,123 $ 794,176 $ 852,961
Astoria Space $ 470,909 $ 484,987 $ 520,886
Power Color Space $ 406,217 $ 418,361 $ 449,328
Mason Tender Space $ 346,475 $ 356,833 $ 383,246
Total Fixed Rent $6,465,522 $6,656,569 $7,143,739
</TABLE>
(b) Fixed rent shall be payable in advance on the first day of each
month during the term of this lease at the offices of the Landlord or at such
other place as the Landlord may designate. The Tenant shall pay the fixed rent
without demand therefor and without any set-off, deduction, abatement or offset
whatsoever, except that the Tenant shall pay the first monthly installment of
fixed rent (with respect to the Initial Premises only) upon the execution of
this lease. If the Commencement Date applicable to any portion of the Premises
occurs on a day other than the first day of a calendar month, the fixed rent for
such calendar month shall be pro-rated based on the number of days in the month.
All rent payments shall be paid in lawful money of the United States of America,
which shall be legal tender in payment of any debts and dues, public and
private, at the time of payment by good and sufficient check subject to
collection and drawn on a New York City bank or trust company which is a member
of the New York Clearinghouse Association.
(c) All sums and charges other than fixed rent due and payable by the
Tenant pursuant to this lease, including, without limitation, charges for
electricity (as defined in Article TEN), escalation charges (as defined in
Article THIRTY) and late charges assessed pursuant to this lease are called
"additional rent". All regularly recurring items of additional rent, including,
without limitation, escalation charges which are payable on a monthly basis
pursuant to the provisions of Article
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THIRTY, shall be due and payable together with the fixed rent on the first day
of each month during the term of this lease. All other items of additional rent
shall be paid to the Landlord within fifteen days after delivery of a notice or
demand therefor, unless otherwise set forth herein. Fixed rent and additional
rent are collectively referred to herein as "rent". The failure of the Tenant to
make any payment of additional rent shall entitle the Landlord to exercise all
of the rights and remedies provided herein for the non-payment of fixed rent.
(d) Intentionally omitted.
(e) If any installment of rent shall not be paid within ten (10) days
following the date on which the same shall be due and payable pursuant to this
lease then, in addition to, and without waiving or releasing any other rights
and remedies of the Landlord, the Tenant shall pay to the Landlord a late charge
of one and one-half (1 1/2%) percent per month computed (on the basis of a
30-day month) from the date on which each such installment became due and
payable to the date of payment of the installment on the amount of each such
installment or installments, as liquidated damages for the Tenant's failure to
make prompt payment, and the same may be collected on demand.
(f) In the event any check issued by the Tenant is dishonored for any
reason, the Tenant shall submit a replacement check within three (3 ) business
days following notice from the Landlord that the check was dishonored. Tenant's
failure to submit a replacement check within such time period shall constitute
an Event of Default under this lease.
(g) Notwithstanding the foregoing, provided no Event of Default shall
have occurred which shall remain uncured, the Tenant shall not be required to
pay fixed rent with respect to a particular portion of the Premises (i) subject
to the last sentence of this paragraph (g), for the period beginning on the
Commencement Date for that portion of the Premises and ending three months after
the completion of the Landlord's Initial Work applicable to such Premises (as
described in the Work Sheet attached hereto and made a part hereof) and (ii) for
the seventeenth, eighteenth, nineteenth and twentieth calendar months following
completion of such Landlord's Initial Work; provided, however, that the Tenant
shall during such abatement period pay all other amounts due under this lease
including, but not limited to, any additional rent payable pursuant to Article
THIRTY of this lease and any service charges for electric current, and overtime
elevator, air-conditioning or heat services. Upon the occurrence of an Event of
Default, the fixed rent at the monthly rate set forth in this lease shall be
payable during the period in which the Tenant would otherwise be entitled to the
use of the Premises free of fixed rent. Any such rent payment shall be paid
within five days after demand therefore and shall constitute additional rent
under this lease. After the date on which any existing tenant shall surrender
its portion of the Premises and prior to the Commencement Date applicable to
that portion of the Premises, Landlord shall afford to Tenant access to such
portion of the Premises for the purpose of taking measurements and planning its
initial alterations. Notwithstanding the first sentence of this paragraph (g),
with respect to the Initial Premises, the free rent period shall be one full
month following the completion of Landlord's Initial Work with respect to the
Initial Premises, and for the second month following the completion of
Landlord's Initial Work, Tenant shall pay the sum of $11,537.33.
ARTICLE TWO
USE
(a) The Tenant shall use the Premises (other than the Basement Space)
only for executive and general offices in connection with Tenant's business of
providing high-quality photography, moving images, art prints and related
products, except that if all or a portion of the Premises (other than the
Basement Space) shall be sublet in accordance with the terms of this lease, or
if this lease shall be assigned in accordance with the terms of this lease, then
the use shall be for executive and general offices in connection with the
business of the permitted subtenant or permitted assignee. The Basement Space
shall be used solely for "dead" storage purposes.
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(b) If any portion of the Premises consists of basement space, such
portion shall be used only for storage purposes.
(c) No auction sale and no other sale of all or substantially all of
the Tenant's property, stock, fixtures and machinery, except a sale made in
connection with an assignment of this lease to another tenant for which the
Landlord's consent shall have been obtained, shall be held at the Premises
unless the provisions of Article THIRTY-ONE (g) of this lease shall have been
complied with.
(d) Tenant shall take reasonable steps to limit the number of
messengers having access to the Premises, including, but not limited to,
installing a messenger center on the Canal Street side of the ground floor of
the building in a location to be designated by the Landlord. Construction of the
messenger center shall be subject to the provisions of Article Four hereof.
ARTICLE THREE
REPAIRS; NOISE AND VIBRATION
(a) The Tenant shall take good care of the Premises and the fixtures,
appurtenances, equipment and facilities therein and shall make, as and when
needed, all repairs in and about the Premises required to keep them in good
order and condition; such repairs to be equal in quality to the original work
provided that the Tenant shall not be obligated for structural or exterior
repairs to the building or for repairs to the systems and facilities of the
building for the use or service of tenants generally, except where structural or
exterior repairs or repairs to such systems and facilities are made necessary by
reason of one or more of the occurrences described below in clauses (i) through
(iv) of this Article THREE (a). All repairs for which the Tenant is responsible
pursuant to this Article shall be made by a contractor reasonably approved by
the Landlord. Should the Tenant fail to repair any condition in or about the
Premises or the fixtures, appurtenances, equipment and facilities therein which
is of such a nature that its neglect would result in damage or danger to the
building, its fixtures, appurtenances, facilities and equipment, or to its
occupants (of which Landlord's judgment, reasonably exercised, shall be
conclusive) or, in the case of repairs of any other nature, should the Tenant
have failed to make the required repairs or to have begun in good faith, the
work necessary to make them within five business days after notice from the
Landlord of the condition requiring repair, the Landlord may, in either such
case, immediately enter the Premises and make the required repairs at the
expense of the Tenant. The Landlord may make, at the expense of the Tenant, any
repairs to the building or to its fixtures, appurtenances, facilities or
equipment, whether of a structural or any other nature, which are required by
reason of damage or injury due (i) to the negligence or willful misconduct of
the Tenant or its employees, agents, licensees or visitors; (ii) to the moving
into or out of the building, of property being delivered to the Tenant or taken
from the Premises by or on behalf of the Tenant; (iii) to the installation,
repair or removal, use or operation of the property of the Tenant in the
Premises; or (iv) to the faulty operation of any machinery, equipment, or
facility installed in the Premises by or for the Tenant. The Tenant will pay the
cost of any repairs made by the Landlord pursuant to this paragraph within
fifteen days after presentation of bills therefor, or the Landlord may, at its
option, add such amounts to any installment or installments of rent due under
this lease and collect the same as additional rent. The liability of the Tenant
under this Article THREE shall survive the expiration or other termination of
this lease for a period of one year.
(b) Except to the extent hereinabove set forth, and subject to the
provisions of Article SIXTEEN, the Landlord shall maintain in working order and
repair the exterior and the structural portions of the building, including the
structural portions of the Premises, and the public portions of the building
interior and the building plumbing, electrical, heating, fire protection, life
safety, sprinkler and ventilating systems, (excluding all ductwork, diffusers,
thermostat controls and any other part of the ventilating system located outside
of the machine room, if any, on the floor) serving the Premises. The Tenant
shall give prompt notice of any defective condition in the Premises for which
the Landlord may be responsible hereunder. There shall be no allowance to the
Tenant for diminution in rental value and no liability on the part of the
Landlord by reason of inconvenience, annoyance or injury to business arising
from the Landlord or others making repairs, alterations, additions or
improvements in or to any portion of the building or the Premises or in and to
the
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fixtures, appurtenances or equipment thereof. It is specifically agreed that the
Tenant shall not be entitled to any set off or reduction of rent by reason of
any failure of the Landlord to comply with the provisions of this or any other
Article of the lease. Landlord shall use reasonable commercial efforts to
minimize any interference with the conduct of Tenant's business on account of
the work undertaken by Landlord in accordance with this Article Three, but
Landlord shall not be required to perform any such work on an overtime basis.
(c) Tenant shall not install or maintain equipment, machinery or
manufacturing equipment of any description in the Premises, the operation of
which produces noise or vibration which is transmitted beyond the Premises. If
the Tenant does install such equipment or machinery and the Landlord deems it
necessary that the noise or vibration of such machinery or equipment be
diminished, eliminated, prevented or confined to the Premises, the Landlord may,
at its election, give written notice to the Tenant, requiring that the Tenant
provide and install rubber or other approved settings for absorbing, preventing
or decreasing the noise or vibration of such machinery or equipment within
fifteen days and if such measures are unsuccessful that the Tenant immediately
remove said equipment from the Premises within fifteen days. The judgment of the
Landlord of the necessity of such installation shall be conclusive, and the
installation shall be made in such manner and of such material as the Landlord
may direct. Should the Tenant fail to comply with such request within fifteen
days, the Landlord may do the work necessary to absorb, prevent or decrease the
noise or vibration of such machinery or equipment and the Tenant will pay to the
Landlord the cost of such work within fifteen days after demand or such cost
may, at the option of the Landlord, be added to any installment or installments
of rent under this lease and shall be payable by the Tenant as additional rent.
ARTICLE FOUR
ALTERATIONS AND FIXTURES
(a) The Tenant shall not make any alteration, addition or improvement
in or upon the Premises, nor incur any expense therefor, without having first
obtained the written consent of the Landlord therefor. The Tenant shall not be
required to obtain the Landlord's consent for alterations, additions or
improvements which are decorative in nature, such as painting or carpeting
(although the Tenant shall give the Landlord prior written notice of the
performance of such work). If the Tenant shall desire to make alterations,
additions or improvements to fit out the Premises for the Tenant's use which
will not affect the exterior of the building or adversely affect the structure
of the building or the operation of any of the systems or facilities of the
building for the use of any tenant or violate the requirements of government
hereafter referred to, the Landlord's approval will not be unreasonably withheld
or delayed. In no event shall the Tenant make any alteration at any time when an
Event of Default is outstanding. Any and all alterations may be made only
subject to and in compliance with the following, as well as all other reasonable
rules and regulations promulgated by the Landlord with respect to the
performance of alterations:
(i) Prior to the commencement of any alteration, the Tenant shall,
except in an emergency, give at least 30 days' notice to Landlord for
all alterations and shall obtain the Landlord's prior approval of the
licensed architect and/or licensed professional engineer and the
contractors and/or mechanics selected by the Tenant, as well as the
Landlord's prior written approval of detailed plans and specifications
prepared by the approved architect and/or engineer and shall reimburse
the Landlord for its out-of-pocket expenses for outside consultants to
review such plans and specifications; and no alterations shall be made
except as are in all material respects in accordance with such plans
and specifications or any approved changes thereto. If requested by the
Landlord, the Tenant shall submit a copy of the general contractor's
contract or other contract for the alterations which shall show the
cost thereof.
(ii) No alteration shall be commenced until the Tenant shall have
obtained and paid for all required permits and authorizations of any
City, State or Federal governmental agency or any board, bureau,
department or body thereof, having or asserting jurisdiction, copies of
which shall be supplied to the Landlord. Landlord shall reasonably and
diligently cooperate with
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Tenant in connection with the performance of its alterations, additions
or improvements, and with respect to alterations approved by Landlord,
shall cooperate (but at no expense to Landlord) with Tenant and execute
such documents as may be reasonably required by Tenant to obtain such
permits and authorizations, including, without limitation, alteration
applications.
(iii) Prior to the commencement of any alteration, the Tenant shall
submit to the Landlord duplicate original policies or certificates
thereof of worker's compensation insurance covering all persons
employed in connection with the work, and builder's all risk and
comprehensive general public liability insurance in such reasonable and
customary amounts and with such companies as may be reasonably approved
by the Landlord and such coverage shall be maintained until all such
alterations have been completed. Such policies shall name the Landlord
and any mortgagee or holder of any ground or underlying lease as
additional named insureds.
(iv) Upon completion of the alterations, the Tenant, at the Tenant's
expense shall obtain certificates of final approval as may be required
by any governmental agency, board, bureau, department or body thereof,
and shall deliver such approvals to the Landlord, together with
"as-built" plans and specifications for such alterations. In addition,
one copy of final drawings shall be delivered to the Landlord in
AutoCad, Release 14 format, either on a 3 1/2" disk or CD Rom, or such
other format as shall from time to time be reasonably designated by the
Landlord.
(v) The cost of all alterations shall be paid when due so that the
Premises shall at all times be free of liens for labor and materials
supplied or claimed to have been supplied to the Premises and free from
any encumbrances, or security interests.
(vi) All alterations, additions or improvements shall be made and
installed in a good and workmanlike manner and shall comply with all
requirements, by law, regulation or rule, of the Federal, State and
City Governments and all subdivisions and agencies thereof, and with
the requirements of the New York Fire Insurance Exchange, New York
Board of Fire Underwriters and all other bodies exercising similar
functions, and shall conform to any particular reasonable requirements
of the Landlord expressed in its consent for the making of any such
alterations, additions, and improvements. The Landlord's review and
approval of the Tenant's plans shall not constitute, nor be deemed to
constitute a representation or agreement by the Landlord that such
plans and specifications comply with such requirements. Such compliance
shall be the sole responsibility of the Tenant.
Any such work once begun shall be completed with all reasonable
dispatch, but shall be done at such time and in such manner as not to interfere
unreasonably with the occupancy of any other tenant or the progress of any work
being performed by or on account of the Landlord. If requested to do so by the
Tenant in connection with the Landlord's approval of any alteration, addition or
improvement, the Landlord will advise the Tenant whether the alteration,
addition or improvement will be required to be removed by the Tenant at the
expiration or earlier termination of this lease or may remain upon the Premises
to become the property of the Landlord. If no such advice is given by the
Landlord, the provision of subdivision (b) of this Article shall apply.
(b) All alterations, additions or improvements, which may be made or
installed in or upon the Premises (whether made during or prior to the term of
this lease or during the term of any prior lease of the Premises by the
Landlord, the Tenant or any previous tenant), except the furniture, trade
fixtures, stock in trade, and like personal property of the Tenant, shall be
conclusively deemed to be part of the freehold and the property of the Landlord,
and shall remain upon the Premises, and, upon the expiration or any termination
of the term of this lease, shall be surrendered therewith as a part thereof,
except for any Specialty Alterations which shall, unless the Landlord advises
the Tenant to the contrary, be removed by the Tenant, at the Tenant's expense,
upon the expiration or earlier termination of this lease, provided, however,
that alterations, additions and improvements installed by the Tenant at Tenant's
expense shall remain the property of Tenant until the expiration or earlier
termination of this lease, but Tenant shall not remove, destroy or alter such
alterations, additions and improvement without Landlord's consent and, in any
event, shall replace such alterations, additions
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and improvements with alterations, additions or improvements of equal or greater
value. A "Specialty Alteration" shall mean an alteration which is in excess of
standard office installations such as kitchens, cafeterias, vaults, sloping,
terraced or raised floors, internal staircases, and other slab penetrations,
data centers, fire suppression or uninterrupted power supply systems,
generators, fuel tanks, dumbwaiters, and other improvements of a similar nature.
The Tenant, at or prior to the expiration or any termination of the term of this
lease shall, at its own expense, remove all its furniture, trade fixtures, stock
in trade and like personal property. The Tenant shall restore and repair, at its
own cost and expense, any damage or disfigurement of the Premises occasioned by
any such removals or remaining after such removals, so as to leave the Premises
in good order and condition or, the Landlord, at its option, may do such
restoration and repair and the Tenant will pay the reasonable cost thereof upon
demand. If any furniture, trade fixtures, stock in trade or other personal
property of the Tenant shall not be removed at the expiration or any termination
of this lease, the Landlord, at the Landlord's option, may treat the same as
having been irrevocably abandoned, in which the Tenant shall have no further
right, title or interest therein and the Landlord may remove the same from the
Premises, disposing of them in any way which the Landlord sees fit to do, and
the Tenant shall, on demand, pay to the Landlord the expense incurred by the
Landlord for the removal thereof, as well as the cost of any restoration of the
Premises above provided. The Tenant's obligations under this subdivision (b) of
this Article FOUR shall survive the expiration of this lease for a period of one
year.
(c) The Landlord may at any time during the term of this lease, change
the arrangement or location of the entrance or passageways, doors and doorways,
and the corridors, elevators, stairs, toilets or other parts of the building
used by the public or in common by the Tenant and other tenants (including,
without limitation, the conversion of elevators from a manually-operated to an
automatic self-service basis) and may alter staffing of the building and the
scale and manner of the operation thereof, provided that the services to which
the Tenant is entitled as specified in this lease are not diminished and may
alter the facilities, fixtures, appurtenances and equipment of the building as
it may deem the same advisable, or as it may be required so to do by any
governmental authority, law, rule or regulation, and provided further that
Landlord shall use commercially reasonable efforts to minimize interference with
the conduct of Tenant's business in making such changes and provided that such
changes do not materially reduce the accessibility of the Premises. The Landlord
may change the name, street number or designation by which the building is
commonly known.
(d) The Tenant shall not at any time prior to or during the term of
this lease, directly or indirectly, employ or permit the employment of any
contractor, mechanic or laborer in or about the Premises, whether in connection
with any alteration or improvement or the providing of any services or
otherwise, if such employment would, in the reasonable judgment of the Landlord,
disrupt, or interfere or cause any conflict with, any other contractors,
mechanics, or laborers engaged by the Landlord or any other tenant in the
building. In the event of any such disruption, interference or conflict, the
Tenant, upon demand of the Landlord, shall immediately cause all contractors,
mechanics or laborers causing such disruption, interference or conflict to leave
the building.
(e) The Tenant, at its own sole cost and expense, shall defend the
Premises and the Landlord against all suits for the enforcement of any mechanics
lien or any bond in lieu of such lien, and the Tenant hereby indemnifies the
Landlord and the Premises against any and all damages, expenses, or liabilities
resulting from any such lien or suit. Should the Tenant fail to commence or
diligently proceed to timely discharge any such lien, the Landlord may do so by
payment, bond, or otherwise on thirty days' prior written notice to the Tenant
and the amount paid or incurred therefor by the Landlord shall be payable by the
Tenant as additional rent. Tenant represents and warrants that it has not
performed any alterations in the Premises prior to the Initial Premises
Commencement Date.
(f) If, in connection with the performance of any alterations,
additions or improvements to the Premises, there is any violation against the
building, the curing of which shall be the responsibility of Landlord, which
shall result in actual delay to Tenant or prevent Tenant from obtaining any
governmental permits, consents, approvals or other documentation to commence or
complete Tenant's alterations, additions or improvements, or prevent the
physical (as opposed to legal) occupancy of the Premises, or if any governmental
agency with jurisdiction orders Tenant not
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to occupy the Premises, then Landlord shall promptly and diligently proceed to
cure and remove of record such violations and Tenant shall be entitled to an
abatement of rent equal to the fixed rent and additional rent allocable to the
portion of the Premises in which such alterations, additions or improvements are
prevented from being performed or completed, or with respect to which Tenant has
been ordered not to occupy, for the period during which Tenant shall be so
prevented from performing such alterations, additions or improvements. Such
abatement period shall not commence any earlier than the date which is ten
business days following notice from Tenant to Landlord of a violation which
prevents Tenant from proceeding with its alterations, additions or improvements,
and such abatement period shall only commence if Landlord has not cured such
violation within the ten-business-day period following Tenant's notice.
ARTICLE FIVE
COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS
The Tenant shall promptly comply, at the Tenant's own expense, with all
laws, ordinances, regulations and requirements now or hereinafter enacted, of
the City, State and Federal Government, and all subdivisions and agencies
thereof, and the New York Fire Insurance Exchange, the New York Board of Fire
Underwriters, and of any fire insurance rating organization, and of all other
departments, bureaus, officials, boards and commissions with regard to the
Premises or the use thereof by the Tenant, and (if the Premises are situated on
the ground floor) the sidewalks adjoining the same in so far as such compliance
is made necessary by the Tenant's use of the sidewalks, provided that the Tenant
shall not be required to make structural alterations or additions to the
Premises, alterations to any building systems servicing the Premises, or
alterations to any common areas in the building utilized by Tenant and other
tenants, except where the same are required by reason of the nature of the
Tenant's use of the Premises, the alterations performed in the Premises by the
Tenant, the manner in which its business is carried on in the Premises, or a
failure on the part of the Tenant to conform to the provisions of this lease.
Tenant shall not be required to comply with any such laws, ordinances,
regulations and requirements for so long as Tenant shall be contesting,
diligently and in good faith, Tenant's obligation to comply therewith through
appropriate proceedings brought in accordance with applicable law, provided that
Tenant's failure to comply shall have no adverse effect on Landlord or on other
tenants in the building. The Tenant will not permit the maintenance of any
nuisance upon the Premises or permit its employees, licensees or visitors to do
any illegal act therein, or in and about the building after notice thereof from
the Landlord. If any such law, ordinance, regulation or requirement shall not be
promptly complied with by the Tenant, then the Landlord may, at its option,
enter upon the Premises to comply therewith, and should any fine or penalty be
imposed for failure to comply therewith or by reason of any such illegal act,
the Tenant agrees that the Landlord may, at its option, pay such fine or
penalty, which the Tenant agrees to repay to the Landlord, with interest (as set
forth in Article Twenty-Four) from the date of payment, as additional rent.
ARTICLE SIX
RULES AND REGULATIONS
The Tenant and the Tenant's employees, and any other persons subject to
the control of the Tenant, shall well and faithfully observe all the rules and
regulations annexed hereto as SCHEDULE A, and also any and all reasonable rules
and regulations affecting the Premises, the building or the equipment,
appurtenances, facilities and services thereof, hereafter promulgated by the
Landlord. The Landlord may at any time, and from time to time, prescribe and
regulate the placing of safes, machinery and other things, and regulate which
elevator and entrance shall be used by the Tenant's employees, and for the
Tenant's shipping; and may make such other and further rules and regulations as
in its reasonable judgment may, from time to time, be needed or desirable for
the safety, care or cleanliness of the building and for the preservation of good
order therein. The Landlord shall not be liable to the Tenant for violations of
any rules and regulations by any other tenant, its servants, employees, agents,
visitors or licensees. Notwithstanding the foregoing, the Landlord agrees that
it shall not discriminate against the Tenant in the enforcement of the rules and
regulations promulgated by the Landlord for the building.
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ARTICLE SEVEN
PLATE GLASS
The Landlord may, at its option, either (i) at the Tenant's expense,
keep the plate glass, if any, in the Premises insured in the name of the
Landlord against loss or damage, the premium for which, whether by separate
policy or as a part of a schedule of another policy, shall be paid by the Tenant
to the Landlord, upon demand, or (ii) require the Tenant, at the Tenant's
expense, to keep the plate glass, if any, in the Premises insured in the name of
the Landlord against loss or damage, in which event, the Tenant shall deliver
such policy and evidence of due payment of the premium therefor to the Landlord.
The Tenant shall promptly replace, at its own expense, any and all plate and
other glass damaged or broken from any cause whatsoever in and about the
Premises. If the Tenant fails to do so, the Landlord shall have the right to
replace such glass at the Tenant's expense.
ARTICLE EIGHT
CARE OF SIDEWALKS
If the Premises, or any part thereof, consist of a first floor or any
part thereof, the Tenant shall, at the Tenant's own expense, keep the sidewalk,
gutter and curb in front thereof in a clean condition, but Tenant shall not be
responsible for removal of snow and ice from the sidewalk.
ARTICLE NINE
LANDLORD'S ACCESS TO THE PREMISES
(a) The Tenant shall, without in any way affecting the Tenant's
obligations hereunder, and without constituting any eviction, permit the
Landlord and its agents and designees: (i) at all reasonable hours, upon
reasonable notice, to enter the Premises and have access thereto, for the
purpose of inspecting or examining them and to show them to other persons; or
(ii) to enter the Premises (including, specifically, all mechanical and air
conditioning rooms located therein) to make repairs and alterations, and to do
any work on the Premises or any adjoining premises and any work in connection
with excavation or construction on any adjoining premises or property
(including, but not limited to, the shoring up of the building) and to take in
any of the foregoing instances, any space needed therefor, provided that any
space so taken shall not be material to the conduct of Tenant's business in the
Premises. The Tenant shall permit the Landlord to erect and maintain ducts,
pipes and conduits in and through the Premises. In the exercise of the rights of
the Landlord reserved under this Article NINE, the Landlord will do so in a
manner which minimizes, so far as is practicable, the interference with the
Tenant's use of the Premises or Tenant's wiring or improvements to the Premises
and where ducts, pipes or conduits are to be erected through the Premises will
locate them along walls or ceilings wherever practicable.
(b) In the event that the Premises shall, in the Landlord's reasonable
judgment, become substantially vacated before the expiration of this lease, or
in the event the Tenant shall be removed by summary proceedings or in the event
that, during the last month of the term, the Tenant shall have removed all or
substantially all of the Tenant's property therefrom, the Landlord may
immediately enter into and upon said Premises for the purpose of decorating,
renovating or otherwise preparing same for a new tenant, without thereby causing
any abatement of rent or liability on the Landlord's part for other
compensation, and such acts shall have no effect upon this lease.
(c) If the Tenant or an officer or authorized employee of the Tenant
shall not be personally present to open and permit an entry into said Premises,
at any time, when for any reason an entry therein shall be necessary or
permissible hereunder, the Landlord or the Landlord's agents, may enter the same
by a master key, or may forcibly enter the same without rendering the Landlord
or such agents liable therefor (if during such entry the Landlord shall accord
reasonable care to the Tenant's property) and without in any manner affecting
the obligations and covenants of this lease and in no event shall any such entry
by the Landlord or its agents be deemed an acceptance of a surrender of this
lease, either expressed or implied, nor a waiver by the Landlord of any covenant
of this lease on the part of the Tenant to be performed.
ARTICLE TEN
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ELECTRIC CURRENT; LIVE STEAM
(a) So long as electric current is to be supplied by the Landlord, the
Tenant covenants and agrees to purchase the Tenant's requirements therefor at
the Premises from the Landlord or the Landlord's designated agent at a price
equal to 108% of the Rates (as hereinafter defined) set forth in the rate
schedule of Consolidated Edison Company of New York, Inc. applicable to the
building (or the conjunctional group in which the building is included), plus an
amount equal to all sales, use and gross receipt taxes and other governmental
charges or levies, generally applicable to the purchase and sale of electricity
in New York City (and without regard to whether the Landlord is exempt from
paying or collecting any such tax, charge or levy), including any adjustment for
time-of-day for either demand or consumption. As used herein, the term "Rates"
shall mean the rates for all components of the aggregate cost of purchasing
electricity for the building, including, without limitation, all charges related
to the generation, transmission, distribution and service and all charges for
consumption and demand (including, without limitation, all seasonal and
time-of-day adjustments and fuel escalation charges relating to such consumption
and demand charges). All amounts payable under this Article TEN shall constitute
additional rent for the purpose of the enforcement of the Landlord's rights.
(b) Where more than one meter measures the service of the Tenant in the
building, the service rendered through each meter may be computed and billed
separately in accord with the rates herein provided for. No current shall be
furnished until the equipment of the Tenant has been approved by the proper
authorities, and after such approval, no changes shall be made in such equipment
without the written consent of the Landlord. The Tenant shall pay, upon demand,
the bills for electric current furnished and the use of meters or the Landlord
may, at its option, add such amounts to any installment or installments of fixed
rent due under this lease and collect the same as additional rent. The Tenant
shall comply with such rules, regulations and contract provisions as are
customarily prescribed by public service corporations supplying such services,
for consumption similar to that of the Tenant.
(c) The Landlord may discontinue the supply of electric current under
subdivision (a) at any time on sixty (60) days' notice to the Tenant without
being liable to the Tenant therefor or without in any way affecting this lease
or the liability of the Tenant hereunder or causing the diminution of rent, and
the same shall not be deemed to be a lessening or diminution of services within
the meaning of any law, rule, or regulation now or hereafter enacted,
promulgated, or issued. Should the Landlord give such notice of discontinuance,
the Tenant shall make the Tenant's own arrangements to receive such service
direct from such public utility corporation serving the building and the
Landlord shall permit the Landlord's wires, conduits and meters, to the extent
to which they are safely available for such use and to the extent to which they
may be used under any applicable governmental regulations or the regulations of
such public utility, to be used for the purpose. Should any additional or other
wiring, conduits, meters or any other or different distribution equipment be
required in order to permit the Tenant to receive such service directly from the
public utility, the same will be installed, as the Landlord shall elect, either
by the Landlord or by the Tenant, the cost of which shall be shared equally by
Landlord and Tenant. In the case of central distribution equipment which is used
in connection with the distribution or metering of current supplied to the
Tenant and other tenants of the building, and which is required to be installed
under governmental regulations or the regulations of such utility, the cost of
installation thereof will be prorated among the several tenants, serviced
through the distribution facility in the proportion which their average
consumption of electric current over the next preceding period of not less than
six month's duration bears to the total consumption of electric current by all
tenants during such period, and the Tenant shall pay to the Landlord the fifty
percent (50%) of Tenant's share of such cost of installation, apportioned as
above, within five (5) days following receipt of a statement showing the cost of
the distribution equipment and the manner in which the cost has been allocated
to the Tenant. (The costs described in the immediately preceding sentence are
not intended to include the costs of the upgrading of the building by Landlord
currently in progress.) All such facilities installed by the Tenant shall be
installed in a workmanlike manner which complies with applicable governmental
regulations and the regulations of the public utility. The Landlord will in any
such case permit any pipe-chases or channels available in the building to be
used by the Tenant for the Tenant's cables and conduits, to the extent that the
same may be available and may be safely used for the purpose.
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(d) The Landlord shall not in any way be liable or responsible to the
Tenant for any loss or damage or expense which the Tenant may sustain or incur
if either the quantity or character or electric service is changed or is no
longer available or suitable for the Tenant's requirements, nor shall the
Landlord be in any way responsible for any interruption of service due to
breakdowns, repairs, malfunction of electrical equipment or any other cause
relating to electrical service which is beyond the Landlord's reasonable
control. The Tenant covenants and agrees that at all times its use of electric
current shall never exceed the capacity of existing feeders to the Tenant's
floor(s) or space (if less than an entire floor) or the capacity of the risers
or wiring installation in the building. The Tenant agrees not to connect any
additional electrical equipment to the building electrical distribution system,
other than lamps, typewriters, computers, scanners, printers, servers, copiers,
and other small office machines which consume comparable amounts of electricity,
without the Landlord's prior written consent. If, in the Landlord's sole
judgment, reasonably exercised, the Tenant's electrical requirements necessitate
installation of an additional riser, risers or other necessary equipment, the
same may be installed by the Landlord at the sole cost and expense of the Tenant
(together with Tenant's Proportionate Share of any electrical panels which are
required to be installed as a result of the installation of such additional
risers), which shall be chargeable and collectible as additional rent. If the
Tenant makes written request to install a riser or risers to supply the Tenant's
electrical requirements, such request shall be subject to the prior written
consent of the Landlord in each instance, and such riser, risers or other
equipment shall be installed by the Landlord at the sole cost and expense of the
Tenant, if in the Landlord's sole judgment, reasonably exercised, the same are
necessary and will not cause or create a dangerous or hazardous condition or
entail excessive or unreasonable alterations, repairs or expense or interfere
with or disturb other tenants or occupants. If the Tenant is not utilizing the
full electrical capacity available to the Premises, the Landlord shall have the
right to make such excess capacity available to other occupants of the building.
Prior to taking such excess capacity, Landlord shall notify Tenant of its
intention to do so, and Tenant shall have two weeks in which to demonstrate that
Tenant has an impending need for such electrical capacity. If in Landlord's
reasonable judgment, Tenant fails to demonstrate an impending need for such
electrical capacity, Landlord shall be entitled to proceed to make such excess
capacity available to other occupants of the building.
(e) If there be any facilities for the supply of live steam in the
building, such steam shall be supplied to the Tenant only if separate agreements
are made therefor and pursuant to such arrangements. In the event that such
separate agreements shall be made, the appropriate provisions of this Article
TEN shall be applicable thereto.
ARTICLE ELEVEN
CONDEMNATION AND DEMOLITION
If the Premises or any part thereof, shall be taken or condemned for
any public or quasi public use (other than for temporary use or occupancy), this
lease and the term hereby granted shall terminate as of the date of vesting of
title by reason of such taking. If any other part of the building shall be so
taken and such taking shall, in the reasonable judgment of the Landlord, make
the operation of the building impractical, unprofitable or uneconomical or would
make substantial structural alterations or reconstruction of the building
necessary (even though no part of the Premises be taken), the Landlord may, at
its option, give to the Tenant, at any time after the vesting of title and prior
to the actual taking of possession, thirty (30) days' notice of intention to
terminate this lease, and upon the date designated in such notice, this lease
and the term hereby granted shall terminate. Anything herein to the contrary
notwithstanding, if ten (10%) percent or less of the Premises shall be so
acquired or condemned, the Landlord, at its option, may elect not to terminate
this lease and, in such case, the Landlord shall, at its expense, restore that
part of the Premises not so acquired or condemned to a self-contained rental
unit exclusive of the Tenant's alterations. In no event shall any condemnation
award be apportioned, and the Tenant hereby assigns to the Landlord all right
and claim to any part of such award, but the rent, and all other sums payable by
the Tenant, shall be apportioned as of the date of any such termination of this
lease with respect to all or part of the
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Premises, as the case may be, and in the case of a partial taking, prospective
rent obligations which are based on square footage shall be adjusted
accordingly. Nothing contained in the foregoing portion of this Article ELEVEN
shall be deemed to prevent the Tenant's making claim for and retaining an award
for the damage to or loss of value of its trade fixtures and such of the
installations made by the Tenant as remain the Tenant's property or from making
claim for and retaining any award which may be made to the Tenant for the
Tenant's moving expenses if, and to the extent that, the award to be claimed and
retained by the Tenant is independent of and does not result in a diminution of
the award, and is not payable out of the award to the Landlord for the taking of
the land, building and the Landlord's other property.
ARTICLE TWELVE
MECHANIC'S LIENS
The Tenant will not permit, during the term hereby granted, any
mechanic's or other lien or order for payment of work, labor, services, or
materials furnished or to be furnished to attach to or affect the Premises or
any portion thereof, and agrees that no such lien or order shall under any
circumstances attach to or affect the fee, leasehold or other estate of the
Landlord herein, or the building. The Tenant's obligation to keep the Premises
in repair, and its right to make alterations therein, if any, shall not be
construed as the consent of the Landlord to the furnishing of any such work,
labor or materials within the meaning of any present or future lien law. Notice
is hereby given that the Tenant has no power, authority or right to do any act
or to make any contract which may create, or be the foundation for, any lien
upon the fee or leasehold estate of the Landlord in the Premises or upon the
land or building of which they are a part or the improvements now erected or
hereafter to be erected upon the Premises or the land, or building of which the
Premises are a part; and if any such mechanic's or other lien or order shall be
filed against the Premises or the land or building of which the Premises are a
part, the Tenant shall, within sixty (60) days thereafter, discharge said lien
or order by payment, deposit or by bond fixed in a proper proceeding according
to law. If the Tenant shall fail to take such action, or shall not cause such
lien or order to be discharged within sixty (60) days after the filing thereof,
the Landlord may, after five (5) days' notice to Tenant, pay the amount of such
lien or discharge the same by deposit or by bond or in any other manner
according to law, and pay any judgment recovered in any action to establish or
foreclose such lien or order, and any amount so paid, together with the expenses
incurred by the Landlord, including all reasonable attorneys' fees and
disbursements incurred in any defense of any such action, bonding or other
proceeding, shall be deemed additional rent. Any reasonable expenses incurred by
the Landlord in connection with the examination of title to the Premises in
order to ascertain the existence of any lien or encumbrance and the discharge of
record thereof, shall be payable by the Tenant to the Landlord on demand,
together with interest as aforesaid as additional rent.
ARTICLE THIRTEEN
SUBORDINATION
(a) Subject to the Tenant obtaining a non-disturbance agreement as
provided in paragraph (d) of this Article THIRTEEN from any existing or future
mortgagee(s) or underlying lessors, this lease, and all the rights of the Tenant
hereunder, are and shall be subject and subordinate to any and all mortgages now
or hereafter liens either in whole or in part on the building, or the land on
which it stands, and also to any and all other mortgages covering other lands or
lands and buildings, which may now or hereafter be consolidated with any
mortgage or mortgages upon the building and the land on which it stands or which
may be consolidated and spread to cover the building and such land and any such
other lands or lands and buildings, and any extension, renewal or modification
of any such mortgages, and to any and all ground or underlying leases which may
now or hereafter affect the buildings or the land on which it stands, and any
extensions, renewals or modifications thereof. This clause shall be
self-operative and no further instrument of subordination (other than the
non-disturbance agreement referred to above and in paragraph (d) below) shall be
required by any ground or underlying lessor or by any mortgagee, affecting any
lease or the building or the land on which it stands. In confirmation of such
subordination, the Tenant shall execute promptly any certificate, in recordable
form, that the Landlord may reasonably request.
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(b) The Tenant hereby agrees that, in the event that any mortgagee
shall succeed to the rights of the Landlord, or if any Landlord of any
underlying lease shall succeed to the position of the Landlord under this lease,
then the Tenant will recognize such successor Landlord as the Landlord of this
lease and pay the rent and attorn to and perform the provisions of this lease
for the benefit of any such successor Landlord. No documentation other than this
lease shall be necessary to evidence such attornment but the Tenant agrees to
execute any documents, in recordable form, reasonably requested by the successor
Landlord to confirm such attornment or to otherwise carry out the intent and
purposes of this Article THIRTEEN.
(c) If, in connection with obtaining financing or refinancing for the
building of which the Premises form a part, a lender shall request modifications
to this lease as a condition to such financing or refinancing, the Tenant will
not unreasonably withhold, delay or defer its consent thereto, provided that
such modifications do not increase the obligations of the Tenant hereunder or
adversely affect the Tenant's leasehold interest. A provision requiring the
Tenant to give notices of any defaults by the Landlord to such lender and/or
permit the curing of such defaults by such lender together with the granting of
such additional time for such curing as may be reasonably required for such
lender to get possession of the building shall not be deemed to increase the
Tenant's obligations or adversely affect the Tenant's leasehold interest. In no
event shall a requirement that the consent (not to be unreasonably withheld) of
any such lender be given for any modification, termination or surrender of this
lease be deemed to materially adversely affect the leasehold interest hereby
created.
(d) Anything herein to the contrary notwithstanding, the Landlord
represents and warrants to the Tenant that as of the date of this lease there is
no mortgage or superior lease encumbering the Premises. The Landlord, at no cost
to Tenant, shall obtain from any future mortgagee or from any future lessor of
any underlying lease, an agreement to the effect that, so long as no Event of
Default shall at the time have occurred and be continuing hereunder, the Tenant
shall not be made party to any proceeding to foreclose the mortgage or to
terminate the underlying lease; that the Tenant's possession of the Premises
under the term of this lease, shall not be terminated or disturbed as a result
of the foreclosure of any mortgage or termination of any underlying lease; that
such mortgagee or underlying lessor, as the case may be, will recognize the
Tenant as the direct tenant of such mortgagee or lessor on all of the terms and
conditions of this lease subject to the provisions hereinafter set forth;
together with such other terms as are customarily contained in a subordination,
non-disturbance and attornment agreement (any such agreement from a mortgagee or
lessor is called a "Nondisturbance Agreement"). The Tenant agrees it will
execute any agreement consistent with the foregoing provisions which may be
required to confirm the subordination of this lease subject to the
non-disturbance provisions above outlined. In any such agreement the Tenant
shall agree that, in the event that the mortgagee shall succeed to the rights of
the Landlord herein named, or if any landlord of any underlying lease shall
succeed to the position of the Landlord under this lease, then the Tenant will
recognize such successor landlord as the Landlord of this lease and pay the rent
and attorn to and perform the provisions of this lease for the benefit of any
such successor Landlord.
(e) Any Nondisturbance Agreement may be made on the condition that, and
the Tenant hereby agrees that, neither the mortgagee nor the lessor, as the case
may be, nor anyone claiming by, through or under such mortgagee or lessor, as
the case may be, including a purchaser at a foreclosure sale, shall be:
(i) liable for any previous act or omission of the Landlord under this
lease, except to the extent that a default continues after the date of
foreclosure or purchase of the Premises (in which case such default shall be
deemed to have occurred on the date of transfer of title to the Premises); or
(ii) subject to any credit, claim, counterclaim, demand, defense or
offset that previously accrued to the Tenant against the Landlord under the
lease; or
(iii) bound by any previous modification of this lease (after notice to
Tenant of the existence of such mortgage or underlying lease), or by any
previous prepayment of rent for a period greater than one month, unless such
modification or prepayment shall have been expressly approved in
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writing by any lessor or any mortgagee who shall have succeeded to the rights of
the Landlord under this lease; or
(iv) obligated to perform any alteration or improvements of the
Premises not expressly required under this lease; or
(v) be responsible for (1) the performance or completion of any
construction work to be performed by the Landlord under the lease, or (2) any
reimbursement or payment required by the Landlord to the Tenant or its designees
pursuant to the Lease on account of work performed by, or for the account of,
the Tenant; or
(vi) be liable for the repayment of any monies owed by the Landlord to
the Tenant; or
(vii) have any obligation with respect to any security deposited under
the lease unless and to the extent such security shall have been transferred to
the mortgagee or lessor, as the case may be, or anyone claiming by, through or
under such party.
(f) The provisions of paragraph (e) shall not be deemed to vitiate the
obligations of any mortgagee or lender succeeding to the Landlord's obligations
hereunder from and after the date such party succeeds to the Landlord's interest
under this lease.
ARTICLE FOURTEEN
CERTIFICATE OF OCCUPANCY
(a) A true copy of the Certificate of Occupancy of the building is
annexed hereto as EXHIBIT B.
(b) The Tenant shall immediately discontinue any use of the Premises,
which may, at any time, be claimed or declared by the City or State of New York
or other governmental authority to be in violation of or contrary to the
Certificate of Occupancy of the building, or by reason of which any attempt may
be made to penalize the Landlord or require the Landlord to secure any
Certificate of Occupancy other than the one, if any, now issued for the
building.
ARTICLE FIFTEEN
VAULTS
Notwithstanding anything herein contained, or shown on any sketch, plan
or schedule hereto attached, to the contrary, if any vault space forms a part of
the Premises, or adjoins the same, or any part or portion of the Premises is not
within the property line of the building or Premises, and if the use of the said
space shall hereafter be prevented or curtailed by exercise of any governmental
authority, the Tenant shall have no claim whatever upon the Landlord for the
loss of such space, by any abatement of the rent, or otherwise, nor shall the
Tenant be relieved from any obligations under this lease, and the Landlord's
covenant of quiet enjoyment hereinafter contained, shall not be deemed to apply
to any such space. The Landlord makes no representation as to the location of
the property line of the building. The Tenant shall reimburse the Landlord for
the vault charge or tax, if any, imposed by the City of New York in respect of
any such vault space.
ARTICLE SIXTEEN
FIRE AND OTHER CASUALTY
(a) If the Premises shall be damaged by fire, action of the elements or
other casualty or cause which is within the risks covered by standard fire and
extended coverage insurance, the Tenant shall give immediate notice thereof to
the Landlord, and said damage shall be repaired by the Landlord, at the
Landlord's expense, with all reasonable speed, making due allowance for delay
due to labor troubles, settlement of loss and other causes beyond the control of
the Landlord, and the Tenant shall, in every reasonable way, facilitate the
making of such repairs, and the rent shall be suspended
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during such period as the Premises shall have been rendered wholly untenantable
until five (5) days after the Landlord notifies the Tenant that the Premises are
substantially ready for the Tenant's occupancy (or the Premises are sooner
occupied by the Tenant) and, in the event that the Premises are rendered
partially untenantable, the rent shall be abated during such period, in the
proportion which the area of the Premises which is rendered untenantable bears
to the area of the whole Premises. In addition to the foregoing rental
abatement, provided that (i) Tenant promptly commences and diligently prosecutes
such alterations to the Premises as are necessary for Tenant to recommence
operations within the Premises, and (ii) Landlord continues to be reimbursed by
Landlord's insurance company for its rental loss, then Tenant shall be entitled
to a further abatement of rent during Tenant's refixturing of the Premises,
which abatement shall be coextensive with the rental loss reimbursement received
by Landlord from Landlord's insurance company. The decision of Landlord's
insurance company shall be conclusive and Landlord shall have no obligation to
contest the same, by litigation or otherwise. No damage to the Premises or the
building by fire, or other cause, however extensive, shall terminate this lease,
or give the Tenant the right to quit and surrender the Premises, or impair any
obligations of the Tenant hereunder, except with respect to the payment of rent
(and with respect thereto to the extent above provided) and except that (i) if
the damage shall be so extensive that the Landlord shall determine to demolish
or substantially alter the building, whether or not the Premises are affected,
the Landlord may at any time within one hundred twenty (120) days following the
occurrence of the damage give to the Tenant thirty (30) days' notice of
intention to terminate this lease; (ii) if the damage to the Premises is
substantial so that the whole or substantially the whole of the Premises is
rendered untenantable by the Tenant or if 50% or more of the common areas of the
building are destroyed or substantially damaged and the Landlord does not within
60 days following the occurrence of the damage notify the Tenant of the
Landlord's intention to repair the damage to the Premises so that the Premises
are again useable by the Tenant within a period of not more than 180 days
following the occurrence of the damage subject to delays due to settlement of
loss or causes of the kinds described in Article THIRTY-FOUR of this lease, the
Tenant may cancel this lease by notice given within 10 days following the
expiration of the said 60-day period for the Landlord's notice of election to
repair, time being of the essence; (iii) if the Landlord has given notice of its
intention to restore the Premises, but fails to substantially complete such
restoration within 180 days following the occurrence of the damage, subject to
delays due to settlement of loss or delays of the kind described in Article
THIRTY-FOUR of this lease, the Tenant may cancel this lease by notice given
within 10 days following the expiration of the said 180-day period, time being
of the essence; and (iv) in the event of the occurrence of damage to the
Premises of the degree described above in clause (ii) of this paragraph (a), the
Landlord may also elect to terminate this lease by notice of election to do so
given within 60 days following the occurrence of the damage. If notice of
election to terminate this lease shall be given as above provided, then, upon
the date for termination designated in any such notice, this lease and the term
hereby granted shall terminate and the rent shall be apportioned as of the date
of the damage or as of such later date as the Tenant may actually surrender
possession. Nothing herein contained shall be deemed to obligate the Landlord to
restore the Tenant's trade fixtures, equipment, stocks, furnishings,
improvements or other property remaining the property of the Tenant. The Tenant
acknowledges that the Landlord will not carry insurance on the Tenant's
furniture or any fixtures or equipment, improvements or appurtenances removable
by Tenant and agrees that the Landlord will not be obligated to repair any
damage thereto or replace the same. The Tenant hereby waives the provisions of
Section 227 of the Real Property Law and agrees that the provisions of this
Article SIXTEEN shall govern and control in lieu thereof.
(b) The Tenant shall conduct its business and use the Premises in such
a manner and so as not to increase the rate of fire insurance applicable to the
building or any property located therein over the rates in effect prior to the
commencement of the Tenant's occupancy, and the Tenant shall install and
maintain all its furniture, fixtures, equipment, stocks and materials in such a
manner as to accomplish the foregoing purposes. The Tenant further agrees not to
permit any act to be done or anything brought into or kept upon the Premises
which will void or avoid the insurer's liability under any contract of fire
insurance on the building or its contents. Should the fire insurance rate on the
building be increased beyond the present rate, by reason of the Tenant's
occupancy or character of its business, or the Tenant's failure to comply with
the terms hereof, the Tenant agrees to pay to the Landlord, on demand, the
additional cost of such insurance, or, at the option of the Landlord, the same
may be added to any installment of rent and be payable as additional rent. The
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schedule of the makeup of a rate issued by an authorized rating organization
shall be conclusive evidence of the facts therein stated and of the items in the
rate applicable to the Premises.
(c) The Landlord, as to the Premises, and the Tenant, as to the
improvements made therein at the Tenant's expense and all of the Tenant's stock,
trade fixtures and other property in the Premises shall each look first to any
insurance in its favor before making any claim against the other party for
recovery for loss or damage resulting from fire or other casualty, and to the
extent that such insurance is in force and collectible and to the extent
permitted by law, the Landlord and the Tenant each hereby release one another or
any one claiming through or under each of them by way of subrogation or
otherwise from all liability for any loss or damage caused by fire or any of the
risks enumerated in standard extended coverage insurance. This foregoing release
and waiver shall be in force only if both releasors' insurance policies contain
a clause providing that such a release or waiver shall not invalidate the
insurance, and also provided that such a policy can be obtained without
additional premiums. The Landlord and Tenant agree that their respective
insurance policies will include the aforesaid clause so long as the same is
obtainable without extra cost or if extra cost be charged, so long as the party
for whose benefit the clause is obtained shall pay such extra cost. If extra
cost shall be chargeable therefor the party so affected shall advise the other
thereof, of the amount of the extra cost and the other party at its election may
pay the same or decline to so pay, in which event the release from liability
given to said party by this Article SIXTEEN shall be deemed to be withdrawn and
of no force and effect.
(d) The Landlord shall keep in full force and effect a policy of
insurance against loss or damage by fire and such other risks and hazards as are
insurable under standard forms of "all risk" insurance policies, with extended
coverage, covering the building, in an amount sufficient to avoid the effects of
co-insurance, in such amounts as the Landlord, acting reasonably, may deem
appropriate.
(e) If notwithstanding the recovery of insurance proceeds by the Tenant
for loss, damage or destruction to its property, the Landlord is liable to the
Tenant with respect thereto or is obligated under this lease to repair or
restore such damage to Tenant's property, the amount of the net proceeds paid to
the Tenant shall either be offset against the Landlord's liability to the
Tenant, or shall be made available to the Landlord to pay for the cost of such
repair or restoration.
ARTICLE SEVENTEEN
CHANGE IN USE OF PREMISES, SUBLETTING AND ASSIGNMENT
(a) The use to be made of the Premises by the Tenant and the identity
of the Tenant being among the inducements to the making of this lease by the
Landlord, the Tenant shall not (except as otherwise permitted herein), without
first having obtained the Landlord's prior written consent thereto, and
otherwise in accordance with the terms of this lease, (i) sublet or underlet, or
permit the subletting or underletting of the Premises or any part thereof; (ii)
assign or transfer, by operation of law or transfer of stock or otherwise, this
lease or any interest therein; (iii) use or permit the Premises or any part
thereof to be used for any purposes other than those specified in the lease;
(iv) permit the Premises or any part thereof to be occupied by anyone other than
the Tenant or its officers or employees; or (v) mortgage or encumber this lease
or any interest therein.
(b) If the Tenant shall desire to assign this lease or to sublet the
Premises, in whole or in part, the Tenant shall send to the Landlord a written
notice (the "Tenant's Notice") stating (i) the action which the Tenant proposes;
(ii) the portion of the Premises with respect to which the Tenant proposes to
take such action (the "Affected Premises"); (iii) the principal terms and
conditions of the desired assignment or subletting, including without
limitation, the rent payable, the proposed commencement and expiration dates of
the terms of the desired subletting, or the effective date of the desired
assignment; and (iv) such other information as the Landlord shall reasonably
request. The Tenant's Notice shall also contain a statement directing the
Landlord's attention to the provisions of Article SEVENTEEN (c) of the lease.
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(c) Within sixty (60) days after receipt of Tenant's Notice which
contains all the information required in paragraph (b) above, the Landlord shall
notify the Tenant (the "Landlord's Notice") whether it elects to (i) terminate
the lease in its entirety, if the desired transaction is an assignment of lease
or a subletting of all or substantially all of the Premises or (ii) terminate
the lease as to the Affected Premises only if the desired transaction is a
subletting of less than substantially all of the Premises. For purposes of this
Article SEVENTEEN, a Tenant shall be deemed to be subletting "substantially all
of the Premises" if the Affected Premises constitutes seventy five (75%) percent
or more of the rentable square footage of the Premises. Landlord's recapture
rights specified above shall not apply (y) to any subletting of five years or
less (unless such term exceeds 75% of the remaining term of this lease), or (z)
to any subletting where the subtenant's space is not separately demised (this
does not include sublettings of all or substantially all of Tenant's space on a
given floor), provided in either case that Tenant is subletting not more than
one third of the total rentable area of the Premises.
(d) If the Landlord exercises the option set forth in paragraph (c) (i)
above to terminate this lease in its entirety, then (i) the term of this lease
shall end and expire with respect to the entire Premises on the ninetieth (90th)
day following the date of Landlord's Notice and (ii) the Tenant shall surrender
the entire Premises to the Landlord on such date, in the same manner and
condition as is required by this lease, as if such date were the Expiration Date
set forth in this lease, and (iii) fixed rent and additional rent shall be
apportioned as of such expiration date. Instead of terminating the lease, the
Landlord may, at its option, elect to have the Tenant assign all of its right,
title and interest in and to this lease to the Landlord, such assignment to be
effective as of the date such lease termination would be effective and otherwise
on the terms and conditions set forth in this paragraph (d). Upon such
assignment, the Tenant shall be relieved of all liability accruing under this
lease after the effective date of such assignment, and the Landlord may
thereafter further assign this lease or sublet all or part of the Premises to
any party and the Tenant shall have no right to any proceeds derived from such
assignment or subletting. In no event shall the provisions of this paragraph (d)
relieve the Tenant of any obligations which accrued prior to the termination of
this lease or the assignment to the Landlord, as the case may be.
(e) If the Landlord exercises the option set forth in paragraph (c)(ii)
above to terminate the lease with respect to the Affected Premises, then (i) the
term of this lease shall end and expire with respect to the Affected Premises on
the ninetieth (90th) day following the date of the Landlord's Notice and (ii)
the Tenant shall surrender the Affected Premises to the Landlord on such date,
in the same manner and condition as is required by this lease, as if such date
were the Expiration Date set forth in this lease and (iii) fixed rent and
additional rent with respect to the Affected Premises shall be apportioned as of
such Expiration Date and the Tenant's prospective rent obligations which are
based on square footage (including, without limitation, fixed rent and
additional rent payable pursuant to Article THIRTY of this lease) shall be
reduced accordingly, and (iv) at the Landlord's election, either the Landlord,
at the Tenant's expense, or the Tenant, at its own expense, shall erect the
partitioning required to separate the Affected Premises from the remainder of
the Premises, create any doors required to provide an independent means of
access to the Affected Premises from elevators and lavatories and segregate the
wiring and meters and electric current facilities, so that the Affected Premises
may be used as a unit for commercial purposes, separate from the remainder of
the Premises. If the remaining Premises contain the core lavatories, the
occupant of the Affected Premises shall have the right to use such lavatories in
common with the Tenant. If the Tenant performs such work, it shall commence such
work promptly upon receipt of Landlord's Notice and shall proceed to complete
such work in a diligent and workmanlike manner. Instead of terminating the lease
with respect to the Affected Premises, the Landlord may, at its option, elect to
have the Tenant assign all of its right, title and interest with respect to the
Affected Premises to the Landlord, such assignment to be effective as of the
date such lease termination would be effective and otherwise on the terms and
conditions set forth in this paragraph (e). Upon the assignment of the lease to
the Landlord with respect to the Affected Premises, the Landlord may further
assign the lease or sublet all or part of the Affected Premises to any party and
the Tenant shall have no right to any proceeds derived from such assignment or
subletting. In no event shall the provisions of this paragraph (e) relieve the
Tenant of any obligations with respect to the Affected Premises which accrued
with respect to the Affected Premises prior to the termination of the lease or
the assignment to the Landlord, as the case may be.
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(f) In the event the Landlord does not elect either of the alternatives
set forth in paragraph (c) (i) or (ii) above, or in the event the Landlord fails
to timely deliver the Landlord's Notice, the Landlord agrees not to unreasonably
withhold or delay its consent to any proposed assignment or subletting,
provided, however, that the Landlord shall have the right to condition its
consent to any proposed assignment or sublease on the following:
(1) No Event of Default shall have theretofore occurred and be
continuing under this lease beyond any applicable notice or cure
period.
(2) The Tenant shall have delivered to the Landlord the Tenant's Notice
as required by paragraph (b) above.
(3) With respect to a sublease, the Tenant shall collaterally assign to
the Landlord, and grant the Landlord a security interest in, the
sublease and the rents payable thereunder and shall take all necessary
steps required to perfect such assignment and security interest.
(4) The sublease shall include provisions to the effect that (i) if the
Landlord shall notify the sublessee that the Tenant is in default in
the payment of rent or in the performance of its other obligations
under this lease, the subtenant shall, if so requested by the Landlord,
pay all rent and other amounts due under the sublease directly to the
Landlord, (ii) notwithstanding any such payment by the subtenant
directly to the Landlord, the term of the sublease shall terminate
simultaneously with the termination of the term of this lease and the
subtenant shall surrender the subleased premises upon such termination,
(iii) the sublease shall be subject and subordinate to this lease and
to all matters to which this lease is or shall be subordinate, and (iv)
any act or omission by the subtenant which, if performed by the Tenant
would constitute an Event of Default under the lease, shall also
constitute an Event of Default under the sublease provided notice
thereof shall have been provided to the Tenant named herein.
(5) The proposed subtenant or assignee shall have a financial standing,
be of a character, be engaged in a business, and propose to use the
Premises in a manner, which in the Landlord's reasonable judgment, is
in keeping with the Landlord's standards in such respect of the other
office tenancies in the building. The parties acknowledge that the
Landlord, as a religious institution, may have special considerations
in determining if the business or proposed use of a proposed subtenant
or assignee is objectionable, and the parties agree that the Landlord's
judgment in such matters shall be conclusive.
(6) The proposed assignee or subtenant shall not then be a tenant,
subtenant or assignee of any space in the building or any other
building then owned, directly or indirectly, by the Landlord, provided
that Landlord then has comparable space available in any of its
buildings, nor shall the proposed subtenant or assignee be a person or
entity with whom the Landlord is then negotiating to lease space in the
building or any other building then owned, directly or indirectly, by
the Landlord.
(7) The Premises shall not, without the Landlord's prior consent, have
been publicly advertised (but may be listed with brokers) for
subletting at a rental rate less than the prevailing asking rental rate
then set by the Landlord for comparable space in the building, and if
no comparable space is then available, at the prevailing rental rate
set by the Landlord.
(8) The character of the business to be conducted or the proposed use
of the Premises by the proposed assignee or subtenant shall not (i) be
likely to increase the Landlord's operating expenses beyond that which
would be incurred for use by the Tenant or for use in accordance with
the standards of use of other tenancies in the
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building, (ii) materially increase the burden on elevators over the
burden prior to such proposed assignment or subletting, (iii)
unreasonably interfere with the use and enjoyment by other tenants in
the building of their premises, or (iv) violate or be likely to violate
any provisions or restrictions contained herein relating to the use or
occupancy of the Premises.
(9) Any proposed sublease shall provide that in the event of the
termination of this lease, or the re-entry or dispossession of the
Tenant by the Landlord under this lease, such subtenant shall, at the
Landlord's option, attorn to the Landlord as its sublessor pursuant to
the then applicable terms of such sublease for the remaining term
thereof, except that the Landlord shall not be (i) liable for any
previous act or omission of Tenant as sublessor under such sublease,
(ii) subject to any offset which theretofore accrued to such subtenant
against the Tenant, (iii) bound by any modification of such sublease
not consented to in writing by the Landlord or by any prepayment of
rent more than one month in advance, (iv) bound to return such
subtenant's security deposit until it has come into its actual
possession and the subtenant would be entitled to its return pursuant
to the terms of the sublease, and (v) bound by any obligation to make
any payment to any subtenant or perform any work in the Premises.
(10) The proposed assignee or subtenant is not entitled, directly or
indirectly, to diplomatic or sovereign immunity, and/or is subject to
the service or process in, and the jurisdiction of the courts of New
York.
(11) At any time during the term of the lease, there shall be no more
than three (3) occupants in the Premises on any floor where Tenant has
leased half or more than half of the rentable area of such floor, or
two (2) occupants in the Premises on any floor where Tenant has leased
less than half the rentable area of such floor, in both such cases,
"occupants" includes Tenant if Tenant is actually occupying any portion
of such floor.
(12) The subletting shall end no later than one (1) day before the
Expiration Date and shall be for a term of no less than two (2) years,
unless it commences less than two (2) years before the Expiration Date
of the term.
(13) Intentionally omitted.
(14) The assignee shall assume, in writing, all obligations of the
Tenant under this lease from and after the date of such assignment.
(15) A fully executed counterpart of the assignment or sublease shall
be delivered to the Landlord within five (5) days after execution
thereof.
(g) In the event the Landlord waives its rights set forth in paragraph
(c) (i) and (ii) above, or consents to any assignment or subletting pursuant to
this Article SEVENTEEN, and the Tenant fails to execute and deliver an
assignment or sublease document, as approved by the Landlord, within six (6)
months after the date of Landlord's Notice, then the Tenant shall again comply
with all of the requirements of this Article SEVENTEEN before assigning its
interest in this lease, or subletting all or part of the Premises, respectively.
(h) The Tenant shall pay all of the reasonable Landlord's costs
(including, without limitation, attorneys' fees and expenses) related to the
Landlord's review of a proposed sublease or assignment and the preparation,
review and approval of any assignment of rents, financing statement and other
documents related to such sublease or assignment, irrespective of whether
consent is granted or the transaction is ultimately consummated. The Tenant
shall also pay the cost of recording or filing any assignment of rents and
financing statements.
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(i) Provided no Event of Default shall have theretofore occurred and be
continuing under this lease beyond any applicable notice or cure period, the
Tenant named herein is authorized to (1) assign the lease to any entity
succeeding to the business and assets of the Tenant, whether by way of merger or
consolidation or by way of acquisition of all or substantially all of the assets
of the Tenant, provided that the acquiring entity shall have assumed in writing
the Tenant's obligations under this lease; or (2) to sublease all or a portion
of the Premises or assign the lease to an entity which shall (x) control, (y) be
under the control of, or (z) be under common control with the Tenant (an entity
described in (x), (y) or (z) being a "Related Entity"). "Control" shall mean
direct or indirect ownership of more than fifty percent (50%) of each class of
stock which is authorized to vote of a corporation or other majority equity and
control interest if not a corporation, or the possession, directly or
indirectly, of power to direct or cause the direction of the management and
policy of such corporation or other entity, whether through the ownership of
voting securities, by statute or according to the provisions of a contract. Upon
making a sublease or assignment to any Related Entity, the Tenant shall notify
the Landlord and certify to the Landlord the manner in which such Related Entity
is related to the Tenant and the purposes for which the Premises will be used.
Any subletting or assignment described in this paragraph (i) shall be on notice
to Landlord but shall not require the prior written consent of the Landlord and
may only be made on the condition that (a) the subtenant or assignee shall
continue to use the Premises for executive and general offices (except for the
Basement Space, which shall only be used for the specific purpose set forth
herein), and (ii) the principal purpose of such sublease or assignment is not
the acquisition of the Tenant's interest in this lease, or to circumvent the
provisions of paragraph (a) of this Article SEVENTEEN. In the event of an
assignment pursuant to the provisions of clause (1) of this paragraph (i), the
successor entity, after giving effect to such merger, consolidation or
acquisition, shall have a tangible net worth, exclusive of good will, computed
in accordance with generally accepted accounting principles ("Net Worth") at
least equal to the Net Worth of the Tenant as of the date of this lease. The
provisions of paragraph (c) of this Article and the provisions of paragraph (k)
of this Article shall not apply to a subleasing or assignment made pursuant to
the provisions of this paragraph (i).
(j) For purposes of this Article SEVENTEEN, an "assignment" shall be
deemed to include, whether occurring at one time or over a period of time
through a series of transfers, a sale or transfer of fifty (50%) percent or more
of beneficial interest in the Tenant (whether stock, partnership or otherwise),
or of any guarantor of the Tenant's obligations under this lease, or the
issuance of additional stock where the issuance of such additional stock will
result in a change of "control" (as defined in paragraph (i)) in the Tenant or
guarantor, if applicable. The transfer of shares or issuance of additional stock
of the Tenant or any guarantor for purposes of this Article SEVENTEEN shall not
include the sale of shares by persons other than those deemed "insiders" within
the meaning of the Securities and Exchange Act of 1934, as amended, which sale
is effected through the "over-the-counter market" or through any nationally
recognized exchange.
(k) In the event the Landlord, in its sole discretion, authorizes the
Tenant to assign the lease or to sublet all or a portion of the Premises (other
than an assignment or subleasing authorized by paragraph (i) above), the Tenant
named herein shall pay to the Landlord, monthly, as additional rent, 50% of all
Tenant's Profit. "Tenant's Profit" shall mean all consideration received by the
Tenant (other than rental or consideration received by the Tenant under a
sublease or assignment entered into pursuant to paragraph (i) of this Article),
less (i) the rent, payable by the Tenant under this lease for the period in
question (exclusive of any amount payable by the Tenant under this subparagraph
(k)), such rent to be pro-rated if less than all of the Premises are sublet,
(ii) any brokerage commissions (not exceeding 110% of those set forth in
Landlord's brokerage commission schedule as published from time to time) and
reasonable legal fees paid by the Tenant in connection with such subletting or
assignment, (iii) any sums payable by the Tenant to the Landlord pursuant to the
provisions of paragraph (h) of this Article, (iv) any payments made by the
Tenant in connection with
the assignment of its interest in this lease pursuant to Article 31-B
of the Tax Law of the State of New York or any real property transfer tax of the
United States or the City or State of New York (other than income taxes), (v)
free rent granted to the assignee or subtenant, and (vi) the cost of work or
alterations or payment therefor to separate the subleased space from the balance
of the Premises or to prepare the Affected Premises for the assignee's or
subtenant's occupancy. In the case of a sublease, the expenses set forth in (ii)
and (iii) shall be amortized on a straight-line basis over the term of the
sublease. In the case of an assignment, if the consideration to be paid to the
Tenant shall
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be paid in installments, the expenses set forth in (ii) through (iv) shall be
amortized over the period during which the installments are to be paid.
(l) No consent given by the Landlord shall be deemed to permit any act
except the act to which it specifically refers, or to render unnecessary any
subsequent consent, and any assignment or subletting of the Premises shall not
relieve the Tenant or any mesne assignee from any obligations, duty or covenant
under this lease. No assignment, transfer, mortgage, encumbrance, subletting or
arrangement in respect of the occupancy of the Premises shall create any right
in the assignee, transferee, mortgagee, subtenant or occupant, unless the
consent of the Landlord shall first have been obtained, in accordance with the
provisions of this Article SEVENTEEN (except as provided in paragraph (i)
above). Any assignee by accepting an assignment shall nevertheless be
conclusively deemed to have assumed this lease and all obligations already
accrued or to accrue thereunder and further to have agreed to fully and duly
perform all the Tenant's covenants herein contained. If the Tenant shall, at any
time, be in default in the payment of rent, the Landlord shall have the right to
collect rent from any assignee or subtenant, and credit the same to the account
of the Tenant, and no such collection shall constitute a waiver of the foregoing
covenant or the acceptance of anyone other than the Tenant, as tenant, or shall
otherwise release, impair or otherwise affect any obligation of the Tenant under
this lease.
(m) The Tenant shall remain fully liable for the performance of all of
the Tenant's obligations hereunder notwithstanding anything provided for herein,
and without limiting the generality of the foregoing, shall remain fully
responsible and liable to the Landlord for all acts and omissions of any
subtenant or assignee or anyone claiming under or through any such person which
shall be in violation of any of the obligations of this lease and any such
violation shall be deemed to be a violation by the Tenant. Provided that the
Tenant named herein shall have provided Landlord with an address for notices, if
such address is different from the Premises, Landlord shall send copies of any
default notices given to an assignee or subtenant to the Tenant named herein,
and the Tenant named herein shall have the same cure period with respect to such
default as provided herein with respect to Tenant's own defaults. Landlord may
not terminate this lease for a default of an assignee or subtenant until the
Tenant named herein is given copies of such default notices and the cure period
to cure such default shall have expired. Upon any termination of this lease, it
is expressly agreed that the Tenant shall deliver to the Landlord all subleases,
security deposits (including interest), contracts, documents, rent rolls and
other records used in the operation of the Premises and, unless the sublease
shall have previously terminated and the security deposit returned to subtenant
or applied as provided by the sublease, all security deposits held by the
Tenant.
(n) With respect to any present or future subleases, the Tenant shall
not accept prepayment of rent prior to its due date in excess of one month (but
the provisions of the foregoing shall not prohibit the Tenant from collecting
from any subtenant a security deposit provided such security deposit is
delineated in the sublease as being not advance rent, but security, returnable
to the subtenant after the termination of the term of the sublease). The Tenant
agrees to indemnify and save the Landlord harmless from and against any claim or
lien against the Landlord or the Premises for the return of any security under
any subleases with a subtenant which was not previously delivered to the
Landlord and agrees further that all subleases hereafter made with subtenants
shall provide that the lease security deposited by the subtenant shall not be a
lien or claim against the interest of the Landlord.
(o) (i) If the Tenant assumes this lease and proposes to assign the
same pursuant to the provisions of 11 U.S.C. Section 101 et. seq (the
"Bankruptcy Code") to any person or entity who shall have made a bona fide offer
to accept an assignment of this lease on terms acceptable to the Tenant, then
notice of such proposed assignment shall be given to the Landlord by the Tenant
no later than twenty (20) days after receipt by the Tenant of such bona fide
offer, but in any event no later than ten (10) days prior to the date that the
Tenant shall make application to a court of competent jurisdiction for authority
and approval to enter into such assignment and assumption. Such notice shall set
forth (x) the name and address of such person, (y) all of the terms and
conditions of such offer, and (z) adequate assurance of future performance by
such person under this lease, including, without limitation, the assurance
referred to in Section 365 (b)(3) of the Bankruptcy Code. The Landlord shall
have the prior right and option, to be exercised by notice to the Tenant
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given at any time prior to the effective date of such proposed assignment, to
accept an assignment of this lease upon the same terms and conditions and for
the same consideration, if any, as the bona fide offer made by such person, less
any brokerage commission which would be payable in connection with such
assignment.
(ii) The term "adequate assurance of future performance" as used in
this lease shall mean that any proposed assignee shall, among other things: (a)
deposit with the Landlord on the assumption of this lease an amount equal to the
then-fixed rent and additional rent as security for the faithful performance and
observance by such assignee of the terms and obligations of this lease, which
sum shall be held in accordance with the provisions of Article TWENTY-NINE
hereof; (b) furnish the Landlord with financial statements of such assignee for
the prior three (3) fiscal years, as finally determined after an audit and
certified as correct by a certified public accountant, which financial
statements shall show a Net Worth of at least two (2) times the Net Worth of the
Tenant named herein as of the date of this lease for each of such three (3)
years; (c) grant to the Landlord a security interest in such property of the
proposed assignee as the Landlord shall deem necessary to secure such assignee's
future performance under this lease; and (d) provide such other information or
take such action as the Landlord, in its reasonable judgment, shall determine is
necessary to provide adequate assurance of the performance by such assignee of
its obligations under this lease.
(p) Notwithstanding anything to the contrary contained herein, no
assignment or subletting by the Tenant, nor any other transfer or vesting of the
Tenant's interest hereunder (whether by merger, operation of law or otherwise),
shall be permitted if the proposed assignment or sublease (i) provides for a
rental or other payment for the leasing, use, occupancy or utilization of all or
any part of the Premises based, in whole or in part, on the income or profits
derived by any person from the property so leased, used, occupied or utilized
other than an amount based on a fixed percentage or percentages of gross
receipts or sales or (ii) does not provide that such assignee or subtenant shall
not enter into any lease, sublease, license, concession or other agreement for
the use, occupancy or utilization of all or any portion of the Premises which
provides for a rental or other payment for such use, occupancy or utilization
based, in whole or in part, on the income or profits derived by any person from
the property so leased, used, occupied or utilized other than an amount based on
a fixed percentage or percentages of gross receipts or sales.
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ARTICLE EIGHTEEN
WAIVER AND SURRENDER; REMEDIES CUMULATIVE
No consent or waiver of any provision hereof or acceptance of any
surrender shall be implied from any act or forbearance by the Landlord. No
agreement purporting to accept a surrender of this lease, or to modify, alter,
amend or waive any term or provision thereof, shall have any effect or validity
whatever, unless the same shall be in writing, and executed by the Landlord and
by the Tenant (or, in the case of a waiver, by the party waiving such term or
provision), and be duly delivered, nor shall the delivery of any keys to anyone
have any legal effect, any rule or provision of law to the contrary
notwithstanding. Any consent, waiver or acceptance of surrender, in writing, and
properly executed and delivered as aforesaid, shall be limited to the special
instance for which it is given, and no superintendent or employee, other than an
officer of the Landlord or of its managing agent, and no renting representative
shall have any authority to accept a surrender of the Premises, or to make any
agreement or modification of this lease, or any of the terms and provisions
hereof. No provision of any lease made by the Landlord to any other tenant of
the building shall be taken into consideration in any manner whatever in
determining the rights of the Tenant herein. No payment by the Tenant or receipt
by the Landlord of a lesser amount than the monthly rent herein stipulated shall
be deemed to be other than on account of the stipulated rent, nor shall any
endorsement on any check, nor any letter accompanying any such payment of rent
be deemed an accord and satisfaction (unless an agreement to accept a lesser
amount be signed by the Landlord), but the Landlord may accept such payment
without prejudice to the Landlord's full right to recover the balance of such
rent and to institute summary proceedings therefor. If the Tenant is in arrears
in the payment of fixed rent or additional rent or any other sum which may
become payable under this lease, the Tenant waives its right, if any, to
designate the items in arrears against which any payments made by Tenant are to
be credited and Landlord may apply any of such payments to any such items in
arrears as the Landlord, in its sole discretion, shall determine, irrespective
of any such designation or request by the Tenant as to the items against which
any such payments shall be credited. The receipt by the Landlord of any fixed
rent, or additional rent or of any other sum of money which may be payable under
this lease, or of any portion thereof, shall not be deemed a waiver of the right
of the Landlord to enforce the payment of any sum of any kind previously due or
which may thereafter become due under this lease, or of the right to forfeit
this lease by such remedies as may be appropriate, or to terminate this lease or
to exercise any of the rights and remedies reserved to the Landlord hereunder,
and the failure of the Landlord to enforce any covenant or condition (although
the Tenant shall have repeatedly or continuously broken the same without
objection from the Landlord) shall not estop the Landlord at any time from
taking any action with respect to such breach which may be authorized by this
lease, or by law, or from enforcing said covenant or any other covenant or
condition on the occasion of any subsequent breach or default. The various
rights, remedies, powers and elections of the Landlord, as provided in this
lease or created by law, are cumulative, and none of them shall be deemed to be
exclusive of the others, or of such other rights, remedies, powers or elections
as are now or may hereafter be conferred upon the Landlord by law or equity.
ARTICLE NINETEEN
NO REPRESENTATIONS AS TO PREMISES,
CERTIFICATE OF OCCUPANCY AND USE
The Tenant represents to the Landlord that the Tenant has made, or
caused to be made, a careful inspection of the Premises and that the Tenant has
made an examination of the certificate of occupancy of the building and that the
area and present condition of the Premises are in all respects satisfactory to
the Tenant, except (if at all) as may herein otherwise be expressly stated in
the Work Sheet (Exhibit C) annexed hereto. The Tenant acknowledges that no
representations or promises have been made by the Landlord or the Landlord's
agents with respect to the Premises or the building or the Certificate of
Occupancy thereof, except as in this lease set forth, and no rights, easements
or licenses are acquired by the Tenant except as expressly set forth herein. The
statements contained in this lease regarding the use of the Premises by the
Tenant shall not be deemed a representation or warranty by the Landlord that
such use is lawful or permitted by the Certificate of Occupancy of the building.
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ARTICLE TWENTY
LIMITATION OF LANDLORD'S LIABILITY
(a) The Tenant shall make no claim upon the Landlord for abatement of
rent, constructive eviction, rescission, or otherwise, and the Landlord shall be
exempt from all liability, except for injuries to the Tenant's person or
property which are due to the negligence of the Landlord, its agents, servants
or employees in the management of the Premises or the real property of which the
Premises are a part, for or on account of any annoyance, inconvenience,
interference with business, or other damage, caused by: (i) any interruption,
malfunction or curtailment of the operation of the elevator service, heating
plant, sprinkler system, gas, water, sewer or steam supply, plumbing, machinery,
electric equipment or other appurtenances, facilities, equipment and
conveniences in the building, whether such interruption, malfunction or
curtailment be due to breakdowns, or repairs, or strikes or inability to obtain
electricity, fuel or water due to any such cause or any other cause beyond the
Landlord's control; (ii) any work of repair, alteration, renovation or
replacement done by or on behalf of the Landlord or any other tenant; (iii) any
water, rain, snow, steam, gas, electricity or other element, which may enter,
flow from or into the Premises or any part of the building, or any noise or
vibration audible in, or transmitted to the Premises; (iv) any vermin; (v) any
falling paint, plaster or cement; (vi) any interference with light or with other
easements or incorporeal hereditaments; (vii) any latent defect or deterioration
in the building or the appurtenances thereof, whether or not the Landlord shall
have been notified of any condition allegedly causing same; (viii) any zoning
ordinance or other acts of governmental or public authority now or hereafter in
force; and (ix) any act or omission of any other occupant of the building or
other person temporarily therein. The Tenant will not hold the Landlord liable
for any loss or theft of, or damage to, any property in the Premises done or
caused by any employee, servant, or agent of the Landlord who is invited into
the Premises by the Tenant for purposes outside the normal scope of such
employee's, servant's or agent's duties, nor for the loss, damage or theft of
any property stored or left in the basement or in any other part of the
building, which is not enclosed within the Premises or of any property, left
with any employee of the Landlord, notwithstanding such theft, loss or damage
may occur through carelessness or negligence of the Landlord's employees; and
the Tenant agrees that any employee in entering the Premises at the invitation
of the Tenant for purposes outside the normal scope of such employee's,
servant's or agent's duties or accepting custody of property shall be then
deemed agent of the Tenant or other person at whose instance he may be acting,
and not agent of the Landlord. Employees are not permitted to receive or accept
packages or property for account of Tenants. The use of storerooms or storage
space for personal property (if provided) shall be at the Tenant's risk and the
Tenant will not hold the Landlord liable for any loss of or damage to person or
property therein or thereby. Nothing in this lease contained shall impose any
obligation upon the Landlord with respect to any real property other than the
building, whether said other real property be owned by the Landlord or
otherwise, or shall in any way limit the Landlord's right to build upon or
otherwise use said other real property in such manner as the Landlord may see
fit. The Tenant shall make no claim upon the Landlord for abatement of rent,
constructive eviction or rescission, and the Landlord shall have no liability by
reason of the Landlord's failure to enforce the provisions of the lease to any
other tenant against such other tenant.
(b) Any right and authority reserved by and granted to the Landlord
under this lease, to enter upon and make repairs in the Premises shall not be
taken as obligating the Landlord to inspect and to repair the Premises and the
Landlord hereby assumes no responsibility or liability for the care, inspection,
maintenance, supervision, alteration or repair of the Premises except as herein
specifically provided. The Tenant assumes possession and control of the Premises
and exclusively the whole duty of care and repair thereof, except as herein
specifically provided, and the duty of care, if any, owed by the Tenant to the
persons on the sidewalks or in the corridors of the building.
(c) The officers, directors, employees, partners, shareholders, and
principals, direct or indirect, comprising the Landlord (collectively, the
"Parties") shall not be liable for the performance of the Landlord's obligations
under this lease. The Tenant shall look solely to the Landlord to enforce the
Landlord's obligations under this lease and shall not seek any damages against
any of the Parties. The liability of the Landlord for the Landlord's obligations
under this lease shall be limited to Landlord's Equity in the building.
"Landlord's Equity" as used herein means the lesser of (i) the interest of the
Landlord in and to the building and (ii) the interest the Landlord would have
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in the building if it were encumbered by an indebtedness held by a person not a
party to this lease in an amount equal to 75% of the then-current fair market
value of the building (as such value of such interest is determined in good
faith by the Landlord). The Tenant shall not look to any other property or
assets of the Landlord, other than Landlord's Equity, or the property or assets
of any of the Parties in seeking either to enforce the Landlord's obligations
under this lease or to satisfy a judgment for the Landlord's failure to perform
such obligations.
(d) The term "Landlord" as used in this lease, means only the owner for
the time being of the Premises. If the Landlord shall hereafter sell, exchange
or lease the entire building or the land and building wherein the Premises are
located, or, being the lessee thereof, shall assign its lease, the grantee,
lessee, or assignee thereof, as the case may be, shall, without further
agreement by any party, be conclusively deemed to be the Landlord of this lease
and to have assumed and undertaken to carry out all of the obligations hereof on
the part of the Landlord to be performed, and the Tenant does hereby release the
above-named Landlord from any claim or liability arising or accruing hereunder
subsequent to such transfer of ownership or possession, for breach of the
covenant of quiet enjoyment, or otherwise.
(e) If the lease provides that the Landlord's consent is not to be
unreasonably withheld or delayed, and it is the final order of any court having
jurisdiction thereof that the Landlord has been unreasonable, the only effect
shall be that the Landlord shall be deemed to have given such consent; but in no
event shall the Landlord be liable to the Tenant for any monetary damages by
reason of the withholding or delaying of its consent.
ARTICLE TWENTY-ONE
INDEMNITY BY TENANT
The Tenant hereby indemnifies and agrees forever to save harmless the
Landlord against any and all liabilities, penalties, claims, damages, expenses
(including, without limitation, attorneys' fees whether in a proceeding between
the Landlord and the Tenant or between the Landlord and any third party) or
judgments, arising from injury to person or property of any kind, occasioned
wholly or in part by the Tenant's failure to perform or abide by any of the
covenants of this lease or occasioned wholly or in part by any act or acts,
omission or omissions of the Tenant, or of the employees, customers, agents,
assigns, invitees or licensees or under-tenants of the Tenant, or based on any
matter or thing growing out of the Tenant's use or occupation of the Premises or
any part of the building. The Tenant shall not do or permit any act or thing to
be done upon the Premises which may subject the Landlord to any liability or
responsibility for injury, damages to persons or property or to any liability by
reason of any violations of any requirements of law with which the Tenant is
obligated to comply under this lease, and the Tenant shall exercise such control
over the Premises as to protect the Landlord against any such liability. In case
any claim, action or proceeding is made or brought against the Landlord by
reason of any such claim, the Tenant, upon written notice from the Landlord,
shall, at the Tenant's sole cost and expense, resist or defend such action or
proceeding by counsel approved by the Landlord in writing. The Landlord agrees
that counsel for the Tenant's insurance carrier shall be deemed satisfactory. If
the damages sought by the party asserting such claim exceed the limits of the
Tenant's insurance coverage, the Landlord shall be entitled to have its own
counsel participate with the Tenant's counsel in resisting or defending such
action and the Tenant shall reimburse the Landlord for any reasonable cost it
incurs in connection therewith. The provisions of this Article TWENTY-ONE shall
survive the expiration or sooner termination of this Lease.
ARTICLE TWENTY-TWO
NOTICES
Any notice which is to be given by either party to the other pursuant
to this lease shall be in writing and shall be given as follows: (a) if such
notice is to be given by the Landlord to the Tenant, such notice may be given
personally by delivering the same to the Tenant, or if the Tenant be a
corporation or partnership, to any officer, partner or other employee of the
Tenant, at the Premises or at any other place, or by registered or certified
mail, postage prepaid, return receipt requested, or by nationally recognized
overnight service providing evidence of delivery, addressed to the Tenant
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at its address given in this lease or at the Premises, or such other address as
the Tenant shall hereafter designate in writing, provided, however, that notices
of default may not be given solely by personal delivery, but shall be given by
mail or overnight service as set forth above, with a copy of such default notice
sent to Marshall J. Cohen, Esq., Stadtmauer Bailkin LLP, 850 Third Avenue, New
York, NY 10022; (b) if such notice is to be given by the Tenant to the Landlord,
such notice shall be given by registered or certified mail, postage prepaid,
return receipt requested, or by nationally recognized overnight service
providing evidence of delivery, addressed to the Landlord at 74 Trinity Place,
New York, New York, 10006, Attention: Director of Commercial Real Estate
Leasing, or at such other address as the Landlord shall hereafter designate in
writing. Notices given by overnight service shall be specified for next business
day delivery. Any notice shall be deemed to have been given on the date when
same shall have been delivered, in the case of personal delivery, or two days
after the same shall have been properly mailed in the case of certified or
registered mail, or on the first following business day if sent by overnight
mail service. The attorneys for either party shall have the right, but not the
obligation, to send notices on behalf of their respective clients.
Notwithstanding the foregoing, all bills may be sent directly to the Tenant by
regular mail.
ARTICLE TWENTY-THREE
INSOLVENCY
(a) Each of the following shall be a "Bankruptcy Event" hereunder:
(1) if the Tenant shall generally not, or shall be unable to, or shall
admit its inability to, pay its debts as they become due; or
(2) if the Tenant shall make a general assignment for the benefit of
creditors; or
(3) if the Tenant shall commence or institute any case, proceeding or
other action (i) seeking relief on its behalf as debtor, or 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 under any
existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of
debtors, or (ii) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of
its property; or
(4) if any case, proceeding or other action shall be commenced against
or instituted against the Tenant (i) seeking an order for relief
entered against the debtor or to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to
its debts under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization
or relief of debtors, or (ii) seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or any
substantial part of its property, which in either case (x) results in
the entry of any order for relief, adjudication of bankruptcy or
insolvency, or such an appointment or the issuance or entry of any
other order having a similar effect or (y) remains undismissed for a
period of sixty (60) days; or
(5) if any case, proceeding or other action shall be commenced or
instituted against the Tenant seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of the Tenant's property which results in the entry of
an order for such relief which is not vacated, discharged, or stayed or
bonded pending appeal within sixty (60) days from the entry thereof; or
(6) if the Tenant shall take shall take any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of
the acts set forth in any of clauses (2) through (5) above; or
(7) if a trustee, receiver or other custodian is appointed for any
substantial part of the assets of the Tenant and such appointment is
not vacated or stayed within seven days.
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(b) If at any time (i) the Tenant shall be comprised of two or more
people; or (ii) the Tenant's obligations under this lease have been guaranteed
by any party other than the Tenant, or (iii) the Tenant's interest in this lease
has been assigned, the word "Tenant" as used in this Article TWENTY-THREE shall
be deemed to mean any one or more of the persons primarily or secondarily liable
for the Tenant's obligations under this lease. Any moneys received by the
Landlord from or on behalf of the Tenant during the pendency of any Bankruptcy
Event shall be deemed paid as compensation for the use and occupation of the
Premises and the acceptance of any such compensation by the Landlord shall not
be deemed an acceptance of rent or a waiver by the Landlord of any rights under
Articles TWENTY-THREE or TWENTY-FIVE.
(c) If a Bankruptcy Event occurs at any time after the execution and
delivery of this lease, whether such event occurs prior or subsequent to the
Commencement Date or the Tenant's entry into possession, such an event shall be
deemed an Event of Default and the Landlord shall have the right to terminate
this lease in the manner hereinafter provided. In the event of such termination,
the Tenant or any person claiming under, by or through the Tenant, by virtue of
any statute or of an order of any court, shall not be entitled to possession or
to remain in possession of the Premises but shall forthwith quit and surrender
same. Exclusive of and in addition to any other rights or remedies the Landlord
may have through any other portion or provision of this lease or by virtue of
any rule of law or statute, said Landlord may keep and retain, as damages, any
rent, security, deposit or other moneys or consideration received by the
Landlord from the Tenant, or others on behalf of the Tenant. Also, in the event
of termination of this lease as aforesaid, the Landlord shall be entitled, as
and for liquidated damages, and not as a penalty, from the Tenant for breach of
the unexpired term of this lease, to a sum equal to the amount by which the rent
for the period of the unexpired portion of the lease term exceeds the then fair
and reasonable rental value for the same period, both discounted to present
value at six percent (6%). If at any time within a reasonable period following
the date of the termination of the lease, as aforesaid, the Premises should be
re-rented by the Landlord, the rent realized by any re-letting shall be deemed
prima facie to be the rental value. In the event of the occurrence of any
Bankruptcy Event occasioned solely through the invocation by the Tenant or by
third parties of the laws of the State of New York, judicial or statutory, as
distinguished from the invocation of Federal laws relating to bankruptcy,
reorganization, or otherwise, the Landlord, in addition to the foregoing, may
accelerate the full amount of rent reserved for the remainder of the lease,
discounted to present value at 6%, and the same shall forthwith become due and
payable to the Landlord. Nothing herein provided shall be deemed to prevent or
restrict the Landlord from proving and receiving as damages herein the maximum
permitted by any rule of law or statute prevailing when such damages are to be
proved, whether they be greater or less than those referred to above.
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ARTICLE TWENTY-FOUR
REMEDIES OF THE LANDLORD
ON DEFAULT IN PERFORMANCE BY THE TENANT
(a) If the Tenant shall default in the full and due performance of any
covenant of this lease, the Landlord shall have the right, upon ten (10) days'
notice to the Tenant (except in an emergency or unless a shorter period of
notice or provision for the performance of such work without notice is elsewhere
established), to perform the same for the account of the Tenant, and in such
event all workman employed by the Landlord shall be deemed the agents of the
Tenant, and any reasonable payment made, and expense incurred, by the Landlord
in this connection, shall become due and payable by the Tenant to the Landlord
within fifteen (15) days after receipt of invoices for same. If the Landlord is
compelled to incur any expenses or incur any obligation for the payment of
money, including, without limitation, reasonable attorneys' fees in instituting,
prosecuting or defending any action or proceeding instituted by the Tenant or
any third party by reason of any Event of Default hereunder, the sum or sums so
paid by the Landlord with all interest, costs and damages, shall be deemed
immediately due to the Landlord upon demand as additional rent. Any and all sums
payable by the Tenant to the Landlord shall bear interest at the lesser of (x)
one and one-half per cent (1_%) per month or (y) the maximum rate permitted by
applicable law from the due date to the date of actual payment, and any and all
such sums (except the fixed rent hereinabove expressly reserved) shall be deemed
to be additional rent for the period prior to such due date, and the Landlord
shall have the same remedies for default in the payment of such additional rent
as for default in the payment of the rent expressly reserved. If the Tenant's
term shall have expired at the time of the making of such expenditures or
incurring such obligations, such sums shall be recoverable by the Landlord as
damages.
(b) In the event that under the provisions of this lease the Landlord
shall have the privilege of performing any covenant in respect of which the
Tenant may be in default and of recovering the expenses so involved from the
Tenant as additional rent or otherwise, such remedy shall not be the exclusive
remedy of the Landlord but the Landlord may, at its option, treat such default
as a breach of substantial obligation of this lease and shall have all the other
remedies in respect thereof provided in this or any other Article of this lease.
ARTICLE TWENTY-FIVE
DEFAULT
(a) Each of the following events shall be an "Event of Default"
hereunder:
(1) if the Tenant shall default in the payment when due of any
installment of fixed rent or any item of additional rent when same
shall be due and such default shall continue for a period of five
business days after notice to Tenant; provided, however, that if
Landlord shall give such notice two or more times in any twelve-month
period, Tenant shall not thereafter be entitled to any such notice; or
(2) if the Tenant shall default in the observance or performance of any
term, covenant or condition of any other lease with the Landlord or the
Landlord's predecessor in interest beyond the expiration of any grace
period set forth in such other lease; or
(3) if the Premises shall be abandoned or deserted; or
(4) if a Bankruptcy Event shall occur; or
(5) if the conduct of the Tenant or any of its employees, agents or
visitors or any occupant of the Premises shall reasonably be deemed
objectionable by the Landlord or the Landlord's managing agent; or
(6) if the Tenant's interest or any portion thereof in this lease shall
devolve upon or pass to any person, whether by operation of law or
otherwise, except as expressly permitted by Article SEVENTEEN hereof;
or
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(7) if the lease is assigned, or all or part of the Premises are
sublet, to a Related Entity and such Related Entity shall no longer (x)
control, (y) be under the control of, or (z) be under common control
with the Tenant (except for a permitted successor by merger,
consolidation or purchase as may be permitted by Article SEVENTEEN) and
such Related Entity has not vacated or been approved by Landlord within
six months following the date on which it ceases to be a Related
Entity; or
(8) if the Tenant's obligations under this lease have been guaranteed
by any party and if the guarantor shall default in the observance or
performance of any of the terms of the guaranty or if the guarantor
shall repudiate the guaranty, or if the guaranty shall terminate or be
terminated for any reason without the prior written consent of the
Landlord or in accordance with the terms thereof; or
(9) if the Tenant shall default in the observance or performance of any
other term, covenant or condition of this lease and the Tenant shall
fail to remedy such default within thirty (30) days after notice from
the Landlord to the Tenant of such default, except that if the default
is of such a nature that it cannot with due diligence by remedied
within such thirty-day period, the Tenant shall not be in default if
the Tenant shall commence within said thirty-day period and thereafter
diligently proceed to complete all steps necessary to remedy such
default, and further, so long as the extension of such cure period
shall not (i) subject the Landlord or any superior lessor or mortgagee
to prosecution for a crime or any other fine or charge, (ii) subject
the Premises, the building or the land upon which the building is
located to being condemned or vacated, (iii) subject the land or the
building to any lien or encumbrance, or (iv) result in the termination
of any superior lease or mortgage.
(b) If an Event of Default shall occur, the Landlord may, at any time
thereafter and at its option, give the Tenant ten (10) days written notice of
its intention to terminate this lease, and in such event, on the tenth day
following the giving of such notice, this lease and the term and all rights of
the Tenant under this lease shall expire and terminate as if that were the
Expiration Date and the Tenant shall immediately quit and surrender the
Premises, but the Tenant shall nonetheless be liable for all of its obligations
hereunder, as provided for in Article TWENTY-SIX.
(c) Notwithstanding the foregoing, if such termination is stayed by
order of any court having jurisdiction over any proceeding which constitutes a
Bankruptcy Event, or by federal or state statute, then, following the expiration
of any such stay, or if the trustee appointed in any such proceeding, the Tenant
or the Tenant as debtor-in-possession shall fail to assume the Tenant's
obligations under this lease within the period provided therefor by law or
within one hundred twenty (120) days after entry of the order for relief or as
may be allowed by the court, or if the trustee, the Tenant or the Tenant as
debtor-in-possession shall fail to provide adequate assurance of the complete
and continuous future performance of the Tenant's obligations under this lease
as provided in Article SEVENTEEN (o), the Landlord, to the extent permitted by
law or by leave of the court having jurisdiction over the proceeding
constituting the Bankruptcy Event, shall have the right, as its election, to
terminate this lease on five (5) days' notice to the Tenant, the Tenant as
debtor-in-possession or said trustee and upon the expiration of said five (5)
day period this lease shall cease and expire as aforesaid the Tenant, the Tenant
as debtor-in-possession or said trustee shall immediately quit and surrender the
Premises as aforesaid.
(d) If an Event of Default described in clause (a)(1) shall occur, or
if this lease shall be terminated in accordance with the provisions of clauses
(b) and (c) above, the Landlord, without notice, may reenter and repossess the
Premises using such force for that purpose as may be necessary without being
liable to indictment, prosecution or damages therefor and may dispossess the
Tenant by summary proceedings or otherwise.
(e) If an Event of Default shall occur prior to the date fixed as the
commencement of any renewal or extension of this lease, and shall remain uncured
as of such date, the Landlord may cancel and terminate such right of renewal or
extension by written notice to the Tenant.
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ARTICLE TWENTY-SIX
REMEDIES AND DAMAGES
(a) If an Event of Default shall occur and if this lease shall be
terminated as provided in Article TWENTY-FIVE:
(i) The Landlord and its agents may immediately, or at any time
thereafter, re-enter the Premises and remove all persons and property
therefrom, either by summary dispossess proceedings, or by any suitable
action or proceeding at law, or by force or otherwise, without being
liable to indictment, prosecution or damages therefor, and repossess
and enjoy the Premises, together with all additions, alterations,
installations and improvements, and no entry by the Landlord shall be
deemed an acceptance of surrender.
(ii) The Landlord may, at its option, re-let the Premises in whole or
in part, for such term or terms and for such rentals and upon such
other conditions, which may include concessions and free rent periods
as the Landlord, in its sole discretion, determine, even though the
same may extend beyond the Expiration Date. The Landlord shall have no
liability to the Tenant to re-let the Premises and the failure or
refusal of the Landlord to re-let the Premises or any part thereof, or
if the Premises are re-let, the failure of the Landlord to collect the
rent under such re-letting, shall not relieve the Tenant of any
liability under this lease. The Landlord may, at its option, make such
repairs, replacements, alterations, additions, improvements and other
physical changes in and to the Premises as the Landlord, in its sole
discretion, considers advisable or necessary in connection with any
such re-letting. Any such re-letting shall, as the Landlord's option,
be either for the Landlord's own account, or as the agent for the
Tenant.
(b) The Tenant, on its behalf and on behalf of all persons claiming
through or under the Tenant, including all creditors, hereby expressly waives
(i) any and all right to regain possession of the Premises or to reinstate or
redeem this lease under any present or future law; (ii) the service of any
notice demanding rent or stating an intention to re-enter or to institute legal
proceedings to that end which may otherwise be required to be given under any
present or future law; and (iii) any and all rights of redemption and all other
rights to regain possession or to reinstate this lease, after (x) the Tenant
shall have been dispossessed by a judgment or by warrant of any court or judge,
or (y) any re-entry by the Landlord, or (z) any expiration or termination of
this lease, whether such dispossess, re-entry, expiration or termination shall
be by operation of law or pursuant to the provisions of this lease. Except as
otherwise provided by law, the Tenant and Landlord waive and will waive all
right to trial by jury in any summary proceedings and in any other proceeding or
action at law hereafter instituted by the Landlord against the Tenant in respect
of this lease, and also in any action or proceeding between the parties hereto
for any cause; and it is hereby agreed, that in any of such events, the matter
in dispute shall be tried before a judge without a jury. In the event the
Landlord shall commence any action or summary proceeding for non-payment of
rent, or other breach of any of the terms, covenants or conditions of this
lease, the Tenant agrees not to interpose any counterclaim of whatever nature or
description in any such action or proceeding, other than compulsory
counterclaims which would be deemed waived if not asserted by the Tenant. The
words "re-enter" and "re-entry" as used in this lease are not restricted to
their technical legal meaning. In the event of a breach or threatened breach by
the Tenant, or anyone claiming by, through or under the Tenant, of any of the
covenants or provisions hereof, the Landlord shall have the right to obtain an
injunction and the right to invoke any remedy allowed at law or in equity as if
re-entry, summary proceedings and other remedies were not herein provided for.
The remedies set forth herein are cumulative and the mention in this lease of
any remedy shall not preclude the Landlord from exercising any other remedy
allowed at law or in equity.
(c) If this lease and the term shall expire as provided in Article
TWENTY-FIVE, or by or under any summary proceeding or any other action or
proceeding by the Landlord against the Tenant or any person claiming by, through
or under the Tenant, or if the Landlord shall re-enter the Premises as provided
in paragraph (a) above, or by or under any summary proceeding or any other
action or proceeding, then, in any of said events:
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(i) The Tenant shall pay to the Landlord all fixed rent and additional
rent and other charges payable under this lease by the Tenant to the
Landlord to the date upon which this lease and the term shall have
expired or has been terminated by the Landlord;
(ii) The Tenant shall also be liable for and shall pay to the Landlord,
as liquidated damages, any deficiency (the "Deficiency") between the
fixed rent and additional rent reserved in this lease for the period
which would have constituted the unexpired portion of the term
(including any renewal term exercised by the Tenant prior to the
termination of this lease or re-entry by the Landlord, and in such case
the additional rent for the renewal term shall be assumed to be the
same as was payable for the year immediately preceding such termination
or re-entry) and the net amount, if any, actually received by the
Landlord from any re-letting of the Premises pursuant to paragraph
(a)(ii) above. The Landlord shall be entitled to deduct from the
rentals actually collected under any re-letting all of the expenses
which Landlord incurred by reason of the Tenant's default and in
connection with such re-entry and re-letting, including, but not
limited to, all repossession costs, legal expenses, brokerage
commissions, attorneys' fees, court costs and disbursements, the cost
of repairs, re-decoration and alterations in preparing the Premises for
re-letting, and the amount of rent concessions and work allowances and
the like granted in connection with such re-letting. The Deficiency
shall be paid in monthly installments by the Tenant on the days
specified in this lease for payment of installments of fixed rent, and
the Tenant shall not be entitled to withhold any such payment until the
Expiration Date set forth in this Lease. The Landlord shall be entitled
to recover from the Tenant each monthly Deficiency as the same arises,
and no suit to collect the amount of the Deficiency for any month shall
prejudice the Landlord's right to collect the Deficiency for any
subsequent month by a similar proceeding.
(iii) Whether or not the Landlord shall have collected any monthly
Deficiency, the Landlord shall be entitled to recover from the Tenant,
and the Tenant shall pay to the Landlord on demand, in lieu of any
further Deficiency as and for liquidated and agreed final damages, and
not as a penalty, a sum equal to the amount by which the rent for the
period of the unexpired portion of the lease term (commencing on the
date immediately succeeding the last day with respect to which a
Deficiency payment, if any, was collected) exceeds the then fair and
reasonable rental value of the Premises for the same period, both
discounted to present value at six percent (6%). If, before
presentation of proof of such liquidated damages to any court, the
Premises, or any part thereof, shall have been relet by the Landlord
for the period which would have constituted the unexpired portion of
the term, or any part thereof, the amount of rent reserved upon such
reletting shall be deemed, prima facie, to be the fair and reasonable
rental value for the part or the whole of the Premises so relet.
(d) The liability of the Tenant shall survive the issuance of a final
order and warrant of dispossess, and re-entry by the Landlord, and any other
termination of this lease as a result of an Event of Default, and the granting
by the Landlord of a new lease upon the Premises to another tenant, and the
Tenant hereby waives any defense which might be predicated upon any of said acts
or events. If the Premises are re-let together with any other space in the
building, the rental collected and the expenses incurred in connection with such
re-letting shall be apportioned as reasonably determined by the Landlord. In no
event shall the Tenant be entitled to receive any rents collected or payable
under any re-letting, whether or not such rents exceed the fixed rent reserved
under this lease. Nothing contained in Articles TWENTY-FIVE or TWENTY-SIX shall
be deemed to limit or preclude the recovery by the Landlord from the Tenant of
the maximum amount allowed to be obtained as damages by any statute or rule of
law, or of any sums or damages to which the Landlord may be entitled in addition
to the damages set forth in paragraph (c) above.
ARTICLE TWENTY-SEVEN
SURRENDER AT EXPIRATION
Upon the expiration or any termination of the term of this lease, the
Tenant shall quit and surrender the Premises, together with any fixtures,
equipment or appurtenances installed in the Premises at the commencement of this
lease, and any alterations, decorations, additions and improvements which are
not to be removed in compliance with the provisions of Article FOUR
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hereof, to the Landlord, in good order and condition, ordinary wear excepted.
The Tenant shall remove all its furnishings, trade fixtures, stock in trade and
like personal property in accord with the requirements of Article FOUR, so as to
leave the Premises broom-clean and in an orderly condition. If the last day of
the term of this lease falls on Saturday or Sunday, this lease shall expire on
the business day immediately preceding. The Tenant's obligation to observe and
perform this covenant shall survive the expiration or other termination of the
term of this lease. The Tenant expressly waives, for itself and for any person
claiming by, through or under the Tenant, any rights which the Tenant or any
such person may have under the provisions of Section 2201 of the New York Civil
Practice Law and Rules or any law of like import then in force in connection
with any holdover summary proceedings when the Landlord may institute to enforce
the provisions of this Article. The Tenant acknowledges that possession of the
Premises must be surrendered to the Landlord on the Expiration Date. The parties
recognize that the damage to the Landlord resulting from any failure by the
Tenant to timely surrender possession of the Premises will be substantial, will
exceed the amount of the monthly installments of the fixed rent and additional
rent payable hereunder and will be impossible to accurately measure. The Tenant
agrees that if possession of the Premises is not delivered to the Landlord on
the Expiration Date (or any sooner termination date), in addition to any other
rights or remedies the Landlord may have hereunder or in equity or at law, and
without in any manner limiting the Landlord's right to demonstrate and collect
any damages suffered by the Landlord, the Tenant shall pay to the Landlord on
account of use and occupancy of the Premises for each month and for each portion
of any month during which the Tenant holds over in the Premises after the
Expiration Date, (a) for the first month following the Expiration Date, a sum
equal to 125% of the aggregate of the fixed rent and additional rent which was
payable under this lease during the last month of the term, (b) for the second
month following the Expiration Date, a sum equal to 150% of the aggregate of the
fixed rent and additional rent which was payable under this lease during the
last month of the term, and (c) for any month thereafter, a sum equal to 200% of
the aggregate of the fixed rent and additional rent which was payable under this
lease during the last month of the term, provided, however, that in no event
shall the amount payable in any month be less than the fair market value of the
Premises. In addition, and without in any manner limiting the Landlord's right
to demonstrate and collect any damages suffered by the Landlord and arising from
the Tenant's failure to surrender the Premises as provided herein, the Tenant
shall indemnify and hold the Landlord harmless from and against all cost,
liability, damages and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) resulting from a delay of three months or
more by the Tenant in so surrendering the Premises, including, without
limitation, any claims made by any succeeding or prospective tenant as a result
of such delay. Nothing herein contained shall be deemed to permit the Tenant to
retain possession of the Premises after the Expiration Date (or sooner
termination) of this lease or to limit in any manner the Landlord's right to
regain possession of the Premises through summary proceedings, or otherwise, and
no acceptance by the Landlord of payments from the Tenant after the Expiration
Date shall be deemed to be other than on account of the amount to be paid by the
Tenant in accordance with the provisions of this Article. The provisions of this
Article shall survive the expiration of the term of this lease.
ARTICLE TWENTY-EIGHT
QUIET ENJOYMENT
The Landlord covenants that, if the Tenant shall duly keep and perform
all the terms and conditions hereof, the Tenant shall peaceably and quietly
have, hold and enjoy the Premises for the term aforesaid, free from interference
from the Landlord or anyone claiming by, through or under the Landlord, subject
however to ground leases, underlying leases and mortgages as hereinbefore
described, and to the lien, rights and estate by virtue of unpaid taxes of any
government having jurisdiction of the Premises of which the herein Premises are
a part.
ARTICLE TWENTY-NINE
SECURITY DEPOSIT
(a) The Tenant has deposited with the Landlord the sum of Five Million,
Seven Hundred Ninety-six Thousand and no/100 Dollars ($5,796,000) to secure the
faithful performance by the Tenant of all the terms, conditions, covenants and
agreements of this lease, and to make good to the Landlord any damage which it
may sustain by reason of any act or omission of the Tenant. The
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Landlord shall segregate the said security deposit as a trust fund not to be
mingled with other funds of the Landlord, and if, during the term of this lease,
the Landlord shall sell, exchange or lease the entire building, subject to this
lease, or, being the lessee thereof, shall assign its lease, the Landlord shall
have the right to pay or transfer the said deposit to such grantee, lessee, or
assignee, as the case may be, and, in such event, the Landlord shall be released
from all responsibility and liability in connection therewith, and the Tenant
will look solely to said grantee, lessee, or assignee for its return. Tenant may
request that cash security be invested in Treasury Securities with a maturity of
not more than 92 days. If the aforesaid security deposit shall be deposited with
a bank or trust company, savings bank or savings and loan association, the
Landlord shall advise the Tenant of the name and address thereof. The Tenant
shall not be entitled to the payment of any interest on the aforesaid security
deposit unless earned and any interest earned upon such deposit, less the amount
equal to the lesser of $5,000 or 1% of the deposit, which shall be paid to
Landlord as an administration expense, shall, at Tenant's request, be paid
annually to Tenant. The Tenant's interest in said deposit shall not be assigned
or encumbered without the written consent of the Landlord and neither the
Landlord nor its successors or assigns shall be bound by any such attempted
assignment or attempted encumbrance, and within sixty (60) days after the
expiration of the term, the amount of said deposit shall be repaid to the
Tenant, less any proper charges against the same, as hereinabove or hereinafter
provided. If the Tenant shall at any time be in default with respect to any
payment of rent or of additional rent or of any other payment due from the
Tenant to the Landlord under this lease, or if the Landlord shall be damaged by
any act or omission of the Tenant the Landlord may, at its option, apply such
portion of said deposit as may be adequate to cure such default or to make good
such damage, including, but not by way of limitation, interest, costs, fees and
other expenses, paid or incurred by the Landlord, and thereafter such portion so
applied shall be free from any claim by the Tenant for its return. If the
Landlord shall re-enter, pursuant to the provisions of this lease (other than in
the event of insolvency in which event the provisions of Article TWENTY-THREE of
the lease shall apply), the Landlord shall continue to hold the said deposit, as
security for the performance of the Tenant's obligations, until the date herein
expressly fixed for the expiration of the term, and apply the same from time to
time to the unpaid obligations of the Tenant, under the same terms and
conditions as if the said lease were still in full force and effect. No
termination of this lease or re-entry by the Landlord for default of the Tenant
shall entitle the Tenant to the return of any part of said deposit, nor shall
the retention of such deposit, after such re-entry, impair or otherwise affect
the Tenant's liability to the Landlord during the balance of the term originally
provided for. If, at any time, the said deposit shall be diminished, by reason
of the Landlord's having applied any part thereof in accordance with the
provisions of this paragraph, the Tenant shall pay over to the Landlord upon
demand, the equivalent of such decrease, to be added to said deposit and to be
held and applied in accordance with the provisions of this paragraph.
Provided that no Event of Default has occurred and is continuing at the
time of the scheduled reduction hereinafter set forth, then the security deposit
shall be reduced on anniversaries of the Initial Premises Rent Commencement Date
in accordance with the following schedule:
Through June 30, 2001 $5,796,000
Thereafter until June 30, 2002 $5,071,500
Thereafter until June 30, 2003 $4,347,000
Thereafter until June 30, 2004 $3,622,500
Thereafter until the Expiration Date $2,898,000
(b) In lieu of delivering cash as the security deposit, the Tenant may
deliver to the Landlord an unconditional, irrevocable and transferable letter of
credit (such letter of credit or any extension or replacement thereof, being
hereinafter referred to as the "Letter of Credit") issued for the account of the
Landlord by a New York Clearing House bank acceptable to the Landlord, in
substance reasonably satisfactory to the Landlord, which Letter of Credit is to
be held by Landlord in accordance with the terms of this Article TWENTY-NINE.
The Letter of Credit shall permit the Landlord or its duly authorized
representative (1) to draw thereon up to the full amount of the credit evidenced
thereby upon presentation of the Letter of Credit and a sight draft in the
amount to be drawn and (2) to draw the full amount thereof to be held as cash
security pursuant to this Article if for any reason the Letter of Credit is not
renewed within sixty (60) days prior to its expiration date.
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The Letter of Credit shall be fully transferable by the Landlord and its
successors and assigns without charge to the Landlord. In the event that the
expiration date of the Letter of Credit is prior to sixty (60) days after the
Expiration Date (or sixty days after any subsequent date through which the term
of this lease may be extended), if the Landlord receives notice from the bank or
the Tenant that the Letter of Credit is not being renewed or in the event that
the Tenant has not delivered a replacement cash security deposit or Letter of
Credit to the Landlord by thirty (30) days before the expiration of the Letter
of Credit, then the Landlord, acting through one of its duly authorized
representatives, shall be entitled to present the Letter of Credit for immediate
payment of the then potential amount available pursuant to the Letter of Credit,
and the amount of the Letter of Credit shall become the Deposit hereunder and
shall be held, applied and returned by the Landlord in accordance with the terms
provided by the lease for the holding, application and return of the Deposit. If
the Letter of Credit is not being renewed but the Tenant does deliver a
replacement Deposit or a similar Letter of Credit by thirty (30) days before
expiration of the Letter of Credit, then the Landlord shall not thereafter be
entitled to present the expiring Letter of Credit for payment of any amounts.
ARTICLE THIRTY
REAL ESTATE TAX AND OPERATING EXPENSE ESCALATION
(a) REAL ESTATE TAXES ESCALATION. In order to adjust, during the term
of this lease, for increases in the expenses of the Landlord for Real Estate
Taxes, the Tenant, commencing on April 1, 2001 and in each year thereafter,
shall pay to the Landlord, as additional rent, the Tenant's Proportionate Share
of any Increase in such Real Estate Taxes, all in accordance with paragraphs (c)
through (g) below.
(b) OPERATING EXPENSE ESCALATION. In order to adjust, during the term
of this lease, for increases in the expenses of the Landlord in operating the
building, the Tenant shall pay to the Landlord, as additional rent, commencing
on April 1, 2001 and on each April 1 thereafter, the amount indicated in
Schedule 1 as the Operating Expense Payment, such amount to be paid (in addition
to the annual fixed rent) in twelve equal monthly installments.
(c) DEFINITIONS. As used in this Article the following capitalized
words or expressions shall have the meaning ascribed to them below:
1. "REAL ESTATE TAXES" shall mean and include all expenditures of the
Landlord for taxes or assessments payable by the Landlord, as finally
determined, upon or with respect to the building and the land upon
which it is located, imposed by Federal, State or local government
(plus all reasonable expenditures for fees and expenses incurred in the
course of obtaining a reduction in any tentative assessed valuation),
but shall not include income, franchise, inheritance or capital stock
or like taxes.
2. "INCREASE IN REAL ESTATE TAXES" shall mean the amount by which Real
Estate Taxes in any Subsequent Year, exceed the real estate taxes in
the Base Year (the "Base Real Estate Taxes").
3. "PROJECTED REAL ESTATE TAXES" shall mean the Landlord's reasonable
estimate of Real Estate Taxes for the particular Subsequent Year.
4. "COMPARATIVE STATEMENT" shall mean a statement, in writing signed by
the Landlord, or on its behalf by an officer of any corporation acting
as its managing agent, showing (i) a comparison of (a) Real Estate
Taxes for the Base Year with (b) Projected Real Estate Taxes for the
upcoming Subsequent Year, (ii) if the Tenant paid additional rent
pursuant to this Article with respect to the immediately preceding
Subsequent Year as a result of Increase in Real Estate Taxes, any
adjustment necessitated by a variance between Projected Real Estate
Taxes for such immediately preceding Subsequent Year (as shown in the
current Comparative Statement) and the actual Real Estate Taxes for
such immediately preceding Subsequent Year (as shown in the last
Comparative Statement) and (iii) the Operating Expense Payment for the
then current Subsequent Year. At the request of
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the Tenant, the Comparative Statement shall be accompanied by a copy of
the most recent statement for real estate taxes for the Premises
received by Landlord from the City of New York.
5. "TENANT'S PROPORTIONATE SHARE" shall mean 8.64% initially and shall
be adjusted appropriately as additional space is added.
6. "BASE YEAR" shall mean the calendar year 2000. The Base Real Estate
Taxes shall be computed as the average of the Real Estate Taxes for the
1999/2000 and 2000/2001 fiscal years.
7. "SUBSEQUENT YEAR" shall mean each twelve-month period commencing
April 1, starting with the period commencing April 1, 2001.
(d) STATEMENTS FOR THE TENANT. Prior to April 1, 2001, and on or before
that day in each Subsequent Year, the Landlord will furnish a Comparative
Statement to the Tenant. The failure of the Landlord to furnish a Comparative
Statement shall be without prejudice to the right of the Landlord to furnish a
Comparative Statement at any time in the future.
Every Comparative Statement furnished by the Landlord pursuant to this
Article shall be conclusive and binding upon Tenant unless within the later of
(i) ninety (90) days after the receipt of such Comparative Statement, or (ii)
ninety (90) days after the Tenant has received a copy of the tax bill if the
Tenant has requested a copy of the tax bill within ninety days after receipt of
the Comparative Statement, Tenant shall notify Landlord that it disputes the
correctness thereof, specifying the particular respects in which such
Comparative Statement is claimed to be incorrect. Pending the determination of
such dispute, Tenant shall pay additional rent in accordance with such
Comparative Statement and such payment shall be without prejudice to Tenant's
position and to the Tenant's rights to a refund of any overpayment. If the
dispute shall be determined in Tenant's favor, Landlord shall within five
business days after Landlord's receipt of the notice of such determination, pay
Tenant the amount of Tenant's overpayment of additional rent resulting from
compliance with such Comparative Statement. This provision shall survive the
expiration or termination of the lease and shall be binding on the successors of
each party.
(e) COMPUTATION OF INCREASES IN RENT PAYABLE BY TENANT. When the
Landlord shall furnish the Tenant with any Comparative Statement in accordance
with this Article which shall show an Increase in Projected Real Estate Taxes,
then commencing April 1, 2001, and on April 1 of each Subsequent Year in
question, in addition to the increase in rent attributable to the Operating
Expense Payment for such Subsequent Year, the rent payable under the lease shall
be increased by the Tenant's Proportionate Share of the increase in the
Projected Real Estate Taxes. Such increases shall be payable (with payment on
account of such increases) as follows: on the first day for the payment of rent
under this lease following the receipt of the Comparative Statement, the Tenant
shall pay to the Landlord the sum equal to (1) the aggregate of one-twelfth of
the Tenant's Proportionate Share of the increase in Projected Real Estate Taxes,
plus or minus, as the case may be, (2) any adjustment necessitated by a variance
between (x) the Projected Real Estate Taxes for such immediately preceding
Subsequent Year and (y) the actual Real Estate Taxes for such immediately
preceding Subsequent Year, plus (3) one-twelfth of the Tenant's Operating
Expenses payment. Until a different Comparative Statement shall be submitted as
above provided, the monthly installments or rent payable under this lease due to
an Increase in Projected Real Estate Taxes shall continue to be increased by
such amount; however, notwithstanding any other provision herein, the failure of
the Landlord to submit a Comparative Statement in any Subsequent Year shall not
affect the amounts payable by Tenant as Operating Expense Payment in such
Subsequent Year.
With respect to the Comparative Statement furnished to the Tenant in
the Subsequent Year following the year in which the term of this lease
terminates, if such Comparative Statement shall indicate an adjustment
necessitated by a variance of the type referred to in clauses (x) and (y) in the
immediately preceding paragraph, then the Tenant shall promptly pay to the
Landlord, or the Landlord promptly shall pay to the Tenant, as the case may be,
the amount of any such adjustment as indicated in such Comparative Statement.
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(f) INSPECTION OF BOOKS. The Tenant or its authorized representative
shall have a right to examine the books of the Landlord showing the Real Estate
Taxes with respect to the building during regular business hours for the purpose
of verifying the information set forth in any Comparative Statement relating to
any Increase in Real Estate Taxes shown in such Comparative Statement; provided
that a written request for such inspection is made by the Tenant within 120 days
of the receipt of any such Comparative Statement.
(g) DECREASES IN REAL ESTATE TAXES. In no event shall any decrease in
the Real Estate Taxes in any way reduce the fixed rent or additional rent
payable by the Tenant under this lease, except to the extent to which a decrease
in Real Estate Taxes shall result in a decrease in the additional rent payable
pursuant to paragraph (a) of this Article; provided, however, that no decrease
in Real Estate taxes shall in any way reduce any additional rent payable on
account of any Operating Expense Payment.
ARTICLE THIRTY-ONE
SERVICES
(a) For purposes of this lease, "Business Hours" shall mean normal
building operation hours of eight a.m. to six p.m. and "Business Days" shall
mean Monday through Friday, except for those days designated as legal holidays
by the Federal or State government or by the unions now or hereafter
representing the Landlord's building personnel.
(b) During the term of this lease, the Landlord shall furnish during
Business Hours on Business Days passenger and freight elevator service with the
elevators now or hereafter in the building sufficient heat during the cold
season to heat the Premises, and condenser water from the Landlord's cooling
tower equipment located on the roof of the building. The Landlord shall maintain
in service and available for the non-exclusive use of the Tenant at least one
passenger elevator at all times. If the Tenant requires freight elevator
service, heat on non-Business Days or during non-Business Hours on Business
Days, the Landlord will furnish the additional requested service upon notice of
the Tenant's need therefor. Such notice may be written or oral and shall be
given prior to 2 p.m. on the day upon which such service is requested or by 2
p.m. of the last preceding Business Day if service is requested on other than a
Business Day. The Tenant will pay for any overtime freight elevator service,
heat at the prevailing rate per hour as established from time to time by the
Landlord for such services at the building or in the buildings of the Landlord,
generally, for each hour during which the additional service is supplied. All
charges for such overtime service shall constitute additional rent and shall be
payable within fifteen (15) days after presentation of a bill, and in the event
of default of payment therefor, the Landlord may refuse further service and the
Landlord shall have all remedies available to it for collection herein specified
with respect to rent. The failure on the part of the Landlord to furnish
elevator service, heat or condenser water, if due to breakdowns, repairs,
maintenance, strikes or other causes beyond the control of the Landlord, shall
involve no liability on the part of the Landlord and shall not constitute an
actual or constructive eviction, nor relieve the Tenant from any of its
obligations under this lease nor entitle the Tenant to an abatement of rent.
(c) The Landlord shall provide 190 tons of condenser water service per
floor to the 4th and 6th floors of the premises (and a pro rata share to the
fifth floor) (the "Base Condenser Water Service") from the Landlord's cooling
tower equipment located on the roof of the building, such service to be
available 24 hours a day, 365 days a year. The Tenant shall pay an annual charge
for the provision of Base Condenser Water Service at the rate of $750 per ton
per year, such rate to increase 3% each year, commencing May 1, 2001. Such
charges shall constitute additional rent. The Tenant shall, at its own expense,
maintain all supplemental air-conditioning systems now or hereafter installed in
the Premises in good condition and repair, using a contractor approved by the
Landlord. The Landlord shall maintain in good order and repair those portions of
the building air-conditioning system serving the Premises, excluding all
ductwork, diffusers, thermostat controls, and any other part of the air-
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conditioning system located outside of the machine room within the Premises. In
all events, the Tenant shall be responsible for any repairs required to be made
to any part of the air-conditioning system when the need for such repairs arises
from the causes set forth in clauses (i) through (iv) of Article THREE (a).
Upon written request of the Tenant, the Landlord shall provide up to a
maximum of forty additional tons of condenser water service above the Base
Condenser Water Service for the Premises, at an annual cost per ton in effect at
the time such additional condenser water service is provided. Tenant shall also
reimburse Landlord for the hard and soft costs actually incurred by Landlord in
providing condenser water service in excess of the Base Condenser Water Service.
(d) Provided the Tenant shall keep the Premises in order, the Landlord,
at the Landlord's expense, shall cause the Premises, excluding any portions
thereof used for the storage, preparation, service or consumption of food or
beverages, to be cleaned on Business Days substantially in accordance with the
Specifications set forth as SCHEDULE B annexed hereto. The Tenant, at the
Tenant's sole cost and expense, shall cause all portions of the Premises used
for the storage, preparation, service or consumption of food or beverages to be
cleaned daily in a manner reasonably satisfactory to the Landlord, and to be
exterminated against infestation by vermin, rodents or roaches regularly and, in
addition, whenever there shall be evidence of any infestation. Any such
extermination shall be done at the Tenant's sole cost and expense and by
contractors reasonably approved by the Landlord. If the Tenant shall perform any
additional cleaning services in addition to the services provided by the
Landlord, the Tenant shall employ such cleaning contractor providing services to
the building on behalf of the Landlord or such other cleaning contractor as
shall be approved by the Landlord. The Tenant shall, at its sole cost and
expense, comply with all present and future laws, ordinances, regulations and
requirements of the City, State or Federal Government or any agency having
jurisdiction over the building, or any rules which the Landlord may reasonably
impose, with respect to the recycling or sorting of refuse and rubbish. The
Landlord reserves the right to refuse to collect or accept from the Tenant any
refuse or rubbish which is not separated and sorted as required and to require
the Tenant to arrange for such collection, at the Tenant's sole cost and
expense, using a contractor reasonably satisfactory to the Landlord. The Tenant
shall indemnify the Landlord from all liability arising from the Tenant's
failure to comply with the provisions of this Article. The Tenant shall pay to
the Landlord the cost of removal of any of the Tenant's refuse and rubbish from
the building which exceeds normal office requirements.
(e) The Landlord shall provide to the Premises hot and cold water for
ordinary drinking, cleaning and lavatory purposes. If the Tenant uses or
consumes water for any other purposes or in unusual quantities (of which fact
the Landlord shall be the sole judge), the Landlord may, at the Tenant's
expense, install a water meter or require the Tenant to install a meter. The
Tenant shall thereafter maintain the meter in good working order at the Tenant's
expense and the Tenant shall pay for water consumed as shown on said meter as
additional rent as and when bills are rendered at 110% of the Landlord's cost
therefor. In default in making such payment, the Landlord may pay such charges
and collect the same from the Tenant. The Tenant shall pay the New York City
sewer rents, charges or any other tax apportioned to the Tenant's metered
consumption of water at the Premises. The apportionment of the sewer rent to the
Premises shall be made in accord with the measurement or apportionment of water
consumed at the Premises as provided herein. The sewer rents shall be billed
with the water charges and shall constitute additional rent.
(f) The Landlord may suspend any service which it is required to
provide hereunder, if it should become necessary or proper so to do, at any
time. The Landlord shall restore such service within a reasonable time, making
due allowance for labor troubles, acts of God, or any cause beyond the
Landlord's control. Should the Tenant be in default in the payment of any rent
hereunder, the Landlord may, upon not less than three days' notice, and without
diminution of the liability of the Tenant hereunder, and without constituting an
eviction, constructive or otherwise, suspend or refuse the Tenant freight
elevator service and should the Tenant, after notice, violate the provisions of
Rule 11, the Landlord may, without any diminution of such liability or
constituting such eviction, suspend or refuse the Tenant freight elevator
service until the conditions in violation of Rule 11 have been fully remedied.
(g) The Landlord shall be entitled to refuse to furnish passenger or
freight elevator service in connection with any sale at auction of the Tenant's
fixtures, machinery, stock in trade and other
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property or a sale in any other manner of all or substantially all of such
property unless the Landlord shall have been given not less than two days'
notice of the intention to hold the auction or other sale and unless the
Landlord shall be given an undertaking by a person, firm or corporation of
satisfactory financial resources wherein the Landlord shall be indemnified
against (i) all expense incurred by the Landlord in connection with the removal
by purchasers of any property sold to them at the auction or other sale, (ii)
all expense for removal or storage of any property sold at the auction or other
sale which is not removed by the purchaser within two days following the sale,
and (iii) all expenses which the Landlord may incur for the removal of property
not sold and waste and rubbish from the Premises.
(h) The Tenant shall have access to and the main entry to the building
shall be open and staffed by a doorman, security guard, concierge or attendant
twenty-four (24) hours a day, seven (7) days a week. During Business Hours on
Business Days, messengers shall have access to the Premises through the
passenger elevators, or, if bulky packages are being delivered, through the
freight elevator. During non-Business Hours or on non-Business Days, messengers
shall have access to the Premises. The Landlord reserves the right, during the
term of this lease, to designate an area in the building for packages to be
delivered, either for transmittal to the Tenant, or notification to the Tenant
of the delivery of same.
ARTICLE THIRTY-TWO
INSURANCE
(a) The Tenant shall obtain and keep in full force and effect during
the term of this lease, at the Tenant's sole cost and expense, (i) a policy of
comprehensive general public liability and property damage insurance on an
occurrence basis, with a broad form contractual liability endorsement and a
completed operations endorsement with minimum limits with a combined single
limit with respect to each occurrence in an amount of not less than $5,000,000
for injury (or death) to persons and damage to property; (ii) an "all risk"
insurance policy, with extended coverage, covering all of Tenant's personal
property and alterations for 100% of the replacement cost thereof, as well as
business interruption insurance adequate to cover the Tenant's loss of income as
a result of a loss sustained by a peril covered under the policy; (iii) Worker's
Compensation Insurance, as required by law; and (iv) such other insurance in
such amounts as Landlord may reasonably require from time to time. Such policies
shall provide that the Tenant is named as the insured. Landlord and any managing
agent, lessors and mortgagees (whose names have been furnished to the Tenant)
shall be named as additional insureds, as their respective interests may appear.
The Tenant shall have the right to insure and maintain the insurance coverages
required under this Article under blanket insurance policies covering other
premises occupied by the Tenant so long as such blanket policies comply as to
terms and amounts with the requirements set forth in this Article; provided
that, upon request, the Tenant shall deliver to the Landlord a certificate from
the Tenant's insurer evidencing the portion of such blanket insurance allocable
to the Premises.
(b) All insurance required to be carried by Tenant hereunder shall be
written in form and substance reasonably satisfactory to the Landlord and issued
by a reputable and independent insurer permitted to do business in the State of
New York, and rated in Best's Insurance Guide (or any successor thereto) as
having a general policyholder rating of not less than "A" and a financial rating
of at least "XIII". The policy required to be carried pursuant to paragraph (a)
(i) above shall contain a provision that (1) the policy shall be non-cancelable
with respect to the Landlord and such managing agents, lessors and mortgagees
(whose names and addresses have been furnished to the Tenant) unless thirty (30)
days' prior written notice shall be given to the Landlord by certified mail,
return receipt requested, which notice shall contain the policy number and the
name of the insured and additional insureds, and (2) no act or omission of the
Tenant shall affect or limit the obligation of the insurer to pay the amount of
any loss sustained. Certificates of insurance (including endorsements and
evidence of the waivers of subrogation required pursuant to Article SIXTEEN
hereof), or evidence of renewal of such coverage, shall be delivered to the
Landlord prior to the Commencement Date (or any earlier entry upon the Premises
by the Tenant or any of the Tenant's employees, agents or contractors prior to
the Commencement Date), and at least thirty (30) days prior
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to the expiration of such policy. If the Tenant fails to obtain or keep in force
the insurance required by this Article, or to pay the premiums thereof, provided
the Tenant is afforded written notice of the Landlord's intention to pay such
premium ten (10) days prior thereto, in addition to all other rights the
Landlord may have under this lease, the Landlord may, from time to time, and as
often as such failure shall occur, pay the premiums therefor, and any and all
sums so paid for insurance by the Landlord shall be and become, and are hereby
declared to be, additional rent under this lease and shall be due and payable
within fifteen (15) days after rendition of a bill therefor.
ARTICLE THIRTY-THREE
DEFAULT UNDER OTHER LEASES
Intentionally omitted.
ARTICLE THIRTY-FOUR
WORK TO BE DONE BY LANDLORD
If work of any nature is agreed herein to be done by the Landlord, the
Tenant agrees that it may be done after the Commencement Date and that no rebate
of rent or allowance will be granted therefor, except as set forth in paragraph
(g) of Article One hereof. The Landlord shall not be required to furnish any
work or materials to the Premises, except as expressly provided in the Work
Letter attached to this lease EXHIBIT C. In case the Landlord is prevented from
making any repairs, improvements, decorations or alterations, installing any
fixtures or articles of equipment, furnishing any services or performing any
other covenant herein contained to be performed on the Landlord's part, due to
the Landlord's inability to obtain, or difficulty in obtaining, labor or
materials necessary therefor, or due to any governmental rules and regulations
relating to the priority of national defense requirements or strikes, or due to
labor troubles, accident or due to any other cause beyond the Landlord's
control, the Landlord shall not be liable to the Tenant for damages resulting
therefrom, nor (except as expressly otherwise provided in Article SIXTEEN hereof
in respect of damage to the Premises due to fire), shall the Tenant be entitled
to any abatement or reduction of rent by reason thereof, nor shall the same give
rise to a claim in the Tenant's favor that such failure constitutes actual or
constructive, total or partial, eviction from the Premises.
ARTICLE THIRTY-FIVE
CONSENT TO JURISDICTION
This lease shall be governed in all respects by the laws of the State
of New York. The Tenant irrevocably consents and submits to the jurisdiction of
any Federal, State, or county court sitting in the State of New York in any
action or proceeding arising out of this lease and/or the use and occupation of
the Premises. The Tenant agrees that any action or proceeding brought by the
Tenant against the Landlord in respect of any matters arising out of or relating
to this lease may only be brought in the State of New York, County of New York.
The Tenant hereby irrevocably designates Colby Attorneys Service Co., Inc., 41
State Street, Suite 106, Albany, New York 12207 to accept service of process on
the Tenant's behalf and agrees that such service shall be deemed sufficient. If
the Tenant is not a New York partnership or corporation or a foreign corporation
qualified to do business in the State of New York, it shall designate in
writing, an agent in New York County for service under the laws of the State of
New York.
ARTICLE THIRTY-SIX
TENANT LIABILITY
(a) If more than one tenant is named as the tenant under this lease,
each of the named tenants shall be jointly and severally liable for the
performance of all of the terms, covenants and agreements on the Tenant's part
to be performed under this lease.
(b) If the Tenant (or any permitted assignee of Tenant) is a
partnership (or is comprised of two or more persons, individually or as
co-partners of a partnership or shareholders of a professional corporation) the
following provisions shall apply to each tenant: (i) the liability of each of
the partners comprising the Tenant shall be joint and several; (ii) each of the
parties comprising the Tenant hereby consents in advance to, and agrees to be
bound by, any modification, termination,
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discharge or surrender of this lease which may hereafter be made and by any
notices, or other communications which may hereafter be given by the Tenant or
any of the parties comprising the Tenant; (iii) all statements, notices or other
communications given to the Tenant or to any of the parties comprising the
Tenant shall be deemed given to the Tenant and all parties; (iv) if the Tenant
shall admit new partners, all such new partners shall, by their admission to the
Tenant, be deemed to have assumed performance of all of the terms, covenants and
conditions of this lease on Tenant's part to be observed and performed, and (v)
the Tenant shall give to the Landlord notice of the admission of any new
partners, and upon demand of the Landlord, such new partners shall execute and
deliver to the Landlord an agreement in form satisfactory to the Landlord,
wherein each new partner shall assume performance of all of the terms, covenants
and conditions of this lease on Tenant's part to be performed (but the
Landlord's failure to request such an agreement nor the partners failure to
deliver such an agreement shall relieve the partner of its liability hereunder).
(c) If the Tenant is a partnership, it shall not convert to or become a
corporation, limited liability company, registered limited liability partnership
or any other form of business organization (such entity being referred to as a
"Successor Entity") , without the Landlord's prior written consent. The Landlord
shall not unreasonably withhold its consent to the Tenant's conversion to a
Successor Entity provided that (i) the Tenant shall cause each partner of the
Tenant to execute and deliver to the Landlord an agreement, in a form reasonably
satisfactory to the Landlord, pursuant to which each partner of the Tenant
agrees to remain personally liable jointly and severally for all of the terms,
covenants and conditions of the lease that are to be performed by the Successor
Entity; (ii) the Successor Entity shall have a Net Worth (as hereinbefore
defined) of not less than the Net Worth of the Tenant on the date of execution
of the lease; (iii) no Event of Default has occurred and is continuing
hereunder; (iv) the Successor Entity succeeds to all of the business and assets
of the Tenant; (v) the Tenant shall deliver to the Landlord such documentation
as may be reasonably required by the Landlord to evidence compliance with the
requirements set forth above; and (vi) the Tenant shall reimburse the Landlord
for all reasonable costs and expenses, including, without limitation, attorneys'
fees, that may be incurred by the Landlord in connection with the conversion of
the Tenant to a Successor Entity.
ARTICLE THIRTY-SEVEN
ADJACENT EXCAVATION-SHORING
If an excavation shall be made upon land adjacent to the Premises, or
shall be authorized to be made, the Tenant shall afford to the person causing or
authorized to cause such excavation, license to enter upon the Premises for the
purpose of doing such work as said person shall deem necessary to preserve the
wall or the building from injury or damage and to support the same by proper
foundations without any claim for damages or indemnity against the Landlord, or
diminution or abatement of rent.
ARTICLE THIRTY-EIGHT
FAILURE TO GIVE POSSESSION
In the event the Landlord, for any reason, shall be unable to give
possession of the Premises by the date set forth in this lease for the
commencement of the term, this lease shall nevertheless continue in full force
and effect and the Landlord shall tender and the Tenant shall take possession of
said Premises under the terms of this lease as soon as the Landlord shall have
tendered possession thereof to the Tenant; the rent, however, to begin on the
date upon which such possession is tendered to the Tenant, subject to the free
rent provisions of paragraph (g) of Article One. This is intended to constitute
an "express provision to the contrary" within the meaning of Section 223-a of
the New York Real Property Law. No such failure to give possession on the date
set forth in this lease for the commencement of this term shall affect the
validity of this lease or give rise to any claim for damages by the Tenant or
claim for rescission of this lease, nor shall the same be construed in any way
to extend the term of this lease. In the event that any tenant holds over in
Premises demised to the Tenant hereunder, Landlord shall use reasonably
commercial efforts, including the institution of summary proceedings, to obtain
possession of such Premises.
ARTICLE THIRTY-NINE
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BROKER
The Tenant represents and warrants to the Landlord that all of the
Tenant's negotiations respecting this lease which were conducted with or through
any person, firm or corporation, other than the officers of the Landlord, were
conducted through Plymouth Partners, Ltd. (the "Broker"). The Landlord agrees to
pay the commission due to the Broker pursuant to the terms of a separate
agreement. Landlord and Tenant agree to indemnify and hold one another harmless
from and against all demands, liabilities, losses, causes of action, damages,
costs and expenses (including, without limitation, attorneys' fees and
disbursements) suffered or incurred in connection with any claims for a
brokerage commission, finder's fee, consultation fees or other compensation
arising out of any conversations or negotiations had by the party against whom
indemnification is claimed with any broker or other party except for the Broker.
ARTICLE FORTY
RENT RESTRICTIONS
If at the commencement of, or at any time or times during the term of
this lease, the fixed rent or additional rent reserved in this lease shall be or
become uncollectible by virtue of any law, governmental order or regulation, the
Tenant shall enter into such agreements and take such other steps (without
additional expense to the Tenant) as the Landlord may reasonably request and as
may be legally permissible to permit the Landlord to collect the maximum amounts
which may from time to time be legally collectible while such restrictions are
in effect (and not in excess of the amounts reserved for under this lease). Upon
the termination of such rent restrictions (a) the fixed rent and additional rent
shall become and thereafter be payable in accordance with the terms of this
lease, and (b) the Tenant shall pay to the Landlord, if legally permissible, an
amount equal to (i) the rent which would have been paid during the period had
such restrictions not been in effect, less (ii) the rents which were paid by the
Tenant to the Landlord during the period such restrictions were in effect.
ARTICLE FORTY-ONE
CERTIFICATES BY TENANT
At any time and from time to time, the Tenant, for the benefit of the
Landlord or any other entity specified by the Landlord, within fifteen business
days after request, shall deliver to the Landlord a duly executed and
acknowledged certificate, certifying that this lease is not modified and is in
full force and effect (or if there shall have been modifications that the same
is in full force and effect as modified and stating the modifications); the
commencement and expiration dates of the lease; the dates to which rent and
additional rent have been paid; whether or not, to the best knowledge of the
Tenant, there are any existing defaults on the part of either the Landlord or
the Tenant in the performance of the terms, covenants and conditions of the
lease to be performed by such party, and if so, specifying the default; and such
other information as the Landlord may reasonably request with respect to this
lease.
ARTICLE FORTY-TWO
RESTRICTIONS ON TENANT'S USE
(a) The Tenant agrees that the value of the Premises and the building
of which the Premises form a part and the reputation of the Landlord will be
seriously injured if the Premises are used for any obscene or pornographic
purposes or any sort of commercial sex establishment. The Tenant covenants and
agrees not to sell, display or post, or knowingly allow to be sold, displayed or
posted any obscene or pornographic material on the Premises. The Tenant agrees
that if at any time the Tenant violates any of the provisions of this Article,
such violation shall be deemed a breach of a substantial obligation of the terms
of this lease.
(b) The Tenant covenants and agrees that during the term of this lease,
it will not use the Premises or any part thereof, or permit the Premises or any
part thereof to be used (1) for banking, trust company or safe deposit business;
(2) as or by a commercial or savings bank, a trust company, a savings and loan
association, a loan company, or a credit union; (3) for the sale or travelers
checks, money orders and/or foreign exchange; (4) as a restaurant and/or bar
and/or for the sale of soda
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and/or beverage and/or sandwiches and/or ice cream and/or baked goods; (5) by
the United States Government, the City or State of New York, any foreign
government, the United Nations or any agency or department of any of the
foregoing, or any other person or entity having sovereign or diplomatic
immunity; (6) as an employment agency, search firm or similar enterprise, school
or vocational training center (except for the training of employees of the
Tenant intended to be employed at the Premises); (7) as a barber shop or beauty
salon; or (8) as a diagnostic medical center and/or for the practice of
medicine.
ARTICLE FORTY-THREE
HAZARDOUS MATERIALS
The Tenant shall not cause or permit any Hazardous Materials to be
used, stored, transported, released, handled, produced or installed in, on or
from the Premises or the building. "Hazardous Materials" shall mean any
flammable, explosives, radioactive materials, hazardous wastes, hazardous and
toxic substances, asbestos or any material containing asbestos, or any other
substance or material which would be defined as a hazardous or toxic substance,
contaminant, or pollutant, or otherwise regulated by any Federal, state or local
environmental law, rule or regulation, including without limitation, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended. In the event of a violation of the foregoing provisions of this
Article, the Landlord may, without notice and without regard to any grace period
contained in this lease, take all remedial action deemed necessary by the
Landlord to correct such condition and the Tenant shall reimburse the Landlord
for the cost thereof, upon demand, as additional rent. Nothing contained herein
shall prevent the Tenant from maintaining customary and normal cleaning supplies
and office equipment and supplies, provided such items are used and stored in
compliance with the requirements of all applicable laws.
ARTICLE FORTY-FOUR
MISCELLANEOUS
(a) This lease contains the entire agreement between the parties and
all prior negotiations and agreements are merged into this lease.
(b) This lease may not be recorded.
(c) The covenants, conditions and agreements contained in this lease
shall bind and inure to the benefit of the Landlord and the Tenant and their
respective heirs, executors, administrators, successors and permitted assigns.
(d) If any term, covenant or provision of this lease, or the
application thereof, shall be held invalid or unenforceable, the remainder of
this lease, or the application thereof to situations other than that as to which
it is invalid or unenforceable, shall not be affected thereby, and each term,
covenant and provision shall be valid and enforceable to the fullest extent
permitted by law.
(e) The submission of this lease for execution by the Tenant shall not
be binding upon the Landlord or the Tenant unless and until both the Landlord
and the Tenant have executed and unconditionally delivered a fully executed copy
of this lease to each other.
(f) The captions in this lease are inserted for convenience only and
shall not define, limit or describe the scope of the provisions to which any of
them apply. The use of any pronoun referring to either of the parties to this
lease shall be construed to include any or no gender and any number.
(g) If the Tenant is a corporation, the person executing this lease on
behalf of the Tenant represents and warrants that the Tenant is duly
incorporated and, if applicable, is duly qualified and authorized to conduct
business in the State of New York, and the person executing this lease on behalf
of the Tenant has been duly authorized to do so. The Tenant shall provide the
Landlord with a copy of a resolution to this effect, and evidence of its due
incorporation and qualification, if applicable, upon request of the Landlord.
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ARTICLE FORTY-FIVE
TENANT'S OPTION TO EXPAND
(a) Fifth Floor Expansion Space.
(i)The remainder of the 5th floor, other than the Fifth Floor Initial
Space and the Mason Tenders Space (such remainder is referred to hereinafter as
the "5th Floor Expansion Space"), is presently leased to the Trustees of Home
Care Industry Local 32B/32J ("32B/32J") which occupies the Fifth Floor Expansion
Space pursuant to a lease (the "32B/32J Lease") which expires January 5, 2008.
If the Tenant wishes to lease the Fifth Floor Expansion Space, it shall give
written notice (the "First Notice") to the Landlord no later than March 31,
2007. Time shall be of the essence with respect to the delivery of the First
Notice. If the Tenant timely delivers the First Notice, the parties shall
endeavor to agree on a rental therefor. If the parties are unable to agree on a
rental for such Fifth Floor Expansion Space by six months prior to the
expiration date of the 32B/32J Lease for such space, or if the Tenant fails to
timely deliver the First Notice for such space, the Landlord shall be free to
lease such Fifth Floor Expansion Space to any unaffiliated third party free of
the rights of the Tenant hereunder, and the Landlord shall have no further
obligation under this Article Forty-Five with respect to the Fifth Floor
Expansion Space, except as set forth in the balance of this paragraph (a). If
the parties are unable to agree on a rental for such Fifth Floor Expansion Space
and the Landlord thereafter offers to lease such space to a third party, the
Landlord shall give the Tenant written notice of the financial terms upon which
it is offering to lease the space to the third party (the "Third Party Offer").
If the present value of the net effective rent set out in the Third Party Offer
(discounted at the rate of 2% over the prime rate then announced by Chase
Manhattan Bank, N.A., or any successor thereto), is less than 90% of the present
value of the net effective rent last offered by the Landlord to the Tenant for
such space, the Tenant shall have a period of five (5) business days in which to
notify the Landlord as to whether it wishes to lease the relevant Fifth Floor
Expansion Space on the terms set forth in the Third Party Offer, (such notice
from Tenant being referred to as the "Second Notice") time being of the essence
with respect to the delivery of the Second Notice. If the Tenant timely delivers
the Second Notice, the Landlord shall promptly prepare an amendment to this
lease reflecting the addition of the Fifth Floor Expansion Space upon the terms
set forth in the Third Party Offer and the Tenant shall then have a period of
fifteen (15) days in which to execute and return the lease amendment to the
Landlord. If the Tenant does not execute and return the lease amendment to the
Landlord within 15 days, or if the Tenant fails to timely deliver the Second
Notice, the Landlord may thereafter lease the relevant Fifth Floor Expansion
Space to a third party at any terms it wishes, free of the Tenant's rights
hereunder and thereafter, the Landlord shall have no further obligation to the
Tenant under paragraph (a) of this Article with respect to such Fifth Floor
Expansion Space.
(ii) If the 32B/32J Lease is terminated prior to its present expiration
date, the Landlord will notify the Tenant of the date such Fifth Floor Expansion
Space will be available for lease. The Tenant shall notify the Landlord within
thirty (30) days after receipt of the Landlord's notice as to whether it wishes
to lease the Fifth Floor Expansion Space, time being of the essence with respect
to the delivery of such notice. If the Tenant notifies the Landlord that it
wishes to lease such space, the parties shall endeavor to agree on a rental
therefor. If the parties are unable to agree on a rental for such Fifth Floor
Expansion Space within sixty (60) days after the date of the Tenant's notice, or
if the Tenant fails to timely deliver such notice, the Landlord shall be free to
lease such Fifth Floor Expansion Space to any unaffiliated third party free of
the rights of the Tenant hereunder, and the Landlord shall have no further
obligation with respect to the Fifth Floor Expansion Space under this Article
Forty-Five, except that the Landlord shall be obligated to send the Tenant a
Third Party Offer for such space and the Tenant shall have the same rights as
set forth in paragraph (a) above if the net effective rent as set out in the
Third Party Offer is less than 90% of the net effective rent last offered by the
Landlord to the Tenant for such space.
(iii) The Fifth Floor Expansion Space shall be leased for a term
expiring on the Expiration Date, and otherwise on the terms and conditions set
forth in this lease (with a current Base Year for computing Real Estate Tax
Escalation and with Operating Expense escalation calculated in accordance with
Schedule 2 attached hereto), except as otherwise agreed between the parties or
as set forth in the Third Party Offer.
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(b) Third Floor Expansion Space.
(i) The entire 3rd floor of the building (the "Third Floor Expansion
Space") is presently leased to the same tenant ("Dean Witter") which occupies
the Dean Witter Premises on the 4th floor pursuant to a lease (the "Dean Witter
Lease") which expires January 31, 2002. Unlike the Dean Witter Premises, the
Third Floor Expansion Space is subject to a renewal option. If the Tenant wishes
to lease the Third Floor Expansion Space (which right shall be subject, in all
events, to the right of renewal contained in the Dean Witter lease), it shall
give written notice (the "First Notice") to the Landlord no later than April 30,
2001. If Dean Witter exercises its option to renew, Tenant shall have no further
rights under this Article Forty-Five with respect to the Third Floor Expansion
Space. Time shall be of the essence with respect to the delivery of the First
Notice. If the Tenant timely delivers the First Notice, the parties shall
endeavor to agree on a rental therefor. If the parties are unable to agree on a
rental for such Third Floor Expansion Space by six months prior to the
expiration date of the Dean Witter Lease for such space, or if the Tenant fails
to timely deliver the First Notice for such space, the Landlord shall be free to
lease such Third Floor Expansion Space to any unaffiliated third party free of
the rights of the Tenant hereunder, and the Landlord shall have no further
obligation under this Article Forty-Five with respect to the Third Floor
Expansion Space, except as set forth in the balance of this paragraph (a). If
the parties are unable to agree on a rental for such Third Floor Expansion Space
and the Landlord thereafter offers to lease such space to a third party, the
Landlord shall give the Tenant written notice of the financial terms upon which
it is offering to lease the space to the third party (the "Third Party Offer").
If the present value of the net effective rent set out in the Third Party Offer
(discounted at the rate of 2% over the prime rate then announced by Chase
Manhattan Bank, N.A., or any successor thereto), is less than 90% of the present
value of the net effective rent last offered by the Landlord to the Tenant for
such space, the Tenant shall have a period of five (5) business days in which to
notify the Landlord as to whether it wishes to lease the relevant Third Floor
Expansion Space on the terms set forth in the Third Party Offer, (such notice
from Tenant being referred to as the "Second Notice") time being of the essence
with respect to the delivery of the Second Notice. If the Tenant timely delivers
the Second Notice, the Landlord shall promptly prepare an amendment to this
lease reflecting the addition of the Third Floor Expansion Space upon the terms
set forth in the Third Party Offer and the Tenant shall then have a period of
fifteen (15) days in which to execute and return the lease amendment to the
Landlord. If the Tenant does not execute and return the lease amendment to the
Landlord within 15 days, or if the Tenant fails to timely deliver the Second
Notice, the Landlord may thereafter lease the relevant Third Floor Expansion
Space to a third party at any terms it wishes, free of the Tenant's rights
hereunder and thereafter, the Landlord shall have no further obligation to the
Tenant under paragraph (a) of this Article with respect to such Third Floor
Expansion Space.
(ii) If the Dean Witter Lease is terminated prior to its present
expiration date, the Landlord will notify the Tenant of the date such Third
Floor Expansion Space will be available for lease. The Tenant shall notify the
Landlord within fifteen (15) business days after receipt of the Landlord's
notice as to whether it wishes to lease the Third Floor Expansion Space, time
being of the essence with respect to the delivery of such notice. If the Tenant
notifies the Landlord that it wishes to lease such space, the parties shall
endeavor to agree on a rental therefor. If the parties are unable to agree on a
rental for such Third Floor Expansion Space within sixty (60) days after the
date of the Tenant's notice, or if the Tenant fails to timely deliver such
notice, the Landlord shall be free to lease such Third Floor Expansion Space to
any unaffiliated third party free of the rights of the Tenant hereunder, and the
Landlord shall have no further obligation under this Article Forty-Five with
respect to the Third Floor Expansion Space, except that the Landlord shall be
obligated to send the Tenant a Third Party Offer for such space and the Tenant
shall have the same rights as set forth in paragraph (a) above if the net
effective rent as set out in the Third Party Offer is less than 90% of the net
effective rent last offered by the Landlord to the Tenant for such space.
(iii) The Third Floor Expansion Space shall be leased for a term
expiring on the Expiration Date, and otherwise on the terms and conditions set
forth in this lease, except as otherwise agreed between the parties or as set
forth in the Third Party Offer.
ARTICLE FORTY-SIX
44
<PAGE> 49
LANDLORD'S CONTRIBUTION
It is agreed that the Tenant will modify and improve the Premises to
make them better suited for use as offices, and that the Landlord will reimburse
the Tenant for the cost of improving the specific portions of the Premises
listed in the schedule below only up to the maximum amounts listed in the
schedule (and the Tenant will pay the cost of any modifications or improvements,
in excess of such amount), all in accordance with, and subject to the
limitations set forth in subparagraphs (a) through (d) below:
45
<PAGE> 50
Unit of Maximum
Space Contribution
Initial Premises $1,429,150
Europadisk Space $ 728,840
Dean Witter Space $ 233,340
Tri-Don Space $ 230,530
Astoria Space $ 140,780
Power Color Space $ 121,440
Mason Tenders Space $ 103,580
In addition, Landlord shall reimburse Tenant an amount not to exceed $75,000 for
Tenant's improvements to the public corridors, in lieu of Landlord's creating
new common corridors.
(a) The Tenant will select an architect to design the office
improvements for the Premises (which improvements, for purposes of calculating
Tenant's reimbursable costs, shall not include any furniture, or telephone,
computer or other office systems or equipment (other than cables for any
telephone or data processing systems), or any furniture or decorations (other
than carpeting, wall coverings and window blinds)) (the "Improvements"). As soon
as practicable after the Commencement Date applicable to each portion of the
Premises listed above, the Tenant shall submit to the Landlord for review and
approval plans and specifications (including all necessary mechanical,
electrical, engineering and working drawings) for the Improvements and such
plans shall be sufficient (i) to comply with all applicable laws, rules,
regulations and requirements of any governmental authority having jurisdiction
over the building, (ii) to permit the Tenant to apply for and obtain all
necessary permits, licenses and approvals necessary in connection with the
Improvements, and (iii) to permit the contractor to commence and complete the
work relating to the Improvements. The Landlord shall review and approve or
comment on such plans within twenty (20) business days of receipt thereof, and
the Tenant shall pay the reasonable fees, expenses and charges of the Landlord
paid to Landlord's outside consultants in connection with such review. As soon
as practical thereafter, the Tenant shall submit to the Landlord for approval
complete and final plans and specifications (including all necessary mechanical,
electrical, engineering and working drawings) for the Improvements, sufficient
to meet the requirements set forth in clauses (i) through (iii) above (such
plans as approved by the Landlord are hereinafter referred to as the "Final
Plans"). The Tenant agrees to reimburse the Landlord for its reasonable fees and
expenses for reviewing plans and specifications.
(b) All professional fees (including those for architectural and design
costs and appraisals) and the cost of all permits, licenses and approvals
required in connection with the construction and installation of the
Improvements shall be borne solely by the Tenant.
(c) The Landlord shall reimburse the Tenant from time-to-time (but not
more often than monthly) for work done in connection with the installation and
construction of the Improvements, up to an aggregate maximum specified for each
portion of the Premises listed above, provided that the Landlord's obligation to
make any such or reimbursement shall be subject to the satisfaction of the
following conditions:
(i) the work done must conform to the design set forth in
the Final Plans in all material respects and the
quality and workmanship of the work done must be
reasonably satisfactory to the Landlord and the
Tenant (and the Tenant shall have so stated in its
request for reimbursement);
(ii) with respect to the reimbursement of any partial
payment made on the basis of the percentage of
completion of any work, the Landlord shall have been
furnished a form by the Tenant's architect indicating
the percentage of completion of the work in question;
(iii) the Landlord shall have been furnished with invoices
from the vendors, supplier, or contractor evidencing
the amount for which payment or
46
<PAGE> 51
reimbursement is sought, such invoices, if submitted
for reimbursement, to be marked "paid in full" by
such vendor, supplier or contractor (or, in lieu
thereof, the Landlord shall be furnished other
documentation satisfactory to the Landlord evidencing
payment in full); and
(iv) the Landlord shall have received, with respect to the
work done for which payment or reimbursement is
claimed hereunder, a written waiver from the
contractor or vendor in question (and all
subcontractors and subvendors involved in the work in
question) waiving any right to assert any vendor's,
mechanic's or other lien on the building, the
Premises or any fixtures, machinery, equipment or
other installation therein.
If so requested by the Tenant, in lieu of reimbursing the Tenant, the
Landlord will make payment directly to the Tenant's vendors, suppliers and
contractors (no more often than monthly and not for amounts which aggregate less
than $50,000), provided that the Landlord's obligation to make any such payment
shall be subject to the conditions set forth above (except that the invoices to
be paid need not be marked "paid in full").
(d) It is understood and agreed that the Landlord shall have no
responsibility for the performance of the contractor installing the Improvements
(including matters of quality or timeliness), and in the event that for any
reason the Improvements are not completed in a timely fashion and/or there is
any delay in the date on which the Premises are ready for occupancy by the
Tenant for the purposes of conducting business, this lease shall nevertheless
continue in full force and effect, and the Tenant shall have no right, remedy or
claim (including any claim for actual, punitive or consequential damages)
against the Landlord.
ARTICLE FORTY-SIX
GENERATOR
(a) The Tenant has advised the Landlord that it may wish to install a
standby generator with associated equipment. Provided that Landlord is able to
provide space on the roof to Tenant, Tenant shall have the right to install a
generator with a capacity of no more than 250 kVA, and related equipment
(colllectively, the "Generator") on the roof of the building in an area to be
designated by the Landlord (the "Roof Space"). The Landlord shall have no
obligation to provide the Roof Space until it has completed construction of the
additional floors on the building, and shall have no obligation at all to
provide Roof Space if, in good faith, Landlord determines that there is no
suitable Roof Space available. As of the date the Landlord delivers the Roof
Space to the Tenant, (i) the Roof Space shall be added to and be deemed to be
part of the premises upon all of the terms of the lease, except as otherwise set
forth herein; (ii) the Landlord shall have no obligation to perform any work on
the Roof Space and shall deliver the same in its then "as-is" condition, (iii)
the annual fixed rent shall be increased by a sum equal to $50 per rentable
square foot (the "Roof Rent"), which rent shall be increased as of the first
anniversary of the date on which the Roof Space was added to the premises and on
each succeeding anniversary thereafter, by 3% over the Roof Rent payable during
the immediately preceding twelve-month period.
(b) Pending the delivery of the Roof Space, Tenant shall be permitted
to install the Generator on the 4th floor, provided that the Generator may only
be vented through louvers located in the two windows directly above the louvers
used by Dean Witter on the 3rd floor, and only through January 31, 2002. On or
before January 31, 2002, Tenant shall remove the Generator from the 4th floor
and remove the louvers installed in the windows, restoring the windows so as to
maintain a uniform appearance of the building. In the event that Landlord has
not been able to provide Roof Space, Tenant shall have no right to maintain a
Generator at the Premises. If Tenant has previously installed a Generator in the
Premises and Landlord subsequently provides Roof Space, Tenant shall be
responsible, at Tenant's cost, to move the Generator from the 4th floor to the
Roof Space.
47
<PAGE> 52
(c) The Generator shall be installed and maintained at the sole cost
and expense of the Tenant and shall be installed and maintained in compliance
with all Legal Requirements, including, without limitation, all Environmental
Laws. The Landlord's written approval of the plans and specifications for the
Generator installation must be obtained before the Tenant may proceed with any
work in connection with the Generator installation. The Generator installation
shall be governed by the provisions of this lease. The Landlord and its agents
and employees shall have reasonable access to the Roof Space as required for the
maintenance, repair or operation of the building or building systems. The Tenant
shall be responsible for any taxes which may be now or hereafter levied on the
Generator. The Landlord may require that its personnel or contractor be present
during the installation and removal of the Generator, and any maintenance and
repair thereof, and the Tenant shall reimburse the Landlord for the charges
incurred by the Landlord in connection therewith. If the Generator is to be
connected to any building system or equipment, the Landlord may, at is option,
either require that the Landlord's contractor physically connect the wiring from
the Generator to such system or equipment, or require its personnel or
contractor to be present when such work is done, and in either case, the Tenant
shall reimburse the Landlord for the costs incurred by the Landlord in
connection therewith.
IN WITNESS WHEREOF, this agreement has been signed and sealed by the
parties hereto as of the date set forth above.
THE RECTOR, CHURCH-WARDENS AND
VESTRYMEN OF TRINITY CHURCH IN THE
CITY OF NEW YORK
By:
-----------------------------------------
Daniel Paul Matthews, Rector
By:
-----------------------------------------
Director of Leasing
By:
-----------------------------------------
Executive Vice President of Real Estate
By:
-----------------------------------------
Finance Department
Attest: PHOTODISC, INC.
As to the Tenant:
By: (L.S.)
- -------------------------- -----------------------------------
An Authorized Officer
(i)
<PAGE> 1
EXHIBIT 10.10
AGREEMENT OF LEASE
between
24-32 UNION SQUARE EAST ASSOCIATES
LIMITED PARTNERSHIP,
as Landlord
- and -
F.P.G. INTERNATIONAL,INC.,
as Tenant
* * * * * * * * * * * * *
Dated: As of August 9, 1990
<PAGE> 2
INDEX TO LEASE DATED AS OF AUGUST 9, 1990
BETWEEN 24-32 UNION SQUARE EAST ASSOCIATES
LIMITED PARTNERSHIP
AND F.P.G. INTERNATIONAL, INC.
<TABLE>
<CAPTION>
ARTICLE TITLE PAGE
- ------- ----- ----
<S> <C> <C>
1 Rent 1
2 Occupancy 1
3 Tenant Alterations 1
4 Maintenance and Repairs 1
5 Window Cleaning 1
6 Requirements of Law, Fire Insurance,
Floor Loads 1
7 Subordination 2
8 Property Loss, Damage, Reimbursement,
Indemnity 2
9 Destruction, fire and Other Casualty 2
10 Eminent Domain 2
11 Assignment, Mortgage, etc. 2
12 Electric Current 2
13 Access to Premises 2
14 Vault, Vault Space, Area 3
15 Occupancy 3
16 Bankruptcy 3
17 Default 3
18 Remedies of Owner and Waiver of Redemption 3
19 Fees and Expenses 3
20 Building Alterations and Management 3
21 No Representations by Owner 3
22 End of Term 4
23 Quiet Enjoyment 4
24 Failure to Give Possession 4
25 No Waiver 4
26 Waiver of Trial by Jury 4
27 Inability to Perform 4
28 Bills and Notices 4
29 Services Provided by Owners 4
30 Captions 4
31 Definitions 5
32 Adjacent Excavation, Shoring 5
33 Rules and Regulations 5
34 Security 5
35 Estoppel Certificate 5
36 Successors and Assigns 5
RIDER PROVISIONS:
37 Rider Provisions Prevail 1
38 As-Is Possession 1
39 Commencement of Term and Rental 1
40 Tenant's Work, Installations and
Alterations 2
41 Electricity 5
42 Tax Escalation 5
43 Intentionally Omitted 7
44 Non-Waiver and Survival of Additional
Rent Obligations 7
45 No Employment Agency, Messenger Service,
Retail or Residential Use of Demised
Premises 8
46 Addendum to Article 6
(Compliance with Laws) 8
47 Waiver of Subrogation 10
48 Assignment, Subletting, Mortgaging 10
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
49 Indemnity-Liability Insurance 14
50 Tenant's Certificate 15
51 Subordination, Attornment 15
52 Exculpatory Clause 17
53 Broker 17
54 Tenant's Remedies 17
55 Tenant's Operating Obligations 17
56 Labor Regulations 20
57 Addendum to Article 22 (End of Term) 20
58 Addendum to Article 18
(Landlord's Remedies) 21
59 Interest 21
60 Arbitration 21
61 Air Conditioning 21
62 Water Charges 22
63 Use 23
64 Landlord's Alterations 23
65 Landlord's Overhead, Supervision and
Approval Charges 24
66 Chemical Waste 24
67 Rubbish Removal 24
68 Recordation 24
69 Mechanic's Liens 25
70 Intentionally Omitted 25
71 Financing Requirements 25
72 No Loitering 26
73 Notices 26
74 Landlord's Consent 26
75 Permits and Fees 26
76 Security 27
77 Notice of Damage 28
78 Lease Not Binding Unless Executed 28
79 Agency 28
80 Restrictions on Rents 28
81 Entire Agreement 29
82 Saving Provision 29
83 Landlord's Work 29
84 Right of First Offer to Lease 30
85 Tenant's Exclusive Right to Lease 31
86 Certificate of Occupancy 32
87 Twenty-Four Hour Access 32
88 Roof Rights 32
89 Supplement to Article 4 32
Exhibit "A" Mortgagee's Subordination, Non-Disturbance
and Attornment Agreement
Exhibit "B" Fee Owner's Non-Disturbance and
Attornment Agreement
Exhibit "C" Work Letter
Exhibit "D" Transferable Irrevocable Letter of Credit
Exhibit "E" Designation of Roof Area
Exhibit "F" Commencement Date Work Requirements
</TABLE>
<PAGE> 4
RIDER TO STANDARD FORM OF OFFICE LEASE,
DATED AS OF AUGUST 9, 1990
BY AND BETWEEN
24-32 UNION SQUARE EAST ASSOCIATES LIMITED PARTNERSHIP,
AS LANDLORD,
AND F.P.G. INTERNATIONAL, INC.,
AS TENANT
37. RIDER PROVISIONS PREVAIL. The Rider provisions of this Lease shall be read
in conjunction with the printed Standard Form of Office Lease annexed hereto. If
there should be any inconsistency or ambiguity between the provisions of this
Rider and the Standard Form of Office Lease, then the Rider provisions of this
Lease shall prevail.
38. AS-IS POSSESSION. Tenant acknowledges that neither Landlord, nor
Landlord's agent, have made any representations or promises to Tenant with
regard to the Building or the Demised Premises except that the Demised Premises
shall be delivered to Tenant free of all asbestos containing materials. The
taking of possession of the Demised Premises by Tenant for the term herein
demised shall be conclusive evidence as against Tenant that Tenant accepts the
same subject to any and all defects therein, latent, patent or otherwise in its
"as-is" condition and that the Demised Premises were in good and satisfactory
condition in all respects at the time such possession was taken. Landlord shall
not be obligated to make any repairs, alterations, improvements or additions to
the Demised Premises for Tenant's occupancy, except that Landlord shall, at its
sole cost and expense, perform Landlord's Work in the Demised Premises as
defined in Article 83 hereof.
39. COMMENCEMENT OF TERM AND RENTAL. A. The term of this Lease shall commence
(the "Commencement Date") ten (10) days following Landlord's notice to Tenant
(the "Commencement Date Notice") that Landlord has substantially completed
Landlord's Work, provided, however, in no event shall the Commencement Date
occur prior to (i) November 1, 1990; (ii) Landlord's substantial completion of
the construction of the lobby of the Building and (iii) completion by Landlord
of those items of Landlord's Work identified on Exhibit "F" (Commencement Date
Work Requirements). For the purposes of this Article, Landlord's Work shall be
deemed to be substantially completed when all major construction is completed
although minor items, details and decorations are not completed, including, but
not limited to touch-up plastering or any other uncompleted construction or
improvement which does not unreasonably interfere with Tenant's ability to carry
on its business in the Demised Premises. Anything contained herein to the
contrary notwithstanding, in the event Landlord has failed to send the
Commencement Date Notice on or before April 1, 1991 then Tenant may cancel this
Lease provided that Tenant sends notice to Landlord (the "Cancellation Notice")
on or before April 15, 1991 and further provided that the Cancellation Notice is
sent prior to the Commencement Date Notice. Upon such cancellation, this Lease
shall be considered terminated and neither party will have any further liability
to the other.
B. The payments reserved under this Lease for the term hereof shall be
and consist of the aggregate of "Minimum Rent" and "Additional Rent," as
follows:
Minimum Rent:
(i) $396,000 per annum ($33,000 per month) during the period
commencing upon the Commencement Date, and continuing to and including the
day next preceding the first (1st) anniversary of the Commencement Date,
both dates inclusive;
(ii) $409,860 per annum ($34,155 per month) during the period
commencing on the first (1st) anniversary of the
1
<PAGE> 5
Commencement date, and continuing to and including the day next preceding
the second (2nd) anniversary of the commencement Date, both dates
inclusive;
(iii) $424,205 per annum ($35,350.42 per month) during the period
commencing on the second (2nd) anniversary of the Commencement Date, and
continuing to and including the day next preceding the third (3rd)
anniversary of the Commencement Date, both dates inclusive;
(iv) $439,052 per annum ($36,587.67 per month) during the period
commencing on the third (3rd) anniversary of the Commencement Date, and
continuing to and including the day next preceding the fourth (4th)
anniversary of the Commencement Date, both dates inclusive;
(v) $454,418.82 per annum ($37,868.24 per month) during the
period commencing on the fourth (4th) anniversary of the Commencement Date,
and continuing to and including the day next preceding the fifth (5th)
anniversary of the Commencement Date, both dates inclusive;
(vi) $472,595.57 per annum ($39,382.96 per month) during the
period commencing on the fifth (5th) anniversary of the Commencement Date,
and continuing to and including the day next preceding the sixth (6th)
anniversary of the Commencement Date, both dates inclusive;
(vii) $491,499.39 per annum ($40,958.28 per month) during the
period commencing on the sixth (6th) anniversary of the Commencement Date,
and continuing to and including the day next preceding the seventh (7th)
anniversary of the Commencement Date, both dates inclusive;
(viii) $511,159.36 per annum ($42,596.61 per month) during the
period commencing on the seventh (7th) anniversary of the Commencement
Date, and continuing to and including the day next preceding the eighth
(8th) anniversary of the Commencement Date, both dates inclusive;
(ix) $531,605.73 per annum ($44,300.48 per month) during the
period commencing on the eighth (8th) anniversary of the Commencement Date,
and continuing to and including the day next preceding the ninth (9th)
anniversary of the Commencement Date, both dates inclusive;
(x) $552,869.95 per annum ($46,072.50 per month) during the
period commencing on the ninth (9th) anniversary of the Commencement Date,
and continuing to and including the day next preceding the tenth (10th)
anniversary of the Commencement Date, both dates inclusive;
"Additional Rent," shall consist of all other sums of money as shall
become due from and payable by Tenant to Landlord hereunder (for default in
payment of which Landlord shall have the same remedies as a default in payment
of Minimum Rent).
C. All rent and Additional Rent shall be made payable to: Crescent
Properties, Inc., Agent and sent to Crescent Properties, Inc., 377 Fifth
Avenue, New York, New York 10016, or as may be otherwise provided in a written
notice by Landlord to Tenant.
D. Notwithstanding anything herein to the contrary, provided that Tenant
is not in default of any covenant of this Lease, Tenant shall be entitled to a
credit against the amount of Minimum Rent (the "Rent Credit") as follows:
(i) For the period commencing on the Commencement Date and for sixty
(60) days thereafter, the amount of the Rent Credit shall be $66,000.00.
2
<PAGE> 6
(61st) day following the Commencement Date and for sixty (60) days
thereafter, the amount of the Rent Credit shall be $10,500.00.
E. Anything herein to the contrary notwithstanding, provided that
Landlord has substantially completed Landlord's Work but the Commencement Date
has not yet occurred solely because the work set forth in Sub-section
39A.(ii)is not substantially complete, Tenant shall nevertheless have the
option of taking possession of the Demised Premises on ten (10) days prior
notice to Landlord. In the event Tenant exercises its option hereunder and
takes possession of the Demised Premises prior to the Commencement Date, Tenant
agrees to be bound by all terms, covenants and conditions of this lease as if
the Commencement Date had occurred except that Tenant shall have no obligation
to pay Minimum Rent pursuant to Sub-section 39B. hereof until such time as
Landlord delivers notice to Tenant advising Tenant that the lobby is
substantially completed pursuant to Sub-section 39a.(ii).
40. TENANT'S WORK, INSTALLATIONS AND ALTERATIONS. At all times during the term
of this Lease, except for Landlord's Work, all work, installations and
alterations necessary or desirable to make the Demised Premises suitable for
Tenant's use and occupancy shall be performed by Tenant at Tenant's own cost and
expense (hereinafter called "Tenant's Work"). At all times during the term of
this Lease, Tenant's Work to be performed by Tenant in the Demised Premises
shall be subject to the following conditions:
A. Tenant shall comply with all the laws, orders, rules and regulations
of all governmental authorities, and of the fire insurance rating organization
having jurisdiction thereof, and the local board of fire underwriters, and the
recommendation of any insurance body or any similar body, and Tenant shall have
procured and paid for, so far as the same may be required, all governmental
permits and authorizations;
B. Prior to commencing Tenant's Work, all plans and specifications
therefor shall be submitted to Landlord for Landlord's prior written approval.
If Landlord shall fail to respond to any request made by Tenant for approval of
such plans and specifications within thirty (30) days after Landlord's receipt
thereof, then Landlord's approval of such plans and specifications shall be
deemed given. The approval by Landlord of any of Tenant's plans and
specifications shall not constitute an assumption of any liability on the part
of Landlord for their accuracy or their conformity with applicable law and
Tenant shall be solely responsible therefor. Approval by Landlord of any of
Tenant's plans and specifications shall not constitute a waiver by Landlord of
the right to thereafter require Tenant to amend same to provide for omissions
or errors therein later discovered by Landlord. If, in connection with
determining whether or not to approve Tenant's plans and specifications
Landlord incurs architectural, engineering or other professional fees and
disbursements, Tenant shall pay such reasonable fees as Additional Rent within
thirty (30) days of submission of such bills by Landlord to Tenant, which fee on
any individual transaction shall not exceed $2,500;
C. Tenant's Work shall be completed (i) with reasonable dispatch, (ii) in
accordance with the plans and specifications submitted to, and approved in
writing by, Landlord pursuant to subparagraph (B) hereof and (iii) only with the
use of new first class materials and supplies. Landlord reserves the right, from
time to time, to inspect work in progress for the purpose of approving or
disapproving the quality of workmanship and its conformity with approved plans,
specifications and drawings. In the event Landlord has a construction
superintendent on the premises, Tenant's contractors will be subject to such
construction superintendent's rules and regulations including but
3
<PAGE> 7
[ILLEGIBLE] the orderly flow of work, utilization of on-site utilities,
loading, unloading and non-interference with the other tenants, occupants,
customers, agents or invitees or any others in the Building;
D. If it shall be necessary for Tenant to perform any item of Tenant's
Work as a prerequisite to completion by Landlord of Landlord's Work, then
Tenant shall commence such work on the date set by Landlord in written notice
given to Tenant at least ten (10) days prior thereto and thereafter shall
complete same within twenty (20) days of the date set for the commencement
thereof. If Tenant shall fail to comply with the foregoing, Landlord, in
addition to any other remedy it may have, shall have the right to proceed with
and perform any work which it has agreed to do for Tenant in accordance with
Landlord's judgment and discretion and the same shall be binding on Tenant.
E. Except as otherwise expressly provided for herein, the cost of such
Tenant's Work shall be paid by Tenant in cash, or its equivalent, so that the
Demised Premises and Building shall at all times be free of liens for labor and
materials supplied in connection with the Tenant's Work. Tenant shall not
permit a mechanic's lien to be placed on the premises or the Building, and
shall have same removed within seven days if placed on the Premises due to work
performed on behalf of Tenant or anyone claiming through Tenant. Tenant shall
obtain releases of lien from all of its contractors, subcontractors,
materialmen and laborers furnishing work and materials to the Tenant for
construction and/or alterations at the Demised Premises;
F. Prior to commencing Tenant's Work, Tenant shall at its own cost and
expense deliver to Landlord an endorsement of its policy of comprehensive
general liability insurance referred to in Article 50 of this Lease, covering
the risk during the course of performance of Tenant's Work, together with proof
of payment of such endorsement, which policy as endorsed shall protect Landlord
in the same amounts against any claims or liability arising out of Tenant's Work
and Tenant's contractors shall obtain Worker's Compensation Insurance to cover
all persons engaged in Tenant's Work and liability insurance covering the work
done at Tenant's premises in the amounts of $500,000 in respect of property
damage and $1,000,000 in respect of any one person and $3,000,000 in respect of
any one accident, and a certificate thereof shall be furnished to the Landlord
before commencement of any work by any contractor, subcontractors, their agents,
servants or employees. Tenant's contractor shall name Crescent Properties, Inc.,
Landlord and any such other party as landlord may request, as additional insured
parties under the said insurance policies;
G. In the event the cost of Tenant's Work exceeds $250,000, then prior to
commencing such Tenant's Work, Tenant, at its own cost and expense, shall
deliver to Landlord a surety company performance bond and a labor and material
and payment bond, issued by a surety company acceptable to Landlord, or other
security satisfactory to Landlord, in an amount at least equal to Landlord's
estimated cost of Tenant's Work, guaranteeing the performance thereof and
payment therefor within a reasonable time, free and clear of all liens,
encumbrances, chattel mortgages, conditional bills of sale and other charges,
and in accordance with the plans and specifications approved by Landlord. Upon
completion of all work to be undertaken hereunder, the performance bond shall be
returned to Tenant; provided however, all of the terms and conditions under this
Article 40 have been complied with and, further, Tenant is not in default under
any of the terms of this Lease.
H. All of Tenant's Work shall be done in such a manner so as not to
materially interfere with, delay, or impose any additional expense upon Landlord
in the maintenance of the Building. In no event shall Landlord be required to
consent to any Tenant's Work which would physically affect any part of the
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[ILLEGIBLE] Demised Premises or would, in Landlord's sole judgment, adversely
affects any of the mechanical, electrical, plumbing, HVAC or other systems of
the Building;
I. Notwithstanding anything herein contained to the contrary, Tenant
shall make all repairs to the Demised Premises necessitated by Tenant's Work,
and shall keep and maintain in good order and condition all of the
installations in connection with Tenant's Work, and shall make all necessary
replacements thereto;
J. Prior to commencing Tenant's Work, Tenant shall deliver to Landlord
the name and address of Tenant's general contractor, subcontractor(s), material
suppliers and laborers, and the breakdown of the aggregate total cost of the
construction and/or alterations. Tenant shall be responsible for furnishing
Landlord: (i) a partial release of lien simultaneously with each payment by
Tenant to Tenant's personnel or contractors for any labor performed or
materials furnished, and (ii) a final release of lien immediately upon a final
payment by Tenant to Tenant's personnel or contractors for any labor performed
or materials furnished;
K. Wherever applicable, Tenant, at its sole cost and expense, shall be
obligated to tie in and coordinate its security and/or fire alarm systems with
both or either of the systems installed in the Building in which the Demised
Premises are located;
L. Promptly following the completion of all of said Tenant's Work, and as
soon as reasonably feasible, Tenant shall obtain and furnish to Landlord all
appropriate certifications from all authorities having jurisdiction to the
effect that all such Tenant's Work has been performed and completed in
accordance with the filed plans, if any, and with all laws, rules, regulations
and orders of said authorities having jurisdiction;
41. ELECTRICITY.
A. Throughout the term hereof and except as otherwise set forth herein,
electricity shall be supplied to the Demised Premises in accordance with the
provisions of this Article 41.
B. Tenant, at Tenant's sole cost and expense, shall obtain electricity
directly from the utility company furnishing electricity to the Building. The
cost of such service shall be paid by Tenant directly to such utility company.
C. Landlord shall not in any way be liable or responsible to Tenant for
any loss or damage or expense which Tenant may sustain or incur if either the
quantity or character of electric service is changed or is no longer available
or suitable for Tenant's requirements. Notwithstanding anything herein to the
contrary, Tenant's use of electric current in the Demised Premises shall not at
any time exceed the capacity of any of the electrical conductors and facilities
in or otherwise serving the Demised Premises. In order to insure that such
capacity is not exceeded and to avert any possible adverse effect upon the
Building's electric service, Tenant shall not, without Landlord's prior written
consent in each instance, connect any fixtures, appliances or equipment (other
than a reasonable number of table or floor lamps, typewriters and similar small
office machines using comparable electric current, a P.C. computer network,
dark room and related photography equipment and a reasonable number of light
boxes) to the Building's electric distribution system nor make any alteration
or addition to the electric system of the Demised Premises. Should Landlord
grant such consent, all additional risers or other equipment required therefor
shall be provided by Landlord, and all costs and expenses in connection
therewith, including, without limitation, those for filing for applications,
permits, licenses and supervision, shall be paid by Tenant in advance upon
Landlord's demand.
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42. TAX ESCALATION.
A. As used in this Lease:
(i) "Taxes" shall mean the real estate taxes and assessments and special
assessments, ordinary or extraordinary, foreseen and unforeseen, of any kind of
nature whatsoever, by whatever name the same may be called, which may be
assessed, levied or imposed upon the Building and/or the Land on which the
Building is situated or any part thereof or any appurtenances thereto by any
governmental bodies or authorities (the "Land"). If at any time during the term
of this Lease the methods of taxation prevailing at the commencement of the term
hereof shall be altered so that in lieu of, or as an addition to, or as a
substitute for, the whole or any part of the taxes, assessments, levies,
impositions or charges now levied, assessed or imposed, there shall be levied,
assessed or imposed wholly or partially (a) a tax assessment, levy or otherwise
on the rents received therefrom, or (b) a license fee measured by the rent
Payable by Tenant to Landlord, or (c) any other such additional or substitute
tax, assessment, levy, imposition or charge, including but not limited to taxes
or charges levied for water, sewer and vaults shall also be included within the
term "Taxes", then all such taxes, assessments, levies, impositions or charges
or the part thereof so measured or based shall be deemed to be included within
the term "Taxes" for the purpose hereof. If Landlord shall be the lessee under a
ground or underlying Lease, the term "Taxes" as used in this Lease shall be
deemed to mean and include the amounts payable as Additional Rent or otherwise
by Landlord under said ground or underlying Lease based on the taxes payable
with respect to the Building and the Land.
(ii) "Base Tax" shall mean Taxes, as finally determined, due and payable
for the fiscal period of July 1, 1990 through June 30, 1991.
(iii) "Tax Year" shall mean the fiscal year for which Taxes are levied by
the governmental authority.
(iv) "Tenant's Share" shall be fourteen and seven-tenths percent (14.7%).
B. (i) If the Taxes for any Tax Year shall be more than the Base Tax,
whether by reason of a increase either in tax rate or the assessed valuation, or
both, or by reason of the levy, assessment or any tax on real estate or rents
now levied, but included within the definition of taxes, Tenant shall pay as
Additional Rent for such Tax Year an amount equal to Tenant's Share of the
amount by which the Taxes for such Tax Year are greater than the Base Tax (the
amount payable by Tenant is hereinafter called the "Tax Payment"). The Tax
Payment shall be prorated, if necessary, to correspond with that portion of a
Tax Year occurring within the term of this Lease. The Tax Payment shall be
payable by Tenant within ten (10) days after receipt of a demand from Landlord
therefor, which demand shall be accompanied by a copy of the tax bill together
with Landlord's computations of the Tax Payment.
(ii) In addition to and supplementing the foregoing, Landlord may
estimate the amount of the Tax Payment which shall be due from Tenant to
Landlord for the next succeeding Tax Year and notify Tenant of the amount so
estimated. Thereupon Tenant shall pay to Landlord the amount so estimated (the
"Estimated Tax Payments"), in equal monthly installments in advance, on the
first day of each calendar month during the applicable tax year. Landlord
agrees that it will deposit the Estimated Tax Payments in a separate account
and not co-mingle such Estimated Tax Payments with Landlord's general funds.
Subsequent to the Commencement Date of this Lease, Landlord shall deliver to
Tenant a statement reflecting Tenant's actual or estimated Tax Payment for the
Taxes payable by Landlord with respect to the Tax Year in
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Payment shall be ratably reduced for that portion of the Tax Year which
occurred prior to the Commencement Date. Tenant shall remit to Landlord upon
receipt of the statement the amount set forth as Tenant's actual or estimated
Tax Payment. If the amount of the payment paid by Tenant exceeds the actual
amount due, the overpayment shall be credited on Tenant's next succeeding
payment if Tenant is not in default hereunder. If the amount of such monthly
payment paid by Tenant shall be less than the actual amount due, Tenant shall
pay to Landlord the difference between the amount paid by Tenant and the actual
amount due within ten (10) days after demand from Landlord. If, on the first
day of any calendar month, the amount of Taxes payable during the then current
Tax Year shall not have been determined by the taxing authority, then the Tax
Payment then payable by Tenant shall be estimated by Landlord subject to (a)
adjustment, if necessary when the amount of such Taxes shall be determined, and
(b) Landlord delivering to Tenant a copy of all tax bills for such Tax Year
together with a statement showing the amount of Tenant's Tax Payment.
(iii) In the event the Base Tax is reduced as a result of an
appropriate proceeding, Landlord shall have the right to adjust the amount of
Tax Payment due from Tenant for any Tax Year hereunder, and Tenant agrees to
pay the amount of said adjustment on the next rental installment day
immediately following receipt of a rent statement from Landlord setting forth
the amount of said adjustment.
C. Only Landlord shall be eligible to institute tax reduction or other
proceedings to reduce the assessed valuation of the Land and the Building
provided, however, that as long as Tenant is not then in default under the
terms or conditions of the Lease, Tenant shall have the right to participate to
a reasonable extent in the proposed tax abatement proceedings currently under
consideration for the Building. Landlord shall be under no obligation to
contest the assessed valuation. Should Landlord be successful in any such
reduction proceedings and obtain a rebate for periods during which Tenant has
paid its share of increase, Landlord shall, after deducting its expenses
including, without limitation, attorney's fees, disbursements and appraisers'
fees in connection therewith, return Tenant's Share of such rebate to Tenant.
Nothing in this paragraph shall be deemed or be construed to require Landlord
to pay to Tenant any portion of a refund of Taxes during any period when Tenant
shall be in default hereunder, in which case, Landlord shall have the right to
apply such amounts against amounts of rent then owed by Tenant.
D. With respect to any period at the commencement of the term or
expiration of the term of this Lease which shall constitute a partial Tax Year,
Landlord's statement shall apportion the amount of the Additional Rent due
hereunder. The obligation of Tenant in respect to such Additional Rent
applicable for the last year of the term of this Lease or part thereof shall
survive the expiration of the term of this Lease.
E. Notwithstanding the fact that the increase in rent is measured by an
increase in taxes, such increase is Additional Rent and shall be paid by Tenant
as provided herein regardless of the fact that Tenant may be exempt, in whole
or in part, from the payment of any taxes by reason of Tenant's diplomatic or
other tax exempt status or for any other reason whatsoever. If any tax
exemption or abatement, in whole or in part, shall be granted or become
effective with respect to the Building and/or the Land, or any part thereof, by
reason of the ownership or any interest in or occupancy of the Building and/or
the Land, or any part thereof, by a charitable, educational, eleemosynary or
non-profit organization or institution, or by reason of any improvements to the
Building made or paid for by Landlord, or for any other reason, then,
notwithstanding such exemption or abatement, the
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???? ???? ???? paragraph shall continue in full force and effect it being the
intention and purpose of this paragraph that Tenant shall remain liable for
Tenant's Share of any increased Taxes to the same extent as if no such
exemption or abatement and had been granted or become effective. In the case of
any such exemption or abatement any statement, certification or bill issued by
the taxing authority, or any official thereof, indicating the amount of Taxes
which would be payable during any period if such exemption or abatement had not
been granted, or had not become effective, shall be conclusive upon the parties
hereto for the purpose of computing Tenant's Share of any increase in Taxes
over the Base Tax.
43. INTENTIONALLY OMITTED
44. NON-WAIVER AND SURVIVAL OF ADDITIONAL RENT OBLIGATIONS. Landlord's failure
during the Lease term to prepare and deliver any of the tax bills, statements,
notice or bills set forth in Article 42 or Landlord's failure to make a demand,
shall not in any way cause Landlord to forfeit or surrender its rights to
collect any of the foregoing items of Additional Rent which may become due
during the term of this Lease. Tenant's liability for the amounts due under
Article 42 shall survive the expiration of the Lease term.
45. NO EMPLOYMENT AGENCY, MESSENGER SERVICE, RETAIL OR RESIDENTIAL USE OF
DEMISED PREMISES. It is an express condition of this Lease that the Demised
Premises be used only for purposes in accordance with the provisions herein
contained. In no event may the Demised Premises be used for Employment Agency,
Messenger Service, Retail or Residential purposes and Tenant covenants and
agrees to use the Demised Premises only for the commercial purposes specified
in Article 2 hereof. Accordingly, it is expressly agreed that any violation by
Tenant of its agreements, representations and obligations pursuant to this
Article shall constitute a material default by Tenant under the terms of this
Lease entitling Landlord to exercise any and all rights granted Landlord
pursuant to Articles 17 and 18 of this Lease, including without limitation, the
right to terminate this Lease and recover possession of the Demised Premises by
reason of Tenant's default.
46. ADDENDUM TO ARTICLE 6 (COMPLIANCE WITH LAWS).
A. Supplementing the provisions of Article 6 hereof, Tenant shall give
prompt notice to Landlord of any notice it receives of the violation of any law
or requirement of any public authority with respect to the Demised Premises or
the use or occupation thereof. Tenant shall promptly comply with all
recommendations, present and future laws, orders and regulations of all state,
federal, municipal and local governments, departments, commissions and boards
or any direction of any public officer pursuant to law, and all orders, rules
and regulations of the New York Board of Fire Underwriters, any insurance
company or any similar body which shall impose any violation, order or duty
upon Landlord or Tenant with respect to the Demised Premises (in which event
Tenant shall effect such compliance at its sole cost and expense) or the
Building (in which event, notwithstanding anything herein to the contrary,
Landlord shall effect such compliance but Tenant shall promptly pay to
Landlord, Tenant's Share, as defined in paragraph 42.A(iv), or the cost
thereof).
B. Tenant covenants and agrees to comply promptly with all present and
future laws, orders and regulations of all federal, state, municipal and local
governments, departments, commissions and boards which shall impose any
violation, order or duty upon Landlord or Tenant with respect to the Demised
Premises whether or not arising out of Tenant's use or manner of use thereof,
or with respect to the Building if arising out of Tenant's use or manner of use
of the Demised Premises or the Building, including, but not limited to, all
laws, orders and regulations pertaining to access and egress to and from the
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[ILLEGIBLE] and elevator and any fire protection, smoke protection and security
requirements related thereto. Notwithstanding the foregoing, if any future law,
order or regulation ("Law") first effective after the eighth (8th) anniversary
of the Commencement Date, imposes any violation, order or duty upon Tenant
pursuant to the provisions of this Article, the parties agree that (i) in the
event the reasonable cost of complying with such Law exceeds $3,500, then in
such event Landlord shall reimburse Tenant for fifty (50%) percent of Tenant's
reasonable costs in complying with such Law upon submission to Landlord of
bills, invoices and other reasonable evidence indicating the amount Tenant paid
to so comply and (ii) if the effective date of such Law is after the ninth (9th)
anniversary of the Commencement Date, then Landlord shall be obligated to
reimburse Tenant for seventy five (75%) percent of the reasonable cost of such
compliance.
C. Tenant acknowledges with respect to the Demised Premises or any
portion of the Building affecting the Demised Premises or relating thereto, that
it shall be Tenant's responsibility and obligation to comply with all
requirements and controls imposed by Local Laws 5 and 16 of the City of New
York, as same now exist or may hereafter be amended, as well as with any and all
other laws, rules and regulations of the City of New York of any governmental
agency or department thereof having jurisdiction over the Building including
without limitation the partitioning, layout, exit signs, telephone
communications, fire extinguishers, electrical outlets, sprinklers,
pressurization, HVAC systems, electrical controls, wiring, public address
systems, conduits and additions to the Building electrical system. Tenant
further acknowledges and agrees, if Landlord shall have performed Tenant's
installation or alteration work for Tenant pursuant to any work letter agreement
or pursuant to Tenant's request, the Landlord's sole responsibility with respect
thereto shall be limited to the workerlike manner of such installation or
alteration and it is the responsibility of Tenant and Tenant's architect insofar
as the legality of any such installation or alteration is concerned, i.e., the
drawing of plans in compliance with law and the obtaining of all permits
relating thereto, including without limitation, all necessary approvals and
signoffs, as well as any subsequent required, by law, modification(s) of any
such installation or alteration made within the Demised Premises or alteration
of the Building required as a result of such installation or alteration, which
shall be solely the responsibility of Tenant, at Tenant's sole cost and expense,
and Landlord shall have no obligation or duty with respect thereto. The
performance of any of the foregoing Local Laws 5 and 16 required work,
installations and alterations shall be performed by Tenant in accordance with
and subject to all applicable provisions of this Lease (including but not
limited to Articles 3 and 6 hereof) and of law, except Landlord shall have the
right to perform any and all of said work on behalf of Tenant at Tenant's sole
cost and expense.
With respect to any work required to be performed under this Article
to any portion of the Building other than the Demised Premises for reasons other
than an alteration or installation made within the Demised Premises, Landlord
shall perform such work on Tenant's behalf at Tenant's sole cost and expense and
the actual expenditure shall be deemed to be the total cost expended multiplied
by Tenant's Share defined in paragraph 42 (A)(iv) of this Lease.
D. Tenant covenants and agrees that, at its sole cost and expense, it
shall promptly comply with all present and future laws, ordinances and
regulations imposed by Local Law 76 of the City of New York, as same now exists
or may hereafter be amended.
E. (i) If the National Board of Fire Underwriters or any local Board of
Fire Underwriters or Insurance Exchange (or other bodies hereafter exercising
similar functions) shall require or recommend the installation of fire
extinguishers, a "sprinkler
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not limited to, smoke detectors and heat sensors), or any changes,
modifications, alterations, or the installation of additional sprinkler heads or
other equipment for any existing sprinkler system, fire extinguishing system,
and/or fire detection system for any reason, whether or not attributable to
Tenant's use of the Demised Premises or Alterations performed by Tenant; or
(ii) If any law, regulation or order or if any bureau, department,
or official of the federal, state, and/or municipal governments shall require
or recommend the installation of fire extinguishers, a "sprinkler system", fire
detection and prevention equipment (including, but not limited to, smoke
detectors and heat sensors), or any changes, modifications, alterations, or the
installation of additional sprinkler heads or other equipment for an existing
sprinkler system, fire extinguishing system, and/or fire detection system for
any reason, whether or not attributable to Tenant's use of the Demised Premises
or alterations performed by Tenant; or
(iii) If any such installations, changes, modifications, alterations,
sprinkler heads, or other equipment become necessary to prevent the imposition
of a penalty, an additional charge, or an increase in the fire insurance rate as
fixed by said Board or Exchange, from time to time, or by any fire insurance
company is a result of the use of the Premises whether or not the same is a
permitted use under Article 2 hereof, then, Tenant shall, at Tenant's sole cost
and expense, promptly make such installations within the Demised Premises and
make such changes, modifications, alterations, or the installation of additional
sprinkler heads or other required or recommended equipment.
F. Anything herein to the contrary notwithstanding, Landlord agrees that
at the Commencement Date of this Lease, the Demised Premises shall be in
compliance with all laws, regulations and orders of any government agency
having jurisdiction over the Demised Premises.
47. WAIVER OF SUBROGATION. Each party hereby releases the other party (which
term as used in this Article includes the employees, agents, officers and
directors of the other party) from all liability, whether for negligence or
otherwise, in connection with loss covered by any fire and/or extended coverage
insurance policies, which the releasor carries with respect to the Demised
Premises, or any interest or property therein or thereon (whether or not such
insurance is required to be carried under this Lease), but only to the extent
that such loss is collected under said fire and/or extended coverage insurance
policies. Such release is also conditioned upon the inclusion in the policy or
policies of a provision whereby any such release shall not adversely affect
said policies, or prejudice any right of the releasor to recover thereunder.
Each party agrees that its insurance policies aforesaid will include such a
provision so long as the same shall be obtainable without extra cost, or if
extra cost shall be charged therefor, so long as the party for whose benefit
the clause or endorsement is obtained shall pay such extra cost. If extra cost
shall be chargeable therefor, each party shall advise the other of the amount
of the extra cost, and the other party at its election, may pay the same, but
shall not be obligated to do so.
48. ASSIGNMENT, SUBLETTING, MORTGAGING.
A. Tenant will not, by operation of law or otherwise, assign, mortgage
or encumber this Lease, nor sublet or permit the Demised Premises or any part
thereof to be used by others without the prior written consent of Landlord
obtained in each instance. The consent by Landlord to any assignment or
subletting shall not in any manner be construed to relieve Tenant from
obtaining Landlord's express written consent to any other or further
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serve to relieve or release Tenant from its obligations to fully and faithfully
observe and perform all of the terms, covenants and conditions of this Lease on
Tenant's part to be observed and performed.
B. If Tenant desires to assign or to sublet all or any portion of the
Demised Premises, Tenant shall give notice thereof to Landlord and in the case
of subletting, Tenant shall specify in said notice the area and location of the
space Tenant wishes to sublet as well as the proposed commencement and
expiration date of such sublease. Upon receipt of such notice, Landlord shall
have the following options to be exercised within thirty (30) days from receipt
of Tenant's notice:
(i) If Tenant's notice states that it is Tenant's desire to make an
assignment of this Lease or a sublet of all or substantially all of the Demised
Premises, Landlord shall have the option, which option shall be exercised within
thirty (30) days from receipt of Tenant's notice, to cancel and terminate this
Lease as of the date proposed by Tenant for such assignment or subletting, and
on said date the term of this Lease shall cease and expire with the same force
and effect as if such date were originally provided herein as the expiration of
the term hereof.
(ii) If Tenant's notice states that it is Tenant's desire to sublet
less than all or substantially all of the Demised Premises, Landlord shall have
the option, to be exercised within said thirty (30) day period, to cancel and
to terminate this Lease as to such portion of the Demised Premises only, said
termination to take effect as of the proposed effective date thereof as stated
in Tenant's notice. In the event Landlord exercises its option under this
subparagraph (ii) the Minimum Rent, Additional Rent and all other charges
payable hereunder shall be equitably adjusted and apportioned.
C. If Landlord does not exercise its right of cancellation under either
of the foregoing options provided for in subparagraph (B) hereof within the
time set forth therein, Tenant shall have the right thereafter for sixty days
to attempt to assign Tenant's interest in this Lease or sublease all or a
portion of the Demised Premises to third parties procured by Tenant or by
outside brokers which Tenant may wish to utilize; provided, however, that such
assignment or subletting shall be subject to the provisions of the above
subparagraph (B) as well as the other provisions of this Article. Upon
obtaining a proposed assignee or sublessee, upon terms satisfactory to Tenant,
Tenant shall submit to Landlord in writing (w) the name of the proposed
assignee or subtenant; (x) the terms and conditions of the proposed assignment
or subletting; (y) the nature and character of the business and credit of the
proposed assignee or subtenant; (z) current financial statements, banking
references and any other references and information reasonably requested by the
Landlord. Landlord shall have the further option, to be exercised within
fifteen (15) business days from submission of Tenant's request, to require
Tenant to execute an assignment or sublease to Landlord or Landlord's designee
on the same terms and conditions in Landlord's own name, or the name of
Landlord's designee, with a right to sublease to others without Tenant's
consent being required for such or any further sublettings. If Landlord shall
not exercise its foregoing further option within the time set forth, its
consent to any such proposed assignment or subletting shall not be unreasonably
withheld or unduly delayed, provided, however, that Landlord may withhold
consent thereto if in the exercise of its sole judgment it determines that:
(i) The financial condition and general reputation of the proposed
assignee or subtenant are not consistent with the extent of the obligation
undertaken by the proposed assignment or sublease or with the character and
reputation of the Building.
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(ii) The proposed use of the Demised Premises is not appropriate for the
Building or in keeping with the character of the existing tenancies or permitted
by the Lease or with the dignity and character of the Building (but the
foregoing shall not be deemed to enlarge the purposes for which the Demised
Premises are permitted to be used as set forth in this Lease).
(iii) The nature of the occupancy of the proposed assignee or subtenant
will cause an excessive density of employees or traffic or make excessive
demands on the Building's services or facilities or in any other way will lessen
the dignity or character of the Building.
(iv) The Tenant proposes to assign or sublet to one who, at the time, is
a tenant or occupant of the Building, or a subsidiary, division or affiliate of
any such tenant or occupant of the Building, or to one with whom Landlord or its
agents are actively negotiating for space in the Building provided, however,
that this subdivision (iv) shall not apply to any proposed subletting by Tenant
of the portion of the Demised Premises consisting solely of the Penthouse if
there is no other space in the Building which is available for lease or which is
not contemplated by the Landlord to be available for lease within six (6) months
thereafter.
(v) The Tenant proposes to assign or sublet all or a portion of the
Demised Premises at a rental rate less than the rental rate Landlord is then
asking for other space in the Building ("Landlord's Rental Rate"), provided
however that any subletting for which subparagraph F below shall be applicable,
the rental rate for the proposed sublet shall not be less than eighty (80%)
percent of Landlord's Rental Rate.
D. Further, and as a condition of Landlord's consent to any assignment or
subletting:
(i) Tenant at the time of requesting Landlord's consent shall not be in
default under this Lease;
(ii) Each assignee of this Lease shall assume in writing all of the
terms covenants and conditions of this Lease on the part of Tenant hereunder to
be performed and observed;
(iii) An original or duplicate original of the instrument of assignment
and assumption or of the sublease agreement shall be delivered to Landlord
within (5) days following the making thereof;
(iv) Any instrument of sublease shall specifically state that each
sublease is subject to all of the terms, covenants and conditions of this Lease;
(v) Landlord may bill and Tenant shall pay all charges estimated by
Landlord to be due through the date of assignment (without relieving Tenant or
its assignee of the obligation to pay any balance due when the actual charges
are computed); and
(vi) Each assignee shall deposit with Landlord and each sublessee shall
deposit with sublessor a sum equal to two months Minimum Rent as an additional
security deposit under the Lease.
E. If Tenant shall duly comply with all of the foregoing then, as
aforesaid, Landlord shall not unreasonably withhold its consent to such
assignment or subletting.
F. Not withstanding anything contained in this Article to the contrary,
Landlord shall not have the option set forth in subparagraph B(ii) of this
Article 48 or the option to require Tenant to execute a sublease to Landlord or
Landlord's designee as set forth in subparagraph C above and subparagraph G
below shall not apply, with respect to any proposed subletting of a
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portion of the Demised Premises consisting of not more than 3,500 square feet.
G. It is agreed that if Landlord does not exercise any of the options
contained herein and shall consent to such assignment or subletting, and Tenant
thereupon assigns this Lease or sublets all or any portion of the Demised
Premises, then and in that event Tenant shall pay to Landlord, as Additional
Rent, (i) in the event of an assignment, the amount of all monies, if any,
which the assignee has agreed to and does pay to Tenant in consideration of the
making of such assignment less, however, all bona fide, third party,
out-of-pocket costs actually incurred by Tenant in connection with the making
of such assignment, including but not limited to any brokerage fees,
advertising and alteration costs; and (ii) in the event of a subletting the
amount, if any, by which the Minimum Rent and Additional Rent payable by
sublessee to Tenant shall exceed the Minimum Rent plus Additional Rent
allocable to that part of the Demised Premises affected by such sublease,
pursuant to the provisions of this Lease plus the amounts, if any, payable by
such sublessee to Tenant pursuant to any side agreement as consideration
(partial or otherwise) for Tenant making such subletting. Such Additional Rent
payments shall be made monthly within five (5) days after receipt of the same
by Tenant or within five (5) days after Tenant is credited with the same by the
assignee or sublessee. At the time of submitting the proposed assignment or
sublease to Landlord, Tenant shall certify to Landlord in writing whether or
not the assignee or sublessee has agreed to pay any monies to Tenant in
consideration of the making of the assignment or sublease other than as
specified and set forth in such instruments, and if so Tenant shall certify the
amounts and time of payment thereof in reasonable detail.
H. If this Lease shall be assigned, or if the Demised Premises or any part
thereof be sublet or occupied by any person or persons other than Tenant,
Landlord may, after default by Tenant, collect rent from the assignee,
subtenant or occupant and apply the net amount collected (which may be treated
by Landlord as rent or as use and occupancy) to the Minimum Rent and Additional
Rent herein reserved but no such assignment, subletting, occupancy or
collection of rent shall be deemed a waiver of the covenants in this Article,
nor shall it be deemed an acceptance of the assignee, subtenant or occupant as
a tenant, nor a release of Tenant from the full performance by Tenant of all
the terms, conditions and covenants of this Lease.
I. Each permitted assignee shall assume and be deemed to have assumed
this Lease and shall be and remain liable jointly and severally with Tenant for
the payment of the Minimum Rent and Additional Rent and for the due performance
of all the terms, covenants, conditions and agreements herein contained on
Tenant's part to be performed for the term of this Lease and any renewals and
modifications hereof. No assignment shall be binding on Landlord unless, as
hereinbefore provided, such assignee or Tenant shall deliver to Landlord a
duplicate original of the instrument of assignment which contains a covenant of
assumption by the assignee of all of the obligations aforesaid and shall obtain
from Landlord the aforesaid written consent prior thereto. Any assignment,
sublease or agreement permitting the use and occupancy of the Demised Premises
or any portion thereof, to which Landlord shall not have expressly consented in
writing shall be deemed null and void and of no force or effect.
J. Tenant agrees that notwithstanding any subletting or assignment
permitted by Landlord, no other or further assignment of this Lease or
subletting of all or any part of the Demised Premises by Tenant or any person
or entity claiming through or under Tenant (except as provided in subparagraph
(C) herein) shall or will be made except upon compliance with and subject to
the provisions of this Article.
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shall constitute a consent to any assignment or subletting.
L. Tenant represents that the ownership and power to vote the majority
of its entire outstanding capital stock or other controlling interests belongs
to and is vested in the person(s) executing this Lease or members of his or
their immediate family. Any transfer of said controlling interests in Tenant
shall constitute an assignment and shall accordingly be subject to the
restrictions set forth in this Article 48 of the Lease. Notwithstanding the
foregoing, in connection with a transfer of substantially all of the capital
stock of Tenant in connection with a bona fide sale of Tenant's business the
provisions of subparagraph B or Landlord's option to require Tenant to execute
an assignment or sublease to Landlord or Landlord's designee as provided in
subparagraph C shall not be applicable provided that upon such stock transfer,
the net worth of Tenant shall not be materially less than the net worth of
Tenant immediately prior to such transfer.
49. INDEMNITY-LIABILITY INSURANCE.
A. Tenant covenants and agrees to indemnify and save Landlord, its
managing agent and its principals, disclosed or undisclosed, harmless from and
against any and all claims, losses, damages or expenses (including reasonable
attorney's fees) or other liability arising during the term of this Lease out
of or in connection with (i) the construction, possession, use, occupancy,
management, repair, maintenance or control of the Demised Premises or any part
thereof or any other part of the Building used by Tenant, or (ii) any act or
omission of Tenant or Tenant's agents, employees, contractors, concessionaires,
licensees, invitees, subtenants or assignees, or (iii) any default, breach,
violation or non-performance of this Lease or any provision hereof by Tenant,
or (iv) any injury to person or property or loss of life sustained in or about
the Demised Premises or any part thereof, except such claims found to be the
result of the negligence of Landlord, its agents, employees or contractors.
Tenant shall, at its own cost and expense, defend any and all actions, suits
and proceedings which may be brought against, and Tenant shall pay, satisfy and
discharge any and all judgments, orders and decrees which may be made or
entered against, Landlord, its principals, disclosed or undisclosed, with
respect to, or in connection with, any of the foregoing. The comprehensive
general liability coverage maintained by Tenant pursuant to this Lease shall
specifically insure the contractual obligations of Tenant as set forth in this
Article and/or as provided in this Lease.
B. Tenant covenants to provide on or before the commencement date of the
term hereof and to keep in force during the term hereof for the benefit of
Landlord, its managing agent and Tenant a comprehensive policy of liability
insurance protecting Landlord and Tenant (and any other parties as Landlord or
any Mortgagee shall designate to be added as insured parties) against any
liability whatsoever occasioned by accident on or about the Demised Premises or
any appurtenances thereto. Such policy is to be written by good and solvent
insurance companies licensed to do business in the State of New York and
satisfactory to Landlord. The policy shall be a comprehensive General Liability
type and extended to include personal injury liability and fire legal liability
with the amounts of liability thereunder not less than $1,000,000.00 in respect
of any one person, not less than $3,000,000.00 in respect of any one accident,
and not less than $500,000.00 in respect of property damages. In addition,
Tenant will, at Tenant's expense, maintain (i) workers' compensation insurance
within statutory limits covering all persons employed, directly or indirectly,
in connection with any of Tenant's Work or any repair or alteration authorized
by this Lease or consented to by Landlord, and all employees and agents of
Tenant with respect to whom death or bodily injury claims could be asserted
against Landlord or Tenant; (ii) fire and
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extended coverage insurance in an amount adequate to cover the cost of
replacement of all fixtures and decorations and improvements in the Demised
Premises; and (iii) rent insurance covering those risks referred to in (ii)
above in an amount equal to all Minimum Rent and Additional Rent payable under
this Lease for a period of twelve (12) months commencing with the date of loss.
Prior to the time such insurance is first required to be carried by Tenant, and
thereafter at least thirty (30) days prior to the expiration of any such policy,
Tenant agrees to deliver to Landlord either a duplicate or original of the
aforesaid policy or a certificate containing an endorsement that such insurance
may not be cancelled or modified except upon twenty (20) days written notice to
Landlord, together with evidence of the payment of the required premium and
failure by Tenant to keep in force the aforementioned insurance which shall be
regarded as a material default hereunder, entitling Landlord to exercise any or
all of the remedies as provided in this Lease in the event of Tenant's default.
The minimum limits of insurance described above shall be subject to increase at
any time, and from time to time, after the third anniversary of the commencement
date of the term hereof, if Landlord shall deem same necessary demand for
adequate protection. Within thirty (30) days after demand therefor by Landlord,
Tenant shall furnish Landlord with evidence of compliance with such demand.
C. Notwithstanding anything contained in this Lease to the contrary,
Landlord shall have the right, at any time during the term of this Lease, upon
five (5) days written notice to Tenant, to request Tenant to furnish to Landlord
a duplicate original of the insurance policy(s), or certificate(s) of insurance,
which are required to be maintained pursuant to the terms of the Lease. In
addition to the aforesaid, Landlord shall have the right, at any time during the
term of the Lease, to enter upon the Demised Premises during reasonable business
hours and request Tenant or Tenant's agent to furnish and/or display to Landlord
a duplicate original of the insurance policy(s) or certificate(s) of insurance
of the insurance which are to be maintained pursuant to terms of the Lease.
Failure on the part of the Tenant to furnish Landlord with the proof of
insurance, as aforesaid, or display same to Landlord and/or permit entrance to
Landlord shall be deemed a default under the terms of the Lease, for which
Landlord shall have those rights that it has for Tenant's default under the same
terms of this Lease.
50. TENANT'S CERTIFICATE. Tenant shall, without charge at any time and from
time to time, within ten (10) days after request by Landlord, certify by
written instrument, duly executed, acknowledged and delivered, to any
mortgagee, assignee of any mortgage or purchaser, or any proposed mortgagee,
assignee of any mortgage or purchaser, or any other person, firm or corporation
specified by landlord:
A. that this Lease is unmodified and in full force and effect (or, if
there has been modification, that the same is in full force and effect as
modified and stating the modification;
B. whether or not there are then existing any set-offs or defenses
against the enforcement of any of the agreements, terms, covenants or
conditions hereof upon the part of Tenant to be performed or complied with
(and, if so, specifying the same);
C. the dates, if any, to which the rental and other charges hereunder
have been paid in advance; and
D. any other information pertaining to this Lease requested by Landlord.
51. SUBORDINATION, ATTORNMENT.
A. This Lease is subject and subordinate to (i) to all ground or
underlying leases and to all mortgages which may now or
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Demised Premises are a part, and to all renewals, modifications, consolidations,
replacements and extensions of any such ground or underlying leases or
mortgages. This clause shall be self-operative and no further instrument or
subordination shall be required by any ground or underlying lessee or by any
mortgagee affecting any lease or the real property of which the Demised Premises
are a part. However, in confirmation of such subordination, tenant shall execute
promptly any certificate the landlord may request and Tenant hereby irrevocably
constitutes and appoints Landlord as Tenant's attorney-in-fact to execute any
such certificate or instrument for and on behalf of Tenant.
B. Tenant covenants and agrees that, if by reason of a default on the
part of Landlord, as lessee under any ground or underlying lease, in the
performance of any of the terms or provisions of such ground or underlying
lease, or for any other reason of any nature whatsoever, such ground or
underlying lease and leasehold estate of Landlord as lessee thereunder is
terminated by summary proceeding or otherwise, or if such ground or underlying
lease and such leasehold estate is terminated through foreclosure proceedings
brought by the holder of any mortgage to which such ground or underlying lease
is subject or subordinate, or in case of any foreclosure of any mortgages
affecting the real property of which the Demised Premises is a part, Tenant will
attorn to the lessor under such proceedings or the holder of such mortgage, as
the case may be and will recognize such lessor or such purchaser as Tenant's
landlord under this Lease, unless the lessor under such ground or underlying
lease or the holder of any such mortgage in any such proceedings shall elect in
connection therewith to terminate this Lease and the rights of Tenant to the
possession of the Demised Premises. Tenant agrees to execute and deliver at any
time and from time to time, upon the request of Landlord, the lessor under any
such ground or underlying lease, or such mortgagee or purchaser any instrument
which may be necessary or appropriate to evidence such attornment and Tenant
hereby irrevocably constitutes and appoints Landlord as Tenant's
attorney-in-fact to execute and deliver any such instrument for and on behalf of
Tenant. Such attornment by Tenant shall contain, among other things, provisions
to the effect that subject to Landlord's right to terminate this Lease pursuant
to Article 9 hereof, in no event shall such lessor, mortgagee or purchaser as
landlord, (i) be obligated to repair, replace or restore the Building or the
Demised Premises in the event of damage or destruction, beyond such repair,
replacement or restoration as can be reasonably accomplished from the net
proceeds of insurance actually received by or made available to such landlord,
(ii) be responsible for any previous act or omission of the landlord or the
tenant under such ground or underlying lease or for the return of any security
deposit unless actually received by such landlord, (iii) be subject to any
liability or offset accruing to Tenant against Landlord, (iv) be bound by any
previous modification or extension of this Lease unless previously consented to,
or (v) be bound by any previous prepayment of more than one month's rent or
other charge. Tenant further waives the provisions of any statute or rule of law
now or hereafter in effect which may give or purport to give Tenant any right of
election to terminate this Lease or to surrender possession of the Demised
Premises in the event such ground or underlying lease terminates or any such
summary proceeding or foreclosure proceeding is brought by the lessor under any
such ground or underlying lease or the holder of any such and agrees that,
unless and until any such lessor under any such ground or underlying lease or
holder of any such mortgage in connection with any such proceeding shall elect
to terminate this Lease and to extinguish the leasehold estate to Tenant
hereunder this lease shall not be affected in any way whatsoever by any such
proceeding or termination.
C. Landlord agrees that it shall obtain (i) from the holder of the
existing mortgage covering the real property of which the demised premises form
a part, and/or any renewal,
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modification, consolidation, replacement and extension of the existing mortgage,
a non-disturbance agreement in favor of Tenant and substantially in the form of
Exhibit "A"; (ii) from the lessor under the ground lease covering the land and
Building of which the demised premises are a part, a non-disturbance agreement
in favor of Tenant substantially in the form of Exhibit "B"; and (iii) from the
holder(s) of any mortgage(s) hereafter made, non-disturbance agreements in
recordable form, providing in substance that provided Tenant shall have entered
into possession and occupancy of the demised premises, and so long as Tenant is
not in default in its obligations for the payment of fixed rent and additional
rent and in the performance of the other terms, covenants and conditions to be
performed on its part under this lease beyond applicable notice and grace
periods, its possession of the demised premises will not be disturbed during the
term hereof, notwithstanding the foreclosure of any such mortgage, and Tenant
will not be named as a party in any foreclosure proceedings brought for the
recovery of possession (except to the extent required by applicable law). Any
such non-disturbance agreement may also contain such other provisions which the
holder of any such mortgage customarily requires. The inability of Landlord to
obtain any such agreement shall not be deemed a default on Landlord's part of
its obligations hereunder, or impose any claim in favor of Tenant against
Landlord by reason thereof, or affect the validity of this lease, except that
the foregoing subordination shall be of no force or effect with respect to any
particular mortgage hereafter made until such time as a non-disturbance and
attornment agreement in the form provided for in this Paragraph is obtained with
respect thereto (unless the failure to obtain such agreement is due to Tenant's
failure or delay in executing and delivering same).
52. EXCULPATORY CLAUSE. Notwithstanding anything contained in this Lease, at
law or in equity to the contrary, it is expressly understood, acknowledged and
agreed by Tenant that there shall at no time be or be construed as being any
personal liability by or on the part of Landlord under or in respect of this
Lease or in any wise related hereto or the Demised Premises; it being further
understood, acknowledged and agreed that Tenant is accepting this Lease and the
estate created hereby upon and subject to the understanding that it shall not
enforce or seek to enforce any claim or judgment or any other matter, for money
or otherwise, personally against any officer, director, stockholder, partner,
principal (disclosed or undisclosed), representative or agent of Landlord, but
shall look solely to the equity of Landlord in its leasehold interest in the
Land and Building, and not to any other assets of Landlord, for the satisfaction
of any and all remedies or claims of Tenant in the event of any breach by
Landlord of any of the terms, covenants or agreements to be performed by
Landlord under this Lease or otherwise; such exculpation of any officer,
director, stockholder, partner principal (disclosed or undisclosed),
representative or agent of Landlord from personal liability as set forth in this
Article shall be absolute, unconditional and without exception of any kind.
53. BROKER. Tenant covenants, warrants and represents that there were no
brokers other than First New York Realty Co., Inc. (the "Broker") instrumental
in consummating this Lease, and no conversations or negotiations were had with
any broker except the Broker concerning the renting of the Demised Premises.
Tenant agrees to indemnify, defend and hold and save Landlord harmless against
any and all liability from any claims of any broker except the Broker who claims
to have dealt with Tenant (including, without limitation, the cost of counsel
fees and disbursements in connection with the renting of the Demised Premises).
Based upon such representation, Landlord has agreed to pay a brokerage
commission to the Broker pursuant to separate agreements.
54. TENANT'S REMEDIES. With respect to any provision of this Lease which
provides, in effect, that Landlord shall not unreasonably withhold or
unreasonably delay any consent or any
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shall Tenant make, any claim, and Tenant hereby waives any claim, for money
damages; nor shall Tenant claim any money damages by way of setoff, counterclaim
or defense, based upon any claim or assertion by Tenant that Landlord has
unreasonably withheld or unreasonably delayed any consent or approval; but
Tenant's sole remedy shall be an action or proceeding to enforce any such
provision, or for specific performance, injunction or declaratory judgment.
55. TENANT'S OPERATING OBLIGATIONS. Tenant covenants and agrees that during
the term of this Lease:
A. If any 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, and if failure to secure such license or permit would in any way
affect Landlord, then Tenant, at its sole cost and expense, shall duly procure
and therefore maintain such license or permit and submit the same to inspection
by Landlord. Tenant shall at all times comply with the terms and conditions of
each such license or permit.
B. Tenant shall not misuse plumbing facilities or dispose of any
foreign substances therein which might cause damage to the plumbing
facilities. Tenant shall not permit any food, waste, or other foreign
substances to be thrown or drawn into the pipes. Tenant shall maintain the
plumbing that it installs in good order, repair and condition, and repair any
damage resulting from any violation of this paragraph. Tenant shall make any
repairs to the other plumbing in the Building, if damage results from Tenant's
improper use of such plumbing.
C. Tenant shall retain a licensed professional exterminating service
which will service the Demised Premises on a regular basis throughout the term
so as to keep the Demised Premises free of vermin. Tenant shall furnish
Landlord with a copy of said contract within seven (7) days from the date of
request therefor by Landlord.
D. Tenant shall not encumber or obstruct or permit to be encumbered or
obstructed any hallway, service elevator, stairway or passageway in the
Building.
E. Tenant covenants and agrees that throughout the term, it shall not
suffer, allow or permit any offensive or obnoxious vibration, noise, odor or
other undesirable effect to emanate from the Demised Premises, or any machine
or other installation therein, or otherwise suffer, allow or permit any such
obnoxious vibration, noise, odor or other undesirable effect to constitute a
nuisance or otherwise interfere with the safety, comfort or convenience of
Landlord, or other tenants, occupants, customers, agents, or invitees or any
others lawfully in or upon the Building and upon Landlord's notice to Tenant,
Tenant shall within five (5) days thereof remove or control the same, and if
any such condition is not so remedied, then Landlord may, at its discretion,
either: (i) cure such condition and add any cost and expense incurred by
Landlord therefor to the next installment of Minimum Rent due under this Lease,
and the Tenant shall then pay said amount, as Additional Rent hereunder; or
(ii) treat such failure on the part of the Tenant to remedy such condition as a
material default of this Lease on the part of the Tenant hereunder, entitling
the Landlord to any of its remedies pursuant to the terms of this Lease.
F. Tenant shall, throughout the term of this Lease, maintain, repair,
service and replace when necessary, all doors leading into and out of the
Demised Premises and all hardware appurtenant thereto, including, but not
limited to, locks, hinges, silencers, door stops, door jambs, door closers,
latchsets, flushbolts, door frames, thresholds and door knobs. Landlord shall
have no liability or obligation whatsoever
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regarding the maintenance, repair, service and replacement of the foregoing.
G. Tenant shall keep the Demised Premises (including, without
limitation, exterior and interior portions of all windows, doors and all other
glass) in a neat and clean condition.
H. Tenant shall handle and dispose of all rubbish, garbage and
waster from Tenant's operations in accordance with reasonable rules and
regulations established by Landlord.
I. Tenant shall not change (whether by alteration,
replacement, rebuilding or otherwise) the exterior color and/or architectural
treatment of the Demised Premises or of the Building or any part thereof.
J. Tenant shall not use, or permit to be used, any advertising
medium and/or loud speaker, and/or sound amplifier, and/or radio or television
broadcast which may be heard outside the Demised Premises or which does not
comply with the general policies or rules and regulations then in effect; it
being understood that breach of the foregoing restriction contained in this
paragraph (K) shall constitute a material breach of this Lease on the part of
Tenant hereunder which, if not cured within three (3) days after notice from
Landlord shall, in addition to all other rights and/or remedies available to
Landlord under this Lease or at law or in equity, constitute a material default
under this Lease.
K. Tenant shall not subject any fixtures or equipment in or on
the Demised Premises which are affixed to the realty, to any mortgage, liens,
conditions sales agreements, security interests or encumbrances.
L. Tenant shall not perform any act or carry on any practice
which may damage, mar or deface the Demised Premises or any other part of the
Building.
M. Tenant shall not operate on the Demised Premises or in any
part of the Building any coin- or token-operated vending machine or similar
device (including, without limitation, pay telephones, pay lockers, pay toilets,
scales, amusement devices, and machines for the sale of beverages, foods, candy,
cigarettes or other merchandise and/or commodities). Notwithstanding the
foregoing, Tenant shall have the right to maintain a kitchen pantry in the
Demised Premises, including therein a "Dwyer type" unit for the warming (cooking
being expressly prohibited) of food, refrigerator and vending machines
dispensing food and beverages for the exclusive use of the employees and
business guests of Tenant, each of which vending machines (if same dispenses any
beverages or other liquids or refrigerates) shall have a waterproof pan located
thereunder.
N. Tenant shall not install any awnings in or on the Demised
Premises which are visible to public view outside the Demised Premises.
O. Tenant shall not permit window cleaning or other exterior
maintenance and janitorial services in and for the Demised Premises to be
performed except by such person(s) as shall be approved by Landlord, and except
during reasonable hours designated for such purposes by Landlord.
P. Tenant shall not install, operate or maintain in the
Demised Premises any electrical equipment which will overload the electrical
system therein, or any part thereof, beyond its reasonable capacity for proper
and safe operation, as determined by Landlord, in light of the overall system
and requirements therefor in the Building, or which does not bear underwriters'
approval.
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any purpose calculated to injure the reputation of said Demised Premises,
and/or the Building or of the neighborhood in which the same are located or to,
presently or in the future, impair the value of said Demised Premises and/or
Building.
R. Tenant shall not suffer, allow or permit the erection or display in,
on or from the Demised Premises any exhibits, banners, decorations, flags,
bunting or any other similar or dissimilar kind or form of description or
display without Landlord's prior written consent in each instance.
S. Tenant shall not permit any business to be operated in or from the
Demised Premises by any concessionaire or licensee without the prior written
consent of Landlord in each instance.
T. Tenant shall not place any signs in the hallway whether placed on the
walls, free standing or hanging from the ceiling. Nor shall Tenant place any
signs on the exterior of the building.
U. Tenant shall be responsible for surrendering the Demised Premises, or
a part of the Demised Premises, in accordance with the terms of this Lease, and
shall remain liable for any and all monies which are due and payable, whether
billed or unbilled, for the period of time up until the time Tenant vacates the
space being recaptured by Landlord.
V. Subject to the conditions hereinafter set forth, Tenant shall have
the right to install and maintain one exterior sign identifying Tenant on the
Union Square East side of the Building. Any exterior sign shall not be
electrified or illuminated. The location of any exterior sign, the coloring,
configuration, design and dimensions of any exterior sign and the lettering
thereon are all subject to the Landlord's prior written approval thereof, which
approval shall not be unreasonably withheld, provided such sign is in keeping
with the dignity and character of the Building. Tenant, at its own cost and
expense, shall maintain any such exterior sign in good appearance and repair
and obtain and keep in force and effect all governmental permits or licenses,
if any, with respect to any such sign. At the expiration of the term of this
Lease, Tenant, at its own cost and expense, shall on or before the expiration
or termination of this Lease remove any such exterior sign and repair any
damage to the Building caused by the installation and/or removal of such sign.
W. Subject to the prior consent of Landlord, which consent shall not be
unreasonably withheld, Tenant shall have the right to display photography used
in connection with Tenant's business and change such photography from time to
time in the lobby of the Building, provided that such photography shall be in
keeping with the dignity and character of the Building and provided further
that under no circumstances shall obscene, immoral or pornographic photography,
as determined by Landlord in Landlord's sole discretion, be permitted.
56. LABOR REGULATIONS. Tenant covenants and agrees that, from and after the
date hereof and throughout the term of this Lease, it shall not take any action
which would violate the Landlord's union contract, if any, affecting the
Building, nor create any work stoppage, picketing, labor dispute, or any
interference with the business of the Landlord or any other tenant or occupant
in the Building or with the rights and privileges or any person(s) lawfully in
the Building, nor cause any impairment or reduction of the good name of the
Building. Any default by Tenant under this Article shall be deemed a material
default entitling Landlord to exercise any or all of the remedies as provided
in this Lease subject to the notice provisions provided in Article 17 hereof.
57. ADDENDUM TO ARTICLE 22. (END OF TERM). If Tenant shall default in
surrendering the Demised Premises upon the expiration or termination of the
term, Tenant's occupancy subsequent to such
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acquiescence of Landlord, shall be deemed to be that of a tenancy at will and
in no event from month-to-month or from year-to-year, and it shall be subject
to all the terms, covenants and conditions of this Lease applicable thereto,
except the Minimum Rent shall be (i) one and one-half (1 1/2) times the amount
payable in the last year of the term for the period commencing on the
expiration or termination of the term and for four (4) months thereafter and
(ii) two (2) times the amount payable in the last year of the term for the
period commencing four (4) months after the expiration or termination of the
term, and no extension or renewal of this Lease shall be deemed to have
occurred by such holding over. In the event Landlord shall commence proceedings
to dispossess Tenant by reason of Tenant's default, Tenant shall pay, in
addition to costs and disbursements, minimum legal fees of $1,000.00 for each
proceeding as Additional Rent hereunder. Tenant shall also be liable to
Landlord for all claims made by any succeeding tenants against Landlord or
otherwise resulting from the failure of Tenant to timely surrender and vacate
the Demised Premises.
58. ADDENDUM TO ARTICLE 18 (LANDLORD'S REMEDIES). Should Tenant fail to pay any
installment of Minimum Rent, Additional Rent, or any other sum payable to
Landlord under the terms of this Lease within ten (10) days after same becomes
due, then interest shall accrue on said Minimum Rent, Additional Rent and other
sums payable to Landlord hereunder, from and after the date on which any such
sum shall be due and payable, and such interest, together with a late charge of
three and one-half cents ($.035) for each dollar ($1.00) overdue to cover the
extra expense involved in handling such delinquency shall be paid by Tenant to
Landlord at the time of payment of the delinquent sum. If Tenant shall issue a
check to Landlord which is returned unpaid for any reason, Tenant shall pay
Landlord an additional charge of Fifty ($50.00) Dollars for Landlord's expense
in connection therewith. In the event Tenant shall issue three (3) checks in any
twelve consecutive month period, which are returned unpaid for any reason, or if
Tenant shall be late in making any payment due under this Lease more than three
(3) times in any twelve consecutive month period, then in either event Landlord
shall be entitled to demand from Tenant and Tenant agrees to tender to Landlord
additional security in the amount of one month's then current Minimum Rent to be
held in accordance with the terms of Article 34 hereof. In addition, in the
event Tenant shall issue three (3) checks in any twelve consecutive month
period, which are unpaid for any reason, Landlord shall be entitled to demand
from Tenant and Tenant agrees to make any and all payments for Minimum Rent,
Additional Rent or any other charges which thereafter become due under this
Lease by certified check or bank check. These remedies shall be without
prejudice to any of Landlord's other rights and remedies hereunder or at law for
non-payment or late payment of rent and shall be in addition thereto.
59. INTEREST. Whenever this Lease refers to "interest", same shall be computed
at a rate equal to the "Prime Rate" (as hereinafter defined) plus two (2%)
percent except where otherwise in this Lease a different rate is specifically
set forth. If, however, payment of interest at any such rate by Tenant (or by
the tenant then in possession having succeeded to the Tenant's interest in
accordance with the terms of this Lease) should be unlawful, i.e., violative of
the usury statutes or otherwise, then "interest" shall, as against such party,
be computed at the maximum lawful rate payable by such party. "Prime Rate" shall
mean the rate being charges at the time in question by Citibank, N.A. for short
term ninety (90) days unsecured loans made to its preferred corporate customers.
60. ARBITRATION. Either party may request arbitration of any matter in
dispute wherein arbitration is expressly provided in this Lease as the
appropriate remedy. The party requesting arbitration shall do so by giving
notice to that effect to the other party, and both parties shall promptly
thereafter apply to
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(or any organization successor thereto) in the City, County and State of New
York for the appointment of a single arbitrator. The decision of the arbitrator
shall be final and conclusive upon the parties hereto and a judgment may be
obtained thereon in any court having jurisdiction in accordance with the
procedural rules than obtaining of the AAA or any successor thereto. The
arbitrator may grant injunctions or other relief in such controversies or
claims. The parties agree that the unsuccessful party shall pay the entire pay
for its own attorney's fees and expenses.
61. AIR CONDITIONING. A. Subject to the provision of paragraph 61.F., all
maintenance, repair, and replacement of the air conditioning and ventilation
system serving the Demised Premises shall be the responsibility of the Tenant,
at the Tenant's sole cost and expense. This is to be done in a manner
satisfactorily to Landlord and only persons approved by Landlord to maintain
and repair Tenant's air conditioning system shall be permitted to enter the
Demised Premises or Building for such purpose. Landlord shall not be liable to
Tenant in damage or otherwise nor shall Tenant be entitled to any abatement or
diminution of the Minimum Rent or any Additional Rent payment under this Lease
if the operation of the air conditioning and/or ventilating system is
interrupted, impaired, suspended or terminated because of failures, repairs,
installations or improvements within the Demised Premises or Building, nor shall
any such interruptions, impairment, suspension, or termination release Tenant
from the performance of any of its obligations hereunder. Landlord reserves the
right to stop the operation of the air-conditioning and ventilating system when
necessary by reason of accident or emergency, or mechanical breakdown, or
requirement of law or any cause beyond Landlord's reasonable control or for
repairs, alterations, replacements, or improvements which, in the judgment of
Landlord, are desirable or necessary within the Building and the Demised
premises and which may affect Tenant's air conditioning.
B. If either the Tenant's quantity of character of cooling and/or
ventilating service within the Demised Premises shall change or cease to be
available or suitable for Tenant's requirements, no such change, unavailability
or unsuitability shall constitute an actual or constructive eviction, in whole
or in part, or entitle Tenant to impose any liability upon Landlord or
Landlord's agents.
C. Tenant shall not, without prior written consent of Landlord in each
instance, make or permit to be made any additions to or modifications of the
existing air conditioning and ventilation system. Any such permitted additions
or modifications permitted to be made hereunder shall be performed by Tenant at
Tenant's expense.
D. Tenant acknowledges that upon the expiration of the term of the
Lease, or earlier termination, the air conditioning system shall be surrendered
by Tenant in good condition and good working order, reasonable wear and tear
excepted, in a manner satisfactory to Landlord.
E. Anything contained herein to the contrary notwithstanding, it is
expressly agreed that Tenant shall pay the cost of any and all permits which
subsequent to the Commencement Date of this Lease may be required by any branch
or department of the borough, county, city, state or federal government in
connection with the air conditioning to be installed in the Demised Premises by
Landlord pursuant to Landlord's Work.
F. Tenant agrees that promptly following the Commencement Date, it will
enter into a service contract for the air conditioning system on such terms and
conditions reasonably approved by Landlord and will renew and maintain such
service contract throughout the term of this Lease. Landlord agrees that
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major component of the air conditioning system requires replacement or repair
and the cost thereof exceeds $3,500, Landlord shall reimburse Tenant for fifty
(50%) percent of the cost of such repair or replacement. In the event such
repair or replacement is required after the ninth (9th) anniversary of the
Commencement Date, Landlord shall reimburse Tenant for seventy five (75%)
percent of such cost. Landlord agrees to assign to Tenant any guarantees or
warranties which Landlord receives with respect to the Air Conditioning System.
In no event, shall Landlord have any obligation to reimburse Tenant for any
replacement or repair attributable to Tenant's negligence, carelessness or
misuse of the Air Conditioning System.
62. WATER CHARGES. If Tenant requires, uses or consumes water for any purpose
in addition to ordinary lavatory purposes and for other purposes permitted
under this Lease (of which fact Tenant constitutes Landlord to be sole judge),
Landlord may install a water meter and thereby measure Tenant's water
consumption for all purposes. Tenant shall pay Landlord as Additional Rent for
the cost of the meter and the cost of the installation thereof, and throughout
the duration of Tenant's occupancy, Tenant shall keep said meter and
installation equipment in good working order and repair at Tenant's own cost
and expense in default of which Landlord may cause such meter and equipment to
be replaced or repaired, and collect the cost thereof as Additional Rent from
Tenant. Tenant agrees to pay for water consumed as shown on said meter as and
when bills are rendered, and on default in making such payment, Landlord may
pay such charges and collect the same from Tenant. Tenant covenants and agrees
to pay the sewer rent charge or any other tax, rent, levy or charge which now or
hereafter is assessed, imposed or a lien upon the Demised Premises or the
realty of which they are a part pursuant to law, order or regulation made or
issued in connection with the use consumption, maintenance or supply of water,
water system or sewage or sewage connection of system. Any bill rendered by
Landlord hereunder shall be payable by Tenant as Additional Rent. If the
Building or the Demised Premises, or any part thereof, be supplied with water
though a meter through which water is also supplied to other premises, Tenant
shall pay to Landlord, as Additional Rent, on the first day of each month ten
(10%) percent of the total meter charges, as Tenant's portion. Independently
of, and in addition to any of the remedies reserved to Landlord hereinabove or
elsewhere in this Lease, Landlord may sue for and collect any monies to be paid
by Tenant or paid by Landlord for any of the reasons or purposes hereinabove
set forth.
63. USE. Tenant shall use the Demised Premises in the following manner:
A. Subject to, and in accordance with Article 2 of this Lease and all
rules, regulations, laws, ordinances, statutes and requirements of all
governmental authorities and any Fire Insurance Rating Organization, Board of
Fire Underwriters and/or other similar bodies having or asserting jurisdiction
thereover.
B. If any 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, and if failure to secure such license or permit would in any way
affect Landlord, Tenant, at its expense, shall duly procure and thereafter
maintain such license or permit and submit the same for inspection by Landlord.
Tenant shall, at all times, comply with the terms and conditions of each such
license or permit.
C. Tenant shall not, at any time, use or occupy, the Demised Premises,
or do or permit anything to be done in the Demised Premises, in violation of
the Certificate of Occupancy for the Demised Premises or for the Building
which the Landlord represents will permit office use.
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64. [ILLEGIBLE]. Tenant understands and acknowledges that Landlord may alter,
restore and/or renovate the entrance lobby and/or other portions of the Building
(exclusive of the Demised Premises) and that such alterations, restoration
and/or renovation or other work in the Building (including, without limitation,
the temporary relocation of the entrance to the Building) may result in certain
inconveniences or disturbances to Tenant and other occupants of the Building but
same shall not result in Tenant being denied access to or use of the Demised
Premises. Tenant agrees that the performance of any such work shall not
constitute or be deemed to be a constructive eviction or be grounds for a rent
abatement, offset or reduction or a termination of this Lease or the term
hereof, nor shall the same in any way affect the obligations of Tenant under
this Lease, including, without limitation, the obligation to pay the rents
herein reserved or give Tenant the right to claim damages or any matter or thing
from Landlord or Landlord's agent(s) or contractor(s). Landlord agrees that in
connection with such work in the Building, Landlord shall use reasonable efforts
to minimize (i) any disruption to Tenant's business and (ii) any inconvenience
to Tenant provided that in no event shall Landlord be required to perform such
work on an overtime basis or on weekends. Landlord further agrees that in no
event will the entrance lobby of the Building be reduced in excess of fifteen
(15%) percent unless required by law, ordinance or regulation.
65. LANDLORD'S OVERHEAD, SUPERVISION AND APPROVAL CHARGES. Whenever Landlord
or its agent shall install a water meter pursuant to Article 29 hereof, or
shall perform work or furnish services at Tenant's request or on behalf of
Tenant which are not otherwise specifically billable to Tenant as Additional
Rent pursuant to any other Lease provision or separate agreement or shall
perform work, which Tenant should have performed but failed to perform prior to
the expiration of any applicable grace period with respect thereto, or any
contractor or vendor performs construction or furnishes labor, material or
services or alteration work on behalf of Tenant, in addition to all other
charges as may be required to be paid by Tenant as elsewhere provided in this
Lease, Tenant shall pay to Landlord, upon rendition of Landlord's bill
therefor, an amount equal to fifteen (15%) percent of the amounts actually
expended by Landlord and/or Tenant in connection with the performance of such
work or installation of such meter (representing a charge of seven and one-half
(7.5%) percent of such cost for Landlord's overhead, plus seven and one-half
(7.5%) percent for supervision). If any plan or specification submitted to
Landlord shall, in Landlord's sole opinion, require the expert opinion of an
architect, engineer or other professional service in order for Landlord to
determine whether or not to approve or withhold consent thereto, Landlord may
retain an architect, engineer or other professional service for such purpose,
and Tenant agrees to pay to Landlord an amount equal to the reasonable fee of
such architect, engineer or other professional service actually paid by
Landlord for reviewing such plan or specifications. Said sum shall be payable
irrespective of whether or not approval of such plans and specifications are
returned to Tenant with objections thereto. Notwithstanding the foregoing,
Landlord shall not be entitled to the overhead and supervision charge as set
forth herein with respect to Landlord's Work being performed in the Demised
Premises prior to the Commencement Date.
66. CHEMICAL WASTE. Tenant agrees that Tenant shall not pour or otherwise
dispose of any chemical, chemical waste, chemical by-products, or other such
material, through the drainage (plumbing) system of the Demised Premises which
may harm or damage any portion of the plumbing, waste disposal or sanitary
systems. This representation by Tenant is a material inducement to Landlord to
enter into this Lease, and without such inducement, Tenant acknowledges that
Landlord would not have entered into this Lease agreement. Accordingly,
Tenant's breach of this agreement shall be deemed a material default under this
Lease,
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Tenant's default.
67. RUBBISH REMOVAL. Tenant agrees to pay, as Additional Rent, in equal
monthly installments, fifteen (15%) percent of the total rubbish removal
charges for the entire building for ordinary rubbish removal from the Demised
Premises, provided that in no event shall such charges include the charges of
rubbish removal for any retail tenants of the Building. Nothing hereinbefore
contained shall be deemed to require the Landlord to remove any furniture,
fixtures or other personalty of the Tenant and Tenant shall place no such
furniture, fixtures, machinery or other material to be abandoned by the Tenant
outside of the Demised Premises, or in the corridors, halls or stairwells
thereof.
68. RECORDATION. Tenant covenants not to place this Lease on record without
the consent of Landlord. At the request of either party, Tenant or Landlord
will execute a statutory short form lease for recording purposes containing
references to such provisions of this lease as Landlord, in its sole
discretion, shall deem necessary.
69. MECHANIC'S LIENS. Notwithstanding anything to the contrary contained in
this Lease, Tenant, its successors and assigns, warrant and guarantee to
Landlord, its successors and assigns, that if any mechanic's lien shall be
filed against the Building of which the Demised Premises form a part, for work
claimed to have been done for, or materials claimed to have been furnished to,
Tenant (a) the same shall be discharged by Tenant, by either payment, by bond
or otherwise, at the sole cost and expense of Tenant, within fifteen (15) days
of the giving of notice thereof by Landlord, (b) either a release or a
satisfaction of lien, as the case may be, shall be filed with the County Clerk
of the county in which the Building is situated within such seven (7) day
period, and (c) a copy of such release or satisfaction, as the case may be,
certified to by such County Clerk shall be delivered to Landlord within three
(3) days after such filing.
In the event such mechanic's lien is not discharged timely, as aforesaid,
Landlord may discharge same for the account of and at the expense of Tenant by
payment, bonding or otherwise, without investigation as to the validity thereof
or of any offsets or defenses thereto, and Tenant shall promptly reimburse
Landlord, as Additional Rent, for all costs, disbursements, fees and expenses,
including without limitation, legal fees, incurred in connection with so
discharging said mechanic's lien, together with interest thereon from the time
or times of payment until reimbursement by Tenant. Tenant shall, within five
(5) days of demand therefor by Landlord, pay to Landlord as Additional Rent,
the sum of One Thousand ($1,000) Dollars on account of Landlord's legal fees
and disbursements, but the foregoing shall not limit the extent of Tenant's
liability as set forth above.
In the event such mechanic's lien is not discharged timely, as aforesaid,
Landlord, in addition to all other rights granted to Landlord in this Lease and
without limitation, may institute a dispossess summary proceeding based upon
such failure to discharge any such lien. In the event Tenant fails to deliver
to Landlord the certified copy of the release or satisfaction required
hereunder within the time period provided for the delivery thereof to Landlord,
Landlord shall have the right to assume that such mechanic's lien has not been
discharged and Landlord shall have all of the rights and remedies provided for
herein based upon Tenant's failure to discharge any such lien.
It is further expressly understood and agreed between the parties hereto
that Landlord may apply all or a portion of the security deposit made by Tenant
hereunder toward discharging any such mechanic's lien and the cost, expenses,
fees and disbursements, including, without limitation, legal fees, in
connection therewith. Upon notification by Landlord of the application of all
or a portion of the security deposited by
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notice, restore the security deposit to such amount held by Landlord prior to
application thereof. Tenant's failure or refusal to restore the security as
aforesaid within said five (5) day period shall constitute a material default
under this Lease.
70. INTENTIONALLY OMITTED.
71. FINANCING REQUIREMENTS. If, in connection with obtaining financing or
refinancing for the Building of which the Demised Premises form a part, a
banking, insurance or other institutional lender shall request reasonable
modifications to this Lease as a condition to such financing or refinancing,
Tenant will not unreasonably withhold, delay or defer its consent thereto;
provided, however, that such modifications do not increase the obligations of
Tenant hereunder (except, perhaps, to the extent that Tenant may be required to
give notices of any defaults by Landlord to such lender and/or permit the curing
of such defaults by such lender together with the granting of such additional
time for such curing as may be required for such lender to get possession of the
said Building) or materially adversely affect the leasehold interest hereby
created. In no event shall a requirement that the consent of any such lender be
given for any modification of this Lease or subject to the provisions of this
Lease for any assignment or sublease, be deemed to materially adversely affect
the leasehold interest hereby created.
72. NO LOITERING. Tenant covenants and agrees that it shall not use or permit
the use by any of its employees, agents, licensees or invitees, the corridor and
halls contiguous and outside the Demised Premises, whereby persons or parties
will assemble within said hallways, causing a disturbance to other tenants by
the loitering of individuals, and in violation of any and all fire and safety
laws and ordinances. In the event Tenant fails to police the hallways and
prevent the loitering as aforesaid, then, such failure shall constitute a
default under Article 17 of this Lease.
73. NOTICES. A. Notwithstanding anything contained in this Lease to the
contrary, notices sent by Landlord's or Tenant's attorney on behalf of their
respective clients shall be valid service pursuant to the terms of this Lease;
provided, however, that the manner in which the notice is sent is in accordance
with the terms of the Lease. In addition, Tenant and Landlord shall not have any
recourse nor the right to contest the fact that Landlord's or Tenant's attorney,
as the case may be, was the sender of said notice.
B. Except as otherwise in this Lease provided, any bills, notices,
statements or other communications required or permitted to be given by Landlord
or Tenant to the other shall be in writing sent by (i) certified mail, return
receipt requested; (ii) overnight courier, with receipt acknowledged; or (iii)
personal delivery to an officer or partner of Tenant or Landlord, with receipt
acknowledged, addressed to the other party at the address hereinabove set forth,
and shall be deemed given, rendered or made on the date delivered provided
however that said bills, notices, statements or other communications shall be
deemed delivered if the party to whom same is addressed shall fail or refuse or
otherwise be unavailable to accept delivery thereof. Either party may, by notice
as aforesaid, designate a different address or addresses for bills, notices,
statements or other communications intended for it. A copy of any notice shall
be given in the manner aforesaid (a) if to Tenant, to Howard I. Golden, Esq.,
360 Lexington Avenue, New York, New York 10017 and (b) if to Landlord, to Dreyer
& Traub, 101 Park Avenue, New York, New York 10178, Attn: Jonathan A. Bernstein,
Esq.
74. LANDLORD'S CONSENT. If Tenant requests Landlord's consent or approval to
alterations, assignment, subletting or any other matter, or thing requiring
Landlord's consent or approval under this Lease, and if in connection with such
request Landlord seeks
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Landlord, as a condition precedent to granting its consent or approval, may
require (in addition to any other requirements of landlord in connection with
such request) that Tenant pay the fees and disbursements of Landlord's
attorney's, architect and/or engineer in connection with the consideration of
such request and/or the preparation of any documents pertaining thereto.
75. PERMITS AND FEES.
A. Tenant covenants and agrees that, upon request of Landlord, it shall,
within then (10) days from the date of the request, furnish Landlord with an
up-to-date copy of any permit or license required by any authority having
jurisdiction therein for tenant to conduct business at the Demised Premises.
B. In addition, Tenant further covenants and agrees that, upon request of
the Landlord, it shall, within ten (10) days from the date of the request,
furnish Landlord with a copy of the canceled check, paid bill or any other
evidence which supports payment of current tax, assessment or fee, for personal
property, fees or other imposition which is imposed upon the Tenant, other than
the Real Estate Tax.
C. In the event Tenant fails to submit to Landlord, upon request, the
items called for under either subparagraphs A. or B. above, such failure shall
be a default under the terms of this Lease.
76. SECURITY. A. Landlord hereby acknowledges receipt, subject to collection,
if by check, from Tenant, of the sum of Sixty-Six Thousand ($66,000.00) DOLLARS
(hereinafter referred to as "Security Deposit"), which Security Deposit is to be
held by Landlord as security for the full and faithful performance by Tenant of
each and every term, condition and covenant of this Lease on the part of Tenant
to be observed and performed, it being expressly understood that such Security
Deposit is not an advance payment of rental or a measure of Landlord's damages
in the case of default by Tenant. Landlord shall deposit the Security Deposit in
a separate, interest bearing bank account and shall annually pay tenant the
amount of such interest accruing in said account, less a one percent (1%)
administration fee. Such Security Deposit shall not be mortgaged, assigned,
transferred or encumbered by tenant without the consent of Landlord and any such
act on the part of Tenant shall be without force and effect and shall not be
binding upon Landlord. If any of the Minimum Rent or any item of Additional Rent
payable by Tenant to Landlord shall be overdue and unpaid or should Landlord
make payments on behalf of Tenant, or should tenant fail to perform any of the
terms of this Lease, the landlord may, at its option, and without prejudice to
any other remedy which Landlord may have on account thereof, appropriate and
apply said entire Security Deposit, or so much thereof as may be necessary to
compensate Landlord toward the payment of Minimum Rent or any item of Additional
Rent due from Tenant or towards any loss, damage or expense sustained by
Landlord resulting from such default on the part of Tenant and, in such event
Tenant shall forthwith, upon demand, restore said Security Deposit to the
original sum deposited. In the event Tenant shall fully and faithfully comply
with all of the terms, covenants and conditions of this Lease and promptly pay
all of the Minimum Rent and all items of Additional Rent as they fall due to
Landlord, any remaining balance of such Security Deposit shall be returned by
Landlord to Tenant after the expiration or termination of this Lease and the
surrender of the Demised Premises by Tenant in compliance with the provisions of
this Lease. In the event any bankruptcy, insolvency, reorganization or other
creditor-debtor proceedings shall be instituted by or against Tenant, or its
successors or assigns, or any surety of this Lease, such Security Deposit shall
be deemed to be applied first to the payment of any Minimum Rent and any item of
Additional Rent due Landlord for all periods prior to the institution of such
proceedings, and the balance, if any, of such
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liquidation of Landlord's damages. Landlord may deliver the Security Deposit by
Tenant hereunder to the purchaser of Landlord's interest in the Demised
Premises, in the event that such interest be sold or transferred and, thereupon,
Landlord shall be discharged and released from all further liability with
respect to such Security Deposit or the return thereof to Tenant, and Tenant
shall look solely to the new landlord for the return of said Security Deposit,
and this provision shall also apply to any subsequent transferees.
B. Notwithstanding the foregoing, provided that for a period of twelve
(12) months commencing on the date Tenant's regular payments of Minimum Rent
commences, Tenant does not default in fulfilling any of the covenants,
provisions or conditions of this Lease, including the covenant for the payment
of Minimum Rent and Additional Rent, the amount of the Security Deposit shall be
reduced to $33,000.
C. In lieu of the cash security provided for in this Article 76 hereof,
Tenant may deliver to Landlord, as security pursuant to said Article, an
irrevocable, clean, commercial letter of credit in the amount of the Security
Deposit (the "Letter"), issued by (or which may be presented for payment at) a
bank which is authorized by the State of New York to conduct banking business in
New York State and is a member of the New York Clearing House Association, in
the form annexed hereto as Exhibit "D". The Letter (and each renewal thereof)
shall (i) be for a term of not less than one (1) year (except that the last
Letter shall be for a term expiring sixty (60) days after the Expiration Date);
(ii) expressly provide for the issuing bank to notify Landlord in writing not
less than thirty (3) days prior to its expiration as to its renewal or
non-renewal, as the case may be, and if not so renewed each year (or later
period of expiration) shall be immediately available for Landlord to draw up to
the full amount of such credit (to be held as cash security pursuant to said
Article 76); and (iii) be fully transferable by the beneficiary thereof (and its
successors and assigns) without charge. Not less than thirty (30) days prior to
the expiration date of each Letter (and every renewal thereof), Tenant shall
deliver to Landlord a renewal or new Letter subject to all of the conditions
aforesaid, all to the intent and purposes, that a Letter in the amount of the
Security Deposit shall be in effect during the entire term of this Lease.
Failure by Tenant to comply with the provisions of this Article shall be deemed
a default hereunder entitling Landlord to exercise any and all remedies as
provided in this Lease for a default in the payment of Minimum Rent and, to draw
on the existing Letter up to its full amount.
77. NOTICE OF DAMAGE. Tenant shall give prompt notice to Landlord of any
fire, accident, loss or damage or dangerous or defective condition materially
affecting the Demised Premises or any party thereof or the fixtures or other
property of Landlord therein of which Tenant has any knowledge. Such notice
shall not, however, be deemed or construed to impose upon Landlord any
obligation to perform any work to be performed by Tenant under this Lease or not
otherwise hereunder undertaken to be performed by Landlord.
78. LEASE NOT BINDING UNLESS EXECUTED. Submission by Landlord of the within
Lease for execution by Tenant shall confer no rights nor impose any obligations
on either party unless and until both Landlord and Tenant shall have executed
this Lease, and duplicate originals thereof shall have been delivered to the
respective parties.
79. AGENCY. Crescent Properties, Inc. is acting as Agent only and shall not
in any event be held liable to the Landlord or to Tenant for the fulfillment or
non-fulfillment of any of the terms, covenants or conditions of this Lease or
for any action or proceedings that may be taken by Landlord against Tenant, or
by
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Tenant against Landlord including, but not limited to, any such action arising
out of, the performance or non-performance by Agent or any act pursuant to
Landlord's direction. Any waiver of Landlord's liability hereunder, including,
but not limited to, any waiver of subrogation rights, shall apply with equal
force and effect to such Agent.
80. RESTRICTIONS ON RENTS. If at the commencement of, or at any time or times
during the term of this Lease, the Minimum Rent or Additional Rents reserved in
this Lease shall not be fully collectible by reason of any federal, state,
county or city law, proclamation, order or regulation, or direction of any
public officer or body pursuant to law, Tenant shall enter into such
agreement(s) and take such other steps as Landlord may request and as may be
legally permissible to permit Landlord to collect the maximum rents which may,
from time to time during the continuance of such legal rental restriction, be
legally permissible (and not in excess of the amounts reserved therefor under
this Lease). Upon the termination of such legal rent restriction prior to the
expiration of the term of this Lease, (a) the rents shall become and thereafter
be payable hereunder in accordance with the amounts reserved in this Lease for
the periods following such termination, and (b) Tenant shall pay to Landlord,
if legally permissible, an amount equal to the Minimum Rent and Additional Rent
which would have been paid pursuant to this Lease but for such legal rent
restriction, less the rents paid by Tenant to Landlord during the period(s) any
legal rent restriction was in effect.
81. ENTIRE AGREEMENT. No earlier statement or prior written matter shall have
any force or effect. Tenant agrees that it is not relying on any
representations or agreements other than those contained in this Lease. This
agreement shall not be modified or cancelled except in writing subscribed by
all of the parties thereto.
82. SAVING PROVISION. If any provision of this Lease, or its application to
any situation shall be invalid or unenforceable to any extent, the remainder of
this Lease, or the application thereof to situations other than that as to
which it is invalid or unenforceable, shall not be affected thereby, and every
provision of this Lease shall be valid and enforceable to the fullest extent
permitted by law.
83. LANDLORD'S WORK. A. Tenant, at Tenant's expense has prepared a set of
plans (the "Plans") which contains complete information and dimensions
necessary for the construction and finishing of the Demised Premises and for
the engineering in connection therewith. The Plans have been submitted by
Tenant to Landlord for Landlord's approval simultaneously herewith.
In accordance with the Plans, Landlord, at Landlord's expense, and except
as otherwise expressly specified in this lease, will make and complete in and
to the Demised Premises the work and installations (hereinafter called
"Landlord's Work") pursuant to the Work Letter attached hereto as Exhibit "C".
B. In all instances where Tenant is required to supply information with
regard to Landlord's Work, Tenant shall supply the same within two (2) business
days after written request therefor by Landlord.
C. Except as provided in this Lease, Landlord shall not be required to
spend any money or to do any work to prepare the Demised Premises for Tenant's
occupancy. The specification of Landlord's Work represents the limit of
Landlord's responsibilities in connection with the preparation of the Demised
Premises and except as so provided, Tenant shall take the Demised Premises
"as-is". Any other improvements, alterations or additions shall be performed by
Tenant, but subject to all of the terms, conditions and covenants of this Lease.
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Landlord agrees that it will use reasonable efforts to have Landlord's Work
commenced without delay and prosecuted without unnecessary interruption until
completion.
E. Tenant shall be permitted to enter into occupancy of the Demised
Premises for installation of its machinery, equipment and fixtures and
performance of its work, all as permitted by this lease prior to commencement of
the term at its sole risk, provided that such entry and work do not interfere in
any way with Landlord's performance of the work to be done by Landlord. At any
time during such period of prior entry, if Landlord notifies Tenant that
Tenant's entry or work is interfering with or delaying Landlord's performance of
Landlord's Work, Tenant shall forthwith discontinue any further work and shall
remove from the Demised Premises and shall cause its workmen or contractors to
remove therefrom, any equipment, materials or installations which are the
subject of Landlord's notice.
F. All work performed by Landlord, including the building air
conditioning installation, shall, upon installation, become Landlord's property
and shall be surrendered at the expiration or sooner termination of the term
of this lease, in good condition, reasonable wear and tear excepted.
G. If Landlord shall be delayed in substantially completing its said
work by reason of but not limited to Tenant's request for substitutions or for
materials, work or installations other than, or in addition to, the standard
work provided herein or by reason of the performance by any party or contractor
employed by Tenant of any work thereto on behalf of the Tenant, or by reason of
Tenant's changes in its plans or giving authorizations or approvals ("Tenant's
Delay"), then and in any of such events, the commencement date of the term of
this Lease and of Tenant's obligations thereunder for the payment of rent shall
be accelerated by the number of days of Tenant's Delay.
H. If Tenant fails to furnish the plans, specifications and information
provided for in Article 83 of the Lease within the time prescribed therein and
if Landlord shall thereby be delayed in completing the work, then Tenant agrees
to pay to Landlord a sum equal to the increased cost to Landlord for labor,
materials and engineering, if any, involved in performing Landlord's Work as
shall be occasioned due to Tenant's Delay in timely furnishing Tenant's Plans as
required in Paragraph B above. Such increased costs to be paid by Tenant shall
be established by Landlord's submitting to Tenant estimates by comparing
Landlord's actual cost of labor and materials involved in performing Tenant's
work with costs that would have been involved had such work been performed
thirty (30) days after due date of plans.
I. On or before September 20, 1990 Landlord shall send written notice to
Tenant advising Tenant of the date Landlord reasonably expects Landlord's Work
to be substantially complete and the expected Commencement Date of this Lease
(the "Expected Commencement Date"). If Landlord fails to send such notice on or
before September 25, 1990, then the Expected Commencement Date shall be deemed
to be January 25, 1991. In the event Landlord fails to substantially complete
Landlord's Work prior to such Expected Commencement Date and such delay in
completing Landlord's Work is not attributable, in whole or in part to (i) any
act or omission of Tenant, including, without limitation, such acts or omissions
set forth in subparagraphs G and H hereof or (ii) any cause beyond Landlord's
reasonable control, including, without limitation (x) strike(s), lockout(s), or
labor dispute(s), (y) inability to obtain labor or materials or restrictions,
regulations or controls, fire or other casualties,
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<PAGE> 34
[ILLEGIBLE]
Section 39D, Tenant shall be entitled to an additional rent credit equal to
$633.33 per day during January 1991, $667.67 per day during February 1991 and
$733.33 per day during March 1991 for each day that Landlord fails to
substantially complete Landlord's Work subsequent to the Expected Commencement
Date.
84. RIGHT OF FIRST OFFER TO LEASE. Notwithstanding anything to the contrary
contained herein, Tenant shall have the right of first offer (the "First Offer
Lease Right") to lease any portion of the Building which is immediately adjacent
to the Demised Premises ("Adjacent Premises") during the term of this Lease,
upon the following terms and conditions:
(a) The First Offer Lease Right shall be effective during the entire
term of this Lease, provided that at the time the First Offer Lease Right
arises, Tenant is not in default of any covenant of this Lease after notice
and the expiration of any cure periods therefor.
(b) Landlord shall not lease all or any portion of Adjacent Premises
during the term of this Lease unless Landlord shall have delivered to
Tenant an offer of lease (the "Lease Offer") containing all of the material
terms and conditions pursuant to which Landlord would agree to lease such
Adjacent Premises.
(c) If Tenant agrees to lease the Adjacent Premises upon the terms
and conditions set forth in the Lease Offer, it shall send to Landlord a
written notice of such acceptance (the "First Lease Offer Acceptance")
within thirty (30) days (the "First Lease Offer Acceptance Period")
following delivery to Tenant of the Lease Offer.
(d) If Tenant so sends the First Lease Offer Acceptance, Landlord and
Tenant shall execute and exchange a lease agreement containing the same
terms and conditions as set forth in this Lease except for the terms and
conditions set forth in the Lease Offer (the "First Offer Lease") as
provided herein. Failure of Tenant to send the First Lease Offer Acceptance
to Landlord within said thirty (30) day period or failure of Tenant to
execute the First Offer Lease within thirty (30) days after the expiration
of the First Offer Acceptance Period shall be deemed a waiver by Tenant of
its First Offer Lease Right and Landlord may lease the Adjacent Premises
upon all of the terms set forth in the Lease Offer or upon such other or
additional terms not less favorable to Landlord than those contained in the
Lease Offer within nine (9) months following the last day of the First
Lease Offer Acceptance Period. If, for any reason, Landlord does not
execute a written lease as provided herein within such nine (9) month
period as provided herein, the First Offer Lease Right set forth herein
shall again be applicable for the balance of the term of this Lease, and
the foregoing procedure shall be repeated.
(e) On a date (the "First Lease Offer Closing Date") which shall be
specified by Tenant in the First Lease Offer Acceptance, but which will not
be less than fifteen (15) nor more than thirty (30) days from the date of
the First Lease Offer Acceptance, Landlord and Tenant shall execute and
exchange original counterparts of the First Offer Lease.
(f) For the purposes hereof, the term "Adjacent Premises" shall mean
the sixth (6th) and eighth (8th) floors of the building known as 32 Union
Square East and the fifth (5th) floor in the building known as 24-30 Union
Square East.
85. TENANT'S EXCLUSIVE RIGHT TO LEASE. Landlord hereby agrees that during the
term of this Lease, it will not lease any space in the Building to any other
stock photo agency, picture library
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<PAGE> 35
of Tenant and which enterprise is primarily engaged in the sale, leasing or
licensing of visual imagery, including photography, illustration, film, footage
or computer graphics without the written consent of Tenant, which Tenant agrees
not to unreasonably withhold. Nothing herein, however, shall prohibit Landlord
from leasing any space in the Building for use as an advertising or graphic arts
agency or studio, photography studio or similar uses to the foregoing. Any
dispute between Landlord and Tenant with respect to this paragraph 85 shall be
decided by arbitration. This Article 85 shall not apply to any existing lease,
lease renewal or modification or new lease with any person, firm or corporation
that presently is a tenant in the Building.
86. CERTIFICATE OF OCCUPANCY. Landlord agrees that at its sole cost and
expense it will obtain a temporary Certificate of Occupancy and thereafter a
permanent Certificate of Occupancy for the Building and the Demised Premises.
87. TWENTY-FOUR HOUR ACCESS. Landlord agrees that the Building will be open
[and the building will manned] twenty-four hours per day, seven (7) days a week
and subject to the terms and conditions of this Lease, Tenant will have access
to the Demised Premises at all times during the term of this Lease.
88. ROOF RIGHTS. Landlord agrees that the Demised Premises shall include the
area known as the "Roof" as shown on Exhibit "E", annexed hereto. Tenant agrees
to maintain the Roof in a clean and orderly condition and agrees to comply with
all of Landlord's rules and regulations governing the use of the Roof. Tenant
shall be responsible for all damage or injury to the Demised Premises or any
other parts of the Building and systems and equipment thereof, whether
requiring structural or nonstructural repairs caused by or resulting from the
carelessness, omission, neglect or improper conduct of Tenant, Tenant's
subtenant, agent, employees, invitees or licenses.
89. SUPPLEMENT TO ARTICLE 4. Anything contained in this Lease to the contrary
notwithstanding, in the event Landlord fails to make any repair which Landlord
is required to make under this Lease and such repair does not result from, nor
was it caused by carelessness, omission, neglect or improper conduct of Tenant,
to all (or to any identifiable portion) of the Demised Premises and the same
shall continue for a period beyond seven (7) days after Landlord's receipt of
notice thereof, then and on condition that Tenant shall, as a result of
Landlord's failure to make such repairs, discontinue conducting its business
within all (or an identifiable portion) of the Demised Premises, of which fact
Tenant shall give prompt written notice to Landlord, the rent payable hereunder
shall completely abate in the event of such discontinuance of doing business by
Tenant in all of the Demised Premises (or proportionately abate in the event of
such portion of the Demised Premises) during the period from and including the
day following the aforementioned seven (7) day period to and including the
sooner to occur of: (i) the day Landlord substantially completes repairs to the
Demised Premises; or (ii) the day preceding the day Tenant shall sooner again
commence doing business within the Demised Premises (or such identifiable
portion thereof).
90. Replace the first complete sentence in paragraph 83(D) with the
following: D. Landlord agrees to complete Landlord's Work by May 1, 1991,
except for delays caused by force majeure, strikes, acts of war or other causes
outside Landlord's control. In the event Landlord fails to complete Landlord's
Work by May 1, 1991, Tenant shall give ten (10) days written Notice to Landlord
setting forth in detail the unfinished work. If the unfinished Landlord's Work
is not completed by the end of the ten (10) days following receipt of such
Notice, Tenant shall be authorized to take such reasonable steps, at reasonable
costs, to complete such work and to deduct such sums from the next rent
payment(s) due Landlord.
32
<PAGE> 1
EXHIBIT 10.11
AMENDMENT OF LEASE
AMENDMENT OF LEASE dated this day of 17th day of October, 1994 by and
between the ESTATE OF S. KLEIN, having an office at 32 Union Square East, New
York, New York 10003 ("Landlord") and F.P.G. INTERNATIONAL INC., having an
office at 24-30 Union Square East, New York, New York 10003 ("Tenant").
WITNESSETH:
WHEREAS, Landlord is the fee owner of certain premises located at 24-32
Union Square East, New York, New York (the "Building"); and
WHEREAS, Landlord and 24-32 Union Square East Associates Limited
Partnership (the "Net Lessee") entered into a ground lease for portions of the
Building dated as of October 1, 1988 as amended by an agreement dated June 1,
1989 (collectively, the "Ground Lease"); and
WHEREAS, the Net Lessee and Tenant entered into a sublease dated August
9, 1990 (the "Lease") whereby the Net Lessee leased to Tenant certain premises
in-the Building, including the entire penthouse floor, the entire sixth floor
south and the entire seventh floor north (the "Existing Premises"); and
WHEREAS, pursuant to a Lease Surrender Agreement dated as of June 30,
1993, Landlord terminated the Ground Lease and released the Net Lessee from
further obligations thereunder and agreed to and has continued to recognize
Tenant as its direct Tenant under the Lease; and
<PAGE> 2
WHEREAS, Landlord and Tenant desire to modify and amend the terms of the
Lease to extend the term thereof, to add the entire fifth floor - south of the
Building (the "New Premises") to the Existing Premises and to make certain other
adjustments and modifications to the Lease.
NOW THEREFORE, in consideration of the terms, conditions and covenants
herein set forth the parties hereto agree as follows:
1. Landlord hereby leases to Tenant and Tenant hereby accepts from
Landlord the entire New Premises for a term of ten (l0) years commencing on the
date hereof (the "Commencement Date"). The New Premises and the Existing
Premises are sometimes hereinafter referred to, collectively, as the "Premises".
The term of the Lease shall be extended so that same shall be for a term of ten
(10) years commencing on the Commencement Date and expiring on the tenth (10th)
anniversary of the Commencement Date (the "Expiration Date"). All of the terms,
covenants and conditions of the Lease which refer to (the "Term") shall be
deemed to refer to a ten (10) year term commencing on the Commencement Date
hereof.
2. In addition to the Minimum Rent set forth in Article 39 B. of the
Lease, Tenant shall pay additional Minimum Rent for the New Premises as follows:
A. Minimum Rent:
(i) $161,000 per annum ($13,416.67 per month) during the period
commencing on the Commencement Date and continuing to
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<PAGE> 3
and including the next day proceeding the second anniversary of the Commencement
Date, both dates inclusive;
(ii) $166,635 per annum ($13,886.25 per month) during the period
commencing on the second anniversary of the Commencement Date and continuing to
and including the day next proceeding the third anniversary of the Commencement
Date, both dates inclusive;
(iii) $172,467.23 per annum ($14,372.27 per month) during the period
commencing on the third anniversary of the Commencement Date and continuing to
and including the day next proceeding the fourth anniversary of the Commencement
Date, both dates inclusive;
(iv) $178,503.58 per annum ($14,875.30 per month) during the period
commencing on the fourth anniversary of the Commencement Date and continuing to
and including the day next proceeding the fifth anniversary of the Commencement
Date, both dates inclusive;
(v) $184,751.20 per annum ($15,395.93 per month) during the period
commencing on the fifth anniversary of the Commencement Date and continuing to
and including the day next proceeding the sixth anniversary of the Commencement
Date, both dates inclusive;
(vi) $191,217.50 per annum ($15,934.79 per month) during the period
commencing on the sixth anniversary of the Commencement Date and continuing to
and including the day next proceeding the seventh anniversary of the
Commencement Date, both dates inclusive;
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<PAGE> 4
(vii) $197,910.11 per annum ($16,492.51 per month) during the period
commencing on the seventh anniversary of the Commencement Date and continuing to
and including the day next proceeding the eighth anniversary of the Commencement
Date, both dates inclusive;
(viii) $204,836.96 per annum ($17,069.75 per month) during the period
commencing on the eighth anniversary of the Commencement Date and continuing to
and including the day next proceeding the ninth anniversary of the Commencement
Date, both dates inclusive; and
(ix) $212,006.25 per annum ($17,667.19 per month) during the period
commencing on the ninth anniversary of the Commencement Date and continuing to
and including the day next proceeding the tenth anniversary of the Commencement
Date, both dates inclusive.
B. "Additional Rent" shall consist of all other sums of money as shall
become due and payable by Tenant to Landlord or to third parties hereunder (for
default in payment of which Landlord shall have the same remedies as a default
in payment of Minimum Rent). All Minimum Rent and Additional Rent shall be made
payable to: Estate of S. Klein, 32 Union Square East, New York, New York 10003,
or as may be otherwise provided in a written notice by Landlord to Tenant.
C. Notwithstanding anything herein to the contrary, provided that Tenant
is not in default of any covenant of this Lease, Tenant shall be entitled to a
credit against the Minimum Rent due for the New Premises in the amount of
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<PAGE> 5
$93,916.69, to be credited in seven (7) equal monthly installments of $13,416.67
each as an offset against the first seven (7) installments of Minimum Rent due
for the New Premises under this Lease.
D. The parties hereto acknowledge that the Commencement Date of the
Lease for the Existing Premises was March 1, 1991 and that the Term has been
extended so that the Expiration Date shall be the tenth (10th) anniversary of
the Commencement of the Lease for the New Premises. Therefore, the Minimum Rent
set forth in Article 39 B. of the Lease for the Existing Premises shall be
modified to provide that commencing March 1, 2001, Minimum Rent for the Existing
Premises shall be as follows:
(i) $572,220.40 per annum ($47,685.03 per month) during the period from
March 1, 2001 to and including February 28, 2002;
(ii) $592,248.11 per annum ($49,354.01 per month) during the period from
March 1, 2002 to and including February 28, 2003;
(iii) $612,976.80 per annum ($51,081.40 per month) during the period
from March 1, 2003 to and including February 29, 2004;
(iv) $634,430.98 per annum ($52,869.25 per month) during the period from
March 1, 2004 to and including the day next preceding the Expiration Date of
this Lease as set forth in Paragraph 1 hereof.
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<PAGE> 6
3. Tenant acknowledges that it is accepting delivery of the New
Premises, "as is" and that Landlord shall have no obligation or responsibility
to perform any work, installations or alterations necessary or desirable to make
the New Premises suitable for Tenant's use and occupancy except as may be set
forth on Exhibit "A" as "Landlord's Work". All of Tenant's Work to make the New
Premises suitable for Tenant's use and occupancy shall be performed in
accordance with the provisions of Article 40 of the Lease.
4. Tenant, at Tenant's sole cost and expense, shall obtain electricity
for the New Premises directly from the utility company furnishing electricity to
the Building. The cost of such service shall be paid by Tenant directly to such
utility company.
5. Article 42 A. of the Lease shall be modified only with respect to the
New Premises to provide that the Base Tax shall be the fiscal period of July 1,
1994 through June 30, 1995 and "Tenant's Share" for the New Premises shall be
7.3%. In all other respects the provisions of Article 42 shall be applicable to
the New Premises, utilizing the Base Tax and Tenant's Share as set forth in this
paragraph.
6. Landlord has advised Tenant and Tenant so acknowledges that there are
no existing mortgages or ground leases to which the Lease is subject and
subordinate. The Mortgage and Ground Lease referred to in Article 51C have been
satisfied, discharged and/or terminated so that the Building is no longer
encumbered by a mortgage or a ground lease.
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<PAGE> 7
7. Article 53 of the Lease is hereby deleted and replaced with the
following Article 53:
"53. BROKER. Tenant covenants, warrants and represents that except for
Mr. Harvey Marks of First New York Realty Co., Inc., there were no
brokers instrumental in consummating this Lease and no conversations or
negotiations were had with any broker concerning the renting or leasing
of the New Premises. Tenant agrees to pay any commissions that may be
due to said broker by and pursuant to a separate writing. Tenant agrees
to indemnify, defend and hold and save Landlord harmless against any and
all liability from any claims of any other broker who claims to have
dealt with the Tenant, including, without limitation, the cost of
counsel fees and disbursements in connection with the renting of the New
Premises."
8. Article 73 B. of the Lease is hereby modified to provide that all
notices to Landlord shall be sent to the address set forth at the head of this
document with a copy to Tenzer, Greenblatt, Fallon & Kaplan, 405 Lexington
Avenue, New York, New York 10174, attention: Kenneth Gordon, Esq.
9. Landlord acknowledges that Tenant shall not be required to post any
security deposit for the New Premises.
10. Article 79 of the Lease is hereby deleted.
11. Article 83 I. of the Lease is hereby deleted.
12. Article 86 of the Lease is hereby modified to provide that the
certificate of occupancy for the New Premises (5th floor) is as shown on the
annexed certified certificate of occupancy for the Building.
13. Article 90 of the Lease is hereby deleted.
14. RIGHT OF FIRST REFUSAL. Notwithstanding anything to the contrary
contained in the Lease, Tenant shall have a right
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<PAGE> 8
of first refusal to lease the fourth floor of the Building on the same terms,
covenants and conditions as may be set forth in any bona fide offer received by
Landlord from a third party, in writing, seeking to rent the fourth floor of the
Building for such purposes and uses as may be permitted by law (the "Offer").
Landlord, upon receipt of the Offer, shall promptly transmit same to Tenant who
shall have a period of 15 days to match the Offer and all of its terms,
covenants and conditions (the "Acceptance Period"). If Tenant agrees to meet the
terms of the Offer, it shall send to Landlord a written notice of acceptance of
the offer within the Acceptance Period. Failure of Tenant to accept the Offer
within the Acceptance Period or failure of Tenant to execute a lease containing
the same terms and conditions as set forth in the Offer (which lease shall be
deemed to be an amendment or an extension of the terms, covenants and conditions
of this Lease, as amended) shall be deemed a waiver by Tenant of its right of
first refusal and Landlord may lease the fourth floor premises upon all of the
terms set forth in the Offer or upon such other or additional terms not less
favorable to Landlord than those contained in the Offer within nine months
following the last day of the Acceptance Period. If, for any reason, Landlord
does not execute a written lease as provided herein within such nine month
period as provided herein, the right of first refusal set forth herein shall
again be applicable for the balance of the term of this Lease and the foregoing
procedure shall be repeated for any subsequent offers to lease the fourth floor
of the Building.
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<PAGE> 9
15. Landlord shall make available to Tenant the non-exclusive use of a
passenger elevator in the Building which services the 5th floor, for use, during
the construction period only, for the performance by Tenant of Tenant's Work in
the New Premises; provided, however, that Tenant shall utilize the elevator to
transport suitable construction material only in a manner which will not damage
the elevator cab, controls, door, frames or cables and further provided Tenant
provides suitable coverings and pads for the floor, walls and doors of the
elevator cab and removes same and cleans any debris after each use thereof.
Tenant shall maintain and keep this elevator in good order and condition and
hereby indemnifies and hold Landlord harmless of and from any damage, cost or
liability which may be incurred by reason of Tenant's use of such elevator to
transport construction materials. From and after completion of Tenant's Work,
Tenant shall be entitled to use and shall use the elevator for passenger
purposes and light deliveries only.
16. Notwithstanding anything contained in this Lease to the contrary,
provided Tenant is not in default under this Lease as of the date of Tenant's
Termination Notice, Tenant shall have the right to terminate this Lease, as to
the New Premises (5th floor) only, at any time after the 3rd anniversary of this
Amendment of Lease (the "Early Termination Date") by written notice ("Tenant's
Termination Notice") delivered to Landlord six (6) months prior to such proposed
Early Termination Date. Tenant's Termination Notice shall be accompanied by
Tenant's certified or bank check in an amount equal to six (6) months rent
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<PAGE> 10
with respect to the delivery of Tenant's Termination Notice as and for an early
termination fee. Upon timely delivery of Tenant's Termination Notice and the
aforementioned check and Tenant's continued compliance with the terms of this
Lease, including all payment of rent and additional rent to and including the
Early Termination Date, this Lease as to the New Premises (5th floor) only will
expire on the Early Termination Date as if such date were the Expiration Date
set forth herein and Tenant shall vacate the New Premises (5th floor) only on or
before the Early Termination Date leaving the same in the condition otherwise
required upon the expiration or sooner Termination of this Amendment of Lease.
17. Except as otherwise modified or amended herein, all of the terms,
covenants and conditions of the Lease are deemed to be ratified and approved as
if set forth at length herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
LANDLORD:
ESTATE OF S. KLEIN
By: /s/ SANFORD SAIDEMAN
------------------------------------------
Sanford Saideman, Administrator
TENANT:
F.P.G. INTERNATIONAL, INC.
By: /s/ BARBARA ROBERTS
------------------------------------------
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EXHIBIT A
LANDLORD'S WORK
A. Landlord agrees to furnish and install in accordance with all
applicable building codes the following Building Standard Work:
All Landlord's Work shall be performed in connection with Tenant's
occupancy of the fifth floor of the Building (the "New Premises") and shall be
performed expeditiously and completed prior to the date Tenant takes occupancy
of the New Premises for purposes of conducting its business therein Landlord's
work will not materially interfere with Tenant's performance of Tenant's Work.
Notwithstanding the aforesaid, items A, B, C and E will not be commenced
until Tenant has authorized Landlord to do so in writing; such work will be
completed by Landlord within 21 business days of Tenant's notification.
A. [Deleted].
B. That portion of the fifth floor slab shown on the plans to be
provided shall be leveled so that the fifth floor slab meets all applicable code
and governmental requirements.
C. That portion of the ceiling as shown on the plans to be provided
shall be fire proofed so that the ceiling meets all code and governmental
requirements.
D. Existing air conditioning system on the fifth floor of the Building
shall be delivered to Tenant in good working condition. Landlord agrees to
provide one year warranty on performance of such units.
E. Landlord will install four thermostat controls for the heating
servicing the fifth floor of the Building at locations designated by Tenant and
noted on the plans to be provided.
F. Existing fifth floor bathrooms will be renovated, where required, to
comply with all ADA requirements and shall be delivered to Tenant in a finished
condition.
G. All exterior windows in the New Premises are to be placed in good
working condition, free of water and air leakage.
H. Landlord shall install a "lock-out" device in at least one elevator
servicing the 5th floor.
<PAGE> 1
EXHIBIT 10.12
SECOND AMENDMENT OF LEASE
AMENDMENT OF LEASE dated this 1st day of June, 1995 by and between the
ESTATE OF S. KLEIN, having an office at 32 Union Square East, New York, New York
10003 ("Landlord") and F.P.G. INTERNATIONAL INC., having an office at 24-30
Union Square East, New York, New York 10003 ("Tenant").
W I T N E S E T H:
WHEREAS, Landlord is the fee owner of certain premises located at 24-32
Union Square East, New York, New York (the "Building"); and
WHEREAS, Landlord and 24-32 Union Square East Associates Limited
Partnership (the "Net Lessee") entered into a ground lease for portions of the
Building dated as of October 1, 1988 as amended by an agreement dated June 1,
1989 (collectively, the "Ground Lease"); and
WHEREAS, the Net Lessee and Tenant entered into a sublease dated August
9, 1990 (the "Lease") whereby the Net Lessee leased to Tenant certain premises
in the Building, including the entire penthouse floor, the entire sixth floor
south and the entire seventh floor north; and
WHEREAS, pursuant to a Lease Surrender Agreement dated as of June 30,
1993, Landlord terminated the Ground Lease and released the Net Lessee from
further obligations thereunder and agreed to and has continued to recognize
Tenant as its direct Tenant under the Lease; and
<PAGE> 2
WHEREAS, pursuant to an Amendment of Lease dated October 17, 1994 (the
"First Amendment"), Landlord and Tenant extended the term of the Lease and added
the entire fifth floor -south of the Building (said fifth floor premises,
together with the entire penthouse floor, the entire sixth floor south and the
entire seventh floor north, is hereinafter referred to collectively as the
"Existing Premises"); and
WHEREAS, Landlord and Tenant now desire to further modify and amend the
terms of the Lease by further extending the term thereof, by adding the entire
rentable area on the fourth floor (the "New Premises") to the Existing Premises
and by making certain other adjustments and modifications to the Lease.
NOW THEREFORE, in consideration of the terms, conditions and covenants
herein set forth the parties hereto agree as follows:
1. Landlord hereby leases to Tenant and Tenant hereby accepts from
Landlord the entire New Premises for a term of approximately ten (10) years
commencing on June 1, 1995 (the "Commencement Date"). The New Premises and the
Existing Premises are sometimes hereinafter referred to, collectively, as the
"Premises". The New Premises, together with the Existing Premises, shall be the
"Demised Premises" for all purposes of the Lease. The term of the Lease shall be
extended so that same shall be for a term of approximately ten (10) years
commencing on the Commencement Date and expiring on May 31, 2005 (the
"Expiration Date"). All of the terms, covenants and conditions of the Lease
which refer to the term of the Lease (the "Term") shall be deemed to refer to an
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<PAGE> 3
approximately ten (10) year term commencing on the Commencement Date hereof.
2. In addition to the Minimum Rent set forth in Article 39 B. of the
Lease, as modified by Paragraphs 2A and 2D of the First Amendment, Tenant shall
pay additional Minimum Rent for the New Premises as follows:
A. Minimum Rent:
(i) $170,000 per annum ($14,166.67 per month) during the period
commencing on the Commencement Date and ending on May 31, 1996:
(ii) $175,950 per annum ($14,662.50 per month) during the period
commencing on the June 1, 1996 and ending on may 31, 1997;
(iii) $182,108.25 per annum ($15,175.69 per month) during the period
commencing on June 1, 1997 and ending on May 31, 1998;
(iv) $188,482.04 per annum ($15,706.84 per month) during the period
commencing on June 1, 1998 and ending on May 31, 1999;
(v) $195,078.91 per annum ($16,256.58 per month) during the period
commencing on June 1, 1999 and ending on May 31, 2000;
(vi) $201,906.67 per annum ($16,825.56 per month) during the period
commencing on June 1, 2000 and ending on May 31, 2001;
(vii) $208,973.40 per annum ($17,414.45 per month) during the period
commencing on June 1, 2001 and ending on may 31, 2002;
(viii) $216,287.47 per annum ($18,023.95 per month) during the period
commencing on June 1, 2002 and ending on May 31, 2003;
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<PAGE> 4
(ix) $223,857.53 per annum ($18,654.79 per month) during the period
commencing on June 1, 2003 and ending on May 31, 2004; and
(x) $231,692.54 per annum ($19,307.71 per month) during the balance of
the within Term.
B. Notwithstanding anything herein to the contrary, provided that Tenant
is not in default of any covenant of the Lease, Tenant shall be entitled to a
credit against the Minimum Rent due for the New Premises in the amount of
$99,166.67, to be credited in seven (7) equal monthly installments of $14,166.67
each as an offset against the first seven (7) installments of Minimum Rent due
for the New Premises under this Lease.
C. The parties hereto acknowledge that the Expiration Date for the
Existing Premises is October 31, 2004 and that Term has been extended so that
the Expiration Date shall be May 31, 2005. Therefore, the Minimum Rent set forth
in Article 39 B. of the Lease for the Existing Premises, as modified by
Paragraph 2A and 2D of the First Amendment, shall be modified to provide that
commencing November 1, 2004, Minimum Rent for the Existing Premises shall be
$876,062.53 per annum ($73,005.21 per month) during the period from November 1,
2004 through May 31, 2005.
3. Tenant acknowledges that it is accepting delivery of the New
Premises, "as is" (except as provided in Paragraph 13 hereof), and that Landlord
shall have no obligation or responsibility to perform any work, installations or
alterations necessary or desirable to make the New Premises suitable for
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Tenant's use and occupancy. All of Tenant's work to make the New Premises
suitable for Tenant's use and occupancy shall be performed in accordance with
the provisions of Articles 3 and 40 of the Lease.
4. Tenant, at Tenant's sole cost and expense, shall obtain electricity
for the New Premises directly from the utility company furnishing electricity to
the Building. The cost of such service shall be paid by Tenant directly to such
utility company. Landlord will permit its electric feeders, risers and wiring
serving the New Premises to be used by Tenant to the extent available and safely
capable of being used for such purpose. Any additional risers, feeders, meters
or other equipment or service proper or necessary to supply Tenant's electrical
requirements, upon written request of Tenant, will be installed by a contractor
approved by Landlord, at the sole cost and expense of Tenant, if in Landlord's
sole judgment, the same are necessary and will not cause or create a dangerous
or hazardous condition or entail excessive or unreasonable alterations, repairs
or expense or interfere with or disturb other tenants or occupants. Rigid
conduit only will be allowed.
5. Article 42 A. of the Lease shall be modified only with respect to the
New Premises to provide that the Base Tax shall be the fiscal period of July 1,
1995 through June 30, 1996 and "Tenant's Share" for the New Premises shall be
7.3%. In all other respects the provisions of Article 42 shall be applicable to
the New Premises, utilizing the Base Tax and Tenant's Share as set forth in this
paragraph.
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6. Solely with respect to a subleasing of all or any portion of the New
Premises and solely during the initial ten (10) year term of this Second
Amendment: (a) Landlord shall not have the option set forth in Subparagraph
B(ii) of Article 48 of the Lease or the option to require Tenant to execute a
sublease to Landlord or Landlord's designee as set forth in Paragraph C of said
Article 48, and, (b) the financial condition of the proposed subtenant of the
New Premises, as set forth in condition "(i)" of said Paragraph C, shall not be
a basis for Landlord's withholding of consent so long as (x) F.P.G.
International, Inc. is the Tenant under the Lease, (y) F.P.G. International,
Inc. occupies at least a majority of the rentable area of the entire Demised
Premises, and (z) F.P.G. International, Inc. has a net worth at least equal to
its net worth as of the date of this Agreement (copies of Tenant's financials
verifying such net worth to be submitted to Landlord upon request), (c) on line
8 of condition "(iv)" of said Paragraph C, after the word "Penthouse", add or
"Fourth Floor"; and (d) condition "(v)", of said Paragraph C shall be deleted in
its entirety.
7. Article 53 of the Lease is hereby deleted and replaced with the
following Article 53:
"53. BROKER. Tenant covenants, warrants and represents that there were
no brokers instrumental in consummating this Lease and no conversations
or negotiations were had with any broker concerning the renting or
leasing of the New Premises. Tenant agrees to indemnify, defend and hold
and save Landlord harmless against any and all liability from any claims
of any broker who claims to have dealt with the Tenant, including,
without limitation, the cost of counsel fees and
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disbursements in connection with the renting of the New Premises."
8. The New Premises shall be kept clean by Tenant, at its expense, in
accordance with the requirements of Article 29 and Paragraph G of Article 55 of
the Lease.
9. The percentage "fifteen (15%) percent," as set forth in Article 67 of
the Lease, shall be increased to "thirty (30%) percent".
10. Landlord acknowledges that Tenant shall not be required to post
any security deposit for the New Premises.
11. Article 86 of the Lease is hereby modified to provide that the
certificate of occupancy for the New Premises (4th floor) is as shown on the
annexed certified certificate of occupancy for the Building.
12. Paragraph 14 of the First Amendment is hereby deleted in its
entirety.
13. Landlord shall, at its sole cost and expense, comply with the
provisions of the Americans with Disabilities Act insofar as it, relates solely
to the bathrooms of the New Premises. Such work shall be performed by Landlord
within a reasonable time following the Commencement Date.
14. A. Solely with respect to Tenant's occupancy of the New Premises and
subject to the provisions of Paragraph E hereof, Tenant shall have the right to
extend the term of this Second Amendment for two (2) additional terms of five
(5) years each, the first additional term (the "First Extension Term")
commencing on June 1, 2005 (hereinafter called the "Commencement
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Date of the First Extension Term") and the second additional term (the "Second
Extension Term") commencing on June 1, 2010 (hereinafter called the
"Commencement Date of the Second Extension Term") provided that:
1. Tenant shall give Landlord notice (hereinafter called the
"Extension Notice") of its election to extend the term of this lease at least
twelve (12) months, but not more than twenty-four (24) months, prior to the
expiration of the (a) initial term of this Second Amendment with respect to the
First Extension Term and (b) First Extension Term with respect to the Second
Extension Term, and
2. Tenant is not in default under the Lease and/or this Second
Amendment, as the case may be, as of the time of the giving of the Extension
Notice and the Commencement Date of the First Extension Term and the
Commencement Date of the Second Extension Term, as the case may be, and
3. With respect to the Second Extension Term, Tenant shall have
exercised its option with respect to the First Extension Term.
B. The Minimum Rent payable by Tenant to Landlord during the First
Extension Term and the Second Extension Term solely with respect to the New
Premises shall be a sum equal to ninety (90%) percent of the fair market rent
for the New Premises as determined as of the date occurring six (6) months prior
to the Commencement Date of the First Extension Term and the Commencement Date
of the Second Extension Term, as the case may be, (each such date is hereinafter
called a "Determination Date") and which
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<PAGE> 9
determination shall be made within a reasonable period of time after the
occurrence of the Determination Date pursuant to the provisions of Paragraph C
hereof, but such Minimum Rent shall in no event be less than the Minimum Rent in
effect under Paragraph 2A of this Second Amendment for the last month of the
immediately preceding term hereof (without giving effect to any temporary
abatement of Minimum Rent under the provisions of Article 9 or any other Article
of the Lease or this Second Amendment). In determining the fair market rent, the
provisions of Article 42 of the Lease (as modified by Paragraph 5 of this
Agreement) shall remain in effect during the First Extension Term and the Second
Extension Term with the same base period as set forth therein, and such base
period shall be recognized in making such determination of fair market value.
C. 1. Landlord and Tenant shall endeavor to agree as to the amount of
the fair market rent for the New Premises pursuant to the provisions of
Paragraph B hereof, during the thirty (30) day period following the
Determination Date. In the event that Landlord and Tenant cannot agree as to the
amount of the fair market rent within such thirty (30) day period following the
Determination Date, then Landlord or Tenant may initiate the arbitration process
provided for herein by giving notice to that effect to the other party, and the
party so initiating the arbitration process (such party hereinafter called the
"Initiating Party") shall specify in such notice the name and address of the
person designated to act as an arbitrator on its behalf. Within thirty (30) days
after the designation of such arbitrator, the
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<PAGE> 10
other party (hereinafter called the "Other Party") shall give notice to the
Initiating Party specifying the name and address of the person designated to act
as an arbitrator on its behalf. If the other Party fails to notify the
Initiating Party of the appointment of its arbitrator within the time above
specified, then the appointment of the second arbitrator shall be made in the
same manner as hereinafter provided for the appointment of a third arbitrator in
the case where the two arbitrators appointed hereunder and the parties are
unable to agree upon such appointment. The two arbitrators so chosen, shall meet
within ten (10) days after the second arbitrator is appointed and if, within
sixty (60) days after the second arbitrator is appointed, the two arbitrators
shall not agree, they shall together appoint a third arbitrator. In the event of
their being unable to agree upon such appointment within eighty (80) days after
the appointment of the second arbitrator, the third arbitrator shall be selected
by the parties themselves if they can agree thereon within a further period of
fifteen (15) days. If the parties do not so agree, then either party, on behalf
of both and on notice to the other, may request such appointment by the American
Arbitration Association (or organization successor thereto) in New York City in
accordance with its rules then prevailing.
2. Each party shall pay the fees and expenses of the one of the
two original arbitrators appointed by or for such party, and the fees and
expenses of the third arbitrator and all other expenses (not including the
attorneys fees, witness fees and similar expenses of the parties which shall be
borne separately by
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<PAGE> 11
each of the parties) of the arbitration shall be borne by the parties equally.
3. The majority of the arbitrators shall determine the fair
market rent of the New Premises and render a written certified report of their
determination to both Landlord and Tenant within sixty (60) days of the
appointment of the first two arbitrators or sixty (60) days from the appointment
of the third arbitrator is such third arbitrator is appointed pursuant to this
Paragraph; and the fair market rent, so determined, shall be applied to
determine the Minimum Rent pursuant to Paragraph B hereof.
4. Each of the arbitrators selected as herein provided shall have
at least ten (10) years experience in the leasing and renting of office space in
office buildings in the Borough of Manhattan, City of New York.
5. If Landlord notifies Tenant that the Minimum Rent for the New
Premises during the First Extension Term or the Second Extension Term, as the
case may be, shall be equal to the Minimum Rent for the immediately preceding
term, then the provisions of Subsection 1 of this Paragraph C shall be
inapplicable and have no force or effect.
6. In the event Landlord or Tenant initiates the arbitration
process and as of the Commencement Date of the First Extension Term or
Commencement Date of the Second Extension Term, as the case may be, the amount
of the fair market rent has not been determined, Tenant shall continue to pay
the Minimum Rent in effect under this Second Amendment for the last month of the
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<PAGE> 12
immediately preceding term and when such determination has been made, an
appropriate retroactive adjustment shall be made as of the Commencement Date of
the First Extension Term or Commencement Date of the Second Extension Term, as
the case may be.
7. The arbitration provisions of this Paragraph shall, solely
with respect to this Paragraph 14, supersede Article 60 of the Lease.
D. Except as provided in Paragraphs A and B hereof, Tenant's occupancy
of the New Premises during the First Extension Term and Second Extension Term,
as the case may be, shall be on the same terms and conditions as are in effect
immediately prior to the expiration of the immediately preceding term of this
Second Amendment, provided, however, (i) Tenant shall have no further right to
extend the term of this lease pursuant to this Paragraph 14, and (ii)
Subparagraph B of Paragraph 2, Paragraph 6 and Paragraph 13 of this Agreement
shall all be deleted in their entirety.
E. If Tenant does not send an Extension Notice pursuant to the
provisions of Paragraph A hereof, this Paragraph 14 shall have no force or
effect and shall be deemed deleted from this Second Amendment.
F. If this Second Amendment is renewed in accordance with the provisions
of this Article, then Landlord or Tenant can request the other party hereto to
execute an amendment to the Lease setting forth the exercise of Tenant's right
to extend the terms of this Second Amendment, the Minimum Rent and the last
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day of the relevant Extension Term (or a new lease on the form then in use for
the Building).
G. If Tenant exercises its right to extend the term of this
Second Amendment for an Extension Term pursuant to this Paragraph 14, the
phrases "the term of this Second Amendment" or "the term hereof" as used in this
Second Amendment shall be construed to include, when practicable, the relevant
Extension Term.
H. Notwithstanding anything to the contrary contained in this
Paragraph 14, Tenant shall not have the right to extend the term of the Lease
with respect to its occupancy of any portion of the Demised Premises other than
the New Premises.
15. Except as otherwise modified or amended herein, all of the terms,
covenants and conditions of the Lease are deemed to be ratified and approved as
if set forth at length herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
LANDLORD:
ESTATE OF S. KLEIN
By: /s/ SANFORD SAIDEMAN
------------------------------------------
Sanford Saideman, Administrator
TENANT:
F.P.G. INTERNATIONAL, INC.
By: /s/ BARBARA ROBERTS
------------------------------------------
Name:
Title: President
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STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On this 30 day of May, 1995, before me personally came BARBARA ROBERTS, to
me known, who, being by me duly sworn, did depose and say that (s)he resides at
299 West 12th Street, New York, NY 10014, that (s)he is the President of F.P.G.
INTERNATIONAL, INC., the corporation described in and which executed the
foregoing instrument, as Tenant; and that (s)he signed his/her name thereto by
order of the board of directors of said corporation.
ELAINE J.H. KRALL
---------------------------
Notary Public
ELAINE J.H. KRALL
Notary Public, State of New York
No. 41-4906502
Qualified in Queens County
Commission Expires September 21, 1995
<PAGE> 15
CERTIFICATE OF OCCUPANCY
[Copy Illegible]
<PAGE> 1
THIS LEASE is made the 13th day of December 1993 B E T W E E N the party named
in paragraph 1 of the First Schedule hereto (hereinafter called "the Landlord")
of the one part and the party or parties named in paragraph 2 of the First
Schedule hereto (hereinafter called "The Tenant") of the other part.
[PENALTY STAMP, DATED 2 FEB 1994]
[INLAND REVENUE PRODUCED
20 JAN 1994
FINANCE ACT 1931
H 3]
WITNESSETH as follows:
1. In this Lease save where the context otherwise requires the following
words and expressions shall have the meanings assigned to them hereunder:
1:1 "the Landlord" shall include the person or persons for the time being
entitled to the reversion immediately expectant on the term hereby granted
1:2 "the Tenant" shall include the successors in title to the Tenant
1:3 "the demised premises" shall mean the premises described in paragraph 3 of
the First Schedule hereto
1:4 "the Building" shall mean The Innovation Centre 225 Marsh Wall Docklands
London E14 9FW
1:5 "the Rent" shall mean the sum specified as the rent in paragraph 4 of the
First Schedule hereto (or such other sum as may be substituted therefor in
accordance with the provisions of the Fourth Schedule hereto)
1:6 "the Term" shall mean the term of years specified as the term in paragraph
5 of the First Schedule hereto
1:7 "Person" shall include a Company or other body legally capable of holding
land
2
<PAGE> 2
1:8 The masculine shall include the feminine and the singular the plural and
vice versa
1:9 Obligations undertaken (or to be undertaken) by more than a single person
are (or shall be) joint and several obligations
1:10 Any agreement by the Tenant not to do any act or thing shall be construed
as if it were an agreement not to do or permit or suffer such act or thing
1:11 Rights excepted reserved or granted to the Landlord shall be construed as
excepted reserved or granted to the Landlord the Superior Landlord and
all persons respectively authorised by it or them
1:12 A reference to a statute shall refer to the statute as amended at the
date hereof and shall include any subsequent statutory amendments or
re-enactment thereof
1:13 "the Bank" shall mean Midland Bank Plc or the Bank which is the successor
to the business of that Bank or if such Bank ceases to trade in
circumstances that no one Bank succeeds to that business such member of
the Committee of London Clearing Bankers as the Landlord nominates
1:14 "Base Rate" shall mean the published base rate from time to time of the
Bank but if no such rate shall be published two per centum above the rate
paid by the Bank from time to time on deposits of the minimum sum
accepted at interest for repayment on seven days notice
1:15 "Interest" is at the annual rate of four per centum above the Base Rate
for the time being compounded with rests the 30th June and 31st December
in each year of the Term
3
<PAGE> 3
1:16 Any covenant to pay interest shall be a covenant to pay interest at
the said rate both before and after judgment or arbitration award
1:17 "the Service Charge" shall mean the sum specified or referred to in
paragraph 6 of the First Schedule hereto
1:18 "the Advance Service Charge" shall mean the sum specified or referred
to in paragraph 9 of the First Schedule hereto
1:19 "the Insurance Rent" shall mean the sum specified or referred to in
paragraph 7 of the First Schedule hereto
1:20 "the Common Parts" shall mean the roads footpaths pavements car
parking areas (including the access to individual parking bays)
landscaped areas and other open areas entrance hall (including
reception and waiting areas) landings lifts lift shafts staircases
passages fire escape routes and all other areas which are from time
to time during the Term provided by the Landlord for common use and
enjoyment by the tenants and occupiers of the Building and all
persons expressly or by implication authorised by them
1:21 "the Permitted Use" shall mean the use specified as the permitted use
in paragraph 8 of the First Schedule hereto
1:22 "the Landlords Surveyor" means any person or firm who or the partners
in which shall be an associate or fellow of the Royal Institution of
Chartered Surveyors acting for the landlord including an employee of
the Landlord appointed to perform the function of a surveyor for any
purpose of this Lease
4
<PAGE> 4
1:23 "The Telephone Charge: means the proportion of the telephone calls
made to and from the Building attributable exclusively to the demised
premises and as determined by the Telephone Equipment and a copy of
the computer printout from the Telephone Equipment shall (save for
manifest or proven error) be conclusive of the same
1:24 "The Telephone Equipment" means all equipment (including the computer
for monitoring the same) installed in the Building from time to time
in order to provide a telephone service for the occupiers of the
Building other than telephone handsets or similar equipment installed
in individual units within the Building
1:25 "The Private Service" means such services as shall be provided by the
Landlord for the benefit of individual tenants within the Building
from time to time the cost of which is intended shall be borne only
by such tenants as shall use such services including (but without
prejudice to the generality of the foregoing):-
1:25:1 Secretarial and clerical services
1:25:2 Telegraphic facsimile transmission services
1:25:3 Photocopying services
1:25:4 Conference facility services
1:25:5 Audio/visual facility services
1:25:6 Any other service which may from time to time be provided by the
Landlord for the benefit of individual tenants within the Building
5
<PAGE> 5
1:26 "The Private Charge" means the amount payable by the Tenant monthly
in arrears in respect of the Tenants use of the Private Services
during the month in question and representing the cost of such
services as determined from time to time by the Landlord who shall
act reasonably in making that determination
1:27 "The Superior Lease" means a lease dated 1st May 1991 and made
between London Docklands Corporation (1) Carroll Investment
Corporation Limited (2)
1:28 "The Superior Landlord" means the persons for the time being entitled
to the reversion immediately expectant on the determination of the
term created by the Superior Lease together with any persons for the
time being entitled to the reversion immediately expectant on the
determination of any term created by any other lease ranking superior
to this Lease
1:29 "The Permitted Hours" means the hours between 8.30 a.m. and 6.00 p.m.
Mondays to Fridays (other than Bank and other Public Holidays) and
8.30 a.m. to 12.30 p.m. on Saturdays
1:30 "The Break Dates" means the 29th September 1996 and the 29th
September 1999
1:31 "Inherent Defect" means any defect in the Building or in anything
installed in or on the Building which is attributable to:-
1:31:1 Defective design or
1:31:2 Defective workmanship or materials or
1:31:3 Defective supervision of the construction of or the installation of
anything in or on the Building or
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<PAGE> 6
1:31:4 Defective preparation of the site upon which the Building is
constructed
2. IN CONSIDERATION of the Rent and of the covenants on the part of the
Tenant hereinafter contained the Landlord HEREBY DEMISES unto the Tenant ALL
THAT the demised premises TOGETHER WITH the easements and rights described in
Part 1 of the Second Schedule hereto EXCEPT AND RESERVING as mentioned in Part
2 of the Second schedule hereto SUBJECT AS specified in Part 3 of the Second
Schedule TO HOLD the same unto the Tenant for the Term PAYING THEREFOR to the
Landlord the following rents:-
2:1 Firstly the Rent
2:2 Secondly the Service Charge
2:3 Thirdly the Insurance Rent
2:4 Fourthly the Advance Service Charge (if any)
3. THE TENANT HERBY COVENANTS with the Landlord in manner following that
is to say:-
3:1:1 To pay the Rent the Serviced Charge the Insurance Rent and the Advance
Service Charge at the times and in the manner described and specified
in the First Schedule hereto and if so required to pay the Rent by
Bankers Standing Order or any other reasonable means (other than by
direct debit) which the Landlord may require
3:1:2 To pay to the Landlord within 21 days of written demand (which demand
shall be accompanied by a copy of the computer printout from the
Telephone Equipment) the Telephone Charge
3:1:3 To pay to the Landlord within 21 days of written demand the Private
Charge
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<PAGE> 7
3:2 To pay all existing and future rates (or any similar tax or outgoing
replacing the same from time to time) taxes assessments impositions
and outgoings assessed or imposed on or in respect of the demised
premises (whether assessed or imposed on the Landlord or the Tenant)
PROVIDED ALWAYS that if any of the foregoing shall be or become
assessed or imposed (without formal apportionment) upon or payable
(whether by the owner or the occupier) in respect of the demised
premises or any part or parts thereof together with other premises not
included in this Lease the Tenant shall pay and discharge (and
indemnify the Landlord against) the fair and proper proportion thereof
attributable to the demised premises or the part or parts thereof so
affected such fair and proper proportion to be determined by the
Landlord's Surveyor for the time being who shall act reasonably in
making such determination and whose decision shall save for any
manifest or proven error be final and binding upon the Tenant
3:3 If any rent or other sums payable by the Tenant to the Landlord under
this Lease shall be due but unpaid for fourteen days to pay to the
Landlord (if the Landlord shall so require) interest from the due date
until payment Provided that this subclause shall not prejudice any
other right or remedy in respect of such money
3:4 Without prejudice to Clauses 3:1:2 and 3:1:3 hereof to pay to the
suppliers thereof all charges for gas electricity water and other
services supplied to the demised premises
3:5:1 To repair and keep in good and substantial repair and condition
(including well and substantially decorated) the whole of the interior
of the demised
8
<PAGE> 8
premises (including without prejudice to the generality of the
foregoing the suspended ceilings the raised floors and other floor
surfaces all plasterwork and other internal finishes any fire exit
doors and normal entrance doors and door frames all windows and
window frames all electrical circuits and wiring and fittings within
the demised premises and/or solely serving the demised premises and
all partitions and fixtures and fittings within the demised premises
and at the expiration or sooner determination of the Term quietly
yield up to the Landlord the demised premises (including all additions
and improvements made thereto) in such good and substantial repair and
condition and properly cleaned and decorated Provided that this
sub-clause shall not apply to damage by fire and other perils
specified in Clause 3 of the Eighth Schedule hereto unless and to the
extent that any act or omission of the Tenant renders the insurance
money irrecoverable Provided further that nothing in this Lease
contained shall oblige the Tenant to repair any damage to the demised
premises arising out of an Inherent Defect nor shall the Tenant be
obliged to rectify any Inherent Defect
3:5:2 As soon as reasonably possible after the Tenant becomes aware of the
same or should reasonably have become aware of the same to give
notice to the Landlord and the Superior Landlord of any defect or
need of repair or renewal arising to the demised premises which would
or might result in the Landlord and/or the Superior Landlord becoming
liable to third parties by reason of the provisions of the Defective
Premises Act 1972 or which would or might give rise to an obligation
on the Landlord to do or refrain from doing any act or thing in order
to comply with its duty of care imposed on the Landlord
9
<PAGE> 9
pursuant to such provisions and insofar as any such defect or need of
repair or renewal as aforesaid shall be the responsibility of the Tenant
under this Lease to indemnify the Landlord (to the extent that it can so
require) against all liability and costs arising in respect of any
notice claim or demand costs and proceedings made or brought thereunder
and furthermore (without prejudice to the foregoing) to indemnify and
keep indemnified the Landlord and the Superior Landlord from and against
any losses claims actions costs demands or other liability arising from
a failure to give such notice as aforesaid and furthermore at all times
to display and maintain all notices (including the wording thereof)
which the Landlord may from time to time display or require to be
displayed on the demised premises
3:5:3 As often as shall be required and in any event in the year 1998 and in
the last year of the Term (howsoever determined including for the
avoidance of doubt where this Lease is determined by the operation of
Clause 6.1 hereof on 29th September 1996 if reasonably so required by
the Landlord but not otherwise) in a proper and workmanlike manner
(a) to prepare and paint all the inside wood metal and other parts of
the demised premises usually or requiring to be painted with not less
than two coats of good quality oil or other suitable paint
(b) to prepare and repolish any inside wood of the demised premises
now polished with best quality materials
(c) to prepare and paint the ceilings and walls of the demised
premises as the same are now treated and
10
<PAGE> 10
(d) to clean and treat in a suitable manner for its maintenance in
good condition any inside wood metal work tiles bricks and similar
surfaces to the demised premises not required to be painted or
polished.
Provided that the painting in the last year of the Term shall be done
in colours first approved in writing by the Landlord such approval not
to be unreasonably withheld or delayed AND PROVIDED ALSO that the
Tenant shall not be liable to carry out any decorative works of this
nature the need for which arises wholly or partly from an Inherent
Defect or damage caused by an Inherent Defect
3:5:4 To make good forthwith any damage to the demised premises or fixtures
therein caused by the Tenant his licencees and invitees whether
accidentally or otherwise
3:5:5 At the expiration or sooner determination of the Term (howsoever
determined) provided that such expiration or sooner determination
shall occur after the third anniversary of the Term to replace all the
carpeting (or carpet tiles as appropriate) within the demised premises
with new carpeting (or carpet tiles as appropriate) of a quality
design and colour similar to the quality design and colour of the
carpeting (or carpet tiles as appropriate) supplied by the Landlord at
the commencement of the Term such replacement carpeting (or carpet
tiles as appropriate) to be first approved in writing by the Landlord
(such approval not to be unreasonably withheld)
3:5:6 The Tenant shall pay the Landlord's Surveyor's reasonable and proper
fees necessarily incurred as a result of any breach of this sub-clause
11
<PAGE> 11
3:6:1 To keep and maintain all drains and pipes exclusively serving the
demised premises in good repair and condition and clear and
unobstructed and not to cause or allow to be caused any blockage or
stoppage of those within the Common Parts
3:6:2 To clean the interior of the windows and other glazing of the demised
premises at least once in every month
3:6:3 To keep all areas forming part of the demised premises clean and tidy
3:6:4 To employ for the cleaning of the demised premises only such firm or
company as shall be approved in writing by the Landlord such approval
not to be unreasonably withheld or delayed
3:7:1 To make good within one month (or sooner if necessary) any defect in
repair or decoration of the demised premises for which the Tenant is
liable in accordance with the Tenant's covenants hereunder and of
which the Landlord has given notice in writing to the Tenant
3:7:2 If the Tenant shall not comply with Clause 3:7:1 hereof the Landlord
may enter the demised premises and make good such defects and the
reasonable expense of so doing (including reasonable Surveyor's fees
necessarily incurred) shall be repaid to the Landlord by the Tenant
within 21 days of written demand and if not so repaid shall be
recoverable by action or distress as if rent in arrear
3:8 To permit the Landlord and its Agents and all others authorised by the
Landlord together with workmen and all necessary tools and appliances
on reasonable notice (except in emergency) at all reasonable hours to
enter the demised premises for the purpose of :-
12
<PAGE> 12
3:8:1 Viewing and recording the condition of the demised premises
3:8:2 Repairing maintaining altering or cleaning adjoining or nearby units
within the Building provided such works cannot be carried out from
outside the demised premises
3:8:3 Repairing maintaining cleaning altering replacing or adding to any
pipes wires flues channels or apparatus which service other parts of
the Building or adjoining or nearby premises provided such works
cannot be carried out from outside the demised premises
3:8:4 Enabling the Landlord to comply with the covenants on its part and
the conditions contained in the Superior Lease or for any purpose
that is in the reasonable opinion of the Landlord necessary in order
to enable it to do so in either case so far as the Tenant does not
expressly covenant hereunder to observe and perform the same
PROVIDED THAT the Landlord or those exercising such right (as appropriate) shall
cause as little damage and/or disturbance as practicable and shall as soon as
practicable make good (to the reasonable satisfaction of the Tenant) all damage
to the demised premises caused by such entry but shall not otherwise be liable
for any damage or inconvenience caused to the Tenant
3:9:1 At the Tenant's own cost to observe and comply as soon as reasonably
practicable in all respects with the provisions and requirements of
any and every enactment (which expression in this sub-clause includes
every general and local Act or Acts of
13
<PAGE> 13
EXHIBIT 2.2
______________________________________________________________________
STOCK PURCHASE AGREEMENT
among
GETTY IMAGES INC.,
GETTY COMMUNICATIONS LIMITED,
VISUAL COMMUNICATIONS GROUP (VCG) B.V.,
UNITED BUSINESS INFORMATION B.V.
and
UNITED NEWS & MEDIA PLC
_______________________________________
Dated as of March 21, 2000
______________________________________________________________________
THIS AGREEMENT SHALL BE KEPT CONFIDENTIAL PURSUANT TO THE TERMS OF THE
CONFIDENTIALITY AGREEMENT BETWEEN UNITED NEWS &
MEDIA PLC AND GETTY IMAGES INC.
DATED DECEMBER 9, 1999.
<PAGE> 14
TABLE OF CONTENTS
<TABLE>
<S> <C>
SUMMARY OF TRANSACTION ...................................................... 1
ARTICLE I -- CERTAIN DEFINITIONS AND TERMS ................................ 1
1.1 Specific Definitions ......................................... 1
1.2 Other Terms .................................................. 7
1.3 Other Definitional Provisions ................................ 7
ARTICLE II -- PURCHASE AND SALE OF VERMONT SHARES .......................... 8
2.1 Basic Transaction ............................................ 8
2.2 Purchase Price ............................................... 8
2.3 Cash Adjustment .............................................. 8
2.4 Closing; Deliveries; Payment ................................. 10
ARTICLE III -- REPRESENTATIONS AND WARRANTIES
CONCERNING THE TRANSACTION ................................................ 11
3.1 Representations and Warranties of Unicorn, UBIBV and VCG ..... 11
(a) Organization ............................................ 11
(b) Execution; Authorization of Transaction ................. 11
(c) Brokers' Fees ........................................... 12
(d) Vermont Shares .......................................... 12
(e) Litigation Regarding Vermont Shares ..................... 12
3.2 Representations and Warranties of the Buyer .................. 12
(a) Organization ............................................ 13
(b) Execution; Authorization of Transaction ................. 13
(c) Brokers' Fees ........................................... 13
(d) Investment .............................................. 13
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES
OF UBIBV CONCERNING THE VERMONT ENTITIES .................................. 14
ARTICLE V -- PRE-CLOSING COVENANTS ........................................ 14
5.1 General ...................................................... 14
5.2 Press Releases and Public Announcements ...................... 14
5.3 Disclosure ................................................... 15
5.4 Operation of Business ........................................ 15
5.5 Notices; HSR ................................................. 18
5.6 Assistance ................................................... 19
5.7 Issuance of Securities ....................................... 19
5.8 Other Changes ................................................ 19
5.9 Pensions ..................................................... 19
</TABLE>
i
<PAGE> 15
<TABLE>
<S> <C>
5.10 Bonuses............................................................ 19
ARTICLE VI -- POST-CLOSING COVENANTS......................................... 20
6.1 Further Actions Regarding Transfer................................. 20
6.2 Confidentiality.................................................... 20
6.3 Covenants.......................................................... 20
6.4 Access to Information.............................................. 21
6.5 Removal of Trademarks, Etc......................................... 22
6.6 Certain Taxes...................................................... 22
6.7 Tax Returns; Utilization of Tax Losses............................. 23
6.8 Leases............................................................. 25
6.9 Indemnifying Party................................................. 26
6.10 Andrew Nugee....................................................... 26
6.11 [Intentionally Omitted]............................................ 26
6.12 New York Lease..................................................... 26
6.13 Share Options...................................................... 27
ARTICLE VII -- CONDITIONS TO OBLIGATION TO CLOSE............................. 28
7.1 Conditions to Obligation of Buyer and Communications............... 28
(a) Performance of Obligations of UBIBV........................... 28
(b) Closing Documentation......................................... 28
(c) Approval of Legal Matters..................................... 30
(d) No Litigation................................................. 30
(e) Hart-Scott-Rodino Waiting Period.............................. 30
(f) Laws.......................................................... 30
(g) Financial Capacity............................................ 30
(h) Form 403...................................................... 30
7.2 Conditions to Obligation of Unicorn, VCG and UBIBV................. 31
(a) Performance of Obligations of Buyer and Communications........ 31
(b) Closing Documentation......................................... 31
(c) Approval of Legal Matters..................................... 32
(d) No Litigation................................................. 32
(e) Hart-Scott-Rodino Waiting Period.............................. 32
ARTICLE VIII -- REMEDIES FOR BREACHES OF THIS AGREEMENT...................... 32
8.1 Survival of Representations and Warranties......................... 32
8.2 Indemnification Provisions for Benefit of Buyer and Communications. 34
8.3 Indemnification Provisions for Benefit of UBIBV and VCG............ 35
8.4 Matters Involving Third Parties.................................... 36
8.5 Sole Remedy........................................................ 37
8.6 Unlimited Claims................................................... 37
8.7 Litigation Claim................................................... 38
</TABLE>
ii
<PAGE> 16
<TABLE>
<S> <C>
ARTICLE IX - TERMINATION............................................... 38
9.1 Termination of Agreement................................... 38
9.2 Effect of Termination...................................... 38
9.3 Liquidated Damages......................................... 39
ARTICLE X - MISCELLANEOUS.............................................. 39
10.1 Entire Agreement........................................... 39
10.2 No Third-Party Beneficiaries............................... 39
10.3 Succession and Assignment.................................. 40
10.4 Counterparts............................................... 40
10.5 Headings................................................... 40
10.6 Notices.................................................... 40
10.7 Governing Law.............................................. 41
10.8 Return of Information...................................... 41
10.9 Amendments and Waivers..................................... 41
10.10 Severability............................................... 42
10.11 Expenses................................................... 42
10.12 Construction............................................... 42
10.13 Incorporation of Exhibits, Annexes and Schedules........... 42
10.14 Specific Performance....................................... 42
10.15 Submission to Jurisdiction................................. 43
10.16 Fulfillment of Obligations................................. 43
10.17 Schedules.................................................. 44
10.18 Definition of "ordinary course"............................ 44
10.19 Attorney's Fees............................................ 44
</TABLE>
iii
<PAGE> 17
DISCLOSURE SCHEDULE
<TABLE>
<CAPTION>
SCHEDULE SECTION HEADING
- -------- ---------------
<S> <C>
I Intercompany Debt
S Subsidiaries
Section 3.1 Representation and Warranties (Seller Side)
Section 3.2 Representation and Warranties (Buyer Side)
Section 5.4(g) Operation of Business
Section 4.1 Interest in Related Entities
Section 4.3 Vermont Entities Capitalization
Section 4.4 Investments
Section 4.5 No Violations
Section 4.6 Title to Assets; Encumbrances
Section 4.7 Possession
Section 4.8 Personal Property
Section 4.10(a) Intellectual Property
Section 4.10(b) Infringement by VCG
Section 4.10(d) Validity
Section 4.10(e) Claims
Section 4.10(f) Infringement against VCG
Section 4.10(m) Registered Marks
Section 4.10(n) Owned Images
Section 4.10(q) Licensed Images
Section 4.10(s) Storage/Handling Contracts
Section 4.10(v) Photographer Contracts
Section 4.11 Environmental Protection
Section 4.13 Certain Changes and Events
Section 4.14 Absence of Changes
Section 4.15 Tax Matters
Section 4.16 Compliance with Laws
Section 4.17 Litigation regarding Vermont Entities
Section 4.18 Permits
Section 4.19 Employees; Labor Relations
Section 4.20(a) Employee Benefit Plans
Section 4.20(c) Qualification; Compliance
Section 4.22 Agreements
Section 4.23 Certain Matters Concerning Pix
Section 4.24 Insurance
EXHIBITS
Exhibit A Form of Joint Press Release
</TABLE>
iv
<PAGE> 18
STOCK PURCHASE AGREEMENT
Agreement entered into as of March 21, 2000, by and among United Business
Information B.V., a corporation organized pursuant to the laws of The
Netherlands ("UBIBV"), Visual Communications Group (VCG) B.V., a corporation
organized under the laws of The Netherlands ("VCG"), United News & Media plc,
an English limited company ("Unicorn"), Getty Communications Limited, an
English limited company ("Communications"), and Getty Images Inc., a Delaware
corporation ("Buyer"). Buyer, Communications, UBIBV and Unicorn are referred to
collectively herein as the "Parties" and each individually as a "Party".
SUMMARY OF TRANSACTION
WHEREAS, UBIBV owns a majority of the issued and outstanding capital stock
and equity interests of VCG;
WHEREAS, VCG is the legal and beneficial owner of all of the issued stock
or share capital of Visual Communications Group Holdings Ltd., a company
incorporated in England and Wales ("VCG Holdings"), Definitive Stock, Inc., a
Delaware corporation ("Definitive Stock"), and VCG Holdings LLC ("VCGLLC") a
Delaware limited liability company; and
WHEREAS, Buyer desires to purchase, and VCG desires to sell all of the
Definitive Stock Shares and all of the VCGLLC Shares, upon the terms and subject
to the satisfaction of the conditions set forth in this Agreement; and
WHEREAS, Communications desires to purchase, and VCG desires to sell all
of the VCG Holdings Shares, upon the terms and subject to the satisfaction of
the conditions set forth in this Agreement; and
NOW, THEREFORE, to effect such transactions and in consideration of the
mutual covenants, representations, warranties and agreements hereinafter set
forth and other good and valuable consideration, the receipt of which is hereby
acknowledged by each Party, and intending to be legally bound hereby, the
Parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS AND TERMS
1.1 SPECIFIC DEFINITIONS. As used in this Agreement, the following terms
shall have the meanings set forth or as referenced below:
<PAGE> 19
"Adverse Consequences" shall mean actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, liabilities, obligations, taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" shall mean with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with, such
other Person at the time at which the determination of affiliation is made. As
used in this definition, the term "control" (including, with correlative
meanings, the terms "controlled by" and "under common control with"), as
applied to any Person, means the possession, direct or indirect, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or other ownership
interests, by contract or otherwise. (When used in relation to Buyer or
Communications, the term "Affiliate" shall include the Vermont Entities after
the Closing and when used in relation to a Vermont Entity the term "Affiliate"
shall include the Buyer and Communications after the Closing.)
"Agreement" shall mean this Agreement, as the same may be amended or
supplemented from time to time in accordance with the terms hereof.
"Approved Images" shall have the meaning set forth in Section 4.10.
"Authorizations" shall have the meaning set forth in Section 4.18.
"Assets" means the assets of the Vermont Entities, including all real and
personal property owned or leased by the Vermont Entities.
"Bavaria" shall mean VCG Deutschland GmbH, a corporation organized under
the laws of Germany.
"Bavaria Agreement" shall mean the Stock Purchase Agreement dated of even
date herewith among Unicorn, UBIBV, Ludgate Holdings GmbH, a corporation
organized under the laws of Germany, Tony Stone Associates GmbH, a corporation
organized under the laws of Germany, and Buyer.
"Bavaria Entities" shall mean Bavaria and each of its Subsidiaries.
"Bavaria Financial Statements" shall have the meaning set forth in Section
4.12 of the Bavaria Agreement.
"Benefit Plans" shall have the meaning set forth in Section 4.20.
"Books and Records" shall mean all books, ledgers, files, reports, plans
and operating records
2
<PAGE> 20
of, or maintained by or for, the Vermont Entities.
"Business" shall mean the business of the Vermont Entities, taken together
as a group, comprised of the licensing of still photography images to persons
in the advertising, design, publishing and corporate markets.
"Business Day(s)" shall mean any day or days other than a Saturday, a
Sunday or a United States federal holiday or a state holiday in the State of
New York.
"Buyer" shall have the meaning set forth in the recitals.
"Cash Adjustment Amount" shall have the meaning set forth in Section 2.3.
"Cash Statement" shall have the meaning set forth in Section 2.3.
"Chosen Courts" shall have the meaning set forth in Section 10.15.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement.
"Closing Date" shall have the meaning set forth in Section 2.4(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Communications" shall have the meaning set forth in the recitals.
"Confidentiality Agreement" shall mean the Agreement dated December 9,
1999 between Unicorn and Buyer.
"Contracts" shall mean any agreements, contracts, leases, purchase orders,
arrangements, commitments and licenses, whether oral or written.
"Damages" shall mean any and all costs, damages, liabilities, fines, fees,
penalties, interest obligations, deficiencies, losses, Taxes and expenses
(including, without limitation, amounts paid in settlement, interest, court
costs, costs of investigation, reasonable fees and expenses of attorneys,
accountants, actuaries, and experts, and other reasonable expenses of
litigation or mediation of any claim, default, or assessment), and diminution
in value, including incidental and consequential damages, whether or not
involving a third party claim.
"Definitive Stock" shall have the meaning set forth in the recitals.
"Definitive Stock Shares" shall mean all of the issued stock and share
capital of Definitive Stock.
3
<PAGE> 21
"Disclosure Schedule" shall have the meaning set forth in Article IV.
"Dispute Accountants" shall have the meaning set forth in Section 2.3.
"Employees" shall mean all current and former employees of the Vermont
Entities.
"Encumbrances" shall mean any and all mortgages, pledges, assessments,
security interests, leases, subleases, liens, adverse claims, tribal claims,
levies, charges, options, warrants, assignments, rights to possession, rights
of others or restrictions (whether on voting, sale, transfer, disposition or
otherwise) or other encumbrances of any kind, whether imposed by agreement,
understanding, law or equity, or any conditional sale contract, title retention
contract, or other contract to give or refrain from giving any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" shall have the meaning set forth in Section 2.3.
"Governmental Authority" shall mean any court (including a court of
equity), any federal, provincial, state, county, municipal or other government
or governmental department, ministry, commission, board, bureau, agency or
instrumentality, any securities commission, stock exchange or other regulatory
or self regulatory body, any arbitrator or arbitration tribunal and any other
tribunal, whether domestic or foreign.
"Governmental Authorizations" shall mean all licenses, permits,
certificates and other authorizations and approvals required (i) with respect to
Buyer, Communications, UBIBV, VCG or a Vermont Entity to perform their
respective obligations hereunder and (ii) with respect to the Vermont Entities,
to carry on its business as currently conducted or presently proposed to be
conducted under applicable laws, ordinances or regulations of any Governmental
Authority.
"Group Entities" shall mean the Vermont Entities and the Bavaria Entities,
and each such entity shall be referred to individually as a "Group Entity".
"Holdings" shall mean Ludgate Holdings GmbH, a corporation organized under
the laws of Germany.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Image" shall have the meaning set forth in Section 4.10.
"Indemnified Parties" shall have the meaning set forth in Section 8.4(a).
4
<PAGE> 22
"Indemnifying Party" shall have the meaning set forth in Section 8.4(a).
"Intellectual Property" shall have the meaning set forth in Section 4.10.
"Intercompany Debt" shall mean that debt owing by any of the Group
Entities to UBIBV or any of UBIBV's Affiliates (other than the Group Entities),
or by UBIBV or any of UBIBV's Affiliates to any Group Entity as at the Closing
Date and to the extent set forth on a Schedule I, to be delivered by UBIBV to
Buyer not less than two (2) Business Days prior to the Closing Date. For
purposes of Purchase Price in Section 2.2 hereof. Intercompany Debt addressed
in the Bavaria Agreement shall be excluded.
"Knowledge of Seller" shall mean knowledge of at least one of the
directors and executive officers of UBIBV or at least one of the following
directors and executive officers of VCG: Andrew Nugee, Michael Wolfson, Leo
Shapiro, Charles Gregson, Neil Mepham (with respect only to Section 4.15) and
David Moody and Rebecca Taylor (with respect only to Section 4.10) and Craig
Baxendale (with respect only to Section 4.10). "Knowledge of Seller" shall
include the knowledge that any of such persons would have had if he or she had
made due inquiry.
"Laws" shall mean any federal, state, foreign, or local law, statute,
ordinance, rule, regulation, order, judgment or decree.
"Leases" shall have the meaning set forth in Section 4.9.
"Licensed Images" shall have the meaning set forth in Section 4.10.
"Licensed Intellectual Property" shall have the meaning set forth in
Section 4.10.
"Listed Intellectual Property" shall have the meaning set forth in Section
4.10.
"Material Adverse Effect" shall mean a material adverse effect on the
validity or enforceability of this Agreement, on the ability of a particular
Party to perform its obligations under this Agreement, or on the business,
operations, assets, liabilities, condition (financial or otherwise) or results
of operations of such Party.
"Material Agreement" shall have the meaning set forth in Section 4.22.
"Merger" shall have the meaning set forth in Section 4.23.
"Owned Images" shall have the meaning set forth in Section 4.10.
"Owned Intellectual Property" shall have the meaning set forth in Section
4.10.
5
<PAGE> 23
"Person" shall mean an individual, a corporation, a partnership, an
association, a limited liability company, a trust or other entity or
organization.
"Regulatory Law" means the Sherman Act, as amended, the Clayton Act, as
amended, the HSR Act, the Federal Trade Commission Act, as amended, and all
other federal, state and foreign, if any, statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines and other laws that are designed
or intended to prohibit, restrict or regulate (i) mergers, acquisitions or
other business combinations, (ii) foreign investment or (iii) actions having
the purpose or effect of monopolization or restraint of trade or lessening
competition.
"Returns" shall mean all information, notices, accounts, computations,
returns, declarations, reports, estimates, information returns and statements
of any nature regarding Taxes.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Software" shall have the meaning set forth in Section 4.10.
"Subsidiaries" shall mean any corporation, company, partnership or other
entity the majority of the voting equity or other ownership interests of which
is owned, directly or indirectly, by the entity in connection with which the
term is employed, and shall include, in the case of a partnership, any
partnership whose general partner is the entity in connection with which the
term is employed (when referring to VCG Holdings, Definitive Stock or VCGLLC,
"Subsidiaries" shall include without limitation each of the entities set forth
on Schedule S attached hereto).
"Taxes" shall mean all federal, state, local or foreign taxes, charges,
duties, fees, imposts, levies or other assessments, in all cases in the nature
of taxation, including, but not limited to income, gross receipts, windfall
profits, capital, net worth, profits, corporate value added, capital duty,
severance, real property, personal property, inheritance, gift, production,
sales, use, license, excise, franchise, employment, withholding, transfer, ad
valorem, inventory, capital stock, social security, national insurance,
payroll, unemployment, severance, stamp, occupation or similar taxes, customs
duties, fees, assessments and charges of any kind whatsoever, in each case: (i)
whether computed on a separate, consolidated, combined, unitary or any other
basis (including pursuant to a statutorily imposed transferee liability); and
(ii) together with any interest, additions or penalties with respect thereto
and any interest in respect of such additions or penalties.
"Taxing Authority" shall mean the Internal Revenue Service and any other
domestic or foreign governmental authority responsible for the administration
of any Taxes.
"UBIBV" shall have the meaning set forth in the recitals.
6
<PAGE> 24
"UK Benefit Plans" shall mean (a) United Money Purchase Pension Scheme;
(b) Group Personal Pension Scheme for VCG employees; (c) United Magazines Final
Salary Pension Scheme; (d) the personal pension arrangement for Mr. Angeloglou
with Scottish Widows; and (e) United Pension Plan.
"Unapproved Images" shall have the meaning set forth in Section 4.10.
"Unicorn" shall have the meaning set forth in the recitals.
"VCG" shall have the meaning set forth in the recitals.
"VCG Holdings" shall have the meaning set forth in the recital.
"VCG Holdings Shares" shall mean all of the issued stock and share capital
of VCG Holdings.
"VCGLLC" shall have the meaning set forth in the recitals.
"VCGLLC Shares" shall mean all of the issued and outstanding equity or
other ownership interests in VCGLLC.
"Vermont Entities" shall mean VCG Holdings, Definitive Stock, VCGLLC and
each of their Subsidiaries.
"Vermont Shares" shall mean all of the VCG Holdings Shares, all of the
Definitive Stock Shares and all of the VCGLLC Shares.
1.2 OTHER TERMS. Other terms may be defined elsewhere in the text of this
Agreement and, unless otherwise indicated, shall have the meaning specifically
ascribed to such terms wherever such terms appear elsewhere in this Agreement.
1.3 OTHER DEFINITIONAL PROVISIONS.
(a) References in this Agreement to "Sections," "Articles,"
"Exhibits," "Annexes" and "Schedules" are to sections, articles, exhibits,
annexes and schedules herein and hereto unless otherwise indicated. Unless
otherwise set forth herein, references in this Agreement to any document,
instrument or agreement (including, without limitation, this Agreement) (i)
shall include all exhibits, annexes, schedules and other attachments thereto,
(ii) shall include all documents, instruments or agreements issued or executed
in replacement thereof and (iii) shall mean such document, instrument or
agreement, or replacement or predecessor thereto, as amended, modified or
supplemented from time to time in accordance with its terms and in effect at any
given time.
7
<PAGE> 25
(b) Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular or plural.
(c) 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.
(d) References to any statute or statutory provision shall be
construed as a reference to such statute or statutory provision as in force at
the date of this Agreement and as respectively subsequently amended, re-enacted
or consolidated.
ARTICLE II
PURCHASE AND SALE OF VERMONT SHARES
2.1 BASIC TRANSACTION. On the terms and subject to the conditions of this
Agreement, and in reliance upon the representations and warranties of the
Parties herein, at the Closing, (i) Buyer agrees to purchase from VCG, and VCG
agrees to sell, transfer and convey to Buyer, or cause the sale, transfer and
conveyance to Buyer, all of the Definitive Stock Shares and VCGLLC Shares, and
(ii) Communications agrees to purchase from VCG and VCG agrees to sell,
transfer and convey to Communications, all of the VCG Holdings Shares,
collectively for the consideration specified in Section 2.2 hereof.
2.2 PURCHASE PRICE. At the Closing, as the Purchase Price to be paid by
Buyer and Communications for the Vermont Shares, Buyer and Communications shall
pay to VCG the aggregate sum of $203,000,000 less the amount of Intercompany
Debt (the "Purchase Price"), subject to post-Closing adjustment to increase or
decrease the Purchase Price by the Cash Adjustment Amount pursuant to Section
2.3.
2.3 CASH ADJUSTMENT. As soon as practicable, but in any event not later
than five (5) business days following the Closing Date, Buyer shall cause to be
delivered to UBIBV an unaudited statement of the cash, cash equivalents and bank
overdrafts of the Group Entities taken as a whole (the "Cash Statement"), as of
the close of business on the Closing Date, prepared in accordance with United
Kingdom generally accepted accounting standards applied on a basis consistent
with the prior practices of the Group Entities (hereinafter, "GAAP"), provided,
however, that cash, cash equivalents and bank overdrafts will be determined for
purposes of the Cash Statement through full application of the procedures used
in preparing the most recent balance sheet included within the Audited Vermont
Financial Statements and the Bavaria Financial Statements. For the avoidance of
doubt, in calculating the amount of cash, such amount shall be reduced by the
amount of any checks drawn prior to Closing which have not been present prior to
closing, and increased by the amount of any receipts paid-in but not yet cleared
as of the Closing. For the avoidance of doubt, the Cash Statement shall be
prepared and shall reflect the cash balances of the Group Entities immediately
8
<PAGE> 26
prior to settlement of the Intercompany Debt.
UBIBV and its accountants PriceWaterhouseCoopers LLC ("UBIBV's
Accountants"), shall have the right to review the Cash Statement, and in
connection with such review, UBIBV and UBIBV's Accountants shall have the right
to examine any books and records of the Group Entities reasonably necessary to
make a complete review of the Cash Statement, and Buyer shall make available to
UBIBV and UBIBV's Accountants their working papers related to the preparation of
the Cash Statement.
Within five (5) business days after UBIBV receives the Cash Statement,
UBIBV shall give written notice to Buyer of any objections UBIBV has with
respect to the Cash Statement, which notice shall specify the basis for such
objections in reasonable detail. If UBIBV does not notify Buyer of any
objections within such five business day period, then UBIBV shall be deemed to
have accepted the Cash Statement and the amounts reflected therein shall become
final and binding on the Parties for purposes of this Section 2.3.
If UBIBV objects to the Cash Statement as provided above, then the parties
shall negotiate in good faith to resolve such objections and arrive at an
agreed upon Cash Statement. Any objections of UBIBV which have not been
resolved by the parties within 10 business days after the delivery of UBIBV's
objections to Buyer shall be presented for resolution to Arthur Andersen LLP
(the "Dispute Accountants"). The Dispute Accountants shall promptly resolve the
disputed items in accordance with the provisions of this Section 2.3 and the
determinations of the Dispute Accountants in respect thereof shall be final and
binding upon the parties for purposes of this Section 2.3. Neither party will
disclose to the Dispute Accountants, nor will the Dispute Accountants consider
for any purpose, any settlement offer made by either party.
As used in this Agreement, the term "Cash Statement" shall mean such
statement in the form which becomes final and binding upon the Parties as
hereinabove provided.
After the Cash Statement is finalized, the Purchase Price shall be
adjusted upward or downward as follows: (A) if the net amount of cash, cash
equivalents and bank overdrafts reflected on the Cash Statement exceeds Pound
Sterling 450,000, then the Purchase Price shall be increased by the amount of
such excess (the "Cash Adjustment Amount") and Buyer shall pay the Cash
Adjustment Amount to UBIBV, or (B) if the net amount of cash, cash equivalents
and bank overdrafts reflected on the Cash Statement are less than Pound
Sterling 450,000, then the Purchase Price shall be decreased by the amount of
such deficiency (the "Cash Adjustment Amount") and UBIBV shall pay the Cash
Adjustment Amount to Buyer.
The appropriate party shall, within one (1) business day after the Cash
Statement becomes final and binding, pay to the other party the Cash Adjustment
Amount, together with interest thereon at a rate of LIBOR plus one percent (1%)
calculated from the Closing Date to the date on which the Cash Adjustment
Amount is received by the party that is entitled to payment thereof.
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2.4 Closing; Deliveries; Payment.
(a) The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Carter, Ledyard & Milburn at Two
Wall Street, New York, New York, commencing at 10:00 a.m. local time on March
26, 2000, or at such other, or such additional, time and place as the Parties
hereto may mutually agree (the "Closing Date"). The Closing shall be deemed to
have occurred at 12:01 a.m. local time, on the Closing Date.
(b) The Vermont Shares shall be delivered to Buyer and Communications free
and clear of all liens, pledges, encumbrances, claims, security interests,
charges, voting trusts, voting agreements, other agreements, rights, options,
warrants or restrictions or claims of any kind, nature or description, other
than pursuant to this Agreement. At the Closing, UBIBV and VCG shall also
deliver such certificates, instruments, and documents as are required of UBIBV
and VCG under the terms and provisions of this Agreement, all of which shall be
in form and substance reasonably satisfactory to Buyer. At the Closing, VCG
shall deliver to Communications a duly executed stock transfer form in relation
to the entire issued share capital of VCG Holdings, together with a share
certificate in respect of the number of shares constituted in that stock
transfer form in favor of Communications and shall cause the name of
Communications to be entered into the register of members of VCG Holdings as the
registered holder of such shares subject to the stock transfer form being duly
stamped. At the Closing, VCG shall deliver to Buyer (on its permitted assignee)
stock powers duly endorsed in blank in respect of the Definitive Stock Shares.
(c) At the Closing, Buyer shall pay the Purchase Price to VCG for the
Vermont Shares in immediately available funds by wire transfer to such
account(s) as shall be designated by VCG in writing at least two (2) full
Business Days prior to the Closing. Buyer and VCG shall agree prior to the
Closing on the allocation of the Purchase Price among the Vermont Entities.
Buyer shall deliver such certificates, instruments and documents as are required
of Buyer and Communications under the terms and provisions of this Agreement,
all of which shall be in form and substance reasonably satisfactory to VCG.
(d) On the Closing Date, Buyer and Communications will cause the Vermont
Entities to settle all Intercompany Debt and shall put them in funds to do so in
an amount equal to the Intercompany Debt. If and to the extent that following
payment of all Intercompany Debt any amount is or may become payable by any of
the Vermont Entities to UBIBV or any Affiliate of UBIBV (other than a Vermont
Entity), the occurrence of Closing shall take effect as a waiver by UBIBV, for
itself and on behalf of each of its Affiliates, of any amount so payable, except
with respect to normal trading balances payable to OiT and Express Newspapers
Limited and receivable by FPG International, L.L.C. in respect to web hosting,
image purchasing and rent respectively, which shall survive and continue on
normal terms or as otherwise provided herein.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
CONCERNING THE TRANSACTION
------------------------------
3.1 REPRESENTATIONS AND WARRANTIES OF UNICORN, UBIBV AND VCG. Unicorn,
UBIBV and VCG jointly and severally represent and warrant to Buyer and
Communications that the statements contained in this Section 3.1 are correct
and complete with respect to itself as of February 27, 2000 and will be correct
and complete with respect to itself as of the Closing Date (as though made then
and as though the Closing Date were substituted for the date of this Agreement
throughout this Section 3.1), except as set forth in Section 3.1 of the
Disclosure Schedule attached hereto.
(a) Organization. Each of Unicorn, UBIBV and VCG is a company duly
organized and validly existing under the laws of its jurisdiction of
organization and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
(b) Execution; Authorization of Transaction. Each of UBIBV, Unicorn
and VCG has all requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder, subject to the receipt of
the approvals, consents and authorizations contemplated hereby. This Agreement
has been duly and validly authorized, executed and delivered by each of UBIBV,
VCG and Unicorn and constitutes a legal, valid and binding obligation of UBIBV,
VCG and Unicorn, enforceable against each of them in accordance with its terms
and conditions, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the HSR Act and as otherwise set
forth in Section 3.1 to the Disclosure Schedule, no filing with or notice to,
and no permit, authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery by each of UBIBV, VCG and
Unicorn of this Agreement or the consummation by each of them of the
transactions contemplated hereby, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings or give
such notice do not or would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect. Neither the execution, delivery
and performance of this Agreement by each of UBIBV, VCG and Unicorn nor the
consummation by them of the transactions contemplated hereby will (i) conflict
with or result in any breach of any provision of the respective articles of
association or bylaws (or similar governing documents) of UBIBV, VCG, Unicorn
or any of the Vermont Equities, or (ii) result in a violation or breach of,
or constitute (with or without due notice or lapse of time or both) a default
(or give rise to any right of termination, amendment, cancellation or
acceleration or lien) under, any of the terms, conditions or provisions of any
Law applicable to UBIBV, VCG and Unicorn or any of the Vermont Entities or any
note, bond, mortgage, indenture, lease, license, contract, agreement or other
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instrument or obligation to which UBIBV, VCG, Unicorn or any of the Vermont
Entities is a party or by which any of them or any of their respective
properties or assets may be bound, except in the case of violations, breaches or
defaults which do not or would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.
(c) Brokers' Fees. None of UBIBV, VCG or Unicorn has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which the Vermont
Entities, Buyer or Communications could become liable or obligated.
(d) Vermont Shares VCG is the legal and beneficial owner of all of the
Vermont Shares, in each case free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act, state securities laws and
restrictions on transfer set forth in the Articles of Association of VCG),
Taxes, Encumbrances, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. Neither UBIBV nor VCG is a party to any option,
warrant, purchase right, or other contract or commitment that could require
UBIBV or VCG to sell, transfer, or otherwise dispose of any capital stock of the
Vermont Entities (other than this Agreement). Neither UBIBV nor VCG is a party
to any trust, proxy, or other agreement or understanding with respect to the
voting of any shares or capital stock of VCG Holdings, Definitive Stock or
VCGLLC. The Vermont Shares owned by VCG constitute 100% of the outstanding
voting capital of VCG Holdings, Definitive Stock and VCGLLC. No dividends or
other distributions of cash or property have been declared on the Vermont Shares
to any person which are due and/or have remained unpaid.
(e) Litigation Regarding Vermont Shares There are no actions, suits,
claims, investigations or legal or administrative or arbitration (or other
binding alternative dispute resolution) proceedings pending or, to the Knowledge
of Seller, threatened by or against: (I) UBIBV or VCG relating to the Vermont
Shares owned by VCG or (II) UBIBV or VCG relating to this Agreement and/or the
transactions contemplated hereby, before any court, governmental agency or other
body, and no judgment, order, writ, injunction, decree or other similar command
of any court or governmental agency or other body has been entered against or
served upon: (I) UBIBV or VCG relating to the Vermont Shares owned by VCG, or
(II) UBIBV or VCG relating to this Agreement and/or the transactions
contemplated hereby.
3.2 REPRESENTATIONS AND WARRANTIES OF THE BUYER. Buyer represents and
warrants to UBIBV and VCG that the statements contained in this Section 3.2 are
correct and complete as of February 27, 2000 and will be correct and complete as
of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3.2), except
as set forth in Section 3.2 of the Disclosure Schedule attached hereto.
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(a) Organization. Each of Buyer and Communications is a corporation duly
organized and validly existing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
(b) Execution; Authorization of Transaction. Each of Buyer and
Communications has all requisite corporate power and authority to enter into
this Agreement and to perform its obligations hereunder, subject to the receipt
of the approvals, consents and authorizations contemplated hereby. This
Agreement has been duly and validly authorized, executed and delivered by Buyer
and Communications and constitutes a legal, valid and binding obligation of
Buyer and Communications, enforceable in accordance with its terms and
conditions, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to or affecting creditors' rights and to general equity principles. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the HSR Act and as otherwise set
forth in Section 3.2 to the Disclosure Schedule, no filing with or notice to,
and no permit, authorization, consent or approval of, any Governmental
Authority is necessary for the execution and delivery by Buyer and
Communications of this Agreement or the consummation by Buyer and
Communications of the transactions contemplated hereby, except where the
failure to obtain such permits, authorizations, consents or approvals or to
make such filings or give such notice do not or would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Neither the execution, delivery and performance of this Agreement by Buyer and
Communications nor the consummation by Buyer and Communications of the
transactions contemplated hereby will (i) conflict with or result in any breach
of any provision of the articles of incorporation or bylaws (or similar
governing documents) of Buyer or Communications, (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both)
a default (or give rise to any right of termination, amendment, cancellation or
acceleration or lien) under, any of the terms, conditions or provisions of any
Law applicable to Buyer or Communications or any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or
obligation to which Buyer or Communications is a party or by which Buyer or
Communications or any of their respective properties or assets may be bound,
except in the case of violations, breaches or defaults which do not or would
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(c) Brokers' Fees. Neither Buyer nor Communications has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which UBIBV, VCG
or Unicorn could become liable or obligated.
(d) Investment. Buyer is acquiring the Definitive Stock Shares and the
VCGLLC Shares, and Communications is acquiring the VCG Holdings Shares, solely
for the purpose of investment and not with a view to, or for sale in connection
with, any distribution thereof in violation of the Securities Act. Buyer and
Communications acknowledge that the Vermont Shares are not
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registered under the Securities Act or any applicable state securities law, and
that such Vermont Shares may not be transferred or sold except pursuant to the
registration provisions of the Securities Act or pursuant to an applicable
exemption therefrom and pursuant to state securities laws and regulation as
applicable.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF UBIBV CONCERNING THE VERMONT ENTITIES
UBIBV represents and warrants to Buyer and Communications, as of
February 27, 2000 and as of the Closing Date (except that representations and
warranties that are made as of a specific date need to be true only as of such
date), as provided in Annex A hereto, subject to and except as disclosed in the
Disclosure Schedule delivered by UBIBV to Buyer and Communications and initialed
by the Parties (the "Disclosure Schedule"). For purposes of this Agreement the
disclosure of any matter in any Section of the Disclosure Schedule shall serve
as sufficient disclosure for purposes of all of the representations and
warranties contained in Annex A hereto as to which the descriptive nature of the
disclosure provides sufficient notice of the materials, facts or items described
therein to indicate such disclosure's relevancy to other representations and
warranties.
ARTICLE V
PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing.
5.1 GENERAL. Each of the Parties will use its commercially reasonable
efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing conditions
set forth in Article VII below).
5.2 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue or
cause to be issued any press release or make or cause to be made any public
announcement relating to the subject matter of this Agreement prior to the
Closing (except for the joint press release to be made on or about the Closing
Date in the form attached hereto as Exhibit A), without the prior written
approval of the other Parties; provided, however, that any Party may make any
public disclosure it believes in good faith is required by applicable law, as a
result of being listed on an exchange or any listing or trading agreement
concerning its publicly-traded securities (in which case the disclosing Party
will use its best efforts to advise the other Parties prior to making the
disclosure). The provisions of this Section 5.2 shall supersede any conflicting
provision contained in the Confidentiality Agreement.
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5.3 DISCLOSURE. All information delivered to Buyer and Communications by
UBIBV, VCG or the Vermont Entities, or to which Buyer and Communications have
been provided access by UBIBV, VCG or the Vermont Entities or in connection
with this Agreement and the transactions contemplated hereby shall be subject
to the terms of the Confidentiality Agreement, which Confidentiality Agreement
shall survive the Closing or any termination of this Agreement.
5.4 OPERATION OF BUSINESS. Except as contemplated by this Agreement,
UBIBV shall procure that each of the Vermont Entities shall conduct its
operations in the ordinary and usual course of business consistent with past
practice and to the extent consistent therewith, with no less diligence and
effort than would be applied in the absence of this Agreement, use their
commercially reasonable efforts: (i) to preserve intact its current business
organizations, and (ii) to keep available the service of its current officers
and employees and to preserve its relationships with customers, suppliers and
others having business dealings with it to the end that goodwill and ongoing
businesses shall be unimpaired at the Closing Date. Without limiting the
generality of the foregoing, and except as otherwise expressly provided in this
Agreement or in the Disclosure Schedule, prior to the Closing Date no Vermont
Entity will, without the prior written consent of Buyer and Communications:
(a) amend its certificate of incorporation or bylaws (or other
similar governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) any
stock of any class or any other securities convertible into or exchangeable for
any stock or any equity equivalents (including, without limitation, any stock
options or stock appreciation rights);
(c) (i) split, combine or reclassify any shares of its capital
stock; (ii) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock; (iii) make any other actual, constructive or deemed
distribution in respect of any shares of its capital stock or otherwise make
any payments to stockholders in their capacity as such; or (iv) redeem,
repurchase or otherwise acquire any of its securities or any securities of any
of its subsidiaries;
(d) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of itself or any of its subsidiaries;
(e) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any subsidiary;
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(f) (i) incur or assume any long-term or short-term debt or issue any
debt securities, except for borrowings under existing lines of credit in the
ordinary and usual course of business consistent with past practice and in
amounts not material to the Group Entities taken as a whole; (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person, except in
the ordinary and usual course of business consistent with past practice and in
amounts not material to the Group Entities, taken as a whole, and except for
obligations of the wholly-owned Subsidiaries of VCG Holdings, Definitive Stock
and VCGLLC; (iii) make any loans, advances or capital contributions to, or
investments in, any other person (other than to the wholly-owned Subsidiaries of
VCG Holdings, Definitive Stock or VCGLLC or customary loans or advances to
employees in the ordinary and usual course of business consistent with past
practice and in amounts not material to the maker of such loan or advance); (iv)
pledge or otherwise encumber shares of capital stock of any of the Vermont
Entities; or (v) mortgage or pledge any of its material assets, tangible or
intangible, or create or suffer to exist any material Lien thereupon;
(g) except as may be required by Law or as contemplated by this
Agreement, enter into, adopt or amend or terminate any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation right,
restricted stock, performance unit, stock equivalent, stock purchase agreement,
pension, retirement, deferred compensation, employment, severance or other
employee benefit agreement, trust, plan, fund, award or other arrangement for
the benefit or welfare of any director, officer or employee in any manner, or
(except as set forth in Section 5.4(g) of the Disclosure Schedule, as required
under existing agreements, and hiring and compensation adjustments occurring in
the ordinary course of business consistent with past practices) increase in any
manner the compensation or fringe benefits of any director, officer or employee
or pay any benefit not required by any plan and arrangement as in effect as of
February 27, 2000 (including, without limitation, the granting of stock
appreciation rights or performance units);
(h) acquire, sell, lease or dispose of any assets outside the
ordinary and usual course of business consistent with past practice or any
assets which in the aggregate are material to the Group Entities taken as a
whole, enter into any commitment or transaction outside the ordinary and usual
course of business consistent with past practice or grant any exclusive
distribution rights;
(i) except as may be required as a result of a change in Law or in
GAAP, change any of the accounting principles or practices used by it;
(j) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or writing-off notes or
accounts receivable other than in the ordinary and usual course of business
consistent with past practice or as required by GAAP;
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(k) acquire (by merger, consolidation, or acquisition of stock or assets)
any corporation, partnership or other business organization or division thereof
or any equity interest therein; (ii) enter into any contract or agreement,
other than in the ordinary and usual course of business consistent with past
practice, or amend in any material respect any of the Material Agreements (iii)
authorize any new capital expenditure or expenditures which, individually, are
in excess of $60,000 or, in the aggregate, are in excess of $250,000 or (iv)
enter into or amend any contract, agreement, commitment or arrangement
providing for the taking of any action that would be prohibited hereunder;
provided that notwithstanding the foregoing each Vermont Entity shall continue
to make any capital expenditure in accordance with any capital expenditure plan
in existence at February 27, 2000;
(l) make or revoke any Tax election, or settle or compromise any Tax
liability or change (or make a request to any taxing authority to change) any
aspect of its method of accounting for Tax purposes;
(m) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction contemplated by
this agreement or in the ordinary and usual course of business consistent with
past practice of liabilities reflected or reserved against in the consolidated
financial statements of the Vermont Entities, or otherwise incurred in the
ordinary and usual course of business consistent with past practice, or waive
the benefits of, or agree to modify in any manner, any confidentiality,
standstill or similar agreement to which any of the Vermont Entities is a party;
provided that each Vermont Entity shall continue to pay its creditors as they
fall due in the period up to the Closing Date consistent with past practices;
(n) settle or compromise any pending or threatened suit, action or claim
relating to the transactions contemplated hereby;
(o) enter into any agreement or arrangement that limits or otherwise
restricts the Vermont Entities or any successor thereto or that could, after
the Closing Date, limit or restrict the Vermont Entities or any successor
thereto, from engaging or competing in any line of business or in any
geographic area;
(p) commit to any new expenditure in respect to iSwoop; or
(q) take, propose to take, or agree in writing or otherwise to take, any
of the actions described in Sections 5.4(a) through 5.4(p) or any action which
would make any of the representations or warranties of UBIBV contained in this
Agreement (i) which are qualified as to materiality untrue or incorrect or (ii)
which are not so qualified untrue or incorrect in any material respect.
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5.5 NOTICES; HSR. (a) Each of the Parties will give any notices to, make
any filings with, and use its reasonable commercial efforts (in the case of
Buyer, subject to the provisions of Section 5.5(c) below) to obtain any
authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in Section 3.1(b) and
Section 3.2(b) above. Without limiting the generality of the foregoing, each of
the Parties (or appropriate Affiliates) have filed the Notification and Report
Forms and related material were required to be filed with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the United States
Department of Justice (the "DOJ") under the HSR Act, and each of the Parties
will make (and UBIBV will cause its appropriate Affiliate to make) any further
filings pursuant thereto that may be necessary, proper, or advisable in
connection therewith. Any filing fees required in connection with filings under
the HSR Act shall be borne by Buyer.
(b) Each of UBIBV, VCG, VCG Holdings, Definitive Stock, VCGLLC and Buyer
shall use its reasonable efforts to (i) cooperate in all respects with each
other in connection with any filing or submission and in connection with any
investigation or other inquiry, including any proceeding initiated by a private
party, (ii) promptly inform the other party of any communication received by
such party from, or given by such party to the DOJ, the FTC or any other
Governmental Authority and of any material communication received or given in
connection with any proceeding by a private party, in each case regarding any
of the transactions contemplated hereby, and (iii) consult with each other in
advance to the extent practicable of any meeting or conference with the DOJ,
the FTC or any such other Governmental Authority or, in connection with any
proceeding by a private party, with any other Person, and to the extent
permitted by the DOJ, the FTC or such other applicable Governmental Authority
or other Person, give the other party the opportunity to attend and participate
in such meetings and conferences.
(c) In furtherance and not in limitation of the covenant of Buyer set
forth in Sections 5.5(a) and (b) above, if any administrative or judicial
action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law, or if any
statute, rule, regulation, executive order, decree, injunction or
administrative order is enacted, entered, promulgated or enforced by a
Governmental Authority which would make this Agreement or the other
transactions contemplated hereby illegal or would otherwise prohibit or
materially impair or delay the consummation of this Agreement or the other
transactions contemplated hereby, Buyer shall use its best efforts, including
without limitation, selling, holding separate or otherwise disposing of or
conducting its business in a specified manner, or agreeing to sell, hold
separate or otherwise dispose of or conduct its business in a specified manner
or permitting the sale, holding separate or other disposition of, any assets of
Buyer or its Subsidiaries or Affiliates or the conducting of their business in
a specified manner, to vigorously contest and resist any such action or
proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
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the consummation of this Agreement or the other transactions contemplated
hereby and to have such statute, rule, regulation, executive order, decree,
injunction or administrative order repealed, rescinded or made inapplicable so
as to permit the consummation of the transactions contemplated by this
Agreement.
5.6 ASSISTANCE. Subject to Section 5.3 hereof, UBIBV and VCG shall
provide Buyer and Communications with such assistance as they may reasonably
request and shall generally assist Buyer and Communications with respect to the
introduction of Buyer, Communications and their representatives and agents, to
appropriate governmental agencies or officials having regulatory jurisdiction
over the Business and shall cooperate generally with Buyer and Communications
in all reasonable respects, including, with limitation, communications with
employees, customers and suppliers.
5.7 ISSUANCE OF SECURITIES. Except as otherwise contemplated hereby UBIBV
shall not permit any of the Vermont Entities to (i) issue any debt or equity
security or any options or warrants, (ii) enter into any subscriptions,
agreements, plans or other commitments pursuant to which any of the Vermont
Entities is or may become obligated to issue any shares of its capital stock or
any securities convertible into shares of its capital stock, (iii) otherwise
change or modify its capital structure, (iv) make interim distributions, (v)
engage in any reorganization or similar transaction, or (vi) agree to take any
of the foregoing actions.
5.8 OTHER CHANGES. VCG and/or the Vermont Entities may (i) make capital
expenditures of an emergency nature required to avoid imminent material damage
to or shutdown of the Business, or reasonably necessary for safety reasons,
(ii) take such actions as may be required by law, (iii) change, for any
Employee who is not exempt from the overtime provisions of the Fair Labor
Standards Act, the method of calculating the regular rate of pay for overtime
pay calculation purposes to using a weighted average of the different rates
earned by the Employee during the workweek.
5.9 PENSIONS. The provisions of the Pension Schedule shall have effect in
respect of the UK Benefit Plans.
5.10 BONUSES. At the Closing Date, VCG shall procure that no amounts in
the nature of bonus payments will remain payable by any Vermont Entity to any
of its employees or former employees (i) for the calendar year ended December
31, 1999, or (ii) in the nature of "stay or loyalty bonuses" payable to any
employee of a Vermont Entity in connection with the transactions contemplated
by this Agreement.
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ARTICLE VI
POST-CLOSING COVENANTS
The Parties agree as follows with respect to the period following the Closing:
6.1 FURTHER ACTIONS REGARDING TRANSFER. From and after the Closing, each
Party hereto shall, if reasonably requested by any other Party, execute and
deliver such further instruments of conveyance and transfer and take such other
reasonable action as may be necessary or desirable to provide more effectively
the sale and transfer of the Vermont Shares to Buyer and Communications.
6.2 CONFIDENTIALITY. For a period of three years after the Closing, UBIBV,
VCG, Unicorn and their Affiliates shall not divulge, furnish or make available,
to anyone (other than Buyer, Communications, UBIBV, VCG, Unicorn and their
respective Affiliates) any knowledge or information with respect to any
proprietary information of the Vermont Entities. This Section 6.2 shall not
apply to any such proprietary information which (i) shall have entered the
public domain or become available to the public through no act or omission of
UBIBV, VCG, Unicorn or any Affiliate of the foregoing, (ii) shall have become
available to UBIBV, VCG, Unicorn or any Affiliate of the foregoing from a third
party whom UBIBV, VCG, Unicorn or such Affiliate of the foregoing reasonably
believes is not obligated to the Vermont Entities, Buyer or Communications to
keep such proprietary information confidential, or (iii) shall be required by
law to be disclosed.
6.3 COVENANTS. Each of UBIBV, VCG, Unicorn and their Affiliates undertakes
with the Buyer and Communications that, without the prior written consent of
Buyer it will not and it will procure that none of their respective Affiliates
will:
(a) for the period of 3 years after the date of this Agreement, either
on its own account or in conjunction with or on behalf of any person carry on or
be engaged, concerned or interested (directly or indirectly and whether as
principal, shareholder, agent, consultant, partner or otherwise) in carrying on
the Business, provided, however, that the provisions of this Section 6.3(a)
shall in no way be construed to restrict UBIBV, VCG, Unicorn and their
Affiliates that are currently engaged in an activity that competes with the
Business from continuing to engage in such activity at levels which are not
materially greater than the levels at which such activity is currently
conducted; or
(b) for the period of 3 years after the date of this Agreement, either
on its own account or in conjunction with or on behalf of any other person,
solicit or endeavor to entice away from any Vermont Entity, with a view to
obtaining its business in relation to the business, any person who is (and was
at the Closing Date) a customer of a Vermont Entity; or
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(c) for the period of 3 years after the date of this Agreement,
either on its own account or in conjunction with or on behalf of any person,
employ, solicit or endeavor to entice away from any Vermont Entity any person
employed or engaged by any Vermont Entity in an executive or managerial
capacity, whether or not such person would commit a breach of contract by
reason of leaving service or office, except for Leo Shapiro and Andrew Nugee.
For purposes of this section 6.3(c), bona fide public advertisements shall not
be deemed to constitute "solicitation" or "enticement" in violation of the
provisions hereof; or
(d) Notwithstanding the foregoing, none of UBIBV, VCG, Unicorn and
their Affiliates shall, either on its own account or in conjunction with or on
behalf of any person, employ solicit or endeavor to entice Michael Wolfson away
from Buyer or Buyer's Affiliates for so long as Mr Wolfson is employed by Buyer
or one of Buyer's Affiliates, provided, however, that the foregoing restriction
shall not apply in the event that, by the Closing Date, Mr Wolfson has not
agreed to become an employee of Buyer or one of Buyer's Affiliates following
the Closing Date.
6.4 ACCESS TO INFORMATION.
(a) In order to facilitate the resolution of any third-party claims
made by or against or incurred by or indemnified by UBIBV prior to or after the
Closing, upon reasonable notice, Buyer and Communications shall, after the
Closing: (i) afford the officers, employees and authorized agents and
representatives of UBIBV reasonable access, during normal business hours, to
the offices, properties, books and records of Buyer, Communications and the
Vermont Entities with respect to the Business for the period prior to the
Closing; (ii) furnish to the officers, employees and authorized agents and
representatives of UBIBV such additional financial and other information
regarding the Business for the period prior to the Closing as Buyer,
Communications or any Vermont Entity has in its possession and UBIBV may from
time to time reasonably request; and (iii) make available to UBIBV, the
employees of Buyer, Communications and the Vermont Entities whose assistance,
testimony or presence is necessary to assist UBIBV in evaluating any such
claims and in defending such claims, including the presence of such persons as
witnesses in hearings on trials for such purposes; provided, however, that
such investigation shall not unreasonably interfere with the businesses or
operations of Buyer, Communications or any of their Affiliates; and provided,
however, that Buyer and Communications shall not be obligated to disclose any
information which they or any of their Affiliates holds under a legally binding
obligation of confidentiality or which is protected by any privilege.
(b) In order to facilitate the resolution of any third-party claims
made by or against or incurred by Buyer or Communications after the Closing,
upon reasonable notice, UBIBV, VCG and, with respect to Taxes, Unicorn shall,
after the Closing: (i) afford the officers, employees and authorized agents and
representatives of Buyer and Communications reasonable access, during normal
business hours, to the offices, properties, books and records of UBIBV and VCG
(and, as regards Taxes, of Unicorn) with respect to the Business and the Assets
for the period prior to the Closing; (ii) furnish to the officers, employees
and authorized agents and representatives of Buyer
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and Communications such additional financial and other information regarding
the Business and the Assets for the period prior to the Closing as Buyer and
Communications may from time to time reasonably request; and (iii) make
available to Buyer and Communications, the employees of UBIBV and VCG (and, as
regards Taxes of any Vermont Entity, of Unicorn) whose assistance, testimony or
presence is necessary to assist Buyer and Communications in evaluating any such
claims and in defending such claims, including the presence of such persons as
witnesses in hearings or trials for such purposes; provided, however, that such
investigation shall not unreasonably interfere with the businesses or
operations of UBIBV, VCG, Unicorn or any of their Affiliates; and provided,
however, that neither UBIBV nor Unicorn shall be obligated to disclose any
information which it or any of its Affiliates holds under a legally binding
obligation of confidentiality or which is protected by any privilege.
6.5 REMOVAL OF TRADEMARKS, ETC. As promptly as practicable after the
Closing, and in no event later than ninety (90) days after the Closing Date,
Buyer and Communications agree to (and will cause the Vermont Entities to)
cease use of and to delete, remove or otherwise obliterate from the Assets, and
from all packaging, advertisements, marketing and promotional materials and
other materials used by the Vermont Entities, all trade names and trademarks of
UBIBV, VCG and their Affiliates, including, but not limited to, references to
"United News & Media" "UNM" and derivatives thereof, and logos associated
therewith, provided, however, that for a period of six months following the
Closing Date, Buyer, Communications and their Affiliates shall be permitted to
dispose of inventory included in the Assets on the Closing Date which bears the
trade names or trade-marks of UBIBV, VCG and their Affiliates, and provided
further that Buyer, Communications and their Affiliates may, following the
Closing Date, ship, deliver and display catalogs bearing such trade names or
trademarks which have been produced prior to the Closing Date.
6.6 CERTAIN TAXES. All transfer, documentary, sales, use, stamp,
registration and other similar taxes and fees (including any penalties and
interest, but excluding taxes imposed on income) incurred in connection with
this Agreement, shall, whether imposed upon UBIBV, VCG, Buyer, Communications or
any Vermont Entity, be borne by Buyer or Communications. VCG will file all
necessary Returns and other documentation with respect to all such taxes, and,
if required by applicable law, Buyer and Communications will, and will cause
the Vermont Entities to, joint in the execution of any such Returns and other
documentation. All costs and expenses incurred in connection with VCG's filing
of Returns hereunder shall be borne by Buyer or Communications. Buyer and VCG
further agree (and each shall cause the Vermont Entities to), upon request, to
use their best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to mitigate,
reduce or eliminate any such tax that could be imposed (including, but not
limited to, with respect to the transactions contemplated hereby).
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6.7 TAX RETURNS; UTILIZATION OF TAX LOSSES.
(a) In respect of any Tax accounting period of any Vermont Entity
ending on or before the Closing Date, VCG and such of VCG's Affiliates as are
legally competent to do so ("the Surrendering Companies") shall be entitled
(but not required) to surrender and Buyer and Communications shall procure that
the relevant Vermont Entity shall cooperate with the Surrendering Companies to
accept, receive or utilize some or all Tax losses of the relevant Surrendering
Company so as to reduce or extinguish any pre-Closing Tax liability of the
Vermont Entity.
(b) To the extent that a Tax loss surrendered in accordance with
paragraph (a) above reduces or eliminates a Tax liability for any 1999 Tax
accounting period that was provided for in the Audited Vermont Financial
Statements, Buyer and Communications shall cause the relevant Vermont Entity to
pay as consideration to the relevant Surrendering Company an amount certified
by VCG's auditors to be equal to the difference between (i) the Tax otherwise
due and payable absent such surrender and (ii) the Tax due and payable taking
into account such surrender. Any payments that are due to be made by the
relevant Vermont Entity hereunder shall be made on the date on which the Tax
that is saved by virtue of such surrender would otherwise first have been due
and payable. To the extent that a Tax liability for any 1999 Tax accounting
period is either paid to the relevant Taxing Authority or reduced by reasons of
a Tax loss surrendered by a Surrendering Company that is reimbursed pursuant to
this Section 6.7(b), the accrual or reserve for Taxes in the Audited Vermont
Financial Statements shall be reduced for purposes of Section 8.2(c) hereof.
(c) To the extent that a Tax loss surrendered in accordance with
Section 6.7(a) reduces or eliminates a Tax liability that was not provided for
in the Audited Vermont Financial Statements in respect of a 1999 Tax accounting
period, no payment shall be made therefor by the relevant Vermont Entity but
the full value or benefit of such surrender to the relevant Vermont Entity
shall be taken into account when computing the amount of any Adverse
Consequences suffered by any relevant Vermont Entity.
(d)(i) Except as provided in Section 6.7(d)(iii), VCG, or its duly
authorized agents, shall be responsible for and have the conduct of preparing,
submitting and agreeing all Returns of the Vermont Entities (and
correspondence and other documentation relating thereto) with respect to Tax
accounting periods ending on or before the December 31, 1999, subject to all
such Returns being submitted in draft form to Buyer or to Buyer's duly
authorized agent for comment at least 42 days before the same are due to be
submitted to the relevant Taxing Authority. Buyer or Buyer's agents shall
within 21 days of such submission provide written comments thereon to VCG and
if VCG shall not have received comments within that period, Buyer shall be
deemed to have approved such draft Returns. Such deemed approval shall not by
itself constitute a waiver of Buyer's or Communications' other rights, if any,
under this Agreement. If Buyer or Buyer's agents shall have made any written
comments in accordance with the provisions of this Section, VCG shall not
unreasonably refuse to adopt such comments provided that VCG and VCG's agents
shall not be
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obliged to submit any Return to any relevant Taxing Authority unless reasonably
satisfied that it is accurate and complete in all material respects. VCG and
Buyer shall respectively afford (or procure to be afforded) to the other or to
the other's agents such information and assistance as may reasonably be required
to prepare, submit and agree all relevant Returns.
(ii) For Vermont Entities which are tax resident in the Netherlands and
Germany, UBIBV, VCG, and their duly authorized agents, shall be responsible for
and have the conduct of preparing, submitting and agreeing to the relevant
fiscal unity Returns for Tax accounting periods beginning prior to the Closing
Date (and correspondence and other documentation relating thereto) subject to
all such returns being submitted in draft form to Buyer or to Buyer's duly
authorized agent for comment at least 42 days before the same are due to be
submitted to the relevant Taxing Authority. Buyer or Buyer's agents shall within
21 days of such submission provide written comments thereon to VCG and if VCG
shall not have received comments within that period, Buyer shall be deemed to
have approved such draft Returns. Such deemed approval shall not by itself
constitute a waiver of Buyer's other rights, if any, under this Agreement. If
Buyer or Buyer's agents shall have made any written comments in accordance with
the provisions of this Section, VCG shall not unreasonably refuse to adopt such
comments provided that VCG and VCG's agents shall not be obliged to submit any
Return to any relevant Taxing Authority unless reasonably satisfied that it is
accurate and complete in all material respects. VCG and Buyer shall respectively
afford (or procure to be afforded) to the other or to the other's agents such
information and assistance as may reasonably be required to prepare, submit and
agree all relevant Returns.
(iii) Buyer, or its duly authorized agents, shall be responsible for and
have the conduct of preparing, submitting and agreeing (x) all 1999 United
States Federal, state and local income tax returns (and correspondence and other
documentation relating thereto) of Vermont Entities which are organized in the
United States and (y) 1999 Irish income tax returns of iSwoop Limited and iSwoop
International Limited, subject to all such Returns being submitted in draft form
to VCG or to VCG's duly authorized agent for comment at least 42 days before the
same are due to be submitted to the relevant Taxing Authority. VCG or VCG's
agents shall within 21 days of such submission provide written comments thereon
to Buyer and if Buyer shall not have received comments within that period, VCG
shall be deemed to have approved such draft Returns. Such deemed approval shall
not by itself constitute a waiver of VCG's other rights, if any, under this
Agreement. If VCG or VCG's agents shall have made any written comments in
accordance with the provisions of this Section, Buyer shall not unreasonably
refuse to adopt such comments provided that Buyer and Buyer's agents shall not
be obliged to submit any Return to any relevant Taxing Authority unless
reasonably satisfied that it is accurate and complete in all material respects.
VCG and Buyer shall respectively afford (or procure to be afforded) to the other
or to the other's agents such information and assistance as may reasonably be
required to prepare, submit and agree all relevant Returns.
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(iv) Except as provided in Section 6.7(d)(ii), Buyer, or its
duly authorized agents, shall be responsible for and have the conduct of
preparing, submitting and agreeing all Returns (and correspondence and other
documentation relating thereto) of Vermont Entities for Tax accounting periods
beginning on or after January 1, 2000, subject to all such Returns for which
Buyer and Communications will seek indemnification under Section 8.2(c) hereof
being submitted in draft form to VCG or to VCG's duly authorized agent for
comment at least 42 days before the same are due to be submitted to the
relevant Taxing Authority. VCG or VCG's agents shall within 21 days of such
submission provide written comments thereon to Buyer and if Buyer shall not
have received comments within that period, VCG shall be deemed to have approved
such draft Returns. Such deemed approval shall not by itself constitute a
waiver of VCG's other rights, if any, under this Agreement. If VCG or VCG's
agents shall have made any written comments in accordance with the provisions
of this Section, Buyer shall not unreasonably refuse to adopt such comments
provided that Buyer and Buyer's agents shall not be obliged to submit any
Return to any relevant Taxing Authority unless reasonably satisfied that it is
accurate and complete in all material respects. VCG and Buyer shall
respectively afford (or procure to be afforded) to the other or to the other's
agents such information and assistance as may reasonably be required to prepare,
submit and agree all relevant Returns.
(e) (i) To the extent that it does not result in more than nominal
Adverse Consequences to any of them, Buyer shall procure that all Vermont
Entities shall cause the agreed Returns referred to in Section 6.7(d) and,
subject to Section 6.7(a) above, all such claims, disclaimers, surrenders and
elections as may be directed by UBIBV relating to all such Returns of all
Vermont Entities with respect to Tax accounting periods ending on or before the
Closing Date to be authorized, signed and returned to UBIBV for submission to
the Taxing Authority as soon as is reasonably practicable. VCG shall submit
such claims, disclaimers, surrenders and elections to the relevant Vermont
Entity for such signature sufficiently in advance of the required filing date
for the relevant Vermont Entity to adequately review such claim, disclaimer,
surrender or election.
(ii) Buyer shall, and shall procure that all Vermont Entities,
cooperate with VCG and its agents as and to the extent reasonably requested by
VCG, in connection with VCG's exercise of their rights and responsibilities
under this Section 6.7. Such cooperation shall include retention and (upon VCG
request) the provision of records and information which are reasonably relevant
to such exercise, and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder. VCG shall reimburse Buyer and the Vermont Entities for any
reasonable out of pocket expenditures incurred by them by reason of such
cooperation.
6.8 LEASES. Buyer shall indemnify VCG and its Affiliates, in the manner
and subject to the limitations set forth in Article VIII, from and against any
and all claims and Adverse Consequences arising from the Leases for all periods
after the Closing Date.
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6.9 INDEMNIFYING PARTY In the event that the net worth of UBIBV shall, at
any time during the period for which UBIBV is obligated to indemnify Buyer
pursuant to Section 8.1 and 8.2 hereof, be less than $650,000,000, Unicorn shall
cause one of its Affiliates having a net worth of not less than $650,000,000
execute such agreement(s) as may be reasonably requested by Buyer including
legal opinions or other assurances as to the enforceability of such agreements
to provide for the assignment by UBIBV and the assumption by such Affiliate of
UBIBV's indemnification obligations pursuant to such Section, provided that in
no event shall such indemnification obligations be expanded or increased beyond
the limitations set forth in such Section.
6.10 ANDREW NUGEE UBIBV shall use its commercially reasonable efforts to
cause Andrew Nugee to voluntarily resign his employment by the Vermont Entity
by which he is currently employed on the third business day following the
Closing, and Buyer and Communications will cause such Vermont Entity to waive
in writing its right to notice of termination of Mr Nugee's employment with
such Vermont Entity.
6.11 [INTENTIONALLY OMITTED]
6.12 NEW YORK LEASE The Parties hereby covenant and agree that, for a
period of 6 months following the Closing Date, Unicorn shall be permitted to
continue its occupation of such portion of the office space located on the 5th
floor at 32 Union Square East, New York, New York as it presently occupies
pursuant to an oral sublease from FPG International, LLC (successor-in-interest
to FPG International Group, Inc., the lessee thereof pursuant to the Lease
dated August 9, 1990 with 24-32 Union Square East Associates, Limited
Partnership (the "Landlord"), as amended), on the same terms, including without
limitation, rental rate, as Unicorn presently occupies such space. The Parties
hereby agree that Unicorn's sublease shall require 6 months prior written
notice for termination by FPG International, LLC. Buyer hereby covenants and
agrees that neither it nor its Affiliates will serve any such termination
notice prior to the six month anniversary of the Closing Date. During the
initial 12 month period, Buyer shall use its commercially reasonable efforts to
assist Unicorn in (i) securing the Landlord's consent to and approval of this
Section 6.12 (with respect to Unicorn's continued occupation, and (ii) securing
a direct lease of such space from the Landlord. On furtherance of the
foregoing, the Parties hereby agree that FPG International LLC and Unicorn
shall be permitted to enter into a written sublease reflecting the terms of the
existing sublease described above, in a form reasonably acceptable to Buyer.
6.13 SHARE OPTIONS
(a) Definitions
the "SCHEMES" the Sharesave Plan, the 1994 International Scheme,
the 1994 UK Scheme and the 1994 SAYE and any other
share option schemes adopted and operated by
UBIBV;
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the "THE 1994
INTERNATIONAL SCHEME" the Unapproved 1994 International Executive
Share Option Scheme;
the "1994 SAYE" the Approved 1994 UK Executive Share Option
Scheme;
the "SHARESAVE PLAN" the 1997 Unapproved United News & Media plc
International Sharesave Plan;
the "OPTION" an option over shares in the issued ordinary
share capital of Unicorn Plc, the terms of
which are as determined by the applicable
Scheme;
"RELEVANT EMPLOYEE" a person who is an employee of any one or
more Vermont Entities on or after Closing and
who currently has or may in the future have
any rights under any of the Schemes, which
expression shall include the personal
representatives of such individual and any
other person deriving rights under any such
Scheme from such individual;
"RETAINED GROUP" UBIBV and any subsidiary or subsidiary
undertaking or any holding company for the
time being of UBIBV, or any subsidiary or
subsidiary undertaking of such holding
company other than the Vermont Entities;
"SCHEME RIGHTS" the right of a Relevant Employee under the
Schemes to exercise any Option under the
Schemes on or in consequence of Closing in
favour of such Relevant Employee.
(b) UBIBV's Obligations
Where Scheme Rights confer upon any Relevant Employee any legal or
contractual right to exercise any outstanding Option under any Scheme and any
Relevant Employee elects to exercise any outstanding Option under any Scheme in
accordance with such legal or contractual right, then UBIBV shall or shall
procure that all relevant shares or securities are issued to the Relevant
Employee in satisfaction of such exercise.
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(c) Buyer's Obligations
Buyer shall co-operate with VCG to ensure that, following Closing,
it shall, at the request of VCG, take such steps as shall be reasonably
necessary or desirable to enable the Retained Group to efficiently administer
the Schemes in an effective and timely manner in relation to the Relevant
Employees (including enabling the Retained Group to utilize the payroll
services of the Vermont Entities to effect any payment and any consequential
deductions therefrom in respect of income tax, social security or the like
required to be made as a result of UBIBV acquitting its responsibilities under
paragraph 2 above.). In particular, and without prejudice to the generality of
the foregoing, Buyer and Communications shall procure that neither they nor any
of the Vermont Entities grant or purport to grant any rights or entitlements
under any Scheme nor does nor purports to do anything pursuant to any Scheme.
For the avoidance of doubt, as between the Parties, Buyer shall be responsible
for any relevant Taxes occurring upon exercise of Scheme Rights as employer of
the Relevant Employees.
ARTICLE VII
CONDITIONS TO OBLIGATION TO CLOSE
7.1 CONDITIONS TO OBLIGATIONS OF BUYER AND COMMUNICATIONS. The
obligations of Buyer and Communications under this Agreement and the
consummation by Buyer and Communications of the transactions contemplated
hereby are subject to the satisfaction at or prior to the Closing of the
following conditions, unless waived by Buyer and Communications in writing:
(a) Performance of Obligations of UBIBV. UBIBV shall have materially
performed all obligations required to be performed by it under this Agreement,
and materially complied with all covenants for which compliance by it is
required under this Agreement, prior to or at the Closing.
(b) Closing Documentation. Buyer and Communications shall have
received the following documents, agreements and instruments from UBIBV and VCG:
(i) Duly executed stock powers and stock transfer forms,
together with share certificates, if applicable, for the Vermont Shares
described in Section 2.4(b) hereof in forms mutually agreeable to the parties;
(ii) Certificates signed by an officer or director of UBIBV
certifying as to the matters set forth in Section 7.1(a) above with respect to
UBIBV;
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(iii) An opinion of Carter, Ledyard & Milburn, U.S. counsel for
Unicorn, UBIBV and VCG, dated the date of the Closing and addressed to Buyer and
Communications, in form and substance reasonably acceptable to Buyer and
Communications, together with such opinions of Baker & McKenzie, PWC Landwell,
or other counsel reasonably acceptable to Buyer and Communications, as shall be
required;
(iv) The Shareholders Registers of VCG Holdings, Definitive Stock
and VCGLLC (which shall be updated at Closing) and statutory company books,
including the minute books and stock record books, of the Vermont Entities to
the extent required to be maintained or actually maintained;
(v) A certificate of a member of the Management Board of each of
UBIBV and VCG dated the Closing Date certifying (A) that attached thereto are
true, complete and correct copies of the Articles of Association of each of
UBIBV, VCG, VCGLLC, VCG Holdings and Definitive Stock as in effect on the date
of such certification, (B) that the Articles of Association or other
organizational document of each of the foregoing entities have not been amended
since the date of the last amendment referred to in the certificate, (C) that
attached thereto are true, complete and correct copies of resolutions, as in
effect on the date of such certification, duly adopted by the Board of Directors
of UBIBV and VCG or a duly authorized committee thereof, approving the
transactions contemplated hereby and authorizing the execution, delivery and
performance by UBIBV and VCG of this Agreement and the sale and transfer of the
Vermont Shares owned by VCG in accordance herewith, and (D) as to the incumbency
and signatures of the officers of UBIBV and VCG executing this Agreement and all
instruments or other documents delivered in connection with this Agreement;
(vi) [Intentionally omitted]
(vii) Signed resignation letters of all directors and officers of
the Vermont Entities requested by Buyer prior to Closing (or actions of the
Shareholders or Board of Directors of VCG removing such persons as directors and
officers); and
(viii) All other instruments and documents required by this
Agreement to be delivered by UBIBV and VCG to Buyer and Communications on or
before the Closing, including execution and delivery of the Bavaria Agreement.
(c) Approval of Legal Matters. The form of all instruments, certificates
and documents to be executed and delivered by UBIBV and VCG to Buyer and
Communications pursuant to this Agreement shall be reasonably satisfactory to
Buyer and its counsel, none of whose approval shall be unreasonably withheld or
delayed.
(d) No Litigation. Except with respect to matters relating to antitrust
laws including the HSR Act which, for purposes of this Section 7.1 are addressed
exclusively in Section
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7.1(e) below:
(i) No action, suit or other proceeding shall be pending or
threatened before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated by this Agreement or seeking to obtain substantial damages in
respect thereof, or involving a claim that consummation thereof would result in
the violation of any law, decree or regulation of any governmental authority
having appropriate jurisdiction; provided, however, that no such action, suit or
proceeding commenced or threatened by a private person or entity shall
constitute failure of a condition to Buyer's obligations under this Agreement;
and
(ii) No order, decree or ruling of any governmental authority or
court shall have been entered prohibiting, restraining or otherwise preventing
the consummation of the transactions contemplated hereby.
(e) Hart-Scott-Rodino Waiting Period. All applicable waiting periods
under the HSR Act shall have expired without any indication by the Department
of Justice or the Federal Trade Commission that either of them intends to
challenge the transactions contemplated hereby, provided, however, that nothing
in this Section 7.1(e) shall be construed to constitute a modification of
Buyer's obligations as set forth in Section 5.5 hereof.
(f) Laws. No statute, rule, regulation or order shall have been
adopted or promulgated which materially adversely affects the Business, the
Assets of the Group Entities taken together as a whole.
(g) Financial Capacity. Buyer shall have obtained sufficient funds to
purchase the Vermont Shares on the terms and conditions contemplated by this
Agreement after using its reasonable commercial efforts to obtain such funds.
(h) Form 403. UBIBV shall have provided the filing by The Telegraph
Colour Library Limited at the Companies Registry of a duly executed and
completed Form 403 in respect of the charge in favour of Hambros Bank Limited.
7.2 CONDITIONS TO OBLIGATIONS OF UNICORN, VCG AND UBIBV. The obligations
of Unicorn and UBIBV under this Agreement and the consummation by Unicorn, VCG
and UBIBV of the transactions contemplated hereby are subject to the
satisfaction at or prior to the Closing of the following conditions, unless
waived by Unicorn, VCG and UBIBV in writing:
(a) Performance of Obligations of Buyer and Communications. Each of
Buyer and Communications shall have performed all obligations required to be
performed by it under this Agreement, and complied with all covenants for which
compliance by it is required under this Agreement, prior to or at the Closing.
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(b) Closing Documentation. UBIBV and VCG shall have received the following
documents, agreements and instruments from Buyer and Communications:
(i) Payment of the Purchase Price pursuant to Section 2.2 hereof;
(ii) A certificate signed by an officer of each of Buyer and
Communications certifying as to the matters set forth in Section 7.2(a) above;
(iii) An opinion of Weil, Gotshal & Manges, LLP, counsel for Buyer and
Communications, dated the date of the Closing and addressed to UBIBV and VCG,
in form and substance reasonably acceptable to UBIBV and VCG;
(iv) Copies of all consents, approvals and notices referred to in
Section 3.2(b) hereof;
(v) A certificate of the Secretary or an Assistant Secretary of each
of Buyer and Communications dated the Closing Date certifying (A) that attached
thereto are true, complete and correct copies of resolutions, as in effect on
the date of such certification, duly adopted by the Board of Directors of Buyer
and Communications, or a duly authorized committee thereof, approving the
transactions contemplated hereby and authorizing the execution, delivery and
performance by Buyer and Communications of this Agreement and the purchase and
acquisition by Buyer and Communications of the Vermont Shares in accordance
herewith, and (B) as to the incumbency and signatures of the officers of Buyer
and Communications executing this Agreement and all instruments or other
documents delivered in connection with this Agreement; and
(vi) All other instruments and documents required by this Agreement
to be delivered by Buyer and Communications to UBIBV and VCG on or before the
Closing, including execution and delivery of the Bavaria Agreement.
(c) Approval of Legal Matters. The form of all instruments, certificates
and documents to be executed and delivered by Buyer and Communications to UBIBV
and VCG pursuant to this Agreement shall be reasonably satisfactory to UBIBV
and its counsel, none of whose approval shall be unreasonably withheld or
delayed.
(d) No Litigation
(i) No action, suit or other proceeding shall be pending or
threatened before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated by this Agreement or seeking to obtain substantial damages in
respect thereof, or involving a claim that consummation thereof would result
in the violation of any law, decree or regulation of any governmental authority
having appropriate jurisdiction; provided, however, that no such action, suit
or proceeding commenced or threatened
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by a private person or entity shall constitute failure of a condition to
UBIBV's or VCG's obligations under this Agreement; and
(ii) No order, decree or ruling of any governmental authority or
court shall have been entered prohibiting, restraining or otherwise preventing
the consummation of the transactions contemplated hereby.
(e) Hart-Scott-Rodino Waiting Period. All applicable waiting periods
under the HSR Act, shall have expired without any indication by the Department
of Justice or the Federal Trade Commission that either of them intends to
challenge the transactions contemplated hereby.
ARTICLE VIII
REMEDIES FOR BREACHES OF THIS AGREEMENT
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Notwithstanding any
otherwise applicable statute of limitations, all of the representations and
warranties of Unicorn, VCG and UBIBV contained in Section 3.1 and all of the
representations and warranties of UBIBV contained in Sections 4.1 - 4.24 of
Annex A hereto, or in any certificate, annex or Schedule to this Agreement or
prepared by UBIBV in connection with this Agreement (including the Disclosure
Schedule) shall survive the Closing hereunder and continue in full force and
effect for the period specified below:
(a) for the representations and warranties contained in
Sections 4.6-4.14 and 4.16 - 4.24 of Annex A, until the 18 month anniversary of
the Closing Date;
(b) notwithstanding Section 8.1(a) above, for claims in relation to
the lost Licensed Images or model consents with releases (or lack thereof)
within the Knowledge of Seller prior to February 27, 2000 (including, for
purposes of this Article VIII, claims in relation to lost Licensed Images or
model consents with arising under the Bavaria Agreement) ("Media Claims"),
until the 5 year anniversary of the Closing Date; and
(c) for all other representations, warranties and covenants of the
parties, until the expiration of the applicable statute of limitations,
including extensions thereof.
Any Party entitled to receive indemnification pursuant to this Article
VIII shall use commercially reasonable efforts to seek recovery (including both
cost of defense and indemnity) under applicable insurance policies with respect
to any Adverse Consequences. In determining the amount payable hereunder there
shall be taken into account the dollar amount of any insurance as other net
proceeds actually received by (or paid for the benefit of) the party claiming
indemnification hereunder with respect to the events giving rise to a claim
hereunder. In the event that a Party (a "Collecting Party") receives payment
under this Article VIII from another Party (a "Paying Party"),
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and then subsequently receives insurance proceeds with respect to the matter
for which such Collecting Party received indemnification payment from Paying
Party, Collecting Party shall, within two (2) business days of the receipt of
such insurance proceeds, remit such proceeds to Paying Party up to the amount
previously paid by Paying Party.
Except as provided in the immediately following paragraph, no Party shall
be entitled to indemnification hereunder for any Adverse Consequences for which
indemnification is sought under the Bavaria Agreement, and no Party shall be
entitled to indemnification for any Adverse Consequences under the Bavaria
Agreement for which indemnification is sought hereunder.
UBIBV and Buyer hereby agree that to the extent that indemnification
claims pursuant to Section 8.2(a), 8.2(c) and 8.3 of the Bavaria Agreement
exceed the aggregate maximum amount set forth in such Sections, Buyer and UBIBV
shall be entitled to raise such claims hereunder as if the indemnities and
warranties contained in this Agreement relating to the Vermont Entities (or any
of them) were warranties and indemnities relating to the Bavaria Entities, to
the extent such claims (together with indemnification claims hereunder) do not
exceed the aggregate maximum amounts set forth in Sections 8.2(a), 8.2(c) and
8.3 hereof. Similarly UBIBV and Buyer hereby agree that to the extent that
indemnification claims pursuant to Sections 8.2(a) and 8.3 hereof exceed the
aggregate maximum amount set forth in such Sections, Buyer and UBIBV shall be
entitled to raise such claims under the comparable provisions of the Bavaria
Agreement as if the indemnities and warranties contained in the Bavaria
Agreement relating to the Bavaria Entities (or any of them) were warranties and
indemnities relating to the Vermont Entities, to the extent such claims
(together with indemnification claims thereunder) do not exceed the aggregate
maximum amounts set forth in Sections 8.2(a), 8.2(c) and 8.3 of the Bavaria
Agreement.
The Parties hereby acknowledge and agree that any item disclosed in
Section 4.10 of the Disclosure Schedule hereto shall be deemed to constitute
disclosure of such item in the comparable section of the Disclosure Schedule to
the Bavaria Agreement for purposes thereof.
8.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF BUYER AND COMMUNICATIONS
(a) In the event that any of Unicorn, VCG or UBIBV breach (or in the
event any third party alleges facts that, if true, would mean that any of
Unicorn, VCG or UBIBV has breached) any of their representations, warranties,
and covenants contained herein, or in any certificate, annex or Schedule
delivered pursuant hereto (except with respect to Media Claims, which are the
subject of Section 8.2(b) below), and, if there is an applicable survival
period pursuant to Section 8.1 above, provided that Buyer or Communications, as
the case may be, makes a written claim for indemnification against UBIBV
pursuant to Section 10.6 below within such survival period, then UBIBV agrees
to indemnify Buyer, Communications, VCGLLC, Definitive Stock and VCG Holdings
from and against the entirety of any Adverse Consequences any of the foregoing
entities may suffer resulting from, arising out of, relating to, in the nature
of, or caused by the breach (or the alleged breach), up to, together with
Adverse Consequences under Section 8.2(c), an aggregate
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maximum amount equal to one-half of the Purchase Price; provided, however, that
UBIBV shall have no obligation to indemnify Buyer, Communications, VCGLLC,
Definitive Stock or VCG Holdings from and against any Adverse Consequence
(treating as a single Adverse Consequence related Adverse Consequences arising
out of a single fact situation) that does not equal or exceed $25,000 ("De
Minimis Claims"); and provided, further, that UBIBV shall have no obligation to
indemnify Buyer, Communications, VCGLLC, Definitive Stock or VCG Holdings until
all such Adverse Consequences shall exceed $2,000,000 in aggregate amount (taken
together with any Adverse Consequences pursuant to the Bavaria Agreement, and
not including, in either case, any Adverse Consequences that are De Minimis
Claims) at which time UBIBV shall be liable to Buyer, Communications, Definitive
Stock, VCGLLC and VCG Holdings for all Adverse Consequences from the first $1 of
such Adverse Consequences.
(b) In the event Buyer or Communications makes a written claim for
indemnification against UBIBV pursuant to Section 10.6 below within the survival
period set forth in Section 8.1(b) above with respect to Adverse Consequence
suffered by Buyer, Communications, VCGLLC, Definitive Stock or VCG Holdings as a
result of Media Claims, UBIBV agrees to indemnify the foregoing entities from
and against all such Adverse Consequences any of the foregoing entities may
suffer resulting from, arising out of or relating to such lost Licensed Images
or model releases, up to an aggregate maximum amount equal to $2,000,000,
provided, however, that UBIBV shall have no obligation to indemnify Buyer,
Communications, VCGLLC, Definitive Stock or VCG Holdings from and against any
Adverse Consequences until all such Adverse Consequences shall exceed $500,000
in aggregate amount (taken together with any such Adverse Consequences pursuant
to the Bavaria Agreement), and provided, further that UBIBV shall have no
obligation to indemnify Buyer, Communications, VCGLLC, Definitive Stock or VCG
Holdings from and against that first $500,000 in aggregate amount of any such
Adverse Consequences.
(c) Without duplication of any indemnification payments pursuant to
Section 8.2(a), UBIBV agrees to indemnify Buyer and Communications from and
against (i) the Adverse Consequences of any Taxes payable by any Vermont Entity
for any Tax accounting period ending prior to January 1, 2000 (or, in the case
of a period that begins before December 31, 1999 and ends after such date, the
portion thereof through December 31, 1999), and (ii) one-half of the Adverse
Consequences of any income Taxes payable by any Vermont Entity for the period
beginning January 1, 2000 and ending on the Closing Date (the "Stub Period"),
up to, together with Adverse Consequences under Section 8.2(a), an aggregate
maximum amount equal to one-half of the Purchase Price. Whether or not an
income Tax accounting period ends on the Closing Date, income Taxes for the
Stub Period for the purposes of this Section 8.2(c) shall be determined based
upon a closing of the books on the Closing Date; provided, however that income
Taxes for the Stub Period shall exclude any Tax attributable to any
extraordinary income or gain that would not be recognized but for an action of
the Buyer or Communications after the Closing Date (including, without
limitation, an election under Code Section 338). With respect to any Taxes
payable for the fiscal year ending December 31, 1999 (or any portion thereof),
UBIBV shall be liable under the first sentence of this Section 8.2(c) only to
the extent that such Taxes are, in the aggregate, in excess of the accrual
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or reserve for Taxes as of December 31, 1999 in the Audited Vermont Financial
Statements. No claim may be brought under this Section 8.2(c) for any single
Tax item (or related series of items) which does not exceed $10,000. Any claim
hereunder must be brought within the time limit specified in Section 8.1(c).
8.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF UBIBV AND VCG. In the event
Buyer or Communications breaches (or in the event any third party alleges facts
that, if true, would mean Buyer of Communications has breached) any of its
representations, warranties, and covenants contained herein, or in any
certificate, annex or Schedule delivered pursuant hereto, and, if there is an
applicable survival period pursuant to Section 8.1 above, provided that UBIBV or
VCG makes a written claim for indemnification against Buyer and Communications
pursuant to Section 10.6 below within such survival period, then Buyer and
Communications agree, jointly and severally, to indemnify UBIBV and VCG from
and against any Adverse Consequences any of the foregoing entities may suffer
(including any Adverse Consequences UBIBV and VCG may suffer after the end of
any applicable survival period) resulting from, arising out of, relating to, in
the nature of, or caused by the breach (or the alleged breach), up to an
aggregate maximum amount equal to one-half of the Purchase Price, provided,
however, that Buyer and Communications shall not have any obligation to
indemnify UBIBV and VCG from and against any Adverse Consequence (treating as a
single Adverse Consequence related Adverse Consequences arising out of a single
fact situation) that does not equal or exceed $25,000 ("De Minimis Claims");
and provided, further, that Buyer and Communications shall not have any
obligation to indemnify UBIBV or VCG until all such Adverse Consequences shall
exceed $2,000,000 in aggregate amount (taken together with any Adverse
Consequences pursuant to the Bavaria Agreement, and not including, in either
case, any Adverse Consequences that are De Minimis Claims) at which time Buyer
and Communications shall, jointly and severally, be liable to UBIBV and VCG for
all Adverse Consequences from the first $1 of such Adverse Consequences.
8.4 MATTERS INVOLVING THIRD PARTIES.
(a) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other Party (the "Indemnifying
Party") under this Article VIII, then the Indemnified Party shall promptly
notify the Indemnifying Party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying the Indemnifying Party
shall relieve the Indemnifying Party from any obligation hereunder unless (and
then solely to the extent) the Indemnifying Party thereby is prejudiced.
(b) The Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
satisfactory to the Indemnified Party so long as (i) the Indemnifying Party
notifies the Indemnified Party in writing within 15 days after the Indemnified
Party has given notice of the Third Party Claim that the Indemnifying Party
will indemnify the Indemnified Party from and against the entirety of any
Adverse Consequences the
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Indemnified Party may suffer resulting from, arising out of, relating to, in
the nature of, or caused by the Third Party Claim, (ii) the Indemnifying Party
provides the Indemnified Party with evidence acceptable to the Indemnified
Party that the Indemnifying Party will have the financial resources to defend
against the Third Party Claim and fulfill its indemnification obligations
hereunder, (iii) the Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief, (iv) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good faith
judgment of the Indemnified Party, likely to establish a precedential custom or
practice adverse to the continuing business interests of the Indemnified Party,
and (v) the Indemnifying Party conducts the defense of the Third Party Claim
actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with Section 8.4(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim, (ii) the Indemnified
Party will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the prior written
consent of the Indemnifying Party (not to be withheld unreasonably), and (iii)
the Indemnifying Party will not consent to the entry of any judgment or enter
into any settlement with respect to the Third Party Claim without the prior
written consent of the Indemnified Party (not to be withheld unreasonably).
(d) In the event any of the conditions in Section 8.4(b) above is or
becomes unsatisfied, however, (i) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it may deem appropriate (and the
Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (ii) the Indemnifying Party will
reimburse the Indemnified Party promptly and periodically for the costs of
defending against the Third Party Claim (including reasonable attorneys' fees
and expenses), and (iii) the Indemnifying Party will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of, or caused by the Third Party Claim to
the fullest extent provided in this Article VIII.
(e) The Indemnified Party shall (and, in the case of Buyer and
Communications, shall cause the Vermont Entities to) cooperate fully, as and to
the extent reasonably requested by the other Party, in connection with any
Third Party Claim. Such cooperation shall include the retention and (upon the
other Party's request) the provision of records and information which are
reasonably relevant to any such Third Party Claim and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Parties agree (i) to
retain, and (in the case of Buyer and Communications) to cause the Vermont
Entities to retain, all books and records with respect to Tax matters pertinent
to the Vermont Entities relating to any taxable period beginning before the
Closing Date until six months after the expiration of the statute of
limitations (and, to the extent notified by Buyer, Communications or UBIBV, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention obligations imposed by law or pursuant to agreements entered
into with any Taxing Authority, and (ii) to give
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the other Party reasonable written notice prior to transferring, destroying or
discarding any such books and records and, if the other Party so requests,
Buyer or Communications or UBIBV, as the case may be, shall allow the other
Party to take possession of such books and records.
8.5 SOLE REMEDY. Each Party acknowledges and agrees that the
foregoing indemnification provisions of this Article VIII (including the
limitations set forth herein) are such Party's sole and exclusive remedy
against the other Parties and their Affiliates for any claim with respect to
the transactions contemplated hereby or otherwise relating to any Vermont
Entity, or the Assets or the Business, and each Party hereby waives and
releases any statutory, equitable or common law remedies which might otherwise
be available against the other Parties and their Affiliates. All
indemnification payments under this Article VIII shall be deemed adjustments to
the Purchase Price.
8.6 UNLIMITED CLAIMS.
(a) The proviso contained in Section 8.2 shall not apply to
UBIBV's liability in respect of any breach of the representations and
warranties contained in Section 3.1 or in Sections 4.1, 4.2, 4.3, 4.4 or 4.5 or
the final sentence of Section 4.6 of Annex A, with respect to which such
Party's liability shall not exceed the Purchase Price hereunder.
(b) The proviso contained in Section 8.3 shall not apply to
Buyer's liability in respect of any breach of the representations and
warranties contained in Section 3.2 with respect to which such Party's
liability shall not exceed the Purchase Price hereunder.
8.7 LITIGATION CLAIM. Notwithstanding the foregoing provisions of
this Article VIII, UBIBV agrees to provide to Buyer and Communications (and the
appropriate Vermont Entities following the Closing) with the benefit of UBIBV's
insurance coverage to the extent that it exists with respect to any Adverse
Consequences Buyer, Communications or any of the Vermont Entities may suffer in
respect of the Latina claim identified and described in Section 4.17 of the
Disclosure Schedule. UBIBV hereby represents and warrants that the Latina claim
has been submitted to its insurance company and has not, as of February 27,
2000, received any notice of rejection or non-coverage.
ARTICLE IX
TERMINATION
9.1 TERMINATION OF AGREEMENT. This Agreement may be terminated by
the Parties as provided below:
(a) The Parties may terminate this Agreement by mutual written
consent at any time prior to the Closing:
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(b) Either of Buyer or Communications may terminate this Agreement by
giving written notice to each of UBIBV, VCG and Unicorn at any time prior to
the Closing if the Closing shall not have occurred on or before March 26, 2000,
by reason of the failure of any condition precedent under Section 7.1(a)-(d)
and 7.1(f) or (g) hereof (unless the failure results primarily from Buyer or
Communications themselves breaching any representation, warranty, or covenant
contained in this Agreement, including, without limitation, Buyer's covenant
set forth in Section 5.5 hereof, or unless the failure otherwise relates to the
HSR Act);
(c) Either of UBIBV, VCG or Unicorn may terminate this Agreement by
giving written notice to each of Buyer and Communications at any time prior to
the Closing if the Closing shall not have occurred on or before March 26, 2000,
by reason of the failure of any condition precedent under Section 7.2 hereof
(unless the failure results primarily from UBIBV, VCG or Unicorn themselves
breaching any representation, warranty, or covenant contained in this
Agreement).
9.2 EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 9.1 above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
or their respective Affiliates, directors, officers or employees, except for
the obligations of the Parties hereto contained in this Section 9.2, Section
9.3 (if applicable) and in all other provisions which are stated to survive any
termination of this Agreement, including, without limitation, Sections 5.2,
5.3, 10.6, 10.7, 10.8, 10.9, 10.12, 10.16 and 10.20.
9.3 LIQUIDATED DAMAGES. Notwithstanding any other provision hereof, the
Parties hereby agree that, in the event that the transactions contemplated
hereby are not consummated by March 26, 2000 Buyer shall pay to UBIBV as
liquidated damages and a break-up fee, and not as a penalty, the aggregate
amount of $2,000,000 (subject to a dollar-for-dollar reduction for any payment
made pursuant to Section 9.3 of the Bavaria Agreement), except in the event
that the transactions contemplated are not consummated as a result of the
failure of the conditions to Closing set forth in Sections 7.1(a), (b), (c)
(unless Buyer unreasonably withholds or delays with respect to Section 7.1(c))
or (d) (with respect to Section 7.1(d) to the extent such litigation does not
arise out of the action of Buyer.)
ARTICLE X
MISCELLANEOUS
10.1 ENTIRE AGREEMENT. This Agreement (including the Annexes, Exhibits,
Schedules and documents attached hereto or referred to herein) constitutes the
entire agreement among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written or oral, to the
extent they related in any way to the subject matter hereof, except for the
Confidentiality Agreement which will remain in full force and effect for the
term provided for therein.
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10.2 NO THIRD-PARTY BENEFICIARIES.
(a) Except as otherwise expressly provided for in this
Agreement, nothing in this Agreement, express or implied, is intended or shall
be construed to confer upon or give to any employee of UBIBV, VCG, VCGLLC,
Buyer, Communications, Definitive Stock, VCG Holdings, or any Subsidiary of the
foregoing, or any other Person, other than the Parties hereto (and their
successors and permitted assigns), any rights, remedies or other benefits under
or by reason of this Agreement.
(b) The Parties hereto agree and acknowledge that after the
Closing Date: (i) VCGLLC, Definitive Stock and VCG Holdings are intended third
party beneficiaries under this Agreement and are independently entitled to
avail themselves of all the rights and remedies of Buyer and Communications
hereunder and all benefits related thereto.
10.3 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of the other Parties, provided, however, that Buyer may
assign, without the approval of the other parties, all or any portion of its
rights hereunder to any entity directly or indirectly owned wholly by Buyer, in
which extent Buyer shall, notwithstanding such assignment, remain wholly and
solely liable for the obligations, representations, warranties and covenants of
Buyer hereunder and under any certificate, schedule, annex or other agreement
delivered pursuant hereto.
10.4 COUNTERPARTS. This Agreement may be executed by exchanging
executed copies or facsimile signatures and in any number of counterparts, and
by any Party on separate counterparts, each of which as so executed and
delivered shall be deemed an original, but all of which together shall
constitute one and the same instrument, and it shall not be necessary in making
proof of this Agreement as to any Party hereto to produce or account for more
than one such counterpart executed and delivered by such Party.
10.5 HEADINGS. The Article and Section headings, and the table of
contents, contained in this Agreement are inserted for convenience only and
shall not affect in any way the meaning or interpretation of this Agreement.
10.6 NOTICES. All notices, certificates, requests, demands, claims,
and other communications hereunder shall be given in writing and shall be
delivered personally (including by personal courier or delivery service) or
sent by facsimile, telex or telegram or by the registered or certified mail
(return receipt requested), postage prepaid, to the Parties at the following
address (or at such other addresses as the shall be specified by like notice):
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IF TO UNICORN, VCG OR UBIBV: COPY TO:
c/o United News & Media plc Carter, Ledyard & Milburn
Ludgate House Two Wall Street
245 Blackfriars Road New York, New York 10005
London SE1 9UY, England
Fax No.: 011-44-171-928-2728 Fax No.: 212-732-3232
Attention: Company Secretary Attention: James E. Abbott
IF TO THE BUYER
OR COMMUNICATIONS: COPY TO:
Getty Images Inc. Weil, Gotshal & Manges, LLP
701 North 34th Street 767 Fifth Avenue
Suite 4000 New York, New York 10153
Seattle, Washington 98103
Fax No.: 206-268-1201 Fax No.: 212-310-8007
Attention: Suzanne Page Attention: Stephen Besen
GETTY IMAGES INC.
c/o PhotoDisc Inc.
475 Park Avenue South
31st Floor
New York, New York 10016
Fax No.: 212-471-5299
Attention: General Counsel
Any notice given personally or by mail or telegram shall be effective when
received. Any notice given by telex or facsimile shall be effective when the
appropriate telex or facsimile answerback is received.
10.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York as to all matters,
including but not limited to matters of validity, construction, effect,
performance and remedies (without giving effect to any choice or conflict of law
provision or rule, whether of the State of New York or any other jurisdiction,
that would cause the application of the laws of any jurisdiction other than the
State of New York).
10.8 RETURN OF INFORMATION. If for any reason whatsoever the sale and
purchase of the Vermont Shares pursuant to this Agreement is not consummated,
Buyer shall promptly return to UBIBV and VCG all books, records and documents of
UBIBV, VCG and the Vermont Entities (including all copies, if any, thereof)
furnished by UBIBV, VCG or any of their Affiliates, agents,
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employees, or representatives, and shall not use or disclose the information
contained in such books, records or documents for any purpose or make such
information available to any other entity or person, except that one copy of
all such information may be retained in the files of Buyer's legal department.
10.9 AMENDMENTS AND WAIVERS. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by
Buyer, Communications, Unicorn, VCG and UBIBV. Any Party hereto may, by written
notice to the other Parties, waive any provision of this Agreement. No waiver
by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
10.10 SEVERABILITY. The provisions of this Agreement shall be deemed
severable and any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof. If any
provision of this Agreement, or the application thereof to any person or entity
or any circumstance, is invalid or unenforceable, (i) a suitable provision
shall be substituted therefor in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or unenforceable provision,
and (ii) the remainder of this Agreement and the application of such provision
to other persons, entities or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
10.11 EXPENSES. Except as otherwise expressly provided in this Agreement,
whether or not the transactions contemplated by this Agreement are consummated,
each of the Parties will bear its own costs and expenses (including, but not
limited to, all compensation and expenses of counsel, financial advisors,
consultants, actuaries and independent accountants) incurred in connection with
this Agreement and the transactions contemplated hereby.
10.12 CONSTRUCTION. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including" shall
mean including without limitation. The Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant contained
herein in any respect, the fact that there exists another representation,
warranty, or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall not
detract from or mitigate the fact that the Party is in breach of the first
representation, warranty, or covenant.
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10.13 INCORPORATION OF EXHIBITS, ANNEXES, AND SCHEDULES. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof. References herein to "Section 4".x shall
refer to Section 4.x of Annex A.
10.14 SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches, or threatened breaches, of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in any court of the United States or
any state thereof having jurisdiction over the Parties and the matter (subject
to the provisions set forth in Section 10.15 below), in addition to any other
remedy to which they may be entitled, at law or in equity.
10.15 SUBMISSION TO JURISDICTION. IF ANY PARTY SHALL HAVE THE RIGHT TO
SEEK RECOURSE TO A COURT WITH RESPECT TO ANY DISPUTE ARISING OUT OF OR RELATED
TO THIS AGREEMENT OR THE TRANSACTIONS CONTAINED IN OR CONTEMPLATED BY THIS
AGREEMENT, WHETHER IN TORT OR CONTRACT OR AT LAW OR IN EQUITY, THEN ANY ACTION
OR PROCEEDING IN RESPECT OF ANY SUCH DISPUTE SHALL BE BROUGHT EXCLUSIVELY IN
THE SUPREME COURT OF THE STATE OF NEW YORK FOR THE COUNTY OF NEW YORK (THE
"CHOSEN COURTS") AND (I) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF
THE CHOSEN COURTS FOR SUCH PURPOSES, (II) WAIVES ANY OBJECTION TO LAYING VENUE
IN ANY SUCH ACTION OR PROCEEDING IN THE CHOSEN COURTS, (III) WAIVES ANY
OBJECTION THAT THE CHOSEN COURTS ARE AN INCONVENIENT FORUM OR DO NOT HAVE
JURISDICTION OVER ANY PARTY HERETO AND (IV) AGREES THAT SERVICE OF PROCESS UPON
SUCH PARTY IN ANY SUCH ACTION OR PROCEEDING SHALL BE EFFECTIVE IF NOTICE IS
GIVEN IN ACCORDANCE WITH SECTION 10.6 OF THIS AGREEMENT. EACH PARTY AGREES THAT
A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING SO BROUGHT SHALL BE CONCLUSIVE AND
MAY BE ENFORCED BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW
OR AT EQUITY. EACH PARTY ALSO AGREES NOT TO BRING ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY OTHER COURT. EACH OF BUYER
AND COMMUNICATIONS IRREVOCABLY DESIGNATES GETTY IMAGES INC.'S NEW YORK OFFICE
AS ITS AGENT AND ATTORNEY-IN-FACT FOR THE ACCEPTANCE OF SERVICE OF PROCESS ON
ITS BEHALF IN ANY SUCH CLAIM OR PROCEEDING AND TAKING ALL SUCH ACTS AS MAY BE
NECESSARY OR APPROPRIATE IN ORDER TO CONFER JURISDICTION OVER IT UPON THE
CHOSEN COURTS AND EACH OF BUYER AND COMMUNICATIONS STIPULATES THAT SUCH CONSENT
AND APPOINTMENT IS IRREVOCABLE AND COUPLED WITH AN INTEREST. EACH OF UBIBV,
VCG AND UNICORN IRREVOCABLY DESIGNATES CT CORPORATION AS ITS AGENT AND
ATTORNEY-IN-FACT FOR THE ACCEPTANCE OF SERVICE OF
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PROCESS AND MAKING AN APPEARANCE ON ITS BEHALF IN ANY SUCH CLAIM OR PROCEEDING
AND TAKING ALL SUCH ACTS AS MAY BE NECESSARY OR APPROPRIATE IN ORDER TO CONFER
JURISDICTION OVER IT UPON THE CHOSEN COURTS AND EACH OF UBIBV, VCG AND UNICORN
STIPULATES THAT SUCH CONSENT AND APPOINTMENT IS IRREVOCABLE AND COUPLED WITH AN
INTEREST.
10.16 FULFILLMENT OF OBLIGATIONS. Any obligation of any Party to any
other Party under this Agreement, which obligation is performed, satisfied or
fulfilled by an Affiliate of such Party, shall be deemed to have been
performed, satisfied or fulfilled by such Party.
10.17 SCHEDULES. The inclusion of any matter in any schedule to this
Agreement shall be deemed to be an inclusion for all purposes of this
Agreement, including each representation and warranty to which it may relate,
but inclusion thereon shall expressly not be deemed to constitute admission by
either Party, or otherwise imply, that any such matter is material or create a
measure for materiality for the purposes of this Agreement.
10.18 DEFINITION OF "ORDINARY COURSE". For purposes of this Agreement,
the term "ordinary course" as it relates to the Business prior to the Closing
means in a manner substantially the same as that normally employed by VCG in
the ordinary course with respect to businesses it holds with a view towards
operating and maintaining such businesses rather than a view towards the sale
of such businesses to a third party.
10.19 ATTORNEY'S FEES. In any proceeding brought by any Party hereto
to enforce this Agreement, the prevailing Party shall be entitled to reasonable
attorneys' fees incurred by the prevailing Party in connection therewith, plus
court costs and experts' fees.
***************
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, UBIBV, VCG, Unicorn, Buyer and Communications have each
executed or caused this Agreement to be executed by their duly authorized
officers, as the case may be, each as of the date first above written.
GETTY IMAGES INC.
By: /s/ Jonathan D. Klein
----------------------
Name: Jonathan D. Klein
Title: CEO
GETTY COMMUNICATIONS LIMITED
By: /s/ Jonathan D. Klein
----------------------
Name: Jonathan D. Klein
Title: Director
UNITED BUSINESS INFORMATION B.V.
By:
----------------------
Name:
Title:
VISUAL COMMUNICATIONS GROUP (VCG)
B.V.
By:
----------------------
Name:
Title:
UNITED NEWS & MEDIA PLC
By:
----------------------
Name:
Title:
<PAGE> 62
IN WITNESS WHEREOF, UBIBV, VCG, Unicorn, Buyer and Communications have each
executed or caused this Agreement to be executed by their duly authorized
officers, as the case may be, each as of the date first above written.
GETTY IMAGES INC.
By:
------------------------
Name:
Title:
GETTY COMMUNICATIONS LIMITED
By:
------------------------
Name:
Title:
UNITED BUSINESS INFORMATION B.V.
By: /s/ illegible signature
------------------------
Name:
Title:
VISUAL COMMUNICATIONS GROUP (VCG)
B.V.
By: /s/ illegible signature
------------------------
Name:
Title:
UNITED NEWS & MEDIA PLC
By: /s/ illegible signature
------------------------
Name:
Title:
<PAGE> 63
Title:
ANNEX A
4.1 INTEREST IN RELATED ENTITIES. Except as set forth in Section 4.1 of
the Disclosure Schedule, neither nor any Affiliate of VCG (i) has any direct or
indirect interest in any person or entity which is a lessor of assets or
properties to, material supplier of, or provider of services to any Vermont
Entity, (ii) has a direct or indirect interest in or is a party to any contract
or agreement to which any Vermont Entity is a party, or (iii) owns directly or,
to the Knowledge of Seller, indirectly, any tangible or intangible property
which any Vermont Entity uses in the conduct of the Business, or (iv) has any
outstanding indebtedness to any Vermont Entity. For purposes of this Section,
any investment by VCG or any Affiliate of VCG in any company whose stock is
listed on a national securities exchange or actively traded in the
over-the-counter market, which investment represents no more than 5% of the
outstanding voting power of such company, shall be deemed not to constitute a
direct or indirect interest in such company.
4.2 ORGANIZATION; QUALIFICATION; POWER. VCG Holdings is a corporation
duly organized and validly existing and in good standing under the laws of
England and Wales. Definitive Stock is a corporation duly organized, validly
existing and in good standing under the laws of Delaware. VCGLLC is a limited
liability company duly organized, validly existing and in good standing under
the laws of Delaware. Each of the Subsidiaries of VCG Holdings, Definitive
Stock and VCGLLC is duly organized, validly existing and in good standing (with
respect to jurisdictions that recognize such concept) under the laws of its
jurisdiction of domicile. The Vermont Entities have all requisite corporate
power and authority to own, lease and operate the Assets and to carry on the
Business as it is now being conducted, except to the extent any failure to be
so empowered or authorized does not have a Material Adverse Effect. Prior to
the Closing, VCG shall have delivered to Buyer and Communications true,
complete and correct copies of the Articles of Association or other
organizational document (including all amendments thereto) and the By-Laws, as
currently in effect, of each of the Vermont Entities. Each of the Vermont
Entities is duly qualified or licensed and in good standing (with respect to
jurisdictions that recognize such a concept) to do business in each
jurisdiction in which the property owned, leased or operated by it or the
nature of the business conducted by it makes such qualification or licensing
necessary.
VCG represents and warrants that the records and minutes of the
meetings of the shareholders and the board of directors as well as the reports
of the statutory auditors of Pix SA and, where applicable, iSwoop EURL, have
been maintained in accordance with French law since the respective dates of
incorporation thereof.
Any shares of Pix SA held by Pix SA as a result of the Merger have
been acquired, held and recorded in accordance with French law governing the
merger by absorption of a company by the subsidiary thereof.
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4.3 CAPITALIZATION. All of the Vermont Shares are duly authorized,
validly issued, fully paid and non-assessable. No depository certificates of
shares in the share capital of VCG have been issued. Section 4.3 of the
Disclosure Schedule sets forth a list of all of the Vermont Entities, the
number of shares of each such entities' authorized capital stock and the number
and class of shares thereof duly issued and outstanding or, if the entity is a
limited partnership, the partnership's capital and the capital contributions
including their respective amounts. Each outstanding share of capital stock of
each of the Vermont Entities is duly authorized, validly issued fully paid and
non-assessable. The capital contributions of Vermont Entities being limited
partnerships have been duly taken over, fully paid and are non-assessable. VCG
owns all of the outstanding shares of capital stock or other equity interests
of VCG Holdings, Definitive Stock and VCGLLC, in each case free and clean of
all encumbrances. There are no pre-emptive rights, whether at law or otherwise,
to purchase any of the securities of VCG and there are no outstanding options,
warrants, subscriptions, agreements, plans or other commitments pursuant to
which any Vermont Entity is or may become obligated to sell or issue any
security.
4.4 INVESTMENTS. Except as set forth in Section 4.4 of the Disclosure
Schedule, as of the Closing Date, no Vermont Entity owns or maintains, directly
or indirectly, any capital stock or other equity or ownership or proprietary
interest in any corporation, partnership, association, trust, joint venture or
other entity.
4.5 NO VIOLATIONS. The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the performance by
UBIBV and VCG of its obligations hereunder and under the agreements to be
executed and delivered pursuant hereto, do not and will not conflict with or
violate any of the terms of the Articles of Association, By-Laws or other
organizational documents of UBIBV, VCG or any Vermont Entity.
4.6 TITLE TO ASSETS; ENCUMBRANCES; DEBT. The Vermont Entities own, lease
or have the legal right to use all of the material Assets, including, without
limitation, real and personal property, presently used in the conduct of the
Business of the Vermont Entities, or which is otherwise owned, leased or used
by the Vermont Entities and, with respect to contract rights, enjoys the right
to the benefits of all material Contracts. The Vermont Entities have good and
marketable title to the Assets (except with respect to the Intellectual
Property included in such Assets, with respect to which, to the Knowledge of
Seller, the Vermont Entities have good and marketable title), free and clear of
all Encumbrances, except those specified in Section 4.6 of the Disclosure
Schedule, liens for taxes not yet due and payable, and Encumbrances that do not
in the aggregate have a Material Adverse Effect on the value or use by the
Vermont Entities of the Assets and the Intellectual Property, as currently
used. At the Closing, and following repayment of all Intercompany Debt, the
Vermont Entities shall be free of all debt of whatever kind or nature, except
for debts between the Vermont Entities, accounts payable and other liabilities
arising in the ordinary course of business.
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4.7 POSSESSION. Except as set forth in Section 4.7 of the Disclosure
Schedule, no other Person has a right of possession or, to the Knowledge of
Seller, claims possession of any material part of the Assets, except for the
rights of lessors over (a) the leased Personal Property identified in Section
4.8 of the Disclosure Schedule and (b) the leased Real Property identified in
Section 4.9 of the Disclosure Schedule.
4.8 PERSONAL PROPERTY.
(a) Set forth in Section 4.8(a) of the Disclosure Schedule is a list
of all material machinery and equipment, apparatus, motor vehicles, furniture,
furnishings and fixtures owned or leased by the Vermont Entities (the "Personal
Property").
(b) Each lease of Personal Property is valid and in full force and
effect, and none of the Vermont Entities is in default on any of their material
obligations under such leases and there is no event or condition that with the
giving of notice or the passage of time, or both, would create such a default
other than defaults that in the aggregate would not result in a Material Adverse
Effect. To the Knowledge of Seller, (i) no lessor under any of such leases is in
default of any of its obligations thereunder and (ii) there is no event or
condition that with the giving of notice or the passage of time, or both, would
create a default by any such lessor under any such lease. The Personal Property
has been maintained in good operating condition (in each case taking into
account the age of such Personal Property) a manner consistent with the ordinary
course of the Business.
4.9 REAL PROPERTY.
(a) No Owned Real Property. The Vermont Entities do not own any real
property.
(b) Leased Real Property. Section 4.9 of the Disclosure Schedule sets
forth all leases, subleases and other agreements under which any Vermont Entity
uses or occupies or has the legal right to use of occupy, now or in the future,
any real property (the "Leases").
(c) Compliance with Leases. Each of the Leases and each lease of real
property identified in Section 4.22 of the Disclosure Schedule is valid and in
full force and effect, and the Vermont Entities are not in default on any of
their obligations under such Leases and, to the Knowledge of Seller, there is no
event or condition that the giving of notice or the passage of time, or both,
would create such a default other than, in each case, defaults that in the
aggregate would not have a Material Adverse Effect. To the Knowledge of Seller,
(i) no lessor under any of such leases is in default of any of its obligations
thereunder and (ii) there is no event or condition that with the giving of
notice or the passage of time, or both, would create a default by any such
lessor under any such lease.
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(d) Pix Lease. To the extent required, the principal lessor consented
to the sublease entered into between Photographie Giraudon SA, as sub-lessee,
and Agence Generale d'Image, AGI SA, as sub-lessor, dated 1 October, 1994.
4.10 INTELLECTUAL PROPERTY.
(a) Section 4.10(a) of the Disclosure Schedule sets forth a true and
complete list of all (i) patents and patent applications, trademark and service
mark registrations, trademark and service mark applications and, to the
Knowledge of Seller, all material common law trademarks and service marks,
registered copyrights and copyright applications, and Internet domain names, in
each case owned by a Vermont Entity and material to the business of the Vermont
Entities ("Listed Intellectual Property"), (ii) Software (as defined herein),
and (iii) licenses, sublicenses, and other agreements pertaining to Intellectual
Property, Software or Images (as defined herein) to which a Vermont Entity is a
party, including agreements with major Internet service providers and major
Internet portals, in each case that are material to the business of the Vermont
Entities ("Licensed Intellectual Property"). For purposes hereof, "Intellectual
Property" means any and all of the following, but excluding Images: (i) United
States, international, and foreign patents, patent applications and statutory
invention registrations, (ii) trademarks, service marks, intent to use
registrations, trade names, trade dress, slogans, logos, and Internet domain
names, including registrations and applications for registration thereof, (iii)
copyrights, including registrations and applications for registration thereof
and (iv) confidential and proprietary information. For purposes hereof, "Owned
Intellectual Property" means Listed Intellectual Property and any copyright,
confidential proprietary information including trade secrets and knowhow, owned
by a Vermont Entity and, to the Knowledge of Seller, material to the business of
the Vermont Entity, "Image" means a reproduction of any artwork, photograph,
illustration, font, video, clip art, map art, film, animation or any other type
of image. For purposes hereof, "Software" means all material computer software
developed by or on behalf of a Vermont Entity, or used by a Vermont Entity,
including all material computer software and databases operated or used by
Vermont or Bavaria on their web sites or used by Vermont or Bavaria in
connection with processing customer orders, storing customer information,
storing Image related vendor information, or storing and archiving Images. For
purposes hereof, "Approved Images" means Images used or held for use by the
Vermont Entities in connection with their business for which a Vermont Entity
has the right to grant licenses or sublicenses in writing to third parties. For
purposes hereof, "Unapproved Images" means Images used or held for use by the
Vermont Entities in connection with their business which are not Approved Images
(the Approved Images and Unapproved Images collectively being "Licensed
Images").
(b) To the Knowledge of Seller, the use of the Owned Intellectual
Property, Software, Licensed Images, and Licensed Intellectual Property by the
Vermont Entities in the ordinary course of business does not infringe upon or
misappropriate the valid Intellectual Property rights of any third party. Except
as set forth in section 4.10(b) of the Disclosure Schedule, no claim
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has been received that the use of the Owned Intellectual property, Software,
Licensed Images, or Licensed Intellectual Property in the ordinary course of
business does or may infringe upon or misappropriate the Intellectual Property
rights, right of privacy or right of publicity of any third party.
(c) The Vermont Entities are the owner of the entire and unencumbered
right, title and interest in and to each item of Owned Intellectual Property,
and the Vermont Entities are entitled to use the Owned Intellectual Property in
the ordinary day-to-day conduct of business.
(d) The Owned Intellectual Property and the Licensed Intellectual Property
include all of the material Intellectual Property and Software used in the
ordinary day-to-day conduct of the business of the Vermont Entities, and there
are no other items of Intellectual Property or Software that are material to
such ordinary day-to-day conduct of such business. Except as set forth in
Section 4.10(d) of the Disclosure Schedule, to the Knowledge of Seller, the
Owned Intellectual Property and Licensed Intellectual Property, is not subject
to any claim or challenge in relation to subsistence, validity or
enforceability and has not been adjudged invalid or unenforceable in whole or
part and, to the actual knowledge of VCG, the Listed Intellectual Property is
subsisting, valid and enforceable.
(e) Except as set forth in Section 4.10(e) of the Disclosure Schedule, no
claims have been made, asserted, are pending, or, to the Knowledge of Seller,
threatened against a Vermont Entity, and no international agent licensee of the
Owned Intellectual Property or end user of the Owned or Licensed Intellectual
Property has informed VCG that any claims have been made, asserted, are pending
or threatened against a Vermont Entity, (i) based upon or challenging or
seeking to deny or restrict the use, license, sublicense, distribution,
display, copying, performance, marketing or creation of derivative works by a
Vermont Entity of any of the Owned Intellectual Property or Licensed
Intellectual property, (ii) alleging that any services provided by, processes
used by, licenses by, sublicenses by, distribution by, display by, copying by,
performances by, marketing by or creation of derivative works by or products
manufactured or sold by a Vermont Entity infringe upon or misappropriate any
Intellectual Property right, right of privacy or right of publicity of any
third party, or (iii) alleging that any Intellectual Property licensed under
the Licensed Intellectual property infringes upon any Intellectual Property
right of any third party or is being licensed or sublicensed in conflict with
the terms of any license or other agreement and to the Knowledge of Seller no
such claims have been made, asserted, are pending, or threatened against any
third party licensor, any licensee, or end user of the Owned Intellectual
Property.
(f) Except as set forth in Section 4.10(f) of the Disclosure Schedule, to
the Knowledge of Seller no person is engaging in any activity that infringes
upon the Owned Intellectual Property or any Intellectual Property Licensed to
the Vermont Entities under the Licensed Intellectual Property. No Vermont
Entity has granted any license or other right to any third party with respect
to the Owned Intellectual Property or Licensed Intellectual Property on a free
or 'pro
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bono' basis without the consent of or a license from the owner of such
Intellectual Property. The consummation of the transactions contemplated by
this Agreement will not result in the termination or material impairment of any
of the Owned Intellectual Property.
(g) VCG has delivered or made available to the Buyer correct and
complete copies of all the material licenses and sublicenses of the Licensed
Intellectual Property (excluding for such purposes all Images included therein)
including all amendments thereto, and all current standard forms of all model
and property releases which are in the custody, or under the control, of VCG
and the Vermont Entities. With respect to each such material license and
sublicense:
(i) such license or sublicense is valid and binding and in
full force and effect with respect to the Vermont Entities and, to the knowledge
of VCG, with respect to the relevant counterparty and represents the entire
agreement between the respective licensor and licensee with respect to the
subject matter of such license or sublicense;
(ii) such license or sublicense will not cease to be valid
and binding and in full force and effect on terms identical to those currently
in effect as a result of the consummation of the transaction contemplated by
this Agreement, nor will the consummation of the transactions contemplated by
this Agreement constitute a breach or default under such license or sublicense
or otherwise give the licensor or sublicensor other than a Vermont Entity a
right to terminate such license or sublicense;
(iii) Except as set forth in Section 4.10 of the Disclosure
Schedule, (A) no Vermont Entity has received any notice of termination or
cancellation under such license or sublicense, (B) no Vermont Entity has
received any notice of a breach or default under such license or sublicense,
which breach has not been cured, and (C) to the Knowledge of Seller no Vermont
Entity has granted to any other third party any rights, adverse or otherwise,
under such license or sublicense that would constitute a breach of such license
or sublicense; and
(iv) no Vermont Entity, nor, to the Knowledge of Seller, any
other party to such license or sublicense is in breach or default in any
material respect, and, to the Knowledge of Seller, no event has occurred that,
with notice or lapse of time would constitute such a breach or default or
permit termination, modification or acceleration under such license or
sublicense.
(h) To the Knowledge of Seller, the Software is as of the Closing
Date free of all viruses, worms, trojan horses and other material known
contaminants, and does not contain any bugs, errors, or problems in each case
which is of a material nature that disrupts its operation or have
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an adverse impact on the operation of other software programs or operating
systems. The Vermont Entities do not import or export from the United States any
Software. No rights in the Software have been transferred to any third party
except to the customers of a Vermont Entity to whom a Vermont Entity licensed
such Software in the ordinary course of business.
(i) The Vermont Entities have the right to use all software
development tools, library functions, compilers, and other third party software
that is material to the business of the Vermont Entities, or that is required to
operate or modify the Software in a manner necessary for the ongoing operation
of the business. The Software which the Vermont Entities purport to own was
either developed (i) by employees of the Vermont Entities within the scope of
their employment; (ii) by independent contractors who have assigned their
rights to the Vermont Entities pursuant to enforceable written agreements; or
(iii) has otherwise been rightfully assigned. The source code for such Software
is maintained on the premises of the Vermont Entities and can be compiled from
the associated source code without undue burden. The Vermont Entities have
copies of all material documentation which exists relating to use, maintenance
and operation of such Software used in the conduct of the Business.
(j) The Vermont Entities have taken reasonable steps in accordance
with normal industry practice to maintain the confidentiality of their trade
secrets and other confidential Intellectual Property. To the Knowledge of
Seller: (i) there has been no misappropriation of any material trade secrets or
other material confidential Intellectual Property of any Vermont Entity by any
person, (ii) no employee, independent contractor or agent of any Vermont Entity
has misappropriated any material trade secrets of any other person in the course
of such performance as any employee, independent contractor or agent and (iii)
no Employee, independent contractor or agent of any Vermont Entity is in
material default or breach of any term of any employment agreement,
non-disclosure agreement, assignment of proprietary rights agreement or similar
agreement or contract relating in any way to the protection, ownership,
development, use or transfer of Owned or Licensed Intellectual Property.
(k) To the Knowledge of Seller, the Internal MIS Systems are Euro
Compliant. For purposes hereof, "Internal MIS Systems" means any computer
software and systems (including hardware, firmware, operating system software,
utilities and applications software) used in the ordinary course of the Business
that process financial information and that are material to the operation of the
Business, including, where applicable, payroll, accounting, billing/receivables,
purchasing payables, inventory, asset tracking, customer service, and human
resources. For purposes hereof, "Euro Compliant" means that the Internal MIS
Systems will record, store, process and present currency denominated in Euros,
in the same manner, and with the same functionality, as the Internal MIS Systems
record, store, process and present currencies denominated in U.S. Dollars and
major European currencies.
(l) The Vermont Entities have obtained the necessary permissions from
the
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appropriate parties for links on its web sites to third party web sites and to
use third party marks in association with those links.
(m) To the Knowledge of the Seller, the Vermont Entities have obtained
all necessary releases and permissions in writing for the use of any artists'
name, biography, likeness, and Image used in marketing and advertising materials
distributed by the Vermont Entities. Except as set forth in Section 4.10(m) of
the Disclosure Schedule, the Vermont Entities' registered trademarks and service
marks as listed at Section 4.10(a) of the Disclosure Schedule have been duly
registered with, filed in or issued by, as the case may be, the United States
Patent and Tradesman Office or such other domestic or foreign office of
appropriate jurisdiction, and such registrations, filings, issuances and other
actions remain in full force and effect, are current and unexpired.
(n) Except for public domain imagery as set forth in Section 4.10(n)
of the Disclosure Schedule, the Vermont Entities validly own or license all
Images used or held for use by a Vermont Entity which are material to the
operation of the business of any Vermont Entity as currently conducted. With
respect to each Image owned by a Vermont Entity ("Owned Images"), the Vermont
Entity, as applicable, has the right to display, reproduce, distribute, sell,
market, perform, advertise, bundle with other derivative works, create
derivative works, license and sublicense the use of such Image to the extent
required for the continued day-to-day operation of the business in a manner
consistent with past practices. The Owned Images and Licensed Images include all
of the Images used or held for use by the Vermont Entities which are material to
the day-to-day operation of the business as currently conducted. With respect to
the public domain Images offered by the Vermont Entities, each Image, to the
Knowledge of Seller, does not require a license or the payment of a fee for the
Vermont Entities' use in a manner consistent with past practice. Without
prejudice to the generality of the foregoing, nothing in this Section shall be
deemed to be construed as a representation or warranty with respect to the
Licensor's ownership or license of Images.
(o) To the Knowledge of Seller, (a) no Vermont Entity has granted any
license, sublicense or other right to any other person with respect to any
Unapproved Images (b) no Vermont Entity has granted any license, sublicense or
other right to any other person with respect to any Approved Image that would
constitute a breach of any agreement or license pertaining to such Approved
Image, and (c) except as disclosed at Section 4.10 of the Disclosure Schedule no
Vermont Entity has granted any license, sublicense or other right to any other
person with respect to any Approved Image for which such Vermont Entity has no
model or property release where such license, sub-license or other right would
constitute a breach of a third party's rights without such model or property
release.
(p) To the Knowledge of Seller, (a) the display, sale, marketing,
distribution, bundling with other works, creation of derivative works, copying,
marketing, performance and advertising of the Licensed Images, and the licensing
and sublicensing of Approved Images as done, authorized or agreed to by the
Vermont Entities does not infringe upon the Intellectual Property
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right, right of publicity, or right of privacy of any third party, and (b) the
display, sale marketing, performance, distribution, bundling with other works,
creation of derivative works, copying and advertising of the Licensed Images,
and the licensing and sublicensing of Approved Images, as done, authorized or
agreed to by the Vermont Entities does not constitute a breach of any agreement
or license to which a Vermont Entity is a party.
(q) Except as set forth in Section 4.10(q) of the Disclosure Schedule, no
claims have been made, asserted, are pending, or to the Knowledge of Seller
threatened, against any Vermont Entity, and no international agent licensee of
the Licensed Images or end user of the Licensed Images has informed VCG that any
claims have been made, asserted, are pending or threatened against a Vermont
Entity, (i) based upon or challenging or seeking to deny or restrict the
display, sale, marketing, performance, distribution, bundling with other works,
creation of derivative works, copying, advertising, licensing or sublicensing by
any Vermont Entity of any of the Licensed Images, (ii) alleging that the sale,
reproduction, distribution, bundling with other derivative works, creation of
derivative works, copying, advertising, licensing or sublicensing of the
Licensed Images by any Vermont Entity or in accordance with the terms granted by
any Vermont Entity does or may infringe upon the Intellectual Property rights,
right of publicity, right of privacy of any third party, (iii) claiming in
respect of loss or damage to Licensed Images, (iv) claiming in respect of model
or property releases (or lack thereof) in respect of the Licensed Images, (v)
challenging the ownership of the Owned Images or the Vermont Entities' rights to
the Licensed Images, and to the Knowledge of Seller, no such claims have been
made, asserted, are pending, or threatened against any third party licensor, any
licensee, or any end user of a Licensed Images or an international agent for a
Vermont Entity. Except as set forth in Schedule 4.10(q) of the Disclosure
Schedule, no person has requested indemnification from any Vermont Entity based
on the proper use of an Owned Image or Licensed Image within the last 24 months.
(r) To the Knowledge of Seller, no person is engaging in any activity that
infringes upon the Licensed Images or upon the rights of any Vermont Entity
therein. The consummation of the transactions contemplated by this Agreement
will not result in the termination or impairment of any right of a Vermont
Entity to sell, copy, market, advertise, perform, bundle with other works,
create derivative works of, distribute or sublicense any of the Licensed Images.
(s) To the Knowledge of Seller, except as set forth in Section 4.10(s) of
the Disclosure Schedule, each of the Vermont Entities has, prior to any
display, bundling, marketing, performance, advertisement, sale, reproduction,
distribution or sublicensing of any Licensed Image, obtained in writing all
such releases and/or other third party consents or authorizations required by
law for such display, bundling, marketing, performance, advertisement, sale,
reproduction, distribution or sublicensing, or taken reasonable steps to ensure
that such releases, consents or authorizations have been given. Except as set
forth in Schedule 4.10(s) of the Disclosure Schedule the Vermont Entities have
not entered into any contract under which a Vermont Entity has assumed any
obligation for the storage and handling of Images outside of the ordinary
course of business.
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(t) With respect to each material license or agreement by which Vermont or
Bavaria has obtained the right to display, perform, advertise, market, sell,
reproduce, distribute, bundle with other derivative works, create derivative
works, market copy, license or sublicense the Licensed Images or by which
Vermont or Bavaria has granted to any third party the right to display, sell,
reproduce, perform or distribute any Licensed Images:
(i) such license or agreement is legal, valid, binding and
enforceable and in full force and effect with respect to the Vermont
Entities and, to the Knowledge of Seller, with respect to the relevant
counterparty and represents the entire agreement between the parties
thereto with respect to the subject matter thereof;
(ii) such license or agreement will not cease to be legal, valid,
binding and enforceable and in full force and effect on terms identical to
those currently in effect as a result of the consummation of the
transactions contemplated by this Agreement, nor will the consummation of
the transactions contemplated by this Agreement constitute a breach or
default under such license or agreement, or otherwise give any party
thereto a right to terminate such license or agreement;
(iii) except as set out in Section 4.10 of the Disclosure Schedule,
with respect to each such license or agreement, (A) no Vermont Entity has
received any notice of termination or cancellation under such license or
agreement, and no party thereto has any right of termination or
cancellation thereunder except in accordance with its terms (B) no Vermont
Entity has received any notice of a breach or default under such license or
agreement which breach or default has not been cured, and (C) to the
Knowledge of Seller no Vermont Entity has granted to any other person any
rights, adverse or otherwise, under such license or agreement that would
constitute a breach of such licence or agreement; and
(iv) none of the Vermont Entities nor, to the Knowledge of Seller,
any other party to such license or agreement, is in breach or default
thereof in any material respect, and, to the Knowledge of Seller, no event
has occurred that, with notice or lapse of time would constitute such a
breach or default or permit termination, modification or acceleration under
such license or agreement.
(u) No Vermont Entity has granted to any Person the right to distribute or
sell the Licensed Images except in the ordinary course of business.
(v) Section 4.10(v) of the Disclosure Schedule identifies each material
contract between a Vermont Entity and a photographer or other content provider
to a Vermont Entity that has been terminated or revoked since January 1, 1998
that involves the display, reproduction, distribution, creation of derivative
works, bundling with other works, licensing or sublicensing the use of any Image
owned or controlled by such third party.
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(w) All publicly and freely available electronic versions of Owned
Images and Licensed Images with a resolution level at or above "comping
resolution" distributed or made available by the Vermont Entities on a web
site, contain watermarks or similar protection mechanisms advertising or
marketing material.
4.11 ENVIRONMENTAL PROTECTION.
(a) Except as set forth in Section 4.11 of the Disclosure Schedule:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received by, no complaint has been
filed against, no penalty has been assessed against, and no investigation,
action, claim, suit, proceeding or review is pending or, to the Knowledge
of Seller, threatened, by any person or Governmental Authority against, any
Vermont Entity with respect to any matters relating to or arising out of
any Environmental Law which, individually or in the aggregate, would have a
Material Adverse Effect;
(ii) to the Knowledge of Seller, no Hazardous Substance has been
discharged, disposed of, dumped, injected, pumped, deposited, spilled,
leaked, emitted or released at, on or under any property now or previously
owned, leased or operated by any Vermont Entity which circumstance,
individually or in the aggregate, would have a Material Adverse Effect; and
(iii) there are no Environmental Liabilities that, individually or
in the aggregate, have had or would have a Material Adverse Effect.
(b) For purposes of this Section, the following terms shall have the
meanings set forth below:
(i) "Vermont Entity" shall include any entity which is, in whole
or in part, a predecessor of any Vermont Entity;
(ii) "Environmental Laws" means any and all federal, state, local
and foreign law (including common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit, or
governmental restrictions or any agreement with any Governmental Authority
or other third party, relating to human health and safety, the environment
or to pollutants, contaminants, wastes or chemicals or toxic, radioactive,
ignitable, corrosive, reactive or otherwise hazardous substances, wastes or
materials, in each case to the extent in effect on February 27, 2000;
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(iii) "Environmental Liabilities" means any and all liabilities of or
relating to the Vermont Entities of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, which (A) have
arisen under or relate to matters covered by Environmental Laws and (B)
have arisen from actions occurring or conditions existing on or prior to
the Closing; and
(iv) "Hazardous Substances" means any pollutant, contaminant, waste or
chemical or any toxic, radioactive, corrosive, reactive or otherwise
hazardous substance, waste or material, or any substance having any
constituent elements displaying any of the foregoing characteristics,
including, without limitation, petroleum, its derivatives, by-products and
other hydrocarbons, or any substance, waste or material regulated under any
Environmental Laws.
4.12 FINANCIAL STATEMENTS. VCG has previously furnished Buyer with a true
and complete copy of the audited consolidated balance sheets of VCG as of
December 31, 1999 and the related audited statements of income for the fiscal
year then ended including the notes thereto (the "Audited Vermont Financial
Statements"). Subject to the elimination of transactions and balances between
the Vermont Entities, the Audited Vermont Financial Statements present fairly in
all material respects the financial position of the Vermont Entities results of
operations and changes in financial position and the income of the Business for
the period ended on the date thereof in conformity with generally accepted
accounting principles in the United Kingdom, applied on a consistent basis.
There are no debts, liabilities or obligations of any kind, whether accrued or
fixed, absolute or contingent, matured or unmatured or determined or
determinable, to the extent required by GAAP to be reflected on financial
statements ("Liabilities") of any Vermont Entity, other than Liabilities (i)
reflected or reserved against on the Audited Vermont Financial Statements or
(ii) incurred in the ordinary course of business, consistent with the past
practices of the Vermont Entities, since December 31, 1999, provided, however,
that to the extent any such Liabilities exist, they shall be offset against any
assets reflected on the Audited Vermont Financial Statements which are later
determined to have a greater value than as reflected thereon.
4.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in Section
4.13 of the Disclosure Schedule, since the date of the Audited Vermont Financial
Statements there has not been any event, change or effect which has had or would
reasonably be expected to have a Material Adverse Effect in the financial
condition, properties, business, results of operations or, to the Knowledge of
Seller, prospects of the Vermont Entities taken as a whole. None of the Vermont
Entities are currently in default on any installment or installments on
indebtedness for borrowed money, or on any rental payment on any long-term
lease.
4.14 ABSENCE OF CHANGES. Except as set forth in Section 4.14 of the
Disclosure Schedule, since the date of the Audited Vermont Financial Statements,
the Business has been operated in the ordinary course, and there has not been
incurred, nor has there occurred:
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(a) Any material damage, destruction or loss (whether or not covered by
insurance), adversely affecting the Business or any of the material Assets;
(b) Any issuance, declaration, setting aside or payment of any dividend or
other distribution of cash or property on any of the capital stock of any
Vermont Entity, or any direct or indirect redemption, purchase or other
acquisition of any shares of capital stock of any Vermont Entity or any
agreement or commitment by any Vermont Entity to do so;
(c) Any strikes, work stoppages or other material labor disputes involving
any Employees;
(d) Any sale, transfer or other disposition of any of the Assets, except
for sales made in the ordinary course of business;
(e) Any amendment, termination, waiver or cancellation of any Material
Agreement included in the Assets, or of any right or claim thereunder;
(f) Any (i) general uniform increase in the compensation of the Employees
of the Vermont Entities (including, without limitation, any increase pursuant to
any bonus, pension, profit sharing or other plan or commitment), other than in
the ordinary course of business and consistent with past practice, (ii) increase
in any compensation payable by any Vermont Entity to any officer, director,
Employee, consultant or agent of any Vermont Entity, other than in the ordinary
course of business and consistent with past practice, (iii) loan or commitment
therefor made by any Vermont Entity to any officer, director, stockholder,
Employee, consultant or agent of a Vermont Entity, (iv) grant of any severance
or termination pay to any director, officer or Employee of any Vermont Entity,
or (v) entering into any employment, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer or Employee or any Vermont Entity.
(g) Any change in the accounting methods, procedures or practices followed
by the Vermont Entities;
(h) Any material change in policies, operations or practices of the Vermont
Entities, including, without limitation, with respect to selling methods,
returns, discounts or other terms of sale, as well as payments of liabilities;
(i) Any sales contracts or commitments which will be materially in excess
of the capacity of the Vermont Entities as of the Closing Date;
(j) Any purchase contracts or commitments materially in excess of the
requirements of the Business in the ordinary course;
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(k) Except as contemplated by clause (i) of Section 5.8 hereof, any
capital appropriation, expenditure or commitment therefor by the Vermont
Entities;
(l) Except as contemplated by clauses (ii) and (iii) of Section 5.8
hereof and except with respect to the Severance Plans, any material change in
policies, operations or practices of the Vermont Entities concerning the
Employees thereof, including, without limitation, with respect to any Employee
fringe Benefit Plans;
(m) Any event, occurrence or development within the control of VCG
and the Vermont Entities which has, or would reasonably be expected to have a
Material Adverse Effect;
(n) Any creation or assumption by any Vermont Entity of any
Encumbrance on any Asset other than in the ordinary course of business,
consistent with past practice;
(o) Any making of any loan, advance or capital contribution to or
investment in any person by any Vermont Entity, involving an amount in excess of
Two Hundred Thousand Dollars ($200,000);
(p) Any making or rescission of any material express or deemed
election relating to Taxes, settlement or compromise of any material claim,
action, suit, litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes, or except as may be required by applicable law,
made any change to any of its material methods of reporting income or
deductions for federal income tax purposes from those employed in the
preparation of its most recently filed federal and foreign income tax returns;
and
(q) Any agreement, whether in writing or otherwise, for any Vermont
Entity to take any of the actions enumerated in this Section 4.14 or any other
material action outside of the ordinary course of business.
4.15 TAX MATTERS. Except as will be disclosed not later than March 26,
2000 in a Schedule 4.15:
(a)(i) each U.S. Vermont Entity (as defined below) utilizes the
accrual method of accounting for computing its federal income Tax liability;
(ii) to the Knowledge of Seller, all Returns required to be filed by or on
behalf of any Vermont Entity have been timely filed in accordance with all
applicable laws (including allowance for extension of time to file); (iii) to
the Knowledge of Seller, such Returns are true, correct and complete in all
material respects (excluding, however, any inaccuracy the correction of which
would not cause a net Tax deficiency on such Returns); (iv) all Taxes shown on
such Returns as due and payable have been paid; (v) each Vermont Entity has
maintained with respect to transfer pricing proper intercompany agreements and
concurrent and supporting documentation as required under OECD guidelines, such
that no transfer pricing amounts will be denied as deductions in any
jurisdiction by reason of a lack of proper agreements or
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supporting documentation; (vi) there are no agreements or consents currently in
effect with any Taxing Authority for the extension or waiver of the time (A) to
file any Return or (B) for assessment or collection of any Taxes relating to the
income, properties, employees or operations of the Vermont Entities, or (C) for
the retention of records, documents or Returns; (vii) to the Knowledge of
Seller, all Taxes which the Vermont Entities are required by law to withhold or
collect have been duly withheld or collected, and have been timely paid over to
the appropriate Taxing Authority to the extent due and payable; and (viii) to
the Knowledge of the Seller, no power of attorney with respect to any Tax matter
of any Vermont Entity is currently in force.
(b) Each Vermont Entity that is a U.S. corporation (a "U.S. Vermont
Entity"), or is a non-U.S. corporation but is engaged in trade or business in
the United States, has filed all reports and has created and/or retained all
records required under Code Section 6038A with respect to its ownership by and
transactions with related parties. Each related foreign person required to
maintain records under Code Section 6038A with respect to transactions between
such Vermont Entity and the related foreign person has maintained such records.
All documents that are required to be created and/or preserved by the related
foreign person with respect to transactions with any such Vermont Entity are
either maintained in the United States, or such Vermont Entity is exempt from
the record maintenance requirements of Code Section 6038A with respect to such
transactions under Treasury Regulation Section 1.6038A-1. No such Vermont Entity
is a party to any record maintenance agreement with the Internal Revenue Service
with respect to Code Section 6038A.
(c) There is no action, suit, proceeding, investigation, audit or claim
currently pending or, to the Knowledge of Seller, threatened, regarding any
Taxes relating to the income, properties or operations of the Vermont Entities.
(d) No U.S. Vermont Entity (i) nor any Person on behalf of any U.S. Vermont
Entity has (A) executed or entered into a closing agreement pursuant to Code
Section 7121 (or any similar provision of U.S. state or local law) that is
currently in force and determines the Tax liabilities of the U.S. Vermont
Entities or (B) agreed to or is required to make any adjustments pursuant to
Code Section 481(a) by reason of a change in accounting method initiated by (or
on behalf of) any U.S. Vermont Entity, nor does VCG have knowledge that any
Taxing Authority has proposed any such adjustment or change in accounting
method, nor does any U.S. Vermont Entity have any application pending with any
Taxing Authority requesting permission for any changes in accounting methods
that relate to the business or operations of any of the U.S. Vermont Entities or
(ii) is subject to any private letter ruling of the Internal Revenue Service nor
is any request for such a ruling pending with the Internal Revenue Service.
(e)(i) No Vermont Entity has executed or entered into a binding agreement
with a non-U.S. Taxing Authority, similar to a Closing Agreement pursuant to US
Code Section 7121, that is currently in force and will determine the Tax
Liability of such Vermont Entity for any period ending after the Closing Date;
and (ii) to the Knowledge of Seller, no Vermont Entity is subject to any written
ruling addressed to it by a non-U.S. Taxing Authority, comparable to a private
letter
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ruling of the Internal Revenue Service, nor has any such ruling been requested.
(f) No Vermont Entity (i) is treated for any taxation purpose as
resident in a country other than the country of its incorporation or (ii) has
been subject to a claim by a Taxing Authority in a jurisdiction where a Vermont
Entity does not file Returns that it is or may be subject to taxation by that
jurisdiction.
(g) None of the Vermont Entities (i) has entered into any tax
sharing or similar agreement or arrangement (whether or not written and
including without limitation any arrangement under which tax losses or tax
reliefs are surrendered or claimed or agreed to be surrendered or claimed)
pursuant to which it will have any obligation to make any payments after the
Closing with respect to any period commencing after December 31, 1999, or (ii)
is liable to taxation chargeable primarily on any other company which is not a
Vermont Entity.
(h) There are no liens for any Tax on the assets of the Vermont
Entities except for taxes not yet due and payable.
(i) No Vermont Entity will be subject to a clawback of any Irish
stamp duty relief claimed under the Irish stamp duty legislation nor any
capital gains tax deferred under the Irish Taxes Acts by virtue of the entering
into and/or completion of this Agreement. To the Knowledge of Seller (limited,
however, to actual knowledge), no charge to taxation will arise on, nor will
any gain or loss otherwise be recognized by, any Vermont Entity by virtue of
the entering into and/or completion of this Agreement (excluding any charge to
taxation that would not arise, and gain or loss that would not be recognized,
but for an action of the Buyer after the Closing Date, including, without
limitation, an election under Code Section 338).
(j) To the Knowledge of Seller, each Vermont Entity is duly
registered in any country or jurisdiction where it could legally be subject to
the collection or payment of value added Tax ("VAT").
(k) Complete and correct copies of the Returns set forth in Schedule
4.15 (to be provided not later than March 26, 2000) were made available to the
Buyer and Communications prior to the date of this Agreement.
(l) There is no contract, agreement, plan or arrangement of any
Vermont Entity covering any person that, individually or collectively, will
give rise to the payment of any amount that would not be deductible by Buyer or
its Affiliates by reason of Code Sections 280G or 162(m).
(m) None of the U.S. Vermont Entities (i) is required to treat any
of their assets as owned by another person pursuant to the "safe harbor"
leasing provisions of the Code, (ii) owns assets that are "tax-exempt use
property" within the meaning of Code Section 168(h), "tax-exempt
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bond financed property" within the meaning of Code Section 168(g), "limited use
property" (as that term is defined in Rev. Proc. 76-30) or security for debt
the interest on which is tax-exempt under Code Section 103(a) or (iii) is
required to apply any of the foregoing rules under any comparable U.S. state or
local Tax provision.
(n) No (i) U.S. Vermont Entity nor any other Person on behalf of any U.S.
Vermont Entity has filed a consent pursuant to Code Section 341(f) or any
comparable foreign, state or local Tax provision or agreed to have Code Section
341(f)(2) or any comparable foreign, state or local Tax provision apply to any
disposition of a subsection (f) asset (as such term is defined in Code Section
341(f)(4)) owned by a Vermont Entity and (ii) UK Vermont Entity has acquired
any of its assets by virtue of a transfer from a group company under Section
171 of the UK Taxation of Chargeable Gains Act 1992.
(o) No claim has been made under Section 152 of the UK Taxation of
Chargeable Gains Act 1992 that affects the amount of the consideration which
would be allowable under Section 8 of such Act on a disposal of an asset by a
Vermont Entity.
(p) No Vermont Entity has at any time after April 6, 1965 repaid, redeemed
or purchased or agreed to repay, redeem or purchase, or granted an option under
which it may become liable to purchase, any shares of any class of its share
capital nor has any Vermont Entity after that date capitalized or agreed to
capitalize in the form of shares or debentures any profits or reserves of any
class or description or otherwise issued or agreed to issue any share capital
other than for the receipt of a new consideration (within the meaning of Part VI
of the UK Income and Corporation Taxes act 1988) or passed or agreed to pass any
resolution to do so.
(q) No indebtedness of any U.S. Vermont Entity is "corporate acquisition
indebtedness" within the meaning of Code Section 279(b), an "applicable high
yield discount obligation" within the meaning of Code Section 163(i) or debt on
which any portion of the interest thereon is "disqualified interest" within the
meaning of Code Section 163(h).
(r) None of the Vermont Entities is or has ever been a "United States
real property holding corporation," a "controlled foreign corporation," a
"personal holding company," a "foreign personal holding company," a "foreign
investment company," or a "passive foreign investment company," as each of
those terms is defined in the U.S. Code. None of the Vermont Entities would,
for 1999, have constituted a foreign investment company or a passive foreign
investment company had it had U.S. shareholders.
(s) None of the U.S. Vermont Entities has participated in, or cooperated
with, an "international boycott" within the meaning of Code Section 999.
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(t) Each Vermont Entity that is incorporated in Ireland or is engaged
in a trade or business in Ireland (an "Irish Vermont Entity") has (a) delivered
a notice of particulars to the Irish Revenue pursuant to Section 882 of the
Taxes Consolidation Act 1997 and (b) complied with the provisions of Chapter 8A
of the Taxes Consolidation Act 1997 in respect of all dividends paid and
distributions made.
(u) No Irish Vermont Entity (a) will be required to make any payment
under Section 411 of the Taxes Consolidation Act 1997 for the trading losses
surrendered in excess of the amount surrendered or (b) has made any disposals of
capital assets which would require Irish Revenue clearance under Section 980 of
the Taxes Consolidation Act 1997.
4.16 COMPLIANCE WITH LAWS, ETC. To the Knowledge of Seller, except with
respect to Environmental Laws, compliance with which is the subject of Section
4.11 hereof: (i) the Vermont Entities are in compliance with (A) all applicable
Laws and (B) all applicable orders, writs, judgments, injunctions, decrees and
similar commands of Governmental Authorities and all decisions and awards of any
arbitration panel or tribunal, except in each case where noncompliance would
have a Material Adverse Effect; and (ii) except as set forth in Section 4.16 of
the Disclosure Schedule, since the date of the Audited Vermont Financial
Statements, the Vermont Entities have not received any notification of any
asserted present or past failure by it to comply with such Laws or such orders,
writs, judgments, injunctions or decrees.
4.17 LITIGATION REGARDING THE VERMONT ENTITIES. Except as set forth in
Section 4.17 of the Disclosure Schedule, there are no (i) civil or criminal
actions, suits, claims, investigations or legal or administrative or
arbitration (or other binding alternative dispute resolution) proceedings
pending or, to the Knowledge of Seller, threatened against any Vermont Entity or
any of the Assets that seek damages in excess of $25,000 or which seek equitable
relief, or (ii) orders, writs, judgments, injunctions, decrees, awards or
similar commands of any Governmental Authority, or any arbitration tribunal or
panel, applicable to any Vermont Entity, except, in each case in this Section
4.17(ii), for those orders, writs, judgments, injunctions, decrees, awards or
similar commands which would not have Material Adverse Effect.
4.18 PERMITS, ETC. Set forth in Section 4.18 of the Disclosure Schedule is
a list of all material governmental licenses, permits, certificates or
inspection, other authorizations, filings and registrations which are necessary
for the Vermont Entities to own and operate the Business and Assets as presently
operated in all material respects (collectively, the "Authorizations"). All the
Authorizations have been duly and lawfully secured or made by UBIBV and are in
full force and effect and the Vermont Entities are in material compliance with
all such Authorizations. There are no proceedings pending or, to the Knowledge
of Seller, threatened to revoke or limit any Authorization. None of VCG or the
Vermont Entities have received notice of any violation of any Authorization.
Except as set forth in Section 4.18 of the Disclosure Schedule, none of the
transactions contemplated by this Agreement will terminate, violate or limit the
effectiveness of any of the Authorizations. The Vermont Entities have made, in a
timely manner, all material filings,
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reports, notices and other communications with the appropriate Governmental
Authority, and have otherwise taken, in a timely manner, all other action
required to be taken by them, reasonably necessary to secure the renewal of the
Authorizations prior to the dates of their respective expirations.
4.19 EMPLOYEES; LABOR RELATIONS. (a) Except as set forth in Section 4.19
of the Disclosure Schedule (i) the Vermont Entities (A) are not delinquent in
the payment to or on behalf of any past or present Employees of the Vermont
Entities of any wages, salaries, social security premiums, commissions,
bonuses, benefit plan contributions or other compensation (including without
limitation disability compensation) for all periods prior to February 27, 2000
and (B) are not delinquent in the payment of any amount which is due and
payable to any state or state fund pursuant to any workers' compensation
statute, rules or regulations or any amount which is due and payable to any
workers' compensation claimant or any other party arising under or with respect
to a claim that has been filed under state workers' compensation statutes and
approved in the ordinary course in accordance with the policies of the Vermont
Entities regarding workers' compensation and/or any applicable state statute or
administrative procedure; (ii) there is no labor strike, slowdown or work
stoppage in progress against any Vermont Entity; (iii) no collective bargaining
agreement currently exists or is currently being negotiated by any Vermont
Entity; (iv) to the Knowledge of Seller, there has been no request to any
Vermont Entity for collective bargaining on behalf of any Employees not
represented currently by a union or from the National Labor Relations Board in
respect of any Employees of any Vermont Entity; (v) to the Knowledge of Seller,
no union representation or jurisdictional dispute or question exists respecting
any Employees of any Vermont Entity; (vi) no material dispute exists between
any Vermont Entity and any of their respective sales representatives or, to the
Knowledge of Seller, between any such sales representatives with respect to
territory, commissions, products or any other terms of their representation;
and (vii) to the Knowledge of Seller, there has been no "mass layoff" or "plant
closing" as defined by WARN with respect to any of the Vermont Entities within
the six (6) months prior to Closing.
(b) With respect to Pix SA and iSwoop EURL, and since the respective
dates of incorporation thereof, all employer contributions payable to any state
social security agency (including, without limitation, L'Union pour le
Recouvrement des cotisations de Securite Sociale et d'Allocations Familiales)
have been paid in a timely manner.
4.20 EMPLOYEE BENEFITS.
(a) Benefits Plans. Section 4.20(a) of the Disclosure Schedule lists each
employee benefit plan (within the meaning of Section 3(3) of ERISA) consulting
or other compensation agreements, incentive, equity or equity-based
compensation, severance pay, sick leave, vacation pay, salary continuation for
disability, retirement benefits scheme (within the meaning of Section 611 of
the UK Income and Corporation Taxes Act 1988 (the "Taxes Act") personal pension
scheme (within the meaning of Section 630 of the Taxes Act) pension or
superannuation arrangement stock purchase plan, stock option plan, fringe
benefit plan, bonus plan and any other deferred compensation
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agreement or plan or funding arrangement which covers any Employee immediately
prior to Closing and which is sponsored or maintained or to which contributions
are required to be made by (i) UBIBV or VCG or (ii) any other organization which
is a member of a controlled group of organizations (within the meanings of
Sections 414(b), (c), (m) or (o) of the Code) or an associated employer (within
the meaning of Section 590A(3) or (4) of the Texas Act) of which VCG is a member
(the "Controlled Group"), such plans described in this sentence being referred
to collectively as the "Benefit Plans." Except as set forth on Section 4.20(a)
of the Disclosure Schedule, there are no material employee plans, arrangements,
benefit programs or similar plans which cover Employees immediately prior to
Closing. Schedule 4.20(a) separately set forth each Benefit Plan which is a
multiemployer plan, as defined in Section 3(37) of ERISA ("Multiemployer Plan"),
or is or has been subject to Sections 4063 or 4064 of ERISA ("Multiple Employer
Plans").
(b) Documents Furnished. VCG has made available to Buyer and Communications
a current, accurate and complete copy of each Benefit Plan specified in Section
4.20(a) of the Disclosure Schedule and, to the extent applicable, copies of the
most recent:
(i) determination letter or outstanding request for a determination
letter with respect to Benefit Plans intended to be qualified under Section
401(a) of the Code or, as the case may be, Chapters I or IV Part XIV or the
Taxes Act; and
(ii) Form 5500 with respect to all Benefit Plans, as applicable, for
which separate Form 5500's are filed, with all attachments and schedules
thereto.
(c) VCG has made available to Buyer and Communications copies of all
agreements, trust deeds and rules currently governing the UK Benefit Plans
together with copies of explanatory literature issued to members of the UK
Benefit Plans and a list of the Employees who are members of the UK Benefit
Plans with all details relevant to their membership including the basis upon
which their entitlements to benefits are calculated.
(d) Except as set forth on Section 4.20(c) of the Disclosure Schedule, for
each Benefit Plan specified below, the following is true:
(i) each such Benefit Plan which is intended to qualify under Section
401(a) of the Code as the case may be, Chapters I or IV Part XIV or the
Taxes Act has received a favorable determination letter as to its
qualification under the Code or the Taxes Act, and to the Knowledge of
Seller nothing has occurred, whether by action or failure to act, which
would cause the loss of such qualification;
(ii) with respect to all Benefit Plans, there are no actions, suits or
claims (other than routine claims for benefits in the ordinary course)
pending, and to the Knowledge of Seller there are no threatened actions,
suits or claims (other than routine claims for benefits in the ordinary
course);
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(iii) each of the Benefit Plans is, and its administration is and has
been since inception, in compliance with ERISA and the Code or equivalent UK
laws and regulation, except for such failures to comply which could not
reasonably be expected to have a Material Adverse Effect on the Business;
(iv) all contributions and other payments required to be made by
UBIBV, VCG or any Vermont Entity to any Benefit Plan under the terms of such
Benefit Plan in respect of Employees for any period ending on the Closing have
been made;
(v) no employer securities, employer real property or other employer
property is included in the assets of any Benefit Plan;
(vi) no assurance, promise or guarantee (oral or written) has been
made or given to an employee who is a member of a UK Benefit Plan of any
particular kind or amount of benefits (other than insured death in service
benefits) to be provided for or in respect of him on retirement, death or
leaving service;
(vii) Buyer will not have (x) any obligation to make any contribution
to any Multiemployer Plan under which VCG or the Controlled Group had
contribution obligations prior to the Closing Date or (y) any withdrawal
liability from any such Multiemployer Plan under Section 4201 of ERISA;
(viii) there has been no "reportable event" as that term is defined
in Section 4043 of ERISA and the regulations thereunder with respect to the
Benefit Plans which would require the giving of notice or any event requiring
disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA;
(ix) none of the VCG nor the Controlled Group has terminated any
Benefit Plan, or incurred any outstanding liability under Section 4062 of ERISA
to the PBGC, or to a trustee appointed under Section 4042 of ERISA. All
premiums due to the PBGC with respect to the Benefit Plans have been paid;
(x) neither VCG nor the Controlled Group or any organization to which
UBIBV is a successor parent corporation, within the meaning of Section 4069(b)
of ERISA, has engaged in any transaction, within the meaning of Section 4069 of
ERISA; and
(xi) none of the Benefit Plans which are "welfare benefit plans"
within the meaning of Section 3(1) of ERISA provide for continuing benefits or
coverage for any participant or any beneficiary or a participant
post-termination of employment, except as may be required under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") or
benefits at the expense of the participant or the participant's beneficiary and
each of UBIBV and the Controlled Group which maintains a "group health plan"
within the meaning of Section 5000(b)(1)
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of the Code has complied with the notice and continuation requirements of
Section 4980B of the Code, COBRA, Part 6 of Subtitle B of Title I of ERISA and
the regulations thereunder, except for such failures to comply which could not
reasonably be expected to have a Material Adverse Effect on the Business.
(e) No Changes. Except as set forth in Section 4.20 of the
Disclosure Schedule, on or after February 27, 2000 and before the Closing, no
Benefit Plan as it affects the Employees has been, or will be (i) amended in
any manner which would materially increase the benefits accrued, or which may
be accrued, by any participating or sponsoring employer thereunder or (ii)
amended in any manner which would increase the cost to UBIBV, VCG or any
Vermont Entity, or Buyer or Communications of maintaining such Benefit Plan
except to the extent required by law.
4.21 POWERS OF ATTORNEY. On the Closing Date, there will be no persons,
firms, associations, corporations or business organizations or entities holding
general or special powers of attorney from any Vermont Entity.
4.22 AGREEMENTS, ETC. Set forth in Section 4.22 of the Disclosure Schedule
is a list of all of the following contracts, agreements, documents,
instruments, understandings or arrangements, written or oral, included in the
Assets (collectively, the "Material Agreements"):
(a) Contracts involving the expenditure of more than Two Hundred
Thousand Dollars ($200,000) in any instance for the purchase of materials,
supplies, equipment or services, specifying those which are not cancelable on
thirty (30) days notice without penalty;
(b) Collective Bargaining Agreements with labor unions;
(c) Contracts and agreements relating to the leasing (as lessor or
lessee) or to the conditional purchase or sale of any property, real, personal
or mixed in excess of Two Hundred Thousand Dollars ($200,000) per year;
(d) Indentures, mortgages, promissory notes, loan agreements,
capital leases, security agreements, or other agreements or commitments for the
borrowing of money, or the purchase of assets involving deferred payments (in
the latter case, involving payments in excess of Two Hundred Thousand Dollars
per year), or which otherwise evidence indebtedness for borrowing or which
create an Encumbrance on any of the Assets;
(e) Guarantees of the obligations of a third party or agreements to
indemnify third parties;
(f) Individual employment, severance or consulting agreements or
arrangements under which payments were in excess of Two Hundred Thousand Dollars
($200,000) during 1999 or are reasonably projected to exceed Two Hundred
Thousand Dollars ($200,000) in 2000;
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<PAGE> 85
(g) Distributor, dealer, sales, advertising, agency, manufacturer's
representative, franchise or similar contracts or any other contract relating to
the payment of a commission under which payments were in excess of Two Hundred
Thousand Dollars ($200,000) during 1999 or are reasonably projected to exceed
Two Hundred Thousand Dollars ($200,000) in 2000;
(h) contracts granting a right of first refusal or first negotiation
with respect to the capital stock of any Vermont Entity;
(i) partnership or joint venture agreements with unaffiliated third
parties;
(j) agreements for the acquisition, sale or lease of material
properties or assets of any Vermont Entity since December 31, 1996 which involve
payments in excess of Two Hundred Thousand Dollars ($200,000) per year;
(k) agreements that purport to limit, curtail or restrict the ability
of any Vermont Entity to compete in any geographic area or line of business,
except for exclusive distributor or agency agreements pursuant to which a
Vermont Entity is not the distributor or agent;
(l) agreements between any Vermont Entity, on the one hand, and UBIBV
or Affiliate of UBIBV, or any officer, director or Employee of any Vermont
Entity, on the other hand;
(m) contracts or agreements with any Governmental Authority which
involve payments in excess of Two Hundred Thousand Dollars ($200,000) per year;
and
(n) agreements relating to the license, purchase, right to use or
other supply of still photographic images to any Vermont Entity which involve
payments in excess of Two Hundred Thousand Dollars ($200,000) per year.
True copies of all written Material Agreements, described on Section 4.22
of the Disclosure Schedule have been furnished to the Buyer and Communications.
Each of the Material Agreements constitutes a valid and binding obligation of
the Vermont Entity party thereto, enforceable in accordance with its terms and
is valid and in full force and effect and, except as set forth in Section 4.22
of the Disclosure Schedule, the transactions contemplated hereby will not
require the consent of any party thereto or otherwise adversely affect the
validity and effectiveness thereof. The Vermont Entities are not in default in
any material respect or alleged to be in default in any material respect under
any Material Agreement nor, to the Knowledge of Seller, is any other party to
any of the Material Agreements in default of any of its obligations thereunder.
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<PAGE> 86
4.23 CERTAIN MATTERS CONCERNING PIX.
(a) Pix SA is the resultant company from the merger by absorption of
Photographie Giraudon SA by Pix SA having as its effective date January 1, 1999
(the "Merger"). VCG further represents that the Merger (in particular, any and
all assessments or valuations made in connection therewith) was effected in
compliance with applicable French law and that the Merger has been duly
consummated, with retroactive effect to January 1, 1999, and is therefore valid
and opposable to third parties. Without in any way limiting the generality of
the foregoing, prior to the Merger, the share transfer agreement between Visual
Communications Group Limited and Photographie Giraudon SA dated 30 November,
1999, was validly made and duly filed with the clerk's office of the relevant
Commercial Court in a timely manner and that, with respect to the Merger, the
following formalities were duly complied with in a timely matter:
(i) consultation of workers' councils;
(ii) draft merger agreement approved by the boards;
(iii) appointment by the Court of a merger auditor;
(iv) filing of draft merger agreement with the Commercial Court;
(v) publication in a legal newspaper;
(vi) appropriate notice to shareholders;
(vii) appropriate notice to creditors;
(viii) special report of the boards; and
(ix) special report of the merger auditor.
(b) The actual net value of the assets of Photographie Giraudon SA
transferred to Pix SA pursuant to the Merger as compared to the net value of
said assets as valued in the Merger does not require adjustment or correction
to Pix SA's share capital as presently stated.
(c) Subsequent to the Merger, Pix SA had no off-balance sheet
liabilities other than those disclosed in Section 4.23 of the Disclosure
Schedule.
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<PAGE> 87
4.24 INSURANCE. Section 4.24 of the Disclosure Schedule sets forth a list
of insurance policies (including information on the premiums payable in
connection therewith and the scope and amount of the coverage provided
thereunder) maintained by any Vermont Entity, which policies have been issued
by insurers which, to the Knowledge of Seller, are reputable and financially
sound and provide coverage for the operations conducted by the Vermont Entities
of a scope and coverage consistent with customary industry practice.
4.25 ADDITIONAL REPRESENTATIONS OR WARRANTIES. Except as expressly set
forth in Section 3.1 and in Sections 4.1 through 4.24 hereof or in the
certificates, annexes, Exhibits and Schedules hereto, VCG makes no
representations or warranties to Buyer or Communications (including, without
limitation, no representations or warranties with respect to financial
projections), express or implied, and no representations or warranties by
UBIBV, VCG or Unicorn to Buyer and Communications shall be deemed to arise
hereafter except as set forth (i) in this Agreement and the documents
contemplated hereby including any certificates, annexes or schedules executed
and/or delivered at the Closing by UBIBV and VCG or (ii) in documents otherwise
delivered by UBIBV and VCG to Buyer or Communications on or after the date of
this Agreement that have been executed by UBIBV and VCG and which expressly
makes representations and warranties to Buyer and Communications.
**************
[Remainder of Page Intentionally Left Blank]
69
<PAGE> 88
PENSION SCHEDULE
1. In this Schedule the following words shall, unless the context otherwise
requires, have the following meanings:
"APPROVAL" approval by the Board of Inland Revenue as
an exempt approved scheme for the purposes
of Chapter 1 of Part XIV of the Income and
Corporation Taxes Act 1988;
"THE EMPLOYEE MEMBERS" those employees and directors of the
Vermont Entities who are active members of
the UNM Plans at Closing (with the
exception of those Employees who are
members of the UNM Plans for life assurance
benefits only);
"THE PENSION TRANSFER DATE" 1 June 2000 or such other date as is
agreed in writing by UBIBV and Buyer;
"THE TRANSITIONAL PERIOD" the period commencing on the day
immediately following Closing and ending
on the day immediately preceding the
Pension Transfer Date; and
"THE UNM PLANS" each of:
(a) the United Money Purchase Pension
Plan;
(b) the United Pension Plan; and
(c) the United Magazines Final Salary
Pension Scheme.
2. UBIBV and Buyer shall use their reasonable endeavors to procure the
continued participation of the Vermont Entities in the UNM Plans during
the Transitional Period for the purpose of the continued membership of
the Employee Members.
3. Buyer undertakes that during the Transitional Period the relevant
Vermont Entities will:
3.1 pay contributions determined in accordance with the Rules of the UNM
Plans to the Trustees of the UNM Plans by no later than the 14th day of
the month following that in which the relevant contributions are due;
70
<PAGE> 89
3.2 in respect of life assurance benefits for Employee Members of the United
Money Purchase Pension Plan and the United Pension Plan, pay contributions
equal to 0.5% of pensionable pay to the Trustees of those Plans;
3.3 in respect of Mr C Baxendale, pay to the trustees of the United Magazines
Final Salary Pension Scheme employer contributions at the rate of 13.1% and
employee contributions at the rate of 5% of his pensionable pay;
3.4 not do or omit to do any act or thing which would or might prejudice the
Approval of the UNM Plans or the contracted-out status of the United
Magazines Final Salary Pension Scheme;
3.5 cooperate with UBIBV to ensure that Mr C Baxendale continues to be in
contracted out employment in respect of the United Magazines Final Salary
Pension Scheme.
4. UBIBV undertakes that during the Transitional Period it will take no
voluntary action and shall use its reasonable endeavours to procure that no
action is taken to wind-up the UNM Plans or alter the provisions of the UNM
Plans to the detriment of the Employee Members or Buyer or the Vermont
Entities without the prior written consent of Buyer which will not be
withheld unreasonably.
5. Buyer shall arrange for those of the Employee Members who are still in the
employment of the Vermont Entities on the Pension Transfer Date to be
offered membership of a group personal pension arrangement with effect from
the Pension Transfer Date.
6. Notwithstanding that an Employee Member may not have been a member of a UNM
Plan for two years and therefore have no legal entitlement to preserved
benefits under Chapter IV of the Pension Schemes Act 1993, the UBIBV shall
use its reasonable endeavours to procure that the trustees of the relevant
UNM Plan will treat such an Employee Member as being so entitled.
7. UBIBV hereby agrees with Buyer (contracting for itself and as trustee for
the Vermont Entities) to indemnify Buyer and the Vermont Entities against
all losses, costs, expenses, damages, liabilities, demands, claims, actions
and proceedings which may be suffered or incurred by or made or brought
against Buyer or the Vermont Entities directly or indirectly in connection
with or as a consequence of the application of section 75 of the Pensions
Act 1995 and any regulations made thereunder in relation to the United
Magazines Final Salary Pension Scheme.
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<PAGE> 90
Parliament now or hereafter enacted and every statutory order rule
instrument regulation and bye-law and every notice order or direction
and every licence consent or permission already or hereafter to be
made or given thereunder) including (but without prejudice to the
generality of the foregoing) the Health and Safety at Work etc Act
1974 and the lawful requirements of any local or public authority so
far as the same shall relate to or affect the demised premises or the
user thereof for the purposes of any manufacture process or business
or the employment therein of any person or persons or any fixtures
machinery plant or chattels for the time being affixed thereto or
being thereupon or used for the purposes thereof and to do and
execute or cause to be done and executed all such works and provide
and maintain all arrangements which by or under any enactment or by
and government department local authority or other public authority
or duly authorised officer or Court of competent jurisdiction acting
under or in pursuance of any enactment are or may be directed or
required to be done executed provided and maintained at any time
during the Term upon or in respect of the demised premises or any
part or parts thereof or in respect of any such user thereof or
employment therein of any person or persons or fixtures machinery
plant or chattels as aforesaid whether by the Landlord or the Tenant
or occupier thereof and to indemnify the Landlord at all times
against all costs charges and expenses of or incidental to the
execution of any works or the provision or maintenance of any
arrangements so directed or required as aforesaid and to pay the
reasonable costs charges and expenses of the Solicitors and of the
surveyors for the time being of the Landlord in relation thereto and
not at any time during the Term to do or omit or suffer to
14
<PAGE> 91
be done or omitted on or about the demised premises any act or thing
by reason of which the Landlord may under any enactment incur or have
imposed upon it or become liable to pay any penalty damages
compensation costs charges or expenses and to pay all costs charges
and expenses incurred by the Landlord in abating a nuisance caused by
the Tenant or anyone within the control of the Tenant and executing
all such works as may be necessary for abating such a nuisance in
connection with the demised premises whether or not in obedience to a
notice served by a Local Authority
3:9:2 To furnish the Landlord with copies of all consents and certificates
which may be obtained by the Tenant under the Health and Safety at
Work etc Act 1974 or any other enactment from time to time affecting
the same
3:10:1 Not to assign charge underlet or part with possession of part only of
the demised premises nor allow any person deriving title from the
tenant to do so
3:10:2 Not without the Landlord's prior written consent (which shall not be
unreasonably withheld or delayed) to underlet the whole of the
demised premises nor allow any person deriving title from the Tenant
to do so Provided that in the event of the Tenant applying for
consent to underlet the whole of the demised premises the Landlord
shall be entitled (without prejudice to the generality of the
foregoing and without prejudice to any other matters the Landlord may
wish to take into account in determining such application) to refuse
to consider such application if in the opinion of the Landlord acting
reasonably there may be a breach of the
15
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EXHIBIT 4.1
-----------------------------------------------
GETTY IMAGES, INC.
To
THE BANK OF NEW YORK,
as Trustee
---------------------------
INDENTURE
Dated as of
March 13, 2000
---------------------------
5% CONVERTIBLE SUBORDINATED NOTES DUE 2007
-----------------------------------------------
<PAGE> 93
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1. DEFINITIONS .................................................................... 1
Section 1.1. Definitions ....................................................... 1
ARTICLE 2. ISSUE, DESCRIPTION, EXECUTION, REGISTRATION AND EXCHANGE OF NOTES .............. 8
Section 2.1. Designation, Amount And Issue Of Notes ............................ 8
Section 2.2. Form Of Notes ..................................................... 8
Section 2.3. Date And Denomination Of Notes; Payments Of Interest .............. 9
Section 2.4. Execution Of Notes ................................................10
Section 2.5. Exchange And Registration Of Transfer Of Notes; Restrictions
On Transfer; Depositary ...........................................11
Section 2.6. Mutilated, Destroyed, Lost Or Stolen Notes ........................18
Section 2.7. Temporary Notes ...................................................19
Section 2.8. Cancellation Of Notes Paid, Etc ...................................19
Section 2.9. CUSIP Numbers .....................................................19
ARTICLE 3. REDEMPTION OF NOTES ............................................................19
Section 3.1. Initial Prohibition On Redemption .................................19
Section 3.2. Notice Of Redemptions; Selection Of Notes .........................20
Section 3.3. Payment Of Notes Called For Redemption ............................22
Section 3.4. Conversion Arrangement On Call For Redemption .....................22
Section 3.5. Redemption At Option Of Holders ...................................23
ARTICLE 4. SUBORDINATION OF NOTES .........................................................25
Section 4.1. Agreement Of Subordination ........................................25
Section 4.2. Payments To Noteholders ...........................................25
Section 4.3. Subrogation Of Notes ..............................................28
Section 4.4. Authorization To Effect Subordination .............................29
Section 4.5. Notice To Trustee .................................................29
Section 4.6. Trustee's Relation To Senior Indebtedness .........................30
Section 4.7. No Impairment Of Subordination ....................................30
Section 4.8. Certain Conversions Not Deemed Payment ............................31
Section 4.9. Article Applicable To Paying Agents ...............................31
Section 4.10. Senior Indebtedness Entitled To Rely ..............................31
Section 4.11. Reliance On Judicial Order Or Certificate Of Liquidating Agent ....31
ARTICLE 5. PARTICULAR COVENANTS OF THE COMPANY ............................................32
Section 5.1. Payment Of Principal, Premium And Interest ........................32
</TABLE>
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<TABLE>
<S> <C>
Section 5.2. Maintenance Of Office Or Agency ..................................32
Section 5.3. Appointments To Fill Vacancies In Trustee's Office ...............33
Section 5.4. Provisions As To Paying Agent ....................................33
Section 5.5. Existence ........................................................34
Section 5.6. Maintenance Of Properties ........................................34
Section 5.7. Payment Of Taxes And Other Claims ................................34
Section 5.8. Rule 144A Information Requirement ................................34
Section 5.9. Stay, Extension And Usury Laws ...................................35
Section 5.10. Compliance Certificate ...........................................35
Section 5.11. Liquidated Damages Notice ........................................36
ARTICLE 6. NOTEHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE .................36
Section 6.1. Noteholders' Lists ...............................................36
Section 6.2. Preservation And Disclosure Of Lists .............................36
Section 6.3. Reports By Trustee ...............................................37
Section 6.4. Reports By Company ...............................................37
ARTICLE 7. REMEDIES OF THE TRUSTEE AND NOTEHOLDERS ON AN EVENT OF DEFAULT ................37
Section 7.1. Events Of Default ................................................37
Section 7.2. Payments Of Notes On Default; Suit Therefor ......................39
Section 7.3. Application Of Monies Collected By Trustee .......................41
Section 7.4. Proceedings By Noteholder ........................................41
Section 7.5. Proceedings By Trustee ...........................................42
Section 7.6. Remedies Cumulative And Continuing ...............................42
Section 7.7. Direction Of Proceedings And Waiver Of Defaults By Majority
Of Noteholders ...................................................42
Section 7.8. Notice Of Defaults ...............................................43
Section 7.9. Undertaking To Pay Costs .........................................43
ARTICLE 8. THE TRUSTEE ...................................................................44
Section 8.1. Duties And Responsibilities Of Trustee ...........................44
Section 8.2. Reliance On Documents, Opinions, Etc .............................45
Section 8.3. No Responsibility For Recitals, Etc ..............................46
Section 8.4. Trustee, Paying Agents, Conversion Agents Or Registrar May
Own Notes ........................................................46
Section 8.5. Monies To Be Held In Trust .......................................46
Section 8.6. Compensation And Expenses Of Trustee .............................46
Section 8.7. Officers' Certificate As Evidence ................................47
Section 8.8. Conflicting Interests Of Trustee .................................47
Section 8.9. Eligibility Of Trustee ...........................................47
Section 8.10. Resignation or Removal Of Trustee ................................48
Section 8.11. Acceptance By Successor Trustee ..................................49
</TABLE>
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<TABLE>
<S> <C>
Section 8.12. Succession By Merger, Etc ..........................................49
Section 8.13. Preferential Collection Of Claims ..................................50
Section 8.14. Trustee's Application For Instructions From The Company ............50
ARTICLE 9. THE NOTEHOLDERS .................................................................50
Section 9.1. Action By Noteholders ..............................................50
Section 9.2. Proof Of Execution By Noteholders ..................................51
Section 9.3. Who Are Deemed Absolute Owners .....................................51
Section 9.4. Company-Owned Notes Disregarded ....................................51
Section 9.5. Revocation Of Consents; Future Holders Bound .......................52
ARTICLE 10. MEETINGS OF NOTEHOLDERS ........................................................52
Section 10.1. Purpose Of Meetings ................................................52
Section 10.2. Call Of Meetings By Trustee ........................................52
Section 10.3. Call Of Meetings By Company Or Noteholders .........................53
Section 10.4. Qualifications For Voting ..........................................53
Section 10.5. Regulations ........................................................54
Section 10.6. Voting .............................................................54
Section 10.7. No Delay Of Rights By Meeting ......................................54
ARTICLE 11. SUPPLEMENTAL INDENTURES ........................................................54
Section 11.1. Supplemental Indentures Without Consent Of Noteholders .............54
Section 11.2. Supplemental Indenture With Consent Of Noteholders .................55
Section 11.3. Effect Of Supplemental Indenture ...................................56
Section 11.4. Notation On Notes ..................................................57
Section 11.5. Evidence Of Compliance Of Supplemental Indenture To Be
Furnished To Trustee ...............................................57
ARTICLE 12. CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE ..............................57
Section 12.1. Company May Consolidate, Etc. On Certain Terms .....................57
Section 12.2. Successor Corporation To Be Substituted ............................57
Section 12.3. Opinion Of Counsel To Be Given Trustee .............................58
ARTICLE 13. SATISFACTION AND DISCHARGE OF INDENTURE ........................................58
Section 13.1. Discharge Of Indenture .............................................58
Section 13.2. Deposited Monies To Be Held In Trust By Trustee ....................59
Section 13.3. Paying Agent To Repay Monies Held ..................................59
Section 13.4. Return Of Unclaimed Monies .........................................59
Section 13.5. Reinstatement ......................................................59
ARTICLE 14. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS ................60
</TABLE>
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<TABLE>
<S> <C>
Section 14.1. Indenture And Notes Solely Corporate Obligations ...................60
ARTICLE 15. CONVERSION OF NOTES ............................................................60
Section 15.1. Right To Convert ...................................................60
Section 15.2. Exercise Of Conversion Privilege; Issuance Of Common Stock On
Conversion; No Adjustment For Interest Or Dividends ................60
Section 15.3. Cash Payments In Lieu Of Fractional Shares .........................62
Section 15.4. Conversion Price ...................................................62
Section 15.5. Adjustment Of Conversion Price .....................................62
Section 15.6. Effect Of Reclassification, Consolidation, Merger Or Sale ..........71
Section 15.7. Taxes On Shares Issued .............................................72
Section 15.8. Reservation Of Shares; Shares To Be Fully Paid; Compliance
With Governmental Requirements; Listing Of Common Stock ............72
Section 15.9. Responsibility Of Trustee ..........................................73
Section 15.10. Notice To Holders Prior To Certain Actions .........................73
ARTICLE 16. MISCELLANEOUS PROVISIONS .......................................................74
Section 16.1. Provisions Binding On Company's Successors .........................74
Section 16.2. Official Acts By Successor Corporation .............................74
Section 16.3. Addresses For Notices, Etc .........................................74
Section 16.4. Governing Law ......................................................75
Section 16.5. Evidence Of Compliance With Conditions Precedent;
Certificates To Trustee ............................................75
Section 16.6. Legal Holidays .....................................................75
Section 16.7. Trust Indenture Act ................................................75
Section 16.8. No Security Interest Created .......................................76
Section 16.9. Benefits Of Indenture ..............................................76
Section 16.10. Table Of Contents, Headings, Etc ...................................76
Section 16.11. Authenticating Agent ...............................................76
Section 16.12. Execution In Counterparts ..........................................77
Section 16.13. Severability .......................................................77
</TABLE>
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Reconciliation and Tie Between the Trust Indenture Act of 1939, as amended, and
Indenture, dated as of March 13, 2000, between Getty Images, Inc. and The Bank
of New York, as Trustee.
<TABLE>
<CAPTION>
TRUST INDENTURE ACT SECTION INDENTURE SECTION
<S> <C>
Section 310(a)(1) ............................................................. 8.9
(a)(2) ................................................................ 8.9
(a)(3) ................................................................N.A.
(a)(4) ................................................................N.A.
(a)(5) ................................................................ 8.9
(b) ...................................................8.8; 8.9; 8.10; 8.11
Section 311(a) ................................................................8.13
(b) ...................................................................8.13
(b)(2) ................................................................8.13
Section 312(a) .........................................................6.1; 6.2(a)
(b) .................................................................6.2(b)
(c) .................................................................6.2(c)
Section 313(a) ..............................................................6.3(a)
(b) .................................................................6.3(a)
(c) .................................................................6.3(a)
(d) .................................................................6.3(b)
Section 314(a) .................................................................6.4
(b) .................................................................. N.A.
(c)(1) ............................................................... 16.5
(c)(2) ............................................................... 16.5
(c)(3) ............................................................... N.A.
(d) .................................................................. N.A.
(e) .................................................................. 16.5
Section 315(a) ........................................................ 8.1
(b) ................................................................... 7.8
(c) ................................................................... 8.1
(d) ................................................................... 8.1
(d)(1) ..............................................................8.1(a)
(d)(2) ..............................................................8.1(b)
(d)(3) ..............................................................8.1(c)
(e) ................................................................... 7.9
Section 316(a) ................................................................ 7.7
(a)(1)(A) ............................................................. 7.7
(a)(1)(B) ............................................................. 7.7
(a)(2) ................................................................N.A.
(b) ................................................................... 7.4
Section 317(a)(1) ............................................................. 7.5
(a)(2) ................................................................ 7.5
(b) ................................................................... 5.4
Section 318(a) ............................................................... 16.7
</TABLE>
- -----------------------
* Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
** Note: N.A. means Not Applicable.
<PAGE> 98
INDENTURE
INDENTURE, dated as of March 13, 2000, between Getty Images,
Inc., a Delaware corporation (hereinafter called the "Company"), having its
principal office at 701 N. 34th Street, Suite 400, Seattle, Washington 98103,
and The Bank of New York, a New York banking corporation, as trustee hereunder
(hereinafter called the "Trustee"), having its principal corporate trust office
at 101 Barclay Street, Floor 21 West, New York, New York 10286.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, for its lawful corporate purposes, the Company has duly
authorized the issue of its 5% Convertible Subordinated Notes due 2007
(hereinafter called the "Notes"), in an aggregate principal amount not to exceed
$250,000,000 and, to provide the terms and conditions upon which the Notes are
to be authenticated, issued and delivered, the Company has duly authorized the
execution and delivery of this Indenture;
WHEREAS, the Notes, the certificate of authentication to be borne
by the Notes, a form of assignment, a form of option to elect repayment upon a
Fundamental Change, and a form of conversion notice to be borne by the Notes are
to be substantially in the forms hereinafter provided for; and
WHEREAS, all acts and things necessary to make the Notes, when
executed by the Company and authenticated and delivered by the Trustee or a duly
authorized authenticating agent, as in this Indenture provided, the valid,
binding and legal obligations of the Company, and to constitute this Indenture a
valid agreement according to its terms, have been done and performed, and the
execution of this Indenture and the issue hereunder of the Notes have in all
respects been duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
That in order to declare the terms and conditions upon which the
Notes are, and are to be, authenticated, issued and delivered, and in
consideration of the premises and of the purchase and acceptance of the Notes by
the holders thereof, the Company covenants and agrees with the Trustee for the
equal and proportionate benefit of the respective holders from time to time of
the Notes (except as otherwise provided below), as follows:
ARTICLE 1.
DEFINITIONS
Section 1.1. Definitions. The terms defined in this Section 1.1
(except as herein otherwise expressly provided or unless the context otherwise
requires) for all purposes of this Indenture and of any indenture supplemental
hereto shall have the respective meanings specified in this Section 1.1. All
other terms used in this Indenture that are defined in the Trust Indenture Act
or which are by reference therein defined in the Securities Act (except as
herein otherwise expressly provided or unless the context otherwise requires)
shall have the meanings assigned to such terms in said Trust Indenture Act and
in said Securities Act as in force at the date of the execution of this
Indenture. The words "herein", "hereof", "hereunder", and words of similar
<PAGE> 99
import refer to this Indenture as a whole and not to any particular Article,
Section or other Subdivision. The terms defined in this Article include the
plural as well as the singular.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control", when used with respect to any specified Person means the power to
direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Board of Directors" means the Board of Directors of the Company
or a committee of such Board duly authorized to act for it hereunder.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which the banking institutions in New York City
or the city in which the Corporate Trust Office is located are authorized or
obligated by law or executive order to close or be closed.
"Closing Price" has the meaning specified in Section 15.5(h)(1).
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this Indenture such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Stock" means any stock of any class of the Company which
has no preference in respect of dividends or of amounts payable in the event of
any voluntary or involuntary liquidation, dissolution or winding up of the
Company and which is not subject to redemption by the Company. Subject to the
provisions of Section 15.6, however, shares issuable on conversion of Notes
shall include only shares of the class designated as common stock of the Company
at the date of this Indenture (namely, the Common Stock, par value $.01 per
share) or shares of any class or classes resulting from any reclassification or
reclassifications thereof and which have no preference in respect of dividends
or of amounts payable in the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Company and which are not subject to redemption
by the Company; provided, however, that if at any time there shall be more than
one such resulting class, the shares of each such class then so issuable shall
be substantially in the proportion which the total number of shares of such
class resulting from all such reclassifications bears to the total number of
shares of all such classes resulting from all such reclassifications.
"Company" means the corporation named as the "Company" in the
first paragraph of this Indenture, and, subject to the provisions of Article
Twelve, shall include its successors and assigns.
"Company Notice" has the meaning specified in Section 3.5(b).
"Conversion Price" has the meaning specified in Section 15.4.
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"Corporate Trust Office" or other similar term, means the
designated office of the Trustee at which at any particular time its corporate
trust business shall be principally administered, which office is, as of the
date of this Indenture, located at 101 Barclay Street, Floor 21 West, New York,
New York 10286, Attention: Corporate Trust Administration.
"Credit Agreement" means that certain Credit Agreement, dated as
of October 25, 1999 and as amended on December 3, 1999, among the Company,
certain of its subsidiaries, HSBC Investment Bank plc, as arranger, facility
agent and security agent, the financial institutions named therein and HSBC Bank
plc, as over-draft bank (including all deferrals, renewals, extensions or
refundings of, or amendments, modifications or supplements to, the foregoing).
"Custodian" means The Bank of New York, as custodian with respect
to the Notes in global form, or any successor entity thereto.
"Default" means any event that is, or after notice or passage of
time, or both, would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 2.3.
"Depositary" means, with respect to the Notes issuable or issued
in whole or in part in global form, the Person specified in Section 2.5(d) as
the Depositary with respect to such Notes, until a successor shall have been
appointed and become such pursuant to the applicable provisions of this
Indenture, and thereafter, "Depositary" shall mean or include such successor.
"Designated Senior Indebtedness" means Senior Indebtedness under
the Credit Agreement and the Company's obligations under any other particular
Senior Indebtedness in which the instrument creating or evidencing the same or
the assumption or guarantee thereof (or related agreements or documents to which
the Company is a party) expressly provides that such Senior Indebtedness shall
be "Designated Senior Indebtedness" for purposes of this Indenture (provided
that such instrument, agreement or other document may place limitations and
conditions on the right of such Senior Indebtedness to exercise the rights of
Designated Senior Indebtedness); provided that while the Credit Agreement shall
be outstanding, "Designated Senior Indebtedness" shall not include any Senior
Indebtedness other than Senior Indebtedness incurred in connection with the
Credit Agreement and Senior Indebtedness incurred in connection with the
Indebtedness described in clause (c) of the definition of "Indebtedness." If any
payment made to any holder of any Designated Senior Indebtedness or its
Representative with respect to such Designated Senior Indebtedness is rescinded
or must otherwise be returned by such holder or Representative upon the
insolvency, bankruptcy or reorganization of the Company or otherwise, the
reinstated Indebtedness of the Company arising as a result of such rescission or
return shall constitute Designated Senior Indebtedness effective as of the date
of such rescission or return.
"Event of Default" means any event specified in Section 7.1(a),
(b), (c), (d) or (e).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, as in effect from
time to time.
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"Fundamental Change" means the occurrence of any transaction or
event in connection with which all or substantially all of the Common Stock
shall be exchanged for, converted into, acquired for or constitute solely the
right to receive consideration (whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination, reclassification,
recapitalization or otherwise) which is not all or substantially all common
stock listed (or, upon consummation of or immediately following such transaction
or event, which will be listed) on a United States national securities exchange
or approved for quotation on the Nasdaq National Market or any similar United
States system of automated dissemination of quotations of securities prices.
"Global Note" has the meaning set forth in Section 2.5(b).
"Indebtedness" means, with respect to any Person, and without
duplication, (a) all indebtedness, obligations and other liabilities (contingent
or otherwise) of such Person for borrowed money (including obligations of the
Company in respect of overdrafts, foreign exchange contracts, currency exchange
agreements, interest rate protection agreements, and any loans or advances from
banks, whether or not evidenced by notes or similar instruments) or evidenced by
bonds, debentures, notes or similar instruments (whether or not the recourse of
the lender is to the whole of the assets of such Person or to only a portion
thereof), other than any account payable or other accrued current liability or
obligation incurred in the ordinary course of business in connection with the
obtaining of materials or services; (b) all reimbursement obligations and other
liabilities (contingent or otherwise) of such Person with respect to letters of
credit, bank guarantees or bankers' acceptances; (c) all obligations and
liabilities (contingent or otherwise) in respect of leases of such Person
required, in conformity with generally accepted accounting principles, to be
accounted for as capitalized lease obligations on the balance sheet of such
Person and all obligations and other liabilities (contingent or otherwise) under
any lease or related document (including a purchase agreement) in connection
with the lease of real property which provides that such Person is contractually
obligated to purchase or cause a third party to purchase the leased property and
thereby guarantee a minimum residual value of the leased property to the lessor
and the obligations of such Person under such lease or related document to
purchase or to cause a third party to purchase such leased property; (d) all
obligations of such Person (contingent or otherwise) with respect to an interest
rate or other swap, cap or collar agreement or other similar instrument or
agreement or foreign currency hedge, exchange, purchase or similar instrument or
agreement; (e) all direct or indirect guaranties or similar agreements by such
Person in respect of, and obligations or liabilities (contingent or otherwise)
of such Person to purchase or otherwise acquire or otherwise assure a creditor
against loss in respect of, indebtedness, obligations or liabilities of another
Person of the kind described in clauses (a) through (d); (f) any indebtedness or
other obligations described in clauses (a) through (e) secured by any mortgage,
pledge, lien or other encumbrance existing on property which is owned or held by
such Person, regardless of whether the indebtedness or other obligation secured
thereby shall have been assumed by such Person; and (g) any and all deferrals,
renewals, extensions and refundings of, or amendments, modifications or
supplements to, any indebtedness, obligation or liability of the kind described
in clauses (a) through (f).
"Indenture" means this instrument as originally executed or, if
amended or supplemented as herein provided, as so amended or supplemented.
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"Initial Purchasers" means Morgan Stanley & Co. Incorporated,
Deutsche Bank Securities Inc., SG Cowen Securities Corporation and Hambrecht &
Quist LLC.
"Institutional Accredited Investor" means an institutional
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"Liquidated Damages" has the meaning specified for "Liquidated
Damages Amount" in Section 2(e) of the Registration Rights Agreement.
"Non-Payment Default" has the meaning specified in Section
4.2(ii).
"Note" or "Notes" means any Note or Notes, as the case may be,
authenticated and delivered under this Indenture, including the Global Note.
"Note Register" has the meaning specified in Section 2.5(a).
"Note Registrar" has the meaning specified in Section 2.5(a).
"Noteholder" or "Holder" as applied to any Note, or other similar
terms (but excluding the term "beneficial holder"), means any Person in whose
name at the time a particular Note is registered on the Note registrar's books.
"Officers' Certificate", when used with respect to the Company,
means a certificate signed by both (a) the Chairman of the Board, the Chief
Executive Officer, the President or any Vice President (whether or not
designated by a number or numbers or word or words added before or after the
title "Vice President") and (b) the Treasurer or any Assistant Treasurer, the
Controller or any Assistant Controller, or the Secretary or any Assistant
Secretary of the Company.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company, or other counsel
reasonably acceptable to the Trustee.
"Outstanding", when used with reference to Notes and subject to
the provisions of Section 9.4, means, as of any particular time, all Notes
authenticated and delivered by the Trustee under this Indenture, except:
(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;
(b) Notes, or portions thereof, (i) for the redemption of
which monies in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or (ii) which shall
have been otherwise defeased in accordance with Article Thirteen;
(c) Notes paid pursuant to Section 2.6 or Notes in lieu of
which, or in substitution for which, other Notes shall have been authenticated
and delivered pursuant to the terms of Section 2.6; and
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(d) Notes converted into Common Stock pursuant to Article
Fifteen and Notes deemed not outstanding pursuant to Article Three.
"Payment Blockage Notice" has the meaning specified in Section
4.2(ii).
"Person" means a corporation, an association, a partnership, a
limited liability company, an individual, a joint venture, a joint stock
company, a trust, an unincorporated organization or a government or an agency or
a political subdivision thereof.
"Portal Market" means The Portal Market operated by the National
Association of Securities Dealers, Inc. or any successor thereto.
"Predecessor Note" of any particular Note means every previous
Note evidencing all or a portion of the same debt as that evidenced by such
particular Note, and, for the purposes of this definition, any Note
authenticated and delivered under Section 2.6 in lieu of a lost, destroyed or
stolen Note shall be deemed to evidence the same debt as the lost, destroyed or
stolen Note that it replaces.
"QIB" means a "qualified institutional buyer" as defined in Rule
144A.
"Registration Rights Agreement" means that certain Registration
Rights Agreement, dated as of March 13, 2000, among the Company and the Initial
Purchasers, as amended from time to time in accordance with its terms.
"Representative" means (a) the indenture trustee or other
trustee, agent or representative for holders of Senior Indebtedness or (b) with
respect to any Senior Indebtedness that does not have any such trustee, agent or
other representative, (i) in the case of such Senior Indebtedness issued
pursuant to an agreement providing for voting arrangements as among the holders
or owners of such Senior Indebtedness, any holder or owner of such Senior
Indebtedness acting with the consent of the required persons necessary to bind
such holders or owners of such Senior Indebtedness and (ii) in the case of all
other such Senior Indebtedness, the holder or owner of such Senior Indebtedness.
"Responsible Officer", when used with respect to the Trustee,
means an officer of the Trustee in the Corporate Trust Office assigned and duly
authorized by the Trustee to administer this Indenture.
"Restricted Securities" has the meaning specified in Section
2.5(d).
"Rule 144A" means Rule 144A as promulgated under the Securities
Act.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder, as in effect from time to
time.
"Senior Indebtedness" means the principal of, premium, if any,
interest (including all interest accruing subsequent to the commencement of any
bankruptcy or similar proceeding, whether or not a claim for post-petition
interest is allowable as a claim in any such proceeding) and rent payable on or
in connection with, and all fees, costs, expenses and other amounts
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accrued or due on or in connection with, Indebtedness of the Company, whether
outstanding on the date of this Indenture or thereafter created, incurred,
assumed, guaranteed or in effect guaranteed by the Company (including all
deferrals, renewals, extensions or refundings of, or amendments, modifications
or supplements to, the foregoing), unless in the case of any particular
Indebtedness the instrument creating or evidencing the same or the assumption or
guarantee thereof expressly provides that such Indebtedness shall not be senior
in right of payment to the Notes or expressly provides that such Indebtedness is
"pari passu" or "junior" to the Notes. Notwithstanding the foregoing, the term
Senior Indebtedness shall not include any Indebtedness of the Company to any
subsidiary of the Company, a majority of the voting stock of which is owned,
directly or indirectly, by the Company or the Company's 4.75% Convertible
Subordinated Notes due 2003. If any payment made to any holder of any Senior
Indebtedness or its Representative with respect to such Senior Indebtedness is
rescinded or must otherwise be returned by such holder or Representative upon
the insolvency, bankruptcy or reorganization of the Company or otherwise, the
reinstated Indebtedness of the Company arising as a result of such rescission or
return shall constitute Senior Indebtedness effective as of the date of such
rescission or return.
"Significant Subsidiary" means, as of any date of determination,
a Subsidiary of the Company, if as of such date of determination either (a) the
assets of such subsidiary equal 10% or more of the Company's total consolidated
assets or (b) the total revenue of which represented 10% or more of the
Company's consolidated total revenue for the most recently completed fiscal
year.
"Subsidiary" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of capital stock or other equity interest entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other subsidiaries
of that Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or managing general partner of which is such Person or a
subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more subsidiaries of such Person (or any combination
thereof).
"Trading Day" has the meaning specified in Section 15.5(h)(5).
"Trigger Event" has the meaning specified in Section 15.5(d).
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended, as it was in force at the date of this Indenture, except as provided in
Sections 11.3 and 15.6; provided, however, that, in the event the Trust
Indenture Act of 1939 is amended after the date hereof, the term "Trust
Indenture Act" shall mean, to the extent required by such amendment, the Trust
Indenture Act of 1939 as so amended.
"Trustee" means The Bank of New York and its successors and any
corporation resulting from or surviving any consolidation or merger to which it
or its successors may be a party and any successor trustee at the time serving
as successor trustee hereunder.
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The definitions of certain other terms are as specified in
Sections 2.5 and 3.5 and Article Fifteen.
ARTICLE 2.
ISSUE, DESCRIPTION, EXECUTION,
REGISTRATION AND EXCHANGE OF NOTES
Section 2.1. Designation, Amount And Issue Of Notes. The Notes shall be
designated as "5% Convertible Subordinated Notes due 2007." Notes not to exceed
the aggregate principal amount of $250,000,000 (except pursuant to Sections 2.5,
2.6, 3.3, 3.5 and 15.2 hereof) upon the execution of this Indenture, or from
time to time thereafter, may be executed by the Company and delivered to the
Trustee for authentication, and the Trustee shall thereupon authenticate and
deliver said Notes to or upon the written order of the Company, signed by (a)
its Chairman of the Board, Chief Executive Officer, President or any Vice
President (whether or not designated by a number or numbers or word or words
added before or after the title "Vice President") and (b) its Treasurer or any
Assistant Treasurer, its Controller or any Assistant Controller or its Secretary
or any Assistant Secretary, without any further action by the Company hereunder.
Section 2.2. Form Of Notes. The Notes and the Trustee's certificate of
authentication to be borne by such Notes shall be substantially in the form set
forth in Exhibit A, which is incorporated in and made a part of this Indenture.
Any of the Notes may have such letters, numbers or other marks of
identification and such notations, legends and endorsements as the officers
executing the same may approve (execution thereof to be conclusive evidence of
such approval) and as are not inconsistent with the provisions of this
Indenture, 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
securities exchange or automated quotation system on which the Notes may be
listed, or to conform to usage.
Any Global Note shall represent such of the outstanding Notes as
shall be specified therein and shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from time
to time be increased or reduced to reflect transfers or exchanges permitted
hereby. Any endorsement of a Global Note to reflect the amount of any increase
or decrease in the amount of outstanding Notes represented thereby shall be made
by the Trustee or the Custodian, at the direction of the Trustee, in such manner
and upon instructions given by the holder of such Notes in accordance with this
Indenture. Payment of principal of and interest and premium, if any, on any
Global Note shall be made to the holder of such Note.
The terms and provisions contained in the form of Note attached
as Exhibit A hereto shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Company and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Section 2.3. Date And Denomination Of Notes; Payments Of Interest. The
Notes shall be issuable in registered form without coupons in denominations of
$1,000 principal amount and
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integral multiples thereof. Every Note shall be dated the date of its
authentication and shall bear interest from the applicable date in each case as
specified on the face of the form of Note attached as Exhibit A hereto. Interest
on the Notes shall be computed on the basis of a 360-day year comprised of
twelve (12) 30-day months.
The Person in whose name any Note (or its Predecessor Note) is
registered on the Note register at the close of business on any record date with
respect to any interest payment date shall be entitled to receive the interest
payable on such interest payment date, except (i) that the interest payable upon
redemption (unless the date of redemption is an interest payment date) will be
payable to the Person to whom principal is payable and (ii) as set forth in the
next succeeding sentence. In the case of any Note (or portion thereof) that is
converted into Common Stock during the period from (but excluding) a record date
to (but excluding) the next succeeding interest payment date either (x) if such
Note (or portion thereof) has been called for redemption on a redemption date
which occurs during such period, or is to be redeemed in connection with a
Fundamental Change on a Repurchase Date (as defined in Section 3.5) that occurs
during such period, the Company shall not be required to pay interest on such
interest payment date in respect of any such Note (or portion thereof) except to
the extent required to be paid upon redemption of such Note or portion thereof
pursuant to Section 3.3 or 3.5 hereof or (y) if such Note (or portion thereof)
has not been called for redemption on a redemption date that occurs during such
period and is not to be redeemed in connection with a Fundamental Change on a
Repurchase Date that occurs during such period, such Note (or portion thereof)
that is submitted for conversion during such period shall be accompanied by
funds equal to the interest payable on such succeeding interest payment date on
the principal amount so converted, as provided in the penultimate paragraph of
Section 15.2 hereof. Interest shall be payable at the office of the Company
maintained by the Company for such purposes in the Borough of Manhattan, City of
New York, which shall initially be an office or agency of the Trustee and may,
as the Company shall specify to the paying agent in writing by each record date,
be paid either (i) by check mailed to the address of the Person entitled thereto
as it appears in the Note register (provided that the holder of Notes with an
aggregate principal amount in excess of $2,000,000 shall, at the written
election of such holder, be paid by wire transfer in immediately available
funds) or (ii) by transfer to an account maintained by such Person located in
the United States; provided, however, that payments to the Depositary will be
made by wire transfer of immediately available funds to the account of the
Depositary or its nominee. The term "record date" with respect to any interest
payment date shall mean the March 1 or September 1 preceding the relevant March
15 or September 15, respectively.
Any interest on any Note which is payable, but is not punctually
paid or duly provided for, on any March 15 or September 15 (herein called
"Defaulted Interest") shall forthwith cease to be payable to the Noteholder on
the relevant record date by virtue of his having been such Noteholder, and such
Defaulted Interest shall be paid by the Company, at its election in each case,
as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted
Interest to the Persons in whose names the Notes (or their respective
Predecessor Notes) are registered at the close of business on a special record
date for the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the amount
of Defaulted Interest to be paid on each Note and the date of the payment
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(which shall be not less than twenty-five (25) days after the receipt by the
Trustee of such notice, unless the Trustee shall consent to an earlier date),
and at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount to be paid in respect of such Defaulted
Interest or shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to be held
in trust for the benefit of the Person entitled to such Defaulted Interest as in
this clause provided. Thereupon the Trustee shall fix a special record date for
the payment of such Defaulted Interest which shall be not more than fifteen (15)
days and not less than ten (10) days prior to the date of the proposed payment,
and not less than ten (10) days after the receipt by the Trustee of the notice
of the proposed payment, the Trustee shall promptly notify the Company of such
special record date and, in the name and at the expense of the Company, shall
cause notice of the proposed payment of such Defaulted Interest and the special
record date therefor to be mailed, first-class postage prepaid, to each
Noteholder at his address as it appears in the Note register, not less than ten
(10) days prior to such special record date. Notice of the proposed payment of
such Defaulted Interest and the special record date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names the
Notes (or their respective Predecessor Notes) were registered at the close of
business on such special record date and shall no longer be payable pursuant to
the following clause (2) of this Section 2.3.
(2) The Company may make payment of any Defaulted Interest
in any other lawful manner not inconsistent with the requirements of any
securities exchange or automated quotation system on which the Notes may be
listed or designated for issuance, and upon such notice as may be required by
such exchange or automated quotation system, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this clause, such
manner of payment shall be deemed practicable by the Trustee.
Section 2.4. Execution Of Notes. The Notes shall be signed in the name
and on behalf of the Company by the manual or facsimile signature of its
Chairman of the Board, Chief Executive Officer, President or any Vice President
(whether or not designated by a number or numbers or word or words added before
or after the title "Vice President") and attested by the manual or facsimile
signature of its Secretary or any of its Assistant Secretaries or its Treasurer
or any of its Assistant Treasurers (which may be printed, engraved or otherwise
reproduced thereon, by facsimile or otherwise). Only such Notes as shall bear
thereon a certificate of authentication substantially in the form set forth on
the form of Note attached as Exhibit A hereto, manually executed by the Trustee
(or an authenticating agent appointed by the Trustee as provided by Section
16.11), shall be entitled to the benefits of this Indenture or be valid or
obligatory for any purpose. Such certificate by the Trustee (or such an
authenticating agent) upon any Note executed by the Company shall be conclusive
evidence that the Note so authenticated has been duly authenticated and
delivered hereunder and that the holder is entitled to the benefits of this
Indenture.
In case any officer of the Company who shall have signed any of
the Notes shall cease to be such officer before the Notes so signed shall have
been authenticated and delivered by the Trustee, or disposed of by the Company,
such Notes nevertheless may be authenticated and delivered or disposed of as
though the person who signed such Notes had not ceased to be such officer of the
Company, and any Note may be signed on behalf of the Company by such persons as,
at the actual date of the execution of such Note, shall be the proper officers
of the
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Company, although at the date of the execution of this Indenture any such
person was not such an officer.
Section 2.5. Exchange And Registration Of Transfer Of Notes;
Restrictions On Transfer; Depositary.
(a) The Company shall cause to be kept at the Corporate Trust
Office a register (the register maintained in such office and in any other
office or agency of the Company designated pursuant to Section 5.2 being herein
sometimes collectively referred to as the "Note register") in which, subject to
such reasonable regulations as it may prescribe, the Company shall provide for
the registration of Notes and of transfers of Notes. The Note register shall be
in written form or in any form capable of being converted into written form
within a reasonably prompt period of time. The Trustee is hereby appointed "Note
registrar" for the purpose of registering Notes and transfers of Notes as herein
provided. The Company may appoint one or more co-registrars in accordance with
Section 5.2.
Upon surrender for registration of transfer of any Note to the
Note registrar or any co-registrar, and satisfaction of the requirements for
such transfer set forth in this Section 2.5, the Company shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Notes of any authorized denominations and of a
like aggregate principal amount and bearing such restrictive legends as may be
required by this Indenture.
Notes may be exchanged for other Notes of any authorized
denominations and of a like aggregate principal amount, upon surrender of the
Notes to be exchanged at any such office or agency maintained by the Company
pursuant to Section 5.2. Whenever any Notes are so surrendered for exchange, the
Company shall execute, and the Trustee shall authenticate and deliver, the Notes
which the Noteholder making the exchange is entitled to receive bearing
registration numbers not contemporaneously outstanding.
All Notes issued upon any registration of transfer or exchange of
Notes shall be the valid obligations of the Company, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
All Notes presented or surrendered for registration of transfer
or for exchange, redemption or conversion shall (if so required by the Company
or the Note registrar) be duly endorsed, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Company, and
the Notes shall be duly executed by the Noteholder thereof or his attorney duly
authorized in writing.
No service charge shall be made to any holder for any
registration of transfer or exchange of Notes, but the Company may require
payment by the holder of a sum sufficient to cover any tax, assessment or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Notes.
Neither the Company nor the Trustee nor any Note registrar shall
be required to exchange or register a transfer of (a) any Notes for a period of
fifteen (15) days next preceding the mailing of a notice of redemption of Notes
to be redeemed, (b) any Notes or portions thereof
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called for redemption pursuant to Section 3.2, (c) any Notes or portions thereof
surrendered for conversion pursuant to Article Fifteen or (d) any Notes or
portions thereof tendered for redemption (and not withdrawn) pursuant to Section
3.5.
(b) So long as the Notes are eligible for book-entry
settlement with the Depositary, or unless otherwise required by law, all Notes
that, upon initial issuance are beneficially owned by QIBs or as a result of a
sale or transfer after initial issuance are beneficially owned by QIBs, will be
represented by one or more Notes in global form registered in the name of the
Depositary or the nominee of the Depositary (the "Global Note"), except as
otherwise specified below. The transfer and exchange of beneficial interests in
any such Global Note shall be effected through the Depositary in accordance with
this Indenture and the procedures of the Depositary therefor. The Trustee shall
make appropriate endorsements to reflect increases or decreases in the principal
amounts of any such Global Note as set forth on the face of the Note ("Principal
Amount") to reflect any such transfers. Except as provided below, beneficial
owners of a Global Note shall not be entitled to have certificates registered in
their names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered holders of such
Global Note.
(c) So long as the Notes are eligible for book-entry
settlement with the Depositary, or unless otherwise required by law, upon any
transfer of a definitive Note to a QIB in accordance with Rule 144A, and upon
receipt of the definitive Note or Notes being so transferred, together with a
certification, substantially in the form on the reverse of the Note, from the
transferor that the transfer is being made in compliance with Rule 144A (or
other evidence satisfactory to the Trustee), the Trustee shall make an
endorsement on the Global Note to reflect an increase in the aggregate Principal
Amount of the Notes represented by such Global Note, and the Trustee shall
cancel such definitive Note or Notes in accordance with the standing
instructions and procedures of the Depositary, the aggregate Principal Amount of
the Notes represented by such Global Note to be increased accordingly; provided,
however, that no definitive Note, or portion thereof, in respect of which the
Company or an Affiliate of the Company held any beneficial interest shall be
included in such Global Note until such definitive Note is freely tradable in
accordance with Rule 144(k) under the Securities Act, provided further that the
Trustee shall issue Notes in definitive form upon any transfer of a beneficial
interest in the Global Note to the Company or any Affiliate of the Company.
Upon any sale or transfer of a Note to an Institutional
Accredited Investor (other than pursuant to a registration statement that has
been declared effective under the Securities Act), such Institutional Accredited
Investor shall, prior to such sale or transfer, furnish to the Company and/or
the Trustee a signed letter containing representations and agreements relating
to restrictions on transfer substantially in the form set forth in Exhibit B to
this Indenture. Upon any transfer of a beneficial interest in the Global Note to
an Institutional Accredited Investor, the Trustee shall make an endorsement on
the Global Note to reflect a decrease in the aggregate Principal Amount of the
Notes represented by such Global Note, and the Company shall execute a
definitive Note or Notes in exchange therefor, and the Trustee, upon receipt of
such definitive Note or Notes and the written order of the Company, shall
authenticate and deliver such, definitive Note or Notes.
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<PAGE> 110
Any Global Note may be endorsed with or have incorporated in the
text thereof such legends or recitals or changes not inconsistent with the
provisions of this Indenture as may be required by the Custodian, the Depositary
or by the National Association of Securities Dealers, Inc. in order for the
Notes to be tradeable on the Portal Market or as may be required for the Notes
to be tradeable on any other market developed for trading of securities pursuant
to Rule 144A or required to comply with any applicable law or any regulation
thereunder or with the rules and regulations of any securities exchange or
automated quotation system upon which the Notes may be listed or traded or to
conform with any usage with respect thereto, or to indicate any special
limitations or restrictions to which any particular Notes are subject.
(d) Every Note that bears or is required under this Section
2.5(d) to bear the legend set forth in this Section 2.5(d) (together with any
Common Stock issued upon conversion of the Notes and required to bear the legend
set forth in Section 2.5(e), collectively, the "Restricted Securities") shall be
subject to the restrictions on transfer set forth in this Section 2.5(d)
(including those set forth in the legend set forth below) unless such
restrictions on transfer shall be waived by written consent of the Company, and
the holder of each such Restricted Security, by such Noteholder's acceptance
thereof, agrees to be bound by all such restrictions on transfer. As used in
Sections 2.5(d) and 2.5(e), the term "transfer" encompasses any sale, pledge,
loan, transfer or other disposition whatsoever of any Restricted Security.
Until the expiration of the holding period applicable to sales
thereof under Rule 144(k) under the Securities Act (or any successor provision),
any certificate evidencing such Note (and all securities issued in exchange
therefor or substitution thereof, other than Common Stock, if any, issued upon
conversion thereof, which shall bear the legend set forth in Section 2.5(e), if
applicable) shall bear a legend in substantially the following form, unless such
Note has been sold pursuant to a registration statement that has been declared
effective under the Securities Act (and which continues to be effective at the
time of such transfer), or unless otherwise agreed by the Company in writing,
with written notice thereof to the Trustee:
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, UNITED
STATES PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS
ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT)
("INSTITUTIONAL ACCREDITED INVESTOR"); (2) AGREES THAT IT WILL NOT,
PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED
HEREBY OR THE COMMON STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT
(A) TO GETTY IMAGES, INC. OR ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES
ACT, (C) TO AN
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<PAGE> 111
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES TO THE BANK OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE,
AS APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE NOTE
EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH
TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES
ACT (IF AVAILABLE) OR (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO
BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER
(OTHER THAN A TRANSFER PURSUANT TO CLAUSE (2)(E) ABOVE), IT WILL FURNISH
TO THE BANK OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS
APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS
THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS
BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (4)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED
HEREBY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THE NOTE EVIDENCED HEREBY
PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE
NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE APPROPRIATE BOX SET
FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND
SUBMIT THIS CERTIFICATE TO THE BANK OF NEW YORK, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A UNITED
STATES PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
BANK OF NEW YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE),
SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS SUCH TRUSTEE
MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE
PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE
REMOVED UPON THE EARLIER OF THE TRANSFER OF THE NOTE EVIDENCED HEREBY
PURSUANT TO CLAUSE (2)(E) ABOVE OR UPON ANY TRANSFER OF THE NOTE
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "UNITED STATES" AND
"U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE
SECURITIES ACT.
Any Note (or security issued in exchange or substitution
therefor) as to which such restrictions on transfer shall have expired in
accordance with their terms or as to conditions for removal of the foregoing
legend set forth therein have been satisfied may, upon surrender of
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<PAGE> 112
such Note for exchange to the Note registrar in accordance with the provisions
of this Section 2.5, be exchanged for a new Note or Notes, of like tenor and
aggregate principal amount, which shall not bear the restrictive legend required
by this Section 2.5(d).
Notwithstanding any other provisions of this Indenture (other
than the provisions set forth in the second paragraph of Section 2.5(c) and in
this Section 2.5(d)), a Global Note may not be transferred as a whole or in part
except by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary.
The Depositary shall be a clearing agency registered under the
Exchange Act. The Company initially appoints The Depository Trust Company to act
as Depositary with respect to the Notes in global form. Initially, the Global
Note shall be issued to the Depositary, registered in the name of Cede & Co., as
the nominee of the Depositary, and deposited with the Custodian for Cede & Co.
If at any time the Depositary for a Global Note notifies the
Company that it is unwilling or unable to continue as Depositary for such Note,
the Company may appoint a successor Depositary with respect to such Note. If a
successor Depositary is not appointed by the Company within ninety (90) days
after the Company receives such notice, the Company will execute, and the
Trustee, upon receipt of an Officers' Certificate for the authentication and
delivery of Notes, will authenticate and deliver, Notes in certificated form, in
aggregate principal amount equal to the principal amount of such Global Note, in
exchange for such Global Note.
If a Note in certificated form is issued in exchange for any
portion of a Global Note after the close of business at the office or agency
where such exchange occurs on any record date and before the opening of business
at such office or agency on the next succeeding interest payment date, interest
will not be payable on such interest payment date in respect of such
certificated Note, but will be payable on such interest payment date, subject to
the provisions of Section 2.3, only to the Person to whom interest in respect of
such portion of such Global Note is payable in accordance with the provisions of
this Indenture.
Notes in certificated form issued in exchange for all or a part
of a Global Note pursuant to this Section 2.5 shall be registered in such names
and in such authorized denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise, shall instruct the
Trustee. Upon execution and authentication, the Trustee shall deliver such Notes
in certificated form to the Persons in whose names such Notes in certificated
form are so registered.
At such time as all interests in a Global Note have been
redeemed, converted, canceled, exchanged for Notes in certificated form, or
transferred to a transferee who receives Notes in certificated form thereof,
such Global Note shall, upon receipt thereof, be canceled by the Trustee in
accordance with standing procedures and instructions existing between the
Depositary and the Custodian. At any time prior to such cancellation, if any
interest in a Global Note is exchanged for Notes in certificated form, redeemed,
converted, repurchased or canceled, or transferred to a transferee who receives
Notes in certificated form therefor or any Note in
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<PAGE> 113
certificated form is exchanged or transferred for part of a Global Note, the
principal amount of such Global Note shall, in accordance with the standing
procedures and instructions existing between the Depositary and the Custodian,
be appropriately reduced or increased, as the case may be, and an endorsement
shall be made on such Global Note, by the Trustee or the Custodian, at the
direction of the Trustee, to reflect such reduction or increase.
(e) Until the expiration of the holding period applicable to
sales thereof under Rule 144(k) under the Securities Act (or any successor
provision), any stock certificate representing Common Stock issued upon
conversion of any Note shall bear a legend in substantially the following form,
unless such Common Stock has been sold pursuant to a registration statement that
has been declared effective under the Securities Act (and which continues to be
effective at the time of such transfer) or such Common Stock has been issued
upon conversion of Notes that have been transferred pursuant to a registration
statement that has been declared effective under the Securities Act, or unless
otherwise agreed by the Company in writing with written notice thereof to the
transfer agent:
THE COMMON STOCK EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR
SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
UNITED STATES PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. THE
HOLDER HEREOF AGREES THAT UNTIL THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K)
UNDER THE SECURITIES ACT (OR ANY SUCCESSOR PROVISION), (1) IT WILL NOT
RESELL OR OTHERWISE TRANSFER THE COMMON STOCK EVIDENCED HEREBY EXCEPT
(A) TO GETTY IMAGES, INC. OR TO ANY SUBSIDIARY THEREOF, (B) TO A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT) IN COMPLIANCE WITH RULE 144A, (C) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7)
UNDER THE SECURITIES ACT) THAT PRIOR TO SUCH TRANSFER, FURNISHES TO THE
BANK OF NEW YORK, AS TRANSFER AGENT (OR A SUCCESSOR TRANSFER AGENT, AS
APPLICABLE), A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THE COMMON STOCK
EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH
TRANSFER AGENT OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), (D)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE), OR (E) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT
(AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF SUCH TRANSFER); (2)
PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO CLAUSE (1)(E)
ABOVE), IT WILL FURNISH TO THE BANK OF NEW YORK, AS TRANSFER AGENT (OR
SUCCESSOR TRANSFER AGENT, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY
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<PAGE> 114
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT; AND (3) IT WILL DELIVER TO EACH
PERSON TO WHOM THE COMMON STOCK EVIDENCED HEREBY IS TRANSFERRED (OTHER
THAN A TRANSFER PURSUANT TO CLAUSE 1(E) ABOVE) A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A UNITED
STATES PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE
BANK OF NEW YORK (OR A SUCCESSOR TRANSFER AGENT, AS APPLICABLE), SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS IT MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. THIS LEGEND WILL BE REMOVED UPON THE
EARLIER OF THE TRANSFER OF THE COMMON STOCK EVIDENCED HEREBY PURSUANT TO
CLAUSE (1)(E) ABOVE OR UPON ANY TRANSFER OF THE COMMON STOCK EVIDENCED
HEREBY AFTER THE EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF
THE SECURITY EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT
(OR ANY SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "UNITED STATES"
AND "UNITED STATES PERSON" HAVE THE MEANING GIVEN TO THEM BY REGULATION
S UNDER THE SECURITIES ACT.
Any such Common Stock as to which such restrictions on transfer
shall have expired in accordance with their terms or as to which the conditions
for removal of the foregoing legend set forth therein have been satisfied may,
upon surrender of the certificates representing such shares of Common Stock for
exchange in accordance with the procedures of the transfer agent for the Common
Stock, be exchanged for a new certificate or certificates for a like number of
shares of Common Stock, which shall not bear the restrictive legend required by
this Section 2.5(e).
(f) Any Note or Common Stock issued upon the conversion or
exchange of a Note that, prior to the expiration of the holding period
applicable to sales thereof under Rule 144(k) under the Securities Act (or any
successor provision), is purchased or owned by the Company or any Affiliate
thereof may not be resold by the Company or such Affiliate unless registered
under the Securities Act or resold pursuant to an exemption from the
registration requirements of the Securities Act in a transaction which results
in such Notes or Common Stock, as the case may be, no longer being "restricted
securities" (as defined under Rule 144).
The Trustee shall have no additional obligation or duty to
determine or inquire as to compliance with any restrictions on transfer imposed
under this Indenture or under applicable law with respect to any transfer of any
interest in any Note (including any transfers between or among Depositary
participants or beneficial owners of interests in any Global Note), other than
to require delivery of such certificates and other documentation or evidence as
are expressly required by, and to do so if and when expressly required by the
terms of, this Indenture, and to
17
<PAGE> 115
examine the same to determine substantial compliance as to form with the express
requirements hereof.
Section 2.6. Mutilated, Destroyed, Lost Or Stolen Notes. In case any
Note shall become mutilated or be destroyed, lost or stolen, the Company in its
discretion may execute, and upon its written request the Trustee or an
authenticating agent appointed by the Trustee shall authenticate and make
available for delivery, a new Note, bearing a number not contemporaneously
outstanding, in exchange and substitution for the mutilated Note, or in lieu of
and in substitution for the Note so destroyed, lost or stolen. In every case the
applicant for a substituted Note shall furnish to the Company, to the Trustee
and, if applicable, to such authenticating agent such security or indemnity as
may be required by them to save each of them harmless for any loss, liability,
cost or expense caused by or connected with such substitution, and, in every
case of destruction, loss or theft, the applicant shall also furnish to the
Company, to the Trustee and, if applicable, to such authenticating agent
evidence to their satisfaction of the destruction, loss or theft of such Note
and of the ownership thereof.
Following receipt by the Trustee or such authenticating agent, as
the case may be, of satisfactory security or indemnity and evidence, as
described in the preceding paragraph, the Trustee or such authenticating agent
may authenticate any such substituted Note and make available for delivery such
Note. Upon the issuance of any substituted Note, the Company may require the
payment by the holder of a sum sufficient to cover any tax, assessment or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. In case any Note which has matured or is about to
mature or has been called for redemption or has been tendered for redemption
(and not withdrawn) or is to be converted into Common Stock shall become
mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a
substitute Note, pay or authorize the payment of or convert or authorize the
conversion of the same (without surrender thereof except in the case of a
mutilated Note), as the case may be, if the applicant for such payment or
conversion shall furnish to the Company, to the Trustee and, if applicable, to
such authenticating agent such security or indemnity as may be required by them
to save each of them harmless for any loss, liability, cost or expense caused by
or connected with such substitution, and, in every case of destruction, loss or
theft, the applicant shall also furnish to the Company, the Trustee and, if
applicable, any paying agent or conversion agent evidence to their satisfaction
of the destruction, loss or theft of such Note and of the ownership thereof.
Every substitute Note issued pursuant to the provisions of this
Section 2.6 by virtue of the fact that any Note is destroyed, lost or stolen
shall constitute an additional contractual obligation of the Company, whether or
not the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of (but shall be subject to all the limitations set
forth in) this Indenture equally and proportionately with any and all other
Notes duly issued hereunder. To the extent permitted by law, all Notes shall be
held and owned upon the express condition that the foregoing provisions are
exclusive with respect to the replacement or payment or conversion of mutilated,
destroyed, lost or stolen Notes and shall preclude any and all other rights or
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment or conversion of negotiable
instruments or other securities without their surrender.
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<PAGE> 116
Section 2.7. Temporary Notes. Pending the preparation of Notes in
certificated form, the Company may execute and the Trustee or an authenticating
agent appointed by the Trustee shall, upon the written request of the Company,
authenticate and deliver temporary Notes (printed or lithographed). Temporary
Notes shall be issuable in any authorized denomination, and substantially in the
form of the Notes in certificated form, but with such omissions, insertions and
variations as may be appropriate for temporary Notes, all as may be determined
by the Company. Every such temporary Note shall be executed by the Company and
authenticated by the Trustee or such authenticating agent upon the same
conditions and in substantially the same manner, and with the same effect, as
the Notes in certificated form. Without unreasonable delay the Company will
execute and deliver to the Trustee or such authenticating agent Notes in
certificated form (other than in the case of Notes in global form) and thereupon
any or all temporary Notes (other than any such Global Note) may be surrendered
in exchange therefor, at each office or agency maintained by the Company
pursuant to Section 5.2 and the Trustee or such authenticating agent shall
authenticate and make available for delivery in exchange for such temporary
Notes an equal aggregate principal amount of Notes in certificated form. Such
exchange shall be made by the Company at its own expense and without any charge
therefor. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits and subject to the same limitations under this
Indenture as Notes in certificated form authenticated and delivered hereunder.
Section 2.8. Cancellation Of Notes Paid, Etc. All Notes surrendered for
the purpose of payment, redemption, conversion, exchange or registration of
transfer shall, if surrendered to the Company or any paying agent or any Note
registrar or any conversion agent, be surrendered to the Trustee and promptly
canceled by it, or, if surrendered to the Trustee, shall be promptly canceled by
it, and no Notes shall be issued in lieu thereof except as expressly permitted
by any of the provisions of this Indenture. The Trustee shall dispose of such
canceled Notes in accordance with its customary procedures. If the Company shall
acquire any of the Notes, such acquisition shall not operate as a redemption or
satisfaction of the indebtedness represented by such Notes unless and until the
same are delivered to the Trustee for cancellation.
Section 2.9. CUSIP Numbers. The Company in issuing the Notes may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Noteholders;
provided, however, that any such notice may state that no representation is made
as to the correctness of such numbers either as printed on the Notes or as
contained in any notice of a redemption and that reliance may be placed only on
the other identification numbers printed on the Notes, and any such redemption
shall not be affected by any defect in or omission of such numbers. The Company
will promptly notify the Trustee of any change in the "CUSIP" numbers.
ARTICLE 3.
REDEMPTION OF NOTES
Section 3.1. Initial Prohibition On Redemption.
(a) Except as otherwise provided in Section 3.5, the Notes may
not be redeemed by the Company, in whole or in part, at any time prior to March
20, 2003.
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<PAGE> 117
(b) Optional Redemption By The Company. At any time on or
after March 20, 2003, and prior to maturity, the Notes may be redeemed at the
option of the Company, in whole or in part, upon notice as set forth in Section
3.2, at the following redemption prices (expressed as percentages of the
principal amount), together in each case with accrued and unpaid interest, if
any (including Liquidated Damages, if any) to, but excluding, the date fixed for
redemption:
<TABLE>
<CAPTION>
Period Redemption Price
------ ----------------
<S> <C>
Beginning on March 20, 2003 and ending on March 14, 2004 ...... 102.857%
Beginning on March 15, 2004 and ending on March 14, 2005 ...... 102.143%
Beginning on March 15, 2005 and ending on March 14, 2006 ...... 101.429%
Beginning on March 15, 2006 and ending on March 14, 2007 ...... 100.714%
</TABLE>
and 100% on March 15, 2007; provided, however, that if the date fixed for
redemption is on a March 15 or September 15, then the interest payable on such
date shall be paid to the holder of record on the preceding March 1 or September
1, respectively.
Section 3.2. Notice Of Redemptions; Selection Of Notes. In case the
Company shall desire to exercise the right to redeem all or, as the case may be,
any part of the Notes pursuant to Section 3.1, it shall fix a date for
redemption and it or, at its written request received by the Trustee not fewer
than forty-five (45) days prior (or such shorter period of time as may be
acceptable to the Trustee) to the date fixed for redemption, the Trustee in the
name of and at the expense of the Company, shall mail or cause to be mailed a
notice of such redemption not fewer than thirty (30) nor more than sixty (60)
days prior to the date fixed for redemption to the holders of Notes so to be
redeemed as a whole or in part at their last addresses as the same appear on the
Note register; provided, however, that if the Company shall give such notice, it
shall also give written notice, and written notice of the Notes to be redeemed,
to the Trustee. Such mailing shall be by first class mail. The notice if mailed
in the manner herein provided shall be conclusively presumed to have been duly
given, whether or not the holder receives such notice. In any case, failure to
give such notice by mail or any defect in the notice to the holder of any Note
designated for redemption as a whole or in part shall not affect the validity of
the proceedings for the redemption of any other Note. Concurrently with the
mailing of any such notice of redemption, the Company shall issue a press
release announcing such redemption, the form and content of which press release
shall be determined by the Company in its sole discretion. The failure to issue
any such press release or any defect therein shall not affect the validity of
the redemption notice or any of the proceedings for the redemption of any Note
called for redemption.
Each such notice of redemption shall specify the aggregate
principal amount of Notes to be redeemed, the CUSIP number or numbers of the
Notes being redeemed, the date fixed for redemption (which shall be a Business
Day), the redemption price at which Notes are to be redeemed, the place or
places of payment, that payment will be made upon presentation and surrender of
such Notes, that interest accrued to the date fixed for redemption will be paid
as specified in said notice, and that on and after said date interest thereon or
on the portion thereof to be redeemed will cease to accrue. Such notice shall
also state the current Conversion Price and the date on which the right to
convert such Notes or portions thereof into Common Stock
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<PAGE> 118
will expire. If fewer than all the Notes are to be redeemed, the notice of
redemption shall identify the Notes to be redeemed (including CUSIP numbers, if
any). In case any Note is to be redeemed in part only, the notice of redemption
shall state the portion of the principal amount thereof to be redeemed and shall
state that, on and after the date fixed for redemption, upon surrender of such
Note, a new Note or Notes in principal amount equal to the unredeemed portion
thereof will be issued.
On or prior to the redemption date specified in the notice of
redemption given as provided in this Section 3.2, the Company will deposit with
the Trustee or with one or more paying agents (or, if the Company is acting as
its own paying agent, set aside, segregate and hold in trust as provided in
Section 5.4) an amount of money in immediately available funds sufficient to
redeem on the redemption date all the Notes (or portions thereof) so called for
redemption (other than those theretofore surrendered for conversion into Common
Stock) at the appropriate redemption price, together with accrued interest to,
but excluding, the date fixed for redemption; provided, however, that if such
payment is made on the redemption date it must be received by the Trustee or
paying agent, as the case may be, by 10:00 a.m., New York City time, on such
date. The Company shall be entitled to retain any interest, yield or gain on
amounts deposited with the Trustee or any paying agent pursuant to this Section
3.2 in excess of amounts required hereunder to pay the redemption price together
with accrued interest to, but excluding, the date fixed for redemption. If any
Note called for redemption is converted pursuant hereto prior to such
redemption, any money deposited with the Trustee or any paying agent or so
segregated and held in trust for the redemption of such Note shall be paid to
the Company upon its written request, or, if then held by the Company, shall be
discharged from such trust. Whenever any Notes are to be redeemed, the Company
will give the Trustee written notice in the form of an Officers' Certificate not
fewer than forty-five (45) days (or such shorter period of time as may be
acceptable to the Trustee) prior to the redemption date as to the aggregate
principal amount of Notes to be redeemed.
If less than all of the outstanding Notes are to be redeemed, the
Trustee shall select the Notes or portions thereof of the Global Note or the
Notes in certificated form to be redeemed (in principal amounts of $1,000 or
integral multiples thereof) by lot, on a pro rata basis or by another method the
Trustee deems fair and appropriate. If any Note selected for partial redemption
is submitted for conversion in part after such selection, the portion of such
Note submitted for conversion shall be deemed (so far as may be) to be the
portion to be selected for redemption. The Notes (or portions thereof) so
selected shall be deemed duly selected for redemption for all purposes hereof,
notwithstanding that any such Note is submitted for conversion in part before
the mailing of the notice of redemption.
Upon any redemption of less than all of the outstanding Notes,
the Company and the Trustee may (but need not), solely for purposes of
determining the pro rata allocation among such Notes as are unconverted and
outstanding at the time of redemption, treat as outstanding any Notes
surrendered for conversion during the period of fifteen (15) days next preceding
the mailing of a notice of redemption and may (but need not) treat as
outstanding any Note authenticated and delivered during such period in exchange
for the unconverted portion of any Note converted in part during such period.
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Section 3.3. Payment Of Notes Called For Redemption. If notice of
redemption has been given as above provided, the Notes or portion of Notes with
respect to which such notice has been given shall, unless converted into Common
Stock pursuant to the terms hereof, become due and payable on the date fixed for
redemption and at the place or places stated in such notice at the applicable
redemption price, together with interest accrued to (but excluding) the date
fixed for redemption, and on and after said date (unless the Company shall
default in the payment of such Notes at the redemption price, together with
interest accrued to said date) interest on the Notes or portion of Notes so
called for redemption shall cease to accrue and, after the close of business on
the Business Day next preceding the date fixed for redemption, such Notes shall
cease to be convertible into Common Stock and, except as provided in Sections
8.5 and 13.4, to be entitled to any benefit or security under this Indenture,
and the holders thereof shall have no right in respect of such Notes except the
right to receive the redemption price thereof and unpaid interest to (but
excluding) the date fixed for redemption. On presentation and surrender of such
Notes at a place of payment in said notice specified, the said Notes or the
specified portions thereof shall be paid and redeemed by the Company at the
applicable redemption price, together with interest accrued thereon to (but
excluding) the date fixed for redemption; provided, however, that if the
applicable redemption date is an interest payment date, the semi-annual payment
of interest becoming due on such date shall be payable to the holders of such
Notes registered as such on the relevant record date instead of the holders
surrendering such Notes for redemption on such date.
Upon presentation of any Note redeemed in part only, the Company
shall execute and the Trustee shall authenticate and make available for delivery
to the holder thereof, at the expense of the Company, a new Note or Notes, of
authorized denominations, in principal amount equal to the unredeemed portion of
the Notes so presented.
Notwithstanding the foregoing, the Trustee shall not redeem any
Notes or mail any notice of redemption during the continuance of a default in
payment of interest or premium, if any, on the Notes. If any Note called for
redemption shall not be so paid upon surrender thereof for redemption, the
principal and premium, if any, shall, until paid or duly provided for, bear
interest from the date fixed for redemption at the rate borne by the Note and
such Note shall remain convertible into Common Stock until the principal and
premium, if any, and interest shall have been paid or duly provided for.
Section 3.4. Conversion Arrangement On Call For Redemption. In
connection with any redemption of Notes, the Company may arrange for the
purchase and conversion of any Notes by an agreement with one or more investment
bankers or other purchasers to purchase such Notes by paying to the Trustee in
trust for the Noteholders, on or before the date fixed for redemption, an amount
not less than the applicable redemption price, together with interest accrued to
(but excluding) the date fixed for redemption, of such Notes. Notwithstanding
anything to the contrary contained in this Article Three, the obligation of the
Company to pay the redemption price of such Notes, together with interest
accrued to (but excluding) the date fixed for redemption, shall be deemed to be
satisfied and discharged to the extent such amount is so paid by such
purchasers. If such an agreement is entered into, a copy of which will be filed
with the Trustee prior to the date fixed for redemption, any Notes not duly
surrendered for conversion by the holders thereof may, at the option of the
Company, be deemed, to the fullest extent permitted by law, acquired by such
purchasers from such holders and (notwithstanding anything
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to the contrary contained in Article Fifteen) surrendered by such purchasers for
conversion, all as of immediately prior to the close of business on the date
fixed for redemption (and the right to convert any such Notes shall be extended
through such time), subject to payment of the above amount as aforesaid. At the
direction of the Company, the Trustee shall hold and dispose of any such amount
paid to it in the same manner as it would monies deposited with it by the
Company for the redemption of Notes. Without the Trustee's prior written
consent, no arrangement between the Company and such purchasers for the purchase
and conversion of any Notes shall increase or otherwise affect any of the
powers, duties, responsibilities or obligations of the Trustee as set forth in
this Indenture.
Section 3.5. Redemption At Option Of Holders.
(a) If there shall occur a Fundamental Change at any time prior
to maturity of the Notes, then each Noteholder shall have the right, at such
holder's option, to require the Company to redeem all of such holder's Notes, or
any portion thereof that is an integral multiple of $1,000 principal amount, on
the date (the "Repurchase Date") that is thirty (30) days after the date of the
Company Notice (as defined in Section 3.5(b) below) of such Fundamental Change
(or, if such 30th day is not a Business Day, the next succeeding Business Day)
at a redemption price equal to 100% of the principal amount thereof, together
with accrued interest to (but excluding) the Repurchase Date; provided, however,
that, if such Repurchase Date is a March 15 or September 15, then the interest
payable on such date shall be paid to the holders of record of the Notes on the
next preceding March 1 or September 1, respectively.
Upon presentation of any Note redeemed in part only, the Company
shall execute and, upon the Company's written direction to the Trustee, the
Trustee shall authenticate and deliver to the holder thereof, at the expense of
the Company, a new Note or Notes, of authorized denominations, in principal
amount equal to the unredeemed portion of the Notes so presented.
(b) On or before the tenth day after the occurrence of a
Fundamental Change, the Company or at its written request (which must be
received by the Trustee at least five (5) Business Days prior to the date the
Trustee is requested to give notice as described below, unless the Trustee shall
agree in writing to a shorter period), the Trustee, in the name of and at the
expense of the Company, shall mail or cause to be mailed to all holders of
record on the date of the Fundamental Change a notice (the "Company Notice") of
the occurrence of such Fundamental Change and of the redemption right at the
option of the holders arising as a result thereof. Such notice shall be mailed
in the manner and with the effect set forth in the first paragraph of Section
3.2 (without regard for the time limits set forth therein). If the Company shall
give such notice, the Company shall also deliver a copy of the Company Notice to
the Trustee at such time as it is mailed to Noteholders. Concurrently with the
mailing of any Company Notice, the Company shall issue a press release
announcing such Fundamental Change referred to in the Company Notice, the form
and content of which press release shall be determined by the Company in its
sole discretion. The failure to issue any such press release or any defect
therein shall not affect the validity of the Company Notice or any proceedings
for the redemption of any Note which any Noteholder may elect to have the
Company redeem as provided in this Section 3.5.
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Each Company Notice shall specify the circumstances constituting
the Fundamental Change, the Repurchase Date, the price at which the Company
shall be obligated to redeem Notes, that the holder must exercise the redemption
right on or prior to the close of business on the Repurchase Date (the
"Fundamental Change Expiration Time"), that the holder shall have the right to
withdraw any Notes surrendered prior to the Fundamental Change Expiration Time,
a description of the procedure which a Noteholder must follow to exercise such
redemption right and to withdraw any surrendered Notes, the place or places
where the holder is to surrender such holder's Notes, the amount of interest
accrued on each Note to the Repurchase Date and the "CUSIP" number or numbers of
the Notes (if then generally in use).
No failure of the Company to give the foregoing notices and no
defect therein shall limit the Noteholders' redemption rights or affect the
validity of the proceedings for the redemption of the Notes pursuant to this
Section 3.5.
(c) For a Note to be so redeemed at the option of the holder, the
Company must receive at the office or agency of the Company maintained for that
purpose or, at the option of such holder, the Corporate Trust Office, such Note
with the form entitled "Option to Elect Repayment Upon A Fundamental Change" on
the reverse thereof duly completed, together with such Notes duly endorsed for
transfer, on or before the Fundamental Change Expiration Time. All questions as
to the validity, eligibility (including time of receipt) and acceptance of any
Note for repayment shall be determined by the Company, whose determination shall
be final and binding absent manifest error.
(d) On or prior to the Repurchase Date, the Company will deposit
with the Trustee or with one or more paying agents (or, if the Company is acting
as its own paying agent, set aside, segregate and hold in trust as provided in
Section 5.4) an amount of money sufficient to redeem on the Repurchase Date all
the Notes to be redeemed on such date at the appropriate redemption price,
together with accrued interest to (but excluding) the Repurchase Date; provided,
however, that if such payment is made on the Repurchase Date it must be received
by the Trustee or paying agent, as the case may be, by 10:00 a.m., New York City
time, on such date. Payment for Notes surrendered for redemption (and not
withdrawn) prior to the Fundamental Change Expiration Time will be made promptly
(but in no event more than five (5) Business Days) following the Repurchase Date
by mailing checks for the amount payable to the holders of such Notes entitled
thereto as they shall appear on the registry books of the Company.
(e) In the case of a reclassification, change, consolidation,
merger, combination, sale or conveyance to which Section 15.6 applies, in which
the Common Stock of the Company is changed or exchanged as a result into the
right to receive stock, securities or other property or assets (including cash),
which includes shares of Common Stock of the Company or shares of common stock
of another Person that are, or upon issuance will be, traded on a United States
national securities exchange or approved for trading on an established automated
over-the-counter trading market in the United States and such shares constitute
at the time such change or exchange becomes effective in excess of 50% of the
aggregate fair market value of such stock, securities or other property or
assets (including cash) (as determined by the Company, which determination shall
be conclusive and binding), then the Person formed by such consolidation or
resulting from such merger or which acquires such assets, as the case may be,
shall execute and deliver to the Trustee a supplemental indenture (accompanied
by an Opinion of
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Counsel that such supplemental indenture complies with the Trust Indenture Act
as in force at the date of execution of such supplemental indenture) modifying
the provisions of this Indenture relating to the right of holders of the Notes
to cause the Company to repurchase the Notes following a Fundamental Change,
including without limitation the applicable provisions of this Section 3.5 and
the definitions of Common Stock and Fundamental Change, as appropriate, as
determined in good faith by the Company (which determination shall be conclusive
and binding), to make such provisions apply to such other Person if different
from the Company and the common stock issued by such Person (in lieu of the
Company and the Common Stock of the Company).
(f) The Company will comply with the provisions of Rule 13e-4 and
any other tender offer rules under the Exchange Act to the extent then
applicable in connection with the redemption rights of the holders of Notes in
the event of a Fundamental Change.
ARTICLE 4.
SUBORDINATION OF NOTES
Section 4.1. Agreement Of Subordination. The Company covenants and
agrees, and each holder of Notes issued hereunder by its acceptance thereof
likewise covenants and agrees, that all Notes shall be issued subject to the
provisions of this Article Four, and each Person holding any Note, whether upon
original issue or upon registration of transfer, assignment or exchange thereof,
accepts and agrees to be bound by such provisions.
The payment of the principal of, premium, if any, and interest
(including Liquidated Damages, if any) on all Notes (including, but not limited
to, the redemption price with respect to the Notes called for redemption in
accordance with Section 3.2 or submitted for redemption in accordance with
Section 3.5, as the case may be, as provided in this Indenture) issued hereunder
shall, to the extent and in the manner hereinafter set forth, be subordinated
and subject in right of payment to the prior payment in full of all Senior
Indebtedness, whether outstanding at the date of this Indenture or thereafter
incurred.
No provision of this Article Four shall prevent the occurrence of
any default or Event of Default hereunder.
Section 4.2. Payments To Noteholders. No payment shall be made with
respect to the principal of, premium, if any, or interest (including Liquidated
Damages, if any) on the Notes (including, but not limited to, the redemption
price with respect to the Notes to be called for redemption in accordance with
Section 3.2 or submitted for redemption in accordance with Section 3.5, as the
case may be, as provided in this Indenture), except payments and distributions
made by the Trustee as permitted by the first or second paragraph of Section
4.5, if:
(i) a default in the payment of principal, premium, if any,
interest, rent or other obligations in respect of Designated Senior Indebtedness
occurs and is continuing (or, in the case of Designated Senior Indebtedness for
which there is a period of grace, in the event of such a default that continues
beyond the period of grace, if any, specified in the instrument or
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lease evidencing such Designated Senior Indebtedness) (a "Payment Default"),
unless and until such Payment Default shall have been cured or waived or shall
have ceased to exist; or
(ii) a default, other than a Payment Default, on any Designated
Senior Indebtedness occurs and is continuing that then permits holders of such
Designated Senior Indebtedness to accelerate its maturity (or in the case of any
lease, a default occurs and is continuing that permits the lessor to either
terminate the lease or require the Company to make an irrevocable offer to
terminate the lease following an event of default thereunder) and the Trustee
receives a notice of the default (a "Payment Blockage Notice") from a holder of
Designated Senior Indebtedness, a Representative of Designated Senior
Indebtedness or the Company (a "Non-Payment Default").
If the Trustee receives any Payment Blockage Notice pursuant to
clause (ii) above, no subsequent Payment Blockage Notice shall be effective for
purposes of this Section 4.2 unless and until at least 365 days shall have
elapsed since the initial effectiveness of the immediately prior Payment
Blockage Notice. No Non-Payment Default that existed or was continuing on the
date of delivery of any Payment Blockage Notice to the Trustee shall be, or be
made, the basis for a subsequent Payment Blockage Notice.
The Company may and shall resume payments on and distributions in
respect of the Notes upon the earlier of:
(1) the date upon which any such Payment Default is cured
or waived or ceases to exist, or
(2) in the case of a Non-Payment Default, the earlier of
(a) the date upon which such default is cured or waived or ceases to exist or
(b) 179 days after the applicable Payment Blockage Notice is received by the
Trustee if the maturity of such Designated Senior Indebtedness has not been
accelerated (or in the case of any lease, 179 days after notice is received if
the Company has not received notice that the lessor under such lease has
exercised its right to terminate the lease or require the Company to make an
irrevocable offer to terminate the lease following an event of default
thereunder), unless this Article Four otherwise prohibits the payment or
distribution at the time of such payment or distribution.
Upon any payment by the Company, or distribution of assets of the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution or winding up or liquidation or reorganization of
the Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become due upon all
Senior Indebtedness shall first be paid in full in cash or other payment
satisfactory to the holders of such Senior Indebtedness (and satisfactory to the
holders of Senior Indebtedness in the case such Senior Indebtedness includes
Designated Senior Indebtedness), or payment thereof in accordance with its terms
provided for in cash or other payment satisfactory to the holders of such Senior
Indebtedness (and satisfactory to the holders of Senior Indebtedness in the case
such Senior Indebtedness includes Designated Senior Indebtedness) before any
payment is made on account of the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Notes (except payments made
pursuant to Article Thirteen from monies deposited with the Trustee pursuant
thereto prior to commencement of proceedings for such dissolution,
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winding up, liquidation or reorganization), and upon any such dissolution or
winding up or liquidation or reorganization of the Company or bankruptcy,
insolvency, receivership or other similar proceeding, any payment by the
Company, or distribution of assets of the Company of any kind or character,
whether in cash, property or securities, to which the holders of the Notes or
the Trustee would be entitled, except for the provisions of this Article Four,
shall (except as aforesaid) be paid by the Company or by any receiver, trustee
in bankruptcy, liquidating trustee, agent or other Person making such payment or
distribution, or by the holders of the Notes or by the Trustee under this
Indenture if received by them or it, directly to the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective amounts of
Senior Indebtedness held by such holders, or as otherwise required by law or a
court order) or their Representative or Representatives, as their respective
interests may appear, to the extent necessary to pay all Senior Indebtedness in
full, in cash or other payment satisfactory to the holders of such Senior
Indebtedness (and satisfactory to the holders of Senior Indebtedness in the case
such Senior Indebtedness includes Designated Senior Indebtedness), after giving
effect to any concurrent payment or distribution to or for the holders of Senior
Indebtedness, before any payment or distribution is made to the holders of the
Notes or to the Trustee.
For purposes of this Article Four, the words, "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in this Article Four with
respect to the Notes to the payment of all Senior Indebtedness which may at the
time be outstanding, provided that (i) the Senior Indebtedness is assumed by the
new corporation, if any, resulting from any reorganization or readjustment, and
(ii) the rights of the holders of Senior Indebtedness (other than leases which
are not assumed by the Company or the new corporation, as the case may be) are
not, without the consent of such holders, altered by such reorganization as the
case may be) are not, without the consent of such holders, altered by such
reorganization or readjustment. The consolidation of the Company with, or the
merger of the Company into, another corporation or the liquidation or
dissolution of the Company following the conveyance or transfer of its property
as an entirety, or substantially as an entirety, to another Person upon the
terms and conditions provided for in Article Twelve shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of this
Section 4.2 if such other Person shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions stated in Article Twelve.
In the event of the acceleration of the Notes because of an Event
of Default, no payment or distribution shall be made to the Trustee or any
holder of Notes in respect of the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Notes (including, but not limited
to, the redemption price with respect to the Notes called for redemption in
accordance with Section 3.2 or submitted for redemption in accordance with
Section 3.5, as the case may be, as provided in this Indenture), except payments
and distributions made by the Trustee as permitted by the first or second
paragraph of Section 4.5, until all Senior Indebtedness has been paid in full in
cash or other payment satisfactory to the holders of Senior Indebtedness (and
satisfactory to the holders of Designated Senior Indebtedness in the case such
Senior Indebtedness includes Designated Senior Indebtedness) or such
acceleration is rescinded in accordance with the terms of this Indenture. If
payment of the Notes is accelerated because of
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an Event of Default, the Company or the Trustee shall promptly notify holders of
Senior Indebtedness (including the agent under the Credit Agreement) of the
acceleration.
In the event that, notwithstanding the foregoing provisions, any
payment or distribution of assets of the Company of any kind or character,
whether in cash, property or securities (including, without limitation, by way
of setoff or otherwise), prohibited by the foregoing provisions in this Section
4.2, shall be received by the Trustee or the holders of the Notes before all
Senior Indebtedness is paid in full in cash or other payment satisfactory to the
holders of such Senior Indebtedness (and satisfactory to the holders of Senior
Indebtedness in the case such Senior Indebtedness includes Designated Senior
Indebtedness), or provision is made for such payment thereof in accordance with
its terms in cash or other payment satisfactory to the holders of such Senior
Indebtedness (and satisfactory to the holders of Senior Indebtedness in the case
such Senior Indebtedness includes Designated Senior Indebtedness), such payment
or distribution shall be held in trust for the benefit of and shall be paid over
or delivered to the holders of Senior Indebtedness or their Representative or
Representatives, as their respective interests may appear, as calculated by the
Company, for application to the payment of any Senior Indebtedness remaining
unpaid to the extent necessary to pay all Senior Indebtedness in full in cash or
other payment satisfactory to the holders of such Senior Indebtedness (and
satisfactory to the holders of Senior Indebtedness in the case such Senior
Indebtedness includes Designated Senior Indebtedness), after giving effect to
any concurrent payment or distribution to or for the holders of such Senior
Indebtedness.
Nothing in this Section 4.2 shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 8.6. This Section 4.2 shall be
subject to the further provisions of Section 4.5.
Section 4.3. Subrogation Of Notes. Subject to the payment in full of all
Senior Indebtedness, the rights of the holders of the Notes shall be subrogated
to the extent of the payments or distributions made to the holders of such
Senior Indebtedness pursuant to the provisions of this Article Four (equally and
ratably with the holders of all indebtedness of the Company which by its express
terms is subordinated to other indebtedness of the Company to substantially the
same extent as the Notes are subordinated and is entitled to like rights of
subrogation) to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Company
applicable to the Senior Indebtedness until the principal, premium, if any, and
interest (including Liquidated Damages, if any) on the Notes shall be paid in
full, and, for the purposes of such subrogation, no payments or distributions to
the holders of the Senior Indebtedness of any cash, property or securities to
which the holders of the Notes or the Trustee would be entitled except for the
provisions of this Article Four, and no payment pursuant to the provisions of
this Article Four, to or for the benefit of the holders of Senior Indebtedness
by holders of the Notes or the Trustee, shall, as among the Company, its
creditors other than holders of Senior Indebtedness, and the holders of the
Notes, be deemed to be a payment by the Company to or on account of the Senior
Indebtedness, and no payments or distributions of cash, property or securities
to or for the benefit of the holders of the Notes pursuant to the subrogation
provisions of this Article Four, which would otherwise have been paid to the
holders of Senior Indebtedness, shall be deemed to be a payment by the Company
to or for the account of the Notes. It is understood that the provisions of this
Article
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Four are intended solely for the purposes of defining the relative
rights of the holders of the Notes, on the one hand, and the holders of the
Senior Indebtedness, on the other hand.
Nothing contained in this Article Four or elsewhere in this
Indenture or in the Notes is intended to or shall impair, as among the Company,
its creditors other than the holders of Senior Indebtedness, and the holders of
the Notes, the obligation of the Company, which is absolute and unconditional,
to pay to the holders of the Notes the principal of, premium, if any, and
interest (including Liquidated Damages, if any) on the Notes as and when the
same shall become due and payable in accordance with their terms, or is intended
to or shall affect the relative rights of the holders of the Notes and creditors
of the Company other than the holders of the Senior Indebtedness, nor shall
anything herein or therein prevent the Trustee or the holder of any Note from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article Four of the
holders of Senior Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy.
Upon any payment or distribution of assets of the Company
referred to in this Article Four, the Trustee, subject to the provisions of
Section 8.1, and the holders of the Notes shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
bankruptcy, dissolution, winding up, liquidation or reorganization proceedings
are pending, or a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
delivered to the Trustee or to the holders of the Notes, for the purpose of
ascertaining the Persons entitled to participate in such distribution, the
holders of the Senior Indebtedness and other indebtedness of the Company, the
amount thereof or payable thereon and all other facts pertinent thereto or to
this Article Four.
Section 4.4. Authorization To Effect Subordination. Each holder of a
Note by the holder's acceptance thereof authorizes and directs the Trustee on
the holder's behalf to take such action as may be necessary or appropriate to
effectuate the subordination as provided in this Article Four and appoints the
Trustee to act as the holder's attorney-in-fact for any and all such purposes.
If the Trustee does not file a proper proof of claim or proof of debt in the
form required in any proceeding referred to in the third paragraph of Section
7.2 hereof at least thirty (30) days before the expiration of the time to file
such claim, the holders of any Senior Indebtedness or their Representatives are
hereby authorized to file an appropriate claim for and on behalf of the holders
of the Notes.
Section 4.5. Notice To Trustee. The Company shall give prompt written
notice in the form of an Officers' Certificate to a Responsible Officer of the
Trustee and to any paying agent of any fact known to the Company that would
prohibit the making of any payment of monies to or by the Trustee or any paying
agent in respect of the Notes pursuant to the provisions of this Article Four.
Notwithstanding the provisions of this Article Four or any other provision of
this Indenture, the Trustee shall not be charged with knowledge of the existence
of any facts that would prohibit the making of any payment of monies to or by
the Trustee in respect of the Notes pursuant to the provisions of this Article
Four, unless and until a Responsible Officer of the Trustee shall have received
written notice thereof at the Corporate Trust Office from the Company (in the
form of an Officers' Certificate) or a Representative or a holder or holders of
Senior Indebtedness, and before the receipt of any such written notice, the
Trustee, subject to the
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provisions of Section 8.1, shall be entitled in all respects to assume that no
such facts exist; provided, however, that if on a date not less than one
Business Day prior to the date upon which by the terms hereof any such monies
may become payable for any purpose (including, without limitation, the payment
of the principal of, or premium, if any, or interest (including Liquidated
Damages, if any) on any Note) the Trustee shall not have received, with respect
to such monies, the notice provided for in this Section 4.5, then, anything
herein contained to the contrary notwithstanding, the Trustee shall have full
power and authority to apply monies received to the purpose for which they were
received, and shall not be affected by any notice to the contrary that may be
received by it on or after such prior date.
Notwithstanding anything in this Article Four to the contrary,
nothing shall prevent any payment by the Trustee to the Noteholders of monies
deposited with it pursuant to Section 13.1, if a Responsible Officer of the
Trustee shall not have received written notice at the Corporate Trust Office on
or before one Business Day prior to the date such payment is due that such
payment is not permitted under Section 4.1 or 4.2.
The Trustee, subject to the provisions of Section 8.1, shall be
entitled to rely on the delivery to it of a written notice by a Representative
or a person representing himself to be a holder of Senior Indebtedness (or a
trustee on behalf of such holder) to establish that such notice has been given
by a Representative or a holder of Senior Indebtedness or a trustee on behalf of
any such holder or holders. The Trustee shall not be required to make any
payment or distribution to or on behalf of a holder of Senior Indebtedness
pursuant to this Article Four unless it has received satisfactory evidence as to
the amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any other
facts pertinent to the rights of such Person under this Article Four.
Section 4.6. Trustee's Relation To Senior Indebtedness. The Trustee, in
its individual capacity, shall be entitled to all the rights set forth in this
Article Four in respect of any Senior Indebtedness at any time held by it, to
the same extent as any other holder of Senior Indebtedness, and nothing in
Section 8.13 or elsewhere in this Indenture shall deprive the Trustee of any of
its rights as such holder.
With respect to the holders of Senior Indebtedness, the Trustee
undertakes to perform or to observe only such of its covenants and obligations
as are specifically set forth in this Article Four, and no implied covenants or
obligations with respect to the holders of Senior Indebtedness shall be read
into this Indenture against the Trustee. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness and, subject to the
provisions of Section 8.1, the Trustee shall not be liable to any holder of
Senior Indebtedness (i) for any failure to make any payments or distributions to
such holder or (ii) if it shall pay over or deliver to holders of Notes, the
Company or any other Person money in compliance with this Article Four.
Section 4.7. No Impairment Of Subordination. No right of any present or
future holder of any Senior Indebtedness to enforce subordination as herein
provided shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Company with the
terms, provisions and covenants of this Indenture, regardless of any knowledge
thereof
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which any such holder may have or otherwise be charged with. Senior Indebtedness
may be created, renewed or extended and holders of Senior Indebtedness may
exercise any rights under any instrument creating or evidencing such Senior
Indebtedness, including, without limitation, any waiver of default thereunder,
without any notice to or consent from the holders of the Notes or the Trustee.
No compromise, alteration, amendment, modification, extension, renewal or other
change of, or waiver, consent or other action in respect of, any liability or
obligation under or in respect of the Senior Indebtedness or any terms or
conditions of any instrument creating or evidencing such Senior Indebtedness
shall in any way alter or affect any of the provisions of this Article Four or
the subordination of the Notes provided thereby.
Section 4.8. Certain Conversions Not Deemed Payment. For the purposes of
this Article Four only, (1) the issuance and delivery of junior securities upon
conversion of Notes in accordance with Article Fifteen shall not be deemed to
constitute a payment or distribution on account of the principal of, premium, if
any, or interest (including Liquidated Damages, if any) on Notes or on account
of the purchase or other acquisition of Notes, and (2) the payment, issuance or
delivery of cash (except in satisfaction of fractional shares pursuant to
Section 15.3), property or securities (other than junior securities) upon
conversion of a Note shall be deemed to constitute payment on account of the
principal of, premium, if any, or interest (including Liquidated Damages, if
any) on such Note. For the purposes of this Section 4.8, the term "junior
securities" means (a) shares of any stock of any class of the Company or (b)
securities of the Company that are subordinated in right of payment to all
Senior Indebtedness that may be outstanding at the time of issuance or delivery
of such securities to substantially the same extent as, or to a greater extent
than, the Notes are so subordinated as provided in this Article Four. Nothing
contained in this Article Four or elsewhere in this Indenture or in the Notes is
intended to or shall impair, as among the Company, its creditors (other than
holders of Senior Indebtedness) and the Noteholders, the right, which is
absolute and unconditional, of the Holder of any Note to convert such Note in
accordance with Article Fifteen.
Section 4.9. Article Applicable To Paying Agents. If at any time any
paying agent other than the Trustee shall have been appointed by the Company and
be then acting hereunder, the term "Trustee" as used in this Article Four shall
(unless the context otherwise requires) be construed as extending to and
including such paying agent within its meaning as fully for all intents and
purposes as if such paying agent were named in this Article Four in addition to
or in place of the Trustee; provided, however, that the first paragraph of
Section 4.5 shall not apply to the Company or any Affiliate of the Company if it
or such Affiliate acts as paying agent.
The Trustee shall not be responsible for the actions or inactions
of any other paying agents (including the Company if acting as its own paying
agent) and shall have no control of any funds held by such other paying agents.
Section 4.10. Senior Indebtedness Entitled To Rely. The holders of
Senior Indebtedness (including, without limitation, Designated Senior
Indebtedness) shall have the right to rely upon this Article Four, and no
amendment or modification of the provisions contained herein shall diminish the
rights of such holders unless such holders shall have agreed in writing thereto.
Section 4.11. Reliance On Judicial Order Or Certificate Of Liquidating
Agent. Upon any payment or distribution of assets of the Company referred to in
this Article Four, the Trustee
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and the Noteholders shall be entitled to rely upon any order or decree entered
by any court of competent jurisdiction in which such insolvency, bankruptcy,
receivership, liquidation, reorganization, dissolution, winding up or similar
case or proceeding is pending, or a certificate of the trustee in bankruptcy,
liquidating trustee, custodian, receiver, assignee for the benefit of creditors,
agent or other Person making such payment or distribution, delivered to the
Trustee or to the Noteholders, for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article Four.
ARTICLE 5.
PARTICULAR COVENANTS OF THE COMPANY
Section 5.1. Payment Of Principal, Premium And Interest. The Company
covenants and agrees that it will duly and punctually pay or cause to be paid
the principal of and premium, if any (including the redemption price upon
redemption pursuant to Article Three), and interest (including Liquidated
Damages, if any), on each of the Notes at the places, at the respective times
and in the manner provided herein and in the Notes.
Section 5.2. Maintenance Of Office Or Agency. The Company will maintain
an office or agency in the Borough of Manhattan, the City of New York, where the
Notes may be surrendered for registration of transfer or exchange or for
presentation for payment or for conversion or redemption and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company will give prompt written notice to the Trustee of the
location and any change in the location of such office or agency not designated
or appointed by the Trustee. If at any time the Company shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office or the office of agency of the Trustee
in The Borough of Manhattan, The City of New York (which shall initially be
located at The Bank of New York, 101 Barclay Street, Floor 21 West, New York,
New York 10286, Attention: Corporate Trust Administration.
The Company may also from time to time designate co-registrars
and one or more offices or agencies where the Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations. The Company will give prompt written notice of any such
designation or rescission and of any change in the location of any such other
office or agency.
The Company hereby initially designates the Trustee as paying
agent, Note registrar, Custodian and conversion agent and each of the Corporate
Trust Office and the office of agency of the Trustee in The Borough of
Manhattan, The City of New York (which shall initially be located at The Bank of
New York, 101 Barclay Street, Floor 21 West, New York, New York 10286,
Attention: Corporate Trust Administration, shall be considered as one such
office or agency of the Company for each of the aforesaid purposes.
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So long as the Trustee is the Note registrar, the Trustee agrees
to mail, or cause to be mailed, the notices set forth in Section 8.10(a) and the
third paragraph of Section 8.11. If co-registrars have been appointed in
accordance with this Section, the Trustee shall mail such notices only to the
Company and the holders of Notes it can identify from its records.
Section 5.3. Appointments To Fill Vacancies In Trustee's Office. The
Company, whenever necessary to avoid or fill a vacancy in the office of Trustee,
will appoint, in the manner provided in Section 8.10, a Trustee, so that there
shall at all times be a Trustee hereunder.
Section 5.4. Provisions As To Paying Agent.
(a) If the Company shall appoint a paying agent other than the
Trustee, or if the Trustee shall appoint such a paying agent, the Company will
cause such paying agent to execute and deliver to the Trustee an instrument in
which such agent shall agree with the Trustee, subject to the provisions of this
Section 5.4:
(1) that it will hold all sums held by it as such agent
for the payment of the principal of and premium, if any, or interest (including
Liquidated Damages, if any) on the Notes (whether such sums have been paid to it
by the Company or by any other obligor on the Notes) in trust for the benefit of
the holders of the Notes;
(2) that it will give the Trustee notice of any failure by
the Company (or by any other obligor on the Notes) to make any payment of the
principal of and premium, if any, or interest on the Notes when the same shall
be due and payable; and
(3) that at any time during the continuance of an Event of
Default, upon request of the Trustee, it will forthwith pay to the Trustee all
sums so held in trust.
The Company shall, on or before each due date of the principal
of, premium, if any, or interest on the Notes, deposit with the paying agent a
sum (in funds which are immediately available on the due date for such payment)
sufficient to pay such principal, premium, if any, or interest, and (unless such
paying agent is the Trustee) the Company will promptly notify the Trustee of any
failure to take such action; provided, however, that if such deposit is made on
the due date, such deposit shall be received by the paying agent by 10:00 a.m.,
New York City time, on such date.
(b) If the Company shall act as its own paying agent, it will, on
or before each due date of the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Notes, set aside, segregate and
hold in trust for the benefit of the holders of the Notes a sum sufficient to
pay such principal, premium, if any, or interest (including Liquidated Damages,
if any) so becoming due and will promptly notify the Trustee of any failure to
take such action and of any failure by the Company (or any other obligor under
the Notes) to make any payment of the principal of, premium, if any, or interest
(including Liquidated Damages, if any) on the Notes when the same shall become
due and payable.
(c) Anything in this Section 5.4 to the contrary notwithstanding,
the Company may, at any time, for the purpose of obtaining a satisfaction and
discharge of this Indenture, or for any other reason, pay or cause to be paid to
the Trustee all sums held in trust by the Company
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or any paying agent hereunder as required by this Section 5.4, such sums to be
held by the Trustee upon the trusts herein contained and upon such payment by
the Company or any paying agent to the Trustee, the Company or such paying agent
shall be released from all further liability with respect to such sums.
(d) Anything in this Section 5.4 to the contrary notwithstanding,
the agreement to hold sums in trust as provided in this Section 5.4 is subject
to Sections 13.3 and 13.4.
The Trustee shall not be responsible for the actions of any other
paying agents (including the Company if acting as its own paying agent) and
shall have no control of any funds held by such other paying agents.
Section 5.5. Existence. Subject to Article Twelve, the Company will do
or cause to be done all things necessary to preserve and keep in full force and
effect its existence and rights (charter and statutory); provided, however, that
the Company shall not be required to preserve any such right if the Company
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company and that the loss thereof is not
disadvantageous in any material respect to the Noteholders.
Section 5.6. Maintenance Of Properties. The Company will cause all
properties used or useful in the conduct of its business or the business of any
Significant Subsidiary to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and will cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section 5.6
shall prevent the Company from discontinuing the operation or maintenance of any
of such properties if such discontinuance is, in the judgment of the Company,
desirable in the conduct of its business or the business of any subsidiary and
not disadvantageous in any material respect to the Noteholders.
Section 5.7. Payment Of Taxes And Other Claims. The Company will pay or
discharge, or cause to be paid or discharged, before the same may become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon the Company or any Significant Subsidiary or upon the income,
profits or property of the Company or any Significant Subsidiary, (ii) all
claims for labor, materials and supplies which, if unpaid, might by law become a
lien or charge upon the property of the Company or any Significant Subsidiary
and (iii) all stamps and other duties, if any, which may be imposed by the
United States or any political subdivision thereof or therein in connection with
the issuance, transfer, exchange or conversion of any Notes or with respect to
this Indenture; provided, however, that, in the case of clauses (i) and (ii),
the Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim (A) if the failure to do so
will not, in the aggregate, have a material adverse impact on the Company or (B)
if the amount, applicability or validity is being contested in good faith by
appropriate proceedings.
Section 5.8. Rule 144A Information Requirement. Within the period prior
to the expiration of the holding period applicable to sales thereof under Rule
144(k) under the
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Securities Act (or any successor provision), the Company covenants and agrees
that it shall, during any period in which it is not subject to Section 13 or
15(d) under the Exchange Act, make available to any holder or beneficial holder
of Notes or any Common Stock issued upon conversion thereof which continue to be
Restricted Securities in connection with any sale thereof and any prospective
purchaser of Notes or such Common Stock designated by such holder or beneficial
holder, the information required pursuant to Rule 144A(d)(4) under the
Securities Act upon the request of any holder or beneficial holder of the Notes
or such Common Stock and it will take such further action as any holder or
beneficial holder of such Notes or such Common Stock may reasonably request, all
to the extent required from time to time to enable such holder or beneficial
holder to sell its Notes or Common Stock without registration under the
Securities Act within the limitation of the exemption provided by Rule 144A, as
such Rule may be amended from time to time. Upon the request of any holder or
any beneficial holder of the Notes or such Common Stock, the Company will
deliver to such holder a written statement as to whether it has complied with
such requirements.
Section 5.9. Stay, Extension And Usury Laws. The Company covenants (to
the extent that it may lawfully do so) that it shall not at any time insist
upon, plead, or in any manner whatsoever claim or take the benefit or advantage
of, any stay, extension or usury law or other law which would prohibit or
forgive the Company from paying all or any portion of the principal of, premium,
if any, or interest (including Liquidated Damages, if any) on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture and the
Company (to the extent it may lawfully do so) hereby expressly waives all
benefit or advantage of any such law, and covenants that it will not, by resort
to any such law, hinder, delay or impede the execution of any power herein
granted to the Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 5.10. Compliance Certificate. The Company shall deliver to the
Trustee, within one hundred twenty (120) days after the end of each fiscal year
of the Company, a certificate signed by either the principal executive officer,
principal financial officer or principal accounting officer of the Company,
stating whether or not, to the best knowledge of the signer thereof, the Company
is in default in the performance and observance of any of the terms, provisions
and conditions of this Indenture (without regard to any period of grace or
requirement of notice provided hereunder) and, if the Company shall be in
default, specifying all such defaults and the nature and the status thereof of
which the signer may have knowledge.
The Company will deliver to the Trustee, forthwith upon becoming
aware of (i) any default in the performance or observance of any covenant,
agreement or condition contained in this Indenture or (ii) any Event of Default,
an Officers' Certificate specifying with particularity such default or Event of
Default and further stating what action the Company has taken, is taking or
proposes to take with respect thereto.
Any notice required to be given under this Section 5.10 or
Section 4.5 shall be delivered to a Responsible Officer of the Trustee at its
Corporate Trust Office. In the event that the payment of the Notes is
accelerated because of an Event of Default, the Company shall promptly provide
written notice to the Trustee specifying the names and addresses of the holders
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of Senior Indebtedness if the Trustee (and not the Company) is to provide
holders of Senior Indebtedness notice of such acceleration under Section 4.5 of
the Indenture.
Section 5.11. Liquidated Damages Notice. In the event that the Company
is required to pay Liquidated Damages to holders of Notes pursuant to the
Registration Rights Agreement, the Company will provide written notice
("Liquidated Damages Notice") to the Trustee of its obligation to pay Liquidated
Damages no later than fifteen (15) days prior to the proposed payment date for
the Liquidated Damages, and the Liquidated Damages Notice shall set forth the
amount of Liquidated Damages to be paid by the Company on such payment date. The
Trustee shall not at any time be under any duty to responsibility to any holder
of Notes to determine the Liquidated Damages, or with respect to the nature,
extent or calculation of the amount of Liquidated Damages when made, or with
respect to the method employed in such calculation of the Liquidated Damages.
ARTICLE 6.
NOTEHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE
Section 6.1. Noteholders' Lists. The Company covenants and agrees that
it will furnish or cause to be furnished to the Trustee, semiannually, not more
than fifteen (15) days after each March 1 and September 1 in each year beginning
with September 1, 2000, and at such other times as the Trustee may request in
writing, within thirty (30) days after receipt by the Company of any such
request (or such lesser time as the Trustee may reasonably request in order to
enable it to timely provide any notice to be provided by it hereunder), a list
in such form as the Trustee may reasonably require of the names and addresses of
the holders of Notes as of a date not more than fifteen (15) days (or such other
date as the Trustee may reasonably request in order to so provide any such
notices) prior to the time such information is furnished, except that no such
list need be furnished by the Company to the Trustee so long as the Trustee is
acting as the sole Note registrar.
Section 6.2. Preservation And Disclosure Of Lists.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of Notes contained in the most recent list furnished to it as provided
in Section 6.1 or maintained by the Trustee in its capacity as Note registrar or
co-registrar in respect of the Notes, if so acting. The Trustee may destroy any
list furnished to it as provided in Section 6.1 upon receipt of a new list so
furnished.
(b) The rights of Noteholders to communicate with other holders
of Notes with respect to their rights under this Indenture or under the Notes,
and the corresponding rights and duties of the Trustee, shall be as provided by
the Trust Indenture Act.
(c) Every Noteholder, by receiving and holding the same, agrees
with the Company and the Trustee that neither the Company nor the Trustee nor
any agent of either of them shall be held accountable by reason of any
disclosure of information as to names and addresses of holders of Notes made
pursuant to the Trust Indenture Act.
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Section 6.3. Reports By Trustee.
(a) Within sixty (60) days after May 15 of each year commencing
with the year 2000, the Trustee shall transmit to holders of Notes such reports
dated as of May 15 of the year in which such reports are made concerning the
Trustee and its actions under this Indenture as may be required pursuant to the
Trust Indenture Act at the times and in the manner provided pursuant thereto.
(b) A copy of such report shall, at the time of such transmission
to holders of Notes, be filed by the Trustee with each stock exchange and
automated quotation system upon which the Notes are listed and with the Company.
The Company will promptly notify the Trustee in writing when the Notes are
listed on any stock exchange or automated quotation system or delisted
therefrom.
Section 6.4. Reports By Company. The Company shall file with the Trustee
(and the Commission if at any time the Indenture becomes qualified under the
Trust Indenture Act), and transmit to holders of Notes, such information,
documents and other reports and such summaries thereof, as may be required
pursuant to the Trust Indenture Act at the times and in the manner provided
pursuant to such Act, whether or not the Notes are governed by such Act;
provided, however, that any such information, documents or reports required to
be filed with the Commission pursuant to Section 13 or 15(d) of the Exchange Act
shall be filed with the Trustee within fifteen (15) days after the same is so
required to be filed with the Commission. Delivery of such reports, information
and documents to the Trustee is for informational purposes only and the
Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
ARTICLE 7.
REMEDIES OF THE TRUSTEE AND
NOTEHOLDERS ON AN EVENT OF DEFAULT
Section 7.1. Events Of Default. In case one or more of the following
Events of Default (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body) shall have occurred and be
continuing:
(a) default in the payment of any installment of interest
(including Liquidated Damages, if any) upon any of the Notes as and when the
same shall become due and payable, and continuance of such default for a period
of thirty (30) days, whether or not such payment is permitted under Article Four
hereof; or
(b) default in the payment of the principal of or premium, if
any, on any of the Notes as and when the same shall become due and payable
either at maturity or in connection
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with any redemption pursuant to Article Three, by acceleration or otherwise,
whether or not such payment is permitted under Article Four hereof; or
(c) failure on the part of the Company duly to observe or perform
any other of the covenants or agreements on the part of the Company in the Notes
or in this Indenture (other than a covenant or agreement a default in whose
performance or whose breach is elsewhere in this Section 7.1 specifically dealt
with) continued for a period of sixty (60) days after the date on which written
notice of such failure, requiring the Company to remedy the same, shall have
been given to the Company by the Trustee, or the Company and a Responsible
Officer of the Trustee by the holders of at least twenty-five percent (25%) in
aggregate principal amount of the Notes at the time outstanding determined in
accordance with Section 9.4; or
(d) the Company shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
the Company or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of the Company or any
substantial part of the property of the Company, or shall consent to any such
relief or to the appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against the Company, or shall
make a general assignment for the benefit of creditors, or shall fail generally
to pay its debts as they become due; or
(e) an involuntary case or other proceeding shall be commenced
against the Company seeking liquidation, reorganization or other relief with
respect to the Company or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of the Company or any
substantial part of the property of the Company, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a period of ninety
(90) consecutive days;
then, and in each and every such case (other than an Event of Default specified
in Section 7.1(d) or (e)), unless the principal of all of the Notes shall have
already become due and payable, either the Trustee or the holders of not less
than twenty-five percent (25%) in aggregate principal amount of the Notes then
outstanding hereunder determined in accordance with Section 9.4, by notice in
writing to the Company (and to the Trustee if given by Noteholders), may declare
the principal of and premium, if any, on all the Notes and the interest accrued
thereon (including Liquidated Damages, if any) to be immediately due and
payable, and upon any such declaration the same shall become and shall be
immediately due and payable, anything in this Indenture or in the Notes
contained to the contrary notwithstanding. If an Event of Default specified in
Section 7.1(d) or (e) occurs, the principal of all the Notes and the interest
accrued thereon shall (including Liquidated Damages, if any) be immediately and
automatically due and payable without necessity of further action. This
provision, however, is subject to the conditions that if, at any time after the
principal of the Notes shall have been so declared due and payable, and before
any judgment or decree for the payment of the monies due shall have been
obtained or entered as hereinafter provided, the Company shall pay or shall
deposit with the Trustee a sum sufficient to pay all matured installments of
interest upon (including Liquidated Damages, if any) all Notes and the principal
of and premium, if any, on any and all Notes which shall have become due
otherwise than by acceleration (with interest on overdue installments of
interest
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(including Liquidated Damages, if any) (to the extent that payment of such
interest is enforceable under applicable law) and on such principal and premium,
if any, at the rate borne by the Notes, to the date of such payment or deposit)
and amounts due to the Trustee pursuant to Section 8.6, and if any and all
defaults under this Indenture, other than the nonpayment of principal of and
premium, if any, and accrued interest on (including Liquidated Damages, if any)
Notes which shall have become due by acceleration, shall have been cured or
waived pursuant to Section 7.7, then and in every such case the holders of a
majority in aggregate principal amount of the Notes then outstanding, by written
notice to the Company and to the Trustee, may waive all defaults or Events of
Default and rescind and annul such declaration and its consequences; but no such
waiver or rescission and annulment shall extend to or shall affect any
subsequent default or Event of Default, or shall impair any right consequent
thereon. The Company shall notify a Responsible Officer of the Trustee, promptly
upon becoming aware thereof, of any Event of Default.
In case the Trustee shall have proceeded to enforce any right
under this Indenture and such proceedings shall have been discontinued or
abandoned because of such waiver or rescission and annulment or for any other
reason or shall have been determined adversely to the Trustee, then and in every
such case the Company, the holders of Notes, and the Trustee shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the Company, the holders of Notes, and the Trustee shall
continue as though no such proceeding had been taken.
Section 7.2. Payments Of Notes On Default; Suit Therefor. The Company
covenants that (a) in case default shall be made in the payment of any
installment of interest upon (including Liquidated Damages, if any) any of the
Notes as and when the same shall become due and payable, and such default shall
have continued for a period of thirty (30) days or (b) in case default shall be
made in the payment of the principal of or premium, if any, on any of the Notes
as and when the same shall have become due and payable, whether at maturity of
the Notes or in connection with any redemption, by or under this Indenture by
declaration or otherwise, then, upon demand of the Trustee, the Company will pay
to the Trustee, for the benefit of the holders of the Notes, the whole amount
that then shall have become due and payable on all such Notes for principal and
premium, if any, or interest (including Liquidated Damages, if any), as the case
may be, with interest upon the overdue principal and premium, if any, and (to
the extent that payment of such interest is enforceable under applicable law)
upon the overdue installments of interest (including Liquidated Damages, if any)
at the rate borne by the Notes, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses of collection, including
reasonable compensation to the Trustee, its agents, attorneys and counsel, and
all other amounts due the Trustee under Section 8.6. Until such demand by the
Trustee, the Company may pay the principal of and premium, if any, and interest
on (including Liquidated Damages, if any) the Notes to the registered holders,
whether or not the Notes are overdue.
In case the Company shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express trust,
shall be entitled and empowered to institute any actions or proceedings at law
or in equity for the collection of the sums so due and unpaid, and may prosecute
any such action or proceeding to judgment or final decree, and may enforce any
such judgment or final decree against the Company or any other obligor on the
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Notes and collect in the manner provided by law out of the property of the
Company or any other obligor on the Notes wherever situated the monies adjudged
or decreed to be payable.
In case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Company or any other obligor on the Notes under
Title 11 of the United States Code, or any other applicable law, or in case a
receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for, or taken
possession of, the Company or such other obligor, the property of the Company or
such other obligor, or in the case of any other judicial proceedings relative to
the Company or such other obligor upon the Notes, or to the creditors or
property of the Company or such other obligor, the Trustee, irrespective of
whether the principal of the Notes shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the Trustee
shall have made any demand pursuant to the provisions of this Section 7.2, shall
be entitled and empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount of principal, premium, if
any, and interest (including Liquidated Damages, if any) owing and unpaid in
respect of the Notes, and, in case of any judicial proceedings, to file such
proofs of claim and other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee and of the Noteholders allowed in
such judicial proceedings relative to the Company or any other obligor on the
Notes, its or their creditors, or its or their property, and to collect and
receive any monies or other property payable or deliverable on any such claims,
and to distribute the same after the deduction of any amounts due the Trustee
under Section 8.6, and any receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, custodian or similar official is hereby authorized
by each of the Noteholders to make such payments to the Trustee, and, in the
event that the Trustee shall consent to the making of such payments directly to
the Noteholders, to pay to the Trustee any amount due it for reasonable
compensation, expenses, advances and disbursements, including counsel fees
incurred by it up to the date of such distribution. To the extent that such
payment of reasonable compensation, expenses, advances and disbursements out of
the estate in any such proceedings shall be denied for any reason, payment of
the same shall be secured by a lien on, and shall be paid out of, any and all
distributions, dividends, monies, securities and other property which the
holders of the Notes may be entitled to receive in such proceedings, whether in
liquidation or under any plan of reorganization or arrangement or otherwise.
All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Trustee without the
possession of any of the Notes, or the production thereof at any trial or other
proceeding relative thereto, and any such suit or proceeding instituted by the
Trustee shall be brought in its own name as trustee of an express trust, and any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel, be for the ratable benefit of the holders of the Notes.
In any proceedings brought by the Trustee (and in any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the holders
of the Notes, and it shall not be necessary to make any holders of the Notes
parties to any such proceedings.
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Section 7.3. Application Of Monies Collected By Trustee. Any monies
collected by the Trustee pursuant to this Article Seven shall be applied in the
order following, at the date or dates fixed by the Trustee for the distribution
of such monies, upon presentation of the several Notes, and stamping thereon the
payment, if only partially paid, and upon surrender thereof, if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 8.6;
SECOND: Subject to the provisions of Article Four, in case the
principal of the outstanding Notes shall not have become due and be unpaid, to
the payment of interest on (including Liquidated Damages, if any) the Notes in
default in the order of the maturity of the installments of such interest, with
interest (to the extent that such interest has been collected by the Trustee)
upon the overdue installments of interest (including Liquidated Damages, if any)
at the rate borne by the Notes, such payments to be made ratably to the Persons
entitled thereto;
THIRD: Subject to the provisions of Article Four, in case the
principal of the outstanding Notes shall have become due, by declaration or
otherwise, and be unpaid to the payment of the whole amount then owing and
unpaid upon the Notes for principal and premium, if any, and interest (including
Liquidated Damages, if any), with interest on the overdue principal and premium,
if any, and (to the extent that such interest has been collected by the Trustee)
upon overdue installments of interest (including Liquidated Damages, if any) at
the rate borne by the Notes, and in case such monies shall be insufficient to
pay in full the whole amounts so due and unpaid upon the Notes, then to the
payment of such principal and premium, if any, and interest (including
Liquidated Damages, if any) without preference or priority of principal and
premium, if any, over interest (including Liquidated Damages, if any), or of
interest (including Liquidated Damages, if any) over principal and premium, if
any, or of any installment of interest over any other installment of interest,
or of any Note over any other Note, ratably to the aggregate of such principal
and premium, if any, and accrued and unpaid interest; and
FOURTH: Subject to the provisions of Article Four, to the payment
of the remainder, if any, to the Company or any other Person lawfully entitled
thereto.
Section 7.4. Proceedings By Noteholder. No holder of any Note shall have
any right by virtue of or by reference to any provision of this Indenture to
institute any suit, action or proceeding in equity or at law upon or under or
with respect to this Indenture, or for the appointment of a receiver, trustee,
liquidator, custodian or other similar official, or for any other remedy
hereunder, unless such holder previously shall have given to the Trustee written
notice of an Event of Default and of the continuance thereof, as hereinbefore
provided, and unless also the holders of not less than twenty-five percent (25%)
in aggregate principal amount of the Notes then outstanding shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for sixty (60)
days after its receipt of such notice, request and offer of indemnity, shall
have neglected or refused to institute any such action, suit or proceeding and
no direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 7.7; it being understood and intended, and being
expressly covenanted by the taker and holder of every Note with every other
taker and holder and the Trustee, that no one or
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more holders of Notes shall have any right in any manner whatever by virtue of
or by reference to any provision of this Indenture to affect, disturb or
prejudice the rights of any other holder of Notes, or to obtain or seek to
obtain priority over or preference to any other such holder, or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal, ratable and common benefit of all holders of Notes (except as otherwise
provided herein). For the protection and enforcement of this Section 7.4, each
and every Noteholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Notwithstanding any other provision of this Indenture and any
provision of any Note, the right of any holder of any Note to receive payment of
the principal of and premium, if any (including the redemption price upon
redemption pursuant to Article Three), and accrued interest on (including
Liquidated Damages, if any) such Note, on or after the respective due dates
expressed in such Note or in the event of redemption, or to institute suit for
the enforcement of any such payment on or after such respective dates against
the Company shall not be impaired or affected without the consent of such
holder.
Anything in this Indenture or the Notes to the contrary
notwithstanding, the holder of any Note, without the consent of either the
Trustee or the holder of any other Note, in its own behalf and for its own
benefit, may enforce, and may institute and maintain any proceeding suitable to
enforce, its rights of conversion as provided herein.
Section 7.5. Proceedings By Trustee. In case of an Event of Default
known to a Responsible Officer of the Trustee, the Trustee may, in its
discretion, proceed to protect and enforce the rights vested in it by this
Indenture by such appropriate judicial proceedings as are necessary to protect
and enforce any of such rights, either by suit in equity or by action at law or
by proceeding in bankruptcy or otherwise, whether for the specific enforcement
of any covenant or agreement contained in this Indenture or in aid of the
exercise of any power granted in this Indenture, or to enforce any other legal
or equitable right vested in the Trustee by this Indenture or by law.
Section 7.6. Remedies Cumulative And Continuing. Except as provided in
Section 2.6, all powers and remedies given by this Article Seven to the Trustee
or to the Noteholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any thereof or of any other powers and remedies
available to the Trustee or the holders of the Notes, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture, and no delay or omission of the Trustee
or of any holder of any of the Notes to exercise any right or power accruing
upon any default or Event of Default occurring and continuing as aforesaid shall
impair any such right or power, or shall be construed to be a waiver of any such
default or any acquiescence therein, and, subject to the provisions of Section
7.4, every power and remedy given by this Article Seven or by law to the Trustee
or to the Noteholders may be exercised from time to time, and as often as shall
be deemed expedient, by the Trustee or by the Noteholders.
Section 7.7. Direction Of Proceedings And Waiver Of Defaults By Majority
Of Noteholders. The holders of a majority in aggregate principal amount of the
Notes at the time outstanding determined in accordance with Section 9.4 shall
have the right to direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or
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exercising any trust or power conferred on the Trustee; provided, however, that
(a) such direction shall not be in conflict with any rule of law or with this
Indenture, (b) the Trustee may take any other action which is not inconsistent
with such direction and (c) the Trustee may decline to take any action that
would benefit some Noteholders to the detriment of other Noteholders. The
holders of a majority in aggregate principal amount of the Notes at the time
outstanding determined in accordance with Section 9.4 may, on behalf of the
holders of all of the Notes, waive any past default or Event of Default
hereunder and its consequences except (i) a default in the payment of interest
(including Liquidated Damages, if any) or premium, if any, on, or the principal
of, the Notes, (ii) a failure by the Company to convert any Notes into Common
Stock, (iii) a default in the payment of the redemption price pursuant to
Article Three or (iv) a default in respect of a covenant or provisions hereof
which under Article Eleven cannot be modified or amended without the consent of
the holders of each or all Notes then outstanding or affected thereby. Upon any
such waiver, the Company, the Trustee and the holders of the Notes shall be
restored to their former positions and rights hereunder; but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon. Whenever any default or Event of Default hereunder
shall have been waived as permitted by this Section 7.7, said default or Event
of Default shall for all purposes of the Notes and this Indenture be deemed to
have been cured and to be not continuing; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon.
Section 7.8. Notice Of Defaults. The Trustee shall, within ninety (90)
days after a Responsible Officer of the Trustee has knowledge of the occurrence
of a default, mail to all Noteholders, as the names and addresses of such
holders appear upon the Note register, notice of all defaults known to a
Responsible Officer, unless such defaults shall have been cured or waived before
the giving of such notice; provided, however, that except in the case of default
in the payment of the principal of, or premium, if any, or interest (including
Liquidated Damages, if any) on any of the Notes, the Trustee shall be protected
in withholding such notice if and so long as a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Noteholders.
Section 7.9. Undertaking To Pay Costs. All parties to this Indenture
agree, and each holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may, in its discretion, require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in such
suit, having due regard to the merits and good faith of the claims or defenses
made by such party litigant; provided, however, that the provisions of this
Section 7.9 (to the extent permitted by law) shall not apply to any suit
instituted by the Trustee, any suit instituted by any Noteholder, or group of
Noteholders, holding in the aggregate more than ten percent (10%) in principal
amount of the Notes at the time outstanding determined in accordance with
Section 9.4, any suit instituted by any Noteholder for the enforcement of the
payment of the principal of or premium, if any, or interest on any Note on or
after the due date expressed in such Note or any suit for the enforcement of the
right to convert any Note in accordance with the provisions of Article Fifteen.
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ARTICLE 8.
THE TRUSTEE
Section 8.1. Duties And Responsibilities Of Trustee. The Trustee, prior
to the occurrence of an Event of Default and after the curing of all Events of
Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Event of
Default has occurred (which has not been cured or waived), the Trustee shall
exercise such of the rights and powers vested in it by this Indenture, and use
the same degree of care and skill in their exercise, as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default which may have occurred:
(1) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture and the Trust
Indenture Act, and the Trustee shall not be liable except for the performance of
such duties and obligations as are specifically set forth in this Indenture and
no implied covenants or obligations shall be read into this Indenture and the
Trust Indenture Act against the Trustee; and
(2) in the absence of bad faith and willful misconduct on
the part of the Trustee, the Trustee may conclusively rely as to the truth of
the statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but, in the case of any such certificates or
opinions which by any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Officers of the Trustee, unless
the Trustee was negligent in ascertaining the pertinent facts;
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the written
direction of the holders of not less than a majority in principal amount of the
Notes at the time outstanding determined as provided in Section 9.4 relating to
the time, method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture;
(d) whether or not therein provided, every provision of this
Indenture relating to the conduct or affecting the liability of, or affording
protection to, the Trustee shall be subject to the provisions of this Section
8.1;
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(e) the Trustee shall not be liable in respect of any payment (as
to the correctness of amount, entitlement to receive or any other matters
relating to payment) or notice effected by the Company or any paying agent or
any records maintained by any co-registrar with respect to the Notes; and
(f) if any party fails to deliver a notice relating to an event
the fact of which, pursuant to this Indenture, requires notice to be sent to the
Trustee, the Trustee may conclusively rely on its failure to receive such notice
as reason to act as if no such event occurred.
None of the provisions contained in this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if there is reasonable ground for believing that
the repayment of such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
Section 8.2. Reliance On Documents, Opinions, Etc. Except as otherwise
provided in Section 8.1:
(a) the Trustee may conclusively rely and shall be protected in
acting upon any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, bond, debenture, note, coupon or other paper or
document (whether in its original or facsimile form) believed by it in good
faith to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request, direction, order or demand of the Company
mentioned herein shall be sufficiently evidenced by an Officers' Certificate
(unless other evidence in respect thereof be herein specifically prescribed);
and any resolution of the Board of Directors may be evidenced to the Trustee by
a copy thereof certified by the Secretary or an Assistant Secretary of the
Company;
(c) the Trustee may consult with counsel of its own selection and
any advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or omitted by it hereunder in good
faith and in accordance with such advice or Opinion of Counsel;
(d) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Noteholders pursuant to the provisions of this
Indenture, unless such Noteholders shall have offered to the Trustee security or
indemnity reasonably satisfactory to it against the costs, expenses and
liabilities which may be incurred therein or thereby;
(e) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and premises
of the Company, personally or by agent or attorney;
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(f) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder;
(g) the Trustee shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights or powers conferred upon
it by this Indenture; provided, however, that the Trustee's conduct does not
constitute willful misconduct or negligence;
(h) the Trustee shall not be deemed to have notice of any Default
or Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Notes and this Indenture;
(i) the rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder; and
(j) the Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.
Section 8.3. No Responsibility For Recitals, Etc. The recitals contained
herein and in the Notes (except in the Trustee's certificate of authentication)
shall be taken as the statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representations as to the validity or sufficiency of this Indenture or of the
Notes. The Trustee shall not be accountable for the use or application by the
Company of any Notes or the proceeds of any Notes authenticated and delivered by
the Trustee in conformity with the provisions of this Indenture.
Section 8.4. Trustee, Paying Agents, Conversion Agents Or Registrar May
Own Notes. The Trustee, any paying agent, any conversion agent or Note
registrar, in its individual or any other capacity, may become the owner or
pledgee of Notes with the same rights it would have if it were not Trustee,
paying agent, conversion agent or Note registrar.
Section 8.5. Monies To Be Held In Trust. Subject to the provisions of
Section 13.4 and Section 4.2, all monies received by the Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received. Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as may be agreed in writing from time to time by the Company and the
Trustee.
Section 8.6. Compensation And Expenses Of Trustee. The Company covenants
and agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, such compensation for all services rendered by it hereunder in any
capacity (which shall not be
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limited by any provision of law in regard to the compensation of a trustee of an
express trust) as mutually agreed to from time to time in writing between the
Company and the Trustee, and the Company will pay or reimburse the Trustee upon
its request for all reasonable expenses, disbursements and advances reasonably
incurred or made by the Trustee in accordance with any of the provisions of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its counsel) except any such expense, disbursement or advance
as may arise from its negligence, willful misconduct, recklessness or bad faith.
The Company also covenants to indemnify the Trustee (or any officer, director or
employee of the Trustee), in any capacity under this Indenture and its agents
and any authenticating agent for, and to hold them harmless against, any and all
loss, liability, damage, claim or expense incurred without negligence, willful
misconduct, recklessness or bad faith on the part of the Trustee or such
officers, directors, employees and agent or authenticating agent, as the case
may be, and arising out of or in connection with the acceptance or
administration of this trust or in any other capacity hereunder, including the
costs and expenses of defending themselves against any claim (whether asserted
by the Company, a holder of Notes or any other Person) of liability in the
premises. The obligations of the Company under this Section 8.6 to compensate or
indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall be secured by a lien prior to that of the Notes
upon all property and funds held or collected by the Trustee as such, except
funds held in trust for the benefit of the holders of particular Notes. The
obligation of the Company under this Section shall survive the satisfaction and
discharge of this Indenture.
When the Trustee and its agents and any authenticating agent
incur expenses or render services after an Event of Default specified in Section
7.1(d) or (e) with respect to the Company occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any bankruptcy, insolvency or similar laws.
The provisions of this Section 8.6 shall not be subject to the
subordination provisions of Article Four.
Section 8.7. Officers' Certificate As Evidence. Except as otherwise
provided in Section 8.1, whenever in the administration of the provisions of
this Indenture the Trustee shall deem it necessary or desirable that a matter be
proved or established prior to taking or omitting any action hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or willful misconduct on the part
of the Trustee, be deemed to be conclusively proved and established by an
Officers' Certificate delivered to the Trustee.
Section 8.8. Conflicting Interests Of Trustee. If the Trustee has or
shall acquire a conflicting interest within the meaning of the Trust Indenture
Act, the Trustee shall either eliminate such interest or resign, to the extent
and in the manner provided by, and subject to the provisions of, the Trust
Indenture Act and this Indenture.
Section 8.9. Eligibility Of Trustee. There shall at all times be a
Trustee hereunder which shall be a Person that is eligible pursuant to the Trust
Indenture Act to act as such and has a combined capital and surplus of at least
$50,000,000 (or if such Person is a member of a bank holding company system, its
bank holding company shall have a combined capital and surplus of at least
$50,000,000). If such Person publishes reports of condition at least annually,
pursuant to
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law or to the requirements of any supervising or examining authority, then for
the purposes of this Section 8.9 the combined capital and surplus of such Person
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Trustee shall cease
to be eligible in accordance with the provisions of this Section 8.9, it shall
resign immediately in the manner and with the effect hereinafter specified in
this Article Eight.
Section 8.10. Resignation or Removal Of Trustee.
(a) The Trustee may at any time resign by giving written notice
of such resignation to the Company and to the holders of Notes. Upon receiving
such notice of resignation, the Company shall promptly appoint a successor
trustee by written instrument, in duplicate, executed by order of the Board of
Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee. If no successor trustee shall
have been so appointed and have accepted appointment sixty (60) days after the
mailing of such notice of resignation to the Noteholders, the resigning Trustee
may petition, at the expense of the Company, any court of competent jurisdiction
for the appointment of a successor trustee, or, if any Noteholder who has been a
bona fide holder of a Note or Notes for at least six (6) months may, subject to
the provisions of Section 7.9, on behalf of himself and all others similarly
situated, petition any such court for the appointment of a successor trustee.
Such court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with Section 8.8
after written request therefor by the Company or by any Noteholder who has been
a bona fide holder of a Note or Notes for at least six (6) months;
(2) the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.9 and shall fail to resign after written
request therefor by the Company or by any such Noteholder; or
(3) the Trustee shall become incapable of acting, or shall
be adjudged bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or control
of the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation;
then, in any such case, the Company may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, executed by order of the
Board of Directors, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee, or, subject to the
provisions of Section 7.9, any Noteholder who has been a bona fide holder of a
Note or Notes for at least six (6) months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor trustee; provided,
however, that if no successor Trustee shall have been appointed and have
accepted appointment sixty (60) days after either the Company or the Noteholders
has removed the Trustee, the Trustee so removed may petition, at the expense of
the
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Company, any court of competent jurisdiction for an appointment of a successor
trustee. Such court may thereupon, after such notice, if any, as it may deem
proper and prescribe, remove the Trustee and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of
the Notes at the time outstanding may at any time remove the Trustee and
nominate a successor trustee which shall be deemed appointed as successor
trustee unless, within ten (10) days after notice to the Company of such
nomination, the Company objects thereto, in which case the Trustee so removed or
any Noteholder, or if such Trustee so removed or any Noteholder fails to act,
the Company, upon the terms and conditions and otherwise as in Section 8.10(a)
provided, may petition any court of competent jurisdiction for an appointment of
a successor trustee.
(d) Any resignation or removal of the Trustee and appointment of
a successor trustee pursuant to any of the provisions of this Section 8.10 shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.11.
Section 8.11. Acceptance By Successor Trustee. Any successor trustee
appointed as provided in Section 8.10 shall execute, acknowledge and deliver to
the Company and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, the trustee ceasing to act shall,
upon payment of any amount then due it pursuant to the provisions of Section
8.6, execute and deliver an instrument transferring to such successor trustee
all the rights and powers of the trustee so ceasing to act. Upon request of any
such successor trustee, the Company shall execute any and all instruments in
writing for more fully and certainly vesting in and confirming to such successor
trustee all such rights and powers. Any trustee ceasing to act shall,
nevertheless, retain a lien upon all property and funds held or collected by
such trustee as such, except for funds held in trust for the benefit of holders
of particular Notes, to secure any amounts then due it pursuant to the
provisions of Section 8.6.
No successor trustee shall accept appointment as provided in this
Section 8.11 unless, at the time of such acceptance, such successor trustee
shall be qualified under the provisions of Section 8.8 and be eligible under the
provisions of Section 8.9.
Upon acceptance of appointment by a successor trustee as provided
in this Section 8.11, the Company (or the former trustee, at the written
direction of the Company) shall mail or cause to be mailed notice of the
succession of such trustee hereunder to the holders of Notes at their addresses
as they shall appear on the Note register. If the Company fails to mail such
notice within ten (10) days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Company.
Section 8.12. Succession By Merger, Etc. Any corporation into which the
Trustee may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation succeeding to all or substantially
all of the corporate trust business of the Trustee (including any
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trust created by this Indenture), shall be the successor to the Trustee
hereunder without the execution or filing of any paper or any further act on the
part of any of the parties hereto, provided that in the case of any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, such corporation shall be qualified under the provisions of Section 8.8
and eligible under the provisions of Section 8.9.
In case at the time such successor to the Trustee shall succeed
to the trusts created by this Indenture, any of the Notes shall have been
authenticated but not delivered, any such successor to the Trustee may adopt the
certificate of authentication of any predecessor trustee or authenticating agent
appointed by such predecessor trustee, and deliver such Notes so authenticated;
and in case at that time any of the Notes shall not have been authenticated, any
successor to the Trustee or any authenticating agent appointed by such successor
trustee may authenticate such Notes in the name of the successor trustee; and in
all such cases such certificates shall have the full force that is provided in
the Notes or in this Indenture; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee or authenticate Notes
in the name of any predecessor Trustee shall apply only to its successor or
successors by merger, conversion or consolidation.
Section 8.13. Preferential Collection Of Claims. If and when the Trustee
shall be or become a creditor of the Company (or any other obligor on the
Notes), the Trustee shall be subject to the provisions of the Trust Indenture
Act regarding the collection of the claims against the Company (or any such
other obligor).
Section 8.14. Trustee's Application For Instructions From The Company.
Any application by the Trustee for written instructions from the Company (other
than with regard to any action proposed to be taken or omitted to be taken by
the Trustee that affects the rights of the holders of the Notes or holders of
Senior Indebtedness under this Indenture, including, without limitation, under
Article Four hereof) may, at the option of the Trustee, set forth in writing any
action proposed to be taken or omitted by the Trustee under this Indenture and
the date on and/or after which such action shall be taken or such omission shall
be effective. The Trustee shall not be liable for any action taken by, or
omission of, the Trustee in accordance with a proposal included in such
application on or after the date specified in such application (which date shall
not be less than three (3) Business Days after the date any officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to any earlier date) unless prior to taking any such action
(or the effective date in the case of an omission), the Trustee shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
ARTICLE 9.
THE NOTEHOLDERS
Section 9.1. Action By Noteholders. Whenever in this Indenture it is
provided that the holders of a specified percentage in aggregate principal
amount of the Notes may take any action (including the making of any demand or
request, the giving of any notice, consent or waiver or the taking of any other
action), the fact that at the time of taking any such action, the holders of
such specified percentage have joined therein may be evidenced (a) by any
instrument or any
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number of instruments of similar tenor executed by Noteholders in person or by
agent or proxy appointed in writing, (b) by the record of the holders of Notes
voting in favor thereof at any meeting of Noteholders duly called and held in
accordance with the provisions of Article Ten, or (c) by a combination of such
instrument or instruments and any such record of such a meeting of Noteholders.
Whenever the Company or the Trustee solicits the taking of any action by the
holders of the Notes, the Company or the Trustee may fix in advance of such
solicitation, a date as the record date for determining holders entitled to take
such action. The record date shall be not more than fifteen (15) days prior to
the date of commencement of solicitation of such action.
Section 9.2. Proof Of Execution By Noteholders. Subject to the
provisions of Sections 8.1, 8.2 and 10.5, proof of the execution of any
instrument by a Noteholder or its agent or proxy shall be sufficient if made in
accordance with such reasonable rules and regulations as may be prescribed by
the Trustee or in such manner as shall be satisfactory to the Trustee. The
holding of Notes shall be proved by the registry of such Notes or by a
certificate of the Note registrar.
The record of any Noteholders' meeting shall be proved in the
manner provided in Section 10.6.
Section 9.3. Who Are Deemed Absolute Owners. The Company, the Trustee,
any paying agent, any conversion agent and any Note registrar may deem the
Person in whose name such Note shall be registered upon the Note register to be,
and may treat it as, the absolute owner of such Note (whether or not such Note
shall be overdue and notwithstanding any notation of ownership or other writing
thereon made by any Person other than the Company or any Note registrar) for the
purpose of receiving payment of or on account of the principal of, premium, if
any, and interest on such Note, for conversion of such Note and for all other
purposes; and neither the Company nor the Trustee nor any paying agent nor any
conversion agent nor any Note registrar shall be affected by any notice to the
contrary. All such payments so made to any holder for the time being, or upon
his order, shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for monies payable upon any
such Note.
Section 9.4. Company-Owned Notes Disregarded. In determining whether the
holders of the requisite aggregate principal amount of Notes have concurred in
any direction, consent, waiver or other action under this Indenture, Notes which
are owned by the Company or any other obligor on the Notes or any Affiliate of
the Company or any other obligor on the Notes shall be disregarded and deemed
not to be outstanding for the purpose of any such determination; provided,
however, that, for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, consent, waiver or other action,
only Notes which a Responsible Officer actually knows are so owned shall be so
disregarded. Notes so owned which have been pledged in good faith may be
regarded as outstanding for the purposes of this Section 9.4 if the pledgee
shall establish to the satisfaction of the Trustee the pledgee's right to vote
such Notes and that the pledgee is not the Company, any other obligor on the
Notes or any Affiliate of the Company or any such other obligor. In the case of
a dispute as to such right, any decision by the Trustee taken upon the advice of
counsel shall be full protection to the Trustee. Upon request of the Trustee,
the Company shall furnish to the Trustee promptly an Officers' Certificate
listing and identifying all Notes, if any, known by the Company to be owned or
held by or for the account of any of the above described Persons, and, subject
to Section 8.1, the Trustee shall be entitled to accept such Officers'
Certificate as conclusive evidence of the facts therein set forth
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and of the fact that all Notes not listed therein are outstanding for the
purpose of any such determination.
Section 9.5. Revocation Of Consents; Future Holders Bound. At any time
prior to (but not after) the evidencing to the Trustee, as provided in Section
9.1, of the taking of any action by the holders of the percentage in aggregate
principal amount of the Notes specified in this Indenture in connection with
such action, any holder of a Note which is shown by the evidence to be included
in the Notes the holders of which have consented to such action may, by filing
written notice with the Trustee at its Corporate Trust Office and upon proof of
holding as provided in Section 9.2, revoke such action so far as concerns such
Note. Except as aforesaid, any such action taken by the holder of any Note shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Note and of any Notes issued in exchange or substitution
therefor, irrespective of whether any notation in regard thereto is made upon
such Note or any Note issued in exchange or substitution therefor.
ARTICLE 10.
MEETINGS OF NOTEHOLDERS
Section 10.1. Purpose Of Meetings. A meeting of Noteholders may be
called at any time and from time to time pursuant to the provisions of this
Article Ten for any of the following purposes:
(1) to give any notice to the Company or to the Trustee or
to give any directions to the Trustee permitted under this Indenture, or to
consent to the waiving of any default or Event of Default hereunder and its
consequences, or to take any other action authorized to be taken by Noteholders
pursuant to any of the provisions of Article Seven;
(2) to remove the Trustee and nominate a successor trustee
pursuant to the provisions of Article Eight;
(3) to consent to the execution of an indenture or
indentures supplemental hereto pursuant to the provisions of Section 11.2; or
(4) to take any other action authorized to be taken by or
on behalf of the holders of any specified aggregate principal amount of the
Notes under any other provision of this Indenture or under applicable law.
Section 10.2. Call Of Meetings By Trustee. The Trustee may at any time
call a meeting of Noteholders to take any action specified in Section 10.1, to
be held at such time and at such place as the Trustee shall determine. Notice of
every meeting of the Noteholders, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting and
the establishment of any record date pursuant to Section 9.1, shall be mailed to
holders of Notes at their addresses as they shall appear on the Note register.
Such notice shall also be mailed to the Company. Such notices shall be mailed
not less than twenty (20) nor more than ninety (90) days prior to the date fixed
for the meeting.
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Any meeting of Noteholders shall be valid without notice if the
holders of all Notes then outstanding are present in person or by proxy or if
notice is waived before or after the meeting by the holders of all Notes
outstanding, and if the Company and the Trustee are either present by duly
authorized representatives or have, before or after the meeting, waived notice.
Section 10.3. Call Of Meetings By Company Or Noteholders. In case at any
time the Company, pursuant to a resolution of its Board of Directors, or the
holders of at least ten percent (10%) in aggregate principal amount of the Notes
then outstanding, shall have requested the Trustee to call a meeting of
Noteholders, by written request setting forth in reasonable detail the action
proposed to be taken at the meeting, and the Trustee shall not have mailed the
notice of such meeting within twenty (20) days after receipt of such request,
then the Company or such Noteholders may determine the time and the place for
such meeting and may call such meeting to take any action authorized in Section
10.1, by mailing notice thereof as provided in Section 10.2.
Section 10.4. Qualifications For Voting. To be entitled to vote at any
meeting of Noteholders a person shall (a) be a holder of one or more Notes on
the record date pertaining to such meeting or (b) be a person appointed by an
instrument in writing as proxy by a holder of one or more Notes on the record
date pertaining to such meeting. The only persons who shall be entitled to be
present or to speak at any meeting of Noteholders shall be the persons entitled
to vote at such meeting and their counsel and any representatives of the Trustee
and its counsel and any representatives of the Company and its counsel.
Section 10.5. Regulations. Notwithstanding any other provisions of this
Indenture, the Trustee may make such reasonable regulations as it may deem
advisable for any meeting of Noteholders, in regard to proof of the holding of
Notes and of the appointment of proxies, and in regard to the appointment and
duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Noteholders as provided in Section 10.3, in which case the
Company or the Noteholders calling the meeting, as the case may be, shall in
like manner appoint a temporary chairman. A permanent chairman and a permanent
secretary of the meeting shall be elected by vote of the holders of a majority
in principal amount of the Notes represented at the meeting and entitled to vote
at the meeting.
Subject to the provisions of Section 9.4, at any meeting each
Noteholder or proxyholder shall be entitled to one vote for each $1,000
principal amount of Notes held or represented by him; provided, however, that no
vote shall be cast or counted at any meeting in respect of any Note challenged
as not outstanding and ruled by the chairman of the meeting to be not
outstanding. The chairman of the meeting shall have no right to vote other than
by virtue of Notes held by him or instruments in writing as aforesaid duly
designating him as the proxy to vote on behalf of other Noteholders. Any meeting
of Noteholders duly called pursuant to the provisions of Section 10.2 or 10.3
may be adjourned from time to time by the holders of a majority of the aggregate
principal amount of Notes represented at the meeting, whether or not
constituting a quorum, and the meeting may be held as so adjourned without
further notice.
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Section 10.6. Voting. The vote upon any resolution submitted to any
meeting of Noteholders shall be by written ballot on which shall be subscribed
the signatures of the holders of Notes or of their representatives by proxy and
the outstanding principal amount of the Notes held or represented by them. The
chairman of the meeting shall appoint two inspectors of votes who shall count
all votes cast at the meeting for or against any resolution and who shall make
and file with the secretary of the meeting their verified written reports in
duplicate of all votes cast at the meeting. A record in duplicate of the
proceedings of each meeting of Noteholders shall be prepared by the secretary of
the meeting and there shall be attached to said record the original reports of
the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that said notice was mailed as provided in
Section 10.2. The record shall show the principal amount of the Notes voting in
favor of or against any resolution. The record shall be signed and verified by
the affidavits of the chairman and secretary of the meeting and one of the
duplicates shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots voted
at the meeting.
Any record so signed and verified shall be conclusive evidence of
the matters therein stated.
Section 10.7. No Delay Of Rights By Meeting. Nothing contained in this
Article Ten shall be deemed or construed to authorize or permit, by reason of
any call of a meeting of Noteholders or any rights expressly or impliedly
conferred hereunder to make such call, any hindrance or delay in the exercise of
any right or rights conferred upon or reserved to the Trustee or to the
Noteholders under any of the provisions of this Indenture or of the Notes.
ARTICLE 11.
SUPPLEMENTAL INDENTURES
Section 11.1. Supplemental Indentures Without Consent Of Noteholders.
The Company, when authorized by the resolutions of the Board of Directors, and
the Trustee may, from time to time, and at any time enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) make provision with respect to the conversion rights of the
holders of Notes pursuant to the requirements of Section 15.6 and the redemption
obligations of the Company pursuant to the requirements of Section 3.5(e);
(b) subject to Article Four, to convey, transfer, assign,
mortgage or pledge to the Trustee as security for the Notes, any property or
assets;
(c) to evidence the succession of another Person to the Company,
or successive successions, and the assumption by the successor Person of the
covenants, agreements and obligations of the Company pursuant to Article Twelve;
(d) to add to the covenants of the Company such further
covenants, restrictions or conditions as the Board of Directors and the Trustee
shall consider to be for the benefit of the holders of Notes, and to make the
occurrence, or the occurrence and continuance,
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of a default in any such additional covenants, restrictions or conditions a
default or an Event of Default permitting the enforcement of all or any of the
several remedies provided in this Indenture as herein set forth; provided,
however, that in respect of any such additional covenant, restriction or
condition, such supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer than that allowed in
the case of other defaults) or may provide for an immediate enforcement upon
such default or may limit the remedies available to the Trustee upon such
default;
(e) to provide for the issuance under this Indenture of Notes in
coupon form (including Notes registrable as to principal only) and to provide
for exchangeability of such Notes with the Notes issued hereunder in fully
registered form and to make all appropriate changes for such purpose;
(f) to cure any ambiguity or to correct or supplement any
provision contained herein or in any supplemental indenture that may be
defective or inconsistent with any other provision contained herein or in any
supplemental indenture, or to make such other provisions in regard to matters or
questions arising under this Indenture that shall not materially adversely
affect the interests of the holders of the Notes;
(g) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes; or
(h) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualifications of
this Indenture under the Trust Indenture Act, or under any similar federal
statute hereafter enacted.
Upon the written request of the Company, accompanied by a copy of
the resolutions of the Board of Directors certified by its Secretary or
Assistant Secretary authorizing the execution of any supplemental indenture, the
Trustee is hereby authorized to join with the Company in the execution of any
such supplemental indenture, to make any further appropriate agreements and
stipulations that may be therein contained and to accept the conveyance,
transfer and assignment of any property thereunder, but the Trustee shall not be
obligated to, but may in its discretion, enter into any supplemental indenture
that affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise.
Any supplemental indenture authorized by the provisions of this
Section 11.1 may be executed by the Company and the Trustee without the consent
of the holders of any of the Notes at the time outstanding, notwithstanding any
of the provisions of Section 11.2.
Notwithstanding any other provision of the Indenture or the
Notes, the Registration Rights Agreement and the obligation to pay Liquidated
Damages thereunder may be amended, modified or waived in accordance with the
provisions of the Registration Rights Agreement.
Section 11.2. Supplemental Indenture With Consent Of Noteholders. With
the consent (evidenced as provided in Article Nine) of the holders of not less
than a majority in aggregate principal amount of the Notes at the time
outstanding, the Company, when authorized by the resolutions of the Board of
Directors, and the Trustee may, from time to time and at any time,
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enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or any supplemental indenture or of modifying in
any manner the rights of the holders of the Notes; provided, however, that no
such supplemental indenture shall (i) extend the fixed maturity of any Note, or
reduce the rate or extend the time of payment of interest thereon, or reduce the
principal amount thereof or premium, if any, thereon, or reduce any amount
payable on redemption thereof, or impair the right of any Noteholder to
institute suit for the payment thereof, or make the principal thereof or
interest or premium, if any, thereon payable in any coin or currency other than
that provided in the Notes, or modify the provisions of this Indenture with
respect to the subordination of the Notes in a manner adverse to the Noteholders
in any material respect, or change the obligation of the Company to redeem any
Note upon the happening of a Fundamental Change in a manner adverse to the
holder of Notes, or impair the right to convert the Notes into Common Stock
subject to the terms set forth herein, including Section 15.6, in each case,
without the consent of the holder of each Note so affected or (ii) reduce the
aforesaid percentage of Notes, the holders of which are required to consent to
any such supplemental indenture, without the consent of the holders of all Notes
then outstanding.
Upon the written request of the Company, accompanied by a copy of
the resolutions of the Board of Directors certified by its Secretary or
Assistant Secretary authorizing the execution of any such supplemental
indenture, and upon the filing with the Trustee of evidence of the consent of
Noteholders as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Noteholders
under this Section 11.2 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall approve
the substance thereof.
Section 11.3. Effect Of Supplemental Indenture. Any supplemental
indenture executed pursuant to the provisions of this Article Eleven shall
comply with the Trust Indenture Act, as then in effect, provided that this
Section 11.3 shall not require such supplemental indenture or the Trustee to be
qualified under the Trust Indenture Act prior to the time such qualification is
in fact required under the terms of the Trust Indenture Act or the Indenture has
been qualified under the Trust Indenture Act, nor shall it constitute any
admission or acknowledgment by any party to such supplemental indenture that any
such qualification is required prior to the time such qualification is in fact
required under the terms of the Trust Indenture Act or the Indenture has been
qualified under the Trust Indenture Act. Upon the execution of any supplemental
indenture pursuant to the provisions of this Article Eleven, this Indenture
shall be and be deemed to be modified and amended in accordance therewith and
the respective rights, limitation of rights, obligations, duties and immunities
under this Indenture of the Trustee, the Company and the holders of Notes shall
thereafter be determined, exercised and enforced hereunder, subject in all
respects to such modifications and amendments and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
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Section 11.4. Notation On Notes. Notes authenticated and delivered after
the execution of any supplemental indenture pursuant to the provisions of this
Article Eleven may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Trustee and the Board of Directors, to any modification of this Indenture
contained in any such supplemental indenture may, at the Company's expense, be
prepared and executed by the Company, authenticated by the Trustee (or an
authenticating agent duly appointed by the Trustee pursuant to Section 16.11)
and delivered in exchange for the Notes then outstanding, upon surrender of such
Notes then outstanding.
Section 11.5. Evidence Of Compliance Of Supplemental Indenture To Be
Furnished To Trustee. Prior to entering into any supplemental indenture, the
Trustee may request an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that any supplemental indenture executed pursuant hereto
complies with the requirements of this Article Eleven.
ARTICLE 12.
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
Section 12.1. Company May Consolidate, Etc. On Certain Terms. Subject to
the provisions of Section 12.2, nothing contained in this Indenture or in any of
the Notes shall prevent any consolidation or merger of the Company with or into
any other Person or Persons (whether or not affiliated with the Company), or
successive consolidations or mergers in which the Company or its successor or
successors shall be a party or parties, or shall prevent any sale, conveyance or
lease (or successive sales, conveyances or leases) of all or substantially all
of the property of the Company, to any other Person (whether or not affiliated
with the Company), authorized to acquire and operate the same and that shall be
organized under the laws of the United States of America, any state thereof or
the District of Columbia; provided, however, that upon any such consolidation,
merger, sale, conveyance or lease, the due and punctual payment of the principal
of and premium, if any, and interest (including Liquidated Damages, if any) on
all of the Notes, according to their tenor and the due and punctual performance
and observance of all of the covenants and conditions of this Indenture to be
performed by the Company, shall be expressly assumed, by supplemental indenture
satisfactory in form to the Trustee, executed and delivered to the Trustee by
the Person (if other than the Company) formed by such consolidation, or into
which the Company shall have been merged, or by the Person that shall have
acquired or leased such property, and such supplemental indenture shall provide
for the applicable conversion rights set forth in Section 15.6.
Section 12.2. Successor Corporation To Be Substituted. In case of any
such consolidation, merger, sale, conveyance or lease and upon the assumption by
the successor Person, by supplemental indenture, executed and delivered to the
Trustee and satisfactory in form to the Trustee, of the due and punctual payment
of the principal of and premium, if any, and interest on all of the Notes and
the due and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Company, such successor Person shall succeed to
and be substituted for the Company, with the same effect as if it had been named
herein as the party of this first part. Such successor Person thereupon may
cause to be signed, and may issue either in its own name or in the name of Getty
Images, Inc. any or all of the Notes,
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issuable hereunder that theretofore shall not have been signed by the Company
and delivered to the Trustee; and, upon the order of such successor Person
instead of the Company and subject to all the terms, conditions and limitations
in this Indenture prescribed, the Trustee shall authenticate and shall deliver,
or cause to be authenticated and delivered, any Notes that previously shall have
been signed and delivered by the officers of the Company to the Trustee for
authentication, and any Notes that such successor Person thereafter shall cause
to be signed and delivered to the Trustee for that purpose. All the Notes so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Notes theretofore or thereafter issued in accordance with the
terms of this Indenture as though all of such Notes had been issued at the date
of the execution hereof. In the event of any such consolidation, merger, sale,
conveyance or lease, the Person named as the "Company" in the first paragraph of
this Indenture or any successor that shall thereafter have become such in the
manner prescribed in this Article Twelve may be dissolved, wound up and
liquidated at any time thereafter and such Person shall be released from its
liabilities as obligor and maker of the Notes and from its obligations under
this Indenture.
In case of any such consolidation, merger, sale, conveyance or
lease, such changes in phraseology and form (but not in substance) may be made
in the Notes thereafter to be issued as may be appropriate.
Section 12.3. Opinion Of Counsel To Be Given Trustee. The Trustee shall
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such consolidation, merger, sale, conveyance or lease and any
such assumption complies with the provisions of this Article Twelve.
ARTICLE 13.
SATISFACTION AND DISCHARGE OF INDENTURE
Section 13.1. Discharge Of Indenture. When (a) the Company shall deliver
to the Trustee for cancellation all Notes theretofore authenticated (other than
any Notes that have been destroyed, lost or stolen and in lieu of or in
substitution for which other Notes shall have been authenticated and delivered)
and not theretofore canceled or (b) all the Notes not theretofore canceled or
delivered to the Trustee for cancellation shall have become due and payable, or
are by their terms to become due and payable within one year or are to be called
for redemption within one year under arrangements satisfactory to the Trustee
for the giving of notice of redemption, and the Company shall deposit with the
Trustee, in trust, funds sufficient to pay at maturity or upon redemption of all
of the Notes (other than any Notes that shall have been mutilated, destroyed,
lost or stolen and in lieu of or in substitution for which other Notes shall
have been authenticated and delivered) not theretofore canceled or delivered to
the Trustee for cancellation, including principal and premium, if any, and
interest due or to become due to such date of maturity or redemption date, as
the case may be, accompanied by a verification report, as to the sufficiency of
the deposited amount, from an independent certified accountant or other
financial professional satisfactory to the Trustee, and if the Company shall
also pay or cause to be paid all other sums payable hereunder by the Company,
then this Indenture shall cease to be of further effect (except as to (i)
remaining rights of registration of transfer, substitution and exchange and
conversion of Notes, (ii) rights hereunder of Noteholders to receive payments of
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principal of and premium, if any, and interest on, the Notes and the other
rights, duties and obligations of Noteholders, as beneficiaries hereof with
respect to the amounts, if any, so deposited with the Trustee and (iii) the
rights, obligations and immunities of the Trustee hereunder), and the Trustee,
on written demand of the Company accompanied by an Officers' Certificate and an
Opinion of Counsel as required by Section 16.5 and at the cost and expense of
the Company, shall execute proper instruments acknowledging satisfaction of and
discharging this Indenture; the Company, however, hereby agrees to reimburse the
Trustee for any costs or expenses thereafter reasonably and properly incurred by
the Trustee and to compensate the Trustee for any services thereafter reasonably
and properly rendered by the Trustee in connection with this Indenture or the
Notes.
Section 13.2. Deposited Monies To Be Held In Trust By Trustee. Subject
to Section 13.4, all monies deposited with the Trustee pursuant to Section 13.1,
provided such deposit was not in violation of Article Four, shall be held in
trust for the sole benefit of the Noteholders and not to be subject to the
subordination provisions of Article Four, and such monies shall be applied by
the Trustee to the payment, either directly or through any paying agent
(including the Company if acting as its own paying agent), to the holders of the
particular Notes for the payment or redemption of which such monies have been
deposited with the Trustee, of all sums due and to become due thereon for
principal and interest and premium, if any.
Section 13.3. Paying Agent To Repay Monies Held. Upon the satisfaction
and discharge of this Indenture, all monies then held by any paying agent of the
Notes (other than the Trustee) shall, upon written request of the Company, be
repaid to it or paid to the Trustee, and thereupon such paying agent shall be
released from all further liability with respect to such monies.
Section 13.4. Return Of Unclaimed Monies. Subject to the requirements of
applicable law, any monies deposited with or paid to the Trustee for payment of
the principal of, premium, if any, or interest on Notes and not applied but
remaining unclaimed by the holders of Notes for two years after the date upon
which the principal of, premium, if any, or interest on such Notes, as the case
may be, shall have become due and payable, shall be repaid to the Company by the
Trustee on written demand and all liability of the Trustee shall thereupon cease
with respect to such monies; and the holder of any of the Notes shall thereafter
look only to the Company for any payment that such holder may be entitled to
collect unless an applicable abandoned property law designates another Person.
Section 13.5. Reinstatement. If the Trustee or the paying agent is
unable to apply any money in accordance with Section 13.2 by reason of any order
or judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 13.1 until such time as the Trustee or the paying
agent is permitted to apply all such money in accordance with Section 13.2;
provided, however, that if the Company makes any payment of interest on or
principal of any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the holders of such Notes to
receive such payment from the money held by the Trustee or paying agent.
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ARTICLE 14.
IMMUNITY OF INCORPORATORS,
STOCKHOLDERS, OFFICERS AND DIRECTORS
Section 14.1. Indenture And Notes Solely Corporate Obligations. No
recourse for the payment of the principal of or premium, if any, or interest on
any Note, or for any claim based thereon or otherwise in respect thereof, and no
recourse under or upon any obligation, covenant or agreement of the Company in
this Indenture or in any supplemental indenture or in any Note, or because of
the creation of any indebtedness represented thereby, shall be had against any
incorporator, stockholder, employee, agent, officer, director or subsidiary, as
such, past, present or future, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise; it being expressly understood that all such
liability is hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Indenture and the issue of the Notes.
ARTICLE 15.
CONVERSION OF NOTES
Section 15.1. Right To Convert. Subject to and upon compliance with the
provisions of this Indenture, including, without limitation, Article Four, the
holder of any Note shall have the right, at its option, at any time after the
original issuance of the Notes hereunder through the close of business on the
final maturity date of the Notes (except that, with respect to any Note or
portion of a Note that shall be called for redemption, such right shall
terminate, except as provided in Section 15.2, Section 3.2 or Section 3.4, at
the close of business on the Business Day next preceding the date fixed for
redemption of such Note or portion of a Note unless the Company shall default in
payment due upon redemption thereof) to convert the principal amount of any such
Note, or any portion of such principal amount which is $1,000 or an integral
multiple thereof, into that number of fully paid and non-assessable shares of
Common Stock (as such shares shall then be constituted) obtained by dividing the
principal amount of the Note or portion thereof surrendered for conversion by
the Conversion Price in effect at such time, by surrender of the Note so to be
converted in whole or in part in the manner provided, together with any required
funds, in Section 15.2. A Note in respect of which a holder is exercising its
option to require redemption upon a Fundamental Change pursuant to Section 3.5
may be converted only if such holder withdraws its election to exercise in
accordance with Section 3.5. A holder of Notes is not entitled to any rights of
a holder of Common Stock until such holder has converted his Notes to Common
Stock, and only to the extent such Notes are deemed to have been converted to
Common Stock under this Article Fifteen.
Section 15.2. Exercise Of Conversion Privilege; Issuance Of Common Stock
On Conversion; No Adjustment For Interest Or Dividends. In order to exercise the
conversion privilege with respect to any Note in certificated form, the holder
of any such Note to be converted in whole or in part shall surrender such Note,
duly endorsed, at an office or agency maintained by the Company pursuant to
Section 5.2, accompanied by the funds, if any, required by the penultimate
paragraph of this Section 15.2, and shall give written notice of conversion in
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the form provided on the Notes (or such other notice which is acceptable to the
Company) to the office or agency that the holder elects to convert such Note or
the portion thereof specified in said notice. Such notice shall also state the
name or names (with address or addresses) in which the certificate or
certificates for shares of Common Stock which shall be issuable on such
conversion shall be issued, and shall be accompanied by transfer taxes, if
required pursuant to Section 15.7. Each such Note surrendered for conversion
shall, unless the shares issuable on conversion are to be issued in the same
name as the registration of such Note, be duly endorsed by, or be accompanied by
instruments of transfer in form satisfactory to the Company duly executed by,
the holder or his duly authorized attorney.
In order to exercise the conversion privilege with respect to any
interest in a Global Note, the beneficial holder must complete, or cause to be
completed, the appropriate instruction form for conversion pursuant to the
Depository's book-entry conversion program, deliver, or cause to be delivered,
by book-entry delivery an interest in such Global Note, furnish appropriate
endorsements and transfer documents if required by the Company or the Trustee or
conversion agent, and pay the funds, if any, required by this Section 15.2 and
any transfer taxes if required pursuant to Section 15.7.
As promptly as practicable after satisfaction of the requirements
for conversion set forth above, subject to compliance with any restrictions on
transfer if shares issuable on conversion are to be issued in a name other than
that of the Noteholder (as if such transfer were a transfer of the Note or Notes
(or portion thereof) so converted), the Company shall issue and shall deliver to
such Noteholder at the office or agency maintained by the Company for such
purpose pursuant to Section 5.2, a certificate or certificates for the number of
full shares of Common Stock issuable upon the conversion of such Note or portion
thereof as determined by the Company in accordance with the provisions of this
Article Fifteen and a check or cash in respect of any fractional interest in
respect of a share of Common Stock arising upon such conversion, calculated by
the Company as provided in Section 15.3. In case any Note of a denomination
greater than $1,000 shall be surrendered for partial conversion, and subject to
Section 2.3, the Company shall execute and the Trustee shall authenticate and
deliver to the holder of the Note so surrendered, without charge to him, a new
Note or Notes in authorized denominations in an aggregate principal amount equal
to the unconverted portion of the surrendered Note.
Each conversion shall be deemed to have been effected as to any
such Note (or portion thereof) on the date on which the requirements set forth
above in this Section 15.2 have been satisfied as to such Note (or portion
thereof), and the Person in whose name any certificate or certificates for
shares of Common Stock shall be issuable upon such conversion shall be deemed to
have become on said date the holder of record of the shares represented thereby;
provided, however, that any such surrender on any date when the stock transfer
books of the Company shall be closed shall constitute the Person in whose name
the certificates are to be issued as the record holder thereof for all purposes
on the next succeeding day on which such stock transfer books are open, but such
conversion shall be at the Conversion Price in effect on the date upon which
such Note shall be surrendered.
No adjustment in respect of interest on any Note converted or
dividends on any shares issued upon conversion of such Note will be made upon
any conversion except as set forth
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in the next sentence. If this Note (or portion hereof) is surrendered for
conversion during the period from the close of business on any record date for
the payment of interest to the close of business on the Business Day preceding
the following interest payment date and either (x) has not been called for
redemption on a redemption date that occurs during such period or (y) is not to
be redeemed in connection with a Fundamental Change on a Repurchase Date that
occurs during such period, this Note (or portion hereof being converted) must be
accompanied by an amount, in New York Clearing House funds or other funds
acceptable to the Company, equal to the interest payable on such interest
payment date on the principal amount being converted; provided, however, that no
such payment shall be required if there shall exist at the time of conversion a
default in the payment of interest on the Notes.
Upon the conversion of an interest in a Global Note, the Trustee
(or other conversion agent appointed by the Company), or the Custodian at the
direction of the Trustee (or other conversion agent appointed by the Company),
shall make a notation on such Global Note as to the reduction in the principal
amount represented thereby. The Company shall notify the Trustee in writing of
any conversions of Notes effected through any conversion agent other than the
Trustee.
Section 15.3. Cash Payments In Lieu Of Fractional Shares. No fractional
shares of Common Stock or scrip representing fractional shares shall be issued
upon conversion of Notes. If more than one Note shall be surrendered for
conversion at one time by the same holder, the number of full shares that shall
be issuable upon conversion shall be computed on the basis of the aggregate
principal amount of the Notes (or specified portions thereof to the extent
permitted hereby) so surrendered. If any fractional share of stock would be
issuable upon the conversion of any Note or Notes, the Company shall make an
adjustment and payment therefor in cash at the current market price thereof to
the holder of Notes. The current market price of a share of Common Stock shall
be the Closing Price on the last Business Day immediately preceding the day on
which the Notes (or specified portions thereof) are deemed to have been
converted.
Section 15.4. Conversion Price. The conversion price shall be as
specified in the form of Note (herein called the "Conversion Price") attached as
Exhibit A hereto, subject to adjustment as provided in this Article Fifteen.
Section 15.5. Adjustment Of Conversion Price. The Conversion Price shall
be adjusted from time to time by the Company as follows:
(a) In case the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding Common Stock in shares of Common
Stock, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect at the opening of
business on the date following the date fixed for the determination of
stockholders entitled to receive such dividend or other distribution by a
fraction, the numerator of which shall be the number of shares of the Common
Stock outstanding at the close of business on the date fixed for such
determination, and the denominator of which shall be the sum of such number of
shares and the total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately after the opening
of business on the day following the date fixed for such determination. For the
purpose of this paragraph (a), the number of shares of Common Stock at any time
outstanding shall not include shares held in
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the treasury of the Company. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of the Company. If
any dividend or distribution of the type described in this Section 15.5(a) is
declared but not so paid or made, the Conversion Price shall again be adjusted
to the Conversion Price that would then be in effect if such dividend or
distribution had not been declared.
(b) In case the Company shall issue rights or warrants to all
holders of its outstanding shares of Common Stock entitling them (for a period
expiring within forty-five (45) days after the date fixed for determination of
stockholders entitled to receive such rights or warrants) to subscribe for or
purchase shares of Common Stock at a price per share less than the Current
Market Price (as defined below) on the date fixed for determination of
stockholders entitled to receive such rights or warrants, the Conversion Price
shall be adjusted so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the date fixed
for determination of stockholders entitled to receive such rights or warrants by
a fraction, the numerator of which shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for determination of
stockholders entitled to receive such rights or warrants plus the number of
shares that the aggregate offering price of the total number of shares so
offered would purchase at such Current Market Price, and the denominator of
which shall be the number of shares of Common Stock outstanding on the date
fixed for determination of stockholders entitled to receive such rights or
warrants plus the total number of additional shares of Common Stock offered for
subscription or purchase. Such adjustment shall be successively made whenever
any such rights or warrants are issued, and shall become effective immediately
after the opening of business on the day following the date fixed for
determination of stockholders entitled to receive such rights or warrants. To
the extent that shares of Common Stock are not delivered after the expiration of
such rights or warrants, the Conversion Price shall be readjusted to the
Conversion Price that would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made on the basis of delivery of only
the number of shares of Common Stock actually delivered. In the event that such
rights or warrants are not so issued, the Conversion Price shall again be
adjusted to be the Conversion Price that would then be in effect if such date
fixed for the determination of stockholders entitled to receive such rights or
warrants had not been fixed. In determining whether any rights or warrants
entitle the holders to subscribe for or purchase shares of Common Stock at less
than such Current Market Price, and in determining the aggregate offering price
of such shares of Common Stock, there shall be taken into account any
consideration received by the Company for such rights or warrants and any amount
payable on exercise or conversion thereof, the value of such consideration, if
other than cash, to be determined by the Board of Directors.
(c) In case outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion Price
in effect at the opening of business on the day following the day upon which
such subdivision becomes effective shall be proportionately reduced, and
conversely, in case outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, the Conversion Price in effect at the
opening of business on the day following the day upon which such combination
becomes effective shall be proportionately increased, such reduction or
increase, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision or
combination becomes effective.
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(d) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock shares of any class of capital
stock of the Company (other than any dividends or distributions to which Section
15.5(a) applies) or evidences of its indebtedness or assets (including
securities, but excluding any rights or warrants referred to in Section 15.5(b),
and excluding any dividend or distribution (x) paid exclusively in cash or (y)
referred to in Section 15.5(a) (any of the foregoing hereinafter in this Section
15.5(d) called the "Securities")), then, in each such case (unless the Company
elects to reserve such Securities for distribution to the Noteholders upon the
conversion of the Notes so that any such holder converting Notes will receive
upon such conversion, in addition to the shares of Common Stock to which such
holder is entitled, the amount and kind of such Securities which such holder
would have received if such holder had converted its Notes into Common Stock
immediately prior to the Record Date (as defined in Section 15.5(h)(4) for such
distribution of the Securities)), the Conversion Price shall be reduced so that
the same shall be equal to the price determined by multiplying the Conversion
Price in effect on the Record Date with respect to such distribution by a
fraction, the numerator of which shall be the Current Market Price per share of
the Common Stock on such Record Date less the fair market value (as determined
by the Board of Directors, whose determination shall be conclusive, and
described in a resolution of the Board of Directors) on the Record Date of the
portion of the Securities so distributed applicable to one share of Common Stock
and the denominator of which shall be the Current Market Price per share of the
Common Stock, such reduction to become effective immediately prior to the
opening of business on the day following such Record Date; provided, however,
that in the event the then fair market value (as so determined) of the portion
of the Securities so distributed applicable to one share of Common Stock is
equal to or greater than the Current Market Price of the Common Stock on the
Record Date, in lieu of the foregoing adjustment, adequate provision shall be
made so that each Noteholder shall have the right to receive upon conversion the
amount of Securities such holder would have received had such holder converted
each Note on the Record Date. In the event that such dividend or distribution is
not so paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price that would then be in effect if such dividend or distribution
had not been declared. If the Board of Directors determines the fair market
value of any distribution for purposes of this Section 15.5(d) by reference to
the actual or when issued trading market for any securities, it must in doing so
consider the prices in such market over the same period used in computing the
Current Market Price of the Common Stock.
In the event that the Company implements a rights agreement, such
rights agreement will provide that upon conversion of the notes into common
stock, the holders will receive, in addition to the common stock, the rights
under the rights agreement, whether or not the rights have separated from the
common stock at the time of conversion, subject to certain limited customary
exceptions.
Rights or warrants distributed by the Company to all holders of
Common Stock entitling the holders thereof to subscribe for or purchase shares
of the Company's capital stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a specified
event or events ("Trigger Event"): (i) are deemed to be transferred with such
shares of Common Stock; (ii) are not exercisable; and (iii) are also issued in
respect of future issuances of Common Stock, shall be deemed not to have been
distributed for purposes of this Section 15.5 (and no adjustment to the
Conversion Price under this Section 15.5 will be required) until the occurrence
of the earliest Trigger Event, whereupon such rights and warrants shall be
deemed to
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have been distributed and an appropriate adjustment (if any is required) to the
Conversion Price shall be made under this Section 15.5(d). If any such right or
warrant, including any such existing rights or warrants distributed prior to the
date of this Indenture, are subject to events, upon the occurrence of which such
rights or warrants become exercisable to purchase different securities,
evidences of indebtedness or other assets, then the date of the occurrence of
any and each such event shall be deemed to be the date of distribution and
record date with respect to new rights or warrants with such rights (and a
termination or expiration of the existing rights or warrants without exercise by
any of the holders thereof). In addition, in the event of any distribution (or
deemed distribution) of rights or warrants, or any Trigger Event or other event
(of the type described in the preceding sentence) with respect thereto that was
counted for purposes of calculating a distribution amount for which an
adjustment to the Conversion Price under this Section 15.5 was made, (1) in the
case of any such rights or warrants that shall all have been redeemed or
repurchased without exercise by any holders thereof, the Conversion Price shall
be readjusted upon such final redemption r repurchase to give effect to such
distribution or Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or repurchase price received by
a holder or holders of Common Stock with respect to such rights or warrants
(assuming such holder had retained such rights or warrants), made to all holders
of Common Stock as of the date of such redemption or repurchase, and (2) in the
case of such rights or warrants that shall have expired or been terminated
without exercise by any holders thereof, the Conversion Price shall be
readjusted as if such rights and warrants had not been issued.
No adjustment of the Conversion Price shall be made pursuant to
this Section 15.5(d) in respect of rights or warrants distributed or deemed
distributed on any Trigger Event to the extent that such rights or warrants are
actually distributed, or reserved by the Company for distribution to holders of
Notes upon conversion by such holders of Notes to Common Stock.
For purposes of this Section 15.5(d) and Sections 15.5(a) and
(b), any dividend or distribution to which this Section 15.5(d) is applicable
that also includes shares of Common Stock, or rights or warrants to subscribe
for or purchase shares of Common Stock (or both), shall be deemed instead to be
(1) a dividend or distribution of the evidences of indebtedness, assets or
shares of capital stock other than such shares of Common Stock or rights or
warrants (and any Conversion Price reduction required by this Section 15.5(d)
with respect to such dividend or distribution shall then be made) immediately
followed by (2) a dividend or distribution of such shares of Common Stock or
such rights or warrants (and any further Conversion Price reduction required by
Sections 15.5(a) and (b) with respect to such dividend or distribution shall
then be made), except (A) the Record Date of such dividend or distribution shall
be substituted as "the date fixed for the determination of stockholders entitled
to receive such dividend or other distribution", "the date fixed for the
determination of stockholders entitled to receive such rights or warrants" and
"the date fixed for such determination" within the meaning of Sections 15.5(a)
and (b), and (B) any shares of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of Section 15.5(a).
(e) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding (x) any quarterly
cash dividend on the Common
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Stock to the extent the aggregate cash dividend per share of Common Stock in any
fiscal quarter does not exceed the greater of (A) the amount per share of Common
Stock of the next preceding quarterly cash dividend on the Common Stock to the
extent that such preceding quarterly dividend did not require any adjustment of
the Conversion Price pursuant to this Section 15.5(e) (as adjusted to reflect
subdivisions, or combinations of the Common Stock), and (B) 3.75% of the
arithmetic average of the Closing Price (determined as set forth in Section
15.5(h)) during the ten (10) Trading Days (as defined in Section 15.5(h))
immediately prior to the date of declaration of such dividend, and (y) any
dividend or distribution in connection with the liquidation, dissolution or
winding up of the Company, whether voluntary or involuntary), then, in such
case, the Conversion Price shall be reduced so that the same shall equal the
price determined by multiplying the Conversion Price in effect immediately prior
to the close of business on such record date by a fraction, the numerator of
which shall be the Current Market Price of the Common Stock on the record date
less the amount of cash so distributed (and not excluded as provided above)
applicable to one share of Common Stock, and the denominator of which shall be
such Current Market Price of the Common Stock, such reduction to be effective
immediately prior to the opening of business on the day following the record
date; provided, however, that in the event the portion of the cash so
distributed applicable to one share of Common Stock is equal to or greater than
the Current Market Price of the Common Stock on the record date, in lieu of the
foregoing adjustment, adequate provision shall be made so that each Noteholder
shall have the right to receive upon conversion the amount of cash such holder
would have received had such holder converted each Note on the record date. In
the event that such dividend or distribution is not so paid or made, the
Conversion Price shall again be adjusted to be the Conversion Price that would
then be in effect if such dividend or distribution had not been declared. If any
adjustment is required to be made as set forth in this Section 15.5(e) as a
result of a distribution that is a quarterly dividend, such adjustment shall be
based upon the amount by which such distribution exceeds the amount of the
quarterly cash dividend permitted to be excluded pursuant hereto. If an
adjustment is required to be made as set forth in this Section 15.5(e) above as
a result of a distribution that is not a quarterly dividend, such adjustment
shall be based upon the full amount of the distribution.
(f) In case a tender or exchange offer made by the Company or any
Subsidiary for all or any portion of the Common Stock shall expire and such
tender or exchange offer (as amended upon the expiration thereof) shall require
the payment to stockholders of consideration per share of Common Stock having a
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors)
that as of the last time (the "Expiration Time") tenders or exchanges may be
made pursuant to such tender or exchange offer (as it may be amended) exceeds
the Current Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time, the Conversion Price shall be reduced so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to the Expiration Time by a fraction the numerator of which
shall be the number of shares of Common Stock outstanding (including any
tendered or exchanged shares) at the Expiration Time multiplied by the Current
Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time and the denominator of which shall be the sum of (x) the fair
market value (determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in the terms
of the tender or exchange offer) of all shares validly tendered or exchanged and
not withdrawn as of the Expiration Time (the shares deemed so accepted, up to
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any such maximum, being referred to as the "Purchased Shares") and (y) the
product of the number of shares of Common Stock outstanding (less any Purchased
Shares) at the Expiration Time and the Current Market Price of the Common Stock
on the Trading Day next succeeding the Expiration Time, such reduction to become
effective immediately prior to the opening of business on the Trading Day
following the Expiration Time. In the event that the Company is obligated to
purchase shares pursuant to any such tender or exchange offer, but the Company
is permanently prevented by applicable law from effecting any such purchases or
all such purchases are rescinded, the Conversion Price shall again be adjusted
to be the Conversion Price that would then be in effect if such tender or
exchange offer had not been made.
(g) In case of a tender or exchange offer made by a Person other
than the Company or any Subsidiary for an amount that increases the offeror's
ownership of Common Stock to more than twenty-five percent (25%) of the Common
Stock outstanding and shall involve the payment by such Person of consideration
per share of Common Stock having a fair market value (as determined by the Board
of Directors, whose determination shall be conclusive, and described in a
resolution of the Board of Directors) that as of the last time (the "Offer
Expiration Time") tenders or exchanges may be made pursuant to such tender or
exchange offer (as it shall have been amended) that exceeds the Current Market
Price of the Common Stock on the Trading Day next succeeding the Offer
Expiration Time, and in which, as of the Offer Expiration Time the Board of
Directors is not recommending rejection of the offer, the Conversion Price shall
be reduced so that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the Offer Expiration Time by a
fraction the numerator of which shall be the number of shares of Common Stock
outstanding (including any tendered or exchanged shares) at the Offer Expiration
Time multiplied by the Current Market Price of the Common Stock on the Trading
Day next succeeding the Offer Expiration Time and the denominator of which shall
be the sum of (x) the fair market value (determined as aforesaid) of the
aggregate consideration payable to stockholders based on the acceptance (up to
any maximum specified in the terms of the tender or exchange offer) of all
shares validly tendered or exchanged and not withdrawn as of the Offer
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Accepted Purchased Shares") and (y) the product of the
number of shares of Common Stock outstanding (less any Accepted Purchased
Shares) at the Offer Expiration Time and the Current Market Price of the Common
Stock on the Trading Day next succeeding the Offer Expiration Time, such
reduction to become effective immediately prior to the opening of business on
the Trading Day following the Offer Expiration Time. In the event that such
Person is obligated to purchase shares pursuant to any such tender or exchange
offer, but such Person is permanently prevented by applicable law from effecting
any such purchases or all such purchases are rescinded, the Conversion Price
shall again be adjusted to be the Conversion Price that would then be in effect
if such tender or exchange offer had not been made. Notwithstanding the
foregoing, the adjustment described in this Section 15.5(g) shall not be made
if, as of the Offer Expiration Time, the offering documents with respect to such
offer disclose a plan or intention to cause the Company to engage in any
transaction described in Article Twelve.
(h) For purposes of this Section 15.5, the following terms shall
have the meaning indicated:
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(1) "Closing Price" with respect to any security on any
day shall mean the closing sale price, regular way, on such day or, in case no
such sale takes place on such day, the average of the reported closing bid and
asked prices, regular way, in each case as quoted on the Nasdaq National Market
or, if such security is not quoted or listed or admitted to trading on such
Nasdaq National Market, on the principal national securities exchange or
quotation system on which such security is quoted or listed or admitted to
trading or, if not quoted or listed or admitted to trading on any national
securities exchange or quotation system, the average of the closing bid and
asked prices of such security on the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated, or a similar
generally accepted reporting service, or if not so available, in such manner as
furnished by any New York Stock Exchange member firm selected from time to time
by the Board of Directors for that purpose, or a price determined in good faith
by the Board of Directors or, to the extent permitted by applicable law, a duly
authorized committee thereof, whose determination shall be conclusive.
(2) "Current Market Price" shall mean the average of the
daily Closing Prices per share of Common Stock for the ten (10) consecutive
Trading Days immediately prior to the date in question except as hereinafter
provided for purposes of any computation under Section 15.5(f) or (g); provided,
however, that (1) if the "ex" date (as hereinafter defined) for any event (other
than the issuance or distribution requiring such computation and other than the
tender or exchange offer requiring such computation under Section 15.5(f) or
(g)) that requires an adjustment to the Conversion Price pursuant to Section
15.5(a), (b), (c), (d), (e), (f) or (g) occurs during such ten (10) consecutive
Trading Days, the Closing Price for each Trading Day prior to the "ex" date for
such other event shall be adjusted by multiplying such Closing Price by the same
fraction by which the Conversion Price is so required to be adjusted as a result
of such other event, (2) if the "ex" date for any event (other than the issuance
or distribution requiring such computation and other than the tender or exchange
offer requiring such computation under Section 15.5(f) or (g)) that requires an
adjustment to the Conversion Price pursuant to Section 15.5(a), (b), (c), (d),
(e), (f) or (g) occurs on or after the "ex" date for the issuance or
distribution requiring such computation and prior to the day in question, the
Closing Price for each Trading Day on and after the "ex" date for such other
event shall be adjusted by multiplying such Closing Price by the reciprocal of
the fraction by which the Conversion Price is so required to be adjusted as a
result of such other event, and (3) if the "ex" date for the issuance or
distribution requiring such computation is prior to the day in question, after
taking into account any adjustment required pursuant to clause (1) or (2) of
this proviso, the Closing Price for each Trading Day on or after such "ex" date
shall be adjusted by adding thereto the amount of any cash and the fair market
value (as determined by the Board of Directors or, to the extent permitted by
applicable law, a duly authorized committee thereof in a manner consistent with
any determination of such value for purposes of Section 15.5(d), (f) or (g),
whose determination shall be conclusive and described in a resolution of the
Board of Directors or such duly authorized committee thereof, as the case may
be) of the evidences of indebtedness, shares of capital stock or assets being
distributed applicable to one share of Common Stock as of the close of business
on the day before such "ex" date. For purposes of any computation under Section
15.5(f) or (g), the "Current Market Price" of the Common Stock on any date shall
be deemed to be the average of the daily Closing Prices per share of Common
Stock for such day and the next two (2) succeeding Trading Days; provided,
however, that if the "ex" date for any event (other than the tender or exchange
offer requiring such computation under Section 15.5(f)
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or (g)) that requires an adjustment to the Conversion Price pursuant to Section
15.5(a), (b), (c), (d), (e), (f) or (g) occurs on or after the Expiration Time
or Offer Expiration Time, as the case may be, for the tender or exchange offer
requiring such computation and prior to the day in question, the Closing Price
for each Trading Day on and after the "ex" date for such other event shall be
adjusted as provided in clauses (1), (2) and (3) of the proviso contained in the
first sentence of this Section 15.5(h)(2). For purpose of this paragraph, the
term "ex" date, (1) when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades, regular way, on the
relevant exchange or in the relevant market from which the Closing Price was
obtained without the right to receive such issuance or distribution, (2) when
used with respect to any subdivision or combination of shares of Common Stock,
means the first date on which the Common Stock trades, regular way, on such
exchange or in such market after the time at which such subdivision or
combination becomes effective, and (3) when used with respect to any tender or
exchange offer means the first date on which the Common Stock trades, regular
way, on such exchange or in such market after the Expiration Time or the Offer
Expiration Time of such offer.
(3) "Fair Market Value" shall mean the amount which a
willing buyer would pay a willing seller in an arm's-length transaction.
(4) "Record Date" shall mean, with respect to any
dividend, distribution or other transaction or event in which the holders of
Common Stock have the right to receive any cash, securities or other property or
in which the Common Stock (or other applicable security) is exchanged for or
converted into any combination of cash, securities or other property, the date
fixed for determination of stockholders entitled to receive such cash,
securities or other property (whether such date is fixed by the Board of
Directors or by statute, contract or otherwise).
(5) "Trading Day" shall mean (x) if the applicable
security is quoted on the Nasdaq National Market, a day on which trades may be
made thereon, (y) if the applicable security is listed or admitted for trading
on the New York Stock Exchange or another national securities exchange, a day on
which the New York Stock Exchange or another national securities exchange is
open for business or (z) if the applicable security is not so listed, admitted
for trading or quoted, any day other than a Saturday or Sunday or a day on which
banking institutions in the State of New York are authorized or obligated by law
or executive order to close.
(i) The Company may make such reductions in the Conversion Price,
in addition to those required by Sections 15.5(a), (b), (c), (d), (e), (f) or
(g) as the Board of Directors considers to be advisable to avoid or diminish any
income tax to holders of Common Stock or rights to purchase Common Stock
resulting from any dividend or distribution of stock (or rights to acquire
stock) or from any event treated as such for income tax purposes.
To the extent permitted by applicable law, the Company from time
to time may reduce the Conversion Price by any amount for any period of time if
the period is at least twenty (20) days, the reduction is irrevocable during the
period and the Board of Directors shall have made a determination that such
reduction would be in the best interests of the Company, which determination
shall be conclusive. Whenever the Conversion Price is reduced pursuant to the
preceding sentence, the Company shall mail to holders of record of the Notes a
notice of the
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reduction at least fifteen (15) days prior to the date the reduced Conversion
Price takes effect, and such notice shall state the reduced Conversion Price and
the period during which it will be in effect.
(j) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least one
percent (1%) in such price; provided, however, that any adjustments that by
reason of this Section 15.5(j) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Article Fifteen shall be made by the Company and shall be made to the
nearest cent or to the nearest one-hundredth (1/100) of a share, as the case may
be. No adjustment need be made for rights to purchase Common Stock pursuant to a
Company plan for reinvestment of dividends or interest. To the extent the Notes
become convertible into cash, assets, property or securities (other than capital
stock of the Company), no adjustment need be made thereafter as to the cash,
assets, property or such securities. Interest will not accrue on the cash.
(k) Whenever the Conversion Price is adjusted as herein provided,
the Company shall promptly file with the Trustee and any conversion agent other
than the Trustee an Officers' Certificate setting forth the Conversion Price
after such adjustment and setting forth a brief statement of the facts requiring
such adjustment. Unless and until a Responsible Officer of the Trustee shall
have received such Officers' Certificate, the Trustee shall not be deemed to
have knowledge of any adjustment of the Conversion Price and may assume that the
last Conversion Price of which it has knowledge is still in effect. Promptly
after delivery of such certificate, the Company shall prepare a notice of such
adjustment of the Conversion Price setting forth the adjusted Conversion Price
and the date on which each adjustment becomes effective and shall mail such
notice of such adjustment of the Conversion Price to the holder of each Note at
his last address appearing on the Note register provided for in Section 2.5 of
this Indenture, within twenty (20) days after execution thereof. Failure to
deliver such notice shall not affect the legality or validity of any such
adjustment.
(l) In any case in which this Section 15.5 provides that an
adjustment shall become effective immediately after (1) a record date or Record
Date for an event, (2) the date fixed for the determination of stockholders
entitled to receive a dividend or distribution pursuant to Section 15.5(a), (3)
a date fixed for the determination of stockholders entitled to receive rights or
warrants pursuant to Section 15.5(b), (4) the Expiration Time for any tender or
exchange offer pursuant to Section 15.5(f), or (5) the Offer Expiration Time for
a tender or exchange offer pursuant to Section 15.5(g) (each a "Determination
Date"), the Company may elect to defer until the occurrence of the relevant
Adjustment Event (as hereinafter defined) (x) issuing to the holder of any Note
converted after such Determination Date and before the occurrence of such
Adjustment Event, the additional shares of Common Stock or other securities
issuable upon such conversion by reason of the adjustment required by such
Adjustment Event over and above the Common Stock issuable upon such conversion
before giving effect to such adjustment and (y) paying to such holder any amount
in cash in lieu of any fraction pursuant to Section 15.3. For purposes of this
Section 15.5(l), the term "Adjustment Event" shall mean:
(a) in any case referred to in clause (1) hereof, the
occurrence of such event,
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(b) in any case referred to in clause (2) hereof, the date
any such dividend or distribution is paid or made,
(c) in any case referred to in clause (3) hereof, the date
of expiration of such rights or warrants, and
(d) in any case referred to in clause (4) or clause (5)
hereof, the date a sale or exchange of Common Stock pursuant to
such tender or exchange offer is consummated and becomes
irrevocable.
(m) For purposes of this Section 15.5, the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of shares of Common Stock. The Company
will not pay any dividend or make any distribution on shares of Common Stock
held in the treasury of the Company.
Section 15.6. Effect Of Reclassification, Consolidation, Merger Or Sale.
If any of the following events occur, namely (i) any reclassification or change
of the outstanding shares of Common Stock (other than a subdivision or
combination to which Section 15.5(c) applies), (ii) any consolidation, merger or
combination of the Company with another Person as a result of which holders of
Common Stock shall be entitled to receive stock, other securities or other
property or assets (including cash) with respect to or in exchange for such
Common Stock or (iii) any sale or conveyance of all or substantially all of the
properties and assets of the Company to any other Person as a result of which
holders of Common Stock shall be entitled to receive stock, other securities or
other property or assets (including cash) with respect to or in exchange for
such Common Stock, then the Company or the successor or purchasing Person, as
the case may be, shall execute with the Trustee a supplemental indenture (which
shall comply with the Trust Indenture Act as in force at the date of execution
of such supplemental indenture) providing that such Note shall be convertible
into the kind and amount of shares of stock, other securities or other property
or assets (including cash) receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance by a holder of a number
of shares of Common Stock issuable upon conversion of such Notes (assuming, for
such purposes, a sufficient number of authorized shares of Common Stock are
available to convert all such Notes) immediately prior to such reclassification,
change, consolidation, merger, combination, sale or conveyance assuming such
holder of Common Stock did not exercise his rights of election, if any, as to
the kind or amount of stock, other securities or other property or assets
(including cash) receivable upon such reclassification, change, consolidation,
merger, combination, sale or conveyance (provided that, if the kind or amount of
stock, other securities or other property or assets (including cash) receivable
upon such reclassification, change, consolidation, merger, combination, sale or
conveyance is not the same for each share of Common Stock in respect of which
such rights of election shall not have been exercised ("non-electing share"),
then for the purposes of this Section 15.6 the kind and amount of stock, other
securities or other property or assets (including cash) receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
for each non-electing share shall be deemed to be the kind and amount so
receivable per share by a plurality of the non-electing shares). Such
supplemental indenture shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in this Article
Fifteen.
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The Company shall cause notice of the execution of such
supplemental indenture to be mailed to each holder of Notes, at its address
appearing on the Note register provided for in Section 2.5 of this Indenture,
within twenty (20) days after execution thereof. Failure to deliver such notice
shall not affect the legality or validity of such supplemental indenture.
The above provisions of this Section 15.6 shall similarly apply
to successive reclassifications, changes, consolidations, mergers, combinations,
sales and conveyances.
If this Section 15.6 applies to any event or occurrence, Section
15.5 shall not apply.
Section 15.7. Taxes On Shares Issued. The issue of stock certificates on
conversions of Notes shall be made without charge to the converting Noteholder
for any tax in respect of the issue thereof. The Company shall not, however, be
required to pay any tax which may be payable in respect of any transfer involved
in the issue and delivery of stock in any name other than that of the holder of
any Note converted, and the Company shall not be required to issue or deliver
any such stock certificate unless and until the Person or Persons requesting the
issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
Section 15.8. Reservation Of Shares; Shares To Be Fully Paid; Compliance
With Governmental Requirements; Listing Of Common Stock. The Company shall
provide, free from preemptive rights, out of its authorized but unissued shares
or shares held in treasury, sufficient shares of Common Stock to provide for the
conversion of the Notes from time to time as such Notes are presented for
conversion.
Before taking any action which would cause an adjustment reducing
the Conversion Price below the then par value, if any, of the shares of Common
Stock issuable upon conversion of the Notes, the Company will take all corporate
action which may, in the opinion of its counsel, be necessary in order that the
Company may validly and legally issue shares of such Common Stock at such
adjusted Conversion Price.
The Company covenants that all shares of Common Stock which may
be issued upon conversion of Notes will upon issue be fully paid and
non-assessable by the Company and free from all taxes, liens and charges with
respect to the issue thereof.
The Company covenants that, if any shares of Common Stock to be
provided for the purpose of conversion of Notes hereunder require registration
with or approval of any governmental authority under any federal or state law
before such shares may be validly issued upon conversion, the Company will in
good faith and as expeditiously as possible, to the extent then permitted by the
rules and interpretations of the Securities and Exchange Commission (or any
successor thereto), endeavor to secure such registration or approval, as the
case may be.
The Company further covenants that, if at any time the Common
Stock shall be listed on the Nasdaq National Market or any other national
securities exchange or automated quotation system, the Company will, if
permitted by the rules of such exchange or automated quotation system, list and
keep listed, so long as the Common Stock shall be so listed on such exchange or
automated quotation system, all Common Stock issuable upon conversion of the
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Note; provided, however, that, if the rules of such exchange or automated
quotation system permit the Company to defer the listing of such Common Stock
until the first conversion of the Notes into Common Stock in accordance with the
provisions of this Indenture, the Company covenants to list such Common Stock
issuable upon conversion of the Notes in accordance with the requirements of
such exchange or automated quotation system at such time.
Section 15.9. Responsibility Of Trustee. The Trustee and any other
conversion agent shall not at any time be under any duty or responsibility to
any holder of Notes to determine the Conversion Price or whether any facts exist
which may require any adjustment of the Conversion Price, or with respect to the
nature or extent or calculation of any such adjustment when made, or with
respect to the method employed, or herein or in any supplemental indenture
provided to be employed, in making the same. The Trustee and any other
conversion agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any shares of Common Stock, or of any securities or
property, which may at any time be issued or delivered upon the conversion of
any Note; and the Trustee and any other conversion agent make no representations
with respect thereto. Neither the Trustee nor any conversion agent shall be
responsible for any failure of the Company to issue, transfer or deliver any
shares of Common Stock or stock certificates or other securities or property or
cash upon the surrender of any Note for the purpose of conversion or to comply
with any of the duties, responsibilities or covenants of the Company contained
in this Article Fifteen. Without limiting the generality of the foregoing,
neither the Trustee nor any conversion agent shall be under any responsibility
to determine the correctness of any provisions contained in any supplemental
indenture entered into pursuant to Section 15.6 relating either to the kind or
amount of shares of stock or securities or property (including cash) receivable
by Noteholders upon the conversion of their Notes after any event referred to in
such Section 15.6 or to any adjustment to be made with respect thereto, but,
subject to the provisions of Section 8.1, may accept as conclusive evidence of
the correctness of any such provisions, and shall be protected in relying upon,
the Officers' Certificate (which the Company shall be obligated to file with the
Trustee prior to the execution of any such supplemental indenture) with respect
thereto.
Section 15.10. Notice To Holders Prior To Certain Actions. In case:
(a) the Company shall declare a dividend (or any other
distribution) on its Common Stock that would require an adjustment in the
Conversion Price pursuant to Section 15.5; or
(b) the Company shall authorize the granting to the holders of
all or substantially all of its Common Stock of rights or warrants to subscribe
for or purchase any share of any class or any other rights or warrants; or
(c) of any reclassification or reorganization of the Common Stock
of the Company (other than a subdivision or combination of its outstanding
Common Stock, or a change in par value, or from par value to no par value, or
from no par value to par value), or of any consolidation or merger to which the
Company is a party and for which approval of any stockholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company or any Significant Subsidiary; or
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(d) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company or any Significant Subsidiary;
the Company shall cause to be filed with the Trustee and to be mailed to each
holder of Notes at his address appearing on the Note register provided for in
Section 2.5 of this Indenture, as promptly as possible but in any event at least
ten (10) days prior to the applicable date hereinafter specified, a notice
stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution or rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record to be entitled
to such dividend, distribution or rights are to be determined or (y) the date on
which such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up is expected to become effective or occur, and the date
as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. Failure to give such notice, or any
defect therein, shall not affect the legality or validity of such dividend,
distribution, reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up.
ARTICLE 16.
MISCELLANEOUS PROVISIONS
Section 16.1. Provisions Binding On Company's Successors. All the
covenants, stipulations, promises and agreements by the Company contained in
this Indenture shall bind its successors and assigns whether so expressed or
not.
Section 16.2. Official Acts By Successor Corporation. Any act or
proceeding by any provision of this Indenture authorized or required to be done
or performed by any board, committee or officer of the Company shall and may be
done and performed with like force and effect by the like board, committee or
officer of any Person that shall at the time be the lawful sole successor of the
Company.
Section 16.3. Addresses For Notices, Etc. Any notice or demand which by
any provision of this Indenture is required or permitted to be given or served
by the Trustee or by the holders of Notes on the Company shall be deemed to have
been sufficiently given or made, for all purposes, if given or served by being
deposited postage prepaid by registered or certified mail in a post office
letter box addressed (until another address is filed by the Company with the
Trustee) to Getty Images, Inc., 701 N. 34th Street, Suite 400, Seattle,
Washington 98103, Attention: Chief Financial Officer. Any notice, direction,
request or demand hereunder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or served by being
deposited, postage prepaid, by registered or certified mail in a post office
letter box addressed to the Corporate Trust Office, which office is, at the date
as of which this Indenture is dated, located at 101 Barclay Street, Floor 21
West, New York, New York 10286, Attention: Corporate Trust Administration.
The Trustee, by notice to the Company, may designate additional
or different addresses for subsequent notices or communications.
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Any notice or communication mailed to a Noteholder shall be
mailed to him by first class mail, postage prepaid, at his address as it appears
on the Note register and shall be sufficiently given to him if so mailed within
the time prescribed.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other Noteholders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
Section 16.4. Governing Law. This Indenture and each Note shall be
deemed to be a contract made under the laws of the State of New York, and for
all purposes shall be construed in accordance with the laws of the State of New
York, without regard to the conflict of laws provisions thereof.
Section 16.5. Evidence Of Compliance With Conditions Precedent;
Certificates To Trustee. Upon any application or demand by the Company to the
Trustee to take any action under any of the provisions of this Indenture, the
Company shall furnish to the Trustee an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, and an Opinion of Counsel stating that,
in the opinion of such counsel, all such conditions precedent have been complied
with, provided that such Opinion of Counsel shall not be required in connection
with the initial issuance of the Notes.
Each certificate or opinion provided for in this Indenture and
delivered to the Trustee with respect to compliance with a condition or covenant
provided for in this Indenture shall include: (1) a statement that the person
making such certificate or opinion has read such covenant or condition; (2) a
brief statement as to the nature and scope of the examination or investigation
upon which the statement or opinion contained in such certificate or opinion is
based; (3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and (4) a statement as to whether or not, in the opinion of such
person, such condition or covenant has been complied with.
Section 16.6. Legal Holidays. In any case in which the date of maturity
of interest on or principal of the Notes or the date fixed for redemption of any
Note will not be a Business Day, then payment of such interest on or principal
of the Notes need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on the date of
maturity or the date fixed for redemption, and no interest shall accrue for the
period from and after such date.
Section 16.7. Trust Indenture Act. This Indenture is hereby made subject
to, and shall be governed by, the provisions of the Trust Indenture Act required
to be part of and to govern indentures qualified under the Trust Indenture Act;
provided, however, that, unless otherwise required by law, notwithstanding the
foregoing, this Indenture and the Notes issued hereunder shall not be subject to
the provisions of subsections (a)(1), (a)(2), and (a)(3) of Section 314 of the
Trust Indenture Act as now in effect or as hereafter amended or modified;
provided further that this Section 16.7 shall not require this Indenture or the
Trustee to be qualified under the Trust Indenture Act prior to the time such
qualification is in fact required under the terms of the Trust
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Indenture Act, nor shall it constitute any admission or acknowledgment by any
party to the Indenture that any such qualification is required prior to the time
such qualification is in fact required under the terms of the Trust Indenture
Act. If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in an indenture qualified
under the Trust Indenture Act, such required provision shall control.
Section 16.8. No Security Interest Created. Nothing in this Indenture or
in the Notes, expressed or implied, shall be construed to constitute a security
interest under the Uniform Commercial Code or similar legislation, as now or
hereafter enacted and in effect, in any jurisdiction in which property of the
Company or its subsidiaries is located.
Section 16.9. Benefits Of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto, any paying agent, any authenticating agent, any Note registrar and their
successors hereunder, the holders of Notes and the holders of Senior
Indebtedness, any benefit or any legal or equitable right, remedy or claim under
this Indenture.
Section 16.10. Table Of Contents, Headings, Etc. The table of contents
and the titles and headings of the articles and Sections of this Indenture have
been inserted for convenience of reference only, are not to be considered a part
hereof, and shall in no way modify or restrict any of the terms or provisions
hereof.
Section 16.11. Authenticating Agent. The Trustee may appoint an
authenticating agent that shall be authorized to act on its behalf, and subject
to its direction, in the authentication and delivery of Notes in connection with
the original issuance thereof and transfers and exchanges of Notes hereunder,
including under Sections 2.4, 2.5, 2.6, 2.7, 3.3 and 3.5, as fully to all
intents and purposes as though the authenticating agent had been expressly
authorized by this Indenture and those Sections to authenticate and deliver
Notes. For all purposes of this Indenture, the authentication and delivery of
Notes by the authenticating agent shall be deemed to be authentication and
delivery of such Notes "by the Trustee" and a certificate of authentication
executed on behalf of the Trustee by an authenticating agent shall be deemed to
satisfy any requirement hereunder or in the Notes for the Trustee's certificate
of authentication. Such authenticating agent shall at all times be a Person
eligible to serve as trustee hereunder pursuant to Section 8.9.
Any corporation into which any authenticating agent may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any authenticating agent
shall be a party, or any corporation succeeding to all or substantially all the
corporate trust business of any authenticating agent, shall be the successor of
the authenticating agent hereunder, if such successor corporation is otherwise
eligible under this Section 16.11, without the execution or filing of any paper
or any further act on the part of the parties hereto or the authenticating agent
or such successor corporation.
Any authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at any
time terminate the agency of any authenticating agent by giving written notice
of termination to such authenticating
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agent and to the Company. Upon receiving such a notice of resignation or upon
such a termination, or in case at any time any authenticating agent shall cease
to be eligible under this Section, the Trustee shall either promptly appoint a
successor authenticating agent or itself assume the duties and obligations of
the former authenticating agent under this Indenture and, upon such appointment
of a successor authenticating agent, if made, shall give written notice of such
appointment of a successor authenticating agent to the Company and shall mail
notice of such appointment of a successor authenticating agent to all holders of
Notes as the names and addresses of such holders appear on the Note register.
The Company agrees to pay to the authenticating agent from time
to time such reasonable compensation for its services as shall be agreed upon in
writing between the Company and the authenticating agent.
The provisions of Sections 8.2, 8.3, 8.4, 9.3 and this Section
16.11 shall be applicable to any authenticating agent.
Section 16.12. Execution In Counterparts. This Indenture may be executed
in any number of counterparts, each of which shall be an original, but such
counterparts shall together constitute but one and the same instrument.
Section 16.13. Severability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, then (to the extent
permitted by law) the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Bank of New York hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions herein above set forth.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed.
GETTY IMAGES, INC.
By:
--------------------------------------
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By:
--------------------------------------
Name:
Title:
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EXHIBIT A
For Global Note only: UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW
YORK, NEW YORK) (THE "DEPOSITARY", WHICH TERM INCLUDES ANY SUCCESSOR DEPOSITARY
FOR THE CERTIFICATES) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITARY (AND ANY PAYMENT HEREIN IS MADE TO CEDE & CO. OR TO SUCH OTHER
ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
THE NOTE EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, UNITED STATES PERSONS
EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE
HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL
"ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE
SECURITIES ACT) ("INSTITUTIONAL ACCREDITED INVESTOR"); (2) AGREES THAT IT WILL
NOT, PRIOR TO EXPIRATION OF THE HOLDING PERIOD APPLICABLE TO SALES OF THE NOTE
EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY SUCCESSOR
PROVISION), RESELL OR OTHERWISE TRANSFER THE NOTE EVIDENCED HEREBY OR THE COMMON
STOCK ISSUABLE UPON CONVERSION OF SUCH NOTE EXCEPT (A) TO GETTY IMAGES, INC. OR
ANY SUBSIDIARY THEREOF, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE
WITH RULE 144A UNDER THE SECURITIES ACT, (C) TO AN INSTITUTIONAL ACCREDITED
INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE BANK OF NEW YORK, AS
TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER
OF THE NOTE EVIDENCED HEREBY (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM SUCH
TRUSTEE OR A SUCCESSOR TRUSTEE, AS APPLICABLE), (D) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE)
OR (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE
UNDER THE SECURITIES ACT (AND WHICH CONTINUES TO BE EFFECTIVE AT THE TIME OF
SUCH TRANSFER); (3) PRIOR TO SUCH TRANSFER (OTHER THAN A TRANSFER PURSUANT TO
CLAUSE (2)(E) ABOVE), IT WILL FURNISH TO THE BANK OF NEW YORK, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER
<PAGE> 177
INFORMATION AS THE TRUSTEE MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER
IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT; AND (4) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THE NOTE EVIDENCED HEREBY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF
THE NOTE EVIDENCED HEREBY PRIOR TO THE EXPIRATION OF THE HOLDING PERIOD
APPLICABLE TO SALES OF THE NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE
SECURITIES ACT (OR ANY SUCCESSOR PROVISION), THE HOLDER MUST CHECK THE
APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE BANK OF NEW YORK, AS TRUSTEE (OR A
SUCCESSOR TRUSTEE, AS APPLICABLE). IF THE PROPOSED TRANSFEREE IS AN
INSTITUTIONAL ACCREDITED INVESTOR OR IS A PURCHASER WHO IS NOT A UNITED STATES
PERSON, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE BANK OF NEW
YORK, AS TRUSTEE (OR A SUCCESSOR TRUSTEE, AS APPLICABLE), SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS SUCH TRUSTEE MAY REASONABLY REQUIRE TO
CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
THIS LEGEND WILL BE REMOVED UPON THE EARLIER OF THE TRANSFER OF THE NOTE
EVIDENCED HEREBY PURSUANT TO CLAUSE (2)(E) ABOVE OR UPON ANY TRANSFER OF THE
NOTE EVIDENCED HEREBY UNDER RULE 144(K) UNDER THE SECURITIES ACT (OR ANY
SUCCESSOR PROVISION). AS USED HEREIN, THE TERMS "UNITED STATES" AND "U.S.
PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES
ACT.
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<PAGE> 178
GETTY IMAGES, INC.
5% CONVERTIBLE SUBORDINATED NOTES DUE 2007
CUSIP:_____________________
No. __________ $____________________
Getty Images, Inc., a corporation duly organized and validly
existing under the laws of the State of Delaware (herein called the "Company",
which term includes any successor corporation under the Indenture referred to on
the reverse hereof), for value received hereby promises to pay to Cede & Co., or
its registered assigns, the principal sum of _______________ ($__________) on
March 15, 2007, at the office or agency of the Company maintained for that
purpose in accordance with the terms of the Indenture, in such coin or currency
of the United States of America as at the time of payment shall be legal tender
for the payment of public and private debts, and to pay interest, semi-annually
on March 15 and September 15 of each year, commencing September 15, 2000, on
said principal sum at said office or agency, in like coin or currency, at the
rate per annum of 5%, from the next preceding date to which interest has been
paid or duly provided for, unless no interest has been paid or duly provided for
on the Notes, in which case from March 13, 2000, until payment of said principal
sum has been made or duly provided for. Except as otherwise provided in the
Indenture, the interest payable on the Note pursuant to the Indenture on any
March 15 or September 15 will be paid to the Person entitled thereto as it
appears in the Note register at the close of business on the record date, which
shall be the March 1 or September 1 (whether or not a Business Day) next
preceding such March 15 or September 15, as provided in the Indenture; provided,
however, that any such interest not punctually paid or duly provided for shall
be payable as provided in the Indenture. Interest may, at the option of the
Company, be paid either (i) by check mailed to the registered address of such
Person (provided that the holder of Notes with an aggregate principal amount in
excess of $2,000,000 shall, at the written election of such holder, be paid by
wire transfer of immediately available funds) or (ii) by transfer to an account
maintained by such Person located in the United States; provided, however, that
payments to the Depositary will be made by wire transfer of immediately
available funds to the account of the Depositary or its nominee.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, including, without limitation, provisions
subordinating the payment of principal of and premium, if any, and interest on
the Notes to the prior payment in full of all Senior Indebtedness, as defined in
the Indenture, and provisions giving the holder of this Note the right to
convert this Note into Common Stock of the Company on the terms and subject to
the limitations referred to on the reverse hereof and as more fully specified in
the Indenture. Such further provisions shall for all purposes have the same
effect as though fully set forth at this place.
This Note shall be deemed to be a contract made under the laws of
the State of New York, and for all purposes shall be construed in accordance
with and governed by the laws of the State of New York, without regard to
principles of conflicts of laws.
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<PAGE> 179
This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by the Trustee or a duly authorized authenticating agent under the Indenture.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed.
GETTY IMAGES, INC.
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Attest:
----------------------
Name:
----------------------
Title:
----------------------
Dated:
----------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes described in the within-named Indenture.
THE BANK OF NEW YORK, as Trustee
By:
---------------------------
Name:
Title:
A-4
<PAGE> 180
FORM OF REVERSE OF NOTE
GETTY IMAGES, INC.
5% CONVERTIBLE SUBORDINATED NOTES DUE 2007
1. General.
This Note is one of a duly authorized issue of Notes of the
Company, designated as its 5% Convertible Subordinated Notes due 2007 (herein
called the "Notes"), limited to the aggregate principal amount of $250,000,000
all issued or to be issued under and pursuant to an Indenture dated as of March
13, 2000 (herein called the "Indenture"), between the Company and The Bank of
New York, as trustee (herein called the "Trustee"), to which Indenture and all
indentures supplemental thereto reference is hereby made for a description of
the rights, limitations of rights, obligations, duties and immunities thereunder
of the Trustee, the Company and the holders of the Notes.
In case an Event of Default (as defined in the Indenture) shall
have occurred and be continuing, the principal of, premium, if any, and accrued
interest (including Liquidated Damages (as defined in the Registration Rights
Agreement), if any) on all Notes may be declared by either the Trustee or the
holders of not less than twenty-five percent (25%) in aggregate principal amount
of the Notes then outstanding, and upon said declaration shall become, due and
payable, in the manner, with the effect and subject to the conditions provided
in the Indenture.
2. Amendment; Supplement; Waiver.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of not less than a majority in
aggregate principal amount of the Notes at the time outstanding, to execute
supplemental indentures adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or of any supplemental
indenture or modifying in any manner the rights of the holders of the Notes;
provided, however, that no such supplemental indenture shall (i) extend the
fixed maturity of any Note, or reduce the rate or extend the time of payment of
interest thereon, or reduce the principal amount thereof or premium, if any,
thereon, or reduce any amount payable upon redemption thereof, or impair the
right of any Noteholder to institute suit for the payment thereof, or make the
principal thereof or interest or premium, if any, thereon payable in any coin or
currency other than that provided in the Notes, or modify the provisions of the
Indenture with respect to the subordination of the Notes in a manner adverse to
the Noteholders in any material respect, or change the obligation of the Company
to redeem any Note upon the happening of a Fundamental Change (as defined in the
Indenture) in a manner adverse to the holder of the Notes, or impair the right
to convert the Notes into Common Stock subject to the terms set forth in the
Indenture, including Section 15.6 thereof, without the consent of the holder of
each Note so affected or (ii) reduce the aforesaid percentage of Notes, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of all Notes then outstanding. Subject to the
provisions of the Indenture, the holders of a majority in aggregate principal
amount of the Notes at the time outstanding may on behalf of the holders of all
of the Notes waive any past default or Event of Default under the Indenture and
its consequences except a default in the payment of
A-5
<PAGE> 181
interest (including Liquidated Damages, if any) or any premium on, or the
principal of, any of the Notes, or a failure by the Company to convert any Notes
into Common Stock of the Company, or a default in the payment of the redemption
price pursuant to Article Three of the Indenture, or a default in respect of a
covenant or provisions of the Indenture which under Article Eleven of the
Indenture cannot be modified without the consent of the holders of each or all
Notes then outstanding or affected thereby. Any such consent or waiver by the
holder of this Note (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such holder and upon all future holders and owners
of this Note and any Notes which may be issued in exchange or substitution
hereof, irrespective of whether or not any notation thereof is made upon this
Note or such other Notes.
3. Subordination.
The indebtedness evidenced by the Notes is, to the extent and in
the manner provided in the Indenture, expressly subordinated and subject in
right of payment to the prior payment in full of all Senior Indebtedness of the
Company, whether outstanding at the date of the Indenture or thereafter
incurred, and this Note is issued subject to the provisions of the Indenture
with respect to such subordination. Each holder of this Note, by accepting the
same, agrees to and shall be bound by such provisions and authorizes the Trustee
on its behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and appoints the Trustee his
attorney-in-fact for such purpose.
4. Payment; Denominations; Exchange.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and any premium and
interest (including Liquidated Damages, if any) on this Note at the place, at
the respective times, at the rate and in the coin or currency herein prescribed.
Interest on the Notes shall be computed on the basis of a 360-day
year of twelve 30-day months.
The Notes are issuable in fully registered form, without coupons,
in denominations of $1,000 principal amount and any integral multiple of $1,000.
At the office or agency of the Company referred to on the face hereof, and in
the manner and subject to the limitations provided in the Indenture, without
payment of any service charge but with payment of a sum sufficient to cover any
tax, assessment or other governmental charge that may be imposed in connection
with any registration or exchange of Notes, Notes may be exchanged for a like
aggregate principal amount of Notes of any other authorized denominations.
5. Redemption.
The Notes will not be redeemable at the option of the Company
prior to March 20, 2003. At any time on or after March 20, 2003, and prior to
maturity, the Notes may be redeemed at the option of the Company, in whole or in
part, upon notice as set forth in Section 3.2, at the following redemption
prices (expressed as percentages of the principal
A-6
<PAGE> 182
amount), together in each case with accrued and unpaid interest, if any
(including Liquidated Damages, if any) to, but excluding, the date fixed for
redemption:
<TABLE>
<CAPTION>
Period Redemption Price
------ ----------------
<S> <C>
Beginning on March 20, 2003 and ending on March 14, 2004 ....... 102.857%
Beginning on March 15, 2004 and ending on March 14, 2005 ....... 102.143%
Beginning on March 15, 2005 and ending on March 14, 2006 ....... 101.429%
Beginning on March 15, 2006 and ending on March 14, 2007 ....... 100.714%
</TABLE>
and 100% on March 15, 2007; provided, however, that if the date fixed for
redemption is on a March 15 or September 15, then the interest payable on such
date shall be paid to the holder of record on the preceding March 1 or September
1, respectively.
The Company may not give notice of any redemption of the Notes if
a default in the payment of interest or premium, if any, on the Notes has
occurred and is continuing.
The Notes are not subject to redemption through the operation of
any sinking fund.
6. Fundamental Change.
If a Fundamental Change occurs at any time prior to maturity of
the Notes, the Notes will be redeemable on the 30th day after notice thereof
(the "Repurchase Date") at the option of the holder of the Notes at a redemption
price equal to 100% of the principal amount thereof, together with accrued
interest to (but excluding) the date of redemption; provided, however, that, if
such Repurchase Date is a March 15 or September 15, the interest payable on such
date shall be paid to the holder of record of the Notes on the preceding March 1
or September 1, respectively. The Notes will be redeemable in multiples of
$1,000 principal amount. The Company shall mail to all holders of record of the
Notes a notice of the occurrence of a Fundamental Change and of the redemption
right arising as a result thereof on or before the 10th day after the occurrence
of such Fundamental Change. For a Note to be so redeemed at the option of the
holder, the Company must receive at the office or agency of the Company
maintained for that purpose in accordance with the terms of the Indenture, such
Note with the form entitled "Option to Elect Repayment Upon a Fundamental
Change" on the reverse thereof duly completed, together with such Note, duly
endorsed for transfer, on or before the 30th day after the date of such notice
of a Fundamental Change (or if such 30th day is not a Business Day, the
immediately succeeding Business Day).
7. Conversion.
Subject to the provisions of the Indenture, the holder hereof has
the right, at its option, at any time after the original issuance of any Notes
through the close of business on the final maturity date of the Notes, or, as to
all or any portion hereof called for redemption, prior to the close of business
on the Business Day immediately preceding the date fixed for redemption (unless
the Company shall default in payment due upon redemption thereof), to convert
the principal hereof or any portion of such principal which is $1,000 or an
integral multiple thereof into that number of shares of the Company's Common
Stock (as such shares shall be constituted
A-7
<PAGE> 183
at the date of conversion) obtained by dividing the principal amount of this
Note or portion thereof to be converted by the Conversion Price of $61.08, as
may adjusted from time to time as provided in the Indenture, upon surrender of
this Note, together with a conversion notice as provided in the Indenture (the
form entitled "Conversion Notice" on the reverse hereof), to the Company at the
office or agency of the Company maintained for that purpose in accordance with
the terms of the Indenture, or at the option of such holder, the Corporate Trust
Office, and, unless the shares issuable on conversion are to be issued in the
same name as this Note, duly endorsed by, or accompanied by instruments of
transfer in form satisfactory to the Company duly executed by, the holder or by
his duly authorized attorney. No adjustment in respect of interest on any Note
converted or dividends on any shares issued upon conversion of such Note will be
made upon any conversion except as set forth in the next sentence. If this Note
(or portion hereof) is surrendered for conversion during the period from the
close of business on any record date for the payment of interest to the close of
business on the Business Day preceding the following interest payment date and
either (x) has not been called for redemption on a redemption date that occurs
during such period or (y) is not to be redeemed in connection with a Fundamental
Change on a Repurchase Date that occurs during such period, this Note (or
portion hereof being converted) must be accompanied by an amount, in New York
Clearing House funds or other funds acceptable to the Company, equal to the
interest payable on such interest payment date on the principal amount being
converted; provided, however, that no such payment shall be required if there
shall exist at the time of conversion a default in the payment of interest on
the Notes. No fractional shares will be issued upon any conversion, but an
adjustment and payment in cash will be made, as provided in the Indenture, in
respect of any fraction of a share which would otherwise be issuable upon the
surrender of any Note or Notes for conversion. A Note in respect of which a
holder is exercising its right to require redemption upon a Fundamental Change
may be converted only if such holder withdraws its election to exercise such
right in accordance with the terms of the Indenture. Any Notes called for
redemption, unless surrendered for conversion by the holders thereof on or
before the close of business on the Business Day preceding the date fixed for
redemption, may be deemed to be redeemed from the holders of such Notes for an
amount equal to the applicable redemption price, together with accrued but
unpaid interest (including Liquidated Damages, if any) to (but excluding) the
date fixed for redemption, by one or more investment banks or other purchasers
who may agree with the Company (i) to purchase such Notes from the holders
thereof and convert them into shares of the Company's Common Stock and (ii) to
make payment for such Notes as aforesaid to the Trustee in trust for the
holders.
8. Transfer.
Upon due presentment for registration of transfer of this Note at
the office or agency of the Company maintained for that purpose in accordance
with the terms of the Indenture, a new Note or Notes of authorized denominations
for an equal aggregate principal amount will be issued to the transferee in
exchange thereof; subject to the limitations provided in the Indenture, without
charge except for any tax, assessment or other governmental charge imposed in
connection therewith.
9. Persons Deemed Owners.
The Company, the Trustee, any authenticating agent, any paying
agent, any conversion agent and any Note registrar may deem and treat the
registered holder hereof as the
A-8
<PAGE> 184
absolute owner of this Note (whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Company or any Note registrar) for the purpose of receiving
payment hereof, or on account hereof, for the conversion hereof and for all
other purposes, and neither the Company nor the Trustee nor any other
authenticating agent nor any paying agent nor other conversion agent nor any
Note registrar shall be affected by any notice to the contrary. All payments
made to or upon the order of such registered holder shall, to the extent of the
sum or sums paid, satisfy and discharge liability for monies payable on this
Note.
10. No Recourse.
No recourse for the payment of the principal of or any premium or
interest on this Note, or for any claim based hereon or otherwise in respect
hereof, and no recourse under or upon any obligation, covenant or agreement of
the Company in the Indenture or any supplemental indenture or in any Note, or
because of the creation of any indebtedness represented thereby, shall be had
against any incorporator, stockholder, employee, agent, officer or director or
subsidiary, as such, past, present or future, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, whether by virtue of any constitution, statute or rule of law or by
the enforcement of any assessment or penalty or otherwise, all such liability
being, by acceptance hereof and as part of the consideration for the issue
hereof, expressly waived and released.
This Note shall be deemed to be a contract made under the laws of
New York, and for all purposes shall be construed in accordance with the laws of
New York, without regard to principles of conflicts of laws.
11. Defined Terms.
Terms used in this Note and defined in the Indenture are used
herein as therein defined.
12. Abbreviations.
The following abbreviations, when used in the inscription of the
face of this Note, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM tenants in common
UNIF GIFT MIN ACT Uniform Gift to Minors Act
TEN ENT tenants by the entireties
CUST custodian
JT TEN joint tenants with right of survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the above
list.
A-9
<PAGE> 185
CONVERSION NOTICE
TO: GETTY IMAGES, INC.
THE BANK OF NEW YORK
The undersigned registered owner of this Note hereby irrevocably
exercises the option to convert this Note, or the portion thereof (which is
$1,000 or an integral multiple thereof) below designated, into shares of Common
Stock of Getty Images, Inc. in accordance with the terms of the Indenture
referred to in this Note, and directs that the shares issuable and deliverable
upon such conversion, together with any check in payment for fractional shares
and any Notes representing any unconverted principal amount hereof, be issued
and delivered to the registered holder hereof unless a different name has been
indicated below. If shares or any portion of this Note not converted are to be
issued in the name of a person other than the undersigned, the undersigned will
provide the appropriate information below and pay all transfer taxes payable
with respect thereto. Any amount required to be paid by the undersigned on
account of interest accompanies this Note.
Dated:
------------------------
- -----------------------------
- -----------------------------
Signature(s)
Signature(s) must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note registrar, which requirements
include membership or participation in the Security Transfer Agent
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.
-------------------------------
Signature Guarantee
A-10
<PAGE> 186
Fill in the registration of shares of Common Stock if to be
issued, and Notes if to be delivered, other than to and in the name of the
registered holder:
- -------------------------------------
(Name)
- -------------------------------------
(Street Address)
- -------------------------------------
(City, State and Zip Code)
- -------------------------------------
Please print name and address
Principal amount to be converted
(if less than all):
$------------------------------------
Social Security or Other Taxpayer
Identification Number:
- -------------------------------------
A-11
<PAGE> 187
OPTION TO ELECT REPAYMENT
UPON A FUNDAMENTAL CHANGE
TO: GETTY IMAGES, INC.
THE BANK OF NEW YORK
The undersigned registered owner of this Note hereby irrevocably
acknowledges receipt of a notice from Getty Images, Inc. (the "Company") as to
the occurrence of a Fundamental Change with respect to the Company and requests
and instructs the Company to repay the entire principal amount of this Note, or
the portion thereof (which is $1,000 or an integral multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this
Note at the price of 100% of such entire principal amount or portion thereof,
together with accrued interest to, but excluding, such repayment date, to the
registered holder hereof.
Dated:
---------------------
- ---------------------------
- ---------------------------
Signature(s)
NOTICE: The above signatures of the
holder(s) hereof must correspond
with the name as written upon the
face of the Note in every particular
without alteration or enlargement or
any change whatever. Principal
amount to be repaid (if less than
all):
$
----------------------------------
----------------------------------
Social Security or Other Taxpayer
Identification Number
A-12
<PAGE> 188
ASSIGNMENT
For value received __________________________________________
hereby sell(s) assign(s) and transfer(s) unto__________________________________
(Please insert social security or other
Taxpayer Identification Number of assignee) the within Note, and hereby
irrevocably constitutes and appoints ____________________________________
attorney to transfer said Note on the books of the Company, with full power of
substitution in the premises.
In connection with any transfer of the Note prior to the
expiration of the holding period applicable to sales thereof under Rule 144(k)
under the Securities Act (or any successor provision) (other than any transfer
pursuant to a registration statement that has been declared effective under the
Securities Act), the undersigned confirms that such Note is being transferred
within the United States only or to, or for the account or benefit of, U.S.
persons only:
[ ] To Getty Images, Inc. or a subsidiary thereof;
[ ] To and in compliance with Rule 144A under the Securities Act of
1933, as amended;
[ ] To an Institutional Accredited Investor pursuant to and in
compliance with the Securities Act of 1933, as amended, in a
minimum denomination of $100,000; or
[ ] Pursuant to and in compliance with Rule 144 under the Securities
Act of 1933, as amended;
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Company as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate").
[ ] The transferee is an Affiliate of the Company.
Dated:
-------------------- ------------------------------------
Signature(s)
Signature(s) must be guaranteed by
an "eligible guarantor institution"
meeting the requirements of the Note
registrar, which requirements
include membership or participation
in the Security Transfer Agent
Medallion Program ("STAMP") or such
other "signature guarantee program"
as may be determined by the Note
registrar in addition to, or in
substitution for, STAMP, all in
accordance with the Securities
Exchange Act of 1934, as amended.
-----------------------------------
Signature Guarantee
A-13
<PAGE> 189
NOTICE: The signature of the conversion notice, the option to elect repayment
upon a Fundamental Change or the assignment must correspond with the name as
written upon the face of the Note in every particular without alteration or
enlargement or any change whatever.
A-14
<PAGE> 190
EXHIBIT B
Getty Images, Inc.
701 N 34th Street
Suite 400
Seattle, Washington 98103
The Bank of New York
as Trustee
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Ladies and Gentlemen:
In connection with our proposed purchase of 5% Convertible
Subordinated Notes due 2007 (the "Notes") of Getty Images, Inc., a Delaware
corporation (the "Company") we confirm that:
(i) we are an "accredited investor" within the meaning of Rule
501(a)(1), (2) or (3) under the Securities Act of 1933, as amended (the
"Securities Act"), or an entity in which all of the equity owners are accredited
investors within the meaning of Rule 501(a)(1), (2) or (3) under the Securities
Act (an "Institutional Accredited Investor");
(ii) (A) any purchase of Notes by us will be for our own account
or for the account of one or more other Institutional Accredited Investors or as
fiduciary for the account of one or more trusts, each of which is an "accredited
investor" within the meaning of Rule 501(a)(7) under the Securities Act and for
each of which we exercise sole investment discretion or (B) we are a "bank,"
within the meaning of Section 3(a)(2) of the Securities Act, or a "savings and
loan association" or other institution described in Section 3(a)(5)(A) of the
Securities Act that is acquiring Notes as fiduciary for the account of one or
more institutions for which we exercise sole investment discretion;
(iii) the event that we purchase any Notes, we will acquire Notes
having a minimum purchase price of not less than $100,000 for our own account or
for any separate account for which we are acting;
(iv) we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks of
purchasing Notes; and
(v) we are not acquiring Notes with a view to distribution
thereof or with any present intention of offering or selling Notes or the Common
Stock of the Company issuable upon conversion thereof, except as permitted
below; provided that the disposition of our property and property of any
accounts for which we are acting as fiduciary shall remain at all times within
our control.
<PAGE> 191
We understand that the Notes are being offered in a transaction
not involving any public offering within the United States within the meaning of
the Securities Act and that the Notes and the Common Stock of the Company
issuable upon conversion thereof have not been registered under the Securities
Act, and we agree, on our own behalf and on behalf of each account for which we
acquire any Notes, that if in the future we decide to resell or otherwise
transfer such Notes or the Common Stock of the Company issuable upon conversion
thereof, such Notes or Common Stock of the Company may be resold or otherwise
transferred only (i) to the Company or any subsidiary thereof, (ii) to a person
who is a "qualified institutional buyer" (as defined in Rule 144A under the
Securities Act) in a transaction meeting the requirements of Rule 144A, (iii) to
an Institutional Accredited Investor that, prior to such transfer, furnishes to
the Trustee for the Notes (or in the case of Common Stock of the Company, the
transfer agent therefor) a signed letter containing certain representations and
agreements relating to the restrictions on transfer of such securities (the form
of which letter can be obtained from the Trustee or the transfer agent, as the
case may be), (iv) pursuant to the exemption from registration provided by Rule
144 under the Securities Act (if applicable), or (v) pursuant to a registration
statement that has been declared effective under the Securities Act (and which
continues to be effective at the time of such transfer), and in each case, in
accordance with any applicable securities law of any state of the United States
and in accordance with the legends set forth on the Notes or the Common Stock of
the Company issuable upon conversion thereof. We further agree to provide any
person purchasing any of the Notes or the Common Stock of the Company issuable
upon conversion thereof (other than pursuant to clause (iv) or (v) above) from
us a notice advising such purchaser that resales of such securities are
restricted as stated herein. We understand that the Trustee and transfer agent
for the Notes and the Common Stock of the Company will not be required to accept
for registration of transfer any Notes or any Common Stock of the Company issued
upon conversion of the Notes, except upon presentation of evidence satisfactory
to the Company that the foregoing restrictions on transfer have been complied
with. We further understand that any Notes and any Common Stock of the Company
issued upon conversion of the Notes will be in the form of definitive physical
certificates and that such certificates will bear a legend reflecting the
substance of this paragraph other than certificates transferred pursuant to (iv)
or (v) above.
The Company and the Trustee and their respective counsel are
entitled to rely upon this letter and are irrevocably authorized to produce this
letter or a copy hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK.
(Name of Purchaser)
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address:
---------------------------------
-----------------------------------------
B-2
<PAGE> 192
provisions of the Tenth Schedule hereto and furthermore the Tenant
shall in the event that the Landlord grants consent to underlet the
whole of the demised premises at all times comply with such provisions
contained in the Tenth Schedule hereto
3:10:3 Not without the Landlord's prior written consent (which shall not be
unreasonably withheld or delayed) to assign charge or part with
possession of the demised premises as a whole
3:10:4 Upon every assignment of the whole of the demised premises if so
required by the Landlord to procure that the intending assignee shall
join in the Licence to Assign to give a direct covenant to the Landlord
to pay the Rent the Service Charge the Insurance Rent the Advance
Service Charge the Telephone Charge and the Private Charge and perform
and observe the covenants contained in this Lease and if such intending
assignee shall be a limited liability company then upon the Landlord's
reasonable demand in that behalf at least two (or more if the Landlord
reasonably so requires) of such company's directors of satisfactory
standing shall join in such deed as sureties for such company in order
jointly and severally to covenant with the Landlord as sureties that at
all times during the Term (or any extension thereof by way of a
continuation thereof pursuant to notice served under or by virtue of
the provisions of the Landlord and Tenant Act 1954) the Rent the
Service Charge the Insurance Rent the Advance Service Charge the
Telephone Charge and the Private Charge and all other sums and payments
herein or therein covenanted to be paid by the Tenant shall be paid at
the respective times and in manner herein or therein appointed and that
all covenants on the part of the
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<PAGE> 193
Tenant herein or therein contained shall be duly performed and
observed and that in case of default in such payment of the Rent the
Service Charge the Insurance Rent the Advance Service Charge the
Telephone Charge the Private Charge or other moneys or performance or
observance of covenants as aforesaid as well after as before any
disclaimer the sureties will pay and make good to the Landlord on
demand all loss damage costs and expenses thereby arising or incurred
by the Landlord and such covenant shall further provide that:-
(a) no neglect or forbearance of the Landlord in endeavouring to
obtain payment of the Rent the Service Charge the Insurance Rent the
Advance Service Charge the Telephone Charge or the Private Charge
hereby reserved or other moneys when the same become due or delay in
taking steps to enforce performance or observance of the covenants on
the Tenant's part herein or therein contained
(b) nor any refusal by the Landlord to accept the Rent the Service
Charge the Insurance Rent the Advance Service Charge the Telephone
Charge or the Private Charge tendered by or on behalf of the Tenant
during a period in which the Landlord is entitled or would after
service of a notice under Section 146 of the Law of Property Act 1925
be entitled to re-enter the demised premises
(c) nor any time which may be given by the Landlord to the Tenant
(d) nor any variation by agreement between the Landlord and the
Tenant of the terms of this Lease or any extension thereof where such
variation is immaterial and not prejudicial to the sureties
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<PAGE> 194
(e) nor any other act or thing whereby but for this provision the
sureties would have been released
shall release or exonerate or in any way lessen or affect the
liability of the sureties AND such deed shall further provide for the
sureties jointly and severally to covenant with the Landlord that in
the event of the intending assignee during the Term (or any extension
thereof pursuant to notice served under the provisions of the Landlord
and Tenant Act 1954) having a receiving order made against the
intending assignee or entering into liquidation and the receiver or
liquidator disclaiming this Lease or extension thereof the sureties
will accept a new lease of the demised premises for a term equal in
duration to the residue remaining unexpired of the Term or of the term
of the extension thereof at the time of the grant of such lease to the
sureties such lease to contain the like Landlord's and the Tenant's
covenants respectively and the proviso for re-entry as are contained
in this Lease PROVIDED ALWAYS that the Landlord within the period of
six (6) months after such disclaimer serves upon the sureties a notice
in writing so to do AND in such case the sureties shall pay the
Landlord's reasonable legal and surveyors' costs and fees and
disbursements necessarily incurred on the grant of such lease or
underlease and execute and deliver to the Landlord a counterpart
thereof
3:10:5 Notwithstanding anything herein contained and subject to and without
prejudice to the express provisions of Clause 3:10 hereof hereinbefore
contained the Tenant shall not create or permit the creation of any
interest derived out of the Term howsoever remote or inferior upon the
payment of a fine or premium or at a rent less than the Rent or
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<PAGE> 195
the full market rent (obtainable without taking a fine or premium) of
the demised premises (whichever shall be the greater) or whereunder
any rent is payable more than one quarter in advance or whereby the
rent is not subject to review on the Review Dates specified in Clause
1 of the Fourth Schedule hereto (such review to be in identical terms
to the provisions of the Fourth Schedule hereto) and shall not create
or permit the creation of any such derivative interest as aforesaid
save by instrument in writing
3:10:6 Within twenty-eight days of any permitted assignment charge or
underletting of the whole of the demised premises or any transmission
of this Lease by reason of a death or otherwise affecting the demised
premises or any part thereof the Tenant shall submit two certified
copies of such assignment charge or counterpart underlease or other
document evidencing or effecting the same (as the case may be) to the
Landlord's Solicitors (for retention by the Landlord and the Superior
Landlord respectively) and shall pay to such Solicitors their
reasonable fees (not being less than L30.00 (Plus VAT)) for the
registration thereof together with the reasonable registration fees
payable to the Superior Landlord (or its Managing Agents) and as
prescribed or referred to in the Superior Leases
3:11:1 Not to make any alterations or additions whatsoever to the demised
premises externally or internally except that the Tenant may with the
Landlord's and the Superior Landlord's prior written consent (which
shall not be unreasonably withheld or delayed) carry out internal
non-structural alterations which do not result in a material increase
in the net lettable area of the demised premises
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<PAGE> 196
3:11:2 Without prejudice to the generality of Clause 3:11:1 hereof not to alter
amend or add to the electrical circuits wiring and fittings within the
demised premises or solely serving the demised premises without the
Landlord's prior written consent which shall not be unreasonably
withheld or delayed Provided that the Landlord may as a condition of
such consent require the Tenant to produce to the Landlord following
completion of any such works a certificate signed by a competent
electrician that any such works have been carried out in accordance with
and the electrical installations at the demised premises have been
inspected and tested (following completion of such works) in accordance
with the current requirements regulations and conditions of the
Electricity Supply Authority and have been found to be satisfactory
3:11:3 Not to merge the demised premises with any adjoining suites within the
Building
3:12 Not to overload the floors or structures of the demised premises or the
Building or permit or suffer the same to be used in any manner which
will cause undue strain or interfere therewith and not to install or
permit to be installed any machinery on the demised premises which shall
be unduly noisy or cause dangerous vibrations or to use or permit or
suffer to be used on the demised premises or any part thereof in such
manner as to subject the same to any strain beyond that which it is
designed to bear
3:13 Not to place or display outside the demised premises or inside the
demised premises so as to be visible from the outside any poster
placard notice advertisement name or sign other than such as shall
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<PAGE> 197
be approved in writing by the Landlord (such approval not to be
unreasonably withheld or delayed) giving the name of the Tenant and
nature of the Tenant's business within the locational signboard in the
entrance lobby to the Building
3:14 Not to do anything upon the demised premises which is or may in the
opinion of the landlord become a nuisance damage or annoyance to the
Landlord or to the tenants or occupiers of the Building or any nearby
premises
3:15:1 Not to use the whole or any part of the demised premises
3:15:1:1 For any illegal or immoral purposes
3:15:1:2 For any dangerous noxious noisy noisome or offensive trade business
occupation or manufacture
3:15:1:3 For any social business functions within the Permitted Hours or any
social functions unconnected with the Tenant's Business at any time
3:15:1:4 For any purpose other than the Permitted Use
3:15:1:5 otherwise than during the Permitted Hours
3:15:2 Provided Always and the Tenant hereby acknowledges and admits that
notwithstanding the foregoing provisions as to use of the demised
premises the Landlord does not thereby or in any other way give or
make nor has given or made at any other time any representation or
warranty that any such use is or will be permitted within the
provisions of the
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EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
GETTY IMAGES, INC.
AS ISSUER,
AND
THE INITIAL PURCHASERS
DATED AS OF MARCH 13, 2000
<PAGE> 199
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into as of March 13, 2000 by and among Getty Images, Inc., a Delaware
corporation (the "COMPANY"), and Morgan Stanley & Co. Incorporated, Deutsche
Bank Securities Inc. and SG Cowen Securities Corporation, as representatives of
the Initial Purchasers (as defined herein) pursuant to the Purchase Agreement,
dated March 6, 2000 (the "PURCHASE AGREEMENT"), among the Company and the
Initial Purchasers. In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company has agreed to provide the registration rights
set forth in this Agreement. The execution of this Agreement is a condition to
the closing under the Purchase Agreement.
The Company agrees with the Initial Purchasers (i) for their
benefit as Initial Purchasers and (ii) for the benefit of the beneficial owners
(including the Initial Purchasers) from time to time of the Notes (as defined
herein) and the beneficial owners from time to time of the Underlying Common
Stock (as defined herein) issued upon conversion of the Notes (each of the
foregoing a "HOLDER" and together the "HOLDERS"), as follows:
SECTION 1. DEFINITIONS. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following terms shall have the
following meanings:
"AFFILIATE" means with respect to any specified person, an
"affiliate," as defined in Rule 144, of such person.
"AMENDMENT EFFECTIVENESS DEADLINE DATE" has the meaning set forth
in Section 2(d) hereof.
"APPLICABLE CONVERSION PRICE" means, as of any date of
determination, the Conversion Price in effect as of such date of determination
or, if no Notes are then outstanding, the Conversion Price that would be in
effect were Notes then outstanding.
"BUSINESS DAY" means each Monday, Tuesday, Wednesday, Thursday
and Friday that is not a day on which banking institutions in New York City are
authorized or obligated by law or executive order to close.
"COMMON STOCK" means the shares of common stock, par value $.01
per share, of the Company and any other shares of common stock as may constitute
"Common Stock" for purposes of the Indenture, including the Underlying Common
Stock.
"CONVERSION PRICE" has the meaning assigned such term in the
Indenture.
"DAMAGES ACCRUAL PERIOD" has the meaning set forth in Section
2(e) hereof.
"DAMAGES PAYMENT DATE" means each interest payment date under the
Indenture in the case of Notes, and each March 15 and September 15 in the case
of the Underlying Common Stock.
"DEFERRAL NOTICE" has the meaning set forth in Section 3(i)
hereof.
"DEFERRAL PERIOD" has the meaning set forth in Section 3(i)
hereof.
<PAGE> 200
"EFFECTIVENESS DEADLINE DATE" has the meaning set forth in
Section 2(a) hereof.
"EFFECTIVENESS PERIOD" means the period commencing on the date
hereof and ending on the date that all Registrable Securities have ceased to be
Registrable Securities.
"EVENT" has the meaning set forth in Section 2(e) hereof.
"EVENT DATE" has the meaning set forth in Section 2(e) hereof.
"EVENT TERMINATION DATE" has the meaning set forth in Section
2(e) hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the SEC promulgated thereunder.
"FILING DEADLINE DATE" has the meaning set forth in Section 2(a)
hereof.
"HOLDER" has the meaning set forth in the second paragraph of
this Agreement.
"INDENTURE" means the Indenture, dated as of March 13, 2000,
between the Company and The Bank of New York, as trustee, pursuant to which the
Notes are being issued.
"INITIAL PURCHASERS" means Morgan Stanley & Co. Incorporated,
Deutsche Bank Securities Inc., SG Cowen Securities Corporation and Hambrecht &
Quist LLC.
"INITIAL SHELF REGISTRATION STATEMENT" has the meaning set forth
in Section 2(a) hereof.
"ISSUE DATE" means the first date of original issuance of the
Notes.
"LIQUIDATED DAMAGES AMOUNT" has the meaning set forth in Section
2(e) hereof.
"LOSSES" has the meaning set forth in Section 6 hereof.
"MATERIAL EVENT" has the meaning set forth in Section 3(i)
hereof.
"NOTES" means the 5% Convertible Subordinated Notes due 2007 of
the Company to be purchased pursuant to the Purchase Agreement.
"NOTICE AND QUESTIONNAIRE" means a written notice delivered to
the Company containing substantially the information called for by the Selling
Securityholder Notice and Questionnaire attached as Annex A to the Offering
Memorandum of the Company issued March 6, 2000 relating to the Notes.
"NOTICE HOLDER" means, on any date, any Holder that has delivered
a Notice and Questionnaire to the Company on or prior to such date.
"PURCHASE AGREEMENT" has the meaning set forth in the preamble
hereof.
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<PAGE> 201
"PROSPECTUS" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any amendment or prospectus
supplement, including post-effective amendments, and all materials incorporated
by reference or explicitly deemed to be incorporated by reference in such
Prospectus.
"RECORD HOLDER" means (i) with respect to any Damages Payment
Date relating to any Notes as to which any such Liquidated Damages Amount has
accrued, the holder of record of such Note on the record date with respect to
the interest payment date under the Indenture on which such Damages Payment Date
shall occur and (ii) with respect to any Damages Payment Date relating to the
Underlying Common Stock as to which any such Liquidated Damages Amount has
accrued, the registered holder of such Underlying Common Stock fifteen (15) days
prior to such Damages Payment Date.
"REGISTRABLE SECURITIES" means the Notes until such Notes have
been converted into or exchanged for the Underlying Common Stock and, at all
times subsequent to any such conversion or exchange, the Underlying Common Stock
and any securities into or for which such Underlying Common Stock has been
converted or exchanged, and any security issued with respect thereto upon any
stock dividend, split or similar event until, in the case of any such security,
(A) the earliest of (i) its effective registration under the Securities Act and
resale in accordance with the Registration Statement covering it, (ii)
expiration of the holding period that would be applicable thereto under Rule
144(k) or (iii) its sale to the public pursuant to Rule 144 (or any similar
provision then in force, but not Rule 144A) under the Securities Act, and (B) as
a result of the event or circumstance described in any of the foregoing clauses
(i) through (iii), the legend with respect to transfer restrictions required
under the Indenture are removed or removable in accordance with the terms of the
Indenture or such legend, as the case may be.
"REGISTRATION EXPENSES" has the meaning set forth in Section 5
hereof.
"REGISTRATION STATEMENT" means any registration statement of the
Company that covers any of the Registrable Securities pursuant to the provisions
of this Agreement including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all materials incorporated by reference or explicitly deemed to be incorporated
by reference in such registration statement.
"RESTRICTED SECURITIES" means "Restricted Securities" as defined
in Rule 144.
"RULE 144" means Rule 144 promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
"RULE 144A" means Rule 144A promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the SEC thereunder.
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"SHELF REGISTRATION STATEMENT" has the meaning set forth in
Section 2(a) hereof.
"SPECIAL COUNSEL" means Latham & Watkins or such other successor
counsel as shall be specified by the Holders of a majority of the Registrable
Securities, but which may, with the written consent of the Initial Purchasers
(which shall not be unreasonably withheld), be another nationally recognized law
firm experienced in securities law matters designated by the Company, the
reasonable fees and expenses of which will be paid by the Company pursuant to
Section 5 hereof.
"SUBSEQUENT SHELF REGISTRATION STATEMENT" has the meaning set
forth in Section 2(b) hereof.
"TIA" means the Trust Indenture Act of 1939, as amended.
"TRUSTEE" means The Bank of New York, the Trustee under the
Indenture.
"UNDERLYING COMMON STOCK" means the Common Stock into which the
Notes are convertible or issued upon any such conversion.
SECTION 2. SHELF REGISTRATION. (a) The Company shall use its best
efforts to prepare and file or cause to be prepared and filed with the SEC, as
soon as practicable but in any event by the date (the "FILING DEADLINE DATE")
ninety (90) days after the Issue Date, a Registration Statement for an offering
to be made on a delayed or continuous basis pursuant to Rule 415 of the
Securities Act (a "SHELF REGISTRATION STATEMENT") registering the resale from
time to time by Holders thereof of all of the Registrable Securities (the
"INITIAL SHELF REGISTRATION STATEMENT"). The Initial Shelf Registration
Statement shall be on Form S-3 or another appropriate form permitting
registration of such Registrable Securities for resale by such Holders in
accordance with the methods of distribution elected by the Holders and set forth
in the Initial Shelf Registration Statement. The Company shall use its
reasonable efforts to cause the Initial Shelf Registration Statement to be
declared effective under the Securities Act as promptly as practicable but in
any event by the date (the "EFFECTIVENESS DEADLINE DATE") that is one hundred
eighty (180) days after the Issue Date, and to keep the Initial Shelf
Registration Statement (or any Subsequent Shelf Registration Statement)
continuously effective under the Securities Act until the expiration of the
Effectiveness Period. At the time the Initial Shelf Registration Statement is
declared effective, each Holder that became a Notice Holder on or prior to the
date ten (10) Business Days prior to such time of effectiveness shall be named
as a selling securityholder in the Initial Shelf Registration Statement and the
related Prospectus in such a manner as to permit such Holder to deliver such
Prospectus to purchasers of Registrable Securities in accordance with applicable
law. None of the Company's security holders (other than the Holders of
Registrable Securities) shall have the right to include any of the Company's
securities in the Shelf Registration Statement.
(b) If the Initial Shelf Registration Statement or any
Subsequent Shelf Registration Statement ceases to be effective for any reason at
any time during the Effectiveness Period (other than because all Registrable
Securities registered thereunder shall have been resold pursuant thereto or
shall have otherwise ceased to be Registrable Securities), the Company shall use
its reasonable efforts to obtain the prompt withdrawal of any order suspending
the effectiveness thereof, and in any event shall within thirty (30) days of
such cessation of effectiveness amend the Shelf Registration Statement in a
manner reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional Shelf
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<PAGE> 203
Registration Statement covering all of the securities that as of the date of
such filing are Registrable Securities (a "SUBSEQUENT SHELF REGISTRATION
STATEMENT"). If a Subsequent Shelf Registration Statement is filed, the Company
shall use its reasonable efforts to cause the Subsequent Shelf Registration
Statement to become effective as promptly as practicable after such filing and
to keep such Registration Statement (or subsequent Shelf Registration Statement)
continuously effective until the end of the Effectiveness Period.
(c) The Company shall supplement and amend the Shelf Registration
Statement if required by the rules, regulations or instructions applicable to
the registration form used by the Company for such Shelf Registration Statement,
if required by the Securities Act or as reasonably requested by the Initial
Purchasers or by the Trustee on behalf of the Holders of the Registrable
Securities covered by such Shelf Registration Statement.
(d) Each Holder of Registrable Securities agrees that if such
Holder wishes to sell Registrable Securities pursuant to a Shelf Registration
Statement and related Prospectus, it will do so only in accordance with this
Section 2(d) and Section 3(i). Each Holder of Registrable Securities wishing to
sell Registrable Securities pursuant to a Shelf Registration Statement and
related Prospectus agrees to deliver a Notice and Questionnaire to the Company
at least three (3) Business Days prior to any intended distribution of
Registrable Securities under the Shelf Registration Statement. From and after
the date the Initial Shelf Registration Statement is declared effective, the
Company shall, as promptly as practicable after the date a Notice and
Questionnaire is delivered, and in any event upon the later of (x) five (5)
Business Days after such date or (y) five (5) Business Days after the expiration
of any Deferral Period in effect when the Notice and Questionnaire is delivered
or put into effect within five (5) Business Days of such delivery date, (i) if
required by applicable law, file with the SEC a post-effective amendment to the
Shelf Registration Statement or prepare and, if required by applicable law, file
a supplement to the related Prospectus or a supplement or amendment to any
document incorporated therein by reference or file any other required document
so that the Holder delivering such Notice and Questionnaire is named as a
selling securityholder in the Shelf Registration Statement and the related
Prospectus in such a manner as to permit such Holder to deliver such Prospectus
to purchasers of the Registrable Securities in accordance with applicable law
and, if the Company shall file a post-effective amendment to the Shelf
Registration Statement, use its reasonable efforts to cause such post-effective
amendment to be declared effective under the Securities Act as promptly as
practicable, but in any event by the date (the "AMENDMENT EFFECTIVENESS DEADLINE
DATE") that is forty-five (45) days after the date such post-effective amendment
is required by this clause to be filed; (ii) provide such Holder copies of any
documents filed pursuant to Section 2(d)(i); and (iii) notify such Holder as
promptly as practicable after the effectiveness under the Securities Act of any
post-effective amendment filed pursuant to Section 2(d)(i); PROVIDED, that if
such Notice and Questionnaire is delivered during a Deferral Period, the Company
shall so inform the Holder delivering such Notice and Questionnaire and shall
take the actions set forth in clauses (i), (ii) and (iii) above upon expiration
of the Deferral Period in accordance with Section 3(i). Notwithstanding anything
contained herein to the contrary, (i) the Company shall be under no obligation
to name any Holder that is not a Notice Holder as a selling securityholder in
any Registration Statement or related Prospectus and (ii) the Amendment
Effectiveness Deadline Date shall be extended by up to ten (10) Business Days
from the expiration of a Deferral Period (and the Company shall incur no
obligation to pay Liquidated Damages during such extension) if such Deferral
Period shall be in effect on the Amendment Effectiveness Deadline Date.
(e) The parties hereto agree that the Holders of Registrable
Securities will suffer damages, and that it would not be feasible to ascertain
the extent of such damages with
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precision, if (i) the Initial Shelf Registration Statement has not been filed on
or prior to the Filing Deadline Date, (ii) the Initial Shelf Registration
Statement has not been declared effective under the Securities Act on or prior
to the Effectiveness Deadline Date, (iii) the Company has failed to perform its
obligations set forth in Section 2(d) within the time period required therein,
(iv) the aggregate duration of Deferral Periods in any period exceeds the number
of days permitted in respect of such period pursuant to Section 3(i) hereof or
(v) the number of Deferral Periods in any period exceeds the number permitted in
respect of such period pursuant to Section 3(i) hereof (each of the events of a
type described in any of the foregoing clauses (i) through (v) are individually
referred to herein as an "EVENT," and the Filing Deadline Date in the case of
clause (i), the Effectiveness Deadline Date in the case of clause (ii), the date
by which the Company is required to perform its obligations set forth in Section
2(d) in the case of clause (iii) (including the filing of any post-effective
amendment prior to the Amendment Effectiveness Deadline Date), the date on which
the aggregate duration of Deferral Periods in any period exceeds the number of
days permitted by Section 3(i) hereof in the case of clause (iv), and the date
of the commencement of a Deferral Period that causes the limit on the number of
Deferral Periods in any period under Section 3(i) hereof to be exceeded in the
case of clause (v), being referred to herein as an "EVENT DATE"). Events shall
be deemed to continue until the "EVENT TERMINATION DATE," which shall be the
following dates with respect to the respective types of Events: the date the
Initial Shelf Registration Statement is filed in the case of an Event of the
type described in clause (i), the date the Initial Shelf Registration Statement
is declared effective under the Securities Act in the case of an Event of the
type described in clause (ii), the date the Company performs its obligations set
forth in Section 2(d) in the case of an Event of the type described in clause
(iii) (including, without limitation, the date the relevant post-effective
amendment to the Shelf Registration Statement is declared effective under the
Securities Act), termination of the Deferral Period that caused the limit on the
aggregate duration of Deferral Periods in a period set forth in Section 3(i) to
be exceeded in the case of the commencement of an Event of the type described in
clause (iv), and termination of the Deferral Period the commencement of which
caused the number of Deferral Periods in a period permitted by Section 3(i) to
be exceeded in the case of an Event of the type described in clause (v).
Accordingly, commencing on (and including) any Event Date and
ending on (but excluding) the next date on which there are no Events that have
occurred and are continuing (a "DAMAGES ACCRUAL PERIOD"), the Company agrees to
pay, as liquidated damages and not as a penalty, an amount (the "LIQUIDATED
DAMAGES AMOUNT"), payable on the Damages Payment Dates to Record Holders of
Notes that are Registrable Securities and of shares of Underlying Common Stock
issued upon conversion of Notes that are Registrable Securities, as the case may
be, accruing, for each portion of such Damages Accrual Period beginning on and
including a Damages Payment Date (or, in respect of the first time that the
Liquidated Damages Amount is to be paid to Holders on a Damages Payment Date as
a result of the occurrence of any particular Event, from the Event Date) and
ending on but excluding the first to occur of (A) the date of the end of the
Damages Accrual Period or (B) the next Damages Payment Date, at a rate per annum
equal to one-half of one percent (0.5%) of the aggregate principal amount of
such Notes or, in the case of Notes that have been converted into or exchanged
for Underlying Common Stock, at a rate per annum equal to one-half of one
percent (0.5%) of the Applicable Conversion Price of such shares of Underlying
Common Stock, as the case may be, in each case determined as of the Business Day
immediately preceding the next Damages Payment Date; PROVIDED, that in the case
of a Damages Accrual Period that is in effect solely as a result of an Event of
the type described in clause (iii) of the immediately preceding paragraph, such
Liquidated Damages Amount shall be paid only to the Notice Holders that caused
the Company to incur the obligations set forth in Section 2(d), the
non-performance of which is the basis of such Event; PROVIDED FURTHER, that any
Liquidated Damages Amount accrued with respect
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<PAGE> 205
to any Note or portion thereof called for redemption on a redemption date or
converted into Underlying Common Stock on a conversion date prior to the Damages
Payment Date, shall, in any such event, be paid instead to the Holder who
submitted such Note or portion thereof for redemption or conversion on the
applicable redemption date or conversion date, as the case may be, on such date
(or promptly as practicable following the conversion date, in the case of
conversion). Notwithstanding the foregoing, no Liquidated Damages Amounts shall
accrue as to any Registrable Security from and after the earlier of (x) the date
such security is no longer a Registrable Security and (y) expiration of the
Effectiveness Period. The rate of accrual of the Liquidated Damages Amount with
respect to any period shall not exceed the rate provided for in this paragraph
notwithstanding the occurrence of multiple concurrent Events. Following the cure
of all Events requiring the payment by the Company of Liquidated Damages Amounts
to the Holders of Registrable Securities pursuant to this Section, the accrual
of Liquidated Damages Amounts will cease (without in any way limiting the effect
of any subsequent Event requiring the payment of Liquidated Damages Amount by
the Company).
The Trustee shall be entitled, on behalf of Holders of Notes or
Underlying Common Stock, to seek any available remedy for the enforcement of
this Agreement, including for the payment of any Liquidated Damages Amount.
Notwithstanding the foregoing, the parties agree that the sole damages payable
for a violation of the terms of this Agreement with respect to which liquidated
damages are expressly provided shall be such liquidated damages. Nothing shall
preclude a Notice Holder or Holder of Registrable Securities from pursuing or
obtaining specific performance or other equitable relief with respect to this
Agreement.
All of the Company's obligations set forth in this Section 2(e)
that are outstanding with respect to any Registrable Security at the time such
security ceases to be a Registrable Security shall survive until such time as
all such obligations with respect to such security have been satisfied in full
(notwithstanding termination of this Agreement pursuant to Section 8(k)).
The parties hereto agree that the liquidated damages provided for
in this Section 2(e) constitute a reasonable estimate of the damages that may be
incurred by Holders of Registrable Securities by reason of the failure of the
Shelf Registration Statement to be filed or declared effective or available for
effecting resales of Registrable Securities in accordance with the provisions
hereof.
SECTION 3. REGISTRATION PROCEDURES. In connection with the
registration obligations of the Company under Section 2 hereof, the Company
shall:
(a) Prepare and file with the SEC a Registration Statement or
Registration Statements on any appropriate form under the Securities Act
available for the sale of the Registrable Securities by the Holders thereof in
accordance with the intended method or methods of distribution thereof, and use
its reasonable efforts to cause each such Registration Statement to become
effective and remain effective as provided herein; PROVIDED, that before filing
any Registration Statement or Prospectus or any amendments or supplements
thereto with the SEC, furnish to the Initial Purchasers and the Special Counsel
copies of all such documents proposed to be filed and use its best efforts to
reflect in each such document when so filed with the SEC such comments as the
Special Counsel reasonably shall propose within four (4) Business Days of the
delivery of such copies to the Initial Purchasers and the Special Counsel.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Registration Statement as may be necessary to
keep such Registration
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Statement continuously effective for the applicable period specified in Section
2(a); cause the related Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) under the Securities Act; and use its best
efforts to comply with the provisions of the Securities Act applicable to it
with respect to the disposition of all securities covered by such Registration
Statement during the Effectiveness Period in accordance with the intended
methods of disposition by the sellers thereof set forth in such Registration
Statement as so amended or such Prospectus as so supplemented.
(c) As promptly as practicable give notice to the Notice Holders,
the Initial Purchasers and the Special Counsel (i) when any Prospectus,
Prospectus supplement, Registration Statement or post-effective amendment to a
Registration Statement has been filed with the SEC and, with respect to a
Registration Statement or any post-effective amendment, when the same has been
declared effective, (ii) of any request, following the effectiveness of the
Initial Shelf Registration Statement under the Securities Act, by the SEC or any
other federal or state governmental authority for amendments or supplements to
any Registration Statement or related Prospectus or for additional information,
(iii) of the issuance by the SEC or any other federal or state governmental
authority of any stop order suspending the effectiveness of any Registration
Statement or the initiation or threatening of any proceedings for that purpose,
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, (v) of the occurrence of (but
not the nature of or details concerning) a Material Event (as defined herein)
and (vi) of the determination by the Company that a post-effective amendment to
a Registration Statement will be filed with the SEC, which notice may, at the
discretion of the Company (or as required pursuant to Section 3 (i)), state that
it constitutes a Deferral Notice, in which event the provisions of Section 3(i)
shall apply.
(d) Use its reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement or the lifting of
any suspension of the qualification (or exemption from qualification) of any of
the Registrable Securities for sale in any jurisdiction in which they have been
qualified for sale, in either case at the earliest possible moment, and provide
prompt notice to each Notice Holder and the Initial Purchasers of the withdrawal
of any such order.
(e) If reasonably requested by the Initial Purchasers or any
Notice Holder, as promptly as practicable incorporate in a Prospectus supplement
or post-effective amendment to a Registration Statement such information as the
Initial Purchasers, the Special Counsel or such Notice Holder shall, on the
basis of a written opinion of nationally-recognized counsel experienced in such
matters, determine to be required to be included therein by applicable law and
make any required filings of such Prospectus supplement or such post-effective
amendment.
(f) As promptly as practicable furnish to each Notice Holder, the
Special Counsel and the Initial Purchasers, without charge, at least one (1)
conformed copy of the Registration Statement and any amendment thereto,
including financial statements but excluding schedules, all documents
incorporated or deemed to be incorporated therein by reference and all exhibits
(unless requested in writing to the Company by such Notice Holder, Special
Counsel, counsel or Initial Purchasers).
(g) During the Effectiveness Period, deliver to each Notice
Holder, the Special Counsel and the Initial Purchasers, in connection with any
sale of Registrable Securities
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pursuant to a Registration Statement, without charge, as many copies of the
Prospectus or Prospectuses relating to such Registrable Securities (including
each preliminary prospectus) and any amendment or supplement thereto as such
Notice Holder may reasonably request; and the Company hereby consents (except
during such periods that a Deferral Notice is outstanding and has not been
revoked) to the use of such Prospectus or each amendment or supplement thereto
by each Notice Holder, in connection with any offering and sale of the
Registrable Securities covered by such Prospectus or any amendment or supplement
thereto in the manner set forth therein.
(h) Prior to any public offering of the Registrable Securities
pursuant to the Shelf Registration Statement, register or qualify or cooperate
with the Notice Holders in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any Notice Holder reasonably requests
in writing (which request may be included in the Notice and Questionnaire);
prior to any public offering of the Registrable Securities pursuant to the Shelf
Registration Statement, keep each such registration or qualification (or
exemption therefrom) effective during the Effectiveness Period in connection
with such Notice Holder's offer and sale of Registrable Securities pursuant to
such registration or qualification (or exemption therefrom) and do any and all
other acts or things reasonably necessary or advisable to enable the disposition
in such jurisdictions of such Registrable Securities in the manner set forth in
the relevant Registration Statement and the related Prospectus; PROVIDED, that
the Company will not be required to (i) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would not otherwise be
required to qualify but for this Agreement or (ii) take any action that would
subject it to general service of process in suits or to taxation in any such
jurisdiction where it is not then so subject.
(i) Upon (A) the issuance by the SEC of a stop order suspending
the effectiveness of the Shelf Registration Statement or the initiation of
proceedings with respect to the Shelf Registration Statement under Section 8(d)
or 8(e) of the Securities Act, (B) the occurrence of any event or the existence
of any fact (a "MATERIAL EVENT") as a result of which any Registration Statement
shall contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any Prospectus shall contain any untrue statement of
a material fact or omit 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, or (C) the occurrence or existence
of any pending corporate development that, in the reasonable discretion of the
Company, makes it appropriate to suspend the availability of the Shelf
Registration Statement and the related Prospectus, (i) in the case of clause (B)
above, subject to the next sentence, as promptly as practicable prepare and
file, if necessary pursuant to applicable law, a post-effective amendment to
such Registration Statement or a supplement to the related Prospectus or any
document incorporated therein by reference or file any other required document
that would be incorporated by reference into such Registration Statement and
Prospectus so that such Registration Statement does not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, and
such Prospectus does not contain any untrue statement of a material fact or omit
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, as thereafter delivered to the purchasers of the
Registrable Securities being sold thereunder, and, in the case of a
post-effective amendment to a Registration Statement, subject to the next
sentence, use its reasonable efforts to cause it to be declared effective as
promptly as practicable, and (ii) give notice to the Notice Holders and the
Special Counsel that the availability of the Shelf Registration
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Statement is suspended (a "DEFERRAL NOTICE") and, upon receipt of any Deferral
Notice, each Notice Holder agrees not to sell any Registrable Securities
pursuant to the Registration Statement until such Notice Holder's receipt of
copies of the supplemented or amended Prospectus provided for in clause (i)
above, or until it is advised in writing by the Company that the Prospectus may
be used, and has received copies of any additional or supplemental filings that
are incorporated or deemed incorporated by reference in such Prospectus. The
Company will use all reasonable efforts to ensure that the use of the Prospectus
may be resumed (x) in the case of clause (A) above, as promptly as practicable,
(y) in the case of clause (B) above, as soon as, in the sole judgment of the
Company, public disclosure of such Material Event would not be prejudicial to or
contrary to the interests of the Company or, if necessary to avoid unreasonable
burden or expense, as soon as practicable thereafter and (z) in the case of
clause (C) above, as soon as, in the discretion of the Company, such suspension
is no longer appropriate. The Company shall be entitled to exercise its right
under this Section 3(i) to suspend the availability of the Shelf Registration
Statement or any Prospectus, without incurring or accruing any obligation to pay
liquidated damages pursuant to Section 2(e), no more than one (1) time in any
three (3) month period or four (4) times in any twelve (12) month period, and
any such period during which the availability of the Registration Statement and
any Prospectus is suspended (the "DEFERRAL PERIOD") shall, without incurring any
obligation to pay liquidated damages pursuant to Section 2(e), not exceed thirty
(30) days; PROVIDED, that in the case of a Material Event relating to an
acquisition or a probable acquisition or financing, recapitalization, business
combination or other similar transaction, the Company may, without incurring any
obligation to pay liquidated damages pursuant to Section 2(e), deliver to Notice
Holders a second notice to the effect set forth above, which shall have the
effect of extending the Deferral Period by up to an additional thirty (30) days,
or such shorter period of time as is specified in such second notice, PROVIDED,
that the aggregate duration of any Deferral Periods shall not, without incurring
any obligation to pay liquidated damages pursuant to Section 2(e), exceed thirty
(30) days in any three (3) month period (or sixty (60) days in any three (3)
month period in the event of a Material Event pursuant to which the Company has
delivered a second notice as required above) or ninety (90) days in any twelve
(12) month period.
(j) If requested in writing by the Notice Holders in connection
with a disposition of Registrable Securities pursuant to a Registration
Statement, make reasonably available for inspection during normal business hours
by a representative for the Notice Holders of such Registrable Securities, and
any broker-dealers, attorneys and accountants retained by such Notice Holders,
all relevant financial and other records and pertinent corporate documents and
properties of the Company and its subsidiaries, and cause the appropriate
officers, directors and employees of the Company and its subsidiaries to make
reasonably available for inspection during normal business hours on reasonable
notice all relevant information reasonably requested by such representative for
the Notice Holders, managing underwriter, or any such broker-dealers, attorneys
or accountants in connection with such disposition, in each case as is customary
for similar due diligence examinations; PROVIDED, HOWEVER, that such persons
shall first agree in writing with the Company that any information that is
reasonably and in good faith designated by the Company in writing as
confidential at the time of delivery of such information shall be kept
confidential by such persons and shall be used solely for the purposes of
exercising rights under this Agreement, unless (i) disclosure of such
information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities, (ii) disclosure of such
information is required by law (including any disclosure requirements pursuant
to federal securities laws in connection with the filing of any Registration
Statement or the use of any Prospectus referred to in this Agreement), (iii)
such information becomes generally available to the public other than as a
result of a disclosure or failure to safeguard by any such person or (iv) such
information becomes available to any such person from a source other than the
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Company and such source is not bound by a confidentiality agreement, and
PROVIDED, that the foregoing inspection and information gathering shall be
coordinated on behalf of all the Notice Holders and the other parties entitled
thereto by the counsel referred to in Section 5, and PROVIDED FURTHER, that the
Company shall not be required to disclose any information subject to the
attorney-client or attorney work product privilege if and to the extent such
disclosure would constitute a waiver of such privilege.
(k) Use all reasonable efforts to comply with all applicable
rules and regulations of the SEC and make generally available to its
securityholders earning statements (which need not be audited) satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 3-month period (or 90 days after the end of any 12-month
period if such period is a fiscal year) commencing on the first day of the first
fiscal quarter of the Company commencing after the effective date of a
Registration Statement, which statements shall cover said periods.
(l) Cooperate with each Notice Holder to facilitate the timely
preparation and delivery of certificates representing Registrable Securities
sold or to be sold pursuant to a Registration Statement, which certificates
shall not bear any restrictive legends, and cause such Registrable Securities to
be in such denominations as are permitted by the Indenture and registered in
such names as such Notice Holder may request in writing at least two (2)
Business Days prior to any sale of such Registrable Securities.
(m) Provide a CUSIP number for all Registrable Securities covered
by each Registration Statement not later than the effective date of such
Registration Statement and provide the Trustee and the transfer agent for the
Common Stock with printed certificates for the Registrable Securities that are
in a form eligible for deposit with The Depository Trust Company.
(n) Cooperate and assist in any filings required to be made with
the National Association of Securities Dealers, Inc.
(o) Upon (i) the filing of the Initial Registration Statement and
(ii) the effectiveness of the Initial Registration Statement, announce the same,
in each case by release to Reuters Economic Services and Bloomberg Business
News.
SECTION 4. HOLDER'S OBLIGATIONS. Each Holder agrees, by
acquisition of the Registrable Securities, that no Holder of Registrable
Securities shall be entitled to sell any of such Registrable Securities pursuant
to a Registration Statement or to receive a Prospectus relating thereto, unless
such Holder has furnished the Company with a Notice and Questionnaire as
required pursuant to Section 2(d) hereof (including the information required to
be included in such Notice and Questionnaire) and the information set forth in
the next sentence. Each Notice Holder agrees promptly to furnish to the Company
all information required to be disclosed in order to make the information
previously furnished to the Company by such Notice Holder not misleading and any
other information regarding such Notice Holder and the distribution of such
Registrable Securities as the Company may from time to time reasonably request.
Any sale of any Registrable Securities by any Holder shall constitute a
representation and warranty by such Holder that the information relating to such
Holder and its plan of distribution is as set forth in the Prospectus delivered
by such Holder in connection with such disposition, that such Prospectus does
not as of the time of such sale contain any untrue statement of a material fact
relating to or provided by such Holder or its plan of distribution and that such
Prospectus does not as of the time of such sale omit to state any material fact
relating to or
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provided by such Holder or its plan of distribution necessary to make the
statements in such Prospectus, in the light of the circumstances under which
they were made, not misleading.
SECTION 5. REGISTRATION EXPENSES. The Company shall bear all fees
and expenses incurred in connection with the performance by the Company of its
obligations under Sections 2 and 3 of this Agreement whether or not any of the
Registration Statements are declared effective. Such fees and expenses shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (x) with respect to filings required to be
made with the National Association of Securities Dealers, Inc. and (y) of
compliance with federal and state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of the Special Counsel in
connection with Blue Sky qualifications of the Registrable Securities under the
laws of such jurisdictions as the Notice Holders of a majority of the
Registrable Securities being sold pursuant to a Registration Statement may
designate), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities in a form eligible for deposit
with The Depository Trust Company, (iii) duplication expenses relating to copies
of any Registration Statement or Prospectus delivered to any Holders hereunder,
(iv) fees and disbursements of counsel for the Company, (v) reasonable fees and
disbursements of the Special Counsel in connection with the Shelf Registration
Statement (provided that the Company shall not be liable for the fees and
expenses of more than one separate firm for all parties participating in any
transaction hereunder), (vi) reasonable fees and disbursements of the Trustee
and its counsel and of the registrar and transfer agent for the Common Stock and
(vii) Securities Act liability insurance obtained by the Company in its sole
discretion. In addition, the Company shall pay the internal expenses of the
Company (including, without limitation, all salaries and expenses of officers
and employees performing legal or accounting duties), the expense of any annual
audit, the fees and expenses incurred in connection with the listing by the
Company of the Registrable Securities on any securities exchange on which
similar securities of the Company are then listed and the fees and expenses of
any person, including special experts, retained by the Company. Notwithstanding
the provisions of this Section 5, each seller of Registrable Securities shall
pay selling expenses and all registration expenses to the extent required by
applicable law.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. The Company shall indemnify
and hold harmless each Notice Holder and each person, if any, who controls any
Notice Holder (within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act) from and against any losses, liabilities,
claims, damages and expenses (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) (collectively, "LOSSES"), arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or based upon 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, PROVIDED,
HOWEVER, that the Company shall not be liable in any such case to the extent
that any such Losses arise out of or are based upon an untrue statement or
alleged untrue statement contained in or omission or alleged omission from any
of such documents in reliance upon and conformity with any of the information
relating to the Holders furnished to the Company in writing by a Holder
expressly for use therein; PROVIDED FURTHER, that the indemnification contained
in this paragraph shall not inure to the benefit of any Holder of Registrable
Securities (or to the benefit of any person controlling such Holder) on account
of any such Losses arising out of or based upon an untrue statement or alleged
untrue statement or
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omission or alleged omission made in any preliminary prospectus provided in each
case the Company has performed its obligations under Section 3(a) hereof if
either (A) (i) such Holder failed to send or deliver a copy of the Prospectus
with or prior to the delivery of written confirmation of the sale by such Holder
to the person asserting the claim from which such Losses arise and (ii) the
Prospectus would have corrected such untrue statement or alleged untrue
statement or such omission or alleged omission, or (B) (x) such untrue statement
or alleged untrue statement, omission or alleged omission is corrected in an
amendment or supplement to the Prospectus and (y) having previously been
furnished by or on behalf of the Company with copies of the Prospectus as so
amended or supplemented, such Holder thereafter fails to deliver such Prospectus
as so amended or supplemented, with or prior to the delivery of written
confirmation of the sale of a Registrable Security to the person asserting the
claim from which such Losses arise.
(b) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES. Each
Holder agrees severally and not jointly to indemnify and hold harmless the
Company and its directors and officers, and each person, if any, who controls
the Company (within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act) or any other Holder, from and against all Losses
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in any Registration Statement or Prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or based upon 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, to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with information furnished to the Company by
such Holder expressly for use in such Registration Statement or Prospectus or
amendment or supplement thereto. In no event shall the liability of any selling
Holder of Registrable Securities hereunder be greater in amount than the dollar
amount of the proceeds received by such Holder upon the sale of the Registrable
Securities pursuant to the Registration Statement giving rise to such
indemnification obligation.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. In case any
proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
either of the two preceding paragraphs, such person (the "INDEMNIFIED PARTY")
shall promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the reasonable
fees and disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all indemnified parties, and that all such fees and
expenses shall be reimbursed as they are incurred. Such separate firm shall be
designated in writing by, in the case of parties indemnified pursuant to Section
6(a), the Holders of a majority (with Holders of Notes deemed to be the Holders,
for purposes of determining such majority, of
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the number of shares of Underlying Common Stock into which such Notes are or
would be convertible or exchangeable as of the date on which such designation is
made) of the Registrable Securities covered by the Registration Statement held
by Holders that are indemnified parties pursuant to Section 6(a) and, in the
case of parties indemnified pursuant to Section 6(b), the Company. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) CONTRIBUTION. To the extent that the indemnification provided
for in this Section 6 is unavailable to an indemnified party under Section 6(a)
or 6(b) hereof in respect of any Losses or is insufficient to hold such
indemnified party harmless, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Losses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party or parties on the one hand and the indemnified party or
parties on the other hand or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the indemnifying party or parties on the one hand and of
the indemnified party or parties on the other hand in connection with the
statements or omissions that resulted in such Losses, as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the initial placement pursuant
to the Purchase Agreement (before deducting expenses) of the Registrable
Securities to which such Losses relate. The relative fault of the Holders on the
one hand and the Company on the other hand 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 Holders or by the Company, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Holders' respective obligations to contribute
pursuant to this paragraph are several in proportion to the respective number of
Registrable Securities they have sold pursuant to a Registration Statement, and
not joint.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this Section 6(d) were determined by pro rata
allocation or by any other method or allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as a result of the Losses
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding this Section 6(d), an
indemnifying party that is a selling Holder of Registrable Securities shall not
be required to contribute any amount in excess of the amount by which the total
price at which the Registrable Securities sold by such indemnifying party and
distributed to the public were offered to the public exceeds the amount of any
damages that such indemnifying party has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
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meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The indemnity, contribution and expense reimbursement
obligations of the parties hereunder shall be in addition to any liability any
indemnified party may otherwise have hereunder, under the Purchase Agreement or
otherwise.
(f) The indemnity and contribution provisions contained in this
Section 6 shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Holder or any person controlling any Holder, or the Company, or the
Company's officers or directors or any person controlling the Company and (iii)
the sale of any Registrable Securities by any Holder.
SECTION 7. INFORMATION REQUIREMENTS. (a) The Company covenants
that, if at any time before the end of the Effectiveness Period the Company is
not subject to the reporting requirements of the Exchange Act, it will cooperate
with any Holder of Registrable Securities and take such further reasonable
action as any Holder of Registrable Securities may reasonably request in writing
(including, without limitation, making such reasonable representations as any
such Holder may reasonably request), all to the extent required from time to
time to enable such Holder to sell Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144 and Rule 144A promulgated under the Securities Act and customarily
taken in connection with sales pursuant to such exemptions. Upon the written
request of any Holder of Registrable Securities, the Company shall deliver to
such Holder a written statement as to whether it has complied with such filing
requirements, unless such a statement has been included in the Company's most
recent report filed pursuant to Section 13 or Section 15(d) of Exchange Act.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Company to register any of its securities (other than the Common
Stock) under any section of the Exchange Act.
(b) The Company shall file the reports required to be filed
by it under the Exchange Act and shall comply with all other requirements set
forth in the instructions to Form S-3 in order to allow the Company to be
eligible to file registration statements on Form S-3.
SECTION 8. MISCELLANEOUS.
(a) NO CONFLICTING AGREEMENTS. The Company is not, as of the date
hereof, a party to, nor shall it, on or after the date of this Agreement, enter
into, any agreement with respect to its securities that conflicts with the
rights granted to the Holders of Registrable Securities in this Agreement. The
Company represents and warrants that the rights granted to the Holders of
Registrable Securities hereunder do not in any way conflict with the rights
granted to the holders of the Company's securities under any other agreements.
(b) AMENDMENTS AND WAIVERS. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company has obtained the written consent of Holders
of a majority of the then outstanding Underlying Common Stock constituting
Registrable Securities (with Holders of Notes deemed to be the Holders, for
purposes of this Section, of the number of outstanding shares of Underlying
Common Stock into which such Notes are or would be convertible or exchangeable
as of the date on which such consent is requested). Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of
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Holders of Registrable Securities whose securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders of Registrable Securities may be given by Holders of at
least a majority of the Registrable Securities being sold by such Holders
pursuant to such Registration Statement; PROVIDED, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence. Each Holder of Registrable
Securities outstanding at the time of any such amendment, modification,
supplement, waiver or consent or thereafter shall be bound by any such
amendment, modification, supplement, waiver or consent effected pursuant to this
Section 8(b), whether or not any notice, writing or marking indicating such
amendment, modification, supplement, waiver or consent appears on the
Registrable Securities or is delivered to such Holder.
(c) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, by telecopier, by
courier guaranteeing overnight delivery or by first-class mail, return receipt
requested, and shall be deemed given (i) when made, if made by hand delivery,
(ii) upon confirmation, if made by telecopier, (iii) one (1) Business Day after
being deposited with such courier, if made by overnight courier or (iv) on the
date indicated on the notice of receipt, if made by first-class mail, to the
parties as follows:
(w) if to a Holder of Registrable Securities, at the most current
address given by such Holder to the Company in a Notice and Questionnaire or any
amendment thereto;
(x) if to the Company, to: Getty Images, Inc.
701 N. 34th Street, Suite 400
Seattle, WA 98103
Attention: Suzanne L. Page
Telecopy No.: (206) 268-1202
and
Weil Gotshal & Manges LLP
2882 Sand Hill Road, Suite 280
Menlo Park, CA 94025
Attention: Richard Millard
Telecopy No.: (650) 854-3713
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(y) if to the Initial
Purchasers, to: Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York
Attention: Equity Capital Markets
Telecopy No.: (212) 761-0538
and
Latham & Watkins
135 Commonwealth Drive
Menlo Park, CA 94025
Attention: Christopher L. Kaufman
Telecopy No.: (650) 463-2600
or to such other address as such person may have furnished to the other persons
identified in this Section 8(c) in writing in accordance herewith.
(d) APPROVAL OF HOLDERS. Whenever the consent or approval of
Holders of a specified percentage of Registrable Securities is required
hereunder, Registrable Securities held by the Company or its affiliates (as such
term is defined in Rule 405 under the Securities Act) (other than the Initial
Purchasers or subsequent Holders of Registrable Securities if such subsequent
Holders are deemed to be such affiliates solely by reason of their holdings of
such Registrable Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
(e) SUCCESSORS AND ASSIGNS. Any person who purchases any
Registrable Securities from the Initial Purchasers shall be deemed, for purposes
of this Agreement, to be an assignee of the Initial Purchasers. This Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties and shall inure to the benefit of and be binding upon each
Holder of any Registrable Securities.
(f) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be original and all of which taken together
shall constitute one and the same agreement.
(g) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
(i) SEVERABILITY. If any term provision, covenant or restriction
of this Agreement is held to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated thereby, and the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction, it being intended that all of the rights and privileges of the
parties shall be enforceable to the fullest extent permitted by law.
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<PAGE> 216
(j) ENTIRE AGREEMENT. This Agreement is intended by the parties
hereto as a final expression of their agreement and is intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein and the registration rights
granted by the Company with respect to the Registrable Securities. Except as
provided in the Purchase Agreement, there are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein,
with respect to the registration rights granted by the Company with respect to
the Registrable Securities. This Agreement supersedes all prior agreements and
undertakings among the parties hereto with respect to such registration rights.
No party hereto shall have any rights, duties or obligations other than those
specifically set forth in this Agreement. In no event will such methods of
distribution take the form of an underwritten offering of the Registrable
Securities without the prior agreement of the Company.
(k) TERMINATION. This Agreement and the obligations of the
parties hereunder shall terminate upon the end of the Effectiveness Period,
except for any liabilities or obligations under Section 4, 5 or 6 hereof and the
obligations to make payments of and provide for liquidated damages under Section
2(e) hereof to the extent such damages accrue prior to the end of the
Effectiveness Period, each of which shall remain in effect in accordance with
its terms.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
GETTY IMAGES, INC.
By:
-----------------------------------------
Name:
Title:
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
DEUTSCHE BANK SECURITIES INC.
SG COWEN SECURITIES CORPORATION
HAMBRECHT & QUIST LLC
By: Morgan Stanley & Co. Incorporated
By:
---------------------------------
Name:
Title:
<PAGE> 218
EXHIBIT 10.4
AMENDMENT TO
EMPLOYMENT AGREEMENT
--------
APRIL 1, 2000
THIS AMENDMENT is made as of April 1, 2000 ("Commencement Date"), and is by and
between Getty Images, Inc. (the "Company") and A.D. "Bud" Albers (the
"Employee").
WHEREAS the Company and the Employee desire to amend the Employment Agreement
dated October 11, 1999 (the "Agreement");
THEREFORE the Company AND the Employee agree to delete Section 3 (a) in its
entirety and replace it as follows:
3. (a) SALARY. The Company shall pay to the Employee an annual salary
(the "Salary") at the initial rate of Two Hundred Fifty Thousand Dollars
($250,000.00), payable to the Employee in accordance with the normal payroll
practices of the Company for its employees as are in effect from time to time.
The amount of the Employee's Salary shall be reviewed annually by the Company on
or about April 1 of each year during the Term beginning in the 2000 calendar
year.
IN WITNESS WHEREOF, Getty Images, Inc. and A.D. "Bud" Albers have caused this
Amendment to be executed as of the Commencement Date.
GETTY IMAGES, INC. A.D. ALBERS
By:
--------------------------------- --------------------------------
Jonathan Klein, CEO A.D. Albers
Date:
--------------------------------- --------------------------------
<PAGE> 219
EXHIBIT 10.5
EMPLOYMENT AGREEMENT
THIS AGREEMENT, dated as of this 3rd day of April, 2000, by and
between GETTY IMAGES, INC., a Delaware corporation (the "Company"), and William
O'Neill, an individual residing at 16B The Mayfair, 1 May Road, Hong Kong (the
"Employee").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, both parties desire that the terms and conditions of the
Employee's employment with the Company be governed by the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. EMPLOYMENT AND DUTIES.
(a) General. The Company hereby employs the Employee, effective
as of the date hereof (the "Effective Date"), and the Employee agrees upon the
terms and conditions herein set forth to serve, effective as of the Effective
Date, as Senior Vice President of Human Resources of the Company and shall
perform all duties customarily appurtenant to such position. In such capacity,
the Employee shall report directly to Jonathan Klein, Chief Executive Officer of
the Company, or to such other person designated by the Board of Directors of the
Company. The Employee's principal place of business shall be Seattle,
Washington.
(b) Services and Duties. For so long as the Employee is employed
by the Company, the Employee shall devote his full business time to the
performance of his duties hereunder; shall faithfully serve the Company; shall
in all respects conform to and comply with the lawful and good faith directions
and instructions given to him by Jonathan Klein, or such other person designated
by the Board of Directors of the Company; and shall use his best efforts to
promote and serve the interests of the Company.
(c) No Other Employment. For so long as the Employee is employed
by the Company, he shall not, directly or indirectly, render services to any
other person or organization for which he receives compensation without the
prior approval of Jonathan Klein, or such other person designated by the Board
of Directors of the Company. No such approval will be required if the Employee
seeks to perform inconsequential services without direct compensation therefor
in connection with the management of personal investments or in connection with
the performance of charitable and civic activities, provided that such
activities do not contravene the provisions of Section 6 hereof.
2. TERM OF EMPLOYMENT. The term of the Employee's employment
under this Agreement (the "Term") shall commence on the Effective Date and
continue until it is
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terminated by either party giving the other at least one month written notice;
provided, however, that in no event may a non-renewal notice be given prior to
March 1, 2001; and provided further, however, that, in any event, the Term shall
not extend beyond the last day of the month in which the Employee attains age
65.
3. COMPENSATION AND OTHER BENEFITS. Subject to the provisions of
this Agreement, the Company shall pay and provide the following compensation and
other benefits to the Employee during the Term as compensation for all services
rendered hereunder and the covenants contained in Section 6 hereof:
(a) Salary. The Company shall pay to the Employee an annual
salary (the "Salary") at the initial rate of $225,000, payable to the Employee
in accordance with the normal payroll practices of the Company for its employees
as are in effect from time to time. The amount of the Employee's Salary shall be
reviewed annually by the Company on or about April 1st of each year during the
Term beginning in the 2001 calendar year.
(b) Annual Bonus. The Employee shall be eligible in 2000 and each
calendar year thereafter that begins during his employment to participate in an
annual incentive bonus program established by the Company, in accordance with
the policies of the Company, its subsidiaries and affiliates (hereinafter,
collectively the "Group") and subject to such terms and conditions as may be
approved annually by the Company. Under the terms of the annual incentive bonus
program, the Employee will be afforded the opportunity to earn up to 30% of his
Salary (the "Bonus") in effect for the applicable calendar year, subject to the
achievement of the performance targets established by the Company for that year,
to be paid on a pro-rata basis in the event that the Employee is employed for
less than a full calendar year (for purposes of determining the 2000 bonus, the
Employee shall be deemed to have commenced employment as of April 1, 2000).
(c) Stock Options. Effective as of the Effective Date, the Company
shall grant the Employee an option (the "Option") to purchase 100,000 shares of
the common stock of the Company pursuant to the terms the Company's 1998 Stock
Option Plan (the "Option Plan"). The per share exercise price of the Option
shall equal the fair market value of a share of Common Stock on the Effective
Date, as determined in accordance with the terms of the Option Plan. The Option
shall vest and become exercisable as to 25% on April 3, 2001; the remainder of
the Option shall vest ratably on the first day of each month over the following
three years. Except as otherwise specified herein, the Option shall be subject
to the terms of the Option Plan and to such other terms and conditions as may be
specified by the Compensation Committee of the Company in the form of a standard
option agreement between the Company and the Employee.
(d) Expenses. The Company shall pay or reimburse the Employee for
all reasonable out-of-pocket expenses incurred by the Employee in connection
with his employment hereunder in accordance with Group Policies. Such expenses
shall be paid upon the periodic submission of invoices and shall be paid
reasonably promptly after the date of such
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invoice. The reimbursement of expenses under this Section 3(d) shall be subject
to the Employee's providing the Company with such documentation of the expenses
as the Company may from time to time reasonably request in accordance with the
policies of the Group.
(d) 401k plan, Health and Fringe Benefits. During the Term, the
Employee shall be eligible to participate in the Company's 401k plan, medical,
disability and life insurance plans applicable to executives of the Company in
accordance with the terms of such plans as in effect from time to time. The
Employee shall also be provided with free parking at the place of employment.
(e) Long-Term Incentive Program. During the Term, the Employee
shall participate in all long-term incentive plans and programs of the Group
that are applicable to its senior executives in accordance with their terms and
in a manner consistent with his position with the Company.
(f) Holidays. In addition to the usual public and bank holidays,
the Employee shall be entitled to twenty days' paid vacation annually, which
shall be taken at such times as are approved by the Company. The Employee shall
be permitted to carry forward any portion of his vacation time for up to one
year and, upon the expiration of such one-year period, the Employee shall be
paid in lieu of such vacation days.
(g) Relocation Expenses. The Company shall pay and/or reimburse
temporary housing expenses and moving expenses as outlined in the attached
relocation agreement.
4. TERMINATION OF EMPLOYMENT. Subject to the notice and other
provisions of this Section 4, the Company shall have the right to terminate the
Employee's employment hereunder, and he shall have the right to resign, at any
time for any reason or for no stated reason.
(a) Termination for Cause; Resignation Without Good Reason. (i)
If, prior to April 1, 2001, the Employee's employment is terminated by the
Company for Cause or if the Employee resigns from his employment hereunder other
than for Good Reason, he shall be entitled to payment of the pro rata portion of
his Salary and accrued Bonus (for purposes of this Agreement, "accrued Bonus"
shall be determined using the number of days in the applicable calendar year
that the Employee was employed by the Company and the applicable performance
criteria under the bonus plan, in each case through the date of termination or
resignation) through and including the date of termination or resignation, as
well as any unreimbursed expenses. Except to the extent required by the terms of
any applicable compensation or benefit plan or program or as otherwise required
by applicable law, the Employee shall have no rights under this Agreement or
otherwise to receive any other compensation or to participate in any other plan,
program or arrangement after such termination or resignation of employment with
respect to the year of such termination or resignation and later years.
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(ii) In addition, the Employee shall be entitled to retain the
then-vested portion of his options to purchase shares of the Company's common
stock until such options expire in accordance with their terms.
(iii) Termination for "Cause" shall mean termination of the
Employee's employment with the Company because of (A) willful, material or
persistently repeated non-performance of the Employee's duties to the Company
(other than by reason of the incapacity of the Employee due to physical or
mental illness) after notice by the Board of such failure and the Employee's
non-performance and continued, willful, material or persistent repeated
non-performance after such notice, (B) the indictment of the Employee for a
felony offense, (C) fraud against the Group or any willful misconduct that
brings the reputation of the Group into serious disrepute or causes the Employee
to cease to be able to perform his duties, (D) any other material breach by the
Employee of any material term of this Agreement, or (E) the Employee is unable
to perform his duties, by reason of disability, for a period of six (6) months
or more.
(iv) Termination of the Employee's employment for Cause shall be
communicated by delivery to the Employee of a written notice from the Company
stating that the Employee has been terminated for Cause, specifying the
particulars thereof and the effective date of such termination. The date of a
resignation by the Employee without Good Reason shall be the date specified in a
written notice of resignation from the Employee to the Company. The Employee
shall provide at least 30 days' advance written notice of resignation without
Good Reason.
(b) Involuntary Termination. (i) If, prior to April 1, 2002, the
Company terminates the Employee's employment for any reason other than Cause or
Employee resigns from his employment hereunder for Good Reason (collectively
hereinafter referred to as an "Involuntary Termination"), the Company shall pay
to the Employee his Salary and accrued Bonus up to and including the date of
such Involuntary Termination, as well as any unreimbursed expenses. In addition,
the Company shall continue to pay to the Employee as severance (the "Severance
Payments") in accordance with the Company's normal payroll practices, his
Salary, at the rate in effect immediately prior to such Involuntary Termination,
through and including April 1, 2002.
(ii) In addition, in the event of the Employee's Involuntary
Termination prior to April 1, 2002, all of the Employee's then-outstanding
options to purchase shares of the Company's common stock shall continue to vest
until April 1, 2002. The Employee shall be entitled to retain the vested portion
of his options as if he had remained an Employee until April 1, 2002.
(iii) Resignation for "Good Reason" shall mean resignation by
Employee because of (A) an adverse and material change in the Employee's duties,
titles or reporting responsibilities, (B) a material breach by the Company of
any term of the Agreement, (C) a
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reduction in the Employee's Salary or bonus opportunity or the failure of the
Company to pay the Employee any material amount of compensation when due, (D)
the assignment to Employee of any material duties that are inconsistent with
those described in Section 1 of this Agreement without the Employee's consent,
or (E) the Company's requirement that Employee perform a substantial portion of
his duties outside the Seattle, Washington metropolitan area, except for travel
in furtherance of the Company's business. The Company shall have 30 business
days from the date of receipt of such notice to effect a cure of the material
breach described therein and, upon cure thereof by the Company to the reasonable
satisfaction of the Employee, such material breach shall no longer constitute
Good Reason for purposes of this Agreement.
(iv) The date of termination of employment without Cause shall be
the date specified in a written notice of termination to the Employee. The date
of resignation for Good Reason shall be the date specified in a written notice
of resignation from the Employee to the Company; provided, however, that no such
written notice shall be effective unless the cure period specified in Section
4(b)(iii) above has expired without the Company having corrected, to the
reasonable satisfaction of the Employee, the event or events subject to cure.
(v) Anything in this Agreement to the contrary notwithstanding,
no amounts shall be payable under this Section 4(b) if the Employee's employment
with the Company ends, for any reason, on or after April 1, 2001.
5. LIMITATION ON PAYMENTS.
Notwithstanding anything herein to the contrary, if any of the
payments made hereunder would constitute a "parachute payment" (as defined in
Section 280G(b)(2) of the Internal Revenue Code of 1986, as amended (the
"Code"), and the net after-tax amount of the parachute payment is less than the
net after-tax amount if the aggregate payments to be made to the Employee were
three times his "base amount" (as defined in Section 280G(b)(3) of the Code),
less $1.00, then the aggregate of the amounts constituting the parachute payment
shall be reduced to an amount that will equal three times the base amount, less
$1.00. The determinations to be made with respect to this Section 5 shall be
made by an independent accounting firm of national standing (other than the
Company's regular auditors). The accounting firm shall be paid by the Company
for its services performed hereunder.
6. PROTECTION OF THE COMPANY'S INTERESTS.
(a) No Competing Employment. For so long as the Employee is
employed by the Company and for one (1) year thereafter (such period being
referred to hereinafter as the "Restricted Period"), the Employee shall not,
without the prior written consent of the Board, directly or indirectly, own an
interest in, manage, operate, join, control, lend money or render financial or
other assistance to or participate in or be connected with, as an officer,
employee, partner, stockholder, consultant or otherwise, any individual,
partnership, firm, corporation or other business organization or entity that
competes with the Group by providing
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any goods or services provided or under development by the Group at the
effective date of the Employee's termination of employment under this Agreement;
provided, however, that this Section 6(a) shall not proscribe the Employee's
ownership, either directly or indirectly, of either less than five percent of
any class of securities which are listed on a national securities exchange or
quoted on the automated quotation system of the National Association of
Securities Dealers, Inc.
(b) No Interference. During the Restricted Period, the Employee
shall not, whether for his own account or for the account of any other
individual, partnership, firm, corporation or other business organization (other
than the Company), intentionally solicit, endeavor to entice away from the Group
or otherwise interfere with the relationship of the Group with, any key person
or team who is employed by or otherwise engaged to perform services for the
Group or any key person or team or entity who is, or was within the then most
recent twelve-month period, a customer, client or supplier of the Group.
(c) Secrecy. The Employee recognizes that the services to be
performed by him hereunder are special, unique and extraordinary in that, by
reason of his employment hereunder, he may acquire confidential information and
trade secrets concerning the operation of the Group, the use or disclosure of
which could cause the Group substantial losses and damages which could not be
readily calculated and for which no remedy at law would be adequate.
Accordingly, the Employee covenants and agrees with the Company that he will not
at any time, except in performance of the Employee's obligations to the Company
hereunder or with the prior written consent of the Board, directly or indirectly
disclose to any person any confidential information that he may learn or has
learned by reason of his association with the Group. The term "confidential
information" means any information not previously disclosed to the public or to
the trade by the Group with respect to the Company's, or any of its affiliates'
or subsidiaries', products, facilities and methods, trade secrets and other
intellectual property, systems, procedures, manuals, confidential reports,
product price lists, customer lists, financial information (including the
revenues, costs or profits associated with any of the Group's products),
business plans, prospects or opportunities.
(d) Exclusive Property. The Employee confirms that all
confidential information is and shall remain the exclusive property of the
Group. All business records, papers and documents kept or made by the Employee
relating to the business of the Group shall be and remain the property of the
Group. Upon the termination of his employment with the Company or upon the
request of the Company at any time, the Employee shall promptly deliver to the
Company, and shall not without the consent of the Board retain copies of, any
written materials not previously made available to the public, or records and
documents made by the Employee or coming into his possession concerning the
business or affairs of the Group; provided, however, that subsequent to any such
termination, the Company shall provide the Employee with copies (the cost of
which shall be borne by the Employee) of any documents which are requested by
the Employee and which the Employee has determined in good faith are (i)
required to establish a defense to a claim that the Employee has not complied
with his duties hereunder or (ii) necessary to the Employee in order to comply
with applicable law.
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(e) Assignment of Developments. All "Developments" (as defined
below) that were or are at any time made, conceived or suggested by Employee,
whether acting alone or in conjunction with others, during Employee's employment
with the Group shall be the sole and absolute property of the Group, free of any
reserved or other rights of any kind on the part of Employee. During Employee's
employment and, if such Developments were made, conceived or suggested by
Employee during his employment with the Group, thereafter, Employee shall
promptly make full disclosure of any such Developments to the Group and, at the
Group's cost and expense, do all acts and things (including, among others, the
execution and delivery under oath of patent and copyright applications and
instruments of assignment) deemed by the Group to be necessary or desirable at
any time in order to effect the full assignment to the Group of Employee's right
and title, if any, to such Developments. For purposes of this Agreement, the
term "Developments" shall mean all data, discoveries, findings, reports,
designs, inventions, improvements, methods, practices, techniques, developments,
programs, concepts, and ideas, whether or not patentable, relating to the
activities of the Group of which Employee is as of the date of this Agreement
aware or of which Employee becomes aware at any time during the Term, excluding
any Development for which no equipment, supplies, facilities or confidential
information of the Group was used and which was developed entirely on Employee's
own time, unless (i) the Development relates directly to the business of the
Group, (ii) the Development relates to actual or demonstrably anticipated
research or development of the Group, or (iii) the Development results from any
work performed by Employee for the Group (the foregoing is agreed to satisfy the
written notice and other requirements of Section 49.44.140 of the Revised Code
of Washington).
(f) Injunctive Relief. Without intending to limit the remedies
available to the Company, the Employee acknowledges that a breach of any of the
covenants contained in this Section 6 may result in material irreparable injury
to the Group for which there is no adequate remedy at law, that it will not be
possible to measure damages for such injuries precisely and that, in the event
of such a breach or threat thereof, the Company shall be entitled to obtain a
temporary restraining order and/or a preliminary or permanent injunction
restraining the Employee from engaging in activities prohibited by this Section
6 or such other relief as may be required to specifically enforce any of the
covenants in this Section 6. Without intending to limit the remedies available
to the Employee, the Employee shall be entitled to seek specific performance of
the Company's obligations under this Agreement.
7. GENERAL PROVISIONS.
(a) Source of Payments. All payments provided under this
Agreement, other than payments made pursuant to a plan which provides otherwise,
shall be paid in cash from the general funds of the Company, and no special or
separate fund shall be established, and no other segregation of assets made, to
assure payment. The Employee shall have no right, title or interest whatever in
or to any investments which the Company may make to aid the Company in meeting
its obligations hereunder. To the extent that any person acquires a right to
receive payments from the Company hereunder, such right shall be no greater than
the right
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of an unsecured creditor of the Company; provided, however, that this provision
shall not be deemed to waive or abrogate any preferential or other rights to
payment accruing to the Employee under applicable bankruptcy laws by virtue of
the Employee's status as an employee of the Company.
(b) No Other Severance Benefits. Except as specifically set forth
in this Agreement, the Employee covenants and agrees that he shall not be
entitled to any other form of severance benefits from the Company, including,
without limitation, benefits otherwise payable under any of the Company's
regular severance policies, in the event his employment hereunder ends for any
reason and, except with respect to obligations of the Company expressly provided
for herein, the Employee unconditionally releases the Company and its
subsidiaries and affiliates, and their respective directors, officers, employees
and stockholders, or any of them, from any and all claims, liabilities or
obligations under this Agreement or under any severance or termination
arrangements of the Company or any of its subsidiaries or affiliates for
compensation or benefits in connection with his employment or the termination
thereof.
(c) Tax Withholding. Payments to the Employee of all compensation
contemplated under this Agreement shall be subject to all applicable tax
withholding.
(d) Notices. Any notice hereunder by either party to the other
shall be given in writing by personal delivery, or certified mail, return
receipt requested, or (if to the Company) by telex or facsimile, in any case
delivered to the applicable address set forth below:
(i) To the Company: Getty Images, Inc.
701 N. 34th , Suite 400
Seattle, WA 98103
(ii) To the Employee: William O'Neill
16B The Mayfair
1 May Road
Hong Kong
or to such other persons or other addresses as either party may specify to the
other in writing.
(e) Representation by the Employee. The Employee represents and
warrants that his entering into this Agreement does not, and that his
performance under this Agreement and consummation of the transactions
contemplated hereby will not, violate the provisions of any agreement or
instrument to which the Employee is a party, or any decree, judgment or order to
which the Employee is subject, and that this Agreement constitutes a valid and
binding obligation of the Employee in accordance with its terms. Breach of this
representation will render all of the Company's obligations under this Agreement
void ab initio.
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(f) Limited Waiver. The waiver by the Company or the Employee of
a violation of any of the provisions of this Agreement, whether express or
implied, shall not operate or be construed as a waiver of any subsequent
violation of any such provision.
(g) Assignment; Assumption of Agreement. No right, benefit or
interest hereunder shall be subject to assignment, encumbrance, charge, pledge,
hypothecation or setoff by the Employee in respect of any claim, debt,
obligation or similar process. The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to assume expressly
and to agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such succession had taken
place.
(h) Amendment; Actions by the Company. This Agreement may not be
amended, modified or canceled except by written agreement of the Employee and
the Company. Any and all determinations, judgments, reviews, verifications,
adjustments, approvals, consents, waivers or other actions of the Company
required or permitted under this Agreement shall be effective only if undertaken
by the Company pursuant to authority granted by a resolution duly adopted by the
Board; provided, however, that by resolution duly adopted in accordance with
this Section 7(h), the Board may delegate its responsibilities hereunder to one
or more of its members other than the Employee.
(i) Severability. If any term or provision hereof is determined
to be invalid or unenforceable in a final court or arbitration proceeding, (i)
the remaining terms and provisions hereof shall be unimpaired and (ii) the
invalid or unenforceable term or provision shall be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision.
(j) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware (determined
without regard to the choice of law provisions thereof).
(k) Entire Agreement. This Agreement sets forth the entire
agreement and understanding of the parties hereto with respect to the matters
covered hereby and supersedes all prior agreements and understandings of the
parties with respect to the subject matter hereof.
(l) Headings. The headings and captions of the sections of this
Agreement are included solely for convenience of reference and shall not control
the meaning or interpretation of any provisions of this Agreement.
(m) Counterparts. This Agreement may be executed by the parties
hereto in counterparts, each of which shall be deemed an original, but both such
counterparts shall together constitute one and the same document.
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<PAGE> 228
(n) Disciplinary and Grievance Procedures. For statutory
purposes, there is no formal disciplinary procedure in relation to the
Employee's employment. The Employee shall be expected to maintain the highest
standards of integrity and behavior. If the Employee has any grievance in
relation to his employment or is not satisfied with any disciplinary procedure
taken in relation to him, he may apply in writing within 14 days of that
decision to the Board, whose decision shall be final. The foregoing shall not be
construed, however, to limit the Employee's remedies at law or otherwise.
IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the day and year first written above.
GETTY IMAGES, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
EMPLOYEE
By:
-------------------------------------
William O'Neill
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<PAGE> 229
3. (g) EXPENSES. The Company shall pay or reimburse the Executive for
all reasonable out-of-pocket expenses incurred by the Executive in connection
with his employment hereunder and expressly agrees that it will reimburse the
Executive for his business class airfare on international flights which are over
five (5) hours in duration taken in connection with Company business. The
Company also agrees that, in the event that the Executive is required to travel
abroad in connection with the performance of his duties hereunder for a period
in excess of two (2) weeks, the Company will reimburse the Executive for the
airfare, hotel and other transportation expenses of his spouse and minor
children so that they may accompany him on such trip. In addition, the Company
shall reimburse the Executive for all fees and costs incurred for services
provided by the Executive's personal tax advisor in connection with his personal
taxes. All of the above listed expenses shall be paid upon the periodic
submission of invoices and shall be paid reasonably promptly after the date of
such invoice. The reimbursement of expenses under this Section 3 (g) shall be
subject to the Executive's providing the Company with such documentation of the
expenses as the Company may from time to time reasonably request in accordance
with the policies of the Group.
3. (j) BENEFITS. During the term, the Company will provide The Executive
with two automobiles of such make and models as the Board deems appropriate and
suitable for his status with the Company for his and his spouse's sole use and
will reimburse the Executive for all costs and expenses incurred by the
Executive in connection with the use of those vehicles, or, at the Executive's
sole discretion, the Company shall pay an equivalent amount of such perquisite
to him as additional compensation. The Company shall install and pay the rental
and unit charges attributable to a dedicated business telephone and/or ISDN line
at his home. During the Term, the Company shall also pay for the Executive's
purchase, line charges, rental and unit charges for his mobile phones. The
Company shall provide the Executive with a fax machine and computer modem and
ISDN line to be installed at the Executive's home and a suitable desktop and
laptop computer, as well as all ancillary equipment and maintenance therefore.
In addition, the Company will pay for the cost of the Executive's member ship in
or subscriptions to the internet service provider of his choice, and such
professional memberships and journals as are appropriate to his duties under
this agreement. In addition, the Company will pay for any healthclub membership
fees that Jonathan and/or his family belong to.
THEREFORE the Company AND the Executive confirm and agree that the three-page
"Appendix A" attached to the Executive's original Employment Agreement dated
June 1, 1999 is a valid and approved section of the Employment Agreement. A copy
of the Appendix A is attached.
IN WITNESS WHEREOF, Getty Images, Inc. and Jonathan D. Klein have caused this
Amendment to be executed as of the Commencement Date.
GETTY IMAGES, INC. JONATHAN D. KLEIN
By:
--------------------------------- --------------------------------
Mark H. Getty Jonathan D. Klein
Executive Chairman Chief Executive Officer
Date:
--------------------------------- --------------------------------
<PAGE> 230
EXHIBIT 10.9
********************************************************************************
LEASE DATED AS OF APRIL 1, 2000
BY AND BETWEEN
THE RECTOR, CHURCH-WARDENS AND VESTRYMEN
OF TRINITY CHURCH IN THE CITY OF NEW YORK, AS LANDLORD
AND
PHOTODISC, INC., AS TENANT
88******************************************************************************
**************************************************
ENTIRE 4TH AND 6TH FLOORS AND PORTION OF 5TH FLOOR
75 VARICK STREET
NEW YORK, NEW YORK
**************************************************
PARISH OF TRINITY CHURCH IN THE CITY OF NEW YORK
REAL ESTATE DEPARTMENT
74 TRINITY PLACE
NEW YORK, NEW YORK 10006-2088
<PAGE> 231
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE ONE TERM; RENT; FREE RENT........................................................................2
ARTICLE TWO USE..........................................................................................3
ARTICLE THREE REPAIRS; NOISE AND VIBRATION...............................................................4
ARTICLE FOUR ALTERATIONS AND FIXTURES....................................................................5
ARTICLE FIVE COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS..........................................8
ARTICLE SIX RULES AND REGULATIONS........................................................................8
ARTICLE SEVEN PLATE GLASS................................................................................9
ARTICLE EIGHT CARE OF SIDEWALKS..........................................................................9
ARTICLE NINE LANDLORD'S ACCESS TO THE PREMISES...........................................................9
ARTICLE TEN ELECTRIC CURRENT; LIVE STEAM................................................................10
ARTICLE ELEVEN CONDEMNATION AND DEMOLITION..............................................................11
ARTICLE TWELVE MECHANIC'S LIENS.........................................................................12
ARTICLE THIRTEEN SUBORDINATION..........................................................................12
ARTICLE FOURTEEN CERTIFICATE OF OCCUPANCY...............................................................14
ARTICLE FIFTEEN VAULTS..................................................................................14
ARTICLE SIXTEEN FIRE AND OTHER CASUALTY.................................................................14
ARTICLE SEVENTEEN CHANGE IN USE OF PREMISES, SUBLETTING AND ASSIGNMENT..................................16
ARTICLE EIGHTEEN WAIVER AND SURRENDER; REMEDIES CUMULATIVE..............................................22
</TABLE>
-ii-
<PAGE> 232
<TABLE>
<CAPTION>
<S> <C>
ARTICLE NINETEEN NO REPRESENTATIONS AS TO PREMISES, CERTIFICATE OF OCCUPANCY AND USE....................23
ARTICLE TWENTY LIMITATION OF LANDLORD'S LIABILITY.......................................................23
ARTICLE TWENTY-ONE INDEMNITY BY TENANT..................................................................24
ARTICLE TWENTY-TWO NOTICES..............................................................................25
ARTICLE TWENTY-THREE INSOLVENCY.........................................................................25
ARTICLE TWENTY-FOUR REMEDIES OF THE LANDLORD ON DEFAULT IN PERFORMANCE BY THE TENANT....................27
ARTICLE TWENTY-FIVE DEFAULT.............................................................................27
ARTICLE TWENTY-SIX REMEDIES AND DAMAGES.................................................................29
ARTICLE TWENTY-SEVEN SURRENDER AT EXPIRATION............................................................30
ARTICLE TWENTY-EIGHT QUIET ENJOYMENT....................................................................31
ARTICLE TWENTY-NINE SECURITY DEPOSIT....................................................................31
ARTICLE THIRTY REAL ESTATE TAX AND OPERATING EXPENSE ESCALATION.........................................33
ARTICLE THIRTY-ONE SERVICES.............................................................................35
ARTICLE THIRTY-TWO INSURANCE............................................................................37
ARTICLE THIRTY-THREE DEFAULT UNDER OTHER LEASES.........................................................38
ARTICLE THIRTY-FOUR WORK TO BE DONE BY LANDLORD.........................................................38
ARTICLE THIRTY-FIVE CONSENT TO JURISDICTION.............................................................38
ARTICLE THIRTY-SIX TENANT LIABILITY.....................................................................38
</TABLE>
-iii-
37
<PAGE> 233
<TABLE>
<CAPTION>
<S> <C>
ARTICLE THIRTY-SEVEN ADJACENT EXCAVATION-SHORING........................................................39
ARTICLE THIRTY-EIGHT FAILURE TO GIVE POSSESSION.........................................................39
ARTICLE THIRTY-NINE BROKER..............................................................................39
ARTICLE FORTY RENT RESTRICTIONS.........................................................................40
ARTICLE FORTY-ONE CERTIFICATES BY TENANT................................................................40
ARTICLE FORTY-TWO RESTRICTIONS ON TENANT'S USE..........................................................40
ARTICLE FORTY-THREE HAZARDOUS MATERIALS.................................................................41
ARTICLE FORTY-FOUR MISCELLANEOUS........................................................................41
ARTICLE FORTY-SIX LANDLORD'S CONTRIBUTION...............................................................43
ARTICLE FORTY-SIX GENERATOR.............................................................................47
SCHEDULE A RULES AND REGULATIONS........................................................................(i)
SCHEDULE B CLEANING SPECIFICATIONS......................................................................(v)
EXHIBIT A - FLOOR PLANS
EXHIBIT B - CERTIFICATE OF OCCUPANCY
EXHIBIT C - WORK LETTER
</TABLE>
<PAGE> 234
THIS LEASE made as of the 1st day of April, 2000 between THE RECTOR,
CHURCH-WARDENS AND VESTRYMEN OF TRINITY CHURCH IN THE CITY OF NEW YORK, a
religious corporation (hereafter referred to as "the Landlord"), having its
offices at 74 Trinity Place, Borough of Manhattan, City, County and State of New
York, and PHOTODISC, INC. (hereafter referred to as "the Tenant"), a corporation
organized under the laws of the state of Washington, having an address at 701
North 34th Street, Suite 400, Seattle, Washington 98103
W I T N E S S E T H :
That the Landlord hereby lets and leases to the Tenant, and the Tenant
hereby takes and hires from the Landlord, the following described spaces in the
building known as 1 Hudson Square, having a street address of 75 Varick Street,
in the Borough of Manhattan, City, County and State of New York (hereafter
referred to as "the building"), with the privilege to the Tenant of using
(subject to such reasonable rules and regulations as the Landlord shall from
time to time prescribe) the necessary entrances and appurtenances to the
premises, reserving to the Landlord all other portions of the building not
herein specifically demised:
<TABLE>
<CAPTION>
Shown By
Cross-Hatching
Unit of Space on Exhibit Referred to as
- -------------- -------------- --------------
<S> <C> <C>
Portion of Basement A-1 the "Basement Space"
Portion of 4th Floor A-2 the "4th Floor Initial Space"
Portion of 4th Floor A-3 the "Europadisk Space"
Portion of 4th Floor A-4 the "Dean Witter Space"
Portion of 5th Floor A-5 the "5th Floor Initial Space"
Portion of 6th Floor A-6 the "6th Floor Initial Space"
Portion of 6th Floor A-7 the "Tri-Don Space"
Portion of 6th Floor A-8 the "Astoria Space"
Portion of 6th Floor A-9 the "Power Color Space"
Portion of 5th Floor A-10 the "Mason Tender Space"
</TABLE>
The Basement Space, 4th Floor Initial Space, the 5th Floor Initial
Space, and the 6th Floor Initial Space are hereinafter collectively referred to
as the "Initial Premises"; all other spaces described above are hereinafter
collectively referred to as "Additional Space"; and all of the units of space
described above are hereinafter referred to the "Premises". At such time as
Tenant occupies the entire 4th Floor or entire 6th Floor, the Premises shall
include that portion of the 4th or 6th Floors, as the case may be, which is
presently a common corridor, so that, with respect to such floor, the Premises
shall be as shown by hatching on Exhibit A-11, which is a typical floor plan.
The several portions of the Premises shall become available at different times.
The Commencement Date and proportionate share for the Initial Premises and each
portion of Additional Space are set forth below. Other than the Initial
Premises, the Commencement Date for each portion of Additional Space is an
estimate and the Commencement Date for each such portion shall be as set forth
in Article One. Subject to paragraph (g) of Article One below, Tenant's right to
occupy the various units of space constituting the Premises, and the obligation
to pay rent, additional rent and other charges with respect to the various units
of space shall commence as of the later of (a) the Commencement Date indicated
below or (b) the date upon which possession is delivered to Tenant.
Unit of Commencement Proportionate
Space Date Share
Initial Premises April 1, 2000 8.64%
Europadisk Space July 1, 2000* 3.56%
Dean Witter Space February 1, 2002 1.14%
Tri-Don Space August 1, 2000* 2.25%
Astoria Space June 1, 2000* 1.38%
Power Color Space July 1, 2000* 1.19%
Mason Tender Space October 1, 2007 1.01%
<PAGE> 235
* Landlord is negotiating with the tenants occupying these units of
space in order to obtain early lease terminations so that Landlord may deliver
the spaces on or before the dates set forth above. Tenant has been advised of
the actual lease expiration dates applicable to each portion of space, and
Tenant acknowledges that Landlord cannot guaranty delivery of such portions of
the Premises by the estimated Commencement Date stated above. As more fully set
forth in Article Thirty-Eight hereof, Landlord shall have no liability to Tenant
if Landlord is unable to deliver one or more of such portions of the Premises to
Tenant by the dates set forth above, Tenant agreeing to accept the risk of such
non-delivery by Landlord. Landlord shall continue to negotiate in good faith
with these tenants to bring the negotiations to a successful conclusion to meet
the estimated Commencement Date.
This letting is upon the following covenants and conditions, each and
every one of which the Tenant covenants and agrees with the Landlord to keep and
perform, and the Tenant agrees that the covenants herein contained on the part
of the Tenant to be performed, shall be deemed conditional limitations, as well
as covenants and conditions.
ARTICLE ONE
TERM; RENT; FREE RENT
(a) The term shall commence (1) with respect to the Initial Premises,
April 1, 2000 (the "Initial Premises Commencement Date"), and (2) with respect
to the other portions of the Premises, upon delivery to Tenant of vacant
possession of such Premises (such delivery dates being referred to hereinafter
as the "_______ Space Commencement Date,"), and shall expire on March 31, 2015
(or until such term shall sooner cease and expire or be terminated as
hereinafter provided) (the "Expiration Date"), at an annual rent ( the "fixed
rent") of :
<TABLE>
<CAPTION>
Unit of Fixed Rent Fixed Rent Fixed Rent
Space 4/1/00-3/31/05 4/1/05-3/31/10 4/1/10-3/31/15
<S> <C> <C> <C>
Initial Premises $2,861,552 $2,944,857 $3,157,285
Europadisk Space $1,218,985 $1,255,427 $1,348,354
Dean Witter Space $ 390,261 $ 401,928 $ 431,679
Tri-Don Space $ 771,123 $ 794,176 $ 852,961
Astoria Space $ 470,909 $ 484,987 $ 520,886
Power Color Space $ 406,217 $ 418,361 $ 449,328
Mason Tender Space $ 346,475 $ 356,833 $ 383,246
Total Fixed Rent $6,465,522 $6,656,569 $7,143,739
</TABLE>
(b) Fixed rent shall be payable in advance on the first day of each
month during the term of this lease at the offices of the Landlord or at such
other place as the Landlord may designate. The Tenant shall pay the fixed rent
without demand therefor and without any set-off, deduction, abatement or offset
whatsoever, except that the Tenant shall pay the first monthly installment of
fixed rent (with respect to the Initial Premises only) upon the execution of
this lease. If the Commencement Date applicable to any portion of the Premises
occurs on a day other than the first day of a calendar month, the fixed rent for
such calendar month shall be pro-rated based on the number of days in the month.
All rent payments shall be paid in lawful money of the United States of America,
which shall be legal tender in payment of any debts and dues, public and
private, at the time of payment by good and sufficient check subject to
collection and drawn on a New York City bank or trust company which is a member
of the New York Clearinghouse Association.
(c) All sums and charges other than fixed rent due and payable by the
Tenant pursuant to this lease, including, without limitation, charges for
electricity (as defined in Article TEN), escalation charges (as defined in
Article THIRTY) and late charges assessed pursuant to this lease are called
"additional rent". All regularly recurring items of additional rent, including,
without limitation, escalation charges which are payable on a monthly basis
pursuant to the provisions of Article
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<PAGE> 236
THIRTY, shall be due and payable together with the fixed rent on the first day
of each month during the term of this lease. All other items of additional rent
shall be paid to the Landlord within fifteen days after delivery of a notice or
demand therefor, unless otherwise set forth herein. Fixed rent and additional
rent are collectively referred to herein as "rent". The failure of the Tenant to
make any payment of additional rent shall entitle the Landlord to exercise all
of the rights and remedies provided herein for the non-payment of fixed rent.
(d) Intentionally omitted.
(e) If any installment of rent shall not be paid within ten (10) days
following the date on which the same shall be due and payable pursuant to this
lease then, in addition to, and without waiving or releasing any other rights
and remedies of the Landlord, the Tenant shall pay to the Landlord a late charge
of one and one-half (1 1/2%) percent per month computed (on the basis of a
30-day month) from the date on which each such installment became due and
payable to the date of payment of the installment on the amount of each such
installment or installments, as liquidated damages for the Tenant's failure to
make prompt payment, and the same may be collected on demand.
(f) In the event any check issued by the Tenant is dishonored for any
reason, the Tenant shall submit a replacement check within three (3 ) business
days following notice from the Landlord that the check was dishonored. Tenant's
failure to submit a replacement check within such time period shall constitute
an Event of Default under this lease.
(g) Notwithstanding the foregoing, provided no Event of Default shall
have occurred which shall remain uncured, the Tenant shall not be required to
pay fixed rent with respect to a particular portion of the Premises (i) subject
to the last sentence of this paragraph (g), for the period beginning on the
Commencement Date for that portion of the Premises and ending three months after
the completion of the Landlord's Initial Work applicable to such Premises (as
described in the Work Sheet attached hereto and made a part hereof) and (ii) for
the seventeenth, eighteenth, nineteenth and twentieth calendar months following
completion of such Landlord's Initial Work; provided, however, that the Tenant
shall during such abatement period pay all other amounts due under this lease
including, but not limited to, any additional rent payable pursuant to Article
THIRTY of this lease and any service charges for electric current, and overtime
elevator, air-conditioning or heat services. Upon the occurrence of an Event of
Default, the fixed rent at the monthly rate set forth in this lease shall be
payable during the period in which the Tenant would otherwise be entitled to the
use of the Premises free of fixed rent. Any such rent payment shall be paid
within five days after demand therefore and shall constitute additional rent
under this lease. After the date on which any existing tenant shall surrender
its portion of the Premises and prior to the Commencement Date applicable to
that portion of the Premises, Landlord shall afford to Tenant access to such
portion of the Premises for the purpose of taking measurements and planning its
initial alterations. Notwithstanding the first sentence of this paragraph (g),
with respect to the Initial Premises, the free rent period shall be one full
month following the completion of Landlord's Initial Work with respect to the
Initial Premises, and for the second month following the completion of
Landlord's Initial Work, Tenant shall pay the sum of $11,537.33.
ARTICLE TWO
USE
(a) The Tenant shall use the Premises (other than the Basement Space)
only for executive and general offices in connection with Tenant's business of
providing high-quality photography, moving images, art prints and related
products, except that if all or a portion of the Premises (other than the
Basement Space) shall be sublet in accordance with the terms of this lease, or
if this lease shall be assigned in accordance with the terms of this lease, then
the use shall be for executive and general offices in connection with the
business of the permitted subtenant or permitted assignee. The Basement Space
shall be used solely for "dead" storage purposes.
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<PAGE> 237
(b) If any portion of the Premises consists of basement space, such
portion shall be used only for storage purposes.
(c) No auction sale and no other sale of all or substantially all of
the Tenant's property, stock, fixtures and machinery, except a sale made in
connection with an assignment of this lease to another tenant for which the
Landlord's consent shall have been obtained, shall be held at the Premises
unless the provisions of Article THIRTY-ONE (g) of this lease shall have been
complied with.
(d) Tenant shall take reasonable steps to limit the number of
messengers having access to the Premises, including, but not limited to,
installing a messenger center on the Canal Street side of the ground floor of
the building in a location to be designated by the Landlord. Construction of the
messenger center shall be subject to the provisions of Article Four hereof.
ARTICLE THREE
REPAIRS; NOISE AND VIBRATION
(a) The Tenant shall take good care of the Premises and the fixtures,
appurtenances, equipment and facilities therein and shall make, as and when
needed, all repairs in and about the Premises required to keep them in good
order and condition; such repairs to be equal in quality to the original work
provided that the Tenant shall not be obligated for structural or exterior
repairs to the building or for repairs to the systems and facilities of the
building for the use or service of tenants generally, except where structural or
exterior repairs or repairs to such systems and facilities are made necessary by
reason of one or more of the occurrences described below in clauses (i) through
(iv) of this Article THREE (a). All repairs for which the Tenant is responsible
pursuant to this Article shall be made by a contractor reasonably approved by
the Landlord. Should the Tenant fail to repair any condition in or about the
Premises or the fixtures, appurtenances, equipment and facilities therein which
is of such a nature that its neglect would result in damage or danger to the
building, its fixtures, appurtenances, facilities and equipment, or to its
occupants (of which Landlord's judgment, reasonably exercised, shall be
conclusive) or, in the case of repairs of any other nature, should the Tenant
have failed to make the required repairs or to have begun in good faith, the
work necessary to make them within five business days after notice from the
Landlord of the condition requiring repair, the Landlord may, in either such
case, immediately enter the Premises and make the required repairs at the
expense of the Tenant. The Landlord may make, at the expense of the Tenant, any
repairs to the building or to its fixtures, appurtenances, facilities or
equipment, whether of a structural or any other nature, which are required by
reason of damage or injury due (i) to the negligence or willful misconduct of
the Tenant or its employees, agents, licensees or visitors; (ii) to the moving
into or out of the building, of property being delivered to the Tenant or taken
from the Premises by or on behalf of the Tenant; (iii) to the installation,
repair or removal, use or operation of the property of the Tenant in the
Premises; or (iv) to the faulty operation of any machinery, equipment, or
facility installed in the Premises by or for the Tenant. The Tenant will pay the
cost of any repairs made by the Landlord pursuant to this paragraph within
fifteen days after presentation of bills therefor, or the Landlord may, at its
option, add such amounts to any installment or installments of rent due under
this lease and collect the same as additional rent. The liability of the Tenant
under this Article THREE shall survive the expiration or other termination of
this lease for a period of one year.
(b) Except to the extent hereinabove set forth, and subject to the
provisions of Article SIXTEEN, the Landlord shall maintain in working order and
repair the exterior and the structural portions of the building, including the
structural portions of the Premises, and the public portions of the building
interior and the building plumbing, electrical, heating, fire protection, life
safety, sprinkler and ventilating systems, (excluding all ductwork, diffusers,
thermostat controls and any other part of the ventilating system located outside
of the machine room, if any, on the floor) serving the Premises. The Tenant
shall give prompt notice of any defective condition in the Premises for which
the Landlord may be responsible hereunder. There shall be no allowance to the
Tenant for diminution in rental value and no liability on the part of the
Landlord by reason of inconvenience, annoyance or injury to business arising
from the Landlord or others making repairs, alterations, additions or
improvements in or to any portion of the building or the Premises or in and to
the
4
<PAGE> 238
fixtures, appurtenances or equipment thereof. It is specifically agreed that the
Tenant shall not be entitled to any set off or reduction of rent by reason of
any failure of the Landlord to comply with the provisions of this or any other
Article of the lease. Landlord shall use reasonable commercial efforts to
minimize any interference with the conduct of Tenant's business on account of
the work undertaken by Landlord in accordance with this Article Three, but
Landlord shall not be required to perform any such work on an overtime basis.
(c) Tenant shall not install or maintain equipment, machinery or
manufacturing equipment of any description in the Premises, the operation of
which produces noise or vibration which is transmitted beyond the Premises. If
the Tenant does install such equipment or machinery and the Landlord deems it
necessary that the noise or vibration of such machinery or equipment be
diminished, eliminated, prevented or confined to the Premises, the Landlord may,
at its election, give written notice to the Tenant, requiring that the Tenant
provide and install rubber or other approved settings for absorbing, preventing
or decreasing the noise or vibration of such machinery or equipment within
fifteen days and if such measures are unsuccessful that the Tenant immediately
remove said equipment from the Premises within fifteen days. The judgment of the
Landlord of the necessity of such installation shall be conclusive, and the
installation shall be made in such manner and of such material as the Landlord
may direct. Should the Tenant fail to comply with such request within fifteen
days, the Landlord may do the work necessary to absorb, prevent or decrease the
noise or vibration of such machinery or equipment and the Tenant will pay to the
Landlord the cost of such work within fifteen days after demand or such cost
may, at the option of the Landlord, be added to any installment or installments
of rent under this lease and shall be payable by the Tenant as additional rent.
ARTICLE FOUR
ALTERATIONS AND FIXTURES
(a) The Tenant shall not make any alteration, addition or improvement
in or upon the Premises, nor incur any expense therefor, without having first
obtained the written consent of the Landlord therefor. The Tenant shall not be
required to obtain the Landlord's consent for alterations, additions or
improvements which are decorative in nature, such as painting or carpeting
(although the Tenant shall give the Landlord prior written notice of the
performance of such work). If the Tenant shall desire to make alterations,
additions or improvements to fit out the Premises for the Tenant's use which
will not affect the exterior of the building or adversely affect the structure
of the building or the operation of any of the systems or facilities of the
building for the use of any tenant or violate the requirements of government
hereafter referred to, the Landlord's approval will not be unreasonably withheld
or delayed. In no event shall the Tenant make any alteration at any time when an
Event of Default is outstanding. Any and all alterations may be made only
subject to and in compliance with the following, as well as all other reasonable
rules and regulations promulgated by the Landlord with respect to the
performance of alterations:
(i) Prior to the commencement of any alteration, the Tenant shall,
except in an emergency, give at least 30 days' notice to Landlord for
all alterations and shall obtain the Landlord's prior approval of the
licensed architect and/or licensed professional engineer and the
contractors and/or mechanics selected by the Tenant, as well as the
Landlord's prior written approval of detailed plans and specifications
prepared by the approved architect and/or engineer and shall reimburse
the Landlord for its out-of-pocket expenses for outside consultants to
review such plans and specifications; and no alterations shall be made
except as are in all material respects in accordance with such plans
and specifications or any approved changes thereto. If requested by the
Landlord, the Tenant shall submit a copy of the general contractor's
contract or other contract for the alterations which shall show the
cost thereof.
(ii) No alteration shall be commenced until the Tenant shall have
obtained and paid for all required permits and authorizations of any
City, State or Federal governmental agency or any board, bureau,
department or body thereof, having or asserting jurisdiction, copies of
which shall be supplied to the Landlord. Landlord shall reasonably and
diligently cooperate with
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Tenant in connection with the performance of its alterations, additions
or improvements, and with respect to alterations approved by Landlord,
shall cooperate (but at no expense to Landlord) with Tenant and execute
such documents as may be reasonably required by Tenant to obtain such
permits and authorizations, including, without limitation, alteration
applications.
(iii) Prior to the commencement of any alteration, the Tenant shall
submit to the Landlord duplicate original policies or certificates
thereof of worker's compensation insurance covering all persons
employed in connection with the work, and builder's all risk and
comprehensive general public liability insurance in such reasonable and
customary amounts and with such companies as may be reasonably approved
by the Landlord and such coverage shall be maintained until all such
alterations have been completed. Such policies shall name the Landlord
and any mortgagee or holder of any ground or underlying lease as
additional named insureds.
(iv) Upon completion of the alterations, the Tenant, at the Tenant's
expense shall obtain certificates of final approval as may be required
by any governmental agency, board, bureau, department or body thereof,
and shall deliver such approvals to the Landlord, together with
"as-built" plans and specifications for such alterations. In addition,
one copy of final drawings shall be delivered to the Landlord in
AutoCad, Release 14 format, either on a 3 1/2" disk or CD Rom, or such
other format as shall from time to time be reasonably designated by the
Landlord.
(v) The cost of all alterations shall be paid when due so that the
Premises shall at all times be free of liens for labor and materials
supplied or claimed to have been supplied to the Premises and free from
any encumbrances, or security interests.
(vi) All alterations, additions or improvements shall be made and
installed in a good and workmanlike manner and shall comply with all
requirements, by law, regulation or rule, of the Federal, State and
City Governments and all subdivisions and agencies thereof, and with
the requirements of the New York Fire Insurance Exchange, New York
Board of Fire Underwriters and all other bodies exercising similar
functions, and shall conform to any particular reasonable requirements
of the Landlord expressed in its consent for the making of any such
alterations, additions, and improvements. The Landlord's review and
approval of the Tenant's plans shall not constitute, nor be deemed to
constitute a representation or agreement by the Landlord that such
plans and specifications comply with such requirements. Such compliance
shall be the sole responsibility of the Tenant.
Any such work once begun shall be completed with all reasonable
dispatch, but shall be done at such time and in such manner as not to interfere
unreasonably with the occupancy of any other tenant or the progress of any work
being performed by or on account of the Landlord. If requested to do so by the
Tenant in connection with the Landlord's approval of any alteration, addition or
improvement, the Landlord will advise the Tenant whether the alteration,
addition or improvement will be required to be removed by the Tenant at the
expiration or earlier termination of this lease or may remain upon the Premises
to become the property of the Landlord. If no such advice is given by the
Landlord, the provision of subdivision (b) of this Article shall apply.
(b) All alterations, additions or improvements, which may be made or
installed in or upon the Premises (whether made during or prior to the term of
this lease or during the term of any prior lease of the Premises by the
Landlord, the Tenant or any previous tenant), except the furniture, trade
fixtures, stock in trade, and like personal property of the Tenant, shall be
conclusively deemed to be part of the freehold and the property of the Landlord,
and shall remain upon the Premises, and, upon the expiration or any termination
of the term of this lease, shall be surrendered therewith as a part thereof,
except for any Specialty Alterations which shall, unless the Landlord advises
the Tenant to the contrary, be removed by the Tenant, at the Tenant's expense,
upon the expiration or earlier termination of this lease, provided, however,
that alterations, additions and improvements installed by the Tenant at Tenant's
expense shall remain the property of Tenant until the expiration or earlier
termination of this lease, but Tenant shall not remove, destroy or alter such
alterations, additions and improvement without Landlord's consent and, in any
event, shall replace such alterations, additions
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and improvements with alterations, additions or improvements of equal or greater
value. A "Specialty Alteration" shall mean an alteration which is in excess of
standard office installations such as kitchens, cafeterias, vaults, sloping,
terraced or raised floors, internal staircases, and other slab penetrations,
data centers, fire suppression or uninterrupted power supply systems,
generators, fuel tanks, dumbwaiters, and other improvements of a similar nature.
The Tenant, at or prior to the expiration or any termination of the term of this
lease shall, at its own expense, remove all its furniture, trade fixtures, stock
in trade and like personal property. The Tenant shall restore and repair, at its
own cost and expense, any damage or disfigurement of the Premises occasioned by
any such removals or remaining after such removals, so as to leave the Premises
in good order and condition or, the Landlord, at its option, may do such
restoration and repair and the Tenant will pay the reasonable cost thereof upon
demand. If any furniture, trade fixtures, stock in trade or other personal
property of the Tenant shall not be removed at the expiration or any termination
of this lease, the Landlord, at the Landlord's option, may treat the same as
having been irrevocably abandoned, in which the Tenant shall have no further
right, title or interest therein and the Landlord may remove the same from the
Premises, disposing of them in any way which the Landlord sees fit to do, and
the Tenant shall, on demand, pay to the Landlord the expense incurred by the
Landlord for the removal thereof, as well as the cost of any restoration of the
Premises above provided. The Tenant's obligations under this subdivision (b) of
this Article FOUR shall survive the expiration of this lease for a period of one
year.
(c) The Landlord may at any time during the term of this lease, change
the arrangement or location of the entrance or passageways, doors and doorways,
and the corridors, elevators, stairs, toilets or other parts of the building
used by the public or in common by the Tenant and other tenants (including,
without limitation, the conversion of elevators from a manually-operated to an
automatic self-service basis) and may alter staffing of the building and the
scale and manner of the operation thereof, provided that the services to which
the Tenant is entitled as specified in this lease are not diminished and may
alter the facilities, fixtures, appurtenances and equipment of the building as
it may deem the same advisable, or as it may be required so to do by any
governmental authority, law, rule or regulation, and provided further that
Landlord shall use commercially reasonable efforts to minimize interference with
the conduct of Tenant's business in making such changes and provided that such
changes do not materially reduce the accessibility of the Premises. The Landlord
may change the name, street number or designation by which the building is
commonly known.
(d) The Tenant shall not at any time prior to or during the term of
this lease, directly or indirectly, employ or permit the employment of any
contractor, mechanic or laborer in or about the Premises, whether in connection
with any alteration or improvement or the providing of any services or
otherwise, if such employment would, in the reasonable judgment of the Landlord,
disrupt, or interfere or cause any conflict with, any other contractors,
mechanics, or laborers engaged by the Landlord or any other tenant in the
building. In the event of any such disruption, interference or conflict, the
Tenant, upon demand of the Landlord, shall immediately cause all contractors,
mechanics or laborers causing such disruption, interference or conflict to leave
the building.
(e) The Tenant, at its own sole cost and expense, shall defend the
Premises and the Landlord against all suits for the enforcement of any mechanics
lien or any bond in lieu of such lien, and the Tenant hereby indemnifies the
Landlord and the Premises against any and all damages, expenses, or liabilities
resulting from any such lien or suit. Should the Tenant fail to commence or
diligently proceed to timely discharge any such lien, the Landlord may do so by
payment, bond, or otherwise on thirty days' prior written notice to the Tenant
and the amount paid or incurred therefor by the Landlord shall be payable by the
Tenant as additional rent. Tenant represents and warrants that it has not
performed any alterations in the Premises prior to the Initial Premises
Commencement Date.
(f) If, in connection with the performance of any alterations,
additions or improvements to the Premises, there is any violation against the
building, the curing of which shall be the responsibility of Landlord, which
shall result in actual delay to Tenant or prevent Tenant from obtaining any
governmental permits, consents, approvals or other documentation to commence or
complete Tenant's alterations, additions or improvements, or prevent the
physical (as opposed to legal) occupancy of the Premises, or if any governmental
agency with jurisdiction orders Tenant not
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to occupy the Premises, then Landlord shall promptly and diligently proceed to
cure and remove of record such violations and Tenant shall be entitled to an
abatement of rent equal to the fixed rent and additional rent allocable to the
portion of the Premises in which such alterations, additions or improvements are
prevented from being performed or completed, or with respect to which Tenant has
been ordered not to occupy, for the period during which Tenant shall be so
prevented from performing such alterations, additions or improvements. Such
abatement period shall not commence any earlier than the date which is ten
business days following notice from Tenant to Landlord of a violation which
prevents Tenant from proceeding with its alterations, additions or improvements,
and such abatement period shall only commence if Landlord has not cured such
violation within the ten-business-day period following Tenant's notice.
ARTICLE FIVE
COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS
The Tenant shall promptly comply, at the Tenant's own expense, with all
laws, ordinances, regulations and requirements now or hereinafter enacted, of
the City, State and Federal Government, and all subdivisions and agencies
thereof, and the New York Fire Insurance Exchange, the New York Board of Fire
Underwriters, and of any fire insurance rating organization, and of all other
departments, bureaus, officials, boards and commissions with regard to the
Premises or the use thereof by the Tenant, and (if the Premises are situated on
the ground floor) the sidewalks adjoining the same in so far as such compliance
is made necessary by the Tenant's use of the sidewalks, provided that the Tenant
shall not be required to make structural alterations or additions to the
Premises, alterations to any building systems servicing the Premises, or
alterations to any common areas in the building utilized by Tenant and other
tenants, except where the same are required by reason of the nature of the
Tenant's use of the Premises, the alterations performed in the Premises by the
Tenant, the manner in which its business is carried on in the Premises, or a
failure on the part of the Tenant to conform to the provisions of this lease.
Tenant shall not be required to comply with any such laws, ordinances,
regulations and requirements for so long as Tenant shall be contesting,
diligently and in good faith, Tenant's obligation to comply therewith through
appropriate proceedings brought in accordance with applicable law, provided that
Tenant's failure to comply shall have no adverse effect on Landlord or on other
tenants in the building. The Tenant will not permit the maintenance of any
nuisance upon the Premises or permit its employees, licensees or visitors to do
any illegal act therein, or in and about the building after notice thereof from
the Landlord. If any such law, ordinance, regulation or requirement shall not be
promptly complied with by the Tenant, then the Landlord may, at its option,
enter upon the Premises to comply therewith, and should any fine or penalty be
imposed for failure to comply therewith or by reason of any such illegal act,
the Tenant agrees that the Landlord may, at its option, pay such fine or
penalty, which the Tenant agrees to repay to the Landlord, with interest (as set
forth in Article Twenty-Four) from the date of payment, as additional rent.
ARTICLE SIX
RULES AND REGULATIONS
The Tenant and the Tenant's employees, and any other persons subject to
the control of the Tenant, shall well and faithfully observe all the rules and
regulations annexed hereto as SCHEDULE A, and also any and all reasonable rules
and regulations affecting the Premises, the building or the equipment,
appurtenances, facilities and services thereof, hereafter promulgated by the
Landlord. The Landlord may at any time, and from time to time, prescribe and
regulate the placing of safes, machinery and other things, and regulate which
elevator and entrance shall be used by the Tenant's employees, and for the
Tenant's shipping; and may make such other and further rules and regulations as
in its reasonable judgment may, from time to time, be needed or desirable for
the safety, care or cleanliness of the building and for the preservation of good
order therein. The Landlord shall not be liable to the Tenant for violations of
any rules and regulations by any other tenant, its servants, employees, agents,
visitors or licensees. Notwithstanding the foregoing, the Landlord agrees that
it shall not discriminate against the Tenant in the enforcement of the rules and
regulations promulgated by the Landlord for the building.
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ARTICLE SEVEN
PLATE GLASS
The Landlord may, at its option, either (i) at the Tenant's expense,
keep the plate glass, if any, in the Premises insured in the name of the
Landlord against loss or damage, the premium for which, whether by separate
policy or as a part of a schedule of another policy, shall be paid by the Tenant
to the Landlord, upon demand, or (ii) require the Tenant, at the Tenant's
expense, to keep the plate glass, if any, in the Premises insured in the name of
the Landlord against loss or damage, in which event, the Tenant shall deliver
such policy and evidence of due payment of the premium therefor to the Landlord.
The Tenant shall promptly replace, at its own expense, any and all plate and
other glass damaged or broken from any cause whatsoever in and about the
Premises. If the Tenant fails to do so, the Landlord shall have the right to
replace such glass at the Tenant's expense.
ARTICLE EIGHT
CARE OF SIDEWALKS
If the Premises, or any part thereof, consist of a first floor or any
part thereof, the Tenant shall, at the Tenant's own expense, keep the sidewalk,
gutter and curb in front thereof in a clean condition, but Tenant shall not be
responsible for removal of snow and ice from the sidewalk.
ARTICLE NINE
LANDLORD'S ACCESS TO THE PREMISES
(a) The Tenant shall, without in any way affecting the Tenant's
obligations hereunder, and without constituting any eviction, permit the
Landlord and its agents and designees: (i) at all reasonable hours, upon
reasonable notice, to enter the Premises and have access thereto, for the
purpose of inspecting or examining them and to show them to other persons; or
(ii) to enter the Premises (including, specifically, all mechanical and air
conditioning rooms located therein) to make repairs and alterations, and to do
any work on the Premises or any adjoining premises and any work in connection
with excavation or construction on any adjoining premises or property
(including, but not limited to, the shoring up of the building) and to take in
any of the foregoing instances, any space needed therefor, provided that any
space so taken shall not be material to the conduct of Tenant's business in the
Premises. The Tenant shall permit the Landlord to erect and maintain ducts,
pipes and conduits in and through the Premises. In the exercise of the rights of
the Landlord reserved under this Article NINE, the Landlord will do so in a
manner which minimizes, so far as is practicable, the interference with the
Tenant's use of the Premises or Tenant's wiring or improvements to the Premises
and where ducts, pipes or conduits are to be erected through the Premises will
locate them along walls or ceilings wherever practicable.
(b) In the event that the Premises shall, in the Landlord's reasonable
judgment, become substantially vacated before the expiration of this lease, or
in the event the Tenant shall be removed by summary proceedings or in the event
that, during the last month of the term, the Tenant shall have removed all or
substantially all of the Tenant's property therefrom, the Landlord may
immediately enter into and upon said Premises for the purpose of decorating,
renovating or otherwise preparing same for a new tenant, without thereby causing
any abatement of rent or liability on the Landlord's part for other
compensation, and such acts shall have no effect upon this lease.
(c) If the Tenant or an officer or authorized employee of the Tenant
shall not be personally present to open and permit an entry into said Premises,
at any time, when for any reason an entry therein shall be necessary or
permissible hereunder, the Landlord or the Landlord's agents, may enter the same
by a master key, or may forcibly enter the same without rendering the Landlord
or such agents liable therefor (if during such entry the Landlord shall accord
reasonable care to the Tenant's property) and without in any manner affecting
the obligations and covenants of this lease and in no event shall any such entry
by the Landlord or its agents be deemed an acceptance of a surrender of this
lease, either expressed or implied, nor a waiver by the Landlord of any covenant
of this lease on the part of the Tenant to be performed.
ARTICLE TEN
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ELECTRIC CURRENT; LIVE STEAM
(a) So long as electric current is to be supplied by the Landlord, the
Tenant covenants and agrees to purchase the Tenant's requirements therefor at
the Premises from the Landlord or the Landlord's designated agent at a price
equal to 108% of the Rates (as hereinafter defined) set forth in the rate
schedule of Consolidated Edison Company of New York, Inc. applicable to the
building (or the conjunctional group in which the building is included), plus an
amount equal to all sales, use and gross receipt taxes and other governmental
charges or levies, generally applicable to the purchase and sale of electricity
in New York City (and without regard to whether the Landlord is exempt from
paying or collecting any such tax, charge or levy), including any adjustment for
time-of-day for either demand or consumption. As used herein, the term "Rates"
shall mean the rates for all components of the aggregate cost of purchasing
electricity for the building, including, without limitation, all charges related
to the generation, transmission, distribution and service and all charges for
consumption and demand (including, without limitation, all seasonal and
time-of-day adjustments and fuel escalation charges relating to such consumption
and demand charges). All amounts payable under this Article TEN shall constitute
additional rent for the purpose of the enforcement of the Landlord's rights.
(b) Where more than one meter measures the service of the Tenant in the
building, the service rendered through each meter may be computed and billed
separately in accord with the rates herein provided for. No current shall be
furnished until the equipment of the Tenant has been approved by the proper
authorities, and after such approval, no changes shall be made in such equipment
without the written consent of the Landlord. The Tenant shall pay, upon demand,
the bills for electric current furnished and the use of meters or the Landlord
may, at its option, add such amounts to any installment or installments of fixed
rent due under this lease and collect the same as additional rent. The Tenant
shall comply with such rules, regulations and contract provisions as are
customarily prescribed by public service corporations supplying such services,
for consumption similar to that of the Tenant.
(c) The Landlord may discontinue the supply of electric current under
subdivision (a) at any time on sixty (60) days' notice to the Tenant without
being liable to the Tenant therefor or without in any way affecting this lease
or the liability of the Tenant hereunder or causing the diminution of rent, and
the same shall not be deemed to be a lessening or diminution of services within
the meaning of any law, rule, or regulation now or hereafter enacted,
promulgated, or issued. Should the Landlord give such notice of discontinuance,
the Tenant shall make the Tenant's own arrangements to receive such service
direct from such public utility corporation serving the building and the
Landlord shall permit the Landlord's wires, conduits and meters, to the extent
to which they are safely available for such use and to the extent to which they
may be used under any applicable governmental regulations or the regulations of
such public utility, to be used for the purpose. Should any additional or other
wiring, conduits, meters or any other or different distribution equipment be
required in order to permit the Tenant to receive such service directly from the
public utility, the same will be installed, as the Landlord shall elect, either
by the Landlord or by the Tenant, the cost of which shall be shared equally by
Landlord and Tenant. In the case of central distribution equipment which is used
in connection with the distribution or metering of current supplied to the
Tenant and other tenants of the building, and which is required to be installed
under governmental regulations or the regulations of such utility, the cost of
installation thereof will be prorated among the several tenants, serviced
through the distribution facility in the proportion which their average
consumption of electric current over the next preceding period of not less than
six month's duration bears to the total consumption of electric current by all
tenants during such period, and the Tenant shall pay to the Landlord the fifty
percent (50%) of Tenant's share of such cost of installation, apportioned as
above, within five (5) days following receipt of a statement showing the cost of
the distribution equipment and the manner in which the cost has been allocated
to the Tenant. (The costs described in the immediately preceding sentence are
not intended to include the costs of the upgrading of the building by Landlord
currently in progress.) All such facilities installed by the Tenant shall be
installed in a workmanlike manner which complies with applicable governmental
regulations and the regulations of the public utility. The Landlord will in any
such case permit any pipe-chases or channels available in the building to be
used by the Tenant for the Tenant's cables and conduits, to the extent that the
same may be available and may be safely used for the purpose.
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(d) The Landlord shall not in any way be liable or responsible to the
Tenant for any loss or damage or expense which the Tenant may sustain or incur
if either the quantity or character or electric service is changed or is no
longer available or suitable for the Tenant's requirements, nor shall the
Landlord be in any way responsible for any interruption of service due to
breakdowns, repairs, malfunction of electrical equipment or any other cause
relating to electrical service which is beyond the Landlord's reasonable
control. The Tenant covenants and agrees that at all times its use of electric
current shall never exceed the capacity of existing feeders to the Tenant's
floor(s) or space (if less than an entire floor) or the capacity of the risers
or wiring installation in the building. The Tenant agrees not to connect any
additional electrical equipment to the building electrical distribution system,
other than lamps, typewriters, computers, scanners, printers, servers, copiers,
and other small office machines which consume comparable amounts of electricity,
without the Landlord's prior written consent. If, in the Landlord's sole
judgment, reasonably exercised, the Tenant's electrical requirements necessitate
installation of an additional riser, risers or other necessary equipment, the
same may be installed by the Landlord at the sole cost and expense of the Tenant
(together with Tenant's Proportionate Share of any electrical panels which are
required to be installed as a result of the installation of such additional
risers), which shall be chargeable and collectible as additional rent. If the
Tenant makes written request to install a riser or risers to supply the Tenant's
electrical requirements, such request shall be subject to the prior written
consent of the Landlord in each instance, and such riser, risers or other
equipment shall be installed by the Landlord at the sole cost and expense of the
Tenant, if in the Landlord's sole judgment, reasonably exercised, the same are
necessary and will not cause or create a dangerous or hazardous condition or
entail excessive or unreasonable alterations, repairs or expense or interfere
with or disturb other tenants or occupants. If the Tenant is not utilizing the
full electrical capacity available to the Premises, the Landlord shall have the
right to make such excess capacity available to other occupants of the building.
Prior to taking such excess capacity, Landlord shall notify Tenant of its
intention to do so, and Tenant shall have two weeks in which to demonstrate that
Tenant has an impending need for such electrical capacity. If in Landlord's
reasonable judgment, Tenant fails to demonstrate an impending need for such
electrical capacity, Landlord shall be entitled to proceed to make such excess
capacity available to other occupants of the building.
(e) If there be any facilities for the supply of live steam in the
building, such steam shall be supplied to the Tenant only if separate agreements
are made therefor and pursuant to such arrangements. In the event that such
separate agreements shall be made, the appropriate provisions of this Article
TEN shall be applicable thereto.
ARTICLE ELEVEN
CONDEMNATION AND DEMOLITION
If the Premises or any part thereof, shall be taken or condemned for
any public or quasi public use (other than for temporary use or occupancy), this
lease and the term hereby granted shall terminate as of the date of vesting of
title by reason of such taking. If any other part of the building shall be so
taken and such taking shall, in the reasonable judgment of the Landlord, make
the operation of the building impractical, unprofitable or uneconomical or would
make substantial structural alterations or reconstruction of the building
necessary (even though no part of the Premises be taken), the Landlord may, at
its option, give to the Tenant, at any time after the vesting of title and prior
to the actual taking of possession, thirty (30) days' notice of intention to
terminate this lease, and upon the date designated in such notice, this lease
and the term hereby granted shall terminate. Anything herein to the contrary
notwithstanding, if ten (10%) percent or less of the Premises shall be so
acquired or condemned, the Landlord, at its option, may elect not to terminate
this lease and, in such case, the Landlord shall, at its expense, restore that
part of the Premises not so acquired or condemned to a self-contained rental
unit exclusive of the Tenant's alterations. In no event shall any condemnation
award be apportioned, and the Tenant hereby assigns to the Landlord all right
and claim to any part of such award, but the rent, and all other sums payable by
the Tenant, shall be apportioned as of the date of any such termination of this
lease with respect to all or part of the
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Premises, as the case may be, and in the case of a partial taking, prospective
rent obligations which are based on square footage shall be adjusted
accordingly. Nothing contained in the foregoing portion of this Article ELEVEN
shall be deemed to prevent the Tenant's making claim for and retaining an award
for the damage to or loss of value of its trade fixtures and such of the
installations made by the Tenant as remain the Tenant's property or from making
claim for and retaining any award which may be made to the Tenant for the
Tenant's moving expenses if, and to the extent that, the award to be claimed and
retained by the Tenant is independent of and does not result in a diminution of
the award, and is not payable out of the award to the Landlord for the taking of
the land, building and the Landlord's other property.
ARTICLE TWELVE
MECHANIC'S LIENS
The Tenant will not permit, during the term hereby granted, any
mechanic's or other lien or order for payment of work, labor, services, or
materials furnished or to be furnished to attach to or affect the Premises or
any portion thereof, and agrees that no such lien or order shall under any
circumstances attach to or affect the fee, leasehold or other estate of the
Landlord herein, or the building. The Tenant's obligation to keep the Premises
in repair, and its right to make alterations therein, if any, shall not be
construed as the consent of the Landlord to the furnishing of any such work,
labor or materials within the meaning of any present or future lien law. Notice
is hereby given that the Tenant has no power, authority or right to do any act
or to make any contract which may create, or be the foundation for, any lien
upon the fee or leasehold estate of the Landlord in the Premises or upon the
land or building of which they are a part or the improvements now erected or
hereafter to be erected upon the Premises or the land, or building of which the
Premises are a part; and if any such mechanic's or other lien or order shall be
filed against the Premises or the land or building of which the Premises are a
part, the Tenant shall, within sixty (60) days thereafter, discharge said lien
or order by payment, deposit or by bond fixed in a proper proceeding according
to law. If the Tenant shall fail to take such action, or shall not cause such
lien or order to be discharged within sixty (60) days after the filing thereof,
the Landlord may, after five (5) days' notice to Tenant, pay the amount of such
lien or discharge the same by deposit or by bond or in any other manner
according to law, and pay any judgment recovered in any action to establish or
foreclose such lien or order, and any amount so paid, together with the expenses
incurred by the Landlord, including all reasonable attorneys' fees and
disbursements incurred in any defense of any such action, bonding or other
proceeding, shall be deemed additional rent. Any reasonable expenses incurred by
the Landlord in connection with the examination of title to the Premises in
order to ascertain the existence of any lien or encumbrance and the discharge of
record thereof, shall be payable by the Tenant to the Landlord on demand,
together with interest as aforesaid as additional rent.
ARTICLE THIRTEEN
SUBORDINATION
(a) Subject to the Tenant obtaining a non-disturbance agreement as
provided in paragraph (d) of this Article THIRTEEN from any existing or future
mortgagee(s) or underlying lessors, this lease, and all the rights of the Tenant
hereunder, are and shall be subject and subordinate to any and all mortgages now
or hereafter liens either in whole or in part on the building, or the land on
which it stands, and also to any and all other mortgages covering other lands or
lands and buildings, which may now or hereafter be consolidated with any
mortgage or mortgages upon the building and the land on which it stands or which
may be consolidated and spread to cover the building and such land and any such
other lands or lands and buildings, and any extension, renewal or modification
of any such mortgages, and to any and all ground or underlying leases which may
now or hereafter affect the buildings or the land on which it stands, and any
extensions, renewals or modifications thereof. This clause shall be
self-operative and no further instrument of subordination (other than the
non-disturbance agreement referred to above and in paragraph (d) below) shall be
required by any ground or underlying lessor or by any mortgagee, affecting any
lease or the building or the land on which it stands. In confirmation of such
subordination, the Tenant shall execute promptly any certificate, in recordable
form, that the Landlord may reasonably request.
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(b) The Tenant hereby agrees that, in the event that any mortgagee
shall succeed to the rights of the Landlord, or if any Landlord of any
underlying lease shall succeed to the position of the Landlord under this lease,
then the Tenant will recognize such successor Landlord as the Landlord of this
lease and pay the rent and attorn to and perform the provisions of this lease
for the benefit of any such successor Landlord. No documentation other than this
lease shall be necessary to evidence such attornment but the Tenant agrees to
execute any documents, in recordable form, reasonably requested by the successor
Landlord to confirm such attornment or to otherwise carry out the intent and
purposes of this Article THIRTEEN.
(c) If, in connection with obtaining financing or refinancing for the
building of which the Premises form a part, a lender shall request modifications
to this lease as a condition to such financing or refinancing, the Tenant will
not unreasonably withhold, delay or defer its consent thereto, provided that
such modifications do not increase the obligations of the Tenant hereunder or
adversely affect the Tenant's leasehold interest. A provision requiring the
Tenant to give notices of any defaults by the Landlord to such lender and/or
permit the curing of such defaults by such lender together with the granting of
such additional time for such curing as may be reasonably required for such
lender to get possession of the building shall not be deemed to increase the
Tenant's obligations or adversely affect the Tenant's leasehold interest. In no
event shall a requirement that the consent (not to be unreasonably withheld) of
any such lender be given for any modification, termination or surrender of this
lease be deemed to materially adversely affect the leasehold interest hereby
created.
(d) Anything herein to the contrary notwithstanding, the Landlord
represents and warrants to the Tenant that as of the date of this lease there is
no mortgage or superior lease encumbering the Premises. The Landlord, at no cost
to Tenant, shall obtain from any future mortgagee or from any future lessor of
any underlying lease, an agreement to the effect that, so long as no Event of
Default shall at the time have occurred and be continuing hereunder, the Tenant
shall not be made party to any proceeding to foreclose the mortgage or to
terminate the underlying lease; that the Tenant's possession of the Premises
under the term of this lease, shall not be terminated or disturbed as a result
of the foreclosure of any mortgage or termination of any underlying lease; that
such mortgagee or underlying lessor, as the case may be, will recognize the
Tenant as the direct tenant of such mortgagee or lessor on all of the terms and
conditions of this lease subject to the provisions hereinafter set forth;
together with such other terms as are customarily contained in a subordination,
non-disturbance and attornment agreement (any such agreement from a mortgagee or
lessor is called a "Nondisturbance Agreement"). The Tenant agrees it will
execute any agreement consistent with the foregoing provisions which may be
required to confirm the subordination of this lease subject to the
non-disturbance provisions above outlined. In any such agreement the Tenant
shall agree that, in the event that the mortgagee shall succeed to the rights of
the Landlord herein named, or if any landlord of any underlying lease shall
succeed to the position of the Landlord under this lease, then the Tenant will
recognize such successor landlord as the Landlord of this lease and pay the rent
and attorn to and perform the provisions of this lease for the benefit of any
such successor Landlord.
(e) Any Nondisturbance Agreement may be made on the condition that, and
the Tenant hereby agrees that, neither the mortgagee nor the lessor, as the case
may be, nor anyone claiming by, through or under such mortgagee or lessor, as
the case may be, including a purchaser at a foreclosure sale, shall be:
(i) liable for any previous act or omission of the Landlord under this
lease, except to the extent that a default continues after the date of
foreclosure or purchase of the Premises (in which case such default shall be
deemed to have occurred on the date of transfer of title to the Premises); or
(ii) subject to any credit, claim, counterclaim, demand, defense or
offset that previously accrued to the Tenant against the Landlord under the
lease; or
(iii) bound by any previous modification of this lease (after notice to
Tenant of the existence of such mortgage or underlying lease), or by any
previous prepayment of rent for a period greater than one month, unless such
modification or prepayment shall have been expressly approved in
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writing by any lessor or any mortgagee who shall have succeeded to the rights of
the Landlord under this lease; or
(iv) obligated to perform any alteration or improvements of the
Premises not expressly required under this lease; or
(v) be responsible for (1) the performance or completion of any
construction work to be performed by the Landlord under the lease, or (2) any
reimbursement or payment required by the Landlord to the Tenant or its designees
pursuant to the Lease on account of work performed by, or for the account of,
the Tenant; or
(vi) be liable for the repayment of any monies owed by the Landlord to
the Tenant; or
(vii) have any obligation with respect to any security deposited under
the lease unless and to the extent such security shall have been transferred to
the mortgagee or lessor, as the case may be, or anyone claiming by, through or
under such party.
(f) The provisions of paragraph (e) shall not be deemed to vitiate the
obligations of any mortgagee or lender succeeding to the Landlord's obligations
hereunder from and after the date such party succeeds to the Landlord's interest
under this lease.
ARTICLE FOURTEEN
CERTIFICATE OF OCCUPANCY
(a) A true copy of the Certificate of Occupancy of the building is
annexed hereto as EXHIBIT B.
(b) The Tenant shall immediately discontinue any use of the Premises,
which may, at any time, be claimed or declared by the City or State of New York
or other governmental authority to be in violation of or contrary to the
Certificate of Occupancy of the building, or by reason of which any attempt may
be made to penalize the Landlord or require the Landlord to secure any
Certificate of Occupancy other than the one, if any, now issued for the
building.
ARTICLE FIFTEEN
VAULTS
Notwithstanding anything herein contained, or shown on any sketch, plan
or schedule hereto attached, to the contrary, if any vault space forms a part of
the Premises, or adjoins the same, or any part or portion of the Premises is not
within the property line of the building or Premises, and if the use of the said
space shall hereafter be prevented or curtailed by exercise of any governmental
authority, the Tenant shall have no claim whatever upon the Landlord for the
loss of such space, by any abatement of the rent, or otherwise, nor shall the
Tenant be relieved from any obligations under this lease, and the Landlord's
covenant of quiet enjoyment hereinafter contained, shall not be deemed to apply
to any such space. The Landlord makes no representation as to the location of
the property line of the building. The Tenant shall reimburse the Landlord for
the vault charge or tax, if any, imposed by the City of New York in respect of
any such vault space.
ARTICLE SIXTEEN
FIRE AND OTHER CASUALTY
(a) If the Premises shall be damaged by fire, action of the elements or
other casualty or cause which is within the risks covered by standard fire and
extended coverage insurance, the Tenant shall give immediate notice thereof to
the Landlord, and said damage shall be repaired by the Landlord, at the
Landlord's expense, with all reasonable speed, making due allowance for delay
due to labor troubles, settlement of loss and other causes beyond the control of
the Landlord, and the Tenant shall, in every reasonable way, facilitate the
making of such repairs, and the rent shall be suspended
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during such period as the Premises shall have been rendered wholly untenantable
until five (5) days after the Landlord notifies the Tenant that the Premises are
substantially ready for the Tenant's occupancy (or the Premises are sooner
occupied by the Tenant) and, in the event that the Premises are rendered
partially untenantable, the rent shall be abated during such period, in the
proportion which the area of the Premises which is rendered untenantable bears
to the area of the whole Premises. In addition to the foregoing rental
abatement, provided that (i) Tenant promptly commences and diligently prosecutes
such alterations to the Premises as are necessary for Tenant to recommence
operations within the Premises, and (ii) Landlord continues to be reimbursed by
Landlord's insurance company for its rental loss, then Tenant shall be entitled
to a further abatement of rent during Tenant's refixturing of the Premises,
which abatement shall be coextensive with the rental loss reimbursement received
by Landlord from Landlord's insurance company. The decision of Landlord's
insurance company shall be conclusive and Landlord shall have no obligation to
contest the same, by litigation or otherwise. No damage to the Premises or the
building by fire, or other cause, however extensive, shall terminate this lease,
or give the Tenant the right to quit and surrender the Premises, or impair any
obligations of the Tenant hereunder, except with respect to the payment of rent
(and with respect thereto to the extent above provided) and except that (i) if
the damage shall be so extensive that the Landlord shall determine to demolish
or substantially alter the building, whether or not the Premises are affected,
the Landlord may at any time within one hundred twenty (120) days following the
occurrence of the damage give to the Tenant thirty (30) days' notice of
intention to terminate this lease; (ii) if the damage to the Premises is
substantial so that the whole or substantially the whole of the Premises is
rendered untenantable by the Tenant or if 50% or more of the common areas of the
building are destroyed or substantially damaged and the Landlord does not within
60 days following the occurrence of the damage notify the Tenant of the
Landlord's intention to repair the damage to the Premises so that the Premises
are again useable by the Tenant within a period of not more than 180 days
following the occurrence of the damage subject to delays due to settlement of
loss or causes of the kinds described in Article THIRTY-FOUR of this lease, the
Tenant may cancel this lease by notice given within 10 days following the
expiration of the said 60-day period for the Landlord's notice of election to
repair, time being of the essence; (iii) if the Landlord has given notice of its
intention to restore the Premises, but fails to substantially complete such
restoration within 180 days following the occurrence of the damage, subject to
delays due to settlement of loss or delays of the kind described in Article
THIRTY-FOUR of this lease, the Tenant may cancel this lease by notice given
within 10 days following the expiration of the said 180-day period, time being
of the essence; and (iv) in the event of the occurrence of damage to the
Premises of the degree described above in clause (ii) of this paragraph (a), the
Landlord may also elect to terminate this lease by notice of election to do so
given within 60 days following the occurrence of the damage. If notice of
election to terminate this lease shall be given as above provided, then, upon
the date for termination designated in any such notice, this lease and the term
hereby granted shall terminate and the rent shall be apportioned as of the date
of the damage or as of such later date as the Tenant may actually surrender
possession. Nothing herein contained shall be deemed to obligate the Landlord to
restore the Tenant's trade fixtures, equipment, stocks, furnishings,
improvements or other property remaining the property of the Tenant. The Tenant
acknowledges that the Landlord will not carry insurance on the Tenant's
furniture or any fixtures or equipment, improvements or appurtenances removable
by Tenant and agrees that the Landlord will not be obligated to repair any
damage thereto or replace the same. The Tenant hereby waives the provisions of
Section 227 of the Real Property Law and agrees that the provisions of this
Article SIXTEEN shall govern and control in lieu thereof.
(b) The Tenant shall conduct its business and use the Premises in such
a manner and so as not to increase the rate of fire insurance applicable to the
building or any property located therein over the rates in effect prior to the
commencement of the Tenant's occupancy, and the Tenant shall install and
maintain all its furniture, fixtures, equipment, stocks and materials in such a
manner as to accomplish the foregoing purposes. The Tenant further agrees not to
permit any act to be done or anything brought into or kept upon the Premises
which will void or avoid the insurer's liability under any contract of fire
insurance on the building or its contents. Should the fire insurance rate on the
building be increased beyond the present rate, by reason of the Tenant's
occupancy or character of its business, or the Tenant's failure to comply with
the terms hereof, the Tenant agrees to pay to the Landlord, on demand, the
additional cost of such insurance, or, at the option of the Landlord, the same
may be added to any installment of rent and be payable as additional rent. The
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schedule of the makeup of a rate issued by an authorized rating organization
shall be conclusive evidence of the facts therein stated and of the items in the
rate applicable to the Premises.
(c) The Landlord, as to the Premises, and the Tenant, as to the
improvements made therein at the Tenant's expense and all of the Tenant's stock,
trade fixtures and other property in the Premises shall each look first to any
insurance in its favor before making any claim against the other party for
recovery for loss or damage resulting from fire or other casualty, and to the
extent that such insurance is in force and collectible and to the extent
permitted by law, the Landlord and the Tenant each hereby release one another or
any one claiming through or under each of them by way of subrogation or
otherwise from all liability for any loss or damage caused by fire or any of the
risks enumerated in standard extended coverage insurance. This foregoing release
and waiver shall be in force only if both releasors' insurance policies contain
a clause providing that such a release or waiver shall not invalidate the
insurance, and also provided that such a policy can be obtained without
additional premiums. The Landlord and Tenant agree that their respective
insurance policies will include the aforesaid clause so long as the same is
obtainable without extra cost or if extra cost be charged, so long as the party
for whose benefit the clause is obtained shall pay such extra cost. If extra
cost shall be chargeable therefor the party so affected shall advise the other
thereof, of the amount of the extra cost and the other party at its election may
pay the same or decline to so pay, in which event the release from liability
given to said party by this Article SIXTEEN shall be deemed to be withdrawn and
of no force and effect.
(d) The Landlord shall keep in full force and effect a policy of
insurance against loss or damage by fire and such other risks and hazards as are
insurable under standard forms of "all risk" insurance policies, with extended
coverage, covering the building, in an amount sufficient to avoid the effects of
co-insurance, in such amounts as the Landlord, acting reasonably, may deem
appropriate.
(e) If notwithstanding the recovery of insurance proceeds by the Tenant
for loss, damage or destruction to its property, the Landlord is liable to the
Tenant with respect thereto or is obligated under this lease to repair or
restore such damage to Tenant's property, the amount of the net proceeds paid to
the Tenant shall either be offset against the Landlord's liability to the
Tenant, or shall be made available to the Landlord to pay for the cost of such
repair or restoration.
ARTICLE SEVENTEEN
CHANGE IN USE OF PREMISES, SUBLETTING AND ASSIGNMENT
(a) The use to be made of the Premises by the Tenant and the identity
of the Tenant being among the inducements to the making of this lease by the
Landlord, the Tenant shall not (except as otherwise permitted herein), without
first having obtained the Landlord's prior written consent thereto, and
otherwise in accordance with the terms of this lease, (i) sublet or underlet, or
permit the subletting or underletting of the Premises or any part thereof; (ii)
assign or transfer, by operation of law or transfer of stock or otherwise, this
lease or any interest therein; (iii) use or permit the Premises or any part
thereof to be used for any purposes other than those specified in the lease;
(iv) permit the Premises or any part thereof to be occupied by anyone other than
the Tenant or its officers or employees; or (v) mortgage or encumber this lease
or any interest therein.
(b) If the Tenant shall desire to assign this lease or to sublet the
Premises, in whole or in part, the Tenant shall send to the Landlord a written
notice (the "Tenant's Notice") stating (i) the action which the Tenant proposes;
(ii) the portion of the Premises with respect to which the Tenant proposes to
take such action (the "Affected Premises"); (iii) the principal terms and
conditions of the desired assignment or subletting, including without
limitation, the rent payable, the proposed commencement and expiration dates of
the terms of the desired subletting, or the effective date of the desired
assignment; and (iv) such other information as the Landlord shall reasonably
request. The Tenant's Notice shall also contain a statement directing the
Landlord's attention to the provisions of Article SEVENTEEN (c) of the lease.
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(c) Within sixty (60) days after receipt of Tenant's Notice which
contains all the information required in paragraph (b) above, the Landlord shall
notify the Tenant (the "Landlord's Notice") whether it elects to (i) terminate
the lease in its entirety, if the desired transaction is an assignment of lease
or a subletting of all or substantially all of the Premises or (ii) terminate
the lease as to the Affected Premises only if the desired transaction is a
subletting of less than substantially all of the Premises. For purposes of this
Article SEVENTEEN, a Tenant shall be deemed to be subletting "substantially all
of the Premises" if the Affected Premises constitutes seventy five (75%) percent
or more of the rentable square footage of the Premises. Landlord's recapture
rights specified above shall not apply (y) to any subletting of five years or
less (unless such term exceeds 75% of the remaining term of this lease), or (z)
to any subletting where the subtenant's space is not separately demised (this
does not include sublettings of all or substantially all of Tenant's space on a
given floor), provided in either case that Tenant is subletting not more than
one third of the total rentable area of the Premises.
(d) If the Landlord exercises the option set forth in paragraph (c) (i)
above to terminate this lease in its entirety, then (i) the term of this lease
shall end and expire with respect to the entire Premises on the ninetieth (90th)
day following the date of Landlord's Notice and (ii) the Tenant shall surrender
the entire Premises to the Landlord on such date, in the same manner and
condition as is required by this lease, as if such date were the Expiration Date
set forth in this lease, and (iii) fixed rent and additional rent shall be
apportioned as of such expiration date. Instead of terminating the lease, the
Landlord may, at its option, elect to have the Tenant assign all of its right,
title and interest in and to this lease to the Landlord, such assignment to be
effective as of the date such lease termination would be effective and otherwise
on the terms and conditions set forth in this paragraph (d). Upon such
assignment, the Tenant shall be relieved of all liability accruing under this
lease after the effective date of such assignment, and the Landlord may
thereafter further assign this lease or sublet all or part of the Premises to
any party and the Tenant shall have no right to any proceeds derived from such
assignment or subletting. In no event shall the provisions of this paragraph (d)
relieve the Tenant of any obligations which accrued prior to the termination of
this lease or the assignment to the Landlord, as the case may be.
(e) If the Landlord exercises the option set forth in paragraph (c)(ii)
above to terminate the lease with respect to the Affected Premises, then (i) the
term of this lease shall end and expire with respect to the Affected Premises on
the ninetieth (90th) day following the date of the Landlord's Notice and (ii)
the Tenant shall surrender the Affected Premises to the Landlord on such date,
in the same manner and condition as is required by this lease, as if such date
were the Expiration Date set forth in this lease and (iii) fixed rent and
additional rent with respect to the Affected Premises shall be apportioned as of
such Expiration Date and the Tenant's prospective rent obligations which are
based on square footage (including, without limitation, fixed rent and
additional rent payable pursuant to Article THIRTY of this lease) shall be
reduced accordingly, and (iv) at the Landlord's election, either the Landlord,
at the Tenant's expense, or the Tenant, at its own expense, shall erect the
partitioning required to separate the Affected Premises from the remainder of
the Premises, create any doors required to provide an independent means of
access to the Affected Premises from elevators and lavatories and segregate the
wiring and meters and electric current facilities, so that the Affected Premises
may be used as a unit for commercial purposes, separate from the remainder of
the Premises. If the remaining Premises contain the core lavatories, the
occupant of the Affected Premises shall have the right to use such lavatories in
common with the Tenant. If the Tenant performs such work, it shall commence such
work promptly upon receipt of Landlord's Notice and shall proceed to complete
such work in a diligent and workmanlike manner. Instead of terminating the lease
with respect to the Affected Premises, the Landlord may, at its option, elect to
have the Tenant assign all of its right, title and interest with respect to the
Affected Premises to the Landlord, such assignment to be effective as of the
date such lease termination would be effective and otherwise on the terms and
conditions set forth in this paragraph (e). Upon the assignment of the lease to
the Landlord with respect to the Affected Premises, the Landlord may further
assign the lease or sublet all or part of the Affected Premises to any party and
the Tenant shall have no right to any proceeds derived from such assignment or
subletting. In no event shall the provisions of this paragraph (e) relieve the
Tenant of any obligations with respect to the Affected Premises which accrued
with respect to the Affected Premises prior to the termination of the lease or
the assignment to the Landlord, as the case may be.
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(f) In the event the Landlord does not elect either of the alternatives
set forth in paragraph (c) (i) or (ii) above, or in the event the Landlord fails
to timely deliver the Landlord's Notice, the Landlord agrees not to unreasonably
withhold or delay its consent to any proposed assignment or subletting,
provided, however, that the Landlord shall have the right to condition its
consent to any proposed assignment or sublease on the following:
(1) No Event of Default shall have theretofore occurred and be
continuing under this lease beyond any applicable notice or cure
period.
(2) The Tenant shall have delivered to the Landlord the Tenant's Notice
as required by paragraph (b) above.
(3) With respect to a sublease, the Tenant shall collaterally assign to
the Landlord, and grant the Landlord a security interest in, the
sublease and the rents payable thereunder and shall take all necessary
steps required to perfect such assignment and security interest.
(4) The sublease shall include provisions to the effect that (i) if the
Landlord shall notify the sublessee that the Tenant is in default in
the payment of rent or in the performance of its other obligations
under this lease, the subtenant shall, if so requested by the Landlord,
pay all rent and other amounts due under the sublease directly to the
Landlord, (ii) notwithstanding any such payment by the subtenant
directly to the Landlord, the term of the sublease shall terminate
simultaneously with the termination of the term of this lease and the
subtenant shall surrender the subleased premises upon such termination,
(iii) the sublease shall be subject and subordinate to this lease and
to all matters to which this lease is or shall be subordinate, and (iv)
any act or omission by the subtenant which, if performed by the Tenant
would constitute an Event of Default under the lease, shall also
constitute an Event of Default under the sublease provided notice
thereof shall have been provided to the Tenant named herein.
(5) The proposed subtenant or assignee shall have a financial standing,
be of a character, be engaged in a business, and propose to use the
Premises in a manner, which in the Landlord's reasonable judgment, is
in keeping with the Landlord's standards in such respect of the other
office tenancies in the building. The parties acknowledge that the
Landlord, as a religious institution, may have special considerations
in determining if the business or proposed use of a proposed subtenant
or assignee is objectionable, and the parties agree that the Landlord's
judgment in such matters shall be conclusive.
(6) The proposed assignee or subtenant shall not then be a tenant,
subtenant or assignee of any space in the building or any other
building then owned, directly or indirectly, by the Landlord, provided
that Landlord then has comparable space available in any of its
buildings, nor shall the proposed subtenant or assignee be a person or
entity with whom the Landlord is then negotiating to lease space in the
building or any other building then owned, directly or indirectly, by
the Landlord.
(7) The Premises shall not, without the Landlord's prior consent, have
been publicly advertised (but may be listed with brokers) for
subletting at a rental rate less than the prevailing asking rental rate
then set by the Landlord for comparable space in the building, and if
no comparable space is then available, at the prevailing rental rate
set by the Landlord.
(8) The character of the business to be conducted or the proposed use
of the Premises by the proposed assignee or subtenant shall not (i) be
likely to increase the Landlord's operating expenses beyond that which
would be incurred for use by the Tenant or for use in accordance with
the standards of use of other tenancies in the
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building, (ii) materially increase the burden on elevators over the
burden prior to such proposed assignment or subletting, (iii)
unreasonably interfere with the use and enjoyment by other tenants in
the building of their premises, or (iv) violate or be likely to violate
any provisions or restrictions contained herein relating to the use or
occupancy of the Premises.
(9) Any proposed sublease shall provide that in the event of the
termination of this lease, or the re-entry or dispossession of the
Tenant by the Landlord under this lease, such subtenant shall, at the
Landlord's option, attorn to the Landlord as its sublessor pursuant to
the then applicable terms of such sublease for the remaining term
thereof, except that the Landlord shall not be (i) liable for any
previous act or omission of Tenant as sublessor under such sublease,
(ii) subject to any offset which theretofore accrued to such subtenant
against the Tenant, (iii) bound by any modification of such sublease
not consented to in writing by the Landlord or by any prepayment of
rent more than one month in advance, (iv) bound to return such
subtenant's security deposit until it has come into its actual
possession and the subtenant would be entitled to its return pursuant
to the terms of the sublease, and (v) bound by any obligation to make
any payment to any subtenant or perform any work in the Premises.
(10) The proposed assignee or subtenant is not entitled, directly or
indirectly, to diplomatic or sovereign immunity, and/or is subject to
the service or process in, and the jurisdiction of the courts of New
York.
(11) At any time during the term of the lease, there shall be no more
than three (3) occupants in the Premises on any floor where Tenant has
leased half or more than half of the rentable area of such floor, or
two (2) occupants in the Premises on any floor where Tenant has leased
less than half the rentable area of such floor, in both such cases,
"occupants" includes Tenant if Tenant is actually occupying any portion
of such floor.
(12) The subletting shall end no later than one (1) day before the
Expiration Date and shall be for a term of no less than two (2) years,
unless it commences less than two (2) years before the Expiration Date
of the term.
(13) Intentionally omitted.
(14) The assignee shall assume, in writing, all obligations of the
Tenant under this lease from and after the date of such assignment.
(15) A fully executed counterpart of the assignment or sublease shall
be delivered to the Landlord within five (5) days after execution
thereof.
(g) In the event the Landlord waives its rights set forth in paragraph
(c) (i) and (ii) above, or consents to any assignment or subletting pursuant to
this Article SEVENTEEN, and the Tenant fails to execute and deliver an
assignment or sublease document, as approved by the Landlord, within six (6)
months after the date of Landlord's Notice, then the Tenant shall again comply
with all of the requirements of this Article SEVENTEEN before assigning its
interest in this lease, or subletting all or part of the Premises, respectively.
(h) The Tenant shall pay all of the reasonable Landlord's costs
(including, without limitation, attorneys' fees and expenses) related to the
Landlord's review of a proposed sublease or assignment and the preparation,
review and approval of any assignment of rents, financing statement and other
documents related to such sublease or assignment, irrespective of whether
consent is granted or the transaction is ultimately consummated. The Tenant
shall also pay the cost of recording or filing any assignment of rents and
financing statements.
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(i) Provided no Event of Default shall have theretofore occurred and be
continuing under this lease beyond any applicable notice or cure period, the
Tenant named herein is authorized to (1) assign the lease to any entity
succeeding to the business and assets of the Tenant, whether by way of merger or
consolidation or by way of acquisition of all or substantially all of the assets
of the Tenant, provided that the acquiring entity shall have assumed in writing
the Tenant's obligations under this lease; or (2) to sublease all or a portion
of the Premises or assign the lease to an entity which shall (x) control, (y) be
under the control of, or (z) be under common control with the Tenant (an entity
described in (x), (y) or (z) being a "Related Entity"). "Control" shall mean
direct or indirect ownership of more than fifty percent (50%) of each class of
stock which is authorized to vote of a corporation or other majority equity and
control interest if not a corporation, or the possession, directly or
indirectly, of power to direct or cause the direction of the management and
policy of such corporation or other entity, whether through the ownership of
voting securities, by statute or according to the provisions of a contract. Upon
making a sublease or assignment to any Related Entity, the Tenant shall notify
the Landlord and certify to the Landlord the manner in which such Related Entity
is related to the Tenant and the purposes for which the Premises will be used.
Any subletting or assignment described in this paragraph (i) shall be on notice
to Landlord but shall not require the prior written consent of the Landlord and
may only be made on the condition that (a) the subtenant or assignee shall
continue to use the Premises for executive and general offices (except for the
Basement Space, which shall only be used for the specific purpose set forth
herein), and (ii) the principal purpose of such sublease or assignment is not
the acquisition of the Tenant's interest in this lease, or to circumvent the
provisions of paragraph (a) of this Article SEVENTEEN. In the event of an
assignment pursuant to the provisions of clause (1) of this paragraph (i), the
successor entity, after giving effect to such merger, consolidation or
acquisition, shall have a tangible net worth, exclusive of good will, computed
in accordance with generally accepted accounting principles ("Net Worth") at
least equal to the Net Worth of the Tenant as of the date of this lease. The
provisions of paragraph (c) of this Article and the provisions of paragraph (k)
of this Article shall not apply to a subleasing or assignment made pursuant to
the provisions of this paragraph (i).
(j) For purposes of this Article SEVENTEEN, an "assignment" shall be
deemed to include, whether occurring at one time or over a period of time
through a series of transfers, a sale or transfer of fifty (50%) percent or more
of beneficial interest in the Tenant (whether stock, partnership or otherwise),
or of any guarantor of the Tenant's obligations under this lease, or the
issuance of additional stock where the issuance of such additional stock will
result in a change of "control" (as defined in paragraph (i)) in the Tenant or
guarantor, if applicable. The transfer of shares or issuance of additional stock
of the Tenant or any guarantor for purposes of this Article SEVENTEEN shall not
include the sale of shares by persons other than those deemed "insiders" within
the meaning of the Securities and Exchange Act of 1934, as amended, which sale
is effected through the "over-the-counter market" or through any nationally
recognized exchange.
(k) In the event the Landlord, in its sole discretion, authorizes the
Tenant to assign the lease or to sublet all or a portion of the Premises (other
than an assignment or subleasing authorized by paragraph (i) above), the Tenant
named herein shall pay to the Landlord, monthly, as additional rent, 50% of all
Tenant's Profit. "Tenant's Profit" shall mean all consideration received by the
Tenant (other than rental or consideration received by the Tenant under a
sublease or assignment entered into pursuant to paragraph (i) of this Article),
less (i) the rent, payable by the Tenant under this lease for the period in
question (exclusive of any amount payable by the Tenant under this subparagraph
(k)), such rent to be pro-rated if less than all of the Premises are sublet,
(ii) any brokerage commissions (not exceeding 110% of those set forth in
Landlord's brokerage commission schedule as published from time to time) and
reasonable legal fees paid by the Tenant in connection with such subletting or
assignment, (iii) any sums payable by the Tenant to the Landlord pursuant to the
provisions of paragraph (h) of this Article, (iv) any payments made by the
Tenant in connection with
the assignment of its interest in this lease pursuant to Article 31-B
of the Tax Law of the State of New York or any real property transfer tax of the
United States or the City or State of New York (other than income taxes), (v)
free rent granted to the assignee or subtenant, and (vi) the cost of work or
alterations or payment therefor to separate the subleased space from the balance
of the Premises or to prepare the Affected Premises for the assignee's or
subtenant's occupancy. In the case of a sublease, the expenses set forth in (ii)
and (iii) shall be amortized on a straight-line basis over the term of the
sublease. In the case of an assignment, if the consideration to be paid to the
Tenant shall
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be paid in installments, the expenses set forth in (ii) through (iv) shall be
amortized over the period during which the installments are to be paid.
(l) No consent given by the Landlord shall be deemed to permit any act
except the act to which it specifically refers, or to render unnecessary any
subsequent consent, and any assignment or subletting of the Premises shall not
relieve the Tenant or any mesne assignee from any obligations, duty or covenant
under this lease. No assignment, transfer, mortgage, encumbrance, subletting or
arrangement in respect of the occupancy of the Premises shall create any right
in the assignee, transferee, mortgagee, subtenant or occupant, unless the
consent of the Landlord shall first have been obtained, in accordance with the
provisions of this Article SEVENTEEN (except as provided in paragraph (i)
above). Any assignee by accepting an assignment shall nevertheless be
conclusively deemed to have assumed this lease and all obligations already
accrued or to accrue thereunder and further to have agreed to fully and duly
perform all the Tenant's covenants herein contained. If the Tenant shall, at any
time, be in default in the payment of rent, the Landlord shall have the right to
collect rent from any assignee or subtenant, and credit the same to the account
of the Tenant, and no such collection shall constitute a waiver of the foregoing
covenant or the acceptance of anyone other than the Tenant, as tenant, or shall
otherwise release, impair or otherwise affect any obligation of the Tenant under
this lease.
(m) The Tenant shall remain fully liable for the performance of all of
the Tenant's obligations hereunder notwithstanding anything provided for herein,
and without limiting the generality of the foregoing, shall remain fully
responsible and liable to the Landlord for all acts and omissions of any
subtenant or assignee or anyone claiming under or through any such person which
shall be in violation of any of the obligations of this lease and any such
violation shall be deemed to be a violation by the Tenant. Provided that the
Tenant named herein shall have provided Landlord with an address for notices, if
such address is different from the Premises, Landlord shall send copies of any
default notices given to an assignee or subtenant to the Tenant named herein,
and the Tenant named herein shall have the same cure period with respect to such
default as provided herein with respect to Tenant's own defaults. Landlord may
not terminate this lease for a default of an assignee or subtenant until the
Tenant named herein is given copies of such default notices and the cure period
to cure such default shall have expired. Upon any termination of this lease, it
is expressly agreed that the Tenant shall deliver to the Landlord all subleases,
security deposits (including interest), contracts, documents, rent rolls and
other records used in the operation of the Premises and, unless the sublease
shall have previously terminated and the security deposit returned to subtenant
or applied as provided by the sublease, all security deposits held by the
Tenant.
(n) With respect to any present or future subleases, the Tenant shall
not accept prepayment of rent prior to its due date in excess of one month (but
the provisions of the foregoing shall not prohibit the Tenant from collecting
from any subtenant a security deposit provided such security deposit is
delineated in the sublease as being not advance rent, but security, returnable
to the subtenant after the termination of the term of the sublease). The Tenant
agrees to indemnify and save the Landlord harmless from and against any claim or
lien against the Landlord or the Premises for the return of any security under
any subleases with a subtenant which was not previously delivered to the
Landlord and agrees further that all subleases hereafter made with subtenants
shall provide that the lease security deposited by the subtenant shall not be a
lien or claim against the interest of the Landlord.
(o) (i) If the Tenant assumes this lease and proposes to assign the
same pursuant to the provisions of 11 U.S.C. Section 101 et. seq (the
"Bankruptcy Code") to any person or entity who shall have made a bona fide offer
to accept an assignment of this lease on terms acceptable to the Tenant, then
notice of such proposed assignment shall be given to the Landlord by the Tenant
no later than twenty (20) days after receipt by the Tenant of such bona fide
offer, but in any event no later than ten (10) days prior to the date that the
Tenant shall make application to a court of competent jurisdiction for authority
and approval to enter into such assignment and assumption. Such notice shall set
forth (x) the name and address of such person, (y) all of the terms and
conditions of such offer, and (z) adequate assurance of future performance by
such person under this lease, including, without limitation, the assurance
referred to in Section 365 (b)(3) of the Bankruptcy Code. The Landlord shall
have the prior right and option, to be exercised by notice to the Tenant
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given at any time prior to the effective date of such proposed assignment, to
accept an assignment of this lease upon the same terms and conditions and for
the same consideration, if any, as the bona fide offer made by such person, less
any brokerage commission which would be payable in connection with such
assignment.
(ii) The term "adequate assurance of future performance" as used in
this lease shall mean that any proposed assignee shall, among other things: (a)
deposit with the Landlord on the assumption of this lease an amount equal to the
then-fixed rent and additional rent as security for the faithful performance and
observance by such assignee of the terms and obligations of this lease, which
sum shall be held in accordance with the provisions of Article TWENTY-NINE
hereof; (b) furnish the Landlord with financial statements of such assignee for
the prior three (3) fiscal years, as finally determined after an audit and
certified as correct by a certified public accountant, which financial
statements shall show a Net Worth of at least two (2) times the Net Worth of the
Tenant named herein as of the date of this lease for each of such three (3)
years; (c) grant to the Landlord a security interest in such property of the
proposed assignee as the Landlord shall deem necessary to secure such assignee's
future performance under this lease; and (d) provide such other information or
take such action as the Landlord, in its reasonable judgment, shall determine is
necessary to provide adequate assurance of the performance by such assignee of
its obligations under this lease.
(p) Notwithstanding anything to the contrary contained herein, no
assignment or subletting by the Tenant, nor any other transfer or vesting of the
Tenant's interest hereunder (whether by merger, operation of law or otherwise),
shall be permitted if the proposed assignment or sublease (i) provides for a
rental or other payment for the leasing, use, occupancy or utilization of all or
any part of the Premises based, in whole or in part, on the income or profits
derived by any person from the property so leased, used, occupied or utilized
other than an amount based on a fixed percentage or percentages of gross
receipts or sales or (ii) does not provide that such assignee or subtenant shall
not enter into any lease, sublease, license, concession or other agreement for
the use, occupancy or utilization of all or any portion of the Premises which
provides for a rental or other payment for such use, occupancy or utilization
based, in whole or in part, on the income or profits derived by any person from
the property so leased, used, occupied or utilized other than an amount based on
a fixed percentage or percentages of gross receipts or sales.
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ARTICLE EIGHTEEN
WAIVER AND SURRENDER; REMEDIES CUMULATIVE
No consent or waiver of any provision hereof or acceptance of any
surrender shall be implied from any act or forbearance by the Landlord. No
agreement purporting to accept a surrender of this lease, or to modify, alter,
amend or waive any term or provision thereof, shall have any effect or validity
whatever, unless the same shall be in writing, and executed by the Landlord and
by the Tenant (or, in the case of a waiver, by the party waiving such term or
provision), and be duly delivered, nor shall the delivery of any keys to anyone
have any legal effect, any rule or provision of law to the contrary
notwithstanding. Any consent, waiver or acceptance of surrender, in writing, and
properly executed and delivered as aforesaid, shall be limited to the special
instance for which it is given, and no superintendent or employee, other than an
officer of the Landlord or of its managing agent, and no renting representative
shall have any authority to accept a surrender of the Premises, or to make any
agreement or modification of this lease, or any of the terms and provisions
hereof. No provision of any lease made by the Landlord to any other tenant of
the building shall be taken into consideration in any manner whatever in
determining the rights of the Tenant herein. No payment by the Tenant or receipt
by the Landlord of a lesser amount than the monthly rent herein stipulated shall
be deemed to be other than on account of the stipulated rent, nor shall any
endorsement on any check, nor any letter accompanying any such payment of rent
be deemed an accord and satisfaction (unless an agreement to accept a lesser
amount be signed by the Landlord), but the Landlord may accept such payment
without prejudice to the Landlord's full right to recover the balance of such
rent and to institute summary proceedings therefor. If the Tenant is in arrears
in the payment of fixed rent or additional rent or any other sum which may
become payable under this lease, the Tenant waives its right, if any, to
designate the items in arrears against which any payments made by Tenant are to
be credited and Landlord may apply any of such payments to any such items in
arrears as the Landlord, in its sole discretion, shall determine, irrespective
of any such designation or request by the Tenant as to the items against which
any such payments shall be credited. The receipt by the Landlord of any fixed
rent, or additional rent or of any other sum of money which may be payable under
this lease, or of any portion thereof, shall not be deemed a waiver of the right
of the Landlord to enforce the payment of any sum of any kind previously due or
which may thereafter become due under this lease, or of the right to forfeit
this lease by such remedies as may be appropriate, or to terminate this lease or
to exercise any of the rights and remedies reserved to the Landlord hereunder,
and the failure of the Landlord to enforce any covenant or condition (although
the Tenant shall have repeatedly or continuously broken the same without
objection from the Landlord) shall not estop the Landlord at any time from
taking any action with respect to such breach which may be authorized by this
lease, or by law, or from enforcing said covenant or any other covenant or
condition on the occasion of any subsequent breach or default. The various
rights, remedies, powers and elections of the Landlord, as provided in this
lease or created by law, are cumulative, and none of them shall be deemed to be
exclusive of the others, or of such other rights, remedies, powers or elections
as are now or may hereafter be conferred upon the Landlord by law or equity.
ARTICLE NINETEEN
NO REPRESENTATIONS AS TO PREMISES,
CERTIFICATE OF OCCUPANCY AND USE
The Tenant represents to the Landlord that the Tenant has made, or
caused to be made, a careful inspection of the Premises and that the Tenant has
made an examination of the certificate of occupancy of the building and that the
area and present condition of the Premises are in all respects satisfactory to
the Tenant, except (if at all) as may herein otherwise be expressly stated in
the Work Sheet (Exhibit C) annexed hereto. The Tenant acknowledges that no
representations or promises have been made by the Landlord or the Landlord's
agents with respect to the Premises or the building or the Certificate of
Occupancy thereof, except as in this lease set forth, and no rights, easements
or licenses are acquired by the Tenant except as expressly set forth herein. The
statements contained in this lease regarding the use of the Premises by the
Tenant shall not be deemed a representation or warranty by the Landlord that
such use is lawful or permitted by the Certificate of Occupancy of the building.
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ARTICLE TWENTY
LIMITATION OF LANDLORD'S LIABILITY
(a) The Tenant shall make no claim upon the Landlord for abatement of
rent, constructive eviction, rescission, or otherwise, and the Landlord shall be
exempt from all liability, except for injuries to the Tenant's person or
property which are due to the negligence of the Landlord, its agents, servants
or employees in the management of the Premises or the real property of which the
Premises are a part, for or on account of any annoyance, inconvenience,
interference with business, or other damage, caused by: (i) any interruption,
malfunction or curtailment of the operation of the elevator service, heating
plant, sprinkler system, gas, water, sewer or steam supply, plumbing, machinery,
electric equipment or other appurtenances, facilities, equipment and
conveniences in the building, whether such interruption, malfunction or
curtailment be due to breakdowns, or repairs, or strikes or inability to obtain
electricity, fuel or water due to any such cause or any other cause beyond the
Landlord's control; (ii) any work of repair, alteration, renovation or
replacement done by or on behalf of the Landlord or any other tenant; (iii) any
water, rain, snow, steam, gas, electricity or other element, which may enter,
flow from or into the Premises or any part of the building, or any noise or
vibration audible in, or transmitted to the Premises; (iv) any vermin; (v) any
falling paint, plaster or cement; (vi) any interference with light or with other
easements or incorporeal hereditaments; (vii) any latent defect or deterioration
in the building or the appurtenances thereof, whether or not the Landlord shall
have been notified of any condition allegedly causing same; (viii) any zoning
ordinance or other acts of governmental or public authority now or hereafter in
force; and (ix) any act or omission of any other occupant of the building or
other person temporarily therein. The Tenant will not hold the Landlord liable
for any loss or theft of, or damage to, any property in the Premises done or
caused by any employee, servant, or agent of the Landlord who is invited into
the Premises by the Tenant for purposes outside the normal scope of such
employee's, servant's or agent's duties, nor for the loss, damage or theft of
any property stored or left in the basement or in any other part of the
building, which is not enclosed within the Premises or of any property, left
with any employee of the Landlord, notwithstanding such theft, loss or damage
may occur through carelessness or negligence of the Landlord's employees; and
the Tenant agrees that any employee in entering the Premises at the invitation
of the Tenant for purposes outside the normal scope of such employee's,
servant's or agent's duties or accepting custody of property shall be then
deemed agent of the Tenant or other person at whose instance he may be acting,
and not agent of the Landlord. Employees are not permitted to receive or accept
packages or property for account of Tenants. The use of storerooms or storage
space for personal property (if provided) shall be at the Tenant's risk and the
Tenant will not hold the Landlord liable for any loss of or damage to person or
property therein or thereby. Nothing in this lease contained shall impose any
obligation upon the Landlord with respect to any real property other than the
building, whether said other real property be owned by the Landlord or
otherwise, or shall in any way limit the Landlord's right to build upon or
otherwise use said other real property in such manner as the Landlord may see
fit. The Tenant shall make no claim upon the Landlord for abatement of rent,
constructive eviction or rescission, and the Landlord shall have no liability by
reason of the Landlord's failure to enforce the provisions of the lease to any
other tenant against such other tenant.
(b) Any right and authority reserved by and granted to the Landlord
under this lease, to enter upon and make repairs in the Premises shall not be
taken as obligating the Landlord to inspect and to repair the Premises and the
Landlord hereby assumes no responsibility or liability for the care, inspection,
maintenance, supervision, alteration or repair of the Premises except as herein
specifically provided. The Tenant assumes possession and control of the Premises
and exclusively the whole duty of care and repair thereof, except as herein
specifically provided, and the duty of care, if any, owed by the Tenant to the
persons on the sidewalks or in the corridors of the building.
(c) The officers, directors, employees, partners, shareholders, and
principals, direct or indirect, comprising the Landlord (collectively, the
"Parties") shall not be liable for the performance of the Landlord's obligations
under this lease. The Tenant shall look solely to the Landlord to enforce the
Landlord's obligations under this lease and shall not seek any damages against
any of the Parties. The liability of the Landlord for the Landlord's obligations
under this lease shall be limited to Landlord's Equity in the building.
"Landlord's Equity" as used herein means the lesser of (i) the interest of the
Landlord in and to the building and (ii) the interest the Landlord would have
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in the building if it were encumbered by an indebtedness held by a person not a
party to this lease in an amount equal to 75% of the then-current fair market
value of the building (as such value of such interest is determined in good
faith by the Landlord). The Tenant shall not look to any other property or
assets of the Landlord, other than Landlord's Equity, or the property or assets
of any of the Parties in seeking either to enforce the Landlord's obligations
under this lease or to satisfy a judgment for the Landlord's failure to perform
such obligations.
(d) The term "Landlord" as used in this lease, means only the owner for
the time being of the Premises. If the Landlord shall hereafter sell, exchange
or lease the entire building or the land and building wherein the Premises are
located, or, being the lessee thereof, shall assign its lease, the grantee,
lessee, or assignee thereof, as the case may be, shall, without further
agreement by any party, be conclusively deemed to be the Landlord of this lease
and to have assumed and undertaken to carry out all of the obligations hereof on
the part of the Landlord to be performed, and the Tenant does hereby release the
above-named Landlord from any claim or liability arising or accruing hereunder
subsequent to such transfer of ownership or possession, for breach of the
covenant of quiet enjoyment, or otherwise.
(e) If the lease provides that the Landlord's consent is not to be
unreasonably withheld or delayed, and it is the final order of any court having
jurisdiction thereof that the Landlord has been unreasonable, the only effect
shall be that the Landlord shall be deemed to have given such consent; but in no
event shall the Landlord be liable to the Tenant for any monetary damages by
reason of the withholding or delaying of its consent.
ARTICLE TWENTY-ONE
INDEMNITY BY TENANT
The Tenant hereby indemnifies and agrees forever to save harmless the
Landlord against any and all liabilities, penalties, claims, damages, expenses
(including, without limitation, attorneys' fees whether in a proceeding between
the Landlord and the Tenant or between the Landlord and any third party) or
judgments, arising from injury to person or property of any kind, occasioned
wholly or in part by the Tenant's failure to perform or abide by any of the
covenants of this lease or occasioned wholly or in part by any act or acts,
omission or omissions of the Tenant, or of the employees, customers, agents,
assigns, invitees or licensees or under-tenants of the Tenant, or based on any
matter or thing growing out of the Tenant's use or occupation of the Premises or
any part of the building. The Tenant shall not do or permit any act or thing to
be done upon the Premises which may subject the Landlord to any liability or
responsibility for injury, damages to persons or property or to any liability by
reason of any violations of any requirements of law with which the Tenant is
obligated to comply under this lease, and the Tenant shall exercise such control
over the Premises as to protect the Landlord against any such liability. In case
any claim, action or proceeding is made or brought against the Landlord by
reason of any such claim, the Tenant, upon written notice from the Landlord,
shall, at the Tenant's sole cost and expense, resist or defend such action or
proceeding by counsel approved by the Landlord in writing. The Landlord agrees
that counsel for the Tenant's insurance carrier shall be deemed satisfactory. If
the damages sought by the party asserting such claim exceed the limits of the
Tenant's insurance coverage, the Landlord shall be entitled to have its own
counsel participate with the Tenant's counsel in resisting or defending such
action and the Tenant shall reimburse the Landlord for any reasonable cost it
incurs in connection therewith. The provisions of this Article TWENTY-ONE shall
survive the expiration or sooner termination of this Lease.
ARTICLE TWENTY-TWO
NOTICES
Any notice which is to be given by either party to the other pursuant
to this lease shall be in writing and shall be given as follows: (a) if such
notice is to be given by the Landlord to the Tenant, such notice may be given
personally by delivering the same to the Tenant, or if the Tenant be a
corporation or partnership, to any officer, partner or other employee of the
Tenant, at the Premises or at any other place, or by registered or certified
mail, postage prepaid, return receipt requested, or by nationally recognized
overnight service providing evidence of delivery, addressed to the Tenant
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at its address given in this lease or at the Premises, or such other address as
the Tenant shall hereafter designate in writing, provided, however, that notices
of default may not be given solely by personal delivery, but shall be given by
mail or overnight service as set forth above, with a copy of such default notice
sent to Marshall J. Cohen, Esq., Stadtmauer Bailkin LLP, 850 Third Avenue, New
York, NY 10022; (b) if such notice is to be given by the Tenant to the Landlord,
such notice shall be given by registered or certified mail, postage prepaid,
return receipt requested, or by nationally recognized overnight service
providing evidence of delivery, addressed to the Landlord at 74 Trinity Place,
New York, New York, 10006, Attention: Director of Commercial Real Estate
Leasing, or at such other address as the Landlord shall hereafter designate in
writing. Notices given by overnight service shall be specified for next business
day delivery. Any notice shall be deemed to have been given on the date when
same shall have been delivered, in the case of personal delivery, or two days
after the same shall have been properly mailed in the case of certified or
registered mail, or on the first following business day if sent by overnight
mail service. The attorneys for either party shall have the right, but not the
obligation, to send notices on behalf of their respective clients.
Notwithstanding the foregoing, all bills may be sent directly to the Tenant by
regular mail.
ARTICLE TWENTY-THREE
INSOLVENCY
(a) Each of the following shall be a "Bankruptcy Event" hereunder:
(1) if the Tenant shall generally not, or shall be unable to, or shall
admit its inability to, pay its debts as they become due; or
(2) if the Tenant shall make a general assignment for the benefit of
creditors; or
(3) if the Tenant shall commence or institute any case, proceeding or
other action (i) seeking relief on its behalf as debtor, or 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 under any
existing or future law of any jurisdiction, domestic or foreign,
relating to bankruptcy, insolvency, reorganization or relief of
debtors, or (ii) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of
its property; or
(4) if any case, proceeding or other action shall be commenced against
or instituted against the Tenant (i) seeking an order for relief
entered against the debtor or to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to
its debts under any existing or future law of any jurisdiction,
domestic or foreign, relating to bankruptcy, insolvency, reorganization
or relief of debtors, or (ii) seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or any
substantial part of its property, which in either case (x) results in
the entry of any order for relief, adjudication of bankruptcy or
insolvency, or such an appointment or the issuance or entry of any
other order having a similar effect or (y) remains undismissed for a
period of sixty (60) days; or
(5) if any case, proceeding or other action shall be commenced or
instituted against the Tenant seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of the Tenant's property which results in the entry of
an order for such relief which is not vacated, discharged, or stayed or
bonded pending appeal within sixty (60) days from the entry thereof; or
(6) if the Tenant shall take shall take any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of
the acts set forth in any of clauses (2) through (5) above; or
(7) if a trustee, receiver or other custodian is appointed for any
substantial part of the assets of the Tenant and such appointment is
not vacated or stayed within seven days.
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(b) If at any time (i) the Tenant shall be comprised of two or more
people; or (ii) the Tenant's obligations under this lease have been guaranteed
by any party other than the Tenant, or (iii) the Tenant's interest in this lease
has been assigned, the word "Tenant" as used in this Article TWENTY-THREE shall
be deemed to mean any one or more of the persons primarily or secondarily liable
for the Tenant's obligations under this lease. Any moneys received by the
Landlord from or on behalf of the Tenant during the pendency of any Bankruptcy
Event shall be deemed paid as compensation for the use and occupation of the
Premises and the acceptance of any such compensation by the Landlord shall not
be deemed an acceptance of rent or a waiver by the Landlord of any rights under
Articles TWENTY-THREE or TWENTY-FIVE.
(c) If a Bankruptcy Event occurs at any time after the execution and
delivery of this lease, whether such event occurs prior or subsequent to the
Commencement Date or the Tenant's entry into possession, such an event shall be
deemed an Event of Default and the Landlord shall have the right to terminate
this lease in the manner hereinafter provided. In the event of such termination,
the Tenant or any person claiming under, by or through the Tenant, by virtue of
any statute or of an order of any court, shall not be entitled to possession or
to remain in possession of the Premises but shall forthwith quit and surrender
same. Exclusive of and in addition to any other rights or remedies the Landlord
may have through any other portion or provision of this lease or by virtue of
any rule of law or statute, said Landlord may keep and retain, as damages, any
rent, security, deposit or other moneys or consideration received by the
Landlord from the Tenant, or others on behalf of the Tenant. Also, in the event
of termination of this lease as aforesaid, the Landlord shall be entitled, as
and for liquidated damages, and not as a penalty, from the Tenant for breach of
the unexpired term of this lease, to a sum equal to the amount by which the rent
for the period of the unexpired portion of the lease term exceeds the then fair
and reasonable rental value for the same period, both discounted to present
value at six percent (6%). If at any time within a reasonable period following
the date of the termination of the lease, as aforesaid, the Premises should be
re-rented by the Landlord, the rent realized by any re-letting shall be deemed
prima facie to be the rental value. In the event of the occurrence of any
Bankruptcy Event occasioned solely through the invocation by the Tenant or by
third parties of the laws of the State of New York, judicial or statutory, as
distinguished from the invocation of Federal laws relating to bankruptcy,
reorganization, or otherwise, the Landlord, in addition to the foregoing, may
accelerate the full amount of rent reserved for the remainder of the lease,
discounted to present value at 6%, and the same shall forthwith become due and
payable to the Landlord. Nothing herein provided shall be deemed to prevent or
restrict the Landlord from proving and receiving as damages herein the maximum
permitted by any rule of law or statute prevailing when such damages are to be
proved, whether they be greater or less than those referred to above.
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ARTICLE TWENTY-FOUR
REMEDIES OF THE LANDLORD
ON DEFAULT IN PERFORMANCE BY THE TENANT
(a) If the Tenant shall default in the full and due performance of any
covenant of this lease, the Landlord shall have the right, upon ten (10) days'
notice to the Tenant (except in an emergency or unless a shorter period of
notice or provision for the performance of such work without notice is elsewhere
established), to perform the same for the account of the Tenant, and in such
event all workman employed by the Landlord shall be deemed the agents of the
Tenant, and any reasonable payment made, and expense incurred, by the Landlord
in this connection, shall become due and payable by the Tenant to the Landlord
within fifteen (15) days after receipt of invoices for same. If the Landlord is
compelled to incur any expenses or incur any obligation for the payment of
money, including, without limitation, reasonable attorneys' fees in instituting,
prosecuting or defending any action or proceeding instituted by the Tenant or
any third party by reason of any Event of Default hereunder, the sum or sums so
paid by the Landlord with all interest, costs and damages, shall be deemed
immediately due to the Landlord upon demand as additional rent. Any and all sums
payable by the Tenant to the Landlord shall bear interest at the lesser of (x)
one and one-half per cent (1_%) per month or (y) the maximum rate permitted by
applicable law from the due date to the date of actual payment, and any and all
such sums (except the fixed rent hereinabove expressly reserved) shall be deemed
to be additional rent for the period prior to such due date, and the Landlord
shall have the same remedies for default in the payment of such additional rent
as for default in the payment of the rent expressly reserved. If the Tenant's
term shall have expired at the time of the making of such expenditures or
incurring such obligations, such sums shall be recoverable by the Landlord as
damages.
(b) In the event that under the provisions of this lease the Landlord
shall have the privilege of performing any covenant in respect of which the
Tenant may be in default and of recovering the expenses so involved from the
Tenant as additional rent or otherwise, such remedy shall not be the exclusive
remedy of the Landlord but the Landlord may, at its option, treat such default
as a breach of substantial obligation of this lease and shall have all the other
remedies in respect thereof provided in this or any other Article of this lease.
ARTICLE TWENTY-FIVE
DEFAULT
(a) Each of the following events shall be an "Event of Default"
hereunder:
(1) if the Tenant shall default in the payment when due of any
installment of fixed rent or any item of additional rent when same
shall be due and such default shall continue for a period of five
business days after notice to Tenant; provided, however, that if
Landlord shall give such notice two or more times in any twelve-month
period, Tenant shall not thereafter be entitled to any such notice; or
(2) if the Tenant shall default in the observance or performance of any
term, covenant or condition of any other lease with the Landlord or the
Landlord's predecessor in interest beyond the expiration of any grace
period set forth in such other lease; or
(3) if the Premises shall be abandoned or deserted; or
(4) if a Bankruptcy Event shall occur; or
(5) if the conduct of the Tenant or any of its employees, agents or
visitors or any occupant of the Premises shall reasonably be deemed
objectionable by the Landlord or the Landlord's managing agent; or
(6) if the Tenant's interest or any portion thereof in this lease shall
devolve upon or pass to any person, whether by operation of law or
otherwise, except as expressly permitted by Article SEVENTEEN hereof;
or
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(7) if the lease is assigned, or all or part of the Premises are
sublet, to a Related Entity and such Related Entity shall no longer (x)
control, (y) be under the control of, or (z) be under common control
with the Tenant (except for a permitted successor by merger,
consolidation or purchase as may be permitted by Article SEVENTEEN) and
such Related Entity has not vacated or been approved by Landlord within
six months following the date on which it ceases to be a Related
Entity; or
(8) if the Tenant's obligations under this lease have been guaranteed
by any party and if the guarantor shall default in the observance or
performance of any of the terms of the guaranty or if the guarantor
shall repudiate the guaranty, or if the guaranty shall terminate or be
terminated for any reason without the prior written consent of the
Landlord or in accordance with the terms thereof; or
(9) if the Tenant shall default in the observance or performance of any
other term, covenant or condition of this lease and the Tenant shall
fail to remedy such default within thirty (30) days after notice from
the Landlord to the Tenant of such default, except that if the default
is of such a nature that it cannot with due diligence by remedied
within such thirty-day period, the Tenant shall not be in default if
the Tenant shall commence within said thirty-day period and thereafter
diligently proceed to complete all steps necessary to remedy such
default, and further, so long as the extension of such cure period
shall not (i) subject the Landlord or any superior lessor or mortgagee
to prosecution for a crime or any other fine or charge, (ii) subject
the Premises, the building or the land upon which the building is
located to being condemned or vacated, (iii) subject the land or the
building to any lien or encumbrance, or (iv) result in the termination
of any superior lease or mortgage.
(b) If an Event of Default shall occur, the Landlord may, at any time
thereafter and at its option, give the Tenant ten (10) days written notice of
its intention to terminate this lease, and in such event, on the tenth day
following the giving of such notice, this lease and the term and all rights of
the Tenant under this lease shall expire and terminate as if that were the
Expiration Date and the Tenant shall immediately quit and surrender the
Premises, but the Tenant shall nonetheless be liable for all of its obligations
hereunder, as provided for in Article TWENTY-SIX.
(c) Notwithstanding the foregoing, if such termination is stayed by
order of any court having jurisdiction over any proceeding which constitutes a
Bankruptcy Event, or by federal or state statute, then, following the expiration
of any such stay, or if the trustee appointed in any such proceeding, the Tenant
or the Tenant as debtor-in-possession shall fail to assume the Tenant's
obligations under this lease within the period provided therefor by law or
within one hundred twenty (120) days after entry of the order for relief or as
may be allowed by the court, or if the trustee, the Tenant or the Tenant as
debtor-in-possession shall fail to provide adequate assurance of the complete
and continuous future performance of the Tenant's obligations under this lease
as provided in Article SEVENTEEN (o), the Landlord, to the extent permitted by
law or by leave of the court having jurisdiction over the proceeding
constituting the Bankruptcy Event, shall have the right, as its election, to
terminate this lease on five (5) days' notice to the Tenant, the Tenant as
debtor-in-possession or said trustee and upon the expiration of said five (5)
day period this lease shall cease and expire as aforesaid the Tenant, the Tenant
as debtor-in-possession or said trustee shall immediately quit and surrender the
Premises as aforesaid.
(d) If an Event of Default described in clause (a)(1) shall occur, or
if this lease shall be terminated in accordance with the provisions of clauses
(b) and (c) above, the Landlord, without notice, may reenter and repossess the
Premises using such force for that purpose as may be necessary without being
liable to indictment, prosecution or damages therefor and may dispossess the
Tenant by summary proceedings or otherwise.
(e) If an Event of Default shall occur prior to the date fixed as the
commencement of any renewal or extension of this lease, and shall remain uncured
as of such date, the Landlord may cancel and terminate such right of renewal or
extension by written notice to the Tenant.
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ARTICLE TWENTY-SIX
REMEDIES AND DAMAGES
(a) If an Event of Default shall occur and if this lease shall be
terminated as provided in Article TWENTY-FIVE:
(i) The Landlord and its agents may immediately, or at any time
thereafter, re-enter the Premises and remove all persons and property
therefrom, either by summary dispossess proceedings, or by any suitable
action or proceeding at law, or by force or otherwise, without being
liable to indictment, prosecution or damages therefor, and repossess
and enjoy the Premises, together with all additions, alterations,
installations and improvements, and no entry by the Landlord shall be
deemed an acceptance of surrender.
(ii) The Landlord may, at its option, re-let the Premises in whole or
in part, for such term or terms and for such rentals and upon such
other conditions, which may include concessions and free rent periods
as the Landlord, in its sole discretion, determine, even though the
same may extend beyond the Expiration Date. The Landlord shall have no
liability to the Tenant to re-let the Premises and the failure or
refusal of the Landlord to re-let the Premises or any part thereof, or
if the Premises are re-let, the failure of the Landlord to collect the
rent under such re-letting, shall not relieve the Tenant of any
liability under this lease. The Landlord may, at its option, make such
repairs, replacements, alterations, additions, improvements and other
physical changes in and to the Premises as the Landlord, in its sole
discretion, considers advisable or necessary in connection with any
such re-letting. Any such re-letting shall, as the Landlord's option,
be either for the Landlord's own account, or as the agent for the
Tenant.
(b) The Tenant, on its behalf and on behalf of all persons claiming
through or under the Tenant, including all creditors, hereby expressly waives
(i) any and all right to regain possession of the Premises or to reinstate or
redeem this lease under any present or future law; (ii) the service of any
notice demanding rent or stating an intention to re-enter or to institute legal
proceedings to that end which may otherwise be required to be given under any
present or future law; and (iii) any and all rights of redemption and all other
rights to regain possession or to reinstate this lease, after (x) the Tenant
shall have been dispossessed by a judgment or by warrant of any court or judge,
or (y) any re-entry by the Landlord, or (z) any expiration or termination of
this lease, whether such dispossess, re-entry, expiration or termination shall
be by operation of law or pursuant to the provisions of this lease. Except as
otherwise provided by law, the Tenant and Landlord waive and will waive all
right to trial by jury in any summary proceedings and in any other proceeding or
action at law hereafter instituted by the Landlord against the Tenant in respect
of this lease, and also in any action or proceeding between the parties hereto
for any cause; and it is hereby agreed, that in any of such events, the matter
in dispute shall be tried before a judge without a jury. In the event the
Landlord shall commence any action or summary proceeding for non-payment of
rent, or other breach of any of the terms, covenants or conditions of this
lease, the Tenant agrees not to interpose any counterclaim of whatever nature or
description in any such action or proceeding, other than compulsory
counterclaims which would be deemed waived if not asserted by the Tenant. The
words "re-enter" and "re-entry" as used in this lease are not restricted to
their technical legal meaning. In the event of a breach or threatened breach by
the Tenant, or anyone claiming by, through or under the Tenant, of any of the
covenants or provisions hereof, the Landlord shall have the right to obtain an
injunction and the right to invoke any remedy allowed at law or in equity as if
re-entry, summary proceedings and other remedies were not herein provided for.
The remedies set forth herein are cumulative and the mention in this lease of
any remedy shall not preclude the Landlord from exercising any other remedy
allowed at law or in equity.
(c) If this lease and the term shall expire as provided in Article
TWENTY-FIVE, or by or under any summary proceeding or any other action or
proceeding by the Landlord against the Tenant or any person claiming by, through
or under the Tenant, or if the Landlord shall re-enter the Premises as provided
in paragraph (a) above, or by or under any summary proceeding or any other
action or proceeding, then, in any of said events:
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(i) The Tenant shall pay to the Landlord all fixed rent and additional
rent and other charges payable under this lease by the Tenant to the
Landlord to the date upon which this lease and the term shall have
expired or has been terminated by the Landlord;
(ii) The Tenant shall also be liable for and shall pay to the Landlord,
as liquidated damages, any deficiency (the "Deficiency") between the
fixed rent and additional rent reserved in this lease for the period
which would have constituted the unexpired portion of the term
(including any renewal term exercised by the Tenant prior to the
termination of this lease or re-entry by the Landlord, and in such case
the additional rent for the renewal term shall be assumed to be the
same as was payable for the year immediately preceding such termination
or re-entry) and the net amount, if any, actually received by the
Landlord from any re-letting of the Premises pursuant to paragraph
(a)(ii) above. The Landlord shall be entitled to deduct from the
rentals actually collected under any re-letting all of the expenses
which Landlord incurred by reason of the Tenant's default and in
connection with such re-entry and re-letting, including, but not
limited to, all repossession costs, legal expenses, brokerage
commissions, attorneys' fees, court costs and disbursements, the cost
of repairs, re-decoration and alterations in preparing the Premises for
re-letting, and the amount of rent concessions and work allowances and
the like granted in connection with such re-letting. The Deficiency
shall be paid in monthly installments by the Tenant on the days
specified in this lease for payment of installments of fixed rent, and
the Tenant shall not be entitled to withhold any such payment until the
Expiration Date set forth in this Lease. The Landlord shall be entitled
to recover from the Tenant each monthly Deficiency as the same arises,
and no suit to collect the amount of the Deficiency for any month shall
prejudice the Landlord's right to collect the Deficiency for any
subsequent month by a similar proceeding.
(iii) Whether or not the Landlord shall have collected any monthly
Deficiency, the Landlord shall be entitled to recover from the Tenant,
and the Tenant shall pay to the Landlord on demand, in lieu of any
further Deficiency as and for liquidated and agreed final damages, and
not as a penalty, a sum equal to the amount by which the rent for the
period of the unexpired portion of the lease term (commencing on the
date immediately succeeding the last day with respect to which a
Deficiency payment, if any, was collected) exceeds the then fair and
reasonable rental value of the Premises for the same period, both
discounted to present value at six percent (6%). If, before
presentation of proof of such liquidated damages to any court, the
Premises, or any part thereof, shall have been relet by the Landlord
for the period which would have constituted the unexpired portion of
the term, or any part thereof, the amount of rent reserved upon such
reletting shall be deemed, prima facie, to be the fair and reasonable
rental value for the part or the whole of the Premises so relet.
(d) The liability of the Tenant shall survive the issuance of a final
order and warrant of dispossess, and re-entry by the Landlord, and any other
termination of this lease as a result of an Event of Default, and the granting
by the Landlord of a new lease upon the Premises to another tenant, and the
Tenant hereby waives any defense which might be predicated upon any of said acts
or events. If the Premises are re-let together with any other space in the
building, the rental collected and the expenses incurred in connection with such
re-letting shall be apportioned as reasonably determined by the Landlord. In no
event shall the Tenant be entitled to receive any rents collected or payable
under any re-letting, whether or not such rents exceed the fixed rent reserved
under this lease. Nothing contained in Articles TWENTY-FIVE or TWENTY-SIX shall
be deemed to limit or preclude the recovery by the Landlord from the Tenant of
the maximum amount allowed to be obtained as damages by any statute or rule of
law, or of any sums or damages to which the Landlord may be entitled in addition
to the damages set forth in paragraph (c) above.
ARTICLE TWENTY-SEVEN
SURRENDER AT EXPIRATION
Upon the expiration or any termination of the term of this lease, the
Tenant shall quit and surrender the Premises, together with any fixtures,
equipment or appurtenances installed in the Premises at the commencement of this
lease, and any alterations, decorations, additions and improvements which are
not to be removed in compliance with the provisions of Article FOUR
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hereof, to the Landlord, in good order and condition, ordinary wear excepted.
The Tenant shall remove all its furnishings, trade fixtures, stock in trade and
like personal property in accord with the requirements of Article FOUR, so as to
leave the Premises broom-clean and in an orderly condition. If the last day of
the term of this lease falls on Saturday or Sunday, this lease shall expire on
the business day immediately preceding. The Tenant's obligation to observe and
perform this covenant shall survive the expiration or other termination of the
term of this lease. The Tenant expressly waives, for itself and for any person
claiming by, through or under the Tenant, any rights which the Tenant or any
such person may have under the provisions of Section 2201 of the New York Civil
Practice Law and Rules or any law of like import then in force in connection
with any holdover summary proceedings when the Landlord may institute to enforce
the provisions of this Article. The Tenant acknowledges that possession of the
Premises must be surrendered to the Landlord on the Expiration Date. The parties
recognize that the damage to the Landlord resulting from any failure by the
Tenant to timely surrender possession of the Premises will be substantial, will
exceed the amount of the monthly installments of the fixed rent and additional
rent payable hereunder and will be impossible to accurately measure. The Tenant
agrees that if possession of the Premises is not delivered to the Landlord on
the Expiration Date (or any sooner termination date), in addition to any other
rights or remedies the Landlord may have hereunder or in equity or at law, and
without in any manner limiting the Landlord's right to demonstrate and collect
any damages suffered by the Landlord, the Tenant shall pay to the Landlord on
account of use and occupancy of the Premises for each month and for each portion
of any month during which the Tenant holds over in the Premises after the
Expiration Date, (a) for the first month following the Expiration Date, a sum
equal to 125% of the aggregate of the fixed rent and additional rent which was
payable under this lease during the last month of the term, (b) for the second
month following the Expiration Date, a sum equal to 150% of the aggregate of the
fixed rent and additional rent which was payable under this lease during the
last month of the term, and (c) for any month thereafter, a sum equal to 200% of
the aggregate of the fixed rent and additional rent which was payable under this
lease during the last month of the term, provided, however, that in no event
shall the amount payable in any month be less than the fair market value of the
Premises. In addition, and without in any manner limiting the Landlord's right
to demonstrate and collect any damages suffered by the Landlord and arising from
the Tenant's failure to surrender the Premises as provided herein, the Tenant
shall indemnify and hold the Landlord harmless from and against all cost,
liability, damages and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) resulting from a delay of three months or
more by the Tenant in so surrendering the Premises, including, without
limitation, any claims made by any succeeding or prospective tenant as a result
of such delay. Nothing herein contained shall be deemed to permit the Tenant to
retain possession of the Premises after the Expiration Date (or sooner
termination) of this lease or to limit in any manner the Landlord's right to
regain possession of the Premises through summary proceedings, or otherwise, and
no acceptance by the Landlord of payments from the Tenant after the Expiration
Date shall be deemed to be other than on account of the amount to be paid by the
Tenant in accordance with the provisions of this Article. The provisions of this
Article shall survive the expiration of the term of this lease.
ARTICLE TWENTY-EIGHT
QUIET ENJOYMENT
The Landlord covenants that, if the Tenant shall duly keep and perform
all the terms and conditions hereof, the Tenant shall peaceably and quietly
have, hold and enjoy the Premises for the term aforesaid, free from interference
from the Landlord or anyone claiming by, through or under the Landlord, subject
however to ground leases, underlying leases and mortgages as hereinbefore
described, and to the lien, rights and estate by virtue of unpaid taxes of any
government having jurisdiction of the Premises of which the herein Premises are
a part.
ARTICLE TWENTY-NINE
SECURITY DEPOSIT
(a) The Tenant has deposited with the Landlord the sum of Five Million,
Seven Hundred Ninety-six Thousand and no/100 Dollars ($5,796,000) to secure the
faithful performance by the Tenant of all the terms, conditions, covenants and
agreements of this lease, and to make good to the Landlord any damage which it
may sustain by reason of any act or omission of the Tenant. The
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Landlord shall segregate the said security deposit as a trust fund not to be
mingled with other funds of the Landlord, and if, during the term of this lease,
the Landlord shall sell, exchange or lease the entire building, subject to this
lease, or, being the lessee thereof, shall assign its lease, the Landlord shall
have the right to pay or transfer the said deposit to such grantee, lessee, or
assignee, as the case may be, and, in such event, the Landlord shall be released
from all responsibility and liability in connection therewith, and the Tenant
will look solely to said grantee, lessee, or assignee for its return. Tenant may
request that cash security be invested in Treasury Securities with a maturity of
not more than 92 days. If the aforesaid security deposit shall be deposited with
a bank or trust company, savings bank or savings and loan association, the
Landlord shall advise the Tenant of the name and address thereof. The Tenant
shall not be entitled to the payment of any interest on the aforesaid security
deposit unless earned and any interest earned upon such deposit, less the amount
equal to the lesser of $5,000 or 1% of the deposit, which shall be paid to
Landlord as an administration expense, shall, at Tenant's request, be paid
annually to Tenant. The Tenant's interest in said deposit shall not be assigned
or encumbered without the written consent of the Landlord and neither the
Landlord nor its successors or assigns shall be bound by any such attempted
assignment or attempted encumbrance, and within sixty (60) days after the
expiration of the term, the amount of said deposit shall be repaid to the
Tenant, less any proper charges against the same, as hereinabove or hereinafter
provided. If the Tenant shall at any time be in default with respect to any
payment of rent or of additional rent or of any other payment due from the
Tenant to the Landlord under this lease, or if the Landlord shall be damaged by
any act or omission of the Tenant the Landlord may, at its option, apply such
portion of said deposit as may be adequate to cure such default or to make good
such damage, including, but not by way of limitation, interest, costs, fees and
other expenses, paid or incurred by the Landlord, and thereafter such portion so
applied shall be free from any claim by the Tenant for its return. If the
Landlord shall re-enter, pursuant to the provisions of this lease (other than in
the event of insolvency in which event the provisions of Article TWENTY-THREE of
the lease shall apply), the Landlord shall continue to hold the said deposit, as
security for the performance of the Tenant's obligations, until the date herein
expressly fixed for the expiration of the term, and apply the same from time to
time to the unpaid obligations of the Tenant, under the same terms and
conditions as if the said lease were still in full force and effect. No
termination of this lease or re-entry by the Landlord for default of the Tenant
shall entitle the Tenant to the return of any part of said deposit, nor shall
the retention of such deposit, after such re-entry, impair or otherwise affect
the Tenant's liability to the Landlord during the balance of the term originally
provided for. If, at any time, the said deposit shall be diminished, by reason
of the Landlord's having applied any part thereof in accordance with the
provisions of this paragraph, the Tenant shall pay over to the Landlord upon
demand, the equivalent of such decrease, to be added to said deposit and to be
held and applied in accordance with the provisions of this paragraph.
Provided that no Event of Default has occurred and is continuing at the
time of the scheduled reduction hereinafter set forth, then the security deposit
shall be reduced on anniversaries of the Initial Premises Rent Commencement Date
in accordance with the following schedule:
Through June 30, 2001 $5,796,000
Thereafter until June 30, 2002 $5,071,500
Thereafter until June 30, 2003 $4,347,000
Thereafter until June 30, 2004 $3,622,500
Thereafter until the Expiration Date $2,898,000
(b) In lieu of delivering cash as the security deposit, the Tenant may
deliver to the Landlord an unconditional, irrevocable and transferable letter of
credit (such letter of credit or any extension or replacement thereof, being
hereinafter referred to as the "Letter of Credit") issued for the account of the
Landlord by a New York Clearing House bank acceptable to the Landlord, in
substance reasonably satisfactory to the Landlord, which Letter of Credit is to
be held by Landlord in accordance with the terms of this Article TWENTY-NINE.
The Letter of Credit shall permit the Landlord or its duly authorized
representative (1) to draw thereon up to the full amount of the credit evidenced
thereby upon presentation of the Letter of Credit and a sight draft in the
amount to be drawn and (2) to draw the full amount thereof to be held as cash
security pursuant to this Article if for any reason the Letter of Credit is not
renewed within sixty (60) days prior to its expiration date.
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The Letter of Credit shall be fully transferable by the Landlord and its
successors and assigns without charge to the Landlord. In the event that the
expiration date of the Letter of Credit is prior to sixty (60) days after the
Expiration Date (or sixty days after any subsequent date through which the term
of this lease may be extended), if the Landlord receives notice from the bank or
the Tenant that the Letter of Credit is not being renewed or in the event that
the Tenant has not delivered a replacement cash security deposit or Letter of
Credit to the Landlord by thirty (30) days before the expiration of the Letter
of Credit, then the Landlord, acting through one of its duly authorized
representatives, shall be entitled to present the Letter of Credit for immediate
payment of the then potential amount available pursuant to the Letter of Credit,
and the amount of the Letter of Credit shall become the Deposit hereunder and
shall be held, applied and returned by the Landlord in accordance with the terms
provided by the lease for the holding, application and return of the Deposit. If
the Letter of Credit is not being renewed but the Tenant does deliver a
replacement Deposit or a similar Letter of Credit by thirty (30) days before
expiration of the Letter of Credit, then the Landlord shall not thereafter be
entitled to present the expiring Letter of Credit for payment of any amounts.
ARTICLE THIRTY
REAL ESTATE TAX AND OPERATING EXPENSE ESCALATION
(a) REAL ESTATE TAXES ESCALATION. In order to adjust, during the term
of this lease, for increases in the expenses of the Landlord for Real Estate
Taxes, the Tenant, commencing on April 1, 2001 and in each year thereafter,
shall pay to the Landlord, as additional rent, the Tenant's Proportionate Share
of any Increase in such Real Estate Taxes, all in accordance with paragraphs (c)
through (g) below.
(b) OPERATING EXPENSE ESCALATION. In order to adjust, during the term
of this lease, for increases in the expenses of the Landlord in operating the
building, the Tenant shall pay to the Landlord, as additional rent, commencing
on April 1, 2001 and on each April 1 thereafter, the amount indicated in
Schedule 1 as the Operating Expense Payment, such amount to be paid (in addition
to the annual fixed rent) in twelve equal monthly installments.
(c) DEFINITIONS. As used in this Article the following capitalized
words or expressions shall have the meaning ascribed to them below:
1. "REAL ESTATE TAXES" shall mean and include all expenditures of the
Landlord for taxes or assessments payable by the Landlord, as finally
determined, upon or with respect to the building and the land upon
which it is located, imposed by Federal, State or local government
(plus all reasonable expenditures for fees and expenses incurred in the
course of obtaining a reduction in any tentative assessed valuation),
but shall not include income, franchise, inheritance or capital stock
or like taxes.
2. "INCREASE IN REAL ESTATE TAXES" shall mean the amount by which Real
Estate Taxes in any Subsequent Year, exceed the real estate taxes in
the Base Year (the "Base Real Estate Taxes").
3. "PROJECTED REAL ESTATE TAXES" shall mean the Landlord's reasonable
estimate of Real Estate Taxes for the particular Subsequent Year.
4. "COMPARATIVE STATEMENT" shall mean a statement, in writing signed by
the Landlord, or on its behalf by an officer of any corporation acting
as its managing agent, showing (i) a comparison of (a) Real Estate
Taxes for the Base Year with (b) Projected Real Estate Taxes for the
upcoming Subsequent Year, (ii) if the Tenant paid additional rent
pursuant to this Article with respect to the immediately preceding
Subsequent Year as a result of Increase in Real Estate Taxes, any
adjustment necessitated by a variance between Projected Real Estate
Taxes for such immediately preceding Subsequent Year (as shown in the
current Comparative Statement) and the actual Real Estate Taxes for
such immediately preceding Subsequent Year (as shown in the last
Comparative Statement) and (iii) the Operating Expense Payment for the
then current Subsequent Year. At the request of
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the Tenant, the Comparative Statement shall be accompanied by a copy of
the most recent statement for real estate taxes for the Premises
received by Landlord from the City of New York.
5. "TENANT'S PROPORTIONATE SHARE" shall mean 8.64% initially and shall
be adjusted appropriately as additional space is added.
6. "BASE YEAR" shall mean the calendar year 2000. The Base Real Estate
Taxes shall be computed as the average of the Real Estate Taxes for the
1999/2000 and 2000/2001 fiscal years.
7. "SUBSEQUENT YEAR" shall mean each twelve-month period commencing
April 1, starting with the period commencing April 1, 2001.
(d) STATEMENTS FOR THE TENANT. Prior to April 1, 2001, and on or before
that day in each Subsequent Year, the Landlord will furnish a Comparative
Statement to the Tenant. The failure of the Landlord to furnish a Comparative
Statement shall be without prejudice to the right of the Landlord to furnish a
Comparative Statement at any time in the future.
Every Comparative Statement furnished by the Landlord pursuant to this
Article shall be conclusive and binding upon Tenant unless within the later of
(i) ninety (90) days after the receipt of such Comparative Statement, or (ii)
ninety (90) days after the Tenant has received a copy of the tax bill if the
Tenant has requested a copy of the tax bill within ninety days after receipt of
the Comparative Statement, Tenant shall notify Landlord that it disputes the
correctness thereof, specifying the particular respects in which such
Comparative Statement is claimed to be incorrect. Pending the determination of
such dispute, Tenant shall pay additional rent in accordance with such
Comparative Statement and such payment shall be without prejudice to Tenant's
position and to the Tenant's rights to a refund of any overpayment. If the
dispute shall be determined in Tenant's favor, Landlord shall within five
business days after Landlord's receipt of the notice of such determination, pay
Tenant the amount of Tenant's overpayment of additional rent resulting from
compliance with such Comparative Statement. This provision shall survive the
expiration or termination of the lease and shall be binding on the successors of
each party.
(e) COMPUTATION OF INCREASES IN RENT PAYABLE BY TENANT. When the
Landlord shall furnish the Tenant with any Comparative Statement in accordance
with this Article which shall show an Increase in Projected Real Estate Taxes,
then commencing April 1, 2001, and on April 1 of each Subsequent Year in
question, in addition to the increase in rent attributable to the Operating
Expense Payment for such Subsequent Year, the rent payable under the lease shall
be increased by the Tenant's Proportionate Share of the increase in the
Projected Real Estate Taxes. Such increases shall be payable (with payment on
account of such increases) as follows: on the first day for the payment of rent
under this lease following the receipt of the Comparative Statement, the Tenant
shall pay to the Landlord the sum equal to (1) the aggregate of one-twelfth of
the Tenant's Proportionate Share of the increase in Projected Real Estate Taxes,
plus or minus, as the case may be, (2) any adjustment necessitated by a variance
between (x) the Projected Real Estate Taxes for such immediately preceding
Subsequent Year and (y) the actual Real Estate Taxes for such immediately
preceding Subsequent Year, plus (3) one-twelfth of the Tenant's Operating
Expenses payment. Until a different Comparative Statement shall be submitted as
above provided, the monthly installments or rent payable under this lease due to
an Increase in Projected Real Estate Taxes shall continue to be increased by
such amount; however, notwithstanding any other provision herein, the failure of
the Landlord to submit a Comparative Statement in any Subsequent Year shall not
affect the amounts payable by Tenant as Operating Expense Payment in such
Subsequent Year.
With respect to the Comparative Statement furnished to the Tenant in
the Subsequent Year following the year in which the term of this lease
terminates, if such Comparative Statement shall indicate an adjustment
necessitated by a variance of the type referred to in clauses (x) and (y) in the
immediately preceding paragraph, then the Tenant shall promptly pay to the
Landlord, or the Landlord promptly shall pay to the Tenant, as the case may be,
the amount of any such adjustment as indicated in such Comparative Statement.
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(f) INSPECTION OF BOOKS. The Tenant or its authorized representative
shall have a right to examine the books of the Landlord showing the Real Estate
Taxes with respect to the building during regular business hours for the purpose
of verifying the information set forth in any Comparative Statement relating to
any Increase in Real Estate Taxes shown in such Comparative Statement; provided
that a written request for such inspection is made by the Tenant within 120 days
of the receipt of any such Comparative Statement.
(g) DECREASES IN REAL ESTATE TAXES. In no event shall any decrease in
the Real Estate Taxes in any way reduce the fixed rent or additional rent
payable by the Tenant under this lease, except to the extent to which a decrease
in Real Estate Taxes shall result in a decrease in the additional rent payable
pursuant to paragraph (a) of this Article; provided, however, that no decrease
in Real Estate taxes shall in any way reduce any additional rent payable on
account of any Operating Expense Payment.
ARTICLE THIRTY-ONE
SERVICES
(a) For purposes of this lease, "Business Hours" shall mean normal
building operation hours of eight a.m. to six p.m. and "Business Days" shall
mean Monday through Friday, except for those days designated as legal holidays
by the Federal or State government or by the unions now or hereafter
representing the Landlord's building personnel.
(b) During the term of this lease, the Landlord shall furnish during
Business Hours on Business Days passenger and freight elevator service with the
elevators now or hereafter in the building sufficient heat during the cold
season to heat the Premises, and condenser water from the Landlord's cooling
tower equipment located on the roof of the building. The Landlord shall maintain
in service and available for the non-exclusive use of the Tenant at least one
passenger elevator at all times. If the Tenant requires freight elevator
service, heat on non-Business Days or during non-Business Hours on Business
Days, the Landlord will furnish the additional requested service upon notice of
the Tenant's need therefor. Such notice may be written or oral and shall be
given prior to 2 p.m. on the day upon which such service is requested or by 2
p.m. of the last preceding Business Day if service is requested on other than a
Business Day. The Tenant will pay for any overtime freight elevator service,
heat at the prevailing rate per hour as established from time to time by the
Landlord for such services at the building or in the buildings of the Landlord,
generally, for each hour during which the additional service is supplied. All
charges for such overtime service shall constitute additional rent and shall be
payable within fifteen (15) days after presentation of a bill, and in the event
of default of payment therefor, the Landlord may refuse further service and the
Landlord shall have all remedies available to it for collection herein specified
with respect to rent. The failure on the part of the Landlord to furnish
elevator service, heat or condenser water, if due to breakdowns, repairs,
maintenance, strikes or other causes beyond the control of the Landlord, shall
involve no liability on the part of the Landlord and shall not constitute an
actual or constructive eviction, nor relieve the Tenant from any of its
obligations under this lease nor entitle the Tenant to an abatement of rent.
(c) The Landlord shall provide 190 tons of condenser water service per
floor to the 4th and 6th floors of the premises (and a pro rata share to the
fifth floor) (the "Base Condenser Water Service") from the Landlord's cooling
tower equipment located on the roof of the building, such service to be
available 24 hours a day, 365 days a year. The Tenant shall pay an annual charge
for the provision of Base Condenser Water Service at the rate of $750 per ton
per year, such rate to increase 3% each year, commencing May 1, 2001. Such
charges shall constitute additional rent. The Tenant shall, at its own expense,
maintain all supplemental air-conditioning systems now or hereafter installed in
the Premises in good condition and repair, using a contractor approved by the
Landlord. The Landlord shall maintain in good order and repair those portions of
the building air-conditioning system serving the Premises, excluding all
ductwork, diffusers, thermostat controls, and any other part of the air-
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conditioning system located outside of the machine room within the Premises. In
all events, the Tenant shall be responsible for any repairs required to be made
to any part of the air-conditioning system when the need for such repairs arises
from the causes set forth in clauses (i) through (iv) of Article THREE (a).
Upon written request of the Tenant, the Landlord shall provide up to a
maximum of forty additional tons of condenser water service above the Base
Condenser Water Service for the Premises, at an annual cost per ton in effect at
the time such additional condenser water service is provided. Tenant shall also
reimburse Landlord for the hard and soft costs actually incurred by Landlord in
providing condenser water service in excess of the Base Condenser Water Service.
(d) Provided the Tenant shall keep the Premises in order, the Landlord,
at the Landlord's expense, shall cause the Premises, excluding any portions
thereof used for the storage, preparation, service or consumption of food or
beverages, to be cleaned on Business Days substantially in accordance with the
Specifications set forth as SCHEDULE B annexed hereto. The Tenant, at the
Tenant's sole cost and expense, shall cause all portions of the Premises used
for the storage, preparation, service or consumption of food or beverages to be
cleaned daily in a manner reasonably satisfactory to the Landlord, and to be
exterminated against infestation by vermin, rodents or roaches regularly and, in
addition, whenever there shall be evidence of any infestation. Any such
extermination shall be done at the Tenant's sole cost and expense and by
contractors reasonably approved by the Landlord. If the Tenant shall perform any
additional cleaning services in addition to the services provided by the
Landlord, the Tenant shall employ such cleaning contractor providing services to
the building on behalf of the Landlord or such other cleaning contractor as
shall be approved by the Landlord. The Tenant shall, at its sole cost and
expense, comply with all present and future laws, ordinances, regulations and
requirements of the City, State or Federal Government or any agency having
jurisdiction over the building, or any rules which the Landlord may reasonably
impose, with respect to the recycling or sorting of refuse and rubbish. The
Landlord reserves the right to refuse to collect or accept from the Tenant any
refuse or rubbish which is not separated and sorted as required and to require
the Tenant to arrange for such collection, at the Tenant's sole cost and
expense, using a contractor reasonably satisfactory to the Landlord. The Tenant
shall indemnify the Landlord from all liability arising from the Tenant's
failure to comply with the provisions of this Article. The Tenant shall pay to
the Landlord the cost of removal of any of the Tenant's refuse and rubbish from
the building which exceeds normal office requirements.
(e) The Landlord shall provide to the Premises hot and cold water for
ordinary drinking, cleaning and lavatory purposes. If the Tenant uses or
consumes water for any other purposes or in unusual quantities (of which fact
the Landlord shall be the sole judge), the Landlord may, at the Tenant's
expense, install a water meter or require the Tenant to install a meter. The
Tenant shall thereafter maintain the meter in good working order at the Tenant's
expense and the Tenant shall pay for water consumed as shown on said meter as
additional rent as and when bills are rendered at 110% of the Landlord's cost
therefor. In default in making such payment, the Landlord may pay such charges
and collect the same from the Tenant. The Tenant shall pay the New York City
sewer rents, charges or any other tax apportioned to the Tenant's metered
consumption of water at the Premises. The apportionment of the sewer rent to the
Premises shall be made in accord with the measurement or apportionment of water
consumed at the Premises as provided herein. The sewer rents shall be billed
with the water charges and shall constitute additional rent.
(f) The Landlord may suspend any service which it is required to
provide hereunder, if it should become necessary or proper so to do, at any
time. The Landlord shall restore such service within a reasonable time, making
due allowance for labor troubles, acts of God, or any cause beyond the
Landlord's control. Should the Tenant be in default in the payment of any rent
hereunder, the Landlord may, upon not less than three days' notice, and without
diminution of the liability of the Tenant hereunder, and without constituting an
eviction, constructive or otherwise, suspend or refuse the Tenant freight
elevator service and should the Tenant, after notice, violate the provisions of
Rule 11, the Landlord may, without any diminution of such liability or
constituting such eviction, suspend or refuse the Tenant freight elevator
service until the conditions in violation of Rule 11 have been fully remedied.
(g) The Landlord shall be entitled to refuse to furnish passenger or
freight elevator service in connection with any sale at auction of the Tenant's
fixtures, machinery, stock in trade and other
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property or a sale in any other manner of all or substantially all of such
property unless the Landlord shall have been given not less than two days'
notice of the intention to hold the auction or other sale and unless the
Landlord shall be given an undertaking by a person, firm or corporation of
satisfactory financial resources wherein the Landlord shall be indemnified
against (i) all expense incurred by the Landlord in connection with the removal
by purchasers of any property sold to them at the auction or other sale, (ii)
all expense for removal or storage of any property sold at the auction or other
sale which is not removed by the purchaser within two days following the sale,
and (iii) all expenses which the Landlord may incur for the removal of property
not sold and waste and rubbish from the Premises.
(h) The Tenant shall have access to and the main entry to the building
shall be open and staffed by a doorman, security guard, concierge or attendant
twenty-four (24) hours a day, seven (7) days a week. During Business Hours on
Business Days, messengers shall have access to the Premises through the
passenger elevators, or, if bulky packages are being delivered, through the
freight elevator. During non-Business Hours or on non-Business Days, messengers
shall have access to the Premises. The Landlord reserves the right, during the
term of this lease, to designate an area in the building for packages to be
delivered, either for transmittal to the Tenant, or notification to the Tenant
of the delivery of same.
ARTICLE THIRTY-TWO
INSURANCE
(a) The Tenant shall obtain and keep in full force and effect during
the term of this lease, at the Tenant's sole cost and expense, (i) a policy of
comprehensive general public liability and property damage insurance on an
occurrence basis, with a broad form contractual liability endorsement and a
completed operations endorsement with minimum limits with a combined single
limit with respect to each occurrence in an amount of not less than $5,000,000
for injury (or death) to persons and damage to property; (ii) an "all risk"
insurance policy, with extended coverage, covering all of Tenant's personal
property and alterations for 100% of the replacement cost thereof, as well as
business interruption insurance adequate to cover the Tenant's loss of income as
a result of a loss sustained by a peril covered under the policy; (iii) Worker's
Compensation Insurance, as required by law; and (iv) such other insurance in
such amounts as Landlord may reasonably require from time to time. Such policies
shall provide that the Tenant is named as the insured. Landlord and any managing
agent, lessors and mortgagees (whose names have been furnished to the Tenant)
shall be named as additional insureds, as their respective interests may appear.
The Tenant shall have the right to insure and maintain the insurance coverages
required under this Article under blanket insurance policies covering other
premises occupied by the Tenant so long as such blanket policies comply as to
terms and amounts with the requirements set forth in this Article; provided
that, upon request, the Tenant shall deliver to the Landlord a certificate from
the Tenant's insurer evidencing the portion of such blanket insurance allocable
to the Premises.
(b) All insurance required to be carried by Tenant hereunder shall be
written in form and substance reasonably satisfactory to the Landlord and issued
by a reputable and independent insurer permitted to do business in the State of
New York, and rated in Best's Insurance Guide (or any successor thereto) as
having a general policyholder rating of not less than "A" and a financial rating
of at least "XIII". The policy required to be carried pursuant to paragraph (a)
(i) above shall contain a provision that (1) the policy shall be non-cancelable
with respect to the Landlord and such managing agents, lessors and mortgagees
(whose names and addresses have been furnished to the Tenant) unless thirty (30)
days' prior written notice shall be given to the Landlord by certified mail,
return receipt requested, which notice shall contain the policy number and the
name of the insured and additional insureds, and (2) no act or omission of the
Tenant shall affect or limit the obligation of the insurer to pay the amount of
any loss sustained. Certificates of insurance (including endorsements and
evidence of the waivers of subrogation required pursuant to Article SIXTEEN
hereof), or evidence of renewal of such coverage, shall be delivered to the
Landlord prior to the Commencement Date (or any earlier entry upon the Premises
by the Tenant or any of the Tenant's employees, agents or contractors prior to
the Commencement Date), and at least thirty (30) days prior
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to the expiration of such policy. If the Tenant fails to obtain or keep in force
the insurance required by this Article, or to pay the premiums thereof, provided
the Tenant is afforded written notice of the Landlord's intention to pay such
premium ten (10) days prior thereto, in addition to all other rights the
Landlord may have under this lease, the Landlord may, from time to time, and as
often as such failure shall occur, pay the premiums therefor, and any and all
sums so paid for insurance by the Landlord shall be and become, and are hereby
declared to be, additional rent under this lease and shall be due and payable
within fifteen (15) days after rendition of a bill therefor.
ARTICLE THIRTY-THREE
DEFAULT UNDER OTHER LEASES
Intentionally omitted.
ARTICLE THIRTY-FOUR
WORK TO BE DONE BY LANDLORD
If work of any nature is agreed herein to be done by the Landlord, the
Tenant agrees that it may be done after the Commencement Date and that no rebate
of rent or allowance will be granted therefor, except as set forth in paragraph
(g) of Article One hereof. The Landlord shall not be required to furnish any
work or materials to the Premises, except as expressly provided in the Work
Letter attached to this lease EXHIBIT C. In case the Landlord is prevented from
making any repairs, improvements, decorations or alterations, installing any
fixtures or articles of equipment, furnishing any services or performing any
other covenant herein contained to be performed on the Landlord's part, due to
the Landlord's inability to obtain, or difficulty in obtaining, labor or
materials necessary therefor, or due to any governmental rules and regulations
relating to the priority of national defense requirements or strikes, or due to
labor troubles, accident or due to any other cause beyond the Landlord's
control, the Landlord shall not be liable to the Tenant for damages resulting
therefrom, nor (except as expressly otherwise provided in Article SIXTEEN hereof
in respect of damage to the Premises due to fire), shall the Tenant be entitled
to any abatement or reduction of rent by reason thereof, nor shall the same give
rise to a claim in the Tenant's favor that such failure constitutes actual or
constructive, total or partial, eviction from the Premises.
ARTICLE THIRTY-FIVE
CONSENT TO JURISDICTION
This lease shall be governed in all respects by the laws of the State
of New York. The Tenant irrevocably consents and submits to the jurisdiction of
any Federal, State, or county court sitting in the State of New York in any
action or proceeding arising out of this lease and/or the use and occupation of
the Premises. The Tenant agrees that any action or proceeding brought by the
Tenant against the Landlord in respect of any matters arising out of or relating
to this lease may only be brought in the State of New York, County of New York.
The Tenant hereby irrevocably designates Colby Attorneys Service Co., Inc., 41
State Street, Suite 106, Albany, New York 12207 to accept service of process on
the Tenant's behalf and agrees that such service shall be deemed sufficient. If
the Tenant is not a New York partnership or corporation or a foreign corporation
qualified to do business in the State of New York, it shall designate in
writing, an agent in New York County for service under the laws of the State of
New York.
ARTICLE THIRTY-SIX
TENANT LIABILITY
(a) If more than one tenant is named as the tenant under this lease,
each of the named tenants shall be jointly and severally liable for the
performance of all of the terms, covenants and agreements on the Tenant's part
to be performed under this lease.
(b) If the Tenant (or any permitted assignee of Tenant) is a
partnership (or is comprised of two or more persons, individually or as
co-partners of a partnership or shareholders of a professional corporation) the
following provisions shall apply to each tenant: (i) the liability of each of
the partners comprising the Tenant shall be joint and several; (ii) each of the
parties comprising the Tenant hereby consents in advance to, and agrees to be
bound by, any modification, termination,
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discharge or surrender of this lease which may hereafter be made and by any
notices, or other communications which may hereafter be given by the Tenant or
any of the parties comprising the Tenant; (iii) all statements, notices or other
communications given to the Tenant or to any of the parties comprising the
Tenant shall be deemed given to the Tenant and all parties; (iv) if the Tenant
shall admit new partners, all such new partners shall, by their admission to the
Tenant, be deemed to have assumed performance of all of the terms, covenants and
conditions of this lease on Tenant's part to be observed and performed, and (v)
the Tenant shall give to the Landlord notice of the admission of any new
partners, and upon demand of the Landlord, such new partners shall execute and
deliver to the Landlord an agreement in form satisfactory to the Landlord,
wherein each new partner shall assume performance of all of the terms, covenants
and conditions of this lease on Tenant's part to be performed (but the
Landlord's failure to request such an agreement nor the partners failure to
deliver such an agreement shall relieve the partner of its liability hereunder).
(c) If the Tenant is a partnership, it shall not convert to or become a
corporation, limited liability company, registered limited liability partnership
or any other form of business organization (such entity being referred to as a
"Successor Entity") , without the Landlord's prior written consent. The Landlord
shall not unreasonably withhold its consent to the Tenant's conversion to a
Successor Entity provided that (i) the Tenant shall cause each partner of the
Tenant to execute and deliver to the Landlord an agreement, in a form reasonably
satisfactory to the Landlord, pursuant to which each partner of the Tenant
agrees to remain personally liable jointly and severally for all of the terms,
covenants and conditions of the lease that are to be performed by the Successor
Entity; (ii) the Successor Entity shall have a Net Worth (as hereinbefore
defined) of not less than the Net Worth of the Tenant on the date of execution
of the lease; (iii) no Event of Default has occurred and is continuing
hereunder; (iv) the Successor Entity succeeds to all of the business and assets
of the Tenant; (v) the Tenant shall deliver to the Landlord such documentation
as may be reasonably required by the Landlord to evidence compliance with the
requirements set forth above; and (vi) the Tenant shall reimburse the Landlord
for all reasonable costs and expenses, including, without limitation, attorneys'
fees, that may be incurred by the Landlord in connection with the conversion of
the Tenant to a Successor Entity.
ARTICLE THIRTY-SEVEN
ADJACENT EXCAVATION-SHORING
If an excavation shall be made upon land adjacent to the Premises, or
shall be authorized to be made, the Tenant shall afford to the person causing or
authorized to cause such excavation, license to enter upon the Premises for the
purpose of doing such work as said person shall deem necessary to preserve the
wall or the building from injury or damage and to support the same by proper
foundations without any claim for damages or indemnity against the Landlord, or
diminution or abatement of rent.
ARTICLE THIRTY-EIGHT
FAILURE TO GIVE POSSESSION
In the event the Landlord, for any reason, shall be unable to give
possession of the Premises by the date set forth in this lease for the
commencement of the term, this lease shall nevertheless continue in full force
and effect and the Landlord shall tender and the Tenant shall take possession of
said Premises under the terms of this lease as soon as the Landlord shall have
tendered possession thereof to the Tenant; the rent, however, to begin on the
date upon which such possession is tendered to the Tenant, subject to the free
rent provisions of paragraph (g) of Article One. This is intended to constitute
an "express provision to the contrary" within the meaning of Section 223-a of
the New York Real Property Law. No such failure to give possession on the date
set forth in this lease for the commencement of this term shall affect the
validity of this lease or give rise to any claim for damages by the Tenant or
claim for rescission of this lease, nor shall the same be construed in any way
to extend the term of this lease. In the event that any tenant holds over in
Premises demised to the Tenant hereunder, Landlord shall use reasonably
commercial efforts, including the institution of summary proceedings, to obtain
possession of such Premises.
ARTICLE THIRTY-NINE
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BROKER
The Tenant represents and warrants to the Landlord that all of the
Tenant's negotiations respecting this lease which were conducted with or through
any person, firm or corporation, other than the officers of the Landlord, were
conducted through Plymouth Partners, Ltd. (the "Broker"). The Landlord agrees to
pay the commission due to the Broker pursuant to the terms of a separate
agreement. Landlord and Tenant agree to indemnify and hold one another harmless
from and against all demands, liabilities, losses, causes of action, damages,
costs and expenses (including, without limitation, attorneys' fees and
disbursements) suffered or incurred in connection with any claims for a
brokerage commission, finder's fee, consultation fees or other compensation
arising out of any conversations or negotiations had by the party against whom
indemnification is claimed with any broker or other party except for the Broker.
ARTICLE FORTY
RENT RESTRICTIONS
If at the commencement of, or at any time or times during the term of
this lease, the fixed rent or additional rent reserved in this lease shall be or
become uncollectible by virtue of any law, governmental order or regulation, the
Tenant shall enter into such agreements and take such other steps (without
additional expense to the Tenant) as the Landlord may reasonably request and as
may be legally permissible to permit the Landlord to collect the maximum amounts
which may from time to time be legally collectible while such restrictions are
in effect (and not in excess of the amounts reserved for under this lease). Upon
the termination of such rent restrictions (a) the fixed rent and additional rent
shall become and thereafter be payable in accordance with the terms of this
lease, and (b) the Tenant shall pay to the Landlord, if legally permissible, an
amount equal to (i) the rent which would have been paid during the period had
such restrictions not been in effect, less (ii) the rents which were paid by the
Tenant to the Landlord during the period such restrictions were in effect.
ARTICLE FORTY-ONE
CERTIFICATES BY TENANT
At any time and from time to time, the Tenant, for the benefit of the
Landlord or any other entity specified by the Landlord, within fifteen business
days after request, shall deliver to the Landlord a duly executed and
acknowledged certificate, certifying that this lease is not modified and is in
full force and effect (or if there shall have been modifications that the same
is in full force and effect as modified and stating the modifications); the
commencement and expiration dates of the lease; the dates to which rent and
additional rent have been paid; whether or not, to the best knowledge of the
Tenant, there are any existing defaults on the part of either the Landlord or
the Tenant in the performance of the terms, covenants and conditions of the
lease to be performed by such party, and if so, specifying the default; and such
other information as the Landlord may reasonably request with respect to this
lease.
ARTICLE FORTY-TWO
RESTRICTIONS ON TENANT'S USE
(a) The Tenant agrees that the value of the Premises and the building
of which the Premises form a part and the reputation of the Landlord will be
seriously injured if the Premises are used for any obscene or pornographic
purposes or any sort of commercial sex establishment. The Tenant covenants and
agrees not to sell, display or post, or knowingly allow to be sold, displayed or
posted any obscene or pornographic material on the Premises. The Tenant agrees
that if at any time the Tenant violates any of the provisions of this Article,
such violation shall be deemed a breach of a substantial obligation of the terms
of this lease.
(b) The Tenant covenants and agrees that during the term of this lease,
it will not use the Premises or any part thereof, or permit the Premises or any
part thereof to be used (1) for banking, trust company or safe deposit business;
(2) as or by a commercial or savings bank, a trust company, a savings and loan
association, a loan company, or a credit union; (3) for the sale or travelers
checks, money orders and/or foreign exchange; (4) as a restaurant and/or bar
and/or for the sale of soda
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and/or beverage and/or sandwiches and/or ice cream and/or baked goods; (5) by
the United States Government, the City or State of New York, any foreign
government, the United Nations or any agency or department of any of the
foregoing, or any other person or entity having sovereign or diplomatic
immunity; (6) as an employment agency, search firm or similar enterprise, school
or vocational training center (except for the training of employees of the
Tenant intended to be employed at the Premises); (7) as a barber shop or beauty
salon; or (8) as a diagnostic medical center and/or for the practice of
medicine.
ARTICLE FORTY-THREE
HAZARDOUS MATERIALS
The Tenant shall not cause or permit any Hazardous Materials to be
used, stored, transported, released, handled, produced or installed in, on or
from the Premises or the building. "Hazardous Materials" shall mean any
flammable, explosives, radioactive materials, hazardous wastes, hazardous and
toxic substances, asbestos or any material containing asbestos, or any other
substance or material which would be defined as a hazardous or toxic substance,
contaminant, or pollutant, or otherwise regulated by any Federal, state or local
environmental law, rule or regulation, including without limitation, the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended. In the event of a violation of the foregoing provisions of this
Article, the Landlord may, without notice and without regard to any grace period
contained in this lease, take all remedial action deemed necessary by the
Landlord to correct such condition and the Tenant shall reimburse the Landlord
for the cost thereof, upon demand, as additional rent. Nothing contained herein
shall prevent the Tenant from maintaining customary and normal cleaning supplies
and office equipment and supplies, provided such items are used and stored in
compliance with the requirements of all applicable laws.
ARTICLE FORTY-FOUR
MISCELLANEOUS
(a) This lease contains the entire agreement between the parties and
all prior negotiations and agreements are merged into this lease.
(b) This lease may not be recorded.
(c) The covenants, conditions and agreements contained in this lease
shall bind and inure to the benefit of the Landlord and the Tenant and their
respective heirs, executors, administrators, successors and permitted assigns.
(d) If any term, covenant or provision of this lease, or the
application thereof, shall be held invalid or unenforceable, the remainder of
this lease, or the application thereof to situations other than that as to which
it is invalid or unenforceable, shall not be affected thereby, and each term,
covenant and provision shall be valid and enforceable to the fullest extent
permitted by law.
(e) The submission of this lease for execution by the Tenant shall not
be binding upon the Landlord or the Tenant unless and until both the Landlord
and the Tenant have executed and unconditionally delivered a fully executed copy
of this lease to each other.
(f) The captions in this lease are inserted for convenience only and
shall not define, limit or describe the scope of the provisions to which any of
them apply. The use of any pronoun referring to either of the parties to this
lease shall be construed to include any or no gender and any number.
(g) If the Tenant is a corporation, the person executing this lease on
behalf of the Tenant represents and warrants that the Tenant is duly
incorporated and, if applicable, is duly qualified and authorized to conduct
business in the State of New York, and the person executing this lease on behalf
of the Tenant has been duly authorized to do so. The Tenant shall provide the
Landlord with a copy of a resolution to this effect, and evidence of its due
incorporation and qualification, if applicable, upon request of the Landlord.
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ARTICLE FORTY-FIVE
TENANT'S OPTION TO EXPAND
(a) Fifth Floor Expansion Space.
(i)The remainder of the 5th floor, other than the Fifth Floor Initial
Space and the Mason Tenders Space (such remainder is referred to hereinafter as
the "5th Floor Expansion Space"), is presently leased to the Trustees of Home
Care Industry Local 32B/32J ("32B/32J") which occupies the Fifth Floor Expansion
Space pursuant to a lease (the "32B/32J Lease") which expires January 5, 2008.
If the Tenant wishes to lease the Fifth Floor Expansion Space, it shall give
written notice (the "First Notice") to the Landlord no later than March 31,
2007. Time shall be of the essence with respect to the delivery of the First
Notice. If the Tenant timely delivers the First Notice, the parties shall
endeavor to agree on a rental therefor. If the parties are unable to agree on a
rental for such Fifth Floor Expansion Space by six months prior to the
expiration date of the 32B/32J Lease for such space, or if the Tenant fails to
timely deliver the First Notice for such space, the Landlord shall be free to
lease such Fifth Floor Expansion Space to any unaffiliated third party free of
the rights of the Tenant hereunder, and the Landlord shall have no further
obligation under this Article Forty-Five with respect to the Fifth Floor
Expansion Space, except as set forth in the balance of this paragraph (a). If
the parties are unable to agree on a rental for such Fifth Floor Expansion Space
and the Landlord thereafter offers to lease such space to a third party, the
Landlord shall give the Tenant written notice of the financial terms upon which
it is offering to lease the space to the third party (the "Third Party Offer").
If the present value of the net effective rent set out in the Third Party Offer
(discounted at the rate of 2% over the prime rate then announced by Chase
Manhattan Bank, N.A., or any successor thereto), is less than 90% of the present
value of the net effective rent last offered by the Landlord to the Tenant for
such space, the Tenant shall have a period of five (5) business days in which to
notify the Landlord as to whether it wishes to lease the relevant Fifth Floor
Expansion Space on the terms set forth in the Third Party Offer, (such notice
from Tenant being referred to as the "Second Notice") time being of the essence
with respect to the delivery of the Second Notice. If the Tenant timely delivers
the Second Notice, the Landlord shall promptly prepare an amendment to this
lease reflecting the addition of the Fifth Floor Expansion Space upon the terms
set forth in the Third Party Offer and the Tenant shall then have a period of
fifteen (15) days in which to execute and return the lease amendment to the
Landlord. If the Tenant does not execute and return the lease amendment to the
Landlord within 15 days, or if the Tenant fails to timely deliver the Second
Notice, the Landlord may thereafter lease the relevant Fifth Floor Expansion
Space to a third party at any terms it wishes, free of the Tenant's rights
hereunder and thereafter, the Landlord shall have no further obligation to the
Tenant under paragraph (a) of this Article with respect to such Fifth Floor
Expansion Space.
(ii) If the 32B/32J Lease is terminated prior to its present expiration
date, the Landlord will notify the Tenant of the date such Fifth Floor Expansion
Space will be available for lease. The Tenant shall notify the Landlord within
thirty (30) days after receipt of the Landlord's notice as to whether it wishes
to lease the Fifth Floor Expansion Space, time being of the essence with respect
to the delivery of such notice. If the Tenant notifies the Landlord that it
wishes to lease such space, the parties shall endeavor to agree on a rental
therefor. If the parties are unable to agree on a rental for such Fifth Floor
Expansion Space within sixty (60) days after the date of the Tenant's notice, or
if the Tenant fails to timely deliver such notice, the Landlord shall be free to
lease such Fifth Floor Expansion Space to any unaffiliated third party free of
the rights of the Tenant hereunder, and the Landlord shall have no further
obligation with respect to the Fifth Floor Expansion Space under this Article
Forty-Five, except that the Landlord shall be obligated to send the Tenant a
Third Party Offer for such space and the Tenant shall have the same rights as
set forth in paragraph (a) above if the net effective rent as set out in the
Third Party Offer is less than 90% of the net effective rent last offered by the
Landlord to the Tenant for such space.
(iii) The Fifth Floor Expansion Space shall be leased for a term
expiring on the Expiration Date, and otherwise on the terms and conditions set
forth in this lease (with a current Base Year for computing Real Estate Tax
Escalation and with Operating Expense escalation calculated in accordance with
Schedule 2 attached hereto), except as otherwise agreed between the parties or
as set forth in the Third Party Offer.
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(b) Third Floor Expansion Space.
(i) The entire 3rd floor of the building (the "Third Floor Expansion
Space") is presently leased to the same tenant ("Dean Witter") which occupies
the Dean Witter Premises on the 4th floor pursuant to a lease (the "Dean Witter
Lease") which expires January 31, 2002. Unlike the Dean Witter Premises, the
Third Floor Expansion Space is subject to a renewal option. If the Tenant wishes
to lease the Third Floor Expansion Space (which right shall be subject, in all
events, to the right of renewal contained in the Dean Witter lease), it shall
give written notice (the "First Notice") to the Landlord no later than April 30,
2001. If Dean Witter exercises its option to renew, Tenant shall have no further
rights under this Article Forty-Five with respect to the Third Floor Expansion
Space. Time shall be of the essence with respect to the delivery of the First
Notice. If the Tenant timely delivers the First Notice, the parties shall
endeavor to agree on a rental therefor. If the parties are unable to agree on a
rental for such Third Floor Expansion Space by six months prior to the
expiration date of the Dean Witter Lease for such space, or if the Tenant fails
to timely deliver the First Notice for such space, the Landlord shall be free to
lease such Third Floor Expansion Space to any unaffiliated third party free of
the rights of the Tenant hereunder, and the Landlord shall have no further
obligation under this Article Forty-Five with respect to the Third Floor
Expansion Space, except as set forth in the balance of this paragraph (a). If
the parties are unable to agree on a rental for such Third Floor Expansion Space
and the Landlord thereafter offers to lease such space to a third party, the
Landlord shall give the Tenant written notice of the financial terms upon which
it is offering to lease the space to the third party (the "Third Party Offer").
If the present value of the net effective rent set out in the Third Party Offer
(discounted at the rate of 2% over the prime rate then announced by Chase
Manhattan Bank, N.A., or any successor thereto), is less than 90% of the present
value of the net effective rent last offered by the Landlord to the Tenant for
such space, the Tenant shall have a period of five (5) business days in which to
notify the Landlord as to whether it wishes to lease the relevant Third Floor
Expansion Space on the terms set forth in the Third Party Offer, (such notice
from Tenant being referred to as the "Second Notice") time being of the essence
with respect to the delivery of the Second Notice. If the Tenant timely delivers
the Second Notice, the Landlord shall promptly prepare an amendment to this
lease reflecting the addition of the Third Floor Expansion Space upon the terms
set forth in the Third Party Offer and the Tenant shall then have a period of
fifteen (15) days in which to execute and return the lease amendment to the
Landlord. If the Tenant does not execute and return the lease amendment to the
Landlord within 15 days, or if the Tenant fails to timely deliver the Second
Notice, the Landlord may thereafter lease the relevant Third Floor Expansion
Space to a third party at any terms it wishes, free of the Tenant's rights
hereunder and thereafter, the Landlord shall have no further obligation to the
Tenant under paragraph (a) of this Article with respect to such Third Floor
Expansion Space.
(ii) If the Dean Witter Lease is terminated prior to its present
expiration date, the Landlord will notify the Tenant of the date such Third
Floor Expansion Space will be available for lease. The Tenant shall notify the
Landlord within fifteen (15) business days after receipt of the Landlord's
notice as to whether it wishes to lease the Third Floor Expansion Space, time
being of the essence with respect to the delivery of such notice. If the Tenant
notifies the Landlord that it wishes to lease such space, the parties shall
endeavor to agree on a rental therefor. If the parties are unable to agree on a
rental for such Third Floor Expansion Space within sixty (60) days after the
date of the Tenant's notice, or if the Tenant fails to timely deliver such
notice, the Landlord shall be free to lease such Third Floor Expansion Space to
any unaffiliated third party free of the rights of the Tenant hereunder, and the
Landlord shall have no further obligation under this Article Forty-Five with
respect to the Third Floor Expansion Space, except that the Landlord shall be
obligated to send the Tenant a Third Party Offer for such space and the Tenant
shall have the same rights as set forth in paragraph (a) above if the net
effective rent as set out in the Third Party Offer is less than 90% of the net
effective rent last offered by the Landlord to the Tenant for such space.
(iii) The Third Floor Expansion Space shall be leased for a term
expiring on the Expiration Date, and otherwise on the terms and conditions set
forth in this lease, except as otherwise agreed between the parties or as set
forth in the Third Party Offer.
ARTICLE FORTY-SIX
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LANDLORD'S CONTRIBUTION
It is agreed that the Tenant will modify and improve the Premises to
make them better suited for use as offices, and that the Landlord will reimburse
the Tenant for the cost of improving the specific portions of the Premises
listed in the schedule below only up to the maximum amounts listed in the
schedule (and the Tenant will pay the cost of any modifications or improvements,
in excess of such amount), all in accordance with, and subject to the
limitations set forth in subparagraphs (a) through (d) below:
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Unit of Maximum
Space Contribution
Initial Premises $1,429,150
Europadisk Space $ 728,840
Dean Witter Space $ 233,340
Tri-Don Space $ 230,530
Astoria Space $ 140,780
Power Color Space $ 121,440
Mason Tenders Space $ 103,580
In addition, Landlord shall reimburse Tenant an amount not to exceed $75,000 for
Tenant's improvements to the public corridors, in lieu of Landlord's creating
new common corridors.
(a) The Tenant will select an architect to design the office
improvements for the Premises (which improvements, for purposes of calculating
Tenant's reimbursable costs, shall not include any furniture, or telephone,
computer or other office systems or equipment (other than cables for any
telephone or data processing systems), or any furniture or decorations (other
than carpeting, wall coverings and window blinds)) (the "Improvements"). As soon
as practicable after the Commencement Date applicable to each portion of the
Premises listed above, the Tenant shall submit to the Landlord for review and
approval plans and specifications (including all necessary mechanical,
electrical, engineering and working drawings) for the Improvements and such
plans shall be sufficient (i) to comply with all applicable laws, rules,
regulations and requirements of any governmental authority having jurisdiction
over the building, (ii) to permit the Tenant to apply for and obtain all
necessary permits, licenses and approvals necessary in connection with the
Improvements, and (iii) to permit the contractor to commence and complete the
work relating to the Improvements. The Landlord shall review and approve or
comment on such plans within twenty (20) business days of receipt thereof, and
the Tenant shall pay the reasonable fees, expenses and charges of the Landlord
paid to Landlord's outside consultants in connection with such review. As soon
as practical thereafter, the Tenant shall submit to the Landlord for approval
complete and final plans and specifications (including all necessary mechanical,
electrical, engineering and working drawings) for the Improvements, sufficient
to meet the requirements set forth in clauses (i) through (iii) above (such
plans as approved by the Landlord are hereinafter referred to as the "Final
Plans"). The Tenant agrees to reimburse the Landlord for its reasonable fees and
expenses for reviewing plans and specifications.
(b) All professional fees (including those for architectural and design
costs and appraisals) and the cost of all permits, licenses and approvals
required in connection with the construction and installation of the
Improvements shall be borne solely by the Tenant.
(c) The Landlord shall reimburse the Tenant from time-to-time (but not
more often than monthly) for work done in connection with the installation and
construction of the Improvements, up to an aggregate maximum specified for each
portion of the Premises listed above, provided that the Landlord's obligation to
make any such or reimbursement shall be subject to the satisfaction of the
following conditions:
(i) the work done must conform to the design set forth in
the Final Plans in all material respects and the
quality and workmanship of the work done must be
reasonably satisfactory to the Landlord and the
Tenant (and the Tenant shall have so stated in its
request for reimbursement);
(ii) with respect to the reimbursement of any partial
payment made on the basis of the percentage of
completion of any work, the Landlord shall have been
furnished a form by the Tenant's architect indicating
the percentage of completion of the work in question;
(iii) the Landlord shall have been furnished with invoices
from the vendors, supplier, or contractor evidencing
the amount for which payment or
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reimbursement is sought, such invoices, if submitted
for reimbursement, to be marked "paid in full" by
such vendor, supplier or contractor (or, in lieu
thereof, the Landlord shall be furnished other
documentation satisfactory to the Landlord evidencing
payment in full); and
(iv) the Landlord shall have received, with respect to the
work done for which payment or reimbursement is
claimed hereunder, a written waiver from the
contractor or vendor in question (and all
subcontractors and subvendors involved in the work in
question) waiving any right to assert any vendor's,
mechanic's or other lien on the building, the
Premises or any fixtures, machinery, equipment or
other installation therein.
If so requested by the Tenant, in lieu of reimbursing the Tenant, the
Landlord will make payment directly to the Tenant's vendors, suppliers and
contractors (no more often than monthly and not for amounts which aggregate less
than $50,000), provided that the Landlord's obligation to make any such payment
shall be subject to the conditions set forth above (except that the invoices to
be paid need not be marked "paid in full").
(d) It is understood and agreed that the Landlord shall have no
responsibility for the performance of the contractor installing the Improvements
(including matters of quality or timeliness), and in the event that for any
reason the Improvements are not completed in a timely fashion and/or there is
any delay in the date on which the Premises are ready for occupancy by the
Tenant for the purposes of conducting business, this lease shall nevertheless
continue in full force and effect, and the Tenant shall have no right, remedy or
claim (including any claim for actual, punitive or consequential damages)
against the Landlord.
ARTICLE FORTY-SIX
GENERATOR
(a) The Tenant has advised the Landlord that it may wish to install a
standby generator with associated equipment. Provided that Landlord is able to
provide space on the roof to Tenant, Tenant shall have the right to install a
generator with a capacity of no more than 250 kVA, and related equipment
(colllectively, the "Generator") on the roof of the building in an area to be
designated by the Landlord (the "Roof Space"). The Landlord shall have no
obligation to provide the Roof Space until it has completed construction of the
additional floors on the building, and shall have no obligation at all to
provide Roof Space if, in good faith, Landlord determines that there is no
suitable Roof Space available. As of the date the Landlord delivers the Roof
Space to the Tenant, (i) the Roof Space shall be added to and be deemed to be
part of the premises upon all of the terms of the lease, except as otherwise set
forth herein; (ii) the Landlord shall have no obligation to perform any work on
the Roof Space and shall deliver the same in its then "as-is" condition, (iii)
the annual fixed rent shall be increased by a sum equal to $50 per rentable
square foot (the "Roof Rent"), which rent shall be increased as of the first
anniversary of the date on which the Roof Space was added to the premises and on
each succeeding anniversary thereafter, by 3% over the Roof Rent payable during
the immediately preceding twelve-month period.
(b) Pending the delivery of the Roof Space, Tenant shall be permitted
to install the Generator on the 4th floor, provided that the Generator may only
be vented through louvers located in the two windows directly above the louvers
used by Dean Witter on the 3rd floor, and only through January 31, 2002. On or
before January 31, 2002, Tenant shall remove the Generator from the 4th floor
and remove the louvers installed in the windows, restoring the windows so as to
maintain a uniform appearance of the building. In the event that Landlord has
not been able to provide Roof Space, Tenant shall have no right to maintain a
Generator at the Premises. If Tenant has previously installed a Generator in the
Premises and Landlord subsequently provides Roof Space, Tenant shall be
responsible, at Tenant's cost, to move the Generator from the 4th floor to the
Roof Space.
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(c) The Generator shall be installed and maintained at the sole cost
and expense of the Tenant and shall be installed and maintained in compliance
with all Legal Requirements, including, without limitation, all Environmental
Laws. The Landlord's written approval of the plans and specifications for the
Generator installation must be obtained before the Tenant may proceed with any
work in connection with the Generator installation. The Generator installation
shall be governed by the provisions of this lease. The Landlord and its agents
and employees shall have reasonable access to the Roof Space as required for the
maintenance, repair or operation of the building or building systems. The Tenant
shall be responsible for any taxes which may be now or hereafter levied on the
Generator. The Landlord may require that its personnel or contractor be present
during the installation and removal of the Generator, and any maintenance and
repair thereof, and the Tenant shall reimburse the Landlord for the charges
incurred by the Landlord in connection therewith. If the Generator is to be
connected to any building system or equipment, the Landlord may, at is option,
either require that the Landlord's contractor physically connect the wiring from
the Generator to such system or equipment, or require its personnel or
contractor to be present when such work is done, and in either case, the Tenant
shall reimburse the Landlord for the costs incurred by the Landlord in
connection therewith.
IN WITNESS WHEREOF, this agreement has been signed and sealed by the
parties hereto as of the date set forth above.
THE RECTOR, CHURCH-WARDENS AND
VESTRYMEN OF TRINITY CHURCH IN THE
CITY OF NEW YORK
By:
-----------------------------------------
Daniel Paul Matthews, Rector
By:
-----------------------------------------
Director of Leasing
By:
-----------------------------------------
Executive Vice President of Real Estate
By:
-----------------------------------------
Finance Department
Attest: PHOTODISC, INC.
As to the Tenant:
By: (L.S.)
- -------------------------- -----------------------------------
An Authorized Officer
(i)
<PAGE> 282
legislation currently in force relating to Town and Country Planning
3:15:3 Not to leave the demised premises continuously unoccupied for more
than one month without:-
3:15:3:1 notifying the Landlord in writing
3:15:3:2 providing such security arrangements as the Landlord shall
reasonably require
3:15:3:3 providing such security or other arrangements as the insurers of
the Building shall require in order to protect the demised
premises from vandalism theft damage or unlawful occupation
3:15:4 not to play or use in the demised premises and musical instrument
loudspeakers tape recorder gramophone radio or other equipment or
apparatus that produces sound that may be heard in nearby premises or
outside the demised premises
3:15:5 Not to hold any sale or auction on the demised premises
3:15:6 Not to do on the demised premises or any part thereof or the Building
or any part thereof any act matter or thing whatsoever which may or
may tend to depreciate the value of the demised premises or the
Building or which may be or tend to be detrimental to the letting of
the same or individual units therein
3:16 Not to store or bring upon the demised premises or any part thereof
any articles or substance or a specially combustible inflammable
explosive or dangerous nature other than those used by the Tenant in
the usual course of its business at the demised
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premises and to comply with all recommendations of any Fire Officer
and of the Insurers of the Building as to fire precautions relating
to the demised premises
3:17:1 Not to being or permit or suffer to be brought in or upon
the demised premises or any part thereof any goods nor to do or permit
or suffer to be done in or upon the demised premises or any part
thereof anything which in either case may invalidate any insurance for
the time being effected on the demised premises or any part thereof or
the Building or whereby any such insurance may be in any way affected
or made void or voidable nor without the consent of the Landlord to do
or allow to be done anything whereby any additional premium may become
payable for the insurance of the demised premises or any other part of
the Building and to repay to the Landlord on demand all sums paid by
way of increased premiums and all expenses incurred by it in
consequence of a breach of this sub-clause
3:17:2 To keep the demised premises sufficiently supplied and equipped with
such fire fighting and extinguishing appliances as shall from time to
time be required by law or by the Local or other competent authority
or by the Landlord's insurers of the Building and not to obstruct or
permit or suffer to be obstructed the access to or means of working
such appliances or the means of escape from the demised premises in
the case of fire or other emergency
3:18 Not to stop up or obstruct or permit or suffer to be stopped up or
obstructed in any way whatsoever or permit or suffer oil grease or
other deleterious or noxious matter or substance to enter the drains
sewers gutters pipes channels or watercourses of or
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serving the demised premises or the Building and in the event of any
breach of this covenant by the Tenant forthwith to make good any
damage to the reasonable satisfaction of the Landlord
3:19 Not to overload or permit or suffer to be overloaded the electrical
system serving the demised premises or the Building (whether serving
the same exclusively or in common with adjoining or neighbouring units
in the Building)
3:20 Within seven days of the receipt of notice of the same to give full
particulars to the Landlord of any notice direction license consent or
permission or order or proposal for a notice or order relating to the
demised premises made given or issued to the Tenant by any government
department local or public authority under or by virtue of any
statutory powers and to produce such notice direction license consent
or permission or order or proposal for a notice or order to the
Landlord AND ALSO without delay to take all necessary steps to comply
with the same AND ALSO at the request of the Landlord to make or join
with the Landlord in making such objections or representations
against or in respect of any such notice direction license consent or
permission or order or proposal as aforesaid as the Landlord shall
deem reasonably expedient
3:21 To be responsible for and to indemnify the Landlord against all damage
occasioned to any part of the Building or to any person chattel or
property (whether or not upon the demised premises) caused by any act
default or negligence of the Tenant or the servants agents or
licensees of the Tenant
3:22:1 At all times to comply with the requirements of the Planning Acts
insofar as they affect the demised
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premises and in particular (but without prejudice to the generality
of the foregoing) so often as occasion shall require at the expense
in all respects of the Tenant to obtain from the Local Authority the
Local Planning Authority and/or the Secretary of State for the
Environment (or other appropriate Minister) all such licences
consents and permissions (if any) as may be required for the
carrying out by the Tenant of any operations on the demised premises
or the institution or continuance by the Tenant of any use thereof
which may constitute development within the meaning of the Planning
Acts
3:22:2 Not without the prior written consent of the Landlord (which shall
not be unreasonably withheld or delayed) to apply for permission to
carry out on the demised premises any development requiring
permission under the Planning Acts and upon obtaining any such
permission immediately to produce the same to the Landlord
3:22:3 Not without the prior written consent of the Landlord (which shall
not be unreasonably withheld or delayed) to implement any planning
permission relating to the demised premises
3:22:4 To comply with any conditions attached to any temporary planning
permission that the Tenant implements and which are intended to be
complied with when the demised premises cease to be used in
accordance with such planning permission even though the period for
which the permission was granted extends beyond the date of
termination of this Lease
3:22:5 Forthwith upon receipt of any notice relating to the development of
the demised premises or any neighbouring property to deliver a copy
thereof to
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the Landlord and if so required by the Landlord to join with the
Landlord in making representations concerning the same
3:22:6 Whenever reasonably required to permit the Landlord to enter upon the
demised premises to comply with any requirement lawfully made of it
under the Planning Acts by any competent authority notwithstanding
that any action reasonably necessary for compliance interferes with
the Tenant's enjoyment of the demised premises
3:22:7 At all times hereafter to indemnify and keep indemnified the Landlord
against all actions proceedings costs expenses claims and demands in
respect of any contravention of the provisions of the Planning Acts
3:22:8 For the purposes of this sub-clause "the Planning Acts" shall mean
the Town and Country Planning Act 1990 the Planning (Listed Buildings
and Conservation Areas) Act 1990 and the Planning and Compensation Act
1991 and the rules regulations and orders which are either made under
one of them or are continued by the Planning (Consequential
Provisions) Act 1990 as they apply from time to time
3:23:1 To preserve so far as the Tenant is able all rights of light and
other easements enjoyed by the demised premises and at all times at
the Tenant's cost to afford to the Landlord such facilities and
assistance as may enable the Landlord to prevent anyone acquiring any
right of light or other easement over the demised premises and/or the
Building and in addition but without prejudice to the generality of
the foregoing to permit the Landlord to bring all such actions as it
may reasonably and properly think
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fit in the name of the Tenant in respect of any obstruction of the
access of light or air to any windows or openings in the demised
premises or in respect of any encroachment upon the demised premises or
the obstruction of any other easement enjoyed by the demised premises
3:23:2 Without prejudice to the generality of Clause 3:23:1 hereof not to give
to any third party any acknowledgement that the Tenant enjoys the
access of light or air to any of the windows or openings in the demised
premises by the consent of such third party or to pay any sum of money
to or to enter into any agreement with such third party for the purpose
of inducing or binding him to abstain from obstructing the access of
light or air to any such windows or openings and in the event of any
such third party doing or threatening to do anything which obstructs or
would obstruct such access of light or air to notify the same forthwith
in writing to the Landlord
3:24:1 To pay the Landlord's reasonable and proper expenses (including legal
costs bailiffs fees and Surveyor's fees) incidental to any notice or
proceedings preparatory to forfeiture of this Lease for a breach of its
terms even if forfeiture is avoided without a Court Order
3:24:2 To pay the Landlord's reasonable and proper expenses (including legal
costs and Surveyor's fees) properly incurred by the Landlord incidental
to the preparation and service of any notice and/or Schedule relating
to a Schedule of Dilapidations and whether or not the same is served
during or after the expiry of the Term (howsoever determined) but
relating in all cases only to dilapidations which accrued prior to the
expiry of the Term
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3:24:3 In the event of the Tenant committing any material breach of any
covenant on the part of the Tenant herein contained whether for
payment of rent or otherwise then if the Landlord shall incur any
expenses (including legal costs bailiffs fees and Surveyor's fees) to
fully and effectively indemnify the Landlord in respect thereof
3:25 Not to store either permanently or temporarily any goods in the
Building other than within the demised premises or (in respect of
refuse only) in the Bin Store located in the basement of the Building
3:26 To comply with the Landlord's reasonable regulations which may be
imposed from time to time by the Landlord for the proper and
efficient management of the Building (including the demised premises)
together with the Superior Landlords regulations as referred to in
Clause 3(10) of the Superior Lease Provided that nothing in any
regulations imposed by the Landlord shall purport to amend the terms
of this Lease and in the event of any inconsistency between the terms
of this Lease and any such regulations the terms of this Lease shall
prevail
3:27:1 Not to obstruct or otherwise prevent the use by the Landlord or any
others entitled thereto of the Common Parts including (without
prejudice to the generality of the foregoing) the Pedestrian Public
Access Areas and the Emergency Vehicular Public Access Areas defined
in the Superior Lease
3:27:2 Without prejudice to the generality of Clause 3:27:1 hereof not to
load or unload any goods or materials onto or from vehicles and
convey the same from and into the Building and the demised premises
except through such entrances as may from time to time be
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<PAGE> 289
designated by the Landlord (acting reasonably) as service entrances
and by means of any lift designated from time to time by the Landlord
for such purposes
3:28 To take all reasonable precautions to prevent the occurrence or
outbreak (as the case may be) of any fire explosion or other
occurrence which might cause damage to the demised premises or the
Building
3:29 If at any time the Tenant is entitled to the benefit of any insurance
on the demised premises or any part or parts thereof or on the
Landlord's fixtures and fittings therein the Tenant shall without
delay apply all monies received by virtue of such insurance in making
good the loss or damage in respect of which the same shall have been
received
3:30 Upon the expiry of the Term (howsoever determined) to give up all
keys of the demised premises to the Landlord
3:31 To use the Common Parts for their proper purposes only and to
indemnify the Landlord against the costs of making good any damage
done thereto by the Tenant or any employee or Licensee of the Tenant
3:32 Not to keep any animals whatsoever in the demised premises
3:33:1 Not to do anything which interferes with the heating cooling or
ventilation of the Common Parts or which imposes an additional load
on any heating cooling or ventilation plant and equipment in the
Building
3:33:2 Not to operate the ventilation equipment in the demised premises
otherwise than:-
3:33:2:1 during the Permitted Hours
29
<PAGE> 290
3:33:2:2 in accordance with the reasonable regulations for such purpose
made by the Landlord from time to time
3:34 Whether or not any notices have been served under the Landlord and
Tenant Act 1954 to permit the Landlord at any time during the last
six months of the Term to enter upon the demised premises to affix
and retain without interference upon any part of the demised premises
a notice for selling or disposing of the same PROVIDED ALWAYS that
such notice shall not obstruct or interfere unreasonably with the
Tenants use of the demised premises And to permit persons with
authority from the Landlord or the Agent of the Landlord at all
reasonable times of the day but upon prior appointment to enter and
view the demised premises or any part thereof
3:35 To pay in addition to any monies due from the Tenant under the
provisions of this Lease such Value Added Tax (at the rate for the
time being in force) as shall be chargeable in respect of any such
monies all of which shall be deemed exclusive of Value Added Tax
3:36 Throughout the period from and including 1st October to and including
30th April in every year of the Term and to provide and maintain
during the Permitted Hours an air temperature within the demised
premises of not less than 65 degrees Fahrenheit whether or not the
demised premises are unoccupied temporarily or otherwise for any
periods during the Term
3:37 To comply at all times with the additional covenants (if any) set
forth in the Third Schedule hereto
3:38 To indemnify the Landlord against any liability arising directly or
indirectly out of the Tenants occupation and/or use of the demised
premises
30
<PAGE> 291
3:39 Not to use or permit or suffer to be used any parking spaces within
the Building (or the curtilage thereof and whether forming part of
the demised premises or the Common Parts) otherwise than for the
temporary parking (meaning parking for a period not exceeding 8 hours
in any 24 hour period) of motor vehicles Provided that:-
3:39:1 No motor vehicles shall be parked within the Building (as aforesaid)
other than those serving the demised premises
3:39:2 All motor vehicles shall be parking in the relevant parking spaces in
a proper orderly and tidy manner
3:40 To give to the Landlord at least 2 weeks prior notice in writing of
any creditors meeting intended to be held for the purpose of
considering or implementing any compromise or proposal under the
provisions of the Insolvency Act 1986
3:41 Not to lodge with the district valuer or the Local Authority any
appeal in respect of the rateable value of the demised premises (or
any similar valuation of the same for the purposes of assessing the
demised premises for liability as to rates or any similar tax or
outgoing replacing the same from time to time) without the consent in
writing of the Landlord and if reasonably required by the Landlord to
allow the Landlord to conduct any such appeal as agent for any at the
cost in all respects of the Tenant
3:42 To indemnify the Landlord against all rates (or any similar tax or
outgoing replacing the same from time to time) which are payable by
the Landlord as a result of the Tenant vacating the demised premises
at any date prior to the termination of the Term to the intent that
this sub-clause shall remain in force notwithstanding such termination
31
<PAGE> 292
3:43 If the Landlord should suffer any loss of rating relief which may be
applicable to empty premises after the termination of the Term by
reason of such relief being allowed to the Tenant in respect of any
period before such termination to immediately make good such loss to
the Landlord on demand
3:44 Upon making any application for any written consent or approval of the
Landlord which is required by this Lease to declare to and provide the
Landlord with such information as the Landlord shall reasonably
require
3:45 To pay the Landlord's reasonable and proper legal expenses and
Surveyor's fees (including disbursements and Stamp Duty) on all
licences and duplicate copies thereof resulting from all applications
to the Landlord for any consent or approval of the Landlord required
by this Lease including charges fees and disbursements actually
incurred in cases where consent is refused or the application is
withdrawn
3:46 To observe and perform the covenants and the conditions on the part of
the lessee contained in the Superior Lease (except insofar as the same
relate to matters of repair and maintenance but without prejudice to
the Tenant's obligations in respect of such matters hereinbefore
contained) so far as the same relate to the demised premises and
except insofar also as the Landlord expressly covenants in this Lease
to observe and perform the same and to indemnify the Landlord from and
against any actions proceedings claims damages costs expenses losses
or other liability arising from any breach non-observance or
non-performance of such covenants and conditions and furthermore not
to do omit suffer
32
<PAGE> 293
or permit in relation to the demised premises any act or thing which
would or might cause the Landlord to be in breach of the Superior
Lease or which if done omitted suffered or permitted by the Landlord
would or might constitute a breach of the covenants on the part of the
lessee and the conditions contained in the Superior Lease
4. The Landlord HEREBY COVENANTS with the Tenant that :-
4:1 The Tenant paying the rents hereinbefore reserved and observing and
performing the several covenants conditions agreements and
stipulations on the part of the Tenant hereinbefore contained shall
and may peaceably and quietly hold and enjoy the demised premises
during the Term without interruption or disturbance from or by the
Landlord or any person or persons rightfully claiming by through under
or in trust for the Landlord or by title paramount
4:2 To keep in a good and substantial state of repair and condition the
Common Parts (damage by fire and other perils specified in Clause 3 of
the Eighth Schedule hereto excepted)
4:3 To insure or cause to be insured the Building in accordance with the
provisions of the Eighth Schedule hereto Provided that the Landlord
shall not be obliged to insure or cause to be insured any fixtures and
fittings which may be installed by the Tenant in the demised premises
and which may become fixtures and fittings of the Landlord until the
Tenant has in writing informed the Landlord of the re-instatement
value thereof but the Landlord may in its discretion increase the
amount of insurance in respect of such fixtures and fittings
33
<PAGE> 294
4:4 If the demised premises shall be destroyed or damaged by any of the risks
specified in Clause 3 of the Eighth Schedule hereto then (unless any such
insurance shall be vitiated or payment of the Policy monies refused in
whole or in part in consequence of any act or default of or permitted by
the Tenant) the Landlord will as soon as reasonably practicable re-instate
or repair such destruction or damage Provided that as regards fixtures and
fittings which have been installed by the Tenant and become fixtures and
fittings of the Landlord the Landlord shall only be responsible to
re-instate or repair the same to the extent of the re-instatement value
thereof notified by the Tenant to the Landlord pursuant to Clause 4:3
hereof or (if any) to the amount of the increased insurance thereof
effected at the discretion of the Landlord
4:5 Subject to the Tenant duly and punctually paying the Advance Service Charge
to provide the services specified in the Fifth Schedule hereto for the
benefit of the demised premises
4:6 To pay the rent reserved by the Superior Lease (if demanded) and to perform
so far as the Tenant or any other tenant or occupier within the Building is
not liable for such performance under the terms of this Lease or any other
lease of any part of the Building or otherwise (as appropriate) the
covenants and the conditions on the part of the lessee contained in the
Superior Lease and to indemnify the Tenant from and against all actions
claims proceedings costs expenses and demands incurred by the Tenant as a
result of any failure by the Landlord so to do
4:7 At the request and cost of the Tenant to use its best endeavours to
enforce:-
34
<PAGE> 295
4:7:1 the covenants on the part of the Superior Landlord contained in the
Superior Lease
4:7:2 the covenants on the part of other tenants/occupiers of the Building
(other than the demised premises) contained in their respective leases
of the relevant parts of the Building provided that the Tenant shall
upon the Landlord's reasonable demand in that behalf deposit with the
Landlord such security for costs incurred or to be incurred by the
Landlord in respect thereof as the Landlord shall reasonably require
4:8 To use its reasonable endeavors to obtain the consent of the Superior
Landlord whenever the Tenant makes application for any consent required
under the Lease where the consent of both the Landlord and the Superior
Landlord is needed by virtue of the Lease and the Superior Lease
5. PROVIDED ALWAYS and notwithstanding anything hereinbefore contained to
the contrary :-
5:1 That if the rents hereby reserved or any part thereof or following an
assignment of this Lease by the said Visual Communications Group
Limited the Telephone Charge and/or the Private Charge or any part
thereof respectively shall be unpaid for the space of 14 days next
after any of the days hereinbefore appointed for payment thereof
(whether such rents shall have been legally demanded or not) or if
default shall be made in the performance or observance of any of the
covenants stipulations conditions or agreements on the part of the
Tenant herein contained or if the Tenant being a Company shall go into
liquidation whether compulsory or voluntarily (otherwise than for the
purpose of amalgamation or reconstruction without insolvency) or shall
pass a resolution for winding up
35
<PAGE> 296
(save as aforesaid) or is unable to pay its debts or has no
reasonable prospect of being able to pay its debts within the meaning
of Sections 122 and 123 of the Insolvency Act of 1986 or summons a
meeting of its creditors or any of them under Part I of the said Act
or suffers a petition for an Administration Order in respect of it to
be filed in Court or suffers a receiver or administrative receiver to
be appointed or if the Tenant being an individual (or being
individuals any one of them) shall become bankrupt or is unable to
pay his debts or has no reasonable prospect of being able to pay his
debts within the meaning of Sections 267 and 268 of the said
Insolvency Act or shall enter into any composition with his or their
creditors or if the Tenant shall suffer any distress or execution to
be levied upon his or their goods or if an interim order is made
under Part VIII of the said Insolvency Act then and in any such case
it shall be lawful for the Landlord or any person or persons duly
authorised by it in that behalf into and upon the demised premises or
any part thereof in the name of the whole to re-enter and the same to
have again repossess and enjoy as in its first and former estate
anything herein contained to the contrary notwithstanding and
thereupon the Term shall immediately cease but without prejudice to
any right of action or remedy of the Landlord in respect of any
antecedent breach of any of the covenants stipulations conditions or
agreements on the part of the Tenant herein contained.
5:2 The Tenant shall not (save as hereinbefore is expressly granted to it
and then subject to the rights herein reserved to the Landlord and
the Superior Landlord and the rights subject to which this demise is
made) be entitled to any right of light air way or other easement or
to exercise any
38
<PAGE> 297
right to other easement over or against the Building or any adjoining
or neighbouring property of the Landlord and/or the Superior Landlord
and this Lease shall be deemed expressly to preclude the grant of any
such right of easement.
5:3 If the demised premises or any part thereof or the access thereto are
destroyed or damaged by any of the risks specified in Clause 3 of the
Eighth Schedule hereto or because of an Inherent Defect so as to
render the demised premises unfit or unsafe for occupation or use and
the demised premises are not rendered fit and safe for occupation or
use within seven days of the event giving rise to such destruction or
damage then (unless any insurance effected or caused to be effected by
the Landlord shall have been vitiated or payment of the policy monies
refused in whole or in part in consequence of some act or default of
or permitted by the Tenant) (a) the yearly rent hereby Firstly
reserved and for the time being payable hereunder or a fair proportion
thereof according to the nature and extent of the damage sustained
shall be suspended from the expiration of such seven days until the
demised premises shall be again rendered fit and safe for occupation
and use or until the expiration of 3 years from such date whichever
shall be the earlier and (b) the rent hereby secondly reserved and for
the time being payable hereunder or a fair proportion thereof
according to the nature and extent of the damage sustained shall be
suspended from the expiration of such seven days until the demised
premises shall be again rendered fit and safe for occupation and use
or until the expiration of 3 years from such date whichever shall be
the earlier but so that the Tenant shall remain liable to pay any
balance due in respect of such rent for any period prior to the
expiration
39
<PAGE> 298
of such seven days when the same shall have been certified AND in case
of any difference between the parties under this present sub-clause
the same shall be referred to an independent surveyor acting as an
expert and not as an arbitrator to be agreed upon by the Landlord and
by the Tenant or (in the event of failure so to agree) to be nominated
on the application of either party by the President of the Royal
Institution of Chartered Surveyors or his deputy and the decision of
that independent surveyor (including any decision as to the costs of
the determination) shall be final and binding on the parties Provided
that in the event of any such damage to or disturbance of the demised
premises or the access thereto not being made good so as to render the
demised premises fit and safe for occupation or use within three years
of the date of occurrence of the same either party may within six
months thereafter (time being of the essence) determine the Lease by
giving to the other notice in writing pursuant to this clause and
upon service of any such notice this Lease and the Term shall
immediately expire and determine but without prejudice to the rights
and remedies of either party against the other in respect of any
antecedent breach or non-observance of any of the provisions of this
Lease and in the event of service of such a notice the said period of
3 years hereinbefore referred to shall be extended to the expiration
of the Term
5:4 Subject to the provisions of Section 38(2) of the Landlord and Tenant
Act 1954 neither the Tenant nor any assignee of the Tenant shall be
entitled on quitting the demised premises to any compensation under
Section 37 of the same Act
5:5 All monies received in respect of loss of rents by virtue of any
policy of insurance effected or caused
31
<PAGE> 299
[ARTICLE] 5
[LEGEND]
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE GETTY
IMAGES INC. FORM 10Q FOR THE THREE MONTHS ENDED MARCH 31, 2000.
[/LEGEND]
[MULTIPLIER] 1,000
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] DEC-31-2000
[PERIOD-START] JAN-01-2000
[PERIOD-END] MAR-31-2000
[CASH] 105,055
[SECURITIES] 0
[RECEIVABLES] 104,635
[ALLOWANCES] 17,900
[INVENTORY] 5,868
[CURRENT-ASSETS] 243,439
[PP&E] 109,979
[DEPRECIATION] 75,737
[TOTAL-ASSETS] 1,183,954
[CURRENT-LIABILITIES] 116,038
[BONDS] 284,587
[PREFERRED-MANDATORY] 0
[PREFERRED] 15
[COMMON] 479
[OTHER-SE] 783,636
[TOTAL-LIABILITY-AND-EQUITY] 1,183,954
[SALES] 104,825
[TOTAL-REVENUES] 104,825
[CGS] 30,518
[TOTAL-COSTS] 60,429
[OTHER-EXPENSES] 47,733
[LOSS-PROVISION] 1,440
[INTEREST-EXPENSE] 1,082
[INCOME-PRETAX] (33,855)
[INCOME-TAX] 1,134
[INCOME-CONTINUING] (32,721)
[DISCONTINUED] 0
[EXTRAORDINARY] 384
[CHANGES] 0
[NET-INCOME] (32,337)
[EPS-BASIC] (.68)
[EPS-DILUTED] 0
</TABLE>
<PAGE> 300
to be effected by the Landlord shall be paid to the Landlord for its own
use and benefit.
5:6 Notwithstanding anything herein contained the Landlord shall not be
responsible for any delay or failure in connection with the performance or
observance of its obligations herein contained or implied or for any
omission to perform the same nor for any loss or inconvenience arising
from any such delay failure or omission if such delay failure or omission
shall be due to causes beyond the control of the Landlord or if the
Landlord has not been at fault or negligent nor shall the Landlord be
responsible to the Tenant or the Tenant's licensees servants agents or
other persons in the demised premises or calling upon the Tenant for any
accident happening or injury suffered or damage to or loss of any chattel
or property sustained in the demised premises or in the Building
5:7 The Landlord shall be entitled to alter add to execute works on and
rebuild the Landlord's adjoining and nearby suites situated in the
Building notwithstanding that the access of light and air to the demised
premises may be interfered with Provided that the Landlord shall cause as
little damage and/or disturbance as practicable and shall as soon as
practicable make good all damage to the demised premises caused by its
works to the reasonable satisfaction of the Tenant but shall not otherwise
be liable for any damage or inconvenience caused to the Tenant
5:8 If at the end of the Term any furniture or effects belonging to the Tenant
are left in the demised premises for more than seven days the Landlord
shall have power to sell the same as agent for and on
39
<PAGE> 301
behalf of the Tenant and the Landlord shall on demand pay or account
to the Tenant for the proceeds of sale (but not any interest thereon)
less any costs of storage and sale reasonably incurred by the Landlord
and the Tenant will indemnify the Landlord against any liability
incurred by the Landlord to any third party whose property shall have
been sold by the Landlord in the mistaken belief held in good faith
(which shall be presumed unless the contrary be proved) that such
property belonged to the Tenant
5:9 Each of the Tenant's covenants herein contained shall remain in full
force both at law and in equity notwithstanding that the Landlord
shall have waived or released temporarily or permanently revocably or
irrevocably or otherwise howsoever a similar covenant or similar
covenants affecting adjoining or neighbouring suites within the
Building
5:10:1 If any part of the rents sums or other payments payable hereunder
(including for the avoidance of doubt the Service Charge the Insurance
Rent and the Advance Service Charge) shall be in arrear for twenty-one
days whether legally demanded or not it shall be lawful for the
Landlord to enter into and upon the demised premises or any part
thereof and distrain and the distress or distresses then and there
found to dispose of in due course of law and to apply the proceeds
thereof in or towards payment of the said rents sums or other payments
so in arrear and all costs charges and expenses occasioned by the
non-payment thereof and so that the power of the Landlord to distrain
upon the demised premises for rents or other monies in arrear shall
extend to and include any Tenant's fixtures and fittings not otherwise
by law distrainable which may from time to time be thereon
40
<PAGE> 302
5:10:2 If any rent or other payments referred to in Clause 5:10:1 hereof
shall be in arrear for more than twenty-one days beyond the days
appointed for payment (whether formally demanded or not) and shall be
paid only after the Landlord or the Landlord's Solicitors have
instructed or caused distress to be levied therefor then the Tenant
shall pay to the Landlord within 21 days of written demand the
Landlord's reasonable Solicitors costs and expenses incurred by reason
of the foregoing including but without prejudice to the generality of
the foregoing Bailiff's fees and commission
5:11 The internal division walls that divide the demised premises from the
adjoining suites in the Building shall be deemed to be party walls
within the meaning of Section 38 of the Law of Property Act 1925 and
shall be maintained at the equally shared expense of the Tenant and
the tenants of such adjoining suites
5:12 The Tenant hereby warrants and acknowledges:-
5:12:1 that prior to the execution of this Lease the Tenant has disclosed to
the Landlord in writing any conviction judgment or finding of any
Court or tribunal relating to the Tenant (or any director or officer
or major shareholder of the Tenant) of such a nature as to be likely
to affect the decision of any insurer or underwriter to grant or to
continue insurance of the demised premises and/or the Building
5:12:2 that this Lease has not been entered into in reliance wholly or
partially on any statement or representation made by or on behalf of
the Landlord except any such statement or representation that is
expressly set out in this Lease or in the Landlord's Solicitors
replies to the Tenant's Solicitors enquiries raised before the grant
hereof
41
<PAGE> 303
5:13 This Lease embodies the entire understanding of the parties relating to
the demised premises and to all the matters dealt with by any of the
provisions of this Lease
5:14 The Schedules to this Lease shall be deemed to be incorporated in this
Lease and form part hereof
5:15 The index to this Lease shall not be taken into account for the purpose of
its construction or interpretation
5:16 Any Notice under this Lease shall be in writing. Any Notice to the
Landlord shall be sufficiently served if sent by registered or recorded
delivery post addressed to the registered office or such other address as
the Landlord may from time to time designate for such purpose. Any Notice
to the Tenant who is a Company shall be sufficiently served if delivered
personally (by the Landlord's employee servant or agent) to or sent by
registered or recorded delivery post addressed to its registered office or
to the demised premises and in the case of a Tenant who is not a Company
if delivered to the Tenant (or if more than one the first named)
personally (as aforesaid) or sent to the Tenant (or if more than one the
first named) by registered or recorded delivery post addressed to the
Tenant at the demised premises or to the Tenant's last known address in
Great Britain or Ireland (whether Eire or Northern Ireland)
6:1 Either the Landlord or the Tenant shall be entitled to determine this
Lease on any of the Break Dates by giving to the other at least six months
previous written notice Provided that in the event of the Tenant serving
such a notice upon the Landlord to determine this Lease upon the 29th
September 1996 the
42
<PAGE> 304
Tenant shall concurrently with the service of such notice pay to the
Landlord the sum of Three thousand five hundred pounds (L3,500.00) and in
the event of the Landlord failing to receive such payment concurrently with
service of such notice for the avoidance of doubt such notice shall be
deemed invalid
6:2 In the case of a notice by the Tenant it shall be a pre-condition that
there is not any material outstanding breach of any of the Tenant's
covenants contained in this Lease or that any breach of covenant by the
Tenant that may have occurred has been so far as possible remedied so that
no material prejudice to the Landlord has resulted
6:3 Upon the expiry of any such notice as aforesaid provided that upon the
expiry thereof in the case of notice by the Tenant there shall be no
arrears of the Rent the Service Charge (provided that the same shall not be
the subject of a material dispute) the Insurance Rent or the Advance
Service Charge or following an assignment of the Lease by the said Visual
Communications Group Limited the Telephone Charge and/or the Private Charge
and upon the Tenant giving up vacant possession of the demised premises
(subject to clause 6:4 below) this Lease shall expire and determine but
without prejudice to the rights and remedies of either party against the
other in respect of any antecedent breach or non-observance of any of the
provisions of this Lease
6:4 In the event of the parties entering into new arrangements under which the
Tenant is to be entitled to remain in occupation following the expiry and
determination of this Lease such new arrangements shall not prejudice the
validity of any notice served under the provisions of this clause
43
<PAGE> 1
DATED 1995
INNOVATION LAND & ESTATES LIMITED
-and-
VISUAL COMMUNICATIONS LIMITED
------------------
Counterpart / LEASE of
Office Suite 18 / situate on the Third Floor
of the Innovation Centre
225 Marsh Wall, Docklands
London E14
------------------
Harris Rosenblatt & Kramer
26/28 Bedford Row
London WCIR 4HE
Tel: 0171-242-3254
Fax: 0171-831-7475
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
CLAUSE PAGE
NUMBER DESCRIPTION NUMBER
- ------ ----------- ------
<S> <C> <C>
1 DEFINITIONS AND INTERPRETATION 1-4
2 DEMISE 4
3 TENANTS COVENANTS 4
3:1 To pay rent/telephone charge/private charge 4
3:2 To pay rates and outgoing 4
3:3 To pay interest 5
3:4 To pay gas electricity and water supply charges 5
3:5 To repair and decorate 5
3:5:1 To keep in repair 5
3:5:2 To notify Landlord of defects 5
3:5:3 To decorate interior 6
3:5:4 To make good damage 6
3:5:5 To replace carpeting 6
3:5:6 To pay Landlords Surveyors fees 6
3:6:1 To maintain drains etc. 6
3:6:2 To clean windows 6
3:6:3 To keep clean and tidy 6
3:6:4 Cleaners 6
3:7:1 To make good defects in accordance with Landlords notice 7
3:7:2 Landlords right to repair in case of default by Tenant 7
3:8 To allow Landlord to inspect and repair adjoining premises etc. 7
3:9:1 To comply with Acts of Parliament etc. 7
3:9:2 To provide Landlord with copy consents etc. 8
3:10 Restrictions on Assignment/Underletting 8
3:10:6 Registration of Assignments/Underlettings 10
3:11:1 Restrictions on Alterations 10
3:11:2 Restrictions on Alterations to electrical system etc. 10
3:11:3 Not to merge with adjoining premises 11
3:12 Not to overload floors or structure 11
3:13 Restrictions on signs etc. 11
3:14 Not to cause nuisance annoyance etc. 11
3:15 Restrictions on User and activities 11
3:16 Not to store inflammable or explosive articles etc. 12
3:17:1 Not to invalidate insurance etc. 12
3:17:2 To provide fire fighting appliances etc. 12
3:18 Not to obstruct drains etc. 12
3:19 Not to overload electrical system 13
3:20 To produce and comply with notices etc. 13
3:21 To indemnify Landlord against damage to Estate etc. 13
3:22 To comply with planning legislation etc. 13
3:23:1 To preserve easements etc. 14
3:23:2 Acquisition of easements 14
3:24 To pay Landlords costs on breach etc. 15
3:25 Restrictions on storage of goods 15
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
THE FIRST SCHEDULE - NAMES OF PARTIES DESCRIPTION OF 24-25
PREMISES TERM OF LEASE RENTS PAYABLE AND PERMITTED USE
THE SECOND SCHEDULE
PART I - RIGHTS GRANTED 25-26
PART II - RIGHTS EXCEPTED AND RESERVED 26-27
PART III - MATTERS TO WHICH DEMISE IS SUBJECT 27
THE THIRD SCHEDULE - ADDITIONAL TENANTS COVENANTS 27
THE FOURTH SCHEDULE - RENT REVIEW PROVISIONS 27-30
THE FIFTH SCHEDULE - SERVICES PROVIDED BY LANDLORD 30-31
THE SIXTH SCHEDULE - THE SERVICE CHARGE 31
THE SEVENTH SCHEDULE - THE EXPENDITURE 32-35
THE EIGHTH SCHEDULE - INSURANCE 35-36
THE NINTH SCHEDULE - THE ADVANCE SERVICE CHARGE 36
THE TENTH SCHEDULE - RESTRICTIONS ON UNDERLETTING 36-37
</TABLE>
<PAGE> 4
THIS LEASE is made the ___________ day of _______________ 1995 BETWEEN the
party named in paragraph 1 of the First Schedule hereto (hereinafter called "the
Landlord") of the First part and the party or parties named in paragraph 2 of
the First Schedule hereto (hereinafter called "The Tenant") of the Second part
WITNESSETH as follows:-
1. In this Lease save where the context otherwise requires the following words
and expressions shall have the meanings assigned to them hereunder:-
1:1 "the Landlord" shall include the person or persons for the time being
entitled to the reversion immediately expectant on the term hereby granted
1:2 "the Tenant" shall include the successors in title to the Tenant
1:3 "the demised premises" shall mean the premises described in paragraph 3 of
the First Schedule hereto
1:4 "the Building" shall mean The Innovation Centre 225 Marsh Wall Docklands
London E14 9FW
1:5 "the Rent" shall mean the sum specified as the rent in paragraph 4 of the
First Schedule hereto (or such other sum as may be substituted therefor in
accordance with the provisions of the Fourth Schedule hereto)
1:6 "the Term" shall mean the term of years specified as the term in paragraph
5 of the First Schedule hereto
1:7 "Person" shall include a Company or other body legally capable of holding
land
1:8 The masculine shall include the feminine and the singular the plural and
vice versa
1:9 Obligations undertaken (or to be undertaken) by more than a single person
are (or shall be) joint and several obligations
1:10 Any agreement by the Tenant not to do any act or thing shall be construed
as if it were an agreement not to do or permit or suffer such act or thing
1:11 Right excepted reserved or granted to the Landlord shall be construed as
excepted reserved or granted to the Landlord the Superior Landlord and all
persons respectively authorised by it or them
1:12 A reference to a statute shall refer to the statute as amended at the date
hereof and shall include any subsequent statutory amendments or
re-enactment thereof
1:13 "the Bank" shall mean Midland Bank Plc or the Bank which is the successor
to the business of that Bank or if such Bank ceases to trade in
circumstances that no one Bank succeeds to that business such member of
the Committee of London Clearing
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Bankers as the Landlord nominates
1:14 "Base Rate" shall mean the published base rate from time to time of the
Bank but if no such rate shall be published two per centum above the rate
paid by the Bank from time to time on deposits of the minimum sum accepted
at interest for repayment on seven days notice
1:15 "Interest" is at the annual rate of four per centum above the Base Rate
for the time being compounded with rests the 30th June and 31st December
in each year of the Term
1:16 Any covenant to pay interest shall be a covenant to pay interest at the
said rate both before and after judgement or arbitration award
1:17 "the Service Charge" shall mean the sum specified or referred to in
paragraph 6 of the First Schedule hereto
1:18 "the Advance Service Charge" shall mean the sum specified or referred to
in paragraph 9 of the First Schedule hereto
1:19 "the Insurance Rent" shall mean the sum specified or referred to in
paragraph 7 of the First Schedule hereto
1:20 "the Common Parts" shall mean the roads footpaths pavements car parking
areas (including the access to individual parking bays) landscaped areas
and other open areas entrance hall (including reception and waiting areas)
landings lifts lift shafts staircases passages fire escape routes and all
other areas which are from time to time during the Term provided by the
Landlord for common use and enjoyment by the tenants and occupiers of the
Building and all persons expressly or by implication authorised by them
1:21 "the Permitted Use" shall mean the use specified as the permitted use in
paragraph 8 of the First Schedule hereto
1:22 "the Landlords Surveyor" means any person or firm who or the partners in
which shall be an associate or fellow of the Royal Institution of
Chartered Surveyors acting for the Landlord including an employee of the
Landlord appointed to perform the function of a surveyor for any purpose
of this Lease
1:23 "the Telephone Charge" means the proportion of the cost of telephone calls
made to and from the Building attributable exclusively to the demised
premises and as determined by the Telephone Equipment and a copy of the
computer printout from the Telephone Equipment shall (save for manifest or
proven error) be conclusive of the same
1:24 "the Telephone Equipment" means all equipment (including the computer for
monitoring the same) installed in the Building from time to time in order
to provide a telephone service for the occupiers of the Building other
than telephone handsets or
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similar equipment installed in individual units within the Building
1:25 "the Private Services" means such services as shall be provided by the
Landlord for the benefit of individual tenants within the Building from
time to time the cost of which is intended shall be borne only by such
tenants as shall use such services including (but without prejudice to the
generality of the foregoing):-
1:25:1 Secretarial and clerical services
1:25:2 Telegraphic facsimile transmission services
1:25:3 Photocopying services
1:25:4 Conference facility services
1:25:5 Audio/visual facility services
1:25:6 Any other service which may from time to time be provided by the
Landlord for the benefit of individual tenants within the Building
1:26 "the Private Charge" means the amount payable by the Tenant monthly in
arrears in respect of the Tenants use of the Private Services during the
month in question and representing the cost of such services as determined
from time to time by the Landlord
1:27 "the Superior Lease" means a lease dated 1st May 1991 and made between
London Docklands Corporation (1) Carroll Investment Corporation Limited (2)
1:28 "the Superior Landlord" means the persons for the time being entitled to
the reversion immediately expectant on the determination of the term
created by the Superior Lease together with any persons for the time being
entitled to the reversion immediately expectant on the determination of any
term created by any other lease ranking superior to this Lease
1:29 "the Permitted Hours" means the hours between 8:30 a.m. and 6:00 p.m.
Mondays to Fridays (other than Bank and other Public Holidays) and
8:30 a.m. to 12:30 p.m. on Saturdays
1:30 "the Break Date" means the 29th September 1999
1:31 "Inherent Defect" means any defect in the Building or in anything installed
in or on the Building which is attributable to:-
1:31:1 defective design or
1:31:2 defective workmanship or materials or
1:31:3 defective supervision of the construction of or the installation of
anything in
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or on the Building or
1:31:4 defective preparation of the site upon which the Building is constructed
1:32 "the Car Parking Spaces" means the 7 car parking spaces shown edged blue
on plan number 2 annexed hereto or such other 7 car parking spaces as
shall from time to time be designated by the Landlord upon giving the
Tenant reasonable prior notice
2. IN CONSIDERATION of the Rent and of the covenants on the part of the
Tenant hereinafter contained the Landlord HEREBY DEMISES unto the Tenant ALL
THAT the demised premises TOGETHER WITH the easements and rights described in
Part 1 of the Second Schedule hereto EXCEPT AND RESERVING as mentioned in Part 2
of the Second Schedule hereto SUBJECT AS specified in Part 3 of the Second
Schedule TO HOLD the same unto the Tenant for the Term PAYING THEREFOR to the
Landlord the following rents:
2:1 Firstly the Rent
2:2 Secondly the Service Charge
2:3 Thirdly the Insurance Rent
2:4 Fourthly the Advance Service Charge (if any)
3. THE TENANT HEREBY COVENANTS with the Landlord in manner following that
is to say:-
3:1:1 To pay the Rent the Service Charge the Insurance Rent and the Advance
Service Charge at the times and in the manner described and specified in
the First Schedule hereto and if so required to make all or any such
payments by Bankers Standing Order or any other reasonable means (other
than by direct debit) which the Landlord may require
3:1:2 To pay the Landlord within 21 days of written demand (which demand shall
be accompanied by a copy of the computer printout from the Telephone
Equipment) the Telephone Charge
3:1:3 To pay to the Landlord within 21 days of written demand the Private
Charge
3:2 To pay all existing and future rates (or any similar tax or outgoing
replacing the same from time to time) taxes assessments impositions and
outgoings assessed or imposed on or in respect of the demised premises
(whether assessed or imposed on the Landlord or the Tenant) PROVIDED
ALWAYS that if any of the foregoing shall be or become assessed or
imposed (without formal apportionment) upon or payable (whether by the
owner or the occupier) in respect of the demised premises or any part or
parts thereof together with other premises not included in this Lease
the Tenant shall pay and discharge (and indemnify the Landlord against)
the fair and proper proportion thereof attributable to the demised
premises or the part or parts thereof so
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<PAGE> 8
affected such fair and proper proportion to be determined by the Landlord's
Surveyor for the time being who shall act reasonably in making such
determination and whose decision shall save for any manifest or proven
error be final and binding upon the Tenant
3:3 If any rent or other sums payable by the Tenant to the Landlord under this
Lease shall be due but unpaid for fourteen days to pay to the Landlord (if
the Landlord shall so require) interest from the due date until payment
Provided that this subclause shall not prejudice any other right or remedy
in respect of such money
3:4 Without prejudice to Clauses 3:1:2 and 3:1:3 hereof to pay to the suppliers
thereof all charges for gas electricity water and other services supplied
to the demised premises
3:5:1 To repair and keep in good and substantial repair and condition
(including well and substantially decorated) the whole of the interior
of the demised premises (including without prejudice to the generality
of the foregoing the suspended ceilings the raised floors and other
floor surfaces all plasterwork and other internal finishes any fire
exit doors and normal entrance doors and door frames all windows and
window frames all electrical circuits and wiring and fittings within
the demised premises or solely serving the demised premises and all
partitions and fixtures and fittings within the demised premises and
at the expiration or sooner determination of the Term quietly yield up
to the Landlord the demised premises (including all additions and
improvements made thereto) in such good and substantial repair and
condition and properly cleaned and decorated Provided that this
sub-clause shall not apply to damage by fire and other perils
specified in Clause 3 of the Eighth Schedule hereto unless and to the
extent that any act or omission of the Tenant renders the insurance
money irrecoverable PROVIDED FURTHER that nothing in this Lease
contained shall oblige the Tenant to repair any damage to the demised
premises arising out of an Inherent Defect nor shall the Tenant be
obliged to rectify any Inherent Defect
3:5:2 As soon as reasonably possible after the Tenant becomes aware of the
same or should reasonably have become aware of the same to give notice
to the Landlord and the Superior Landlord of any defect or need of
repair or renewal arising to the demised premises which would or might
result in the Landlord and/or the Superior Landlord becoming liable to
third parties by reason of the provisions of the Defective Premises
Act 1972 or which would or might give rise to an obligation on the
Landlord to do or refrain from doing any act or thing in order to
comply with its duty of care imposed on the Landlord pursuant to such
provisions and insofar as any such defect or need of repair or renewal
as aforesaid shall be the responsibility of the Tenant under this
Lease to indemnify the Landlord (to the extent that it can so require)
against all liability and costs arising in respect of any notice claim
or demand costs and proceedings made or brought thereunder and
furthermore (without prejudice to the foregoing) to indemnify and keep
indemnified the Landlord and the Superior Landlord from and against
any losses claims actions costs demands or other liability arising
from a failure to give such notice as aforesaid and furthermore at all
times to display and maintain all notices (including the wording
thereof) which the Landlord may from time to time display or require
to be displayed on the demised premises
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3:5:3 As often as shall be required and in any event in the year 1998 and in
the last year of the Term (howsoever determined) in a proper and
workmanlike manner
(a) to prepare and paint all the inside wood metal and other parts of
the demised premises usually or requiring to be painted with not less
than two coats of good quality oil or other suitable paint
(b) to prepare and repolish any inside wood of the demised premises now
polished with best quality materials
(c) to prepare and paint the ceilings and walls of the demised premises
as the same are now treated and
(d) to clean and treat in a suitable manner for its maintenance in good
condition any inside wood metal work tiles bricks and similar surfaces
to the demised premises not required to be painted or polished.
Provided that the painting in the last year of the term shall be done in
colours first approved in writing by the Landlord such approval not to
be unreasonably withheld or delayed and Provided also that the Tenant
shall not be liable to carry out any decorative works of this nature the
need for which arises wholly or partly from an Inherent Defect or damage
caused by an Inherent Defect
3:5:4 To make good forthwith any damage to the demised premises or fixtures
therein caused by the Tenant his licensees and invitees whether
accidentally or otherwise
3:5:5 At the expiration or sooner determination of the Term (howsoever
determined) provided that such expiration or sooner determination shall
occur after the third anniversary of the Term to replace all the
carpeting (or carpet tiles as appropriate) within the demised premises
with new carpeting (or carpet tiles as appropriate) of a quality design
and colour similar to the quality design and colour of the carpeting (or
carpet tiles as appropriate) supplied by the Landlord at the
commencement of the Term such replacement carpeting (or carpet tiles as
appropriate) to be first approved in writing by the Landlord (such
approval not to be unreasonably withheld)
3:5:6 The Tenant shall pay the Landlord's Surveyor's reasonable and proper fees
incurred as a result of any breach of this sub clause
3:6:1 To keep and maintain all drains and pipes exclusively serving the
demised premises in good repair and condition and clear and unobstructed
and not to cause or allow to be caused any blockage or stoppage of those
within the Common Parts
3:6:2 To clean the interior of the windows and other glazing of the demised
premises at least once in every month
3:6:3 To keep all areas forming part of the demised premises clean and tidy
3:6:4 To employ for the cleaning of the demised premises only such firm or
company as
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shall be approved in writing by the Landlord such approval not to be
unreasonably withheld or delayed
3:7:1 To make good within one month (or sooner if necessary) any defect in
repair or decoration of the demised premises for which the Tenant is
liable in accordance with the Tenant's covenants hereunder and of which
the Landlord has given notice in writing to the Tenant
3:7:2 If the Tenant shall not comply with Clause 3:7:1 the Landlord may enter
the demised premises and make good such defects and the reasonable
expense of so doing (including reasonable Surveyor's fees necessarily
incurred) shall be repaid to the Landlord by the Tenant within 21 days of
written demand and if not so repaid shall be recoverable by action or
distress as if rent in arrear
3:8 To permit the Landlord and its Agents and all others authorised by the
Landlord together with workmen and all necessary tools and appliances on
reasonable notice (except in emergency) at all reasonable hours to enter
the demised premises for the purpose of:-
3:8:1 Viewing and recording the condition of the demised premises
3:8:2 Repairing maintaining altering or cleaning adjoining or nearby units
within the Building Provided such works cannot be carried out from
outside the demised premises
3:8:3 Repairing maintaining cleaning altering replacing or adding to any pipes
wires flues channels or apparatus which serve other parts of the Building
or adjoining or nearby premises Provided such works cannot be carried out
from outside the demised premises
3:8:4 Enabling the Landlord to comply with the covenants on its part and the
conditions contained in the Superior Lease or for any purpose that is in
the reasonable opinion of the Landlord necessary in order to enable it to
do so in either case so far as the Tenant does not expressly covenant
hereunder to observe and perform the same
PROVIDED THAT the Landlord or those experiencing such right (as appropriate)
shall cause as little damage and/or disturbance as practicable and shall as soon
as practicable make good (to the reasonable satisfaction of the Tenant) all
damage to the demised premises caused by such entry but shall not otherwise be
liable for any damage or inconvenience caused to the Tenant
3:9:1 At the Tenant's own cost to observe and comply as soon as reasonably
practicable in all respects with the provisions and requirements of any
and every enactment (which expression in this sub-clause includes every
general and local Act or Acts of Parliament now or hereafter enacted and
every statutory order rule instrument regulation and bye-law and every
notice order or direction and every license consent or permission already
or hereafter to be made or given thereunder) including (but without
prejudice to the generality of the foregoing) the Health and Safety at
Work
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etc Act 1974 and the lawful requirements of any local or public
authority so far as the same shall relate to or affect the demised
premises or the user thereof for the purposes of any manufacture
process or business or the employment therein of any person or persons
or any fixtures machinery plant or chattels for the time being affixed
thereto or being thereupon or used for the purposes thereof and to do
and execute or cause to be done and executed all such works and
provide and maintain all arrangements which by or under any enactment
or by any government department local authority or other public
authority or duly authorized officer or Court of competent
jurisdiction acting under or in pursuance of any enactment are or may
be directed or required to be done executed provided and maintained at
any time during the Term upon or in respect of the demised premises or
any part or parts thereof or in respect of any such user thereof or
employment therein of any person or persons or fixtures machinery
plant or chattels as aforesaid whether by the Landlord or the Tenant
or occupier thereof and to indemnify the Landlord at all times against
all costs charges and expenses of or incidental to the execution of
any works or the provision or maintenance of any arrangements so
directed or required as aforesaid and to pay the reasonable costs
charges and expenses of the Solicitors and of the surveyors for the
time being of the Landlord in relation thereto and not at any time
during the Term to do or omit or suffer to be done or omitted on or
about the demised premises any act or thing by reason of which the
Landlord may under any enactment incur or have imposed upon it or
become liable to pay any penalty damages compensation costs charges or
expenses and to pay all costs charges and expenses incurred by the
Landlord in abating a nuisance and executing all such works as may be
necessary for abating a nuisance in connection with the demised
premises whether or not in obedience to a notice served by a Local
Authority.
3:9:2 To furnish the Landlord with copies of all consents and certificates
which may be obtained by the Tenant under the Health and Safety at
Work etc Act 1974 or any other enactment from time to time affecting
the same
3:10:1 Not to assign charge underlet or part with possession of part only of
the demised premises nor allow any person deriving title from the
tenant to do so
3:10:2 Not without the Landlord's prior written consent (which shall not be
unreasonably withheld or delayed) to underlet the whole of the demised
premises nor allow any person deriving title from the Tenant to do so
Provided that in the event of the Tenant applying for consent to
underlet the whole of the demised premises the Landlord shall be
entitled (without prejudice to the generality of the foregoing and
without prejudice to any other matters the Landlord may wish to take
into account in determining such application) to refuse to consider
such application if in the opinion of the Landlord acting reasonably
there may be a breach of the provisions of the Tenth Schedule hereto
and furthermore the Tenant shall in the event that the Landlord grants
consent to underlet the whole of the demised premises at all times
comply with such provisions contained in the Tenth Schedule hereto
3:10:3 Not without the Landlord's prior written consent (which shall not be
unreasonably withheld or delayed) to assign charge or part with
possession of
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the demised premises as a whole
3:10:4 Upon every assignment of the whole of the demised premises if so
required by the Landlord to procure that the intending assignee shall
join in the Licence to Assign to give a direct covenant to the Landlord
to pay the Rent the Service Charge the Insurance Rent the Advance
Service Charge the Telephone Charge and the Private Charge and perform
and observe the covenants contained in this Lease and if such intending
assignee shall be a limited liability company then upon the Landlord's
reasonable demand in that behalf at least two (or more if the Landlord
reasonably so requires) of such company's directors of satisfactory
standing shall join in such deed as sureties for such company in order
jointly and severally to covenant with the Landlord as sureties that at
all times during the Term (or any extension thereof) the Rent the
Service Charge the Insurance Rent the Advance Service Charge the
Telephone Charge and the Private Charge and all other sums and payments
herein or therein covenanted to be paid by the Tenant shall be paid at
the respective times and in manner herein or therein appointed and that
all covenants on the part of the Tenant herein or therein contained
shall be duly performed and observed and that in case of default in
such payment of the Rent the Service Charge the Insurance Rent the
Advance Service Charge the Telephone Charge the Private Charge or other
moneys or performance or observance of covenants as aforesaid as well
after as before any disclaimer the sureties will pay and make good to
the Landlord on demand all loss damage costs and expenses thereby
arising or incurred by the Landlord and such covenant shall further
provide that:-
(a) no neglect or forbearance of the Landlord in endeavouring to obtain
payment of the Rent the Service Charge the Insurance Rent the Advance Service
Charge the Telephone Charge or the Private Charge hereby reserved or other
moneys when the same become due or delay in taking steps to enforce
performance or observance of the covenants on the Tenant's part herein or
therein contained
(b) nor any refusal by the Landlord to accept the Rent the Service Charge
the Insurance Rent the Advance Service Charge the Telephone Charge or the
Private Charge tendered by or on behalf of the Tenant during a period in
which the Landlord is entitled or would after service of a notice under
Section 146 of the Law of Property Act 1925 be entitled to re-enter the
demised premises
(c) nor any time which may be given by the Landlord to the Tenant
(d) nor any variation by agreement between the Landlord and the Tenant of
the terms of this Lease or any extension thereof where such variation is
immaterial and not prejudicial to the sureties
(e) nor any other act or thing whereby but for this provision the sureties
would have been released
shall release or exonerate or in any way lessen or affect the liability of
the sureties AND such deed shall further provide for the sureties jointly and
severally to covenant
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with the Landlord that in the event of the intending assignee during the
Term (or any extension thereof pursuant to notice served under the
provisions of the Landlord and Tenant Act 1954) having a receiving order
made against the intending assignee or entering into liquidation and the
receiver or liquidator disclaiming this Lease or extension thereof the
sureties will accept a new lease of the demised premises for a term
equal in duration to the residue remaining unexpired of the Term or of
the term of the extension thereof at the time of the grant of such lease
to the sureties such lease to contain the like Landlord's and the
Tenant's covenants respectively and the proviso for re-entry as are
contained in this Lease PROVIDED ALWAYS that the Landlord within the
period of six (6) months after such disclaimer serves upon the sureties
a notice in writing so to do AND in such case the sureties shall pay the
Landlord's reasonable legal and surveyors' costs and fees and
disbursements necessarily incurred on the grant of such lease or
underlease and execute and deliver to the Landlord a counterpart thereof
3:10:5 Notwithstanding anything herein contained and subject to and without
prejudice to the express provisions of Clause 3:10 hereof hereinbefore
contained the Tenant shall not create or permit the creation of any
interest derived out of the Term howsoever remote or inferior upon the
payment of a fine or premium or at a rent less than the Rent or the full
market rent (obtainable without taking a fine or premium) of the demised
premises (whichever shall be the greater) or whereunder any rent is
payable more than one quarter in advance or whereby the rent is not
subject to review on the Review Dates specified in Clause 1 of the
Fourth Schedule hereto (such review to be in identical terms to the
provisions of the Fourth Schedule hereto) and shall not create or permit
the creation of any such derivative interest as aforesaid save by
instrument in writing
3:10:6 Within twenty-eight days of any permitted assignment charge or
underletting of the whole of the demised premises or any transmission of
this Lease by reason of a death or otherwise affecting the demised
premises or any part thereof the Tenant shall submit two certified
copies of such assignment charge or counterpart underlease or other
document evidencing or effecting the same (as the case may be) to the
Landlord's Solicitors (for retention by the Landlord and the Superior
Landlord respectively) and shall pay to such Solicitors their reasonable
fees (not being less than L30.00 (Plus VAT)) for the registration
thereof together with the reasonable registration fees payable to the
Superior Landlord (or its Managing Agents) and as prescribed or referred
to in the Superior Leases
3:11:1 Not to make any alterations or additions whatsoever to the demised
premises externally or internally except what the Tenant may with the
Landlord's and the Superior Landlord's prior written consent (which
shall not be unreasonably withheld or delayed) carry out internal
non-structural alterations which do not result in a material increase in
the net lettable area of the demised premises
3:11:2 Without prejudice to the generality of Clause 3:11:1 hereof not to alter
amend or add to the electrical circuits wiring and fittings within the
demised premises
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or solely serving the demised premises without the Landlord's prior
written consent which shall not be unreasonably withheld or delayed
Provided that the Landlord may as a condition of such consent require
the Tenant to produce to the Landlord following completion of any such
works a certificate signed by a competent electrician that any such
works have been carried out in accordance with and the electrical
installations at the demised premises have been inspected and tested
(following completion of such works) in accordance with the current
requirements regulations and conditions of the Electricity Supply
Authority and has been found to be satisfactory
3:11:3 Not to merge the demised premises with any adjoining units within the
Building
3:12 Not to overload the floors or structures of the demised premises or the
Building or permit or suffer the same to be used in any manner which will
cause undue strain or interfere therewith and not to install or permit to
be installed any machinery on the demised premises which shall be unduly
noisy or cause dangerous vibrations or to use or permit or suffer to be
used on the demised premises or any part thereof in such manner as to
subject the same to any strain beyond that which it is designed to bear
3:13 Not to place or display outside the demised premises or inside the demised
premises so as to be visible from the outside any poster placard notice
advertisement name or sign other than such as shall be approved in writing
by the Landlord (such approval not to be unreasonably withheld or delayed)
giving the name of the Tenant and nature of the Tenant's business within
the locational signboard in the entrance lobby to the Building
3:14 Not to do anything upon the demised premises which is or may in the opinion
of the Landlord become a nuisance damage or annoyance to the Landlord or to
the tenants or occupiers of the Building or any nearby premises
3:15:1 Not to use the whole or any part of the demised premises
3:15:1:1 For any illegal or immoral purposes
3:15:1:2 For any dangerous noxious noisy noisome or offensive trade business
occupation or manufacture
3:15:1:3 For any social business functions within the Permitted Hours or any
social functions unconnected with the Tenant's business at any time
3:15:1:4 For any purpose other than the Permitted Use
3:15:1:5 otherwise than during the Permitted Hours
3:15:2 Provided Always and the Tenant hereby acknowledges and admits that
notwithstanding the foregoing provisions as to use of the demised
premises the Landlord does not thereby or in any other way give or
make nor has given or
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made at any other time any representation or warranty that any
such use is or will be permitted within the provisions of the
legislation currently in force relating to Town and Country
Planning
3:15:3 Not to leave the demised premises continuously unoccupied for
more than one month without:-
3:15:3:1 notifying the Landlord in writing
3:15:3:2 providing such security arrangements as the Landlord shall
reasonably require
3:15:3:3 providing such security or other arrangements as the insurers of
the Building shall require in order to protect the demised
premises from vandalism theft damage or unlawful occupation
3:15:4 Not to play or use in the demised premises any musical
instrument loudspeakers tape recorder gramophone radio or other
equipment or apparatus that produces sound that may be heard in
nearby premises or outside the demised premises
3:15:5 Not to hold any sale or auction on the demised premises
3:15:6 Not to do on the demised premises or any part thereof or the
Building or any part hereof any act matter or thing whatsoever
which may or may tend to depreciate the value of the demised
premises or the Building or which may be or tend to be
detrimental to the letting of the same or individual units
therein
3:16 Not to store or bring upon the demised premises or any part
thereof any articles or substance of a specially combustible
inflammable explosive or dangerous nature other than those used by the
Tenant in the usual course of its business at the demised premises and
to comply with all recommendations of any Fire Officer and of the
Insurers of the Building as to fire precautions relating to the
demised premises
3:17:1 Not to bring or permit or suffer to be brought in or upon the
demised premises or any part thereof any goods nor to do or
permit or suffer to be done in or upon the demised premises of
any part thereof anything which in either case may invalidate
any insurance for the time being effected on the demised
premises or any part thereof or the Building or whereby any such
insurance may be in any way affected or made void or voidable
nor without the consent of the Landlord to do or allow to be
done anything whereby any additional premium may become payable
for he insurance of the demised premises or any other part of
the Building and to repay to the Landlord on demand all sums
paid by way of increased premiums and all expenses incurred by
it in consequence of a breach of this sub-clause
3:17:2 To keep the demised premises sufficiently supplied and equipped
with such fire fighting and extinguishing appliances as shall
from time to time be required by law or by the Local or other
competent authority or by the
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Landlord's insurers of the Building and not to obstruct or permit or
suffer to be obstructed the access to or means of working such
appliances or the means of escape from the demised premises in the
case of fire or other emergency
3:18 Not to stop up or obstruct or permit or suffer to be stopped up or
obstructed in any way whatsoever or permit or suffer oil grease or other
deleterious or noxious matter or substance to enter the drains sewers
gutters pipes channels or watercourses of or serving the demised premises
or the Building and in the event of any breach of this covenant by the
Tenant forthwith to make good any damage to the reasonable satisfaction of
the Landlord
3:19 Not to overload or permit or suffer to be overloaded the electrical system
serving the demised premises or the Building (whether serving the same
exclusively or in common with adjoining or neighbouring units in the
Building)
3:20 Within seven days of the receipt of notice of the same to give full
particulars to the Landlord of any notice direction licence consent or
permission or order or proposal for a notice or order relating to the
demised premises made given or issued to the Tenant by any government
department local or public authority under or by virtue of any statutory
powers and to produce such notice direction licence consent or permission
or order or proposal for a notice or order to the Landlord AND ALSO without
delay to take all necessary steps to comply with the same AND ALSO at the
request of the Landlord to make or join with the Landlord in making such
objections or representations against or in respect of any such notice
direction licence consent or permission or order or proposal as aforesaid
as the Landlord shall deem reasonably expedient
3:21 To be responsible for and to indemnify the Landlord against all damage
occasioned to any part of the Building or to any person chattel or
property (whether or not upon the demised premises) caused by any act
default or negligence of the Tenant or the servants agents or licensees of
the Tenant
3:22:1 At all times to comply with the requirements of the Planning Acts
insofar as they affect the demised premises and in particular (but
without prejudice to the generality of the foregoing) so often as
occasion shall require at the expense in all respects of the Tenant to
obtain from the Local Authority the Local Planning Authority and/or
the Secretary of State for the Environment (or other appropriate
Minister) all such licences consents and permissions (if any) as may
be required for the carrying out by the Tenant of any operations on
the demised premises or the institution or continuance by the Tenant
of any use thereof which may constitute development within the
meaning of the Planning Acts
3:22:2 Not without the prior written consent of the Landlord (which shall
not be unreasonably withheld or delayed) to apply for permission to
carry out on the demised premises any development requiring
permission under the Planning Acts and upon obtaining any such
permission immediately to produce the same to the Landlord
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<PAGE> 17
3:22:3 Not without the prior written consent of the Landlord (which shall not
be unreasonably withheld or delayed) to implement any planning
permission relating to the demised premises
3:22:4 To comply with any conditions attached to any temporary planning
permission that the Tenant implements and which are intended to be
complied with when the demised premises cease to be used in accordance
with such planning permission even though the period for which the
permission was granted extends beyond the date of termination of this
Lease
3:22:5 Forthwith upon receipt of any notice relating to the development of the
demised premises or any neighbouring property to deliver a copy thereof
to the Landlord and if so required by the Landlord to join with the
Landlord in making representations concerning the same
3:22:6 Whenever reasonably required to permit the Landlord to enter upon the
demised premises to comply with any requirement lawfully made of it
under the Planning Acts by any competent authority notwithstanding that
any action reasonably necessary for compliance interferes with the
Tenant's enjoyment of the demised premises
3:22:7 At all times hereafter to indemnify and keep indemnified the Landlord
against all actions proceedings costs expenses claims and demands in
respect of any contravention of the provisions of the Planning Acts
3:22:8 For the purposes of this sub-clause "the Planning Acts" shall mean the
Town and Country Planning Act 1990 the Planning (Listed Buildings and
Conservation Areas) Act 1990 and the Planning and Compensation Act 1991
and the rules regulations and orders which are either made under one of
them or are continued by the Planning (Consequential Provisions) Act
1990 as they apply from time to time
3:23:1 To preserve so far as the Tenant is able all rights of light and other
easements enjoyed by the demised premises and at all times at the
Tenant's cost to afford to the Landlord such facilities and assistance
as may enable the Landlord to prevent anyone acquiring any right of
light or other easement over the demised premises and/or the Building
and in addition but without prejudice to the generality of the foregoing
to permit the Landlord to bring all such actions as it may reasonably
and properly think fit in the name of the Tenant in respect of any
obstruction of the access of light or air to any windows or openings in
the demised premises or in respect of any encroachment upon the demised
premises or the obstruction of any other easement enjoyed by the demised
premises
3:23:2 Without prejudice to the generality of Clause 3:23:1 hereof not to give
to any third party any acknowledgment that the Tenant enjoys the access
of light or air to any of the windows or openings in the demised
premises by the consent of such third party or to pay any sum of money
to or to enter into any
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<PAGE> 18
agreement with such third party for the purpose of inducing or
binding him to abstain from obstructing the access of light or air
to any such windows or openings and in the event of any such third
party doing or threatening to do anything which obstructs or would
obstruct such access of light or air to notify the same forthwith in
writing to the Landlord
3:24:1 To pay the Landlord's reasonable and proper expenses (including
legal costs bailiffs fees and Surveyor's fees) incidental to any
notice or proceedings preparatory to forfeiture of this Lease for a
breach of its terms even if forfeiture is avoided without a Court
Order
3:24:2 To pay the Landlord's reasonable and proper expenses (including
legal costs and Surveyor's fees) properly incurred by the Landlord
incidental to the preparation and service of any notice and/or
Schedule relating to a Schedule of Dilapidations and whether or not
the same is served during or after the expiry of the Term (howsoever
determined) but relating in all cases only to dilapidations which
accrued prior to the expiry of the Term
3:24:3 In the event of the Tenant committing any material breach of any
covenant on the part of the Tenant herein contained whether for
payment of rent or otherwise then if the Landlord shall incur any
expenses (including legal costs bailiffs fees and Surveyor's fees)
to fully and effectively indemnify the Landlord in respect thereof
3:25 Not to store either permanently or temporarily any goods in the Building
other than within the demised premises or (in respect of refuse only) in
the Bin Store located in the basement of the Building
3:26 To comply with the Landlord's reasonable regulations which may be imposed
from time to time by the Landlord for the proper and efficient management
of the Building (including the demised premises) together with the
Superior Landlords regulations as referred to in Clause 3(10) of the
Superior Lease Provided that nothing in any regulations imposed by the
Landlord shall purport to amend the terms of this Lease and in the event
of any inconsistency between the terms of this Lease and any such
regulations the terms of this Lease shall prevail
3:27:1 Not to obstruct or otherwise prevent the use by the Landlord or any
others entitled thereto of the Common Parts including (without
prejudice to the generality of the foregoing) the Pedestrian Public
Access Areas and the Emergency Vehicular Public Access Areas defined
in the Superior Lease
3:27:2 Without prejudice to the generality of Clause 3:27:1 hereof not to
load or unload any goods or materials onto or from vehicles and
convey the same from and into the Building and the demised premises
except through such entrances as may from time to time be designated
by the Landlord (acting reasonably) as service entrances and by
means of any lift designated from time to time by the Landlord for
such purposes
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<PAGE> 19
3:28 To take all reasonable precautions to prevent the occurrence or outbreak
(as the case may be) of any fire explosion or other occurrence which might
cause damage to the demised premises or the Building
3:29 If at any time the Tenant is entitled to the benefit of any insurance on
the demised premises or any part or parts thereof or on the Landlord's
fixtures and fittings therein the Tenant shall without delay apply all
monies received by virtue of such insurance in making good the loss or
damage in respect of which the same shall have been received
3:30 Upon the expiry of the Term (howsoever determined) to give up all keys of
the demised premises to the Landlord
3:31 To use the Common Parts for their proper purposes only and to indemnify the
Landlord against the costs of making good any damage done thereto by the
Tenant or any employee or Licensee of the Tenant
3:32 Not to keep any animals whatsoever in the demised premises
3:33:1 Not to do anything which interferes with the heating cooling or
ventilation of the Common Parts or which imposes an additional load on
any heating cooling or ventilation plant and equipment in the Building
3:33:2 Not to operate the ventilation equipment in the demised premises
otherwise than:-
3:33:2:1 during the Permitted Hours
3:33:2:2 in accordance with the reasonable regulations for such purpose made by
the Landlord from time to time
3:34 To permit the Landlord at any time during the last six months of the Term
to enter upon the demised premises to affix and retain without interference
upon any part of the demised premises a notice for selling or disposing of
the same PROVIDED ALWAYS that such notice shall not obstruct or interfere
unreasonably with the Tenants use of the demised premises And to permit
persons with authority from the Landlord or the Agent of the Landlord at
all reasonable times of the day but upon prior appointment to enter and
view the demised premises or any part thereof
3:35 To pay in addition to any monies due from the Tenant under the provisions
of this Lease such Value Added Tax (at the rate for the time being in
force) as shall be chargeable in respect of any such monies all of which
shall be deemed exclusive of Value Added Tax
3:36 Throughout the period from and including 1st October to and including 30th
April in every year of the Term to provide and maintain during the
Permitted Hours an air temperature within the demised premises of not less
than 65 degrees centigrade
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<PAGE> 20
whether or not the demised premises are unoccupied temporarily or
otherwise for any periods during the Term
3:37 To comply at all times with the additional covenants (if any) set
forth in the Third Schedule hereto
3:38 To indemnify the Landlord against any liability arising directly or
indirectly out of the Tenants occupation and/or use of the demised
premises
3:39 Not to use or permit or suffer to be used any parking spaces within
the Building (or the curtilage thereof and whether forming part of the
demised premises or the Common Parts) other than the Car Parking
Spaces for the temporary parking (meaning parking for a period not
exceeding 8 hours in any 24 hour period) of motor vehicles Provided
that:-
3:39:1 No motor vehicles shall be parked within the Building (as aforesaid)
other than those serving the demised premises
3:39:2 All motor vehicles shall be parked in the relevant Car Parking Spaces
in a proper orderly and tidy manner
3:40 To give to the Landlord at least 2 weeks prior notice in writing of
any creditors meeting intended to be held for the purpose of
considering or implementing any compromise or proposal under the
provisions of the Insolvency Act 1986
3:41 Not to lodge with the district valuer or the Local Authority any
appeal in respect of the rateable value of the demised premises (or
any similar valuation of the same for the purposes of assessing
premises for liability as to rates or any similar tax or outgoing
replacing the same from time to time) without the consent in writing
of the Landlord and if reasonably required by the Landlord to allow
the Landlord to conduct any such appeal as agent for and at the cost
in all respects of the Tenant
3:42 To indemnify the Landlord against all rates (or any similar tax or
outgoing replacing the same from time to time) which are payable by
the Landlord as a result of the Tenant vacating the demised premises
at any date prior to the termination of the Term to the intent that
this sub-clause shall remain in force notwithstanding such termination
3:43 If the Landlord should suffer any loss of rating relief which may be
applicable to empty premises after the termination of the Term by
reason of such relief being allowed to the Tenant in respect of any
period before such termination to immediately make good such loss to
the Landlord on demand
3:44 Upon making any application for any written consent or approval of the
Landlord which is required by this Lease to declare to and provide the
Landlord with such information as the Landlord shall reasonably
require
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<PAGE> 21
3:45 To pay the Landlord's reasonable and proper legal expenses and Surveyor's
fees (including disbursements and Stamp Duty) on all licences and duplicate
copies thereof resulting from all applications to the Landlord for any
consent or approval of the Landlord required by this Lease including
charges fees and disbursements actually incurred in cases where consent is
refused or the application is withdrawn
3:46 To observe and perform the covenants and the conditions on the part of the
lessee contained in the Superior Lease (except insofar as the same relate
to matters of repair and maintenance but without prejudice to the Tenant's
obligations in respect of such matters hereinbefore contained) so far as
the same relate to the demised premises and except insofar also as the
Landlord expressly covenants in this Lease to observe and perform the same
and to indemnify the Landlord from and against any actions proceedings
claims damages costs expenses losses or other liability arising from any
breach non-observance or non-performance of such covenants and conditions
and furthermore not to do omit suffer or permit in relation to the demised
premises any act or thing which would or might cause the Landlord to be in
breach of the Superior Lease or which if done omitted suffered or permitted
by the Landlord would or might constitute a breach of the covenants on the
part of the lessee and the conditions contained in the Superior Lease
4. The Landlord HEREBY COVENANTS with the Tenant that:-
4:1 The Tenant paying the rents hereinbefore reserved and observing and
performing the several covenants conditions agreements and stipulations on
the part of the Tenant hereinbefore contained shall and may peaceably and
quietly hold and enjoy the demised premises during the Term without
interruption or disturbance from or by the Landlord or any person or
persons rightfully claiming by through under or in trust for the Landlord
or by title paramount
4:2 To keep in a good and substantial state of repair and condition the Common
Parts (damage by fire and other perils specified in Clause 3 of the Eighth
Schedule hereto excepted)
4:3 To insure or cause to be insured the Building in accordance with the
provisions of the Eighth Schedule hereto Provided that the Landlord shall
not be obliged to insure or cause to be insured any fixtures and fittings
which may be installed by the Tenant in the demised premises and which may
become fixtures and fittings of the Landlord until the Tenant has in
writing informed the Landlord of the re-instatement value thereof but the
Landlord may in its discretion increase the amount of insurance in respect
of such fixtures and fittings
4:4 If the demised premises shall be destroyed or damaged by any of the risks
specified in Clause 3 of the Eighth Schedule hereto then (unless any such
insurance shall be vitiated or payment of the Policy monies refused in
whole or in part in consequence of any act or default of or permitted by
the Tenant) the Landlord will as soon as reasonably practicable re-instate
or repair such destruction or damage Provided that as regards fixtures and
fittings which have been installed by the Tenant and become fixtures and
fittings of the Landlord the Landlord shall only be responsible to
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<PAGE> 22
re-instate or repair the same to the extent of the re-instatement value
thereof notified by the Tenant to the Landlord pursuant to Clause 4:3
hereof or (if any) to the amount of the increased insurance thereof
effected at the discretion of the Landlord
4:5 Subject to the Tenant duly and punctually paying the Advance Service
Charge to provide the services specified in the Fifth Schedule hereto
for the benefit of the demised premises
4:6 To pay the rent reserved by the Superior Lease (if demanded) and to
perform so far as the Tenant or any other tenant or occupier within the
Building is not liable for such performance under the terms of this
Lease or any other lease of any part of the Building or otherwise (as
appropriate) the covenants and the conditions on the part of the lessee
contained in the Superior Lease and to indemnify the Tenant from and
against all actions claims proceedings costs expenses and demands
incurred by the Tenant as a result of any failure by the Landlord so to
do
4:7 At the request and cost of the Tenant to use its best endeavours to
enforce:-
4:7:1 the covenants on the part of the Superior Landlord contained in the
Superior Lease
4:7:2 the covenant on the part of other tenants occupiers of the Building
(other than the demised premises) contained in their respective leases
of the relevant parts of the Building provided that the Tenant shall
upon the Landlord's reasonable demand in that behalf deposit with the
Landlord such security for costs incurred or to be incurred by the
Landlord in respect thereof as the Landlord shall reasonably require
4:8 To use its reasonable endeavours to obtain the consent of the Superior
Landlord whenever the Tenant makes application for any consent required
under this Lease where the consent of both the landlord and the Superior
Landlord is needed by virtue of the Lease and the Superior Lease
5. PROVIDED ALWAYS and notwithstanding anything hereinbefore contained to
the contrary:-
5:1 That if the rents hereby reserved or any part thereof or following an
assignment of this Lease by the said Visual Communications Limited the
Telephone Charge and/or the Private Charge or any part thereof
respectively shall be unpaid for the space of 14 days next after any of
the days hereinbefore appointed for payment thereof (whether such rents
shall have been legally demanded or not) or if default shall be made in
the performance or observance of any of the covenants stipulations
conditions or agreements on the part of the Tenant herein contained or
if the Tenant being a Company shall go into liquidation whether
compulsory or voluntary (otherwise than for the purpose of amalgamation
or reconstruction without insolvency) or shall pass a resolution for
winding up (save as aforesaid) or is unable to pay its debts or has no
reasonable prospect of being able to pay its debts within the meaning of
Sections 122 and 123 of the Insolvency Act 1986 or summons a meeting of
its creditors or any of them under Part I of the said Act or suffers a
petition for an Administration Order in respect of it to be filed in
Court or suffers a receiver or administrative receiver to be
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<PAGE> 23
appointed or if the Tenant being an individual (or being individuals any
one of them) shall become bankrupt or is unable to pay his debts or has no
reasonable prospect of being able to pay his debts within the meaning of
Sections 267 and 268 of the said Insolvency Act or shall enter into any
composition with his or their creditors or if the Tenant shall suffer any
distress or execution to be levied upon his or their goods or if an
interim order is made under Part VIII of the said Insolvency Act then and
in any such case it shall be lawful for the Landlord or any person or
persons duly authorised by it in that behalf into and upon the demised
premises or any part thereof in the name of the whole to re-enter and the
same to have again repossess and enjoy as in it first and former estate
anything herein contained to the contrary notwithstanding and thereupon
the Term shall immediately cease but without prejudice to any right of
action or remedy of the Landlord in respect of any antecedent breach of
any of the covenants stipulations conditions or agreements on the part of
the Tenant herein contained
5:2 The Tenant shall not (save as hereinbefore is expressly granted to it and
then subject to the rights herein reserved to the Landlord and the
Superior Landlord and the rights subject to which this demise is made) be
entitled to any right of light air way or other easement or to exercise
any right or other easement over or against the Building or any adjoining
or neighbouring property of the Landlord and/or the Superior Landlord and
this Lease shall be deemed expressly to preclude the grant of any such
right of easement
5:3 If the demised premises or any part thereof or the access thereto are
destroyed or damaged by any of the risks specified in Clause 3 of the
English Schedule hereto or because of an Inherent Defect so as to render
the demised premises unfit or unsafe for occupation or sue and the demised
premises are not rendered fit and safe for occupation or use within seven
days of the event giving rise to such destruction or damage then (unless
any insurance effected or caused to be effected by the Landlord shall have
been vitiated or payment of the policy monies refused in whole or in part
in consequence of some act or default of or permitted by the Tenant) (a)
the yearly rent hereby Firstly reserved and for the time being payable
hereunder or a fair proportion thereof according to the nature and extent
to the damage sustained shall be suspended from the expiration of such
seven days until the demised premises shall be again rendered fit and safe
for occupation and use or until the expiration of 3 years from such date
whichever shall be the earlier and (b) the rent hereby secondly reserved
and for the time being payable hereunder or a fair proportion thereof
according to the nature and extent of the damage sustained shall be
suspended from the expiration of such seven days until the demised
premises shall be again rendered fit and safe for occupation and use or
until the expiration of 3 years from such date whichever shall be the
earlier but so that the Tenant shall remain liable to pay any balance due
in respect of such rent for any period prior to the expiration of such
seven days when the same shall have been certified AND in case of any
difference between the parties under this present sub-clause the same shall
be referred to an independent surveyor acting as an expert and not as an
arbitrator to be agreed upon by the Landlord and by the Tenant or (in the
event of failure so to agree) to be nominated on the application of either
party by the President of the Royal Institution of Chartered Surveyors or
his deputy and the decision of that independent surveyor
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<PAGE> 24
(including any decision as to the costs of the determination) shall be
final and binding on the parties Provided that in the event of any such
damage to or disturbance of the demised premises or the access thereto not
being made good so as to render the demised premises fit and safe for
occupation or use within three years of the date of occurrence of the same
either party may within six months thereafter (time being of the essence)
determine the Lease by giving to the other notice in writing pursuant to
this clause and upon service of any such notice this Lease and the Term
shall immediately expire and determine but without prejudice to the rights
and remedies of either party against the other in respect of any antecedent
breach or non-observance of any of the provisions of this Lease and in the
event of service of such a notice the said period of three years
hereinbefore referred to shall be extended to the expiration of the Term
5:4 Subject to the provisions of Section 38(2) of the Landlord and Tenant Act
1954 neither the Tenant nor any assignee of the Tenant shall be entitled on
quitting the demised premises to any compensation under Section 37 of the
same Act
5:5 All monies received in respect of loss of rents by virtue of any policy of
insurance effected or caused to be effected by the Landlord shall be paid
to the Landlord for its own use and benefit
5:6 Notwithstanding anything herein contained the Landlord shall not be
responsible for any delay or failure in connection with the performance or
observance of its obligations herein contained or implied or for any
omission to perform the same nor for any loss or inconvenience arising from
any such delay failure or omission if such delay failure or omission shall
be due to causes beyond the control of the Landlord or if the Landlord has
not been at fault or negligent nor shall the Landlord be responsible to the
Tenant or the Tenant's licensees servants agents or other persons in the
demised premises or calling upon the Tenant for any accident happening or
injury suffered or damage to or loss of any chattel or property sustained
on the demised premises or in the Building
5:7 The Landlord shall be entitled to alter add to execute works on and rebuild
the Landlord's adjoining and nearby suites situated in the Building
notwithstanding that the access of light and air to the demised premises
may be interfered with Provided that the Landlord shall cause as little
damage and/or disturbance as practicable and shall as soon as practicable
make good all damage to the demised premises caused by its works to the
reasonable satisfaction of the Tenant but shall not otherwise be liable for
any damage or inconvenience caused to the Tenant
5:8 If at the end of the Term any furniture or effects belonging to the Tenant
are left in the demised premises for more than seven days the Landlord
shall have power to sell the same as agent for and on behalf of the Tenant
and the Landlord shall on demand pay or account to the Tenant for the
proceeds of sale (but not any interest thereon) less any costs of storage
and sale reasonably incurred by the Landlord and the Tenant will indemnify
the Landlord against any liability incurred by the Landlord to any third
party whose property shall have been sold by the Landlord in the mistaken
belief held in good faith (which shall be presumed unless the contrary be
proved) that such
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property belonged to the Tenant
5:9 Each of the Tenant's covenants herein contained shall remain in full
force both at law and in equity notwithstanding that the Landlord shall
have waived or released temporarily or permanently revocably or
irrevocable or otherwise howsoever a similar covenant or similar
covenants affecting adjoining or neighbouring suites within the Building
5:10:1 If any part of the rents sums or other payments payable hereunder
(including for the avoidance of doubt the Service Charge the Insurance
Rent and the Advance Service Charge) shall be in arrear for twenty-one
days whether legally demanded or not it shall be lawful for the Landlord
to enter into and upon the demised premises or any part thereof and
distrain and the distress or distresses then and there found to dispose
of in due course of law and to apply the proceeds thereof in or towards
payment of the said rents sums or other payments so in arrear and all
costs charges and expenses occasioned by the non-payment thereof and so
that the power of the Landlord to distrain upon the demised premises for
rents or other monies in arrear shall extend to and include any Tenant's
fixtures and fittings not otherwise by law distrainable which may from
time to time be thereon
5:10:2 If any rent or other payments referred to in Clause 5:10:1 hereof shall
be in arrear for more than twenty-one days beyond the days appointed for
payment (whether formally demanded or not) and shall be paid only after
the Landlord or the Landlords Solicitors have instructed or caused
distress to be levied therefor then the Tenant shall pay to the Landlord
within 21 days of written demand the Landlords reasonable Solicitors
costs and expenses incurred by reason of the foregoing including but
without prejudice to the generality of the foregoing Bailiff's fees and
commission
5:11 The internal division walls that divide the demised premises from the
adjoining suites in the Building shall be deemed to be party walls
within the meaning of Section 38 of the Law of Property Act 1925 and
shall be maintained at the equally shared expense of the Tenant and the
tenants of such adjoining suites
5:12 The Tenant hereby warrants and acknowledges:-
5:12:1 that prior to the execution of this Lease the Tenant has disclosed to
the Landlord in writing any conviction judgment or finding of any Court
or tribunal relating to the Tenant (or any director or officer or major
shareholder of the Tenant) of such a nature as to be likely to affect
the decision of any insurer or underwriter to grant or to continue
insurance of the demised premises and/or the Building
5:12:2 that this Lease has not been entered into in reliance wholly or
partially on any statement or representation made by or on behalf of the
Landlord except any such statement or representation that is expressly
set out in this Lease or in the Landlord's Solicitors' replies to the
Tenant's Solicitors' enquiries raised
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before the grant hereof
5:13 This Lease embodies the entire understanding of the parties relating to
the demised premises and to all the matters dealt with by any of the
provisions of this Lease
5:14 The Schedules to this Lease shall be deemed to be incorporated in this
Lease and form part hereof
5:15 The index to this Lease shall not be taken into account for the purpose
of its construction or interpretation
5:16 Any Notice under this Lease shall be in writing. Any Notice to the
Landlord shall be sufficiently served if sent by registered or recorded
delivery post addressed to the registered office or such other address
as the Landlord may from time to time designate for such purpose. Any
Notice to the Tenant who is a Company shall be sufficiently served if
delivered personally (by the Landlord's employee servant or agent) to or
sent by registered or recorded delivery post addressed to its registered
office or to the demised premises and in the case of a Tenant who is not
a Company if delivered to the Tenant (or if more than one the first
named) personally (as aforesaid) or sent to the Tenant (or if more than
one the first named) by registered or recorded delivery post addressed
to the Tenant at the demised premises or to the Tenant's last known
address in Great Britain or Ireland (whether Eire or Northern Ireland)
6:1 The Tenant shall be entitled to determine this lease on the Break Date
by giving to the Landlord at least six months previous written notice
6:2 In the case of a notice by the Tenant it shall be a pre-condition that
there is not any material outstanding breach of any of the Tenants
covenants contained in this Lease or that any breach of covenant by the
Tenant that may have occurred has so far as possible been remedied so
that no material prejudice to the Landlord has resulted
6:3 Upon the expiry of any such notice as aforesaid provided that upon the
expiry thereof in the case of a notice by the Tenant there shall be no
arrears of the Rent the Service Charge (provided that the same shall not
be the subject of a material dispute) the Insurance Rent or the Advance
Service Charge or following an assignment of the Lease by the said
Visual communications Limited the Telephone Charge and/or the Private
Charge and upon the Tenant giving up vacant possession of the demised
premises (subject to clause 6:4 below) this Lease shall expire and
determine but without prejudice to the rights and remedies of either
party against the other in respect of any antecedent breach or
non-observance of any of the provisions of this Lease
6:4 In the event of the parties entering into new arrangements under which
the Tenant is to be entitled to remain in occupation following the
expiry and determination of this Lease such new arrangements shall not
prejudice the validity of any notice served under the provisions of this
clause
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<PAGE> 27
7. IT IS HEREBY AGREED that the provision of Section 24 to 28 (inclusive)
of the Landlord and Tenant Act 1954 shall not apply to this demise
which agreement has been authorised by an Order of the Central London
County Court dated the ___, day of _______ 1995 under the provisions
of Section 38(4) of the Landlord and Tenant Act 1954
IN WITNESS whereof the Landlord the Tenant have respectively executed and
delivered this Lease as a Deed in both cases the day and year first before
written
THE FIRST SCHEDULE
1. The Landlord: INNOVATION LAND & ESTATES LIMITED whose registered
office is situate at 16 Wimpole Street London W1
(Company No. 3037194)
2. The Tenant: VISUAL COMMUNICATIONS LIMITED (Company
Registration Number 320338) whose registered
office is situate at Visual House 1 Mastmaker
Road London E14 9WT
3. The Demised Premises ALL THAT office suite situate on the Third Floor
of the Building as the same is shown edged red on
plan number 1 annexed hereto together with the Car
Parking Spaces
4. The Rent: With effect from the date hereof until and
including the 24th April 1996 one peppercorn (if
demanded) and thereafter from and including the
25th April 1996 the sum of Twenty seven thousand
one hundred pounds (L27,100.00) per annum payable
by equal quarterly payments in advance on the
usual quarter days in each year of the Term the
first payment in respect of the period from and
including the 25th April 1996 to and including the
23rd June 1996 to be made on the 25th March 1996.
The Rent is subject to review in accordance with
the provisions of the Fourth Schedule hereto
5. The Term: A term from and including the date hereof and
expiring on 12th December 2002
6. The Service Charge: Such periodic sum as may be determined by the
Landlord's Surveyor pursuant to the provisions of
the
24
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE GETTY
IMAGES INC. FORM 10Q FOR THE THREE MONTHS ENDED MARCH 31, 2000.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 105,055
<SECURITIES> 0
<RECEIVABLES> 104,635
<ALLOWANCES> 17,900
<INVENTORY> 5,868
<CURRENT-ASSETS> 243,439
<PP&E> 109,979
<DEPRECIATION> 75,737
<TOTAL-ASSETS> 1,183,954
<CURRENT-LIABILITIES> 116,038
<BONDS> 284,587
0
15
<COMMON> 479
<OTHER-SE> 783,636
<TOTAL-LIABILITY-AND-EQUITY> 1,183,954
<SALES> 104,825
<TOTAL-REVENUES> 104,825
<CGS> 30,518
<TOTAL-COSTS> 60,429
<OTHER-EXPENSES> 47,733
<LOSS-PROVISION> 1,440
<INTEREST-EXPENSE> 1,082
<INCOME-PRETAX> (33,855)
<INCOME-TAX> 1,134
<INCOME-CONTINUING> (32,721)
<DISCONTINUED> 0
<EXTRAORDINARY> 384
<CHANGES> 0
<NET-INCOME> (32,337)
<EPS-BASIC> (.68)
<EPS-DILUTED> 0
</TABLE>
