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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-K
FOR ANNUAL REPORT AND TRANSITION REPORTS PURSUANT
TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998
or
[_] TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period From to .
Commission File Number: 333-48821
IMPAC GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 23-2923682
(I.R.S. EmployerIdentification No.)
(State or other jurisdiction of
incorporation or organization)
1950 North Ruby Street, Melrose Park, Illinois 60160
(Address of Principal Executive Offices)
Registrant's telephone number, including area code
(708) 344-9100
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Securities registered pursuant to Section 12(b) of the Act: None
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<CAPTION>
Title of each class Name of each exchange on which registered
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None None
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Securities registered pursuant to Section 12(g) of the Act: None:
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 12 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 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-X is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [_]
Number of shares of Series A Common Stock, $0.001 par value per share (the
"Series A Common Stock") and Series B Common Stock, $0.001 par value per share
(the "Series B Common Stock" and, together with the Series A Common Stock, the
"Common Stock") outstanding as of the close of business on March 15, 1999:
<TABLE>
<CAPTION>
Class Number of Shares Outstanding
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<S> <C>
Series A Common Stock 161,658
Series B Common Stock 4,500
</TABLE>
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CONTENTS
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Page
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PART I
Item 1. Business..................................................... 1
Item 2. Properties................................................... 8
Item 3. Legal Proceedings............................................ 9
Item 4. Submission of Matters to Vote of Security Holders............ 9
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters..................................................... 10
Item 6. Selected Pro Forma and Historical Financial Data............. 12
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 14
Item 7A. Quantitative and Qualitative Disclosures About Market Risk... 26
Item 8. Financial Statements and Supplementary Data.................. 27
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure.................................... 27
PART III
Item 10. Directors and Executive Officers of the Registrant........... 28
Item 11. Executive Compensation....................................... 31
Item 12. Security Ownership of Certain Beneficial Owners and
Management.................................................. 34
Item 13. Certain Relationships and Related Transactions............... 36
PART IV
Item 14. Exhibits, Financial Statements Schedules and Reports on Form
8-K......................................................... 40
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PART I.
ITEM 1. BUSINESS
Company Overview
IMPAC Group, Inc. ("IMPAC" or the "Registrant", and, collectively with its
consolidated subsidiaries, the "Company") is an international designer,
manufacturer and marketer of high-end, value-added specialty packaging for
various consumer products markets including entertainment, cosmetics and
personal care. The Company offers innovative specialty packaging solutions for
customers that seek to differentiate their products in the consumer
marketplace. In addition, the Company utilizes a broad range of paper,
paperboard and transparent rigid plastic materials for its products. As used
in this Annual Report on Form 10-K (the "Report"), the terms "fiscal 1996",
"fiscal 1997", "fiscal 1998" and "fiscal 1999" refer to the fiscal years of
the Company ended or ending on December 31 of the applicable calendar year.
The Company has built strong relationships with marketing-driven customers
in diverse industries, including Avon Products, Inc. and Revlon Consumer
Products Corporation in the cosmetics industry, EMI Group plc ("EMI")
(including the Capitol and Virgin Records labels), Universal Music Group (a
business unit of the Seagram Company Ltd. including the Geffen, Mercury and
Motown labels) and Fox Entertainment Group, Inc. in the entertainment
industry, and Clairol, Inc. and Colgate-Palmolive Company in the personal care
industry. In the entertainment industry, examples of the Company's products
include printed paper inserts for standard compact disc ("CD") packaging as
well as specialty paperboard-based CD packaging and specialty packaging for
home videos and digital versatile discs ("DVD"). In the cosmetics and personal
care industries, the Company offers products such as paperboard and plastic
folding cartons, transparent rigid plastic toothbrush packages and windowed
boxes made of paperboard and transparent rigid plastic for face creams,
lipsticks and other skin care products.
In March, 1998, KFI Holding Corporation ("KFI"), the parent company of
Klearfold, Inc. ("Klearfold") acquired AGI Incorporated ("AGI"). Upon
completion of the acquisition of AGI, KFI changed its name to "IMPAC Group,
Inc." This combination of AGI and Klearfold under common ownership is referred
to as the "Combination". AGI is a supplier of standard and specialty printed
packaging in the United States for the entertainment, cosmetics and personal
care industries. Klearfold is a supplier of innovative display packaging using
specialty windowed folding cartons that combine rigid plastic film with
paperboard for the cosmetics and other consumer products industries.
Subsequently, in September 1998, the Company acquired all of the issued and
outstanding shares of capital stock of Tinsley Robor plc (together with its
subsidiaries, "Tinsley", with the acquisition referred to as the "Tinsley
Acquisition"). Similar to the Company's domestic operations, Tinsley is a
supplier of printed packaging for the United Kingdom music and multimedia
markets and has an established presence in Europe. Tinsley's plants in the
U.K., The Netherlands, Ireland and Austria enable it to offer fast turn around
times, high quality and large volumes to satisfy customer demand. Tinsley also
provides design and pre-press services to a wide customer base from its
operations in the U.K. and has facilities which produce self-adhesive labels.
In March, 1998, IMPAC issued $100,000,000 aggregate principal amount of its
10 1/8% Senior Subordinated Notes due 2008 (the "Original Notes") in a
transaction exempt from the registration requirements under the Securities Act
of 1933, as amended (the "Offering"). In October 1998, IMPAC exchanged
$100,000,000 in aggregate principal amount of its 10 1/8% Senior Subordinated
Notes due 2008, Series B (the "Exchange Notes") that had been registered under
the Securities Act of 1933, as amended, for a like principal amount of the
Original Notes, which were retired. Each of the Exchange Notes and the
Original Notes have been guaranteed by certain of IMPAC's subsidiaries (the
"Subsidiary Guarantors"). The Exchange Notes are referred to hereinafter
interchangeably with the Original Notes as the "Senior Subordinated Notes".
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Business Information
Product and Services
The Company designs, manufactures and markets high-end specialty packaging
for a variety of applications in the consumer products industry. The Company
believes it offers its customers one of the most extensive product lines in
the specialty packaging industry. Principal product areas include (i) standard
music packaging, (ii) specialty music packaging, (iii) multimedia packaging,
(iv) specialty video packaging, (v) paperboard folding cartons, (vi) plastic
folding cartons, (vii) specialty windowed folding cartons, (viii) rigid
paperboard set-up boxes, (ix) self-adhesive labels, and (x) design and pre-
press services. The following table details the proprietary products sold by
the Company:
<TABLE>
<CAPTION>
Product Description Sample Applications
------- ----------- -------------------
<C> <S> <C>
DIGIPAK(R) A paperboard-based package that can Music releases by leading artists
fold open in a variety of ways and hold such as Pearl Jam, Eric Clapton,
single or multiple CDs as well as DVDs. Counting Crows, Beastie Boys and R.
Kelly.
Digilite(TM) A lighter version of the DIGIPAK Music releases by leading artists
typically utilized for packaging CD such as Kenny G, Carly Simon and
singles. Duran Duran.
DIGI-BOKS(R) A rigid one-piece paperboard set-up box Multi-CD boxed releases by The
used in a wide variety of applications. Police and Frank Sinatra and multi-
product cosmetics packages including
Ralph Lauren(R) and Polo Sport(R).
Klearfold(R) Plastic folding cartons produced from Colgate's toothbrush line, Jockey(R)
transparent rigid plastic, offering International, Inc. brand underwear,
maximum visibility for the consumer Clairol's haircolor products and
product at the retail level. Totes(R) umbrellas.
Duofold(R) Durable, windowed boxes made from Chesebrough-Pond's(R) skin care
paperboard and scored rigid film. products and Revlon's Colorstay(R)
Because the Company's rigid film can lipsticks and mascara.
wrap around any edge, Duofold(R)
cartons allow far more visibility than
conventional windowed cartons.
KlearPOP(TM) Plastic folding cartons which utilize BIC(R) writing instruments, Andes(R)
Klearfold transparent packaging to candies and other products
provide multi-unit dispensers and frequently sold at impulse purchase
displays that can be hung or placed on locations.
shelves.
KlearForm(TM) An alternative type of plastic folding Small consumer products such as
carton which combines thermoformed pocket knives and personal care
plastic parts with printed film. The products.
result is a striking package that holds
the packaged product securely.
Hologravure(TM) Licensed three-dimensional printing Point-of-sale posters, packaging for
technology that provides a cost- CDs and candy and other consumer
effective means of adding three- products packaging such as labels
dimensional visual effects to standard for Apple's iMac(R) personal
transparent plastic materials. computers.
</TABLE>
Set forth below is a description of the categories of products sold by the
Company utilizing the proprietary products described above as well as various
other products.
Standard Music Packaging. The Company's standard music packaging products
for CDs, cassette tapes and computer games include paper inlay cards, folders
and booklets for CD jewel boxes and insert cards for
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cassette tape boxes, as well as the Company's patented DIGIPAK(R) and
Digilite(TM) products. The Company provides standard CD and cassette packaging
components to a wide variety of customers in the recorded music industry.
These products are manufactured in a variety of size configurations and
process printing color combinations. Examples of the Company's recent standard
music packaging include the CD inserts for Sheryl Crow's The Globe Sessions
and the soundtrack for The Prince of Egypt.
Specialty Music Packaging. The Company's creative staff often works in
close collaboration with music customers to create and develop ideas for
unique or unusual custom packaging. These packages are designed to be highly
distinctive and often incorporate a variety of materials and advanced
manufacturing processes into a single package. The Company's patented
DIGIPAK(R), Digilite(TM) and DIGIBOKS(R) products have provided the recorded
music industry with the flexibility to create innovative and interesting CD
packaging. Specialty music packages have been used for music releases such as
Madonna's Ray of Light and The Complete Hank Williams box set, both of which
won Grammy Awards in 1999 for package design.
Multimedia Packaging. The Company's multimedia packaging for CD-ROM
applications include many of the same CD packaging components sold to music
customers such as paper inlay cards, folders and booklets for CD jewel boxes
as well as DIGIPAK(R) products. In addition, the Company supplies folding
cartons to certain customers in this market. The Company also provides paper
packaging components such as booklets and tray cards for cassette based
computer games. Examples of the Company's recent multimedia packaging include
Sony Playstation's NHL Powerplay '98 and GT Interactive's Deer Hunter II.
Specialty Video Packaging. In the home video market, the Company provides
paperboard packaging for major event titles and multi-title collections
combined for re-release principally directed to the sell-through market. The
Company manufactures specialty video packaging utilizing any combination of
its innovative manufacturing processes and its well-developed network of
specialized outside suppliers. Creative specialty video packages were recently
utilized for the Star Wars and James Bond 007 multi-title video collections as
well as the Titanic video release.
Paperboard Folding Cartons. Premium paperboard folding cartons are
manufactured using a variety of production and design techniques including
special prints and coatings, foil stamping, laminates and other special
materials which help customers achieve product differentiation and add to the
perceived value of the product. Premium paperboard folding cartons are used to
package a wide variety of products for the Company's cosmetics and personal
care customers and are frequently included in packaging solutions for CD-ROM
multimedia industry customers.
Plastic Folding Cartons. The Company manufacturers plastic folding cartons
under the Klearfold(R), KlearPOP(TM) and KlearForm(TM) brand names. The vast
majority of these cartons are produced from transparent rigid plastic film,
offering maximum visibility of the product packaged in the carton. Like more
conventional folding cartons produced from paperboard, Klearfold(R) cartons
ship and store in flat form, minimizing storage space. The Company's patented
Soft Crease feature enables Klearfold(R) cartons to be used easily and
effectively in manual or automatic filling of its cartons on its customers'
packaging lines. In addition, the Company's manufacturing process produces a
Smooth Edge feature, which minimizes sharp edges along the perimeter of the
cartons and provides safer handling than most competitive products. The
Company prints on the plastic film used in the manufacture of its products,
offering a variety of printing processes to enhance the package's appearance.
Klearfold(R) cartons are also manufactured from tinted, opaque, or embossed
plastic film, increasing the options available to customers.
Specialty Windowed Folding Cartons. The Company has created its line of
Duofold(R) cartons in order to offer many of the benefits of its fully
transparent cartons, in combination with the advantages of additional graphics
capabilities and rigidity offered by incorporating paperboard into the
package. In addition, by substituting less expensive paperboard for plastic in
a portion of the carton, Duofold(R) cartons are more cost efficient than all-
plastic cartons. Unlike the typical thin film in windowed cartons, the rigid
film used in Duofold(R) cartons resists tearing and puncturing and contributes
to the stability of the carton. Additionally, the Duofold(R)
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manufacturing process allows the transparent rigid plastic film to wrap around
any edge of the carton without compromising structural strength. Duofold(R)
cartons are available in a wide variety of structures that can be stacked,
racked or hung in virtually any configuration without sacrificing visual
impact or display density. Also, as with Klearfold(R) transparent cartons,
Duofold(R) cartons are shipped flat, can be easily set up manually or
automatically, and can be enhanced using a wide variety of processes,
including printing directly on the transparent film portion of the package.
Examples of products utilizing Duofold(R) cartons include Chesebrough-
Pond's(R) Skin Cream and Revlon's Colorstay(R) lipsticks and mascara.
Rigid Paperboard Set-Up Boxes. The Company's licensed DIGIBOKS(R) product
and the Company's two-piece rigid setup boxes are used to provide creative
packaging solutions for special music releases, special promotions and
cosmetics boxed sets which include multiple products. Most notably, these
products have been used to package multi-CD boxed releases by John Lennon and
The Smashing Pumpkins and to package Ralph Lauren Safari(R) and Polo Sport(R)
multi-product sets.
Self-Adhesive Labels. The Company provides self-adhesive labels for various
consumer products including toiletries, drinks and foods. Examples of the
Company's products include toiletries for Sara Lee Corporation and body washes
for Safeway Stores plc supermarkets.
Design and Pre-Press Services. The Company provides high quality creative
design and pre-press services to customers across all consumer products
industries. Designers have access to a full range of computer graphics
equipment, including digital print capabilities. This enables the Company to
provide competitive short run, fast turnaround color print typically used for
promotional literature.
Markets And Customers
The Company's markets are divided into three principal categories: (i)
entertainment, (ii) cosmetics, and (iii) other consumer products. The
following chart illustrates the Company's unaudited pro forma combined sales
in each of these markets for each of the last three fiscal years:
<TABLE>
<CAPTION>
Years Ended December 31,
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1996 1997 1998
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(dollars in millions) (dollars in millions) (dollars in millions)
<S> <C> <C> <C> <C> <C> <C>
Entertainment........... $ 133.4 53.9% $ 164.5 58.5% $ 152.5 56.3%
Cosmetics............... 46.9 18.9% 41.4 14.7% 39.9 14.7%
Other Consumer
Products............... 67.3 27.2% 75.3 26.8% 78.6 29.0%
----------- ---------- ----------- ---------- ----------- ----------
Total................. $ 247.6 100.0% $ 281.2 100.0% $ 271.0 100.0%
=========== ========== =========== ========== =========== ==========
</TABLE>
Strategy
The Company's principal growth strategy is to leverage its reputation for
product innovation, high quality and customer service in order to expand into
new and existing markets and customers. Key elements of the Company's strategy
include:
Capitalize on Cross-Selling Opportunities. The Company believes that it
will create significant additional revenue opportunities with existing
customers by marketing its expanded array of high-end packaging solutions. The
Company believes that AGI, Klearfold and Tinsley each bring a strong position
in certain closely related consumer products markets that the other companies
should be able to leverage. In particular, the Company believes that Tinsley
represents an excellent platform from which to offer the Klearfold product
capabilities, while AGI and Tinsley will each benefit from the other's strong
position in closely related entertainment markets such as video and multimedia
packaging.
Further Integrate with Key Customers. Historically, the Company has enjoyed
cooperative integrated relationships with its key customers. The Company's
recent expansion into international markets through the
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Tinsley Acquisition allows it to further integrate with its global customers
in an environment in which the general trend is to limit the number of outside
suppliers. Furthermore, in an effort to enhance its service and turnaround
time, the Company has strategically positioned several of its facilities in
close proximity to one or several major music or multimedia customers.
Pursue New Market Opportunities. The Company intends to expand into related
product lines that serve new markets, which will provide an opportunity for
additional revenue growth. As a result of the Combination, the Company's
creative design team has an enhanced capability to develop new packaging
products based on the most suitable type of materials or combinations. The
Company believes that its innovative product development experience positions
it to capture additional customers in new and existing markets.
Increase Operating Efficiencies. The Company believes that combining the
operations of AGI, Klearfold and Tinsley presents opportunities to effectively
capitalize on operating efficiencies and economies of scale. A portion of
AGI's and Klearfold's printing capacity is interchangeable, allowing work to
be processed wherever capacity is available during times of peak demand. The
Tinsley Acquisition gives the Company access to international manufacturing
operations which allows the Company to produce packaging in close proximity to
its customers' global distribution channels. The Company intends to utilize
the most efficient practices currently used in each of its facilities to
enhance manufacturing capabilities and improve cost structures.
Pursue Strategic Acquisitions. The Company may pursue other strategic
acquisitions within the specialty packaging industry. The Company believes
that significant opportunities exist to acquire distinctive businesses that
would enable the Company to further broaden its product offerings as well as
to expand its operations both domestically and internationally. For example,
in November, 1998 the Company acquired Music Print B.V. ("Music Print") a
Netherlands company operating a music packaging plant close to major global
customers.
Sales And Marketing
Customer relationships in the specialty packaging industry are generally
developed and maintained over extended periods. These relationships develop
because of the high degree of coordination necessary between packaging
suppliers and their customers to ensure that packaging conforms precisely to
the needs of the customer. The integration of product design and manufacturing
together with inventory management and distribution systems provide the
Company with a competitive advantage in maintaining and expanding business
with established customers. This integrated marketing, design and
manufacturing operation also represents an important source of new business
opportunities through the modification of existing packaging and the
development of new applications. The Company has approximately 63 sales
professionals together offering the combined product lines of Tinsley, AGI and
Klearfold allowing for broader product offerings and creating opportunities
for significant cross-selling to existing customers.
Industry And Customer Concentrations
Industry Concentrations
Although the Company markets its packaging to various consumer products
industries, a substantial portion of its products are sold to the
entertainment industry and the cosmetics industry. In 1998, on an unaudited
pro forma combined basis, approximately 56.3% and 14.7% of the Company's total
sales represented sales to the entertainment industry and the cosmetics
industry, respectively.
Customer Concentration
The Company has been successful in establishing strong relationships with
its key customers. In fiscal year 1998, on a combined historical basis, EMI
and Universal Music Group accounted for approximately 23.1% of the Company's
net sales.
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Distribution
A significant amount of the Company's products are shipped directly from
its manufacturing facilities to its customers' facilities. Because of this,
the proximity of the manufacturing facility to the customer's plant can
significantly affect the price of products. The Company believes that its
manufacturing facilities are well-positioned to serve national markets. In an
effort to enhance its service and turnaround time, the Company has positioned
several of its facilities in close proximity to one or several major music or
multimedia customers. The Company has established its strategically located
facilities by constructing new facilities, leasing existing facilities and
acquiring existing businesses. Examples of each of these initiatives include
the construction of the Grover, North Carolina facility in 1998, the lease of
the Swindon, U.K. facility in 1995 and the acquisition of Irish Printing
Resources Limited in Dublin, Ireland in 1995. In part because of the foregoing
factors, the Company does not have significant warehouse facilities.
Competition
The Company's business is highly competitive. Major competitive factors
include product quality, service and price. In addition, as more of the
Company's customers adopt "just-in-time" inventory systems, delivery lead time
has increased in importance. The Company believes that its manufacturing
facilities are well-positioned to serve national markets.
The Company believes that some of its primary competitors are Ivy Hill
Corporation and Shorewood Packaging Corporation in the United States and
Gerhard Kaiser GMBH, St. Ives plc and CMCS Group plc in the U.K. and Europe,
some of which are larger than the Company and may have substantially greater
financial resources.
Government Regulation
The past and present operations of the Company and the past and present
ownership and use of real property by the Company are subject to extensive and
changing federal, state and local environmental laws and regulations
pertaining to the discharge of materials into the environment, the handling
and disposition of wastes, the recycling, composition and recycled content of
packaging, or otherwise relating to the protection of the environment. These
laws include, but are not limited to, the Comprehensive Environmental Response
Compensation and Liability Act, the Water Pollution Control Act, the Clean Air
Act and the Resource Conservation and Recovery Act, as those laws have been
amended and supplemented, the regulations promulgated thereunder, and any
applicable state analogs. The Company's operations are also governed by laws
and regulations relating to employee health and safety. Governmental
authorities have the power to enforce compliance with their regulations and
violations may result in the payment of fines or the entry of injunctions or
both. The Company believes that it is in material compliance with such
applicable laws and regulations and that its current environmental controls
are adequate to address existing regulatory requirements.
As is the case with other companies engaged in similar businesses, the
Company could incur costs relating to environmental compliance, including
remediation costs related to historical hazardous materials handling and
disposal practices at certain facilities. In the past the Company has
undertaken remedial activities to address on-site soil contamination caused by
historic operations. None of these cleanups has resulted in any material
liability. It is possible that future developments (e.g., new regulations or
stricter regulatory requirements) could result in the Company incurring
material costs to comply with applicable environmental laws and regulations.
In addition, the Company has not undertaken an independent investigation of
all of its facilities; accordingly, there can be no assurance that in the
future conditions requiring remediation will not be identified.
Technology, Product Development and Patents
The Company produces high-quality, value-added, specialized packaging
products through the development of creative designs and innovative
manufacturing techniques. The Company's technical and product development
centers that support the Company's marketing efforts are staffed with 36 full-
time personnel as of December 31, 1998 and feature extensive in-house design,
engineering, tooling, prototype production, graphics and processing
capabilities. The Company's in-house design and production engineers work
closely with existing and potential customers in the preliminary stages of
product design and development, in many instances producing real-time
prototypes. The Company believes that its in-house design, engineering and
graphics capabilities, which utilize
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CAD/CAM technology, are among the more extensive and sophisticated in the
industry and enhance the Company's ability to better integrate its creative
design capabilities with its customers' conceptual design processes.
The Company has patented some of its various technology and processes. The
Company currently owns approximately 57 patents and patent applications, with
its patents expiring on various dates between 1999 and 2016. However, the
Company believes that the design, innovation and quality of its products and
its relationships with its customers are substantially more important to the
maintenance and growth of its business than its patents. Accordingly, the
Company does not believe that its business is dependent to any material extent
upon any single patent. Certain of the Company's patents are expiring in the
next few years.
Manufacturing And Supplies
The Company operates in an industry that requires continued investment in
equipment to support growth, quality and efficient operations. The Company
intends to continue this level of commitment by investing in equipment. The
Company utilizes its modern machinery to lower turnaround time while reducing
staffing requirements and maintaining "just-in-time" manufacturing.
The Company, like its competitors, is subject to rigorous quality control
standards imposed by its customers. The Company has implemented a
comprehensive quality assurance program, which includes computer-aided testing
of parts for size, color and strength. Using advanced measurement technology,
the Company is able to satisfy and exceed the most demanding customer
requirements. Statistical quality control methods are also used to promote
total customer satisfaction.
The Company believes that it is generally able to pass raw material price
increases on to its customers, given the customized and high-end nature of its
packaging and the relatively low proportion of packaging cost in relation to
the cost of the end-product. In addition, the Company's customer contracts for
longer production runs generally include provisions for raw material cost
escalation.
Employees
As of December 31, 1998, the Company had 1,821 employees, of which 1,506
were engaged in production or product support, 36 in research, development and
engineering, 98 in marketing and sales and 181 in corporate management and
administration. The 214 member hourly workforce at the Company's Warrington,
Pennsylvania facility is represented by the United Paperworkers International
Union under a collective bargaining agreement which expires on November 30,
2002. Most of the Company's European facilities have separate house union
agreements or series of agreements specific to the workforce at such facility.
Approximately 340 of the Company's European workforce are members of these
house unions. The Company believes that its relations with employees are good,
and it has not experienced any strikes or work stoppages.
Financial Information About Foreign and Domestic Operations
Sales and manufacturing operations outside the United States are conducted
through subsidiaries located principally in the U.K. and Europe. The Company
has 17 manufacturing facilities: six in the U.S. and eleven in the U.K. and
Europe. During fiscal 1998, on an unaudited pro forma combined basis, 56.8% of
the Company's net sales were attributable to domestic operations and 43.2% of
the Company's net sales were attributable to foreign operations. (For more
information about domestic and foreign segments and sales, see Note 15 to the
Company's Consolidated Financial Statements).
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ITEM 2. PROPERTIES
The Company's operations are conducted through 26 facilities located in the
United States, U.K., Ireland, The Netherlands and Austria. The Company's
principal executive offices are located in Melrose Park, Illinois. The leases
for the Warrington, Pennsylvania, Louisa, Virginia, Melrose Park, Illinois and
Uden, Holland facilities provide the Company with an option to renew for an
additional five year period. The Company's facilities are designed to provide
for efficient manufacturing, material handling and storage of its products and
no facility is materially underutilized, with the exception of the Rustington,
West Sussex facility. This facility previously functioned as a manufacturing
operation; however, such facility is currently not used by the Company. The
Company believes that substantially all of its property and equipment is in
good condition and that it has sufficient capacity to meet its current
manufacturing and distribution requirements.
The Company provides its multimedia customers with complete turnkey
fulfillment solutions, which often includes the purchase of materials as well
as assembly, warehousing and distribution of finished product, from its
Franklin Park, Illinois facility. The Company's long-range plans for this
operation are currently under review by management.
The following table provides certain information regarding the Company's
operating facilities as of December 31, 1998:
<TABLE>
<CAPTION>
Building
sq. feet
Facility Ownership (approx.) Function Lease expiration
-------- --------- --------- -------- ----------------
<S> <C> <C> <C> <C>
U.S. Facilities
Franklin Park, IL....... Leased 41,000 Fulfillment Center/Office September 30, 2000
Grover, NC.............. Owned 51,000 Manufacturing N/A
Horsham, PA............. Leased 3,000 Office June 30, 1999
Jacksonville, IL........ Owned 77,000 Manufacturing/Office N/A
Los Angeles, CA......... Leased 3,000 Sales August 31, 1999
Louisa, VA.............. Leased 78,000 Manufacturing December 31, 2005
Melrose Park, IL........ Leased 257,000 Manufacturing/Office September 30, 2002
Melrose Park, IL........ Leased 41,000 Warehouse March 31, 2002
New York, NY............ Leased 5,000 Sales April 30, 2000
Warrington, PA.......... Leased 100,000 Manufacturing December 31, 2005
Warrington, PA.......... Leased 86,000 Warehouse/Manufacturing December 31, 1999
U.K. and European Facilities
Chichester, UK.......... Leased 6,000 Office February 26, 2000
London, UK.............. Owned 2,000 Sales/Office N/A
London, UK.............. Leased 6,000 Manufacturing March 25, 2005
London, UK.............. Leased 5,000 Manufacturing April 27, 2003
Slough, UK.............. Owned 13,000 Manufacturing N/A
Birmingham, UK.......... Owned 74,000 Manufacturing N/A
Swindon, UK............. Leased 25,000 Manufacturing May 1, 2010
West Sussex, UK......... Leased 10,000 Not in use June 19, 2003
Littlehampton, UK....... Leased 29,000 Manufacturing September 30, 2008
Southhampton, UK........ Leased 25,000 Sublet Unit 7-December 25, 2009
Unit 8-December 1, 2008
Dublin, Ireland......... Leased 24,000 Manufacturing January 7, 2016
Uden, Holland........... Leased 31,000 Manufacturing August, 2000
Enschede, Holland....... Owned 55,000 Manufacturing N/A
Salzburg, Austria....... Leased 24,000 Manufacturing August 31, 2006
Weesp, Holland.......... Owned 24,000 Manufacturing N/A
</TABLE>
8
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to various legal actions arising in the ordinary
course of its business. The Company believes that the resolution of these
legal actions will not have a material adverse effect on the Company's
financial position or results of operation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
On December 18, 1998, IMPAC's stockholders consented, in lieu of a meeting,
to the restatement of IMPAC's Amended and Restated Certificate of
Incorporation and Amended and Restated By-Laws. Such stockholder action was
consented to by the affirmative vote of the holders of approximately 128,236
shares of IMPAC's Common Stock.
On January 8, 1999, IMPAC's stockholders consented, in lieu of a meeting,
to an additional restatement of IMPAC's Amended and Restated Certificate of
Incorporation. Such stockholder action was consented to by the affirmative
vote of the holders of approximately 119,586 shares of IMPAC's Common Stock.
On March 26, 1999, IMPAC's stockholders consented, in lieu of a meeting, to
the election of M. Shaun Lawson and Lee Newbon to IMPAC's Board of Directors
with each of Richard Block, Zenas Block, David Horowitz, Melvin B. Herrin, H.
Scott Herrin, Michael Gilligan and Michel Reichert continuing as directors of
IMPAC. Such stockholder action was consented to by the affirmative vote of the
holders of approximately 132,735 shares of IMPAC's Common Stock.
9
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
IMPAC's Common Stock is not publicly traded.
Holders
As of March 15, 1999, IMPAC had 161,658 shares of Series A Common Stock
outstanding held by approximately 24 stockholders of record and 4,500 shares
of Series B Common Stock outstanding held by one stockholder of record.
Dividends
IMPAC has never paid dividends on its Common Stock nor does it expect to
pay dividends on its Common Stock in the foreseeable future. IMPAC's ability
to pay future dividends on its Common Stock is limited by the Indenture, as
defined below, IMPAC's Fourth Amended and Restated Certificate of
Incorporation (the "Charter") and the Company's Amended and Restated
Multicurrency Credit Facility, dated as of July 7, 1998, among the Company and
Bank of America, National Trust and Savings Association, as agent, and certain
other financial instititutions parties thereto (the "Amended and Restated
Credit Facility").
Recent Sales of Unregistered Securities
On February 19, 1998, KFI (now known as "IMPAC Group, Inc.") issued an
aggregate of 100,000 shares of its Series A Common Stock to 22 of its
shareholders, all of whom were either (i) shareholders of KFI who contributed
to KFI the entire outstanding capital stock of KFI and a warrant to purchase
capital stock of KFI and invested approximately $4.6 million in cash or (ii)
stockholders and holders of stock appreciation rights of AGI, who contributed
to KFI shares of AGI common stock and invested the proceeds of their stock
appreciation rights, totaling an aggregate of $14.4 million. The issuances of
Series A Common Stock were made by KFI in reliance on the exemption from
registration provided by Section 4(2) under the Securities Act of 1933, as
amended (the "Securities Act").
On March 12, 1998, IMPAC issued $100,000,000 in the aggregate principal
amount of Original Notes to Goldman Sachs & Co. and Donaldson, Lufkin &
Jennette Securities Corporation (the "Initial Purchasers") in a transaction
exempt under Regulation D under the Securities Act. The Initial Purchasers
resold the Original Notes to certain qualified institutional buyers in
reliance upon, and subject to the restrictions imposed pursuant to, Rule 144A
and Regulation S under the Securities Act.
On September 3, 1998, IMPAC commenced an offer to exchange $100,000,000 in
the aggregate principal amount of Exchange Notes that had been registered
under the Securities Act for a like principal amount of the Original Notes.
This exchange was commenced pursuant to the terms of the Registration Rights
Agreement, dated March 12, 1998, between IMPAC, its subsidiaries, and the
Initial Purchasers. Each of the Exchange Notes and the Original Notes have
been guaranteed by the Subsidiary Guarantors. $100,000,000 in the aggregate
principal amount of Exchange Notes were issued in exchange for the Original
Notes on October 20, 1998, and the Original Notes were retired.
In connection with the Tinsley Acquisition on September 10, 1998, the
Company issued 96,246 shares of Common Stock to six (6) of the Company's
existing stockholders or their affiliates, for aggregate consideration of
$58,575,000. Each of such issuances of such Common Stock were made by IMPAC in
reliance on the exemption from registration provided by Section 4(2) under the
Securities Act.
10
<PAGE>
On January 12, 1999, IMPAC issued to BT Capital Investors, L.P. and Phoenix
Home Life Mutual Insurance Company, for an aggregate consideration of
$20,000,000, (i) an aggregate of 20,000 shares of Series A Mandatorily
Redeemable Preferred Stock, $0.001 par value per share (the "Preferred Stock")
and (ii) detachable, ten-year warrants (the "Warrants") to purchase an
aggregate of 6,913 shares of IMPAC's Series A Common Stock at an exercise
price of $0.01 per share. The Company used the net proceeds from the sale of
Preferred Stock to acquire 30,087 shares of outstanding Series A Common Stock.
The Warrants are exercisable at any time during the ten-year period subsequent
to their issuance. The issuances of such Preferred Stock and Warrants (the
"Preferred Stock Issuance") were made by IMPAC in reliance on the exemption
from registration provided under Regulation D under the Securities Act. See
"Note 17 to Consolidated Financial Statements".
11
<PAGE>
ITEM 6. SELECTED PRO FORMA AND HISTORICAL FINANCIAL DATA
Selected Unaudited Pro Forma Combined Financial Data
The selected unaudited pro forma combined data for the years ended December
31, 1996, 1997 and 1998 are based on the historical consolidated financial
statements of the Company included elsewhere in this Report, adjusted to give
effect to the Combination, the Tinsley Acquisition and the additional
borrowings incurred to fund those transactions as if they had occurred as of
January 1, 1996. As a result of these transactions, the Company's historical
consolidated financial statements for the years ended December 31, 1996, 1997
and 1998 are not comparable due to the inclusion in the consolidated financial
statements of AGI's and Tinsley's assets, liabilities and operating results
from the dates of acquisitions. Management believes the following unaudited
pro forma combined financial data presents a more meaningful comparison of the
Company's operating results from year to year. However, the unaudited pro
forma combined financial data do not purport to represent what the Company's
financial position or results of operations would actually have been had the
Combination, the Tinsley Acquisition and the incurrence of the related
indebtedness occurred on the assumed date or to project the Company's
financial position or results of operations for any future date or period. The
information contained in the following table should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the financial statements and the related notes thereto
included elsewhere in this Report.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------
1996 (1) 1997 1998
-------- -------- --------
(dollars in thousands)
<S> <C> <C> <C>
Income Statement Data
Net sales....................................... $247,604 $281,170 $271,049
Cost of goods sold.............................. 178,201 198,669 196,642
-------- -------- --------
Gross profit.................................... 69,403 82,501 74,407
Selling, general and administrative expenses.... 45,826 55,171 53,245
-------- -------- --------
Operating expenses.............................. 23,576 27,330 21,162
Interest expense, net........................... 21,259 21,352 21,537
Other (income) expense.......................... 181 (139) 456
-------- -------- --------
Income (loss) from continuing operations before
income taxes................................... 2,136 6,118 (831)
Income taxes.................................... 2,376 4,038 1,149
-------- -------- --------
Income (loss) from continuing operations(2)..... $ (240) $ 2,080 $ (1,980)
======== ======== ========
Other Data
EBITDA (as defined)(3).......................... $ 35,686 $ 45,858 $ 40,306
Depreciation and amortization................... 12,841 18,561 19,144
Capital expenditures............................ 31,263 21,494 27,426
</TABLE>
- --------
(1) The unaudited pro forma combined financial data for the year ended
December 31, 1996 includes the results of operations for Tinsley for the
year ended March 31, 1997.
(2) The results of operations for the year ended December 31, 1998 include an
extraordinary loss of $552 (net of tax benefit of $368) due to the write-
off of deferred financing costs.
(3) EBITDA is defined as income from continuing operations before deducting
interest expense, income taxes, depreciation and amortization and
excludes, to the extent applicable for the relevant period, (i) other
(income) expense, (ii) stock-based compensation expense of $171, $2,326
and $1,171 for the years ended December 31, 1996, 1997 and 1998,
respectively, and (iii) PTP Industries, Inc. ("PTP") royalty and
commission income of $731 and $33 for the years ended December 31, 1996
and 1997, respectively. EBITDA is not a substitute for operating income,
net earnings and cash flow from operating activities as determined in
accordance with generally accepted accounting principles as a measure of
profitability or liquidity. EBITDA is presented as additional information
because management believes it to be a useful indicator of the Company's
ability to service and/or incur indebtedness.
12
<PAGE>
Selected Historical Consolidated Financial Data
The selected historical consolidated financial data set forth below as of
and for each of the four years ended December 31, 1997 have been derived from
the Company's financial statements audited by KPMG LLP, independent public
accountants. The selected historical consolidated financial data set forth
below as of and for the year ended December 31, 1998 have been derived from
the Company's financial statements audited by PricewaterhouseCoopers LLP,
independent public accountants. The audited consolidated financial statements
of the Company as of December 31, 1997 and 1998 and for each of the three
years ended December 31, 1998 are included elsewhere herein. The selected
historical consolidated financial data of the Company include AGI from March
13, 1998, Tinsley from September 12, 1998 and Klearfold for all periods
presented. The information contained in the following table should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the financial statements and the related notes
thereto included elsewhere in this Report.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
1994 1995 1996 1997 1998
------- ------- ------- ------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Income Statement Data
Net sales....................... $47,714 $51,214 $54,218 $52,493 $184,298
Cost of goods sold.............. 35,223 36,757 40,094 39,322 134,643
------- ------- ------- ------- --------
Gross profit.................... 12,491 14,457 14,124 13,171 49,655
Selling, general and
administrative expenses........ 7,029 7,942 7,594 7,589 31,762
PTP royalty and commission
(income)(1).................... (200) (377) (731) (33) --
------- ------- ------- ------- --------
Operating income................ 5,662 6,892 7,261 5,615 17,893
Interest expense, net........... (1,020) (1,197) (2,324) (3,469) (13,514)
Other expense, net.............. -- -- -- -- (457)
------- ------- ------- ------- --------
Income from continuing
operations before income
taxes.......................... 4,642 5,695 4,937 2,146 3,922
Income (taxes) benefit.......... (1,616) (2,417) (2,003) (754) (1,879)
------- ------- ------- ------- --------
Income (loss) from continuing
operations(2).................. $ 3,026 $ 3,278 $ 2,934 $ 1,392 $ 2,043
======= ======= ======= ======= ========
Balance Sheet Data(3) (at period
end)
Total assets.................... $33,602 $38,025 $27,275 $28,293 $366,335
Long-term debt, including
current portion................ 9,120 6,623 30,950 33,850 240,559
Stockholders' equity (deficit).. 8,807 11,511 (15,279) (13,887) 65,583
</TABLE>
- -------
(1) Klearfold received commissions and royalties on certain sales made by PTP.
Klearfold owned 51% of PTP prior to the sale of this subsidiary on April
19, 1996. PTP ceased operations in 1997.
(2) The results of operations for the year ended December 31, 1998 include an
extraordinary loss of $552 (net of tax benefit of $368) due to the write-
off of deferred financing costs.
(3) Balance sheet data includes amounts related to PTP at December 31, 1994
and 1995 prior to the sale of PTP on April 19, 1996.
13
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
On March 12, 1998, KFI, the parent company of Klearfold, completed both its
acquisition of AGI and also the issuance of the Company's Senior Subordinated
Notes. Upon consummation of these transactions KFI changed its corporate name
to IMPAC Group, Inc. On September 11, 1998, IMPAC acquired substantially all
of the outstanding capital stock of Tinsley. IMPAC funded the Tinsley
Acquisition through borrowings under the Amended and Restated Credit Facility,
proceeds from the sale of common stock to IMPAC's existing stockholders or
their affiliates and the issuance of five year promissory notes ("Loan Notes")
to former Tinsley shareholders. References below to the "Company" mean IMPAC
Group, Inc. and its consolidated subsidiaries.
As a result of these transactions, the Company's historical consolidated
financial statements for the years ended December 31, 1996, 1997 and 1998 are
not comparable due to the inclusion in the consolidated financial statements
of AGI's and Tinsley's assets, liabilities and operating results from the
dates of acquisition. Management believes the pro forma financial information
included in the Selected Unaudited Pro Forma Combined Financial Data table in
Item 6 presents a more meaningful comparison of the Company's operating
results from year to year. As such, the discussion and analysis of the
historical results of operations and financial position for the years ended
December 31, 1996, 1997 and 1998 are supplemented with the discussion and
analysis of the unaudited pro forma results of operations and financial
position for the years ended December 31, 1996, 1997 and 1998 as if the
acquisitions of AGI and Tinsley and the borrowings incurred to fund those
acquisitions occurred as of January 1, 1996.
IMPAC is a holding company with no material assets or operations other than
its investments in its wholly-owned subsidiaries. All of the Company's
domestic subsidiaries and certain foreign subsidiaries of the Company have
guaranteed the Senior Subordinated Notes on a full, unconditional, joint and
several basis, subject to the subordination provisions in the related
Indenture. Separate financial statements and other disclosures of the
Subsidiary Guarantors have not been presented in this Report because the
Company believes that such financial statements and other information would
not provide additional information that is material to investors. However, the
condensed consolidating financial information of the parent Company and its
Subsidiary Guarantors have been presented in Note 16 to Notes to Consolidated
Financial Statements for purposes of complying with the reporting
requirements.
Overview
IMPAC is a designer, manufacturer and marketer of high-end, value-added
specialty packaging for various consumer products markets including
entertainment, cosmetics and personal care. The Company offers innovative
specialty packaging solutions for customers that seek to differentiate their
products in the consumer marketplace. In addition, the Company utilizes a
broad range of paper, paperboard and transparent rigid plastic materials for
its products.
14
<PAGE>
Unaudited Pro Forma Results of Operations
Unaudited Pro Forma Year Ended December 31, 1998 Compared to Unaudited Pro
Forma Year Ended December 31, 1997
The following table sets forth certain unaudited income statement data
(expressed as a percentage of net sales) for the years ended December 31, 1997
(the "1997 period") and 1998 (the "1998 period") on a pro forma basis as if
the acquisitions of AGI and Tinsley and the borrowings incurred to fund those
acquisitions occurred as of January 1, 1996.
<TABLE>
<CAPTION>
1997 1998
----- -----
<S> <C> <C>
Income Statement Data:
Net sales............... 100.0% 100.0%
Cost of goods sold...... 70.7% 72.6%
----- -----
Gross profit............ 29.3% 27.4%
Selling, general and
administrative
expenses............... 19.6% 19.6%
----- -----
Operating income........ 9.7% 7.8%
Interest expense, net... 7.6% 7.9%
Other (income) expense,
net.................... (0.1%) 0.2%
----- -----
Income (loss) before
income taxes and
extraordinary item..... 2.2% (0.3%)
Income taxes............ 1.5% 0.4%
----- -----
Income (loss) before
extraordinary item..... 0.7% (0.7%)
===== =====
</TABLE>
Net Sales for the 1998 period were $271.0 million compared to $281.2
million for the 1997 period, a decrease of 3.6%. This decrease was due to a
$12.0 million decline in entertainment packaging and a $1.5 million decline in
cosmetics packaging, partially offset by a $3.3 million increase in other
consumer products packaging. The entertainment packaging reduction was due to
a decline in sales of special video packaging compared to strong 1997 sales
related to the successful releases of several popular titles by the Company's
existing customers. The decrease in cosmetics sales relates primarily to a
decision by one of the Company's significant cosmetics packaging customers to
begin to manufacture certain of its packaging internally and to lower than
expected retail sales of one product line of another significant cosmetics
customer. The increase in other consumer products packaging resulted from
increases in sales in the personal care and food and beverage markets.
Gross Profit for the 1998 period was $74.4 million compared to $82.5
million for the 1997 period, a decrease of 9.8%. The resulting decline in
gross margin from 29.3% to 27.4% was primarily due to the decrease in sales of
higher value-added packaging products to the entertainment industry, as
discussed above. Gross margin was also negatively impacted by the less
favorable absorption of fixed costs due to the lower overall sales volume, the
start-up of the Company's Grover, North Carolina facility and developmental
costs associated with new packaging for two significant customers.
Additionally, the 1997 period benefited from a supply contract termination
settlement of $0.8 million and a favorable insurance adjustment of $0.4
million.
Selling, General and Administrative Expenses for the 1998 period were $53.2
million compared to $55.2 million for the 1997 period, a decrease of 3.5%. The
decrease is due primarily to reductions in anticipated payouts under various
compensation programs tied to sales and profitability offset by start-up costs
associated with the Company's Grover, North Carolina facility and by expenses
associated with the relocation and consolidation of certain of the Company's
foreign operations. SG&A as a percentage of sales did not change.
Operating Income for the 1998 period was $21.2 million compared to $27.3
million for the 1997 period, a decrease of 22.6% due to the factors discussed
above.
Net Interest Expense for the 1998 period was $21.5 million compared to
$21.4 million for the 1997 period. The increase was due to the issuance of
$4.0 million of industrial revenue bonds in August, 1997.
15
<PAGE>
Income Taxes for the 1998 period were $1.1 million compared to $4.0 million
for the 1997 period. The Company's effective tax rates for the periods
exceeded the U.S. federal statutory rate primarily due to the effect of non-
deductible goodwill amortization of approximately $4.0 million in each period.
Net Loss for the 1998 period was $2.0 million compared to net income of
$2.1 million for the 1997 period due to the factors discussed above. The pro
forma loss for the 1998 period does not include an extraordinary charge of
$0.8 million, net of tax, related to the early extinguishment of debt arising
from the Combination and the Tinsley Acquisition.
Unaudited Pro Forma Year Ended December 31, 1997 Compared to Unaudited Pro
Forma Year Ended December 31, 1996
The following table sets forth certain unaudited income statement data
(expressed as a percentage of net sales) for the years ended December 31, 1996
(the "1996 period") and 1997 (the "1997 period") on a pro forma basis as if
the acquisitions of AGI and Tinsley and the borrowings incurred to fund those
acquisitions occurred as of January 1, 1996.
<TABLE>
<CAPTION>
1996 1997
----- -----
<S> <C> <C>
Income Statement Data:
Net sales.................................................. 100.0% 100.0%
Cost of goods sold......................................... 72.0% 70.7%
----- -----
Gross profit............................................... 28.0% 29.3%
Selling, general and administrative expenses............... 18.5% 19.6%
----- -----
Operating income........................................... 9.5% 9.7%
Interest expense, net...................................... 8.5% 7.6%
Other (income) expense, net................................ 0.1% (0.1%)
----- -----
Income before income taxes................................. 0.9% 2.2%
Income taxes............................................... 1.0% 1.5%
----- -----
Net income................................................. (0.1%) 0.7%
===== =====
</TABLE>
Net Sales for the 1997 period were $281.2 million compared to $247.6
million for the 1996 period, an increase of 13.6%. This increase was due
largely to a $31.1 million increase in entertainment packaging and an $8.0
million increase in other consumer products packaging partially offset by a
$5.5 million decrease in cosmetics packaging. The entertainment packaging
increase was due primarily to strong 1997 special video sales related to the
successful releases of several popular titles by the Company's existing
customers, increased sales of music packaging and strong growth in the sales
of multimedia packaging to the Company's U.K. and European customers. The
increase in other consumer products packaging was due largely to increased
demand for Klearfold's visual packaging, particularly with customers in the
personal care and undergarment markets. Decreased sales in cosmetics packaging
were due primarily to a decision by one of the Company's significant cosmetics
packaging customers to begin to manufacture certain of its packaging
internally.
Gross Profit for the 1997 period was $82.5 million compared to $69.4
million for the 1996 period, an increase of 18.9%. In addition to the effect
of the sales increase referred to above, gross profit was also positively
impacted by the increase in gross margin from 28.0% to 29.3%. The margin
increase was primarily due to the increase in sales of higher value-added
packaging products to the entertainment industry, as discussed above. Gross
margin was also positively impacted by the more favorable absorption of fixed
costs due to the higher overall sales volume.
Selling, General and Administrative Expenses for the 1997 period were $55.2
million compared to $45.8 million for the 1996 period, an increase of 20.4%.
The increase in SG&A as a percentage of sales from 18.5% to 19.6% was due
primarily to increases in anticipated payouts under various compensation
programs tied to sales and profitability.
16
<PAGE>
Operating Income for the 1997 period was $27.3 million compared to $23.6
million for the 1996 period, an increase of 15.9% due to the factors discussed
above.
Net Interest Expense for the 1997 period was $21.4 million compared to
$21.3 million for the 1996 period. The increase was due to the issuance of
$4.0 million of industrial revenue bonds in August, 1997.
Income Taxes for the 1997 period were $4.0 million compared to $2.4 million
for the 1996 period. The Company's effective tax rates for the periods
exceeded the U.S. federal statutory rate primarily due to the effect of non-
deductible goodwill amortization of approximately $4.0 million in the 1997
period and $3.8 million in the 1996 period.
Net Income for the 1997 period was $2.1 million compared to a net loss of
$0.2 million for the 1996 period due to the factors discussed above.
Historical Results of Operations
Historical Year ended December 31, 1998 Compared to Historical Year Ended
December 31, 1997
The results of operations for the year ended December 31, 1998 (the "1998
period") include the results of AGI and Tinsley from the dates of
acquisitions. The Company's growth in net sales, gross profit and operating
income during the 1998 period as compared to the year ended December 31, 1997
(the "1997 period") relates primarily to the effect of these acquisitions. Net
interest expense increased from $3.5 million in the 1997 period to $13.5
million in the 1998 period due to the additional borrowings incurred to fund
the acquisitions of AGI and Tinsley. Income taxes for the 1998 period were
$1.9 million compared to $0.8 million for the 1997 period. The Company's
effective tax rates increased from 35.1% in the 1997 period to 47.9% in the
1998 period primarily due to the effect of non-deductible goodwill
amortization of approximately $1.7 million during the 1998 period. Net income
for the 1998 period was $2.0 million compared to $1.4 million during the 1997
period due to the factors discussed above.
Historical Year ended December 31, 1997 Compared to Historical Year Ended
December 31, 1996
Net Sales for the year ended December 31, 1997 (the "1997 period") were
$52.5 million compared to $54.2 million for the year ended December 31, 1996
(the "1996 period"), a decrease of 3.2%. This decrease was due to a decrease
in sales in the cosmetics market of approximately $4.3 million. This decrease
in cosmetics sales was due primarily to a decision by Klearfold's largest
customer for cosmetics packaging to begin to manufacture certain of its
packaging internally. The decrease in sales to this customer was partially
offset by an approximately $2.6 million increase in sales of windowed
packaging to other cosmetics customers. The increased sales to other consumer
products markets was due largely to increased demand for Klearfold's visual
packaging, particularly with customers in the personal care and undergarment
markets.
Gross Profit for the 1997 period was $13.2 million compared to $14.1
million for the 1996 period, a decrease of 6.7%. The decrease in gross margin
from 26.1% to 25.1% was due primarily to additional expenses experienced in
the fourth quarter of 1997 associated with the installation and start-up of a
new printing press and a less favorable absorption rate of fixed costs at the
lower sales volume. Gross profit in the 1997 period also benefited from a
supply contract termination settlement of $0.8 million and a favorable
insurance adjustment of $0.4 million.
Selling, General Administrative Expenses for both the 1997 period and the
1996 period were $7.6 million. Selling, general and administrative expenses as
a percentage of net sales were 14.5% in 1997 compared to 14.0% in 1996.
PTP Royalty and Commission Income for the 1997 period was $33,000 compared
to $0.7 million for the 1996 period, a decrease of 95.5%. The decrease was due
to PTP closing operations in February 1997.
17
<PAGE>
Operating Income for the 1997 period was $5.6 million compared to $7.3
million for the 1996 period, a decrease of 22.7%
Net Interest Expense for the 1997 period was $3.5 million compared to $2.3
million for the 1996 period, an increase of 49.3%. The increase was due to
higher average debt levels in the 1997 period due to the June 1996
recapitalization and the associated debt which includes $58,000 of interest
expense with respect to the Klearfold IRBs.
Income Taxes for the 1997 period were $0.8 million compared to $2.0 million
for the 1996 period reflecting an effective tax rate of approximately 35% and
41%, for 1997 and 1996, respectively, which includes the effect of reduced
state income taxes.
Income from Continuing Operations for the 1997 period was $1.4 million
compared to $2.9 million for the 1996 period.
Liquidity and Capital Resources
On March 12, 1998, KFI acquired all of the common stock of AGI for $69.0
million including $54.6 million of cash and $14.4 million of newly issued
common stock, plus acquisition costs. Concurrently, the Company funded the
retirement of $8.3 million of indebtedness outstanding under AGI's credit
facility immediately prior to the transaction. The acquisition was funded by
the proceeds (net of $4.1 million in debt issuance costs) from the issuance of
$100.0 million of 10 1/8% Senior Subordinated Notes and $4.6 million of new
common stock. The balance of the proceeds of the Senior Subordinated Notes
were used to retire all outstanding indebtedness of $29.9 million under KFI's
prior bank credit agreement. At the same time, KFI entered into a new five
year credit agreement which provided for a $40.0 million revolving credit
facility and a $13.0 million letter of credit facility (the "Original Credit
Facility").
On July 7, 1998, the Company entered into the Amended and Restated Credit
Facility, which became effective on the initial funding date of the Tinsley
Acquisition and replaced the Original Credit Facility. The Amended and
Restated Credit Facility provides for up to $53.0 million of revolving credit
borrowings (the "Revolver") with a $20 million letter of credit subfacility
under the Revolver (the "L/C Facility"). The Amended and Restated Credit
Facility also provides for $37.0 million of Term Loan A borrowings and $64.0
million of Term Loan B borrowings. The Amended and Restated Credit Facility
also provides a guarantee to the holders of the Loan Notes. Under the
provisions of the Amended and Restated Credit Facility, the aggregate amount
available of Term Loan A borrowings is limited by the amount outstanding under
the Loan Note guarantee. Up to $8.5 million of drawings under this guarantee
to redeem the Loan Notes will be converted to additional borrowings under Term
Loan A and any drawings which, as a consequence of currency fluctuations,
exceed $8.5 million will be converted to additional borrowings under the
Revolver. The Revolver has a five and one-half year maturity, the Term Loan A
has a five and one-half year maturity and the Term Loan B has a six and one-
half year maturity. As of December 31, 1998, $28.4 million in Term Loan A
borrowings were outstanding, $63.8 million in Term Loan B borrowings were
outstanding, $11.2 million in Revolver borrowings were outstanding and $29.2
million in additional Revolver borrowings were available.
On September 11, 1998, the Company acquired the common stock of Tinsley for
$137.7 million plus acquisition costs. Concurrently, the Company funded the
retirement of $18.5 million of indebtedness outstanding under Tinsley's credit
agreements. The acquisition was funded through borrowings of $93.7 million
under the Amended and Restated Credit Facility described above, $58.6 million
in proceeds from the sale of common stock to the Company's existing
stockholders or their affiliates and the issuance, in the aggregate, of $8.5
million of five year promissory notes ("Loan Notes") to former Tinsley
shareholders.
On November 24, 1998, the Company purchased the outstanding capital stock
of Music Print for approximately $5.3 million plus acquisition costs.
Concurrently, the Company retired approximately $0.2 million of historical
indebtedness of Music Print and purchased the facility in which Music Print
operates for $1.3 million.
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The acquisition was funded through additional revolver borrowings under the
Company's Amended and Restated Credit Facility. Music Print supplies printed
packaging in The Netherlands for the music and multimedia markets.
On January 12, 1999, IMPAC issued 20,000 shares of Preferred Stock with a
face value of $20.0 million together with detachable, ten-year Warrants to
purchase 6,913 shares of Common Stock at an exercise price of $0.01 per share
for net proceeds of $18.9 million. IMPAC used the net proceeds from the sale
of Preferred Stock to acquire 30,087 shares of outstanding Series A Common
Stock. The Preferred Stock accrues dividends on a cumulative basis at 14.0%
per annum for years 1-5, 15.0% per annum for year 6, and either 14.0% or 15.0%
per annum for years 7-10 depending on whether the dividends are paid in cash
or with additional Preferred Stock, respectively. During the first six years
after issuance, dividends on the Preferred Stock are payable solely by issuing
additional shares of Preferred Stock. The Preferred Stock accrues dividends at
24.0% per annum if certain events occur, including an event of non-compliance
as defined and certain significant changes in the ownership of IMPAC. IMPAC is
required to redeem all outstanding shares of Preferred Stock on December 31,
2008 at face value plus all accrued and unpaid dividends. IMPAC may redeem
some or all outstanding shares of Preferred Stock at an earlier date,
provided, however, that a premium of up to 10.0% be paid. The Preferred Stock
is not redeemable at the option of the holders of Preferred Stock. The
Preferred Stock contains covenants, among others, limiting additional
indebtedness, restricted payments, guaranties, advances to affiliates,
mergers, asset sales and dispositions. The Preferred Stock ranks senior to all
classes of Common Stock with respect to dividend distributions and
distributions upon the liquidation or dissolution of IMPAC.
The Company's primary cash requirements historically have related to
capital expenditures, working capital and debt service. The Company has
historically funded these requirements through internally generated cash flow,
borrowings under bank credit arrangements and the issuance of industrial
revenue bonds.
Net cash provided by operating activities for the 1998 period was $13.2
million compared to $6.2 million for the 1997 period. Income from operations
before non-cash charges increased to $14.8 million from $2.6 million due to
the acquisition of AGI and Tinsley. In the 1998 period, income from operations
before non-cash charges of $14.8 million, the issuance of the Senior
Subordinated Notes, a $0.9 million increase in capital leases, the issuance of
common stock and stock options and the issuance of $112.4 million of
borrowings under the Company's Amended and Restated Credit Facility, Loan
Notes and industrial revenue bonds were used to fund the acquisitions of
Tinsley, AGI and Music Print, the repayment of $30.1 million of bank
borrowings, $10.9 million of debt issuance costs, $16.0 million of capital
expenditures and a $1.6 million increase in working capital requirements. In
the 1997 period, income from operations before non-cash charges of $2.6
million, $3.2 million of net proceeds of an industrial revenue bond issuance
and a $3.6 million decrease in working capital requirements were used to fund
a net decrease of $5.1 million in outstanding borrowings under KFI's prior
credit agreement and $4.1 million of capital expenditures. The Company
currently expects to spend $27.5 million on capital expenditures in 1999. The
Company expects to fund its capital expenditures and other working capital
requirements in 1999 through internally generated cash flow and borrowings
under the Amended and Restated Credit Facility.
Net cash provided by operating activities for the 1997 period was $6.2
million compared to $4.2 million for the 1996 period. Income from operations
before non-cash charges decreased to $2.6 million from $5.2 million due to
decreased income from operations. In the 1997 period, income from operations
before non-cash charges of $2.6 million, $3.2 million of net proceeds of an
industrial revenue bond issuance and a $3.6 million decrease in working
capital requirements were used to fund a net decrease of $5.1 million in
outstanding borrowings under KFI's prior credit agreement and $4.1 million of
capital expenditures. In the 1996 period, income from operations before non-
cash charges of $5.2 million, $1.9 million of proceeds from the sale of PTP,
$34.2 million proceeds from bank borrowings and the issuance of common and
preferred stock were used to fund $0.7 million of working capital
requirements, $1.3 million of capital expenditures, $49.7 million to
repurchase common stock, $8.1 million to retire previous bank indebtedness and
$1.2 million of deferred financing costs.
IMPAC is a holding company with no operations of its own. The Company's
ability to make required interest payments on the Senior Subordinated Notes
depends upon its ability to receive funds from its domestic
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and foreign subsidiaries. The Company, at its discretion, controls the receipt
of dividends or other payments from its domestic and foreign subsidiaries,
subject in the case of certain foreign subsidiaries to limitations that may be
imposed under the laws of the applicable jurisdictions of organization. These
limitations are not considered to be material to the Company as a whole. There
are no contractual restrictions, under the Amended and Restated Credit
Facility or otherwise, upon the ability of the Subsidiary Guarantors to make
distributions or pay dividends, directly or indirectly, to IMPAC.
Since its acquisition of Tinsley, the Company is exposed to currency
exchange rate risk with respect to its net assets, transactions and the
related net income denominated in U.K. Pounds Sterling, Dutch Guilders, Irish
Punts, Austrian Shillings and the Euro. Business activities in various
currencies expose the Company to the risk that the eventual net dollar cash
inflows resulting from transactions with foreign customers and suppliers
denominated in foreign currencies may be adversely affected by changes in
currency exchange rates. The Company is evaluating these risks and developing
its hedging program.
Adoption of New Accounting Standard
In June, 1998, the FASB issued Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities". This statement requires that
an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
Due to the recent release and complexity of this new standard, an assessment
of the impact it will have on the financial position or results of operations
has not been completed.
Year 2000 Issues
The information provided below constitutes "Year 2000 Readiness Disclosure"
as defined in the Year 2000 Information and Readiness Disclosure Act and is
subject to the terms thereof. The following description of the Company's
remediation process is meant for information purposes and not as a form of
covenant, warranty, representation or guarantee of any kind. In addition, many
of the Company's Year 2000-related efforts are dependent upon third-parties
that are effectively beyond the Company's control.
General
As many computer systems and other equipment with embedded chips or
processors use only two digits to represent the year, they may be unable to
accurately process certain data during or after the year 2000. This is
commonly known as the Year 2000 ("Y2K") issue. The Y2K issue can arise at any
point in an entity's supply, manufacturing, processing, distribution and
financial chains.
IMPAC and its wholly owned domestic subsidiaries, AGI and Klearfold, are
undertaking an initiative entitled IMPAC 2000 (the "Domestic Project"). While
addressing the Y2K issue specifically, the Domestic Project is intended to
change the entire business systems infrastructure and make it Y2K compliant.
The Company believes that Tinsley has substantially addressed the Y2K
issue, with Tinsley's information technology ("IT") systems currently in
compliance with Y2K. With regard to non-IT issues, Tinsley has contacted
vendors who have provided assurances that the relevant systems are in
compliance.
Projects
The Domestic Project is divided into 4 major areas: (i) Infrastructure
Systems, (ii) Applications Software, (iii) Manufacturing Equipment, and (iv)
External Stakeholders. At the present time, the Infrastructure Systems portion
of the project is believed to be complete in so far as it pertains to Y2K.
This includes personal computers, local and wide area networks and telephony.
In addition, desktop environments have been standardized and all such
applications are now believed to be Y2K compliant. At present, the
Applications Software at AGI and Klearfold are different. These systems will
be harmonized with the implementation of the ORACLE Enterprise Resource
Planning ("ERP") systems. The Company has retained an outside consultant to
assist in the integration
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of the business and systems processes into an ORACLE ERP solution. The project
is approximately 60 percent complete, with Y2K compliance being expected by
mid 1999. A Y2K compliant patch of Klearfold's application software is
available and will be installed as a contingency plan in the event of project
delays in the ORACLE environment. A contingency plan for the AGI Applications
Software has been developed but not yet implemented. With respect to the
Manufacturing Equipment portion of the project, a comprehensive review of
Manufacturing Equipment has been completed and the Company believes that
substantially all significant equipment is Y2K compliant. With respect to its
External Stakeholders, the Company is in the process of contacting its
material suppliers and Electronic Data Interfaces with third party customers
and vendors are in the process of review.
Tinsley implemented the SAGE accounting application for its UK subsidiaries
in the second half of 1998. The European subsidiaries operate stand alone
accounting systems which the Company believes are Y2K compliant. In addition,
the Company expects that the IMPRINT management information system, which is
used by Tinsley, will become Y2K compliant during the balance of 1999.
Costs
The total cost associated with required modifications to business systems
is not expected to be material to the financial position of the Company. The
estimated cost of the Domestic Project is $8.1 million, of which $3.3 million
was spent through December 31, 1998. The residual amount of $4.8 million is to
be spent in 1999. The Company will fund the Domestic Project, along with its
other capital expenditures, with internally generated cash flows along with
additional Revolver borrowings, as necessary.
Risks
The failure to correct a material Y2K problem could result in an
interruption in, or a failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the results of
operations, liquidity and financial condition of the Company. Due to the
general uncertainty inherent with regards to Y2K issues, resulting in part
from the uncertainty of the Y2K readiness of third-party suppliers and
customers, the Company is unable to predict what consequences any Y2K failures
would have on its results of operations, liquidity or financial condition or
on the most reasonably likely worst case scenario. The domestic and foreign
projects will continue to significantly reduce the level of uncertainty about
the Y2K problem and, in particular, about the Y2K compliance and readiness of
its material suppliers. The Company believes that, with the implementation of
the new business systems and completion of the projects listed above as
scheduled, the possibility of significant interruptions of normal operations
should be reduced.
Euro
The European Community introduced a common European monetary unit, the
Euro, effective January 1, 1999. The UK, where Tinsley is headquartered, has
opted not to adopt the Euro. However, certain subsidiary operations are in
countries such as The Netherlands, the Republic of Ireland and Austria, which
participated in its introduction. The new SAGE system implemented at Tinsley
is capable of handling multicurrency transactions, with the Euro being a
currency in its portfolio. The Company does not believe that the introduction
of the Euro will have a material adverse effect on the results of its
operations. See "Liquidity and Capital Resources" for further discussion of
currency and exchange rate issues.
Cautionary Note
This Report may contain "forward-looking statements" within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act of 1934, as amended, including, but not limited to statements regarding:
the Company's growth strategy to leverage its reputation for product
innovation, high quality and customer service; the Company's ability to create
significant additional revenue opportunities with existing customers by
marketing its expanded array of high-end marketing solutions; the Company's
ability to integrate with its global customers due to the Tinsley Acquisition;
the opportunity to leverage the Klearfold product line as
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the result of the Tinsley Acquisition; the benefit to Tinsley and AGI of each
other's position in the entertainment market; the Company's ability to
increase revenues by expanding into related product lines that serve new
markets; the Company's ability to capture additional customers through its
innovative product line; the Company's ability to utilize the most efficient
practices currently used in each of its facilities to enhance manufacturing
capabilities and improve cost structures; the Company's ability to pursue new
business opportunities through modification of existing packaging and the
development of new applications; opportunities for significant cross-selling
to existing customers; the ability to serve national markets; investment in
equipment; the Company's pursuit of other strategic acquisitions within the
specialty packaging industry; the ability to pass raw material price increases
on to its customers; the potential future costs incurred related to
environmental compliance; the expectation of the Company not to pay dividends
on Common Stock; the redemption by the Company of the Preferred Stock; the
effect on the Company of the limitations and covenants imposed by the terms of
the Preferred Stock; the delay in repurchase of employee stock under the terms
of certain employment agreements; the payments from the Company to certain
employees upon termination in accordance with employment agreements; the
financing of employee stock repurchases; the insurance policies for certain
officers of the Company; the adoption of a cash bonus plan similar to the 1998
bonus plan; the development by Company of a currency hedging program; the
impact of the new FASB statement; the Company's projects with respect to Y2K
issues and the possibility of interruptions caused therefrom; the effect of
the introduction of the Euro; funding of and projected amount of capital
expenditures in 1999; expectations regarding the Company's Y2K compliance; the
Company's ability to incur substantial additional indebtedness; the effects of
an increase in interest rates; and, certain other statements identified or
qualified by words such as "likely", "will", "suggests", "may", "would",
"could", "should", "expects", "anticipates", "estimates", "plans", "projects",
"believes", or similar expressions (and variants of such words or
expressions). Investors are cautioned that forward-looking statements are
inherently uncertain. Actual performance and results of operations may differ
materially from those projected or suggested in the forward-looking statements
due to certain risks and uncertainties, including, without limitation, those
described below:
Leverage
Significant Leverage as a Result of Transactions
In connection with the acquisition of AGI and Tinsley, the Company incurred
a significant amount of indebtedness and, as a result, the Company is highly
leveraged. At December 31, 1998, approximately $240.6 million in total debt
was outstanding, including $140.6 million of senior debt of which
approximately $11.6 million is secured by letters of credit outstanding under
the Amended and Restated Credit Facility, and the Company had stockholders'
equity of approximately $65.6 million. Subject to certain covenants, the
Company is permitted to incur substantial additional indebtedness in the
future.
Liquidity and Capital Resources
The Company's ability to make scheduled payments of principal of, or to pay
the interest or liquidated damages, if any, on, or to refinance, its
indebtedness (including the Senior Subordinated Notes), or to fund planned
capital expenditures and any acquisitions will depend on its future
performance, which, to a certain extent, is subject to general economic,
financial, competitive, legislative, regulatory and other factors that are
beyond its control. In addition, the Company may need to refinance all or a
portion of the principal of the Senior Subordinated Notes on or prior to
maturity. There can be no assurance that the Company's business will generate
sufficient cash flow from operations, that anticipated revenue growth and
operating improvements will be realized or that future borrowings will be
available under the Amended and Restated Credit Facility in an amount
sufficient to enable the Company to service its indebtedness, including the
Senior Subordinated Notes, or to fund its other liquidity needs. In addition,
there can be no assurance that the Company will be able to effect any such
refinancing on commercially reasonable terms or at all. The Company's ability
to raise additional capital may also be limited by the terms of the Preferred
Stock.
Effects of Leverage
The degree to which the Company is leveraged could have important
consequences to holders of the Senior Subordinated Notes, including, but not
limited to: (i) making it more difficult for the Company to satisfy its
obligations with respect to the Senior Subordinated Notes, (ii) increasing the
Company's vulnerability to general
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adverse economic and industry conditions, (iii) limiting the Company's ability
to obtain additional financing to fund future working capital, capital
expenditures, acquisitions and other general corporate requirements, (iv)
requiring the dedication of a substantial portion of the Company's cash flow
from operations to the payment of principal of, and interest on, its
indebtedness, thereby reducing the availability of such cash flow to fund
working capital, capital expenditures, research and development or other
general corporate purposes, (v) limiting the Company's flexibility in planning
for, or reacting to, changes in its business and the specialty packaging
industry, and (vi) placing the Company at a competitive disadvantage with
respect to less leveraged competitors.
Ranking
The Senior Subordinated Notes and the related subsidiary guarantees (the
"Subsidiary Guarantees") are subordinated in right of payment to all current
and future senior debt of IMPAC and the Subsidiary Guarantors. However, the
Senior Subordinated Notes indenture (the "Indenture") provides that IMPAC will
not, and will not permit Subsidiary Guarantors to, incur or otherwise become
liable for any indebtedness that is subordinate or junior in right of payment
to any senior debt and senior in any respect in right of payment to the Senior
Subordinated Notes or any of the Subsidiary Guarantees. Upon any distribution
to creditors of IMPAC or a Subsidiary Guarantor in a liquidation or
dissolution of IMPAC or a Subsidiary Guarantor or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to
IMPAC or a Subsidiary Guarantor or its property, the holders of senior debt
will be entitled to be paid in full before any payment may be made with
respect to the Senior Subordinated Notes. In addition, the subordination
provisions of the Indenture provide that payments with respect to the Senior
Subordinated Notes will be blocked in the event of a payment default on senior
debt and may be blocked for up to 179 days each year in the event of certain
non-payment defaults on senior debt. In the event of a bankruptcy, liquidation
or reorganization of IMPAC or a Subsidiary Guarantor, holders of the Senior
Subordinated Notes will participate ratably with all holders of subordinated
indebtedness of IMPAC or such Subsidiary Guarantor that is deemed to be of the
same class as the Senior Subordinated Notes, and potentially with all other
general creditors of IMPAC, based upon the respective amounts owed to each
holder or creditor, in the remaining assets of IMPAC. In any of the foregoing
events, there can be no assurance that there would be sufficient assets to pay
amounts due on the Senior Subordinated Notes. As a result, holders of Senior
Subordinated Notes may receive less, ratably, than the holders of senior debt.
The Indenture permits the incurrence of substantial additional indebtedness,
including senior debt, by IMPAC and its subsidiaries in the future. There is
currently no indebtedness outstanding that is subordinated to the Senior
Subordinated Notes.
Ability of Company to Obtain Funds from Subsidiaries
IMPAC has no operations of its own and derives substantially all of its
revenue from its subsidiaries. Holders of indebtedness and trade creditors of
subsidiaries of IMPAC would generally be entitled to payment of their claims
from the assets of the affected subsidiaries before such assets were made
available for distribution to IMPAC. The Indenture permits the incurrence of
substantial additional indebtedness by IMPAC and its subsidiaries and permits
significant investments by IMPAC in its subsidiaries. In the event of a
bankruptcy, liquidation or reorganization of a subsidiary, holders of any of
such subsidiary's indebtedness will have a claim to the assets of such
subsidiary that is prior to IMPAC's interest in those assets.
Guarantees By Foreign Subsidiaries
Several of IMPAC's foreign subsidiaries are not required to deliver a
guarantee with respect to the Senior Subordinated Notes. Additionally, IMPAC
is allowed under the Indenture to acquire or create additional foreign
subsidiaries that may not be required to deliver a guarantee with respect to
the Senior Subordinated Notes. In the event of a bankruptcy, liquidation or
reorganization of such a subsidiary, holders of any of such subsidiary's
indebtedness will have a claim to the assets of such subsidiary that is prior
to IMPAC's interest in those assets.
Effect of Fraudulent Transfer Statutes on Validity of Notes and Guarantees
Under applicable provisions of federal bankruptcy law or comparable
provisions of state fraudulent transfer law, the Senior Subordinated Notes or
the Subsidiary Guarantees, could be voided, or claims in respect of the
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Senior Subordinated Notes or the Subsidiary Guarantees could be subordinated
to all other debts of IMPAC or any Subsidiary Guarantor. In addition, the
payment of interest and principal by IMPAC or any Subsidiary Guarantor
pursuant to the Senior Subordinated Notes could be voided and required to be
returned to the person making such payment, or to a fund for the benefit of
the creditors of IMPAC or any Subsidiary Guarantor.
Possible Inability to Fund a Change of Control Offer
Upon a change of control, as defined in the Indenture, the Company will be
required to offer to repurchase all outstanding Senior Subordinated Notes at
101% of the principal amount thereof plus accrued and unpaid interest and
liquidated damages, if any, to the date of repurchase. However, there can be
no assurance that sufficient funds will be available at the time of any change
of control to make any required repurchases of Senior Subordinated Notes
tendered or that restrictions in the Amended and Restated Credit Facility will
allow the Company to make such required repurchases. Furthermore, upon certain
ownership changes, the dividend rate on the Preferred Stock will increase to
24.0%.
Failure to Integrate Businesses
Prior to March 1998, the Company had no prior history as a combined entity
and its operations had not previously been managed on a combined basis. Prior
to the combination of AGI and Klearfold in March, 1998 and the acquisition of
Tinsley in September, 1998, Tinsley, AGI and Klearfold were operated as
separate entities. The Company's future operations and earnings are largely
dependent upon management's ability to successfully execute the Company's
strategy of offering the combined product line of Tinsley, AGI and Klearfold
to the Company's customers. This requires substantial attention from the
Company's management team which, prior to the dates of acquisitions, had not
operated on a combined basis. In addition, management is required to apply its
business strategy to an entity which is significantly larger than the entity
it previously managed. Additionally, the need to focus management's attention
on integration of the businesses and implementation of the Company's post-
combination strategy may limit the Company's ability to successfully pursue
other opportunities related to its business for the foreseeable future. The
historical financial statements and unaudited pro forma financial information
presented in this Report may not necessarily be indicative of the results that
would have been attained had the Company operated on a combined basis.
Foreign Operations
A substantial portion of the Company's business is conducted in
international markets. Risks inherent in foreign operations, such as
fluctuations in foreign currency exchange rates and changes in social,
political and economic conditions, could materially adversely affect the
Company's business.
Effects of Technology Changes and Industry Shifts
The Company's packaging products are almost entirely targeted to consumer
products companies. Sales of consumer products are subject to changing tastes
and technologies that cannot be predicted. The adoption by various consumer
products industries of new forms of packaging may in the future have a
material adverse effect on the Company. For example, the Company experienced
significant, although temporary, declines in revenues as the CD displaced the
LP and as the CD industry abandoned the "long-box" packaging for CDs.
In addition to technological and new product changes that could affect
demand for the Company's products in traditional distribution channels, demand
for the Company's products could also be materially affected by change in
retail distribution channels. Almost all of the Company's products are sold to
consumer products manufacturers that seek to differentiate their products in
the consumer marketplace. The anticipated growth in electronic commerce
distribution channels (often referred to as "e-commerce"), in which products
are sold directly to customers over the Internet, could have a material
adverse effect on the demand for the Company's products. For example, new
technology permits consumers to download music releases directly from the
Internet, eliminating the need for the Company's packaging products.
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The Company's success will depend, in part, upon its continued ability to
manufacture products that meet changing customer needs and industry-wide
shifts, successfully anticipate or respond to technological changes in
manufacturing processes on a cost-effective and timely basis and enhance and
expand its existing product offerings. Current competitors or new market
entrants may develop new products with features that could adversely affect
the competitive position of the Company's products. The Company has invested
and continues to invest resources in the development of new products and
improved manufacturing processes; however, there can be no assurance that the
Company's new product or process development efforts will be successful or
that the emergence of new technologies, industry standards or customer
requirements will not render the Company's technology, equipment or processes
obsolete or uncompetitive. Any failure or delay in accomplishing these goals
could have a material adverse effect on the Company's business, results of
operations and financial condition. In addition, to the extent that the
Company determines that new manufacturing equipment or processes are required
to remain competitive, the acquisition and implementation of these
technologies, equipment and processes are likely to require significant
capital investment by the Company.
Variability of Quarterly Results
A significant portion of the Company's business is attributable to special
projects relating to particular hit movie or music releases. The existence and
timing of such major releases may cause the Company's quarterly and annual
revenues to vary significantly. These swings in quarterly results could have a
material adverse effect on the Company's ability to comply with the financial
covenants in its financing agreements and could have a material adverse effect
on the market prices for the Senior Subordinated Notes.
Potential Future Acquisitions Could Increase Debt or Disrupt Operations
The Company may in the future pursue selective acquisitions within the
specialty packaging industry. Future acquisitions by the Company could result
in the incurrence of debt and contingent liabilities and an increase in
amortization expenses related to goodwill and other intangible assets, which
could have a material adverse effect upon the Company's business, financial
condition and results of operations. In addition, acquisitions involve
numerous risks, including difficulties in the assimilation of the operation,
technologies, services and products of the acquired companies and the
diversion of management's attention from other business concerns. In the event
that such acquisitions were to occur, there can be no assurance that the
Company's business, financial condition and results of operations would not be
materially adversely affected.
Competition
Many of the Company's products are sold in highly competitive markets in
the United States, the U.K. and Europe. The Company competes with a
significant number of companies of varying sizes on the basis of quality,
service and price and the ability to supply products to customers in a timely
manner. The Company believes that its primary competitors are Ivy Hill
Corporation and Shorewood Packaging Corporation in the United States and
Gerhard Kaiser GMBH, St. Ives plc and CMCS Group plc in the U.K. and Europe,
some of which are larger than the Company and may have substantially greater
financial resources. Competitive pressures or other factors could cause the
Company to lose existing business or opportunities to generate new business or
could result in significant price erosion, all of which would have a material
adverse effect on the Company's business, financial condition and results of
operations.
Failure to Comply with Environmental Matters and Governmental Regulations
The past and present operations of the Company and the past and present
ownership and operations of real property by the Company are subject to
extensive and changing federal, state and local environmental laws and
regulations pertaining to the discharge of materials into the environment, the
handling and disposition of wastes, the recycling, composition and recycled
content of packaging, or otherwise relating to the protection of the
environment. The Company's operations are also governed by laws and
regulations relating to employee health and safety. Governmental authorities
have the power to enforce compliance with their regulations, and violations
may result in the payment of fines or the entry of injunctions or both.
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As is the case with other companies engaged in similar businesses, the
Company could incur costs relating to environmental compliance, including
remediation costs related to historical hazardous materials handling and
disposal practices at certain facilities. It is possible that future
developments (for example, new regulations or stricter regulatory
requirements) could result in the Company incurring material costs to comply
with applicable environmental laws and regulations.
Effect of Environmental Concerns on Market
In addition to the effects of regulation, the Company's business may also
be affected by environmental concerns of consumers with respect to packaging.
For example, in the early 1990's the music industry voluntarily stopped using
"long-box" packaging for CDs in response to these concerns. Future
environmental concerns could have a material effect on the demand for the
Company's packaging.
Controlling Stockholders
The Company's majority stockholder or its affiliates and certain members of
senior management own substantially all of the outstanding voting stock of
IMPAC, which is the sole stockholder of AGI, Klearfold and Tinsley and, by
virtue of such ownership, have the power to control all matters submitted to
stockholders of IMPAC and to elect all directors of IMPAC and its
subsidiaries, including AGI, Klearfold and Tinsley.
Year 2000 Issues
The Company's ability to successfully address its Y2K issues will depend on
the availability of resources, the Company's ability to discover and correct
those potential Y2K problems which could have a serious impact on specific
Company facilities and the ability of vendors to bring their computer systems
and other equipment into Y2K compliance.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has foreign subsidiaries that manufacture and sell products in
the U.K. and Europe. Additionally, the Company incurred a significant amount
of indebtedness in connection with the acquisition of AGI and Tinsley and
accordingly is highly leveraged. As a result, its cash flows and earnings are
exposed to fluctuations in foreign currency exchange rates and interest rates.
The Company's debt obligations are primarily U.S. dollar denominated. The
Company's market risk therefore is the potential loss arising from adverse
changes in interest rates. The debt can be categorized as follows:
<TABLE>
<CAPTION>
December 31, 1998
-----------------
(in thousands)
<S> <C>
Fixed interest rates:
- ---------------------
Senior Subordinated Debt...................................... $100,000
Industrial revenue bonds...................................... 4,000
Covered by interest rate swaps:
- -------------------------------
Portion of bank borrowings.................................... 64,000
Subject to interest rate fluctuations:
- --------------------------------------
Portion of bank borrowings.................................... 39,410
Industrial revenue bonds...................................... 7,640
Capital leases................................................ 17,116
Loan Notes.................................................... 8,393
--------
Total indebtedness............................................ $240,559
========
</TABLE>
26
<PAGE>
Market risk is estimated as the potential decrease in pretax earnings
resulting from a hypothetical 71 basis-point increase in interest rates
(representing a 10% increase) on floating-rate debt instruments. If interest
rates increased by such 10%, the Company would incur approximately $0.5
million per annum in additional interest expense based on the long-term debt
outstanding at December 31, 1998.
Apart from the interest rate swaps noted above (which are discussed further
in Note 11 to the Consolidated Financial Statements), the Company does not
currently hold any other derivatives for managing risks or for trading
purposes.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
IMPAC's Consolidated Financial Statements, together with the auditors'
reports thereon, appear at pages F-2 through F-28 of this Report and are
summarized by the Index to Consolidated Financial Statements at page F-1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Certain changes with respect to the Company's independent public
accountants have previously been reported in the Registrant's Registration
Statement No. 333-48821, on Form S-4, filed by the Registrant with respect to
the Senior Subordinated Notes.
27
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The executive officers and directors of IMPAC are as follows:
<TABLE>
<CAPTION>
Name Age Position(s)
---- --- -----------
<S> <C> <C>
Melvin B. Herrin........ 64 Director and Chairman
Richard H. Block........ 58 Director, President and Chief Executive Officer
M. Shaun Lawson......... 53 Director and Vice Chairman
H. Scott Herrin......... 42 Director
Michel Reichert......... 48 Director
Michael F. Gilligan..... 43 Director
David C. Underwood...... 39 Treasurer, Secretary and Chief Financial Officer
Lee Newbon.............. 55 Director and Chief Operating Officer of IMPAC
Group, Inc.
James H. Oppenheimer.... 56 Executive Vice President--U.S. Sales
Richard L. Oppenheimer.. 50 Chief Operating Officer--U.S. Operations
Dean J. Henkel.......... 46 Executive Vice President--U.S. Operations
Zenas Block............. 82 Director
David H. Horowitz....... 70 Director
</TABLE>
Mr. Melvin B. Herrin founded Klearfold and has been Chairman of Klearfold
since its incorporation in 1977 and a Director and Chairman of IMPAC since
1996. Mr. Herrin graduated from Temple University. Mr. Herrin is the father of
H. Scott Herrin.
Mr. Richard H. Block has served as the President and Chief Executive
Officer of AGI since October 1987 and the Chief Executive Officer of IMPAC
since March, 1998. He began his career at AGI in 1970 as a salesman; he was
subsequently promoted to Sales Manager and Executive Vice President. Prior to
1970, he served as a Sales Manager for Westvaco Corporation in New York and
Chicago. Mr. Block graduated from Alfred University. Mr. Block is the son of
Zenas Block.
Mr. M. Shaun Lawson has been a director of IMPAC since March, 1999. Prior
to joining IMPAC, Mr. Lawson spent eight years as a non-executive director of
Tinsley Robor plc, three years of which were served as the Chairman. Mr.
Lawson is also a Managing Director of Priory Investments Limited Group.
Mr. H. Scott Herrin has been a Director of Klearfold since 1981, President
of Klearfold from 1996 to 1998 and a Director of IMPAC since 1996. From March,
1998, until December, 1998, Mr. Herrin was an Executive Vice President of
IMPAC. Mr. Herrin graduated from Amherst College and has a law degree from
Harvard Law School. Mr. Herrin is the son of Melvin Herrin.
Mr. Michel Reichert has been a Director of IMPAC since 1996. Since 1994,
Mr. Reichert has been a Managing General Partner of Heritage Partners, Inc. a
Boston-based private investment company ("Heritage"). Prior to 1994, Mr.
Reichert was a Managing Director of BancBoston Capital Inc., a private equity
investment firm. Mr. Reichert graduated from the University of Bourges,
France.
Mr. Michael F. Gilligan has been a Director of IMPAC since 1996. Since
1994, Mr. Gilligan has been a General Partner of Heritage. Prior to 1994, Mr.
Gilligan was a Director of BancBoston Capital Inc., a private equity
investment firm. Mr. Gilligan graduated from Boston College.
Mr. David C. Underwood has been with AGI since 1990 and IMPAC since March,
1998 and has been responsible for IMPAC's finance, information technologies
and human resources functions. Prior to joining AGI, Mr. Underwood was a
manager in the audit and financial consulting division of Arthur Andersen &
Company's Chicago office. Mr. Underwood graduated from the University of
Wisconsin and is a Certified Public Accountant.
28
<PAGE>
Mr. Lee Newbon was appointed Chief Operating Officer of IMPAC and Chief
Executive Officer of IMPAC Group Europe in November, 1998 and has been a
director of IMPAC since March, 1999. Prior to joining IMPAC, Mr. Newbon spent
over twenty years with Tinsley Robor plc, the last four of which he served as
Chief Executive Officer. Mr. Newbon has worked in the printing or music
industries since 1959.
Mr. James H. Oppenheimer is responsible for sales, marketing and
administration for all U.S. markets. Mr. Oppenheimer joined AGI in 1983 as the
East Coast Sales Manager, and subsequently served as Vice President of East
Coast Sales and later as Executive Vice President of Sales for the packaging
and multimedia markets. Prior to joining AGI, he served as Executive Vice
President of Sales for the Walter Frank Organization, a packaging company
specializing in cosmetics. He joined IMPAC in March 1998. Mr. Oppenheimer
graduated from the University of Illinois, Champaign-Urbana. Mr. Oppenheimer
is the brother of Richard Oppenheimer.
Mr. Richard L. Oppenheimer is responsible for managing the operations of
the U.S. businesses. Mr. Oppenheimer joined AGI in 1977 as Chicago Sales
Representative, and subsequently served in positions including California
Sales Representatives for Music, Sales Manager for Packaging, Vice President
of West Coast Sales and Executive Vice President of Sales for the music and
video markets. Prior to joining AGI, he spent six years selling custom
injection molding designs, specializing in the cosmetics industry. Mr.
Oppenheimer graduated from Southern Illinois University. He joined IMPAC in
March, 1998. Mr. Oppenheimer is the brother of James Oppenheimer.
Mr. Dean J. Henkel is responsible for the manufacturing operations at the
Company's U.S. plants. Mr. Henkel has worked at AGI since 1975 in a number of
positions, including as a machine operator, finishing superintendent, plant
superintendent and plant manager in AGI's Melrose Park facility and most
recently as Executive Vice President--U.S. Operations. He joined IMPAC in
March, 1998. Mr. Henkel graduated from Illinois Benedictine College.
Mr. Zenas Block has been a director of AGI since 1988 and a director of
IMPAC since March, 1998. Since 1991, Mr. Block has been an adjunct professor
at the New York University Stern School of Business and was a founder of its
Center for Entrepreneurial Studies. Mr. Block graduated from the City College
of New York. Mr. Block is the father of Richard Block.
Mr. David H. Horowitz has been a director of AGI since 1988 and a director
of IMPAC since March, 1998. Mr. Horowitz is a consultant and investor in the
media and communications industry and is a director of theglobe.com., inc. Mr.
Horowitz graduated from Columbia College and has a law degree from Columbia
Law School.
Stockholder Agreement
In January 1999, IMPAC and its stockholders entered into the Second Amended
and Restated Stockholder Agreement, dated as of January 11, 1999 (the
"Stockholder Agreement"). The Stockholder Agreement provides that IMPAC's
board of directors (the "Board") will in most circumstances consist of eleven
members to be elected as follows: (i) four individuals designated by the
holders of a majority of the shares of the Common Stock purchased by
affiliates of Heritage (the "Heritage Holders"); (ii) two individuals
designated by the holders of a majority of the shares of Common Stock
purchased by or on behalf of Melvin Herrin and Scott Herrin (the "Klearfold
Holders"); (iii) two individuals designated by the holders of a majority of
shares of Common Stock to be purchased by Messrs. Lawson and Newbon and other
prior employees and stockholders of Tinsley (the "Tinsley Holders"); and (iv)
three individuals designated as follows: (A) if Richard Block is both chief
executive officer of IMPAC and continues to hold at least 75% of his shares of
Common Stock, Richard Block and two individuals designated by Richard Block;
(B) if Richard Block is both chief executive officer of IMPAC and continues to
hold at least 50% but less than 75% of his shares of Common Stock, Richard
Block, one individual designated by Richard Block, and one individual
designated by the holders of a majority of the shares of the Common Stock held
by the holders of the Common Stock then employed by IMPAC and who had been
employed by AGI prior to the Combination (the "AGI Holders"); (C) if Richard
Block is both chief executive
29
<PAGE>
officer of IMPAC and continues to hold less than 50% of his shares of Common
Stock held by him after the closing of the Combination, Richard Block and two
individuals designated by the AGI Holders; (D) if Richard Block is not chief
executive officer of IMPAC and continues to hold more than 50% of his shares
of Common Stock, one individual designated by Richard Block and two
individuals designated by the AGI Holders; and (E) if Richard Block is not
chief executive officer of IMPAC and continues to hold less than 50% of his
shares of Common Stock, three individuals designated by the AGI Holders.
At any time the Heritage Holders may provide a written notice to IMPAC,
upon which the Board will then consist of: (A) eight individuals designated by
the Heritage Holders; (B) three individuals designated by the AGI Holders; (C)
two individuals designated by the Klearfold Holders; and (D) two individuals
designated by the Tinsley Holders.
Board vacancies will be filled by a designee of the individual or group who
originally designated the vacating director. Each individual or group entitled
to designate a director will also be entitled to direct the removal of such
director and designate a replacement director.
Executive officers of IMPAC will be appointed by the Board upon the
President's recommendations, subject to the provisions of such officers'
respective employment agreements.
The Stockholder Agreement also contains each of (i) registration rights
provisions, which will provide certain demand registration rights, to become
effective upon the earlier to occur of June 7, 2002 and six months following
the consummation of an initial public offering of IMPAC's Common Stock, and
certain piggyback registration rights, (ii) transfer restrictions, (iii)
piggy-back and co-sale rights, (iv) rights of first refusal with respect to
certain transfers of Common Stock, (v) rights of first refusal with respect to
certain proposed sales of the Company and (vi) certain pre-emptive rights with
respect to certain equity issuances.
Section 16(a) Beneficial Ownership Reporting Compliance.
Not applicable.
30
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the aggregate compensation paid by IMPAC for
services rendered during fiscal 1998 to its Chief Executive Officer and its
five most highly-compensated executive officers (determined on a historical
combined basis).
<TABLE>
<CAPTION>
Annual Compensation
--------------------------
Other
Annual All Other
Salary Bonus Compensation Compensation
Name and Principal Position ($) ($) ($)(3) ($)(4)
- --------------------------- ------- ----- ------------ ------------
<S> <C> <C> <C> <C>
Richard Block(1)....................... 288,230 -- -- 8,668
President and Chief Executive Officer
H. Scott Herrin(2)..................... 323,028 -- -- 597
Executive Vice President
James Oppenheimer(1)................... 265,653 -- -- 6,392
Executive Vice President--U.S. Sales
Richard L. Oppenheimer(1).............. 265,558 -- -- 8,047
Chief Operating Officer--U.S.
Operations
Dean J. Henkel(1)...................... 184,743 -- -- 7,544
Executive Vice President--U.S.
Operations
David C. Underwood(1).................. 184,743 -- -- 7,547
Treasurer, Secretary and Chief
Financial Officer
</TABLE>
- --------
(1) Commenced employment with IMPAC in March 1998.
(2) In December 1998, H. Scott Herrin terminated his employment with the
Company.
(3) The value of perquisites and other personal benefits are not shown because
the aggregate amount of such compensation did not exceed $50,000 or 10% of
each executive's total annual salary and bonus.
(4) Reflects company contributions to the Company's 401(k) retirement savings
plans on behalf of the named executive.
Option/SAR Grants in Fiscal 1998
Although IMPAC has adopted certain stock option plans, in fiscal 1998 no
options were granted thereunder to any of the executive officers named in the
Summary Compensation Table and such executive officers do not hold any options
for the purchase of IMPAC's Common Stock.
Compensation of Directors
Other than Melvin B. Herrin and M. Shaun Lawson, directors of IMPAC do not
receive compensation from IMPAC for their service in such capacities. In
fiscal 1998, Melvin B. Herrin received $323,028 pursuant to an Employment,
Non-Competition and Stock Repurchase Agreement for services provided by him to
IMPAC as Chairman of IMPAC's Board of Directors. See "Employment, Non-
Competition and Stock Repurchase Agreements" below. IMPAC has agreed to
provide M. Shaun Lawson with a base salary of $125,000 for services provided
by him as Vice Chairman of IMPAC's Board of Directors. Mr. Lawson became a
director of IMPAC in March 1999. IMPAC has agreed to provide Lee Newbon with a
base salary of $350,000, and the ability to participate in IMPAC's cash bonus
plan, for services provided by him as Chief Operating Officer of IMPAC and as
Chief Executive Officer of IMPAC Group Europe. Mr. Newbon became IMPAC's Chief
Operating Officer in November 1998 and was elected to IMPAC's Board of
Directors in March 1999.
Employment, Non-Competition and Stock Repurchase Agreements
At the closing of the Combination, IMPAC entered into Employment, Non-
Competition and Stock Repurchase Agreements with each of Richard H. Block,
Melvin B. Herrin, H. Scott Herrin, David C.
31
<PAGE>
Underwood, James H. Oppenheimer, Richard L. Oppenheimer and Dean J. Henkel, as
well as with certain other employees who are officers of one or more of its
subsidiaries, but will not be officers of IMPAC.
Each employment agreement with one of the employees named above provides a
term of employment through June 2001, specifies a base salary and a package of
benefits and provides for participation in IMPAC's cash bonus plan. Each such
employment agreement (except as noted below) gives such individual (or his
estate) the right to offer his or her shares back to IMPAC in the event of
death, disability, retirement, upon his termination of his employment for good
reason, or upon termination of his employment by IMPAC without cause, and,
except in the instance of retirement or, if insurance proceeds are not
available to complete the repurchase, death or disability, IMPAC shall be
required to complete such repurchase, in each case at fair market value
calculated in accordance with such employment agreements. Each of Melvin
Herrin's and Scott Herrin's employment agreement give such individual's estate
the right, following the death of both Melvin Herrin and Scott Herrin, to
offer such estate's shares of Common Stock back to IMPAC. In the event that a
repurchase offer following an employee's death, disability or retirement is
rejected by IMPAC, and the offered shares are not repurchased by those of the
employee's fellow managers who may also have rights to repurchase the
employee's shares, then such shares will become freely transferable. Any
repurchase is subject to compliance with the terms of the Amended and Restated
Credit Facility, the Indenture and the terms of IMPAC's Charter, and if IMPAC
is unable to complete a purchase in compliance with such terms, the purchase
may be delayed until compliance is possible.
The employment agreements provided base salaries for the year ending
December 31, 1998, as follows: Richard H. Block--$350,000; Melvin B. Herrin--
$325,000; H. Scott Herrin--$325,000; David C. Underwood--$225,000; James H.
Oppenheimer--$325,000; Richard L. Oppenheimer--$325,000; and Dean J. Henkel--
$225,000. Such base salaries are subject to cost of living adjustments for
each year thereafter.
Each of the employment agreements also provides for severance pay upon
termination by IMPAC without cause or by the employee for good reason. IMPAC
must pay the employee his base salary as in effect prior to any such
termination, together with benefits and a variable compensation element
calculated with reference to IMPAC's payments under IMPAC's cash bonus plan,
until the later of (i) the end of the term of the employment contract, or (ii)
if so elected by IMPAC, the first anniversary of termination or, under certain
circumstances and with respect to certain employees, eighteen months after
termination, provided that the period during which severance pay is payable
may be extended for up to one additional year by notice to the employee from
IMPAC. If the employee is terminated by IMPAC without cause, or the employee
terminates his employment for good reason, at any time after the end of the
term of the employment agreement, IMPAC may by written notice to the employee
elect to pay the employee his base salary as in effect prior to any such
termination, together with benefits and a variable compensation element
calculated with reference to IMPAC's payments under the cash bonus plan, for a
period of one year from the date of termination or, under certain
circumstances and with respect to certain employees, eighteen months after
termination, provided that such period may be extended for up to one
additional year by notice to the employee from IMPAC. No severance is payable
in the event of a termination of employment as a result of death, disability
or retirement, or a termination by the employee without good reason or by
IMPAC with cause.
Each of the employment agreements with the employees named above also
contains non-competition covenants pursuant to which the employee is
prohibited, during the term of his employment and for a "Restricted Period"
thereafter, from competing with the Company in any place where the Company now
or during the employee's employment does business, and, subject to certain
exceptions, from soliciting or encouraging any employee, contractor, customer,
vendor or supplier of the Company to terminate or materially reduce its
relationship with the Company. The applicable "Restricted Period" will, with
certain exceptions, be that period following the employee's termination during
which severance pay is being paid to the employee, and if no severance pay is
payable, the "Restricted Period" shall be the longer of (i) one year from the
date of termination, and (ii) two years from March 12, 1998. In addition, the
"Restricted Period" shall be extended by any period in which the employee is
in breach of his non-competition and non-solicitation obligations.
32
<PAGE>
Each of the employment agreements also provides that IMPAC and certain "co-
managers", taken together (in the case of Richard H. Block, David C.
Underwood, James H. Oppenheimer, Richard L. Oppenheimer and Dean J. Henkel,
the "co-managers" include each such person (other than himself), as well as
Dennis L. McGuin, Mary Frances Griffin and Jacqueline M. Barry) have the right
to repurchase the employee's shares of IMPAC's Common Stock following
termination of the employee's employment, as well as providing the rights
described above for the employee to require the repurchase of his stock. The
Company will obtain insurance policies on the life of each of Richard H.
Block, David C. Underwood, James H. Oppenheimer, Richard L. Oppenheimer and
Dean J. Henkel, and on the life of the survivor of Melvin Herrin and Scott
Herrin in order to assist in the financing of its obligations to repurchase
their stock. IMPAC will finance any stock repurchase, first, out of cash if
and to the extent available under the terms of the Amended and Restated Credit
Facility, the Indenture and the Charter and if IMPAC is unable to complete a
purchase at any time because no cash is then available under such terms, the
purchase may be delayed until cash becomes available to permit IMPAC to
complete the purchase in compliance with such terms.
Executives and other employees are also entitled to participate in the
Company's 401(k) retirement savings plans, which provide retirement benefits
to employees and includes both employer and employee contributions.
Bonus Plan
For fiscal 1998, the Company adopted a cash bonus plan that provided for
annual cash bonuses based on achievement of Company and individual performance
objectives. Because these performance objectives were not achieved, the
Company did not award any bonuses in fiscal 1998. The Company intends to adopt
a similar cash bonus plan for fiscal 1999.
Compensation Committee Interlocks and Insider Participation
The Board of Directors of IMPAC does not maintain a compensation committee.
Executive compensation decisions are considered and decided by all of the
directors of IMPAC. All executive compensation decisions relating to fiscal
1998, including decisions relating to the compensation of persons named on the
Summary Compensation Table, were decided by the Board of Directors of IMPAC.
In fiscal 1998, no officers or employees of IMPAC other than Richard Block,
David Underwood and H. Scott Herrin participated in any discussions with the
Board of Directors of IMPAC regarding executive compensation.
33
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
BENEFICIAL OWNERSHIP
The following table sets forth certain information regarding ownership of
the outstanding Common Stock of IMPAC as of March 15, 1999 by (i) each
director of IMPAC, (ii) each of the executive officers of IMPAC named in the
"Summary Compensation Table", (iii) each of the directors and executive
officers of IMPAC as a group and (iv) each person who beneficially owns more
than 5% of the outstanding shares of IMPAC's Common Stock(1).
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial
Name and Address Ownership(2) Percent of Class
---------------- ----------------- ----------------
<S> <C> <C>
Heritage Fund I, L.P.(3).............. 56,431 33.96%
c/o Heritage Partners, Inc.
30 Rowes Wharf
Boston, MA 02110
Heritage Fund II, L.P.(4)............. 43,853 26.39%
c/o Heritage Partners, Inc.
30 Rowes Wharf
Boston, MA 02110
Michel Reichert(5).................... 100,284 60.35%
c/o Heritage Partners, Inc.
30 Rowes Wharf
Boston, MA 02110
Michael Gilligan(6)................... 100,284 60.35%
c/o Heritage Partners, Inc.
30 Rowes Wharf
Boston, MA 02110
Richard H. Block...................... 19,005 11.44%
c/o IMPAC Group, Inc.
1950 North Ruby St.
Melrose Park, IL 60160
H. Scott Herrin, Arthur S. Keyser and
Matthew H. Kamens.................... 9,780 5.89%
as Trustees under an
Irrevocable Deed of Trust
dated August 12, 1992
f/b/o H. Scott Herrin
c/o Klearfold, Inc.
364 Valley Road
Warrington, PA 18976
H. Scott Herrin(7).................... 9,780 5.89%
James H. Oppenheimer.................. 6,227 3.75%
Melvin B. Herrin...................... 4,964 2.99%
Richard L. Oppenheimer................ 4,440 2.67%
Arthur S. Keyser and Matthew H.
Kamens............................... 3,916 2.36%
as Trustees under an Indenture of
Trust of Melvin B. Herrin
dated June 4, 1996
c/o Klearfold, Inc.
364 Valley Road
Warrington, PA 18976
Dean J. Henkel........................ 3,782 2.28%
David C. Underwood.................... 3,318 2.00%
Lee Newbon............................ 766 (*)
David Horowitz........................ 588 (*)
Zenas Block........................... 147 (*)
M. Shaun Lawson....................... 0 0
All Directors and executive officers
as a group (13 persons).............. 153,302 91.8%
</TABLE>
34
<PAGE>
- --------
(1) Holders of Series A Common Stock and Series B Common Stock vote together
as a single class. See "Item 13. Certain Relationships and Related
Transactions--Amendments to Charter".
(2) As used in this table, beneficial ownership means the sole or shared power
to vote, or to direct the voting of a security, or the sole or shared
power to dispose, or direct the disposition of, a security.
(3) HF Partners I, L.P. is the General Partner of Heritage Fund I, L.P. ("Fund
I") and shares voting and investment control over the shares held by Fund
I.
(4) Includes 2,775 shares of Series A Common Stock owned of record by Heritage
Fund II Investment Corporation ("Fund II Investment Corporation"), and
4,500 shares of Series B Common Stock and 36,578 shares of Series A Common
Stock owned of record by Heritage Fund II, L.P. ("Fund II" and, together
with Fund I and Fund II Investment Corporation, the "Heritage Funds").
Fund II Investment Corporation is a wholly-owned subsidiary of Fund II and
Fund II shares voting and investment control over the shares held by Fund
II Investment Corporation. HF Partners II, L.L.C. is the General Partner
of Fund II and shares voting and investment control over the shares held
by Fund II.
(5) The shares shown as beneficially owned by Mr. Reichert represent 100,284
shares owned of record by the Heritage Funds. Mr. Reichert through one or
more intermediaries may be deemed to control the voting and disposition of
the securities owned by the Heritage Funds, and accordingly may be deemed
to have shared voting and investment power with respect to all shares held
by the Heritage Funds. However, Mr. Reichert disclaims beneficial
ownership of the securities held by the Heritage Funds.
(6) The shares shown as beneficially owned by Mr. Gilligan represent 100,284
shares owned of record by the Heritage Funds. Mr. Gilligan through one or
more intermediaries may be deemed to control the voting and disposition of
the securities owned by the Heritage Funds, and accordingly may be deemed
to have shared voting and investment power with respect to all shares held
by the Heritage Funds. However, Mr. Gilligan disclaims beneficial
ownership of the securities held by the Heritage Funds.
(7) Includes 7,959 shares that are held by H. Scott Herrin, Arthur S. Keyser
and Matthew H. Kamens, as Trustees under an Irrevocable Deed of Trust
dated August 12, 1992 f/b/o H. Scott Herrin (the "1992 Trust"), and over
which H. Scott Herrin directs investment and voting control and an option
the 1992 Trust has to purchase 803 shares of Series A Common Stock held of
record by Arthur S. Keyser and Matthew H. Kamens as Trustees under an
Indenture of Trust of Melvin B. Herrin dated June 4, 1996 and an option
the 1992 Trust has to purchase 1,018 shares of Series A Common Stock held
of record by Melvin B. Herrin.
(*) Represents less than one percent (1%).
35
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Investment Agreement and Related Transactions
Investment Agreement
In February 1998, KFI, each of Heritage Fund I Investment Corporation (an
affiliate of Heritage, "Fund I Investment Corporation "), Matthew H. Kamens,
as Trustee under Indenture of Trust dated 06/04/96 of Melvin B. Herrin
("Kamens") and Arthur S. Keyser, as Trustee under an Irrevocable Deed of Trust
dated 08/12/92 f/b/o H. Scott Herrin ("Keyser", and, together with Fund I
Investment Corporation and Kamens, each a security holder who owned more than
5% of the outstanding shares of IMPAC's Common Stock, the "Major
Stockholders"), each of Zenas Block and David Horowitz (each a director of
IMPAC and, collectively, the "Outside Directors"), each of Melvin B. Herrin,
H. Scott Herrin, Richard Block, James Oppenheimer, Richard Oppenheimer, David
Underwood and Dean Henkel (each an executive officer of IMPAC and,
collectively, the "Executive Officers") and other IMPAC shareholders entered
into an Investment Agreement (the "Investment Agreement"), pursuant to which
(i) the existing stockholders of KFI (the "Klearfold Contributing Parties")
agreed to contribute to KFI the entire outstanding capital stock of KFI and a
warrant to purchase KFI capital stock and to invest approximately $4.6 million
in cash, and (ii) certain stockholders and holders of stock appreciation
rights of AGI (the "AGI Contributing Parties") agreed to contribute to KFI
shares of common stock and to invest the proceeds of their stock appreciation
rights, totaling an aggregate of $14.4 million. In exchange for these
contributions and cash investments, KFI issued to each contributing or
investing party shares of KFI's common stock.
In addition, immediately prior to completion of the Combination, Melvin B.
Herrin and H. Scott Herrin, and other shareholders of KFI surrendered to KFI
shares of its outstanding capital stock in exchange for the cancellation of
certain promissory notes representing approximately $35,000 in unpaid purchase
price for such shares. Such employees and certain other employees of KFI
received options to purchase shares of IMPAC's Common Stock.
Pursuant to the Investment Agreement, each of the Executive Officers and
other managers of IMPAC entered into Employment, Non-Competition and Stock
Repurchase Agreements and each recipient of stock options as described above
entered into an Agreement relating to Employment and Stock Ownership. See
"Item 11. Executive Compensation--Employment, Non-Competition and Stock
Repurchase Agreements".
Pursuant to the Investment Agreement, each of the contributing or investing
parties made representations and warranties to KFI as to their title to the
shares being contributed and as to their authority to enter into the
Investment Agreement and the related transactions, and KFI made customary
representations and warranties to the contributing or investing parties. From
and after the closing of the Combination, Heritage and Messrs. Herrin and
their affiliates (the "KFI Indemnitors") have indemnified the AGI Contributing
Parties for any breach by the Company of its representations, warranties and
covenants in the Investment Agreement ("Holding Indemnified Claims").
The aggregate amount payable by the KFI Indemnitors with respect to all
claims for indemnification after the closing of the Combination will not
exceed approximately $2.3 million, except with respect to claims arising from
breaches of representations as to KFI's equity capitalization, authority to
consummate the Combination, taxes and brokers, as to which indemnification is
limited to the value to the KFI Indemnitors of their investment in KFI
pursuant to the Investment Agreement, immediately after the Combination (the
"Share Value").
Each of the contributing or investing parties have indemnified KFI for
breach of such party's representations and warranties in the Investment
Agreement, up to such party's Share Value.
Pursuant to the Investment Agreement KFI agreed to comply with a number of
operating covenants that survived the completion of the Combination, including
the maintenance of corporate existence and insurance, compliance with
applicable laws and contracts and the provision of financial information and
similar matters.
36
<PAGE>
AGI Dividend
Prior to the consummation of the Combination the AGI stockholders received
a dividend in the form of promissory notes aggregating approximately $22.5
million, which was approximately the amount of AGI's undistributed accumulated
S corporation earnings. These notes were paid in full concurrently with the
consummation of the Combination.
Agreement and Plan of Merger
In February 1998, KFI, its wholly-owned subsidiary AGI Acquisition Corp.,
AGI and Klearfold, and Richard Block, James Oppenheimer, Richard Oppenheimer,
Donald W. Kosterka, James A. Ladwig, Dean Henkel, Gary Mankoff and David
Underwood (the "Principal AGI Stockholders") and Melvin B. Herrin, H. Scott
Herrin and the Major Stockholders entered into an Agreement and Plan of Merger
under which AGI Acquisition Corp. agreed to merge with and into AGI, with AGI
as the surviving corporation. In this merger, the shares of AGI not
contributed to KFI under the Investment Agreement, together with certain
outstanding stock appreciation rights of AGI and an outstanding option for the
purchase of AGI's common stock, were converted into a right to receive cash in
the aggregate amount of $30.5 million, net of fees. Of this amount,
approximately $813,000 was placed in escrow to secure certain indemnification
obligations described below.
The payment of the foregoing cash consideration was funded from the
proceeds of the Offering and the cash investments made pursuant to the
Investment Agreement.
In the Agreement and Plan of Merger, AGI and the Principal AGI Stockholders
made customary representations and warranties to KFI, the existing
stockholders of KFI, and AGI Acquisition Corp., and KFI, Klearfold and AGI
Acquisition Corp. made customary representations and warranties to AGI. From
and after the closing of the Combination, all of the existing stockholders of
AGI (the "AGI Indemnitors") have indemnified the Company for any breach of
certain representations, warranties and covenants in the Agreement and Plan of
Merger. From and after the closing of the Combination, the KFI Indemnitors
have indemnified the former AGI investors for any breaches of certain
representations, warranties and covenants in the Agreement and Plan of Merger.
The aggregate amount payable by the AGI Indemnitors with respect to all
claims for indemnification after the closing of the Combination will not
exceed $3.5 million, except with respect to claims arising from breaches of
representations as to equity capitalization, authority to consummate the
Combination, taxes and brokers, as to which indemnification will be limited to
the combined after-tax value to the indemnifying party of its proceeds from
the merger and related transactions. The aggregate amount payable by the KFI
Indemnitors with respect to all claims for indemnification after the closing
of the Combination will not exceed approximately $2.3 million, except with
respect to claims arising from breaches of representations as to equity
capitalization, authority to consummate the Combination, taxes and brokers,
and certain other specified claims, as to which indemnification will be
limited to the KFI Indemnitors' share value.
Payments to Management Shareholders
In connection with the Combination and certain related transactions,
Richard Block, James Oppenheimer, Richard Oppenheimer and Dean Henkel received
an aggregate of approximately $18.3 million in cash payments for the
repurchase of equity and cancellation of stock appreciation rights, net of
amounts reinvested in the Company, including approximately $16.9 million paid
to Mr. Richard Block, the Chief Executive Officer of the Company.
37
<PAGE>
Indebtedness of Management
In connection with the Combination, IMPAC made advances to each of Messrs.
Underwood and Henkel, and James Oppenheimer and Richard Oppenheimer (each an
executive officer of IMPAC and collectively referred to as the "Indebted
Officers") with respect to the tax effect incurred by each Indebted Officer in
connection with receiving the proceeds of their stock appreciation rights and
rolling such proceeds into shares of IMPAC capital stock. The largest amount
of these advances that was outstanding during fiscal 1998 and as of March 15,
1999 for each of the Indebted Officers were:
<TABLE>
<S> <C>
Dave Underwood................................................. $460,081.10
Richard Oppenheimer............................................ 359,888.28
James Oppenheimer.............................................. 336,941.10
Dean Henkel.................................................... 336,941.10
</TABLE>
In connection with such advances each Indebted Officer is required to pay
cash interest at a fixed rate of 5.85% per annum.
Other Transactions
The Company's manufacturing facility in Warrington, Pennsylvania is leased
directly from Melvin B. Herrin for an annual rent of approximately $336,000,
and the Louisa, Virginia facility is also leased directly from Mr. Herrin
through an entity controlled by Mr. Herrin for an annual rent of approximately
$273,000. The leases expired on December 31, 1995 and, pursuant to option
clauses, were renewed effective January 1, 1996. The leases contain escalation
clauses based on the producer price index increase and expire on December 31,
2005 with an option to renew for a further five year period. The Company
believes the terms of these leases to be at fair market value.
The Company's Melrose Park, Illinois facility is leased to the Company by a
partnership which includes the founder of AGI and Richard Block for an annual
rent of approximately $475,000. The term of the lease expires on September 30,
2002. AGI has options to extend the lease for several additional five year
terms. The Company believes that the terms of these leases were at fair market
value at the time entered into by the Company.
For fiscal 1998, the Company paid approximately $110,377 to Freya Block
Design, Inc. for consulting services. Freya Block Design, Inc. is a
corporation wholly-owned by Freya Block, the wife of Richard Block.
Tinsley Acquisition and Related Transactions
Tinsley Equity Funding
In September 1998 and in connection with the Tinsley Acquisition, IMPAC,
Fund I, Fund II, Messrs. Block and Underwood, and certain other persons
entered into a Stock Purchase Agreement, pursuant to which Fund I, Fund II,
Messrs. Block and Underwood and such other certain persons party thereto
agreed to invest in IMPAC an aggregate amount of approximately $58,575,000 in
cash. In exchange for such cash investment, IMPAC issued to each investing
party shares of IMPAC's Common Stock.
Heritage Holders Repurchase
In January 1999, in connection with the Preferred Issuance and with part of
the proceeds therefrom, IMPAC repurchased 30,087 shares of its Common Stock
held by the Heritage Holders for an aggregate purchase price of $18,806,000.
Amendments to Charter
In January 1999, IMPAC amended and restated its Certificate of
Incorporation to provide for two classes of common stock, the Series A Common
Stock and the Series B Common Stock, and one class of preferred stock, the
Preferred Stock. The holders of each share of Series A Common Stock and Series
B Common Stock have
38
<PAGE>
one vote per share and the holders of the Series A Common Stock and the Series
B Common Stock vote together as the holders of a single class. At the option
of IMPAC, upon the closing of an underwritten public offering pursuant to an
effective registration statement under the Securities Act (covering the offer
and sale of shares of any series of Common Stock), all shares of Series B
Common Stock then issued and outstanding will be converted into shares of
Series A Common Stock. Except with respect to certain votes affecting their
rights as holders of Preferred Stock, the holders of Preferred Stock have no
voting rights. The Preferred Stock accrues dividends on a cumulative basis at
14.0% per annum for years 1-5, 15.0% per annum for year 6, and either 14.0% or
15.0% per annum for years 7-10 depending on whether the dividends are paid in
cash or with additional Preferred Stock, respectively. During the first six
years after issuance, dividends on the Preferred Stock are payable solely by
issuing additional shares of Preferred Stock. The Preferred Stock accrues
dividends at 24.0% per annum if certain events occur, including an event of
non-compliance as defined and certain signficant changes in the ownership of
IMPAC. On or after January 12, 2002, IMPAC, at its option, may redeem in whole
or in part, all of the outstanding shares of Preferred Stock, provided,
however, that a premium of up to 10.0% be paid. The Preferred Stock is not
redeemable at the option of the holders of Preferred Stock. IMPAC is required
to redeem all outstanding shares of Preferred Stock on December 31, 2008 at
face value plus all accrued and unpaid dividends. The Preferred Stock contains
covenants, among others, limiting additional indebtedness, restricted
payments, guaranties, advances to affiliates, mergers, asset sales and
dispositions. The Preferred Stock ranks senior to all classes of Common Stock
with respect to dividend distributions and distributions upon the liquidation
or dissolution of IMPAC.
39
<PAGE>
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) Financial Statements. See "Index to Consolidated Financial
Statements".
(a)(2) All schedules other than Schedule 27.1, the Financial Data Schedule,
have been omitted because either they are not required, they are not applicable
or they have been included in the Consolidated Financial Statements.
(a)(3) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
2.1 Agreement and Plan of Merger, dated February 19, 1998, between KFI
Holding Corporation (which subsequently changed its name to "IMPAC
Group, Inc." and is sometimes referred to below as "Holding" or the
"Company"), AGI Acquisition Corporation, Heritage, Klearfold, AGI,
certain stockholders of AGI, and certain stockholders of Holding.*
2.2 Investment Agreement, dated February 19, 1998, between Holding,
Heritage Fund I Investment Corporation ("Heritage"), certain
stockholders of Holding, certain stockholders of AGI and certain
other persons.*
2.3 Stock Purchase Agreement, dated as of September 10, 1998, by and
among the Company, Heritage Fund I, L.P., Heritage Fund II, L.P.,
Richard Block and certain other persons.+
2.4 Share Sale and Purchase Agreement, dated as of November 20, 1998,
between J.L.B. Holding B.V. and James Upton Holding B.V. and Music
Print B.V. and J.D.H. Lamme.
3.3 Second Amended and Restated By-laws of the Company.
3.5 Fourth Amended and Restated Certificate of Incorporation of the
Company.
4.1 Indenture, dated as of March 12, 1998, by and among the Company, AGI
Incorporated ("AGI"), Klearfold, Inc. ("Klearfold"), KF--Delaware,
Inc. ("KFD"), KF--International, Inc. ("International" and,
collectively, with AGI, Klearfold, KFD and International, the
"Guarantors") and State Street Bank and Trust Company, as Trustee.*
4.2 Form of the Company's 10 1/8% Senior Notes due 2008.*
4.3 Registration Rights Agreement, dated as of March 12, 1998, by and
among the Company, the Guarantors, Goldman, Sachs & Co. ("Goldman")
and Donaldson, Lufkin, and Jenrette Securities Corporation ("DLJ").*
4.4 First Supplemental Indenture, dated as of July 21, 1998, between the
Company and the Trustee.*
10.1 Purchase Agreement, dated as of March 5, 1998, by and among the
Company, Goldman and DLJ.*
10.2 Escrow Agreement, dated March 12, 1998, between AGI, the Company,
the Escrow Agent and the Escrowed Stockholder Representative.*
10.4 Labor Agreement between Klearfold and United Paperworker's
International Union Local 286, effective December 1, 1994, as
extended by amendment through November 30, 2002.*
10.5 Second Amendment to Lease dated September 30, 1994 between Norman
Levin and Evelyn F. Levin and Klearfold (Warrington, Pennsylvania).*
10.6 Amended and Restated Lease, dated as of June 7, 1996, between Dena
Corp. and Klearfold (Louisa, Virginia).*
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
10.7 Amended and Restated Lease, dated as of June 7, 1996, between Melvin
B. Herrin and Klearfold (Warrington, Pennsylvania).*
10.8 Lease dated May 29, 1985 by and between Chicago Title and Trust
Company as Trustee under Trust Agreement dated February 1, 1977, and
known as Trust No. 1069185 and AGI re 256,629 sq. ft. at 1950 N.
Ruby Street.*
10.9 Amendment to Lease dated as of October 1, 1987 by and between
Chicago Title and Trust Company, as Trustee under a Trust Agreement
dated February 1, 1977, and known as Trust No. 1069185 and AGI re
256,629 sq. ft. at 1950 Ruby Street.*
10.10 Second Amendment to Lease dated as of April 30, 1992, by and between
Chicago Title and Trust Company as Trustee under a Trust Agreement
dated February 1, 1977 and known as Trust No. 1069185 and AGI re
256,629 sq. ft. at 1950 Ruby Street.*
10.11 Third Amendment to Lease dated July 2, 1997 by and between Chicago
Title and Trust Company as Trustee under Trust Agreement dated
February 1, 1997 and known as Trust No. 1069185 and AGI re 256,629
sq. ft. at 1950 N. Ruby Street.*
10.12 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and David Underwood.*
/**
10.13 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and James
Oppenheimer.* /**
10.14 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and Richard
Oppenheimer.* /**
10.15 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and Dean Henkel.* /**
10.16 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and H. Scott Herrin.*
/**
10.17 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and Melvin Herrin.*
/**
10.18 Employment, Non-Competition and Stock Repurchase Agreement, dated as
of March 12, 1998, by and between the Company and Richard Block.*
/**
10.21 Company Security Agreement, dated as of March 12, 1998 between the
Company and Bank of America NT & SA ("BofA") .*
10.22 Borrowers Security Agreement, dated as of March 12, 1998 between
AGI, Klearfold and BofA.*
10.23 Klearfold Subsidiaries Security Agreement, dated as of March 12,
1998 between KFD and International (the "Klearfold Subsidiaries")
and BofA.*
10.24 Company Pledge Agreement, dated as of March 12, 1998 between the
Company and BofA.*
10.25 Borrowers Pledge Agreement, dated as of March 12, 1998 between AGI,
Klearfold and BofA.*
10.26 Klearfold Subsidiaries Pledge Agreement, dated as of March 12, 1998
between the Klearfold Subsidiaries and BofA.*
10.27 Company Guaranty, dated as of March 12, 1998, between the Company
and BofA.*
10.28 Borrowers Guaranty, dated as of March 12, 1998 between AGI,
Klearfold and BofA.*
10.29 Klearfold Subsidiaries Guaranty, dated as of March 12, 1998 between
the Klearfold Subsidiaries and BofA.*
10.30 Company Patent Assignment dated as of March 12, 1998 between the
Company and BofA.*
10.31 AGI Patent Assignment, dated as of March 12, 1998 between AGI and
BofA.*
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
10.32 Klearfold Patent Assignment, dated as of March 12, 1998 between
Klearfold and BofA.*
10.33 International Patent Assignment, dated March 12, 1998, between
International and BofA.*
10.34 KFD Patent Assignment, dated March 12, 1998, between KFD and BofA.*
10.35 Company Trademark Assignment, dated as of March 12, 1998 between the
Company and BofA.*
10.36 AGI Trademark Assignment, dated as of March 12, 1998 between AGI and
BofA.*
10.37 Klearfold Trademark Assignment, dated as of March 12, 1998 between
Klearfold and BofA.*
10.38 International Trademark Assignment, dated March 12, 1998, between
International and BofA.*
10.39 KFD Trademark Assignment, dated March 12, 1998, between KFD and
BofA.*
10.40 Company Copyright Assignment, dated as of March 12, 1998 between the
Company and BofA.*
10.41 AGI Copyright Assignment, dated as of March 12, 1998 between AGI and
BofA.*
10.42 Klearfold Copyright Assignment, dated as of March 12, 1998 between
Klearfold and BofA.*
10.43 International Copyright Assignment, dated March 12,, 1998, between
International and BofA.*
10.44 KFD Copyright Assignment, dated March 12, 1998, between KFD and
BofA.*
10.45 Promissory Note--L/C Loan Note, dated March 12, 1998, from Klearfold
to BofA.*
10.46 Promissory Note--L/C Loan Note, dated March 12, 1998, from AGI to
BofA.*
10.47 AGI Pledge and Security Agreement, dated March 12, 1998, between
AGI, BofA, Bank One, Illinois, NA and William Blair & Co.*
10.48 Subrogation Agreement, dated March 11, 1998, between Mellon Bank,
N.A. ("Mellon"), BofA, the Company and Klearfold.*
10.49 Letter of Credit and Reimbursement Agreement, dated August 1, 1997,
between Klearfold and Mellon.*
10.50 First Amendment to Reimbursement Agreement, dated March 11, 1998,
between Mellon, and Klearfold.*
10.51 AGI Letter of Credit, dated December 15, 1997.*
10.52 Mellon Bank, N.A. Letter of Credit, dated as of August 21, 1997.*
10.53 Back-Up Klearfold Letter of Credit, dated March 11, 1998.*
10.54 Loan Agreement, dated January 1, 1995, between AGI and City of
Jacksonville, Illinois.*
10.55 Loan Agreement, dated August 1, 1997, between Bucks County and
Klearfold.*
10.56 Klearfold Profit Sharing/401(K) Plan.*/**
10.57 Klearfold Flexible Benefits Plan for Salaried Employees.*/**
10.58 Amended and Restated Multicurrency Credit Facility, dated March 12,
1998 and as amended and restated July 7, 1998 (the "Credit
Facility"), among BofA, the Company, AGI and Klearfold.*
10.59 Commitment Letter, dated July 7, 1998, from Heritage Fund I, L.P.
and Heritage Fund II, L.P.*
10.61 Second Amended and Restated Stockholder Agreement, dated as of
January 11, 1998, between the Company, its stockholders.
10.62 Securities Purchase Agreement, dated January 11, 1999, between the
Company, BT Capital Investors, L.P. ("BT") and Phoenix Home Life
Mutual Insurance Company ("Phoenix").
10.63 Warrant, dated January 11, 1999, issued to BT for the purchase of
the Company's common stock.
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
10.64 Warrant, dated January 11, 1999, issued to Phoenix for the purchase
of the Company's common stock.
10.65 First Amendment to the Credit Facility, dated as of September 11,
1998, among BofA, the Company, AGI and Klearfold.
10.66 Second Amendment to the Credit Facility, dated as of November 13,
1998, among BofA, the Company, AGI and Klearfold.
10.67 Third Amendment to the Credit Facility, dated as of November 16,
1998, among BofA, the Company, AGI and Klearfold.
10.68 Fourth Amendment to the Credit Facility, dated as of December 10,
1998, among BofA, the Company, AGI and Klearfold.
10.69 Fifth Amendment to the Credit Facility, dated as of January 11,
1999, among BofA, the Company, AGI and Klearfold.
10.70 Lease dated March 11, 1996 between Friends Provident Life Assurance
Limited and Printing Resource Limited and Tinsley Robor plc.
("Tinsley")(Dublin, Ireland).
10.71 Supplement to Lease Agreement dated as of August 14, 1996, among
Walter Reischl, W.R. Druck Medien Ges.m.b.H & Co. KG, Reischl-Druck
Ges.m.b.H. (formerly James Upton GmbH), and Tinsley (Salzburg,
Austria).
10.72 Lease dated January 1, 1996 between Stichting Adminstratiekantoor
Kinderen van den Nieuwenhuizen en Daandels and Tinsley (Uden, The
Netherlands).
10.73 Lease dated January 31, 1985, among Pension Funds Securities Limited
and Minipack Systems Limited and Tinsley (Southhampton, England).
10.74 Lease dated March 19, 1984 among Pension Funds Securities Limited
and Minipack Systems Limited and Tinsley (Southhampton, England).
10.75 Lease dated June 16, 1993 among Orlinworth Plc, Messrs. T Walker-
Arnott & I Rackley, Conduit Communications Limited, and Verulam
Investments Limited (London, England).
10.76 Lease dated June 16, 1995 between M. Webber and R.M. Harris and
Tinsley (London, England).
10.77 Lease dated June 16, 1995, between M. Webber and R.M. Harris and
Tinsley (London, England).
10.78 Lease dated August 13, 1998 between Courtaulds CIF Nominees Limited
and Tinsley (Littlehampton, England).
10.79 Lease dated May 4, 1995 between Sun Alliance and London Assurance
Company Limited and Tinsley (Swindon, England).
10.80 Lease dated May 4, 1995 between Sun Alliance and London Assurance
Company Limited and Tinsley (Swindon, England).
10.81 Lease dated June 12, 1996 between Sun Alliance and London Assurance
Company Limited and Tinsley (Swindon, England).
10.82 Supplemental Lease and License for Alterations dated June 12, 1995
between Sun Alliance and London Assurance Company Limited and
Tinsley (Swindon, England).
10.83 First Amendment to Employment, Non-Competition and Stock Repurchase
Agreement , dated as of January 8, 1999, by and between the Company
and David C. Underwood.**
10.84 First Amendment to Employment, Non-Competition and Stock Repurchase
Agreement, dated as of January 8, 1999, by and between the Company
and Dean Henkel.**
10.85 Letter Agreement, dated as of January 7, 1999, between the Company
and certain employees.**
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<C> <S>
10.86 First Amendment to Employment, Non-Competition and Stock Repurchase
Agreement, dated as of January 8, 1999, by and between the Company
and Richard Oppenheimer.**
10.87 Service Agreement, dated as of June 20, 1996, between Tinsley and
Lee Newbon with Individual Pension Arrangement dated June 29,
1998.**
10.89 Support Agreement, dated as of December 15, 1998, between the
Company, AGI, Klearfold, IMPAC Europe Limited, Levelprompt Limited
and the companies party thereto.
10.90 Amended and Restated Revolving Loan, dated as of July 7, 1998,
between the Company and BofA.
10.91 Amended and Restated Loan, dated as of July 7, 1998, between AGI and
BofA.
10.92 Amended and Restated L/C Loan, dated as of July 7, 1998, between
Klearfold BofA.
10.93 Promissory Note--Term Loan A, dated as of July 7, 1998, between the
Company and BofA.
10.94 Promissory Note--Term Loan B, dated as of July 7, 1998, between the
Company and BofA.
10.95 Swing Line Note, dated as of July 7, 1998, between the Company and
BofA.
10.96 Global Amendment No. 1 to Collateral documents, dated as of July 6,
among the Company, AGI, Klearfold, KFD, International and BofA.
10.97 Global Amendment No. 1 to Security documents, dated as of September
11, 1998, among the Company, AGI, Klearfold, KFD, International and
BofA.
10.98 Global Amendment No. 1 to Guaranties, dated as of September 11,
1998, among the Company, AGI, Klearfold, KFD and BofA.
10.99 Amendment No. 1 to AGI Pledge and Security Agreement, dated as of
September 11, 1998, among AGI, BofA, Bank One Trust Company NA and
William Blair and Company.
10.100 Letter Agreement, dated as of January 11, 1999, between Heritage
Fund II Investment Corporation and the Company.
10.101 Loan Note Instrument dated September 10, 1998 by IMPAC Europe public
limited company and BofA.
10.102 Subscription Agreement dated July 7, 1998 between IMPAC Europe plc,
the Company, Levelprompt Limited and BT Wolfensohn.
16.1 Letter of Arthur Andersen LLP re: Change in Certifying Accountant.*
16.2 Letter of KPMG Peat Marwick LLP re: Change in Certifying
Accountant.*
21.1 List of Subsidiaries.
24.1 Power of Attorney (included in signature pages to Form 10-K).
27.1 Financial Data Schedule.
</TABLE>
- --------
* Incorporated by reference to the same numbered exhibit to the Registrant's
Registration Statement No. 333-48821, on Form S-4, filed by the Registrant
with respect to $100,000,000 aggregate principal amount of the Company's 10
1/8% Senior Subordinated Notes due 2008.
+ Incorporated by reference to the same numbered exhibit to the Registrant's
Form 10-Q filed by the Registrant for the quarterly period ending September
30, 1998.
** This item is a management contract or compensatory plan.
44
<PAGE>
(b) Reports on Form 8-K.
A report on Form 8-K was filed on October 27, 1998, announcing the
consummation of the Tinsley Acquisition on September 11, 1998.
A report on Form 8K/A was filed on December 14, 1998 supplementing the Form
8-K filed by the Company on October 27, 1998 by filing as an exhibit thereto
the information included under the headings "Unaudited Pro Forma Combined
Financial Data" and "Consolidated Financial Statements" in the Prospectus
included in the Company's Registration Statement on Form S-4 (file no. 333-
48821) filed under the Securities Act of 1933 (incorporated by reference).
45
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Accountants........................................ F-2
Independent Auditors' Report............................................. F-3
Consolidated Balance Sheets as of December 31, 1997 and 1998............. F-4
Consolidated Statements of Income for the Years Ended December 31, 1996,
1997 and 1998........................................................... F-5
Consolidated Statements of Shareholders' Equity (Deficit) for the Years
Ended December 31, 1996, 1997 and 1998.................................. F-6
Consolidated Statements of Cash Flows for the Years Ended December 31,
1996, 1997 and 1998..................................................... F-7
Notes to Consolidated Financial Statements............................... F-9
Schedule II, Summary of Valuation and Qualifying Accounts................ F-28
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders
of IMPAC Group, Inc.:
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of IMPAC Group, Inc. and its subsidiaries (the "Company") at December
31, 1998, and the results of their operations and their cash flows for the
year then ended, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express and opinion on these financial statements
based on our audit. We conducted our audit of these statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for the
opinion expressed above. The financial statements of the Company as of
December 31, 1997, and for each of the two years in the period then ended were
audited by other independent accountants whose report dated February 6, 1998,
expressed an unqualified opinion on those statements.
PricewaterhouseCoopers LLP
Chicago, Illinois
March 29, 1999
F-2
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
IMPAC Group, Inc.:
We have audited the consolidated balance sheet of IMPAC Group, Inc. and
subsidiaries (formerly KFI Holding Corporation and subsidiaries) as of
December 31, 1997, and the related consolidated statements of income,
shareholders' equity (deficit) and cash flows for each of the years in the
two-year period ended December 31, 1997. In connection with our audits of the
consolidated financial statements, we also have audited the related financial
statement schedule as listed in the accompanying index for each of the years
in the two-year period ended December 31, 1997. These consolidated financial
statements and financial statement schedule are the responsibility of
management. Our responsibility is to express an opinion on these consolidated
financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of IMPAC
Group, Inc. and subsidiaries (formerly KFI Holding Corporation and
subsidiaries) as of December 31, 1997, and the results of their operations and
their cash flows for each of the years in the two-year period ended December
31, 1997, in conformity with generally accepted accounting principles. Also in
our opinion, the related financial statement schedule for each of the two
years in the two-year period ended December 31, 1997, when considered in
relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
KPMG LLP
Philadelphia, Pennsylvania
February 6, 1998
F-3
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1997 and 1998
(In thousands)
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 194 $ 4,239
Trade accounts receivable, net of allowances of $1,517 in
1998 and $560 in 1997.................................... 5,986 44,361
Other receivables......................................... 439 4,278
Inventories............................................... 6,957 23,982
Deferred income taxes..................................... 661 3,160
Prepaids and other current assets......................... 666 1,650
-------- --------
Total current assets.................................... 14,903 81,670
-------- --------
Long-term assets:
Property, plant and equipment, net........................ 11,100 107,669
Goodwill, net............................................. 0 163,623
Deferred financing costs, net............................. 1,024 10,449
Restricted cash........................................... 625 426
Other assets.............................................. 641 2,498
-------- --------
Total assets............................................ $ 28,293 $366,335
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Bank overdraft............................................ $ 0 $ 4,804
Current maturities of long-term debt...................... 0 5,487
Trade payables............................................ 5,098 20,289
Accrued expenses.......................................... 1,925 23,800
-------- --------
Total current liabilities............................... 7,023 54,380
-------- --------
Long-term debt.............................................. 33,850 235,072
Deferred income taxes....................................... 1,307 10,477
Other noncurrent liabilities................................ 0 823
-------- --------
Total liabilities....................................... 42,180 300,752
-------- --------
Shareholders' equity (deficit):
Common stock, voting, $.001 par value; authorized 135,813
shares, 90,500 Shares issued and outstanding at December
31, 1997................................................. 0 --
Common stock, nonvoting, $.001 par value; 9,500 shares
authorized, issued and outstanding at December 31, 1997.. 0 --
Common stock, series A, $.001 par value; 1,000,000 shares
authorized, 191,746 shares issued and outstanding at
December 31, 1998........................................ -- 0
Common stock, series B, $.001 par value; 50,000 shares
authorized, 4,500 shares issued and outstanding at
December 31, 1998........................................ -- 0
Preferred stock, nonvoting, $.001 par value; 100,000
shares authorized, issued and outstanding at December 31,
1997..................................................... 0 --
Paid in capital............................................. 20,000 98,625
Notes receivable............................................ (35) 0
Carryover basis adjustment.................................. (37,143) (37,143)
Accumulated other comprehensive income...................... -- (681)
Retained earnings........................................... 3,291 4,782
-------- --------
Total shareholders' equity (deficit).................... (13,887) 65,583
-------- --------
Total liabilities & shareholders' equity (deficit).... $ 28,293 $366,335
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
F-4
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Years ended Decmber 31, 1996, 1997 and 1998
(In thousands)
<TABLE>
<CAPTION>
1996 1997 1998
------- ------- --------
<S> <C> <C> <C>
Net sales......................................... $54,218 $52,493 $184,298
Cost of goods sold................................ 40,094 39,322 134,643
------- ------- --------
Gross profit...................................... 14,124 13,171 49,655
Selling, general and administrative expenses...... 7,594 7,589 31,762
PTP royalty and commission (income)............... (731) (33) --
------- ------- --------
Operating income.................................. 7,261 5,615 17,893
Other income (expense):
Interest income................................. -- -- 1,093
Interest expense................................ (2,324) (3,469) (14,607)
Other expense................................... -- -- (192)
Loss on sale of fixed assets.................... -- -- (265)
------- ------- --------
Income from continuing operations before income
taxes............................................ 4,937 2,146 3,922
Income taxes...................................... (2,003) (754) (1,879)
------- ------- --------
Income from continuing operations................. 2,934 1,392 2,043
Discontinued operations--Gain on disposal of PTP
Industries, Inc., net of tax benefit of $140..... 35 -- --
Extraordinary charge for early retirement of debt,
net of tax benefit of $368....................... -- -- (552)
------- ------- --------
Net income........................................ $ 2,969 $ 1,392 $ 1,491
======= ======= ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
F-5
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
Years ended December 31, 1996, 1997 and 1998
(in thousands except number of shares)
<TABLE>
<CAPTION>
Common Stock Preferred Stock Accumulated
Compre- ------------------- ----------------- Carryover Other
hensive Number of Number of Paid-in Notes Basis Comprehensive Retained
Income Shares Amount Shares Amount Capital Receivable Adjustment Income Earnings
------- ----------- ------ --------- ------ ------- ---------- ---------- ------------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at
January 1, 1996.. 13,500,000 $ 135 -- $-- $ 3,983 $-- $ -- $ -- $ 7,393
Net income from
January 1, 1996
to June 7,
1996........... -- -- -- -- -- -- -- -- 1,070
Redemption of
common stock... (13,500,000) (135) -- -- (3,983) -- (37,143) -- (8,463)
Sale of common
stock.......... 100,000 -- -- -- 1,000 -- -- -- --
Issuance of
notes
Receivable..... -- -- -- -- -- (35) -- -- --
Sale of
preferred
stock.......... -- -- 100,000 -- 19,000 -- -- -- --
Net income from
June 8, 1996 to
December 31,
1996........... -- -- -- -- -- -- -- -- 1,899
----------- ----- --------- ---- ------- ---- -------- ----- -------
Balance at
December 31,
1996........... 100,000 -- 100,000 -- 20,000 (35) (37,143) -- 1,899
Net income...... -- -- -- -- -- -- -- -- 1,392
----------- ----- --------- ---- ------- ---- -------- ----- -------
Balance at
December 31,
1997........... 100,000 -- 100,000 -- 20,000 (35) (37,143) -- 3,291
Recapitalization
in connection
with the
acquisition of
AGI............ -- -- (100,000) -- 18,965 35 -- -- --
Sale of common
stock.......... 96,246 -- -- -- 58,575 -- -- -- --
Stock options
granted........ -- -- -- -- 1,085 -- -- -- --
Cumulative
translation
adjustment..... $ (681) -- -- -- -- -- -- -- (681) --
Net income...... 1,491 -- -- -- -- -- -- -- -- 1,491
------
Comprehensive
income......... $ 810 -- -- -- -- -- -- -- -- --
====== ----------- ----- --------- ---- ------- ---- -------- ----- -------
Balance at
December 31,
1998........... 196,246 $ -- -- $-- $98,625 $-- $(37,143) $(681) $ 4,782
=========== ===== ========= ==== ======= ==== ======== ===== =======
<CAPTION>
Total
---------
<S> <C>
Balance at
January 1, 1996.. $ 11,511
Net income from
January 1, 1996
to June 7,
1996........... 1,070
Redemption of
common stock... (49,724)
Sale of common
stock.......... 1,000
Issuance of
notes
Receivable..... (35)
Sale of
preferred
stock.......... 19,000
Net income from
June 8, 1996 to
December 31,
1996........... 1,899
---------
Balance at
December 31,
1996........... (15,279)
Net income...... 1,392
---------
Balance at
December 31,
1997........... (13,887)
Recapitalization
in connection
with the
acquisition of
AGI............ 19,000
Sale of common
stock.......... 58,575
Stock options
granted........ 1,085
Cumulative
translation
adjustment..... (681)
Net income...... 1,491
Comprehensive
income......... --
---------
Balance at
December 31,
1998........... $ 65,583
=========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-6
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1996, 1997 and 1998
(In thousands)
<TABLE>
<CAPTION>
1996 1997 1998
-------- ------- ---------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income...................................... $ 2,969 $ 1,392 $ 1,491
Adjustments to reconcile net income to net cash
provided by operating activities--
Extraordinary charge for early retirement of
debt......................................... -- -- 552
Depreciation and amortization................. 1,969 1,814 9,772
Amortization of goodwill...................... -- -- 1,692
Loss on sale of fixed assets.................. -- -- 265
Deferred income taxes......................... 253 (595) 992
Net cash used in discontinued operations...... (250) -- --
Changes in assets and liabilities--
Trade accounts receivable, net............... (423) 2,199 (6,930)
Inventories.................................. 1,014 76 (1,943)
Trade payables and bank overdraft............ (2,079) 1,049 6,644
Other assets and liabilities................. 754 278 662
-------- ------- ---------
Net cash provided by operating
activities.............................. 4,207 6,213 13,197
-------- ------- ---------
Cash flows from investing activities:
Capital expenditures............................ (1,271) (4,144) (16,016)
Proceeds from sale of investment in PTP
Industries, Inc................................ 1,860 -- --
Acquisition of AGI Incorporated, net of cash
acquired....................................... -- -- (64,163)
Acquisition of Tinsley Robor plc, net of cash
acquired....................................... -- -- (159,870)
Acquisition of Music Print B.V., net of cash
acquired....................................... -- -- (6,917)
-------- ------- ---------
Net cash provided by (used for) investing
activities.............................. 589 (4,144) (246,966)
-------- ------- ---------
Cash flows from financing activities:
Net change in borrowings under revolving credit
line........................................... 833 (3,996) 11,200
Repayment of long-term debt..................... (8,942) (1,100) (30,103)
Proceeds from issuance of long-term debt........ 34,200 -- 101,033
Proceeds from senior subordinated notes......... -- -- 100,000
Proceeds from issuance of bonds................. -- 4,000 --
Change in capital leases........................ -- -- 908
(Increase) decrease in restricted cash.......... -- (625) 199
Proceeds from issuance of common stock.......... 1,000 -- 63,175
Proceeds from issuance of preferred stock....... 19,000 -- --
Payments to acquire stock of previous
shareholders................................... (49,724) -- --
Change in deferred financing costs.............. (1,171) (160) (10,881)
-------- ------- ---------
Net cash provided by (used for) financing
activities.............................. (4,804) (1,881) 235,531
-------- ------- ---------
Effect of exchange rate differences on cash...... -- -- 2,283
-------- ------- ---------
(Decrease) increase in cash...................... (8) 188 4,045
Cash, beginning of period........................ 14 6 194
-------- ------- ---------
Cash, end of period.............................. $ 6 $ 194 $ 4,239
======== ======= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
F-7
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS--(Continued)
Years ended December 31, 1996, 1997 and 1998
(In thousands)
<TABLE>
<CAPTION>
1996 1997 1998
------ ------ --------
<S> <C> <C> <C>
Supplemental Cash Flow Information:
Interest paid.......................................... $2,147 $3,474 $ 9,316
Income taxes paid...................................... 1,630 1,479 2,953
Acquisition of AGI Incorporated--
Fair market value of assets acquired, including
goodwill of $40.5 million........................... $103,529
Fair market value of liabilities assumed............. 24,945
Common stock issued.................................. 14,400
--------
Cash paid............................................ 64,184
Cash acquired........................................ 21
--------
Acquisition of AGI Incorporated, net of cash acquired.. $ 64,163
========
Acquisition of Tinsley Robor plc--
Fair market value of assets acquired, including
goodwill of $122.7 million.......................... $199,747
Fair market value of liabilities assumed............. 37,841
Stock options granted................................ 1,085
--------
Cash paid............................................ 160,821
Cash acquired........................................ 951
--------
Acquisition of Tinsley Robor plc, net of cash
acquired.............................................. $159,870
========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements
F-8
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1--Business Description
The Company is an international designer, manufacturer and marketer of
high-end, value-added specialty packaging for various consumer products
markets including entertainment, cosmetics and personal care. Through its
creative design work, specialized manufacturing techniques and diverse
printing capabilities, the Company offers innovative specialty packaging
solutions for customers that seek to differentiate their products in the
consumer marketplace.
On March 12, 1998, KFI Holding Corporation ("KFI"), the parent company of
Klearfold, Inc. ("Klearfold"), completed its acquisition of AGI Incorporated
("AGI") (see Note 3) and the issuance of $100 million of 10 1/8% Senior
Subordinated Notes ("Senior Subordinated Notes") (See Note 11). Upon
consummation of this acquisition, KFI changed its name to "IMPAC Group, Inc."
In September 1998, IMPAC Group, Inc. acquired substantially all of the issued
and outstanding shares of capital stock of Tinsley Robor plc, subsequently
renamed Tinsley Robor Limited ("Tinsley") (see Note 3).
The accompanying consolidated financial statements include the financial
statements of IMPAC Group, Inc. ("IMPAC") and all of its domestic and foreign
wholly-owned subsidiaries (together, the "Company"). All intercompany
transactions have been eliminated in consolidation.
Certain amounts appearing in prior years financial statements have been
reclassified to conform with the current period presentation and changes in
the Company's debt arrangements described below.
Note 2--Significant Accounting Policies
Revenue recognition
Revenues are recognized upon shipment to a customer pursuant to specific
purchase orders and are recorded net of allowances and rebates.
Inventories
Inventories are stated at the lower of cost or market and include the
appropriate elements of material, labor and manufacturing overhead costs. Cost
is determined using the first-in, first-out ("FIFO") method for all components
of inventory other than the paper component of inventory for AGI Incorporated
("AGI") which is determined using the last-in, first-out ("LIFO") method.
Property, plant and equipment
Property, plant and equipment are stated at cost and depreciated over their
estimated useful lives using the straight-line method. Leasehold improvements
and capital leased assets are amortized over the shorter of the lease term or
estimated useful life of the related asset. Equipment under construction is
not depreciated until placed in full-time use. When properties are retired or
disposed, the costs and related depreciation reserves are eliminated and the
resulting gain or loss is recognized in income. The useful lives of property,
plant and equipment are summarized as follows:
<TABLE>
<S> <C>
Buildings and leasehold improvements............................ 3-50 years
Machinery and equipment......................................... 3-10 years
Furniture and fixtures.......................................... 5-10 years
</TABLE>
Depreciation expense included in the statements of income was $1,678,
$1,614 and $8,780 for the years ended December 31, 1996, 1997 and 1998,
respectively.
F-9
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Goodwill
Goodwill consists of the excess of purchase price over the fair market
value of the net assets acquired and is being amortized over 40 years.
Amortization of goodwill during the year ended December 31, 1998 and
accumulated amortization at December 31, 1998 were $1.7 million. The Company
continually evaluates whether events and circumstances have occurred that
indicate the asset may not be recoverable. When factors indicate that the
asset should be evaluated for possible impairment, the Company uses an
estimate of the related undiscounted future cash flows over the remaining
lives of the asset in measuring whether or not an impairment has occurred.
Deferred financing costs
The Company incurred various financing costs associated with the issuance
of long-term debt. These costs are being amortized over the term of the debt
agreements.
Concentration of credit risk
Sales to two customers accounted for approximately 27% and 23% of the
Company's net sales for the years ended December 31, 1996 and 1997. Sales to
two customers accounted for approximately 21.5% of the Company's net sales for
the year ended December 31, 1998.
Income Taxes
Income taxes are accounted for under the asset and liability method. Under
this method, deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. The effect on
deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
Fair value of financial instruments
Management believes that the fair value of all financial instruments
approximates their carrying value.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and related disclosures. Actual
results could differ from these estimates.
Foreign currency transactions
The financial statements of the Company's foreign subsidiaries were
prepared in their respective local currency and translated into U.S. dollars
based on the currency exchange rate at the end of the period for the balance
sheet and a weighted-average rate for the period on the statement of income.
Translation adjustments are reflected as accumulated other comprehensive
income in shareholders' equity (deficit) and accordingly have no effect on net
income.
F-10
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Note 3--Acquisitions
Acquisition of AGI Incorporated--
On March 12, 1998, the Company acquired all of the common stock of AGI for
$69.0 million including $54.6 million of cash and $14.4 million of newly
issued common stock, plus acquisition costs. Concurrently, the Company funded
the retirement of $8.3 million of indebtedness outstanding under AGI's credit
facility immediately prior to the transaction. The acquisition was funded by
the proceeds from the issuance of $100.0 million of Senior Subordinated Notes
and $4.6 million of new common stock.
This acquisition was accounted for as a purchase and, accordingly, the
operating results of AGI have been included in the Company's consolidated
financial statements from the date of acquisition. A summary of the Company's
purchase price allocation follows:
<TABLE>
<S> <C>
Receivables......................................................... $11,555
Inventories......................................................... 6,998
Deferred incomes taxes.............................................. 2,221
Property, plant and equipment....................................... 40,550
Other assets........................................................ 1,703
Trade payables and accrued expenses................................. (11,800)
Long-term debt...................................................... (7,640)
Deferred income taxes............................................... (5,505)
-------
Net assets acquired............................................... $38,082
=======
</TABLE>
Acquisition of Tinsley Robor plc--
On September 11, 1998, the Company acquired the common stock of Tinsley for
$137.7 million plus acquisition costs. Concurrently, the Company funded the
retirement of $18.5 million of indebtedness outstanding under Tinsley's credit
agreements immediately prior to the transaction. The acquisition was funded
through additional borrowings of $93.7 million under the Company's Amended and
Restated Multicurrency Credit Facility described in Note 11 below, $58.6
million in proceeds from the sale of common stock to the Company's existing
stockholders or their affiliates and the issuance, in aggregate, of $8.5
million of five year promissory notes to former Tinsley shareholders. Tinsley
is a supplier of printed packaging for the music and multimedia market and has
an established presence in the U.K. and Europe.
This acquisition was accounted for as a purchase and, accordingly, the
operating results of Tinsley have been included in the Company's consolidated
financial statements from the date of acquisition. A summary of the Company's
preliminary purchase price allocation follows:
<TABLE>
<S> <C>
Receivables........................................................ $ 19,646
Inventory.......................................................... 7,944
Property, plant and equipment...................................... 46,139
Other assets....................................................... 2,392
Trade payables and accrued expenses................................ (20,267)
Long-term debt..................................................... (15,179)
Deferred income taxes.............................................. (2,395)
--------
Net assets acquired.............................................. $ 38,280
========
</TABLE>
F-11
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Acquisition of Music Print B.V.--
On November 24, 1998, the Company purchased the outstanding capital stock
of Music Print B.V. ("Music Print"), a Netherlands limited liability company,
for approximately $5.3 million plus acquisition costs. Concurrently, the
Company retired approximately $0.2 million of historical indebtedness of Music
Print and purchased the facility in which Music Print operates for $1.3
million. The acquisition was funded through additional revolver borrowings
under the Company's Amended and Restated Multicurrency Credit Facility. Music
Print supplies printed packaging in the Netherlands for the music and
multimedia markets.
Unaudited Pro Forma for Acquisitions--
The following unaudited pro forma information presents certain operating
data calculated to reflect the acquisitions of AGI and Tinsley and the
additional borrowings incurred to fund those acquisitions as if they occurred
as of January 1, 1997.
<TABLE>
<CAPTION>
1997 1998
-------- --------
<S> <C> <C>
Net sales................................................. $281,170 $271,049
Net income (loss)......................................... $ 2,080 $ (2,731)
</TABLE>
This pro forma data does not purport to represent what actual operating
results would have been had the acquisitions been consummated on the dates
indicated or what such results will be for any future period.
Note 4--Leveraged Recapitalization
On June 7, 1996, a merger between Klearfold and KFI/Heritage Acquisition
Corporation ("Acquisition"), a wholly-owned subsidiary of KFI, was
consummated. KFI and Acquisition were formed for the purpose of acquiring all
the capital stock of Klearfold by certain affiliates of Heritage Partners
Management Company ("Heritage") together with certain existing Klearfold
shareholders and key members of Klearfold management ("Management Investors")
in a leveraged recapitalization transaction.
The Management Investors maintained the majority voting interest in the
Company and no change in control as described in Emerging Issue Task Force
Issue 88-16 occurred as a result of the merger. Therefore, the merger has been
accounted for as a leveraged recapitalization with the accounting basis of
Klearfold's assets and liabilities being carried over after the merger. The
difference between the accounting basis of Klearfold's assets and liabilities
and their fair values was $34,831, which was recorded in shareholders' equity
(deficit) as a carryover basis adjustment. An additional $2,312 was recorded
as carryover basis adjustment related to merger costs incurred to effect the
recapitalization. The funds required to effect the recapitalization were
provided by the issuance of $20,000 of common and preferred stock with the
balance of the funding provided by bank borrowings. The funds were used to
acquire $47,319 of the outstanding stock of Klearfold's previous shareholders,
to repay $7,763 of existing bank loans, and to pay $3,470 in merger and
financing costs.
Note 5--Discontinued Operations
On April 19, 1996, the Company sold its 51% interest in its thermoform
packaging operations--PTP Industries, Inc. (PTP). Accordingly, PTP is
accounted for as discontinued operations in the accompanying consolidated
financial statements. Proceeds from the sale of PTP were $1,860 and a gain of
$35 (net of taxes of $140) was recognized in 1996.
F-12
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Note 6--Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
1997 1998
------- --------
<S> <C> <C>
Raw materials............................................. $ 3,658 $ 9,597
Work in process and finished goods........................ 3,299 14,385
------- --------
$ 6,957 $ 23,982
======= ========
Inventories accounted for under the LIFO method at December 31, 1998 were
$3,783. Under the FIFO method of accounting, such inventories would have been
$379 lower than those reported at December 31, 1998. During 1998, LIFO
inventory prices decreased, the effect of which increased net income by $379.
Note 7--Property, Plant and Equipment
Property, plant and equipment, net at December 31, 1997 and 1998 consisted
of the following:
<CAPTION>
1997 1998
------- --------
<S> <C> <C>
Land...................................................... $ -- $ 1,801
Building and leasehold improvements....................... 1,916 27,753
Machinery and equipment................................... 24,244 160,360
Furniture and fixtures.................................... 2,034 3,690
Construction in progress.................................. 176 3,235
------- --------
28,370 196,839
Less--Accumulated depreciation............................ (17,270) (89,170)
------- --------
Net property, plant and equipment......................... $11,100 $107,669
======= ========
Property, plant and equipment at December 31, 1998 included capital leases
of $7.5 million, net of accumulated amortization of $2.0 million.
Note 8--Accrued Expenses
Accrued expenses at December 31, 1997 and 1998 consisted of the following:
<CAPTION>
1997 1998
------- --------
<S> <C> <C>
Employee compensation and withholdings.................... $ 951 $ 7,488
Rebates payable........................................... -- 5,179
Accrued interest.......................................... 233 3,478
Other..................................................... 741 7,655
------- --------
$ 1,925 $ 23,800
======= ========
</TABLE>
Note 9--Income Taxes
The sources of income from continuing operations before income taxes for
1998 are $425 from U.S. operations and $3,497 from foreign operations. The
components of the provision for income taxes on income from continuing
operations for the years ended December 31, 1996, 1997 and 1998 consisted of
the following:
<TABLE>
<CAPTION>
1996 1997 1998
------ ------ ------
<S> <C> <C> <C>
Current-
U.S. federal........................................ $1,616 $1,292 $ 580
U.S. state and local................................ 134 57 373
Foreign............................................. -- -- (66)
------ ------ ------
1,750 1,349 887
Deferred.............................................. 253 (595) 992
------ ------ ------
Provision for income taxes............................ $2,003 $ 754 $1,879
====== ====== ======
</TABLE>
F-13
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The provision for income taxes on income from continuing operations in each
period differs from that which would be computed by applying the statutory
U.S. federal income tax rate to income from continuing operations before
income taxes as a result of the following:
<TABLE>
<CAPTION>
1996 1997 1998
---- ---- ----
<S> <C> <C> <C>
Tax provision at statutory rate............................ 34.0% 34.0% 34.0%
State income taxes, net of federal benefit................. 2.3 -- 0.9
Goodwill................................................... -- -- 15.7
Tax effect resulting from foreign activities............... -- -- (4.8)
Other, net................................................. 4.3 1.1 2.1
---- ---- ----
Effective tax rate......................................... 40.6% 35.1% 47.9%
==== ==== ====
</TABLE>
The tax effects of temporary differences between the financial statement
carrying amounts and tax bases of assets and liabilities that give rise to
significant portions of the net deferred tax liability were as follows at
December 31, 1997 and 1998:
<TABLE>
<CAPTION>
1997 1998
------- --------
<S> <C> <C>
Gross deferred tax assets:
Accounts receivable.................................... $ 212 $ 376
Inventories............................................ 362 693
Accruals not deductible until paid..................... -- 2,108
Other.................................................. 87 158
------- --------
Total gross deferred tax assets.......................... 661 3,335
------- --------
Gross deferred tax liabilities:
Property, plant and equipment.......................... (1,245) (10,480)
Other.................................................. (62) (172)
------- --------
Total gross deferred tax liabilities..................... (1,307) (10,652)
------- --------
Net deferred tax liability............................... $ (646) $ (7,317)
======= ========
</TABLE>
The Company has not provided a valuation allowance for deferred tax assets
because, although realization is not assured, the Company believes it is more
likely than not that such tax assets will be recognized through reversals of
taxable timing differences and taxable income in future periods.
Note 10--Employee Benefit Plans
Defined Contribution Plans--
Several of the Company's subsidiaries maintain defined contribution plans
in which non-union employees may voluntarily elect to participate. Under
certain plans, the Company matches a portion of the amounts contributed by
employees. Additionally, under certain plans the Company can make additional
discretionary contributions. The cost incurred for these plans was $24, $28
and $791 in 1996, 1997 and 1998, respectively.
One of the Company's subsidiaries is required, on behalf of union-
registered employees, to contribute to a union-managed multi-employer pension
plan. If the Company completely or partially withdraws from the pension plan,
the Company may be required to pay its share of the pension plan's unfunded
vested liability. There was no unfunded vested liability at December 31, 1998.
The cost incurred for the union pension plan was $118, $121 and $121 in 1996,
1997 and 1998, respectively.
F-14
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Defined Benefit Plan--
The Company's U.K. subsidiaries maintain a defined benefit pension plan.
Total costs for the plan for the year ended December 31, 1998 were $86. The
funded status of the plan at December 31, 1998 was as follows:
<TABLE>
<CAPTION>
1998
-------
<S> <C>
Plan assets at fair value........................................... $10,621
Projected benefit obligation........................................ 8,464
-------
Assets over projected benefit obligation............................ 2,157
Unrecognized gain................................................... (1,279)
-------
Net pension asset................................................... $ 878
=======
</TABLE>
The key assumptions used in accounting for the defined benefit plan include
a weighted average discount rate of 5.5%, salary increases of 3.0% and a long-
term rate of return on plan assets of 8.0%.
Note 11--Long-term Debt
Long-term debt as of December 31, 1997 and 1998, consisted of the
following:
<TABLE>
<CAPTION>
1997 1998
------- --------
<S> <C> <C>
Bank borrowings............................................ $29,850 $103,410
Senior subordinated notes.................................. -- 100,000
Industrial revenue bonds................................... 4,000 11,640
Loan notes................................................. -- 8,393
Capital leases............................................. -- 17,116
------- --------
Total debt............................................... 33,850 240,559
Less--current maturities................................. -- 5,487
------- --------
Total long-term debt..................................... $33,850 $235,072
======= ========
</TABLE>
On March 12, 1998, the Company completed the issuance of $100.0 million in
Senior Subordinated Notes. The Senior Subordinated Notes bear interest at 10
1/8% and mature March 15, 2008. The Indenture governing the Senior
Subordinated Notes contains certain covenants that, among other things, limit
the ability of the Company to incur additional indebtedness, pay dividends,
make investments or restricted payments, enter into certain transactions with
affiliates, dispose of certain assets, incur liens securing subordinated
indebtedness and engage in mergers and consolidations. The Senior Subordinated
Notes are general, unsecured obligations of IMPAC and are fully and
unconditionally guaranteed by all domestic and, subsequent to December 31,
1998, certain foreign subsidiaries of the Company (the "Subsidiary
Guarantors") on a joint and several basis (see Note 16). The Senior
Subordinated Notes will be senior to any future subordinated debt of the
Company. At December 31, 1998, the Company had no indebtedness outstanding
that was subordinated to the Senior Subordinated Notes. The proceeds of the
Senior Subordinated Notes were used to fund the acquisition of AGI and to
retire all outstanding indebtedness under the Company's prior credit
agreement. As a result of the refinancing, the Company recorded an
extraordinary charge of $552 (net of tax), reflecting the write-off of
deferred financing costs.
On March 12, 1998, the Company entered into a new five year credit facility
which provided for a $40.0 million revolving credit facility and a $13.0
million letter of credit facility. On July 7, 1998, the Company entered into
an Amended and Restated Multicurrency Credit Facility (the "Facility") which
became effective on the initial funding date of the Tinsley acquisition and
replaced the prior credit agreement. The Facility provides for up to $53.0
million of revolving credit borrowings (the "Revolver") with a $20 million
letter of credit subfacility
F-15
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
under the Revolver (the "L/C Facility"). The Facility also provides for $37.0
million of Term Loan A borrowings and $64.0 million of Term Loan B borrowings.
The Facility also provides a guarantee to the holders of the Loan Notes
described below. Under the provisions of the Facility, the aggregate amount of
outstanding Term Loan A borrowings is limited by the amount outstanding under
the Loan Notes guarantee. Up to $8.5 million of drawings under this guarantee
to redeem the Loan Notes will be converted to additional borrowings under Term
Loan A and any drawings which, as a consequence of currency fluctuations,
exceed $8.5 million will be converted to additional borrowings under the
Revolver. Borrowings under the Facility rank senior to the Senior Subordinated
Notes and are guaranteed by the Subsidiary Guarantors on a senior basis and
are secured by substantially all of the assets of IMPAC and the Subsidiary
Guarantors. As of December 31, 1998, there were $11.2 million of borrowings
outstanding under the Revolver, $28.4 million of borrowings outstanding under
Term Loan A and $63.8 million of borrowings outstanding under Term Loan B. The
Company currently has $12.6 million in letters of credit outstanding under the
L/C Facility securing its industrial revenue bond ("IRB") borrowings. The
unused portion of the facility at December 31, 1998 was $29.2 million. The
interest rate on the Facility is based on either the IBOR or Base Rate plus
the applicable margin and at December 31, 1998, the weighted average interest
rate for the facility was 7.73%. The interest rate on the L/C Facility is
based on the applicable IBOR margin which was 2.25% at December 31, 1998. The
Company currently pays a commitment fee of 1/2 of 1% per annum on the amount
of the available credit on the Revolver over the amount outstanding, plus any
outstanding letters of credit available. The Revolver has a five and one-half
year maturity. The Term Loan A and Term Loan B provide for quarterly scheduled
payments maturing in five and one-half years and six and one-half years,
respectively. The Company is required to make mandatory prepayments on the
term loans beginning in March, 2000 if the Company generates excess cash flow,
as defined.
The credit agreement governing the Facility (the "Credit Agreement")
includes covenants requiring the Company to maintain (i) maximum leverage
ratios, (ii) maximum senior leverage ratios, (iii) minimum interest coverage
ratios, and (iv) minimum fixed charge coverage ratios. The Credit Agreement
also contains covenants, among others, limiting additional indebtedness,
liens, dividends, restricted payments, guaranties, advances to affiliates,
investments, mergers, creation of subsidiaries, asset sales and dispositions.
In connection with the Facility, in November 1998, the Company entered into
two interest rate swap agreements effectively fixing its IBOR interest rate at
5.42% by exchanging its variable interest rate on Term Loan B of the Facility
for a fixed interest rate. The interest rate differential relating to these
swaps is reflected as an adjustment to interest expense over the lives of the
swaps. The aggregate notional amount under these agreements is $64.0 million.
Management estimates the carrying value of these interest rate swaps to
approximate fair value.
In connection with the acquisition of Tinsley, the Company issued $8.5
million of five year promissory notes ("Loan Notes") to former Tinsley
shareholders. The Loan Notes rank senior to the Senior Subordinated Notes and
are guaranteed by Bank of America. Drawings under this guarantee will be
converted into borrowings under Term Loan A and the Revolver of the Credit
Facility.
In connection with the acquisition of AGI, the Company assumed $7.6 million
of variable rate IRB borrowings which mature on February 1, 2026 and accrue
interest at 4.25%, as of December 31, 1998. In connection with the acquisition
of Tinsley, the Company assumed $15.2 million of capital leases ($17.1 million
at December 31, 1998) which mature in 1-7 years and accrue interest at a
weighted average interest rate of 6.53%, as of December 31, 1998.
On August 1, 1997, the Company issued $4,000 of IRB borrowings which mature
on August 1, 2007 and accrue interest at a fixed rate of 4.35%. The indenture
agreement requires the Company to use the proceeds for the acquisition of an
offset printing press and related equipment. All proceeds not used immediately
for these costs are to be kept in a restricted cash account. The balance of
restricted cash at December 31, 1998 is $426.
F-16
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
The maturities of long-term debt and capital leases at December 31, 1998
are as follows:
<TABLE>
<S> <C>
1999................................................................ $ 5,487
2000................................................................ 9,850
2001................................................................ 12,030
2002................................................................ 12,423
2003................................................................ 13,593
Thereafter.......................................................... 187,176
--------
Total long-term debt, including current maturities................ $240,559
========
</TABLE>
Note 12--Equity
Issuances of Common Stock--
In connection with the acquisition of AGI on March 12, 1998, the Company
(i) exchanged 44,118 shares of new Common Stock, Series A for all previously
issued and outstanding shares of non-voting Common Stock, voting Common Stock
and Preferred Stock of KFI Holdings, (ii) issued 13,529 shares of new Common
Stock, Series A for $4.6 million, and (iii) issued 42,353 shares of new Common
Stock, Series A as partial consideration to former shareholders of AGI. In
connection with the acquisition of Tinsley on September 11, 1998, the Company
issued 96,246 shares of new Common Stock, Series A and Series B, to certain of
the Company's existing stockholders or their affiliates for $58.6 million.
Stock Options--
In 1998, the Company established a nonqualified stock option plan for key
employees ("Stock Option Plan"). The Company accounts for this plan under APB
Opinion No. 25, under which no compensation cost has been recognized. Had
compensation costs for this plan been determined consistent with FASB
Statement No. 123, the Company's net income would not have been materially
different.
At December 31, 1998, the Company is authorized to grant options to
purchase an additional of 20,000 shares of Series A Common Stock under its
Stock Option Plan. The option price of all grants under this plan will be
equal to the stock's market price on the date of grant and no options may be
exercised after ten years from the date of grant. The following is a summary
of stock option activity for 1998:
<TABLE>
<CAPTION>
Wtd. Average
Shares Exercise Price
------- --------------
<S> <C> <C>
Outstanding at beginning of year..................... -- $ --
Granted.............................................. 1,064.0 340
Exercised............................................ -- --
Forfeited............................................ (288.8) (340)
Outstanding at end of year........................... 775.2 340
Exercisable at end of year........................... 91.2 340
Weighted average fair value of options granted....... $ 124
</TABLE>
During 1998, the Company granted 1,064 shares of options to purchase Series
A Common Stock at an exercise price of $340 per share to certain key
employees. In connection with the acquisition of Tinsley, the Company offered
former Tinsley optionholders the opportunity to either exercise their existing
options in Tinsley for cash or to convert their options into options of the
Company. Pursuant to this agreement, on February 27, 1999, the Company granted
options to purchase 3,456.6 shares of Series B Common Stock of the Company at
a
F-17
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
weighted average exercise price of $303. The difference between the exercise
price and the fair market value of these options was recorded as additional
goodwill with a corresponding increase in additional paid-in capital.
Note 13--Commitments and Contingencies
Leases--
The Company has several noncancellable operating leases for buildings and
equipment that expire over the next years. Several of these leases are with
related parties as described in Note 14. Minimum future rental commitments
under noncancellable operating leases having initial or remaining terms in
excess of one year as of December 31, 1998, are as follows:
<TABLE>
<S> <C>
1999................................................................ $ 6,743
2000................................................................ 5,493
2001................................................................ 3,903
2002................................................................ 3,413
2003................................................................ 2,405
Thereafter.......................................................... 6,664
-------
Total minimum payments.............................................. $28,621
=======
</TABLE>
Rental expense was $1,995, $2,034 and $4,863 for 1996, 1997 and 1998,
respectively.
Employment Agreements--
The Company has entered into employment agreements with certain employee-
shareholders which expire in June 2001. The aggregate commitment for future
salaries, excluding bonuses, under these employment agreements at December 31,
1998 is approximately $5.3 million.
Note 14--Related Party Transactions
The Company leases its Melrose Park, Illinois, facility under an operating
lease which expires in September 2002. The Company has the option to renew the
lease for several additional five year terms. The lessor is a partnership that
includes the Chief Executive Officer of the Company. The Company has paid a
deposit to the partnership of approximately $340 which is reflected in the
accompanying balance sheet as part of other assets. Rents under this lease
amounted to approximately $475 in 1998.
The Company leases manufacturing and warehouse premises in Warrington,
Pennsylvania, from the Chairman of the Board for $336 annually and is
adjustable for inflation beginning in 2001. The Company leases manufacturing
and warehouse premises in Louisa, Virginia, from a company wholly-owned by the
same shareholder, for $273 annually and is adjustable for inflation beginning
in 2001. Both leases expire in 2005 and may be extended for an additional five
years at the option of the Company.
In connection with the acquisition of AGI, certain members of management
borrowed $1.6 million in promissory notes from the Company. The notes are
payable on demand, accrue interest at 5.85% and are included in the
accompanying balance sheet as part of other receivables.
F-18
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
Note 15--Segment Information
The Company operates in one business segment, providing specialty packaging
for various consumer products markets. During 1998, the Company expanded its
specialty packaging operations geographically to include the United Kingdom
and Europe. The following table presents sales and other financial information
for each geographic region for 1998:
<TABLE>
<CAPTION>
Geographic Regions
--------------------------
U.K. and
U.S. Europe Total
-------- -------- --------
<S> <C> <C> <C>
Sales to unaffiliated customers.................. $138,431 $ 45,867 $184,298
Operating income................................. 11,190 6,703 17,893
Identifiable assets.............................. 149,553 216,782 366,335
Depreciation and amortization.................... 8,064 3,400 11,464
Capital expenditures............................. 10,724 5,292 16,016
</TABLE>
Note 16--Guarantors and Financial Information
The following consolidating financial information is presented for purposes
of complying with the reporting requirements of the Subsidiary Guarantors. The
Subsidiary Guarantors are directly or indirectly wholly-owned subsidiaries of
the Company and have fully and unconditionally guaranteed the Senior
Subordinated Notes on a joint and several basis. Subsequent to December 31,
1998, certain foreign subsidiaries of the Company that were acquired in
connection with the acquisition of Tinsley provided full and unconditional
guarantees on the Senior Subordinated Notes and are included in the condensed
consolidating financial information below as Subsidiary Guarantors. Separate
financial statements and other disclosures with respect to the Subsidiary
Guarantors are not presented because the Company believes that such financial
statements and other information would not provide additional information that
is material to investors. The condensed consolidating financial information
presents condensed consolidating financial statements as of December 31, 1998
and for the year ended December 31, 1998 of:
(a) IMPAC on a parent company only basis ("IMPAC Parent"), carrying its
investments in subsidiaries under the equity method;
(b) the Subsidiary Guarantors, which include the domestic subsidiaries
of AGI Incorporated, Klearfold, Inc., KF-International, Inc., and KF-
Delaware, Inc. and the following foreign subsidiaries of IMPAC: IMPAC
Europe Limited, Levelprompt Limited, Tinsley Robor Limited, James Upton
Limited, Tinsley Robor Labels Limited, Tinsley Robor Sales Limited, Sonicon
Limited, Tophurst Properties Limited and Printing Resources Limited;
(c) the Non-Guarantor Subsidiaries ("Non-Guarantor Subsidiaries"),
which include Van de Steeg Packaging B.V., James Upton Holding B.V., James
Upton B.V., James Upton GmbH and Music Print B.V.;
(d) elimination entries necessary to consolidate IMPAC Parent and its
subsidiaries, and
(e) IMPAC on a consolidated basis ("IMPAC Consolidated").
F-19
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1998
<TABLE>
<CAPTION>
Non-
IMPAC Subsidiary Guarantor IMPAC
Parent Guarantors Subsidiaries Eliminations Consolidated
-------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash.................. $ 319 $ 1,387 $ 2,533 $ -- $ 4,239
Trade accounts
receivable, net...... -- 36,088 8,273 -- 44,361
Intercompany
receivables.......... 11,106 31,283 -- (42,389) --
Inventories........... -- 21,740 2,242 -- 23,982
Other current assets.. 197 8,403 488 -- 9,088
-------- -------- ------- --------- --------
Total current
assets............. 11,622 98,901 13,536 (42,389) 81,670
-------- -------- ------- --------- --------
Property, plant and
equipment, net....... -- 85,533 22,136 -- 107,669
Goodwill.............. -- 142,237 21,386 -- 163,623
Intercompany
receivables.......... 168,128 18,568 -- (186,696) --
Investment in
subsidiaries......... 81,829 55,525 -- (137,354) --
Other assets.......... 10,012 3,361 -- -- 13,373
-------- -------- ------- --------- --------
Total assets........ $271,591 $404,125 $57,058 $(366,439) $366,335
======== ======== ======= ========= ========
Current liabilities:
Current maturities of
long-term debt....... $ 1,010 $ 3,324 $ 1,153 $ -- $ 5,487
Trade payables........ -- 21,974 3,119 -- 25,093
Intercompany
payables............. -- 30,181 30,777 (60,958) --
Accrued expenses...... 2,598 17,767 3,435 -- 23,800
-------- -------- ------- --------- --------
Total current
liabilities........ 3,608 73,246 38,484 (60,958) 54,380
-------- -------- ------- --------- --------
Long-term debt.......... 202,400 29,112 3,560 -- 235,072
Other long-term
liabilities............ -- 11,154 146 -- 11,300
Intercompany debt....... -- 168,128 -- (168,128) --
-------- -------- ------- --------- --------
Total liabilities..... 206,008 281,640 42,190 (229,086) 300,752
-------- -------- ------- --------- --------
Total shareholders'
(deficit) equity....... 65,583 122,485 14,868 (137,353) 65,583
-------- -------- ------- --------- --------
Total liabilities and
shareholders' (deficit)
equity................. $271,591 $404,125 $57,058 $(366,439) $366,335
======== ======== ======= ========= ========
</TABLE>
F-20
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CONDENSED CONSOLIDATING STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Non-
IMPAC Subsidiary Guarantor IMPAC
Parent Guarantors Subsidiaries Eliminations Consolidated
------ ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $ -- $164,864 $21,832 $(2,398) $184,298
Cost of goods sold...... -- 121,341 15,700 (2,398) 134,643
------ -------- ------- ------- --------
Gross profit............ -- 43,523 6,132 -- 49,655
Selling, general and ad-
ministrative expenses.. 473 29,376 1,913 -- 31,762
------ -------- ------- ------- --------
Operating income........ (473) 14,147 4,219 -- 17,893
Equity earnings in sub-
sidiaries.............. 3,036 -- -- (3,036) --
Other income (expense).. (1,172) (12,413) (386) -- (13,971)
------ -------- ------- ------- --------
Income before income
taxes.................. 1,391 1,734 3,833 (3,036) 3,922
Income (taxes) benefit.. 652 (1,484) (1,047) -- (1,879)
------ -------- ------- ------- --------
Income before extraordi-
nary item.............. 2,043 250 2,786 (3,036) 2,043
Extraordinary item...... (552) -- -- -- (552)
------ -------- ------- ------- --------
Net income.............. $1,491 $ (250) $ 2,786 $(3,036) $ 1,491
====== ======== ======= ======= ========
</TABLE>
F-21
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
Non-
IMPAC Subsidiary Guarantor IMPAC
Parent Guarantors Subsidiaries Eliminations Consolidated
-------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:..
Net cash provided by
operating
activities........... $ 2,231 $ 6,685 $ 3,769 $ 512 $ 13,197
-------- -------- ------- ------ --------
Cash flows from
investing activities:
Capital expenditures.. -- (12,180) (6,412) 2,576 (16,016)
Acquisition of
subsidiaries......... (64,184) (161,047) (8,109) 2,390 (230,950)
-------- -------- ------- ------ --------
Net cash used in
investing activities... (64,184) (173,227) (14,521) 4,966 (246,966)
-------- -------- ------- ------ --------
Cash flows from
financing activities:
Proceeds from issuance
of long-term debt.... 203,663 8,570 -- -- 212,233
Repayments of long-
term debt............ (30,103) -- -- -- (30,103)
Proceeds from issuance
of common stock...... 63,175 -- -- -- 63,175
Loans and advances
(to) from related
parties.............. (162,096) 156,738 10,926 (5,568) --
Other financing
activities........... (10,835) (528) 2,529 (940) (9,774)
-------- -------- ------- ------ --------
Net cash provided by
financing activities... 63,804 164,780 13,455 (6,508) 235,531
-------- -------- ------- ------ --------
Effect of exchange
rate differences on
cash................. (1,532) 2,955 (170) 1,030 2,283
-------- -------- ------- ------ --------
Decrease in cash........ 319 1,193 2,533 -- 4,045
Cash, beginning of
period................. -- 194 -- -- 194
-------- -------- ------- ------ --------
Cash, end of period..... $ 319 $ 1,387 $ 2,533 $ -- $ 4,239
======== ======== ======= ====== ========
</TABLE>
The following condensed consolidating financial information is that of
Tinsley and its subsidiaries on a stand alone basis as of March 31, 1998 and
for the years ended March 31, 1998 and 1997 of:
(a) Tinsley Robor Limited on a parent company only basis ("Tinsley
Parent"), carrying its investments in subsidiaries under the equity method;
(b) the Subsidiary Guarantors of Tinsley Parent, which include James
Upton Limited, Tinsley Robor Labels Limited, Tinsley Robor Sales Limited,
Sonicon Limited, Tophurst Properties Limited and Printing Resources
Limited;
(c) the Non-Guarantor Subsidiaries of Tinsley Parent, which include Van
de Steeg Packaging B.V., James Upton Holding B.V., James Upton B.V. and
James Upton GmbH;
(d) elimination entries necessary to consolidate the parent Tinsley
Robor Limited and its subsidiaries, and
(e) Tinsley Robor Limited on a consolidated basis ("Tinsley
Consolidated").
F-22
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31, 1998
<TABLE>
<CAPTION>
Non-
Tinsley Subsidiary guarantor Tinsley
Parent Guarantors Subsidiaries Eliminations Consolidated
------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash.................. $ 29 $ 431 $ 1,604 $ -- $ 2,064
Trade accounts
receivable, net...... -- 16,030 5,145 -- 21,175
Inventories........... -- 6,175 1,712 -- 7,887
Intercompany
receivables.......... 33,741 1,255 1,760 (36,756) --
Other current assets.. 467 1,167 468 -- 2,102
------- ------- ------- -------- --------
Total current
assets............. 34,237 25,058 10,689 (36,756) 33,228
------- ------- ------- -------- --------
Property, plant and
equipment, net....... 329 27,980 14,256 -- 42,565
Goodwill.............. -- 6,638 17,318 -- 23,956
Investment in
subsidiaries......... 12,506 -- -- (12,506) --
Other assets.......... 2,293 -- -- -- 2,293
------- ------- ------- -------- --------
Total assets........ $49,365 $59,676 $42,263 $(49,262) $102,042
======= ======= ======= ======== ========
Current liabilities:
Current maturities of
long-term debt....... $ 89 $ 5,683 $ 3,262 $ -- $ 9,034
Trade payables........ 252 6,730 1,511 -- 8,493
Intercompany
payables............. 1,255 18,046 17,455 (36,756) --
Accrued expenses...... 2,288 5,388 3,773 -- 11,449
------- ------- ------- -------- --------
Total current
liabilities........ 3,884 35,847 26,001 (36,756) 28,976
------- ------- ------- -------- --------
Long-term debt.......... 32 8,599 13,757 -- 22,388
Other long-term
liabilities............ -- 5,229 -- -- 5,229
------- ------- ------- -------- --------
Total liabilities... 3,916 49,675 39,758 (36,756) 56,593
------- ------- ------- -------- --------
Total shareholders'
(deficit) equity....... 45,449 10,001 2,505 (12,506) 45,449
------- ------- ------- -------- --------
Total liabilities and
shareholders' (deficit)
equity................. $49,365 $59,676 $42,263 $(49,262) $102,042
======= ======= ======= ======== ========
</TABLE>
F-23
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CONDENSED CONSOLIDATING STATEMENT OF INCOME
YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
Non-
Tinsley Subsidiary guarantor Tinsley
Parent Guarantors Subsidiaries Eliminations Consolidated
------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $ -- $ 75,842 $ 34,872 $ (3,644) $ 107,070
Cost of goods sold...... -- 52,679 25,133 (3,644) 74,168
------- -------- -------- -------- ---------
Gross profit............ -- 23,163 9,739 -- 32,902
Selling, general and
administrative
expenses............... (715) 15,920 4,957 -- 20,162
------- -------- -------- -------- ---------
Operating income........ 715 7,243 4,782 -- 12,740
Interest (expense)
income, net............ 1,073 (1,150) (1,649) -- (1,726)
Equity earnings in
subsidiaries........... 5,897 -- -- (5,897) --
------- -------- -------- -------- ---------
Income before income
taxes.................. 7,685 6,093 3,133 (5,897) 11,014
Income taxes............ (385) (1,780) (1,549) -- (3,714)
------- -------- -------- -------- ---------
Net income.............. $ 7,300 $ 4,313 $ 1,584 $ (5,897) $ 7,300
======= ======== ======== ======== =========
</TABLE>
F-24
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
Non-
Tinsley Subsidiary guarantor Tinsley
Parent Guarantors Subsidiaries Eliminations Consolidated
-------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flow from operating
activities:
Net cash provided by
operating
activities........... $ 1,089 $ 3,717 $ 5,949 $ 1,145 $ 11,900
-------- ------- -------- ------- --------
Cash flow from investing
activities:
Capital expenditures.. (138) (3,885) (5,928) 4,443 (5,508)
Acquisition of
subsidiaries......... (546) -- (21,113) (507) (22,166)
-------- ------- -------- ------- --------
Net cash used in
investing activities... (684) (3,885) (27,041) 3,936 (27,674)
-------- ------- -------- ------- --------
Cash flow from financing
activities:
Net change in long-
term debt............ (79) 992 9,413 (2,542) 7,784
Proceeds from issuance
of common stock...... 170 37 2,072 (2,259) 20
Loans to related
parties.............. (9,886) (746) 10,924 (292) --
Dividends paid........ (1,834) -- -- -- (1,834)
-------- ------- -------- ------- --------
Net cash provided by
financing activities... (11,629) 283 22,409 (5,093) 5,970
-------- ------- -------- ------- --------
Effect of exchange
rate differences on
cash................. 54 11 38 12 115
-------- ------- -------- ------- --------
(Decrease) increase in
cash................... (11,170) 126 1,355 -- (9,689)
Cash, beginning of
period................. 11,199 305 249 -- 11,753
-------- ------- -------- ------- --------
Cash, end of period..... $ 29 $ 431 $ 1,604 $ -- $ 2,064
======== ======= ======== ======= ========
</TABLE>
F-25
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CONDENSED CONSOLIDATING STATEMENT OF INCOME
YEAR ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
Non-
Tinsley Subsidiary guarantor Tinsley
Parent Guarantors Subsidiaries Eliminations Consolidated
------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............... $ -- $ 72,463 $ 13,806 $ (5,379) $ 80,890
Cost of goods sold...... -- 51,572 9,982 (5,427) 56,127
------- -------- -------- -------- --------
Gross profit............ -- 20,891 3,824 48 24,763
Selling, general and
administrative
expenses............... (735) 15,534 1,608 (96) 16,311
------- -------- -------- -------- --------
Operating income........ 735 5,357 2,216 144 8,452
Interest (expense)
income, net............ 162 (736) (208) -- (782)
Equity earnings in
subsidiaries........... 4,322 -- -- (4,322) --
------- -------- -------- -------- --------
Income before income
taxes.................. 5,219 4,621 2,008 (4,178) 7,670
Income taxes............ (231) (1,513) (794) -- (2,538)
------- -------- -------- -------- --------
Net income.............. $ 4,988 $ 3,108 $ 1,214 $ (4,178) $ 5,132
======= ======== ======== ======== ========
</TABLE>
F-26
<PAGE>
IMPAC GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
YEAR ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
Non-
Tinsley Subsidiary Guarantor Tinsley
Parent Guarantors Subsidiaries Eliminations Consolidated
------- ---------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Cash flows from
operating activities:
Net cash provided by
operating
activities........... $ 1,201 $(1,617) $1,115 $3,413 $ 4,112
------- ------- ------ ------ -------
Cash flows from
investing activities:
Capital expenditures.. (50) (7,438) (6,101) 3,281 (10,308)
Acquisition of
subsidiaries......... 719 -- (1,468) (958) (1,707)
------- ------- ------ ------ -------
Net cash used in
investing activities... 669 (7,438) (7,569) 2,323 (12,015)
------- ------- ------ ------ -------
Cash flows from
financing activities:
Net change in long-
term debt............ (1,357) 2,771 5,565 (4,679) 2,300
Proceeds from issuance
of common stock...... 18,359 (6) 36 (30) 18,359
Loans to related
parties.............. (6,769) 6,497 1,088 (816) --
Dividends paid........ (1,192) -- -- -- (1,192)
------- ------- ------ ------ -------
Net cash provided by
financing activities... 9,041 9,262 6,689 (5,525) 19,467
------- ------- ------ ------ -------
Effect of exchange
rate differences on
cash................. 288 12 6 (211) 95
------- ------- ------ ------ -------
(Decrease) increase in
cash................... 11,199 219 241 -- 11,659
Cash, beginning of
period................. -- 86 8 -- 94
------- ------- ------ ------ -------
Cash, end of period..... $11,199 $ 305 $ 249 $ -- $11,753
======= ======= ====== ====== =======
</TABLE>
Note 17--Subsequent Events
On January 12, 1999, the Company issued 20,000 shares of Series A
Mandatorily Redeemable Preferred Stock with a face value of $20,000 together
with detachable, ten-year warrants to purchase 6,913 shares of common stock at
an exercise price of $.01 per share for net proceeds of $18.9 million. The
Company used the net proceeds from the sale of preferred stock to acquire
30,087 shares of outstanding Series A Common Stock. The preferred stock
accrues dividends on a cumulative basis at 14% per annum for years 1-5, 15%
per annum for year 6, and either 14% or 15% per annum for years 7-10 depending
on whether the dividends are paid in cash or with additional preferred stock,
respectively. During the first six years after issuance, dividends on the
preferred stock are payable solely by issuing additional shares of preferred
stock. The preferred stock accrues dividends at 24% per annum if certain
events occur, including an event of non-compliance as defined and certain
significant changes in the ownership of IMPAC. The Company is required to
redeem all outstanding shares of preferred stock on December 31, 2008 at face
value plus all accrued and unpaid dividends. The Company may redeem some or
all outstanding shares of preferred stock at an earlier date, provided,
however, that a premium of up to 10% be paid. The preferred stock is not
redeemable at the option of the holders of preferred stock. The preferred
stock contains covenants, among others, limiting additional indebtedness,
restricted payments, guaranties, advances to affiliates, mergers, asset sales
and dispositions. The preferred stock ranks senior to all classes of common
stock with respect to dividend distributions and distributions upon the
liquidation or dissolution of the Company.
Upon issuance of the preferred stock, the warrants were valued at $4.2
million and the shares of preferred stock were valued at $14.7 million. The
difference between the carrying value and the face value of the preferred
stock, along with dividends accrued, will be accreted using the effective
interest rate method over the period the preferred stock is outstanding.
Accretion on the preferred stock decreases the net income available to common
shareholders in the period incurred and is recorded directly to retained
earnings.
F-27
<PAGE>
SCHEDULE II
Valuation and Qualifying Accounts and Reserves for the Years Ended December
31, 1996, 1997 and 1998 (in thousands)
<TABLE>
<CAPTION>
Balance Balances
at Assumed Charged Credit Foreign Balance
Beginning Through to (Writeoffs)/ Memos Currency at End
of Year Acquisitions Expense Recoveries Issued Fluctuations of Year
--------- ------------ ------- ------------ ------ ------------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Allowance for Doubtful
Accounts and Credit
Memos:
1996.................. $553 $-- $507 $ (91) $(703) $-- $ 266
1997.................. $266 $-- $451 $ 43 $(200) $-- $ 560
1998.................. $560 $773 $999 $(171) $(634) $(10) $1,517
</TABLE>
F-28
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 as of March 31,
1999.
IMPAC Group, Inc.
/s/ Richard Block
By: _________________________________
Richard Block,
Chief Executive Officer
S-1
<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below hereby appoints Richard Block
and David C. Underwood, and each of them severally, acting alone and without
the other, his true and lawful attorney-in-fact with the authority to execute
in the name of each such person, including exhibits thereto and other
documents therewith, any and all amendments to this Annual Report on Form 10-K
necessary or advisable to enable the Report to comply with the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and any rules,
regulations and requirements of the Securities and Exchange Commission in
respect thereof which amendments may make such other changes in the Report as
the aforesaid attorney-in-fact executing the same deems appropriate.
Pursuant to the requirements of the Exchange Act, this Report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard Block Chief Executive Officer and March 31, 1999
______________________________________ Director of IMPAC Group,
Richard Block Inc.
/s/ H. Scott Herrin Director of IMPAC Group, March 30, 1999
______________________________________ Inc.
H. Scott Herrin
/s/ David C. Underwood Chief Financial Officer of March 31, 1999
______________________________________ IMPAC Group, Inc.
David C. Underwood (principal financial and
accounting officer)
/s/ Michel Reichert Director of IMPAC Group, March 31, 1999
______________________________________ Inc.
Michel Reichert
/s/ Michael Gilligan Director of IMPAC Group, March 29, 1999
______________________________________ Inc.
Michael Gilligan
/s/ David H. Horowitz Director of IMPAC Group, March 31, 1999
______________________________________ Inc.
David Horowitz
/s/ Zenas Block Director of IMPAC Group, March 31, 1999
______________________________________ Inc.
Zenas Block
/s/ M. Shaun Lawson Director of IMPAC Group, March 31, 1999
______________________________________ Inc.
Shaun Lawson
/s/ Lee Newbon Director of IMPAC Group, March 31, 1999
______________________________________ Inc.
Lee Newbon
/s/ Melvin B. Herrin Director of IMPAC Group, March 31, 1999
______________________________________ Inc.
Melvin B. Herrin
</TABLE>
S-2
<PAGE>
Exhibit 2.4
-----------
SHARE SALE AND PURCHASE AGREEMENT
---------------------------------
BETWEEN
J.L.B. HOLDING B.V.
-------------------
AS THE VENDOR
AND
JAMES UPTON HOLDING B.V.
------------------------
AS THE PURCHASOR
AND
MUSIC PRINT B.V.
----------------
AS THE COMPANY
AND
MR. J.D.H. LAMME
----------------
AS MANAGING DIRECTOR AND 100%-SHAREHOLDER OF THE VENDOR
- --------------------------------------------------------------------------------
FOR THE ACQUISITION BY THE PURCHASER OF THE
ENTIRE ISSUED SHARE CAPITAL OF MUSIC PRINT B.V.
- --------------------------------------------------------------------------------
<PAGE>
INDEX
-----
<TABLE>
<S> <C>
1. DEFINITIONS............................................................ 2
1.1. General Words................................................ 2
1.2. Definitions.................................................. 2
2. SALE, PURCHASE AND TRANSFER OF SHARES.................................. 7
2.1. Sale and Purchase of the Shares.............................. 7
2.2. Transfer of the Shares....................................... 7
3. PURCHASE PRICE AND PAYMENT............................................. 8
3.1. Purchase Price............................................... 8
3.2. Payment...................................................... 8
3.3. Escrow....................................................... 8
4. COMPLETION............................................................. 8
4.1. Date and Venue............................................... 8
4.2. Vendor's Obligations......................................... 8
4.3. Other Transactions........................................... 9
5. RELATIONSHIPS WITH THE COMPANY......................................... 9
5.1. General...................................................... 9
5.2. Exclusions................................................... 10
5.3. Other Interests.............................................. 11
6. OTHER TRANSACTIONS..................................................... 11
6.1. Consultancy Agreement........................................ 11
6.2. Agreements with Associates................................... 11
6.3. Vacation of the Properties................................... 11
6.4. William Verweij.............................................. 12
6.5. Packaging Personnel.......................................... 12
7. WARRANTIES AND INDEMNITIES............................................. 12
7.1. The Warranties............................................... 12
7.2. Limitations.................................................. 12
7.3. Quantification of Loss....................................... 12
7.4. Further Disclosure........................................... 13
7.5. Indemnities.................................................. 13
7.6. Liability to Tax............................................. 14
7.7. Indemnities in respect of Tax Liabilities.................... 14
</TABLE>
<PAGE>
8. COVENANTS......................................................... 15
8.1. Specific Covenants........................................ 15
8.2. Compensation for Infringement............................. 16
8.3. Benefit of Undertaking.................................... 16
9. FURTHER ASSURANCE................................................. 16
9.1. Investing Ownership and Ensuring Benefit.................. 16
9.2. Information............................................... 17
10. GENERAL........................................................... 17
10.1. Costs..................................................... 17
10.2. Successors................................................ 17
10.3. Collateral Agreements and Variations...................... 17
10.4. Continuing Effect......................................... 17
10.5. Non Waiver................................................ 18
10.6. Several Dealings.......................................... 18
10.7. Circulars and Announcements............................... 18
10.8. Previous Agreements....................................... 18
10.9. Counter Parts............................................. 18
10.10. Fraud..................................................... 18
10.11. No Recision............................................... 19
11. NOTICES........................................................... 19
11.1. Authorized Addresses...................................... 19
11.2. Service................................................... 19
12. LAW AND PROCEEDINGS............................................... 19
12.1. Governing Law............................................. 19
12.2. Proceedings............................................... 20
SCHEDULE 1
----------
Draft Notarial Deed
SCHEDULE 2a
-----------
Excerpt from the Registers of the Chamber of Commerce concerning the
Company
SCHEDULE 2b
-----------
Articles of Association of the Company
SCHEDULE 3
----------
Employees
<PAGE>
<TABLE>
<S> <C>
SCHEDULE 4
- ----------
SCHEDULE 5
- ----------
Properties
SCHEDULE 6
- ----------
Article 7.1: The Warranties........................................... 1
1. PRELIMINARY........................................................... 1
1.1. Disclosures.................................................... 1
1.2. Other knowledge................................................ 1
1.3. Vendor's Claims against the Company............................ 2
1.4. Independence of Warranties..................................... 2
1.5. Warranties..................................................... 2
1.6. Definition..................................................... 2
2. COMPANY INFORMATION................................................... 2
2.1. Incorporation, Constitution and Statutory Matters.............. 2
2.2. Share Capital and Shares....................................... 3
3. ACCOUNTS AND RECORDS.................................................. 3
3.1. Contents of Accounts........................................... 3
3.2. Stock Provisions............................................... 4
3.3. Debts.......................................................... 4
3.4. Depreciation................................................... 4
3.5. Company Records................................................ 4
3.6. Management Accounts............................................ 5
4. FINANCIAL MATTERS..................................................... 5
4.1. Bank Accounts.................................................. 5
4.2. Financial Facilities........................................... 5
4.3. Encumbrances................................................... 5
4.4. Loss of Benefits............................................... 6
4.5. Guarantees for the Company..................................... 6
4.6. Foreign Exchange Commitments................................... 6
4.7. Creditors...................................................... 6
5. REAL PROPERTY......................................................... 6
5.1. Identity and Information....................................... 6
5.2. Title.......................................................... 6
5.3. Encumbrances on Title.......................................... 7
5.4. Possession..................................................... 7
</TABLE>
<PAGE>
<TABLE>
<S> <C>
5.5. Adverse Interests............................................. 7
5.6. Forfeiture and Loss of Use.................................... 7
5.7. Access........................................................ 8
5.8. Public Authority Obligation................................... 8
5.9. Private Obligations........................................... 8
5.10. Leasehold Obligations......................................... 8
5.11. Condition and Repair.......................................... 8
5.12. Right to buy a Freehold....................................... 8
6. INTELLECTUAL PROPERTY................................................ 9
6.1. Ownership..................................................... 9
6.2. Registered Intellectual Property.............................. 9
6.3. Valid Registrations........................................... 9
6.4. Adverse Claims................................................ 9
6.5. Infringement of Third Party Rights............................ 9
6.6. Third Party Rights............................................ 10
6.7. Licences from Third Parties................................... 10
6.8. Disclosures................................................... 10
6.9. Trade Name.................................................... 10
6.10. Business Name................................................. 11
6.11. Software...................................................... 11
6.12. Software Support.............................................. 11
6.13. Fault Correction.............................................. 12
6.14. Millennium Compliance......................................... 12
7. FYSICAL ASSETS....................................................... 12
7.1. Ownership..................................................... 12
7.2. Leasing and Hire Purchase..................................... 13
7.3. Asset Register................................................ 13
7.4. Condition..................................................... 13
7.5. Computers..................................................... 13
7.6. Stock-in-Trade................................................ 13
8. CONDUCT OF BUSINESS.................................................. 14
8.1. Business since last Accounting Date........................... 14
8.2. Authorizations and Approvals.................................. 15
8.3. Absence of Legal Proceedings.................................. 16
8.4. Public Obligations............................................ 16
8.5. Invalid and Disputed Contracts................................ 16
8.6. Negligent Services............................................ 16
8.7. Defective Goods............................................... 17
8.8. Orders and Judgements......................................... 17
8.9. Competition Law............................................... 17
</TABLE>
<PAGE>
8.10. Contractual Characteristics................................. 18
8.11. Overseas Undertakings....................................... 19
8.12. Agency Distributorship and Similar Arrangements............. 19
8.13. Material Contracts.......................................... 20
8.14. Adverse Matters............................................. 20
8.15. Material Customers.......................................... 20
8.16. Insurance................................................... 20
8.17. Legal Documents............................................. 21
8.18. Effect of Agreement......................................... 21
8.19. Health and Safety........................................... 21
8.20. Improper Practices.......................................... 21
8.21. Outstanding Tenders......................................... 21
9. EMPLOYMENT............................................................ 22
9.1. Employment Particulars...................................... 22
9.2. Termination of Employment................................... 22
9.3. Disputes.................................................... 22
9.4. Compensation Obligations.................................... 23
9.5. Claims...................................................... 23
9.6. Incentive Schemes........................................... 23
9.7. Long Term Contracts......................................... 23
9.8. Industrial Action........................................... 23
9.9. Employment Records.......................................... 23
9.10. Obligations to Employee..................................... 23
9.11. Engagement of Employees by Operation of Law................. 24
10. PENSIONS.............................................................. 24
11. TAXATION.............................................................. 24
11.1. Submission of Returns....................................... 24
11.2. Payment of Tax Due.......................................... 24
11.3. Penalties and Interest...................................... 24
11.4. Deduction of Tax............................................ 24
11.5. Tax Authority Investigations................................ 25
11.6. Accounts Provisions......................................... 25
11.7. Secondary Liabilities....................................... 25
11.8. Asset Values................................................ 25
12. ENVIRONMENTAL MATTERS................................................. 25
12.1. Existing Legislation........................................ 25
12.2. Breach of Legislation....................................... 25
12.3. Litigation.................................................. 25
12.4. Released Substances......................................... 25
<PAGE>
12.5. Authorizations............................................. 26
13. MISCELLANEOUS...................................................... 26
13.1. Accuracy of Information.................................... 26
13.2. Finders fee................................................ 26
SCHEDULE 7
- ----------
Article 7.7.: Indemnity against Taxation Liabilities
SCHEDULE 8
- ----------
Article 7.2.: Limitations on Claims
1. LIABILITY FOR WARRANTY CLAIMS
2. MAXIMUM LIABILITY AND THRESHOLD
2.1. Maximum
2.2. Threshold
SCHEDULE 9
- ----------
Consultancy Agreement
SCHEDULE 10
- -----------
Printing and Production Work Agreement
SCHEDULE 11
- -----------
Disclosure
<PAGE>
1
SHARE SALE AND PURCHASE AGREEMENT
---------------------------------
The undersigned:
I. J.L.B. HOLDING B.V., a private company with limited liability organized and
------------------
existing under the laws of the Netherlands, having its statutory seat at
Amersfoort, the Netherlands, and its principal office at Fuutstraat 28,
39815 JP Amersfoort, the Netherlands, under registration number 31045538
(Handelsregister Kamer van Koophandel cn Fabrieken voor Gooi- en Eemland),
in this duly represented by its managing and statutory director Mr. Johan
Dirk Herman LAMME, as hereafter mentioned under IV, hereinafter referred to
as "the Vendor";
II. JAMES UPTON HOLDING B.V., a private company with limited liability
-------------------------
organized and existing under the laws of the Netherlands, having its
statutory seat at Uden, the Netherlands, under registration number 16079138
(Handelsregister Kamer van Koophandel en Fabrieken voor Oost-Brabant), in
this duly represented by its managing and statutory director Mr. Nicholas
TOMS, hereinafter referred to as "the Purchaser";
III. MUSIC PRINT B.V., a private company with limited liability organized and
-----------------
existing under the laws of the Netherlands, operating under the trade name
MUSIC PRINT & MORE, having its statutory seat at Weesp, the Netherlands,
------------------
and its principal office at Bloemendalerweg 30, 1382 KC Weesp, the
Netherlands, under registration number 32061865 (Handelsregister Kamer van
Koophandel en Fabrieken voor Gooi- en Eemland), in this duly represented by
J.L.B. HOLDING B.V. as aforementioned under I, hereinafter referred to as
"the Company";
IV. MR. JOHAN DIRK HERMAN LAMME, born 15/th/ November 1935 in Amsterdam, the
---------------------------
Netherlands, residing at Fuutstraat 28, 3815 JP Amersfoort, the
Netherlands, hereinafter referred to as "Mr Lamme";
<PAGE>
2
WHEREAS:
A. the Vendor has full right and title to the entire issued and outstanding
share capital of the Company;
B. Mr. Lamme has full right and title to the entire issued and outstanding
share capital of the Vendor;
C. the Vendor wishes that the Shares (as defined in article 1 hereof) be sold
to the Purchaser and the Purchaser wishes to purchase the Shares subject
to the terms and conditions set out in this Agreement;
HEREBY AGREE UNDER THE FOLLOWING TERMS AND
CONDITIONS AS FOLLOWS:
ARTICLE 1: DEFINITIONS
1.1 GENERAL WORDS
- -----------------
The words and phrases "other", "including" and "in particular" shall not limit
the generality of any preceding words or be construed as being limited to the
same class as the preceding words where a wider interpretation is possible.
1.2. DEFINITIONS
- ----------------
Unless the context requires otherwise, the following terms and expressions in
this Agreement including its recitals and schedules are defined terms and
expressions which shall have the following meaning:
The Accounts: The audited balance sheet of the Company as at
the Last Accounting Date and the profit and
loss account of the Company for the period then
ended together with the explanatory notes
thereto and the directors' and auditors'
reports thereon or attached thereto.
The Last Accounting Date: 31/st/ December 1997.
<PAGE>
3
Associate: Means any person:
a. which is a Subsidiary of or controlled by the person
concerned, or
b. of which or by whom the person concerned is a Subsidiary
or is controlled, or
c. who or which is a Subsidiary of or controlled by a person
who or which controls or is the holding company of the
person concerned, or
d. in which the person concerned has a direct or indirect
financial interest (disregarding any interest in shares
in a company quoted on a recognized stock exchange
representing less than 1% [one percent] of its issued
share capital and investment in independently managed
pension schemes, unit trusts, managed funds or any
similar investments), or
e. of which one is an officer of the other, or
f. of which one is the spouse, parent, issue, brother or
sister of the other, or
g. of which one is trustee or nominee for the other or for
any associate of the other (whether sole or joint trustee
or nominee and whether the other or the associate is sole
or one of several beneficiaries), or
h. who or which is acting on behalf of that other, and
without limiting the foregoing each of the following is an
Associate of the Vendor and of Mr. Lamme:
D.M.S.I G.m.b.H and Music Print Packaging B.V.
"aware" means that the person concerned is either actually aware or
ought to be aware were he diligently to make all appropriate
and reasonable enquiries and give the matter full and
careful consideration.
Civil Law Notary: Any civil law notary of Nauta Dutilh Advocaten Notarissen
Belastingadviseurs (Nauta Dutilh lawyers, civil law notaries
and tax advisors) or any of their deputies.
Completion: Actual completion of the sale and purchase hereunder.
<PAGE>
4
Confidential Information: Any and all information and other matters referred
to in paragraph (a) of the definition of
Intellectual Property and all other information of
a confidential nature relating to customers,
suppliers, finances or other affairs of the
Company, especially in relation to Products.
Deed of Transfer: The notarial Deed of Transfer of the Shares in
the draft form attached hereto as Schedule 1.
----------
Disclosure Letter: The letter and annexes thereto of even date with
this Agreement from the Vendor to the Purchaser in
the form attached hereto as Schedule 11, accepted
-----------
in writing by the Purchaser and containing various
disclosures against the Representations and
Warranties.
Employees: The employees of the Company listed in Schedule 3,
----------
which schedule shows their dates of birth, dates
of entry into service, as well as their current
salaries and benefits and positions.
Encumbrance: Any mortgage, charge, lien, pledge, attachment,
usufruct, security, option, right to acquire,
equity or other encumbrance or adverse interest
whatsoever or commitment to constitute any of the
same, or registrations thereof.
Environmental Claim: Any claim, notice of violation, prosecution,
demand, action, official warning, abatement or
other order or notice (conditional or otherwise),
relating to any notification or order requiring
compliance with the terms of any Environmental
Licence or Environmental Law.
Environmental Law: All European, state, national, provincial,
municipal or local laws, regulations, statutory
instruments and orders, whether administrative,
criminal or otherwise, and all guidelines relating
thereto and/or rules and practices promulgated
thereunder in respect of environmental matters
including without limitation any such laws,
regulations, statutory instruments and orders
relating to emission or
<PAGE>
5
discharge of substances into the environment or to
the production, processing, distribution,
management, use, treatment, storage, burial,
disposal, transport or handling of any hazardous
material. The foregoing as may be in force or
applicable to the Company from time to time in the
Netherlands.
Environmental Licence: Any permit, licence, authorisation, consent,
certificate, regulatory plan, exemptions, consents
and authorisations, howsoever named, compliance
schedule or other approval obtained or which ought
to have been obtained at any time by the Company
and / or in relation to the business carried on by
the Company pursuant to any environmental law.
Hazardous Material: Any material such as chemicals, radio active
materials, paints, ink, pollutants, or other
hazardous material, the presence or release of
which into the environment is or may be considered
hazardous or damaging for the public health and /
or the environment, and such other material as is
or may from time to time be designated or treated
as hazardous materials under the environmental
laws.
Indemnities: The obligations of the Warrantors under Schedule 8.
----------
Intellectual Property: a. all know-how, expertise, technological
information, data, formulae, designs,
processes, specifications and other
knowledge and information;
b. all drawings, writings and other papers,
computer programs and other tangible and non-
tangible manifestations of any items referred
to in paragraph a. of this definitions;
c. all rights to and copy right, patent, trade
mark, registered design, design right and
other protection for or relating to the
foregoing; and
d. all claims and rights in or arising from the
foregoing.
The aforementioned a. to d. especially in relation
to Products.
<PAGE>
6
Management Accounts: The management accounts of the Company a copy of which
is attached to the Disclosure Letter.
Material Customer: Each of the following: EMI Compaq Disc Holland,
Polygram (Germany), Polygram (France), Sentinel, T.S.I.
(France).
person: includes any legal or natural person, partnership,
trust, company, government, local or public authority
department or other body or association of persons.
Products: Printed material for use in or with packaging for 12
cm. disks, mini disks and related or derivative
products and any other CD-ROM or other medium for
electronic machine readible storage of music, data and
other information.
Properties: The land described in Schedule 5.
----------
Purchaser's Group: The Purchaser and any Subsidiary of the Purchaser for
the time being, not including the Company.
Purchaser's Lawyers: Pot & Stoop Advocaten, Veerkade 2, 3016 DE Rotterdam,
the Netherlands (P.O. Box 23202, 3001 KE Rotterdam, the
Netherlands).
Relevant Substance: a. any radio active emissions;
b. electricity and any electrical or electromagnetic
emissions;
c. any substance whatsoever (whether in a solid or
liquid form or in the form of a gas or vapour or
whether unknown or in combination with any other
substance);
d. waste material;
e. any activity or other phenomenam, which in the
case of e. and d. above is capable of causing harm
to men or any other living organism supported by
the environment (which include natural resources
whether pertaining to life or not, such as air,
qua water, soil, qua fauna and flora and the
interaction between the same factors and also the
built
<PAGE>
7
environment) or damaging the environment or public
health or welfare.
Shares: All 400 issued and outstanding shares with a nominal
value of Dfls. 100 (in words: one hundred Dutch
guilders) each in the share capital of the Company with
numbers 1 through 400 constituting the whole of the
allotted and issued share capital of the Company, which
is fully paid up.
Tax and Taxation: Any liability to any form of taxation or other
financial duty, contribution, premium, grant, subsidy,
levy, withholding or imposed of any kind, whether of
the Netherlands or not and whether of a supra-national,
national, regional, municipal or other public authority
including but not limited to corporate income tax
("vennootschaps-belasting") and all sums paid in
respect thereof by way of deduction, in advance or
otherwise and all fines, penalties, charges, costs and
interest ("heffings- en invorderingsrente") or damages
incidental or relating thereto.
Tax Warranties: The warranted statements contained in part XI of
Schedule 6 (relating to Taxation).
----------
Vendor's Lawyers: Van Mens & Wisselink, Advocaten, Wilhelminapark 60-61,
3581 NP Utrecht, the Netherlands (P.O. Box 85450, 3508
AL Utrecht, the Netherlands).
Warranties: The warranted statements in Schedule 6.
----------
ARTICLE 2: SALE, PURCHASE AND TRANSFER OF SHARES
2.1. SALE AND PURCHASE OF THE SHARES
- ------------------------------------
Subject to the terms and conditions set out in this Agreement, the Vendor hereby
sells to the Purchaser 400 shares in the Company numbered 1 through 400 and the
Purchaser hereby purchases the Shares from the Vendor.
2.2. TRANSFER OF THE SHARES
- ---------------------------
On Completion the Vendor shall transfer the Shares to Purchaser by executing the
Deed of Transfer before the Civil Law Notary. The Company shall acknowledge the
transfer of the
<PAGE>
8
Shares on Completion and enter such transfer in its Register of Shareholders
forthwith. On Completion the parties shall furthermore take such action as may
be required by this Agreement.
ARTICLE 3: PURCHASE PRICE AND PAYMENT
3.1. PURCHASE PRICE
- -------------------
The total Purchase Price for the sale of the Shares shall be the sum of TEN
MILLION DUTCH GUILDERS (Dfls. 10,000,000) which shall be paid in cash upon
Completion.
3.2. PAYMENT
- ------------
On or before Completion Purchaser shall transfer an amount equal to the Purchase
Price to the bankaccount of the Civil Law Notary in same day funds. Immediately
after the Deed of Transfer has been passed and the requirements of article 4
have been satisfied, the Civil Law Notary shall release the Purchase Price to
the Vendor, with regard to what is stated in article 3.3. of this Agreement
hereunder.
3.3. ESCROW
- -----------
By way of Escrow from the Purchase Price an amount of TWO MILLION DUTCH GUILDERS
(Dfls. 2,000,000,--) will, as commissioned by Purchaser and vendor, be paid by
Purchaser to a yet to be specified account with STAAL BANKIERS N.V., hereinafter
referred to as "the Escrow Agent". The rights and obligations of parties with
regard to this Escrow are laid down in the Escrow Agreement which, in draft
form, is attached to this Agreement under Schedule 4. As long as the Escrow
----------
Agreement is not yet signed by all parties thereto the aforementioned amount
will rest under the Civil Law Notary.
ARTICLE 4: COMPLETION
4.1. DATE AND VENUE
- -------------------
4.1.1. Subject to the provisions of this Agreement, Completion shall take
place at the offices of the Civil Law Notary, no later than five
working days after signature of this Agreement.
4.1.2. Completion will be dependent on the Company having become the sole
owner of the Properties as mentioned under article 5 of the Warranties
which are attached to this Agreement under Schedule 6.
----------
4.2. VENDOR'S OBLIGATIONS
- -------------------------
Upon or before Completion the Vendor shall:
<PAGE>
9
4.2.1. deliver to Purchaser:
a. the resignations required by article 4.2.2. duly executed as
required by the respective persons who so resign;
b. the items required by article 5;
4.2.2. procure:
a. that such persons as the Purchaser may nominate are validly
appointed additional directors of the Company and that upon such
appointment such other directors as the Purchaser may specify of
the Company resign, each such resignation being confirmed by the
person resigning handing to the Purchaser a letter addressed to
the Company in a form required by the Purchaser acknowledging
that he has no claim or entitlement whatsoever against or from
the Company outstanding or arising from termination of his office
or employment whether for compensation, arrears of salary, fees,
expenses, damages or otherwise howsoever;
b. the revocation of all authorities to bankers for the Company
relating to bankaccounts giving authority through such persons as
the Purchaser may direct to operate the same;
c. the resignation of the existing auditors of the Company in
writing, acknowledging that they have no claim against the
Company.
4.3. OTHER TRANSACTIONS
- -----------------------
It shall be a precondition to the obligation of the Purchaser to proceed to
Completion that upon Completion each of the persons respectively party thereto
(other than the Purchaser) shall effect or procure that there are effected the
transactions and enter into or procure that there are entered into the documents
required by article 7; shall deliver to the other parties thereto a part of such
document duly executed by him (underhand or as a deed, as the document
requires).
ARTICLE 5: RELATIONSHIPS WITH THE COMPANY
5.1. GENERAL
- ------------
Each of the Vendor and Mr. Lamme undertake with the Purchaser that, subject to
article 5.2., upon or before Completion each of the Vendor and Mr. Lamme will:
5.1.1. repay and fulfil, or procure there to be repaid and fulfilled, to the
Company all sums and liabilities which are owing, incurred or
outstanding to the Company at Completion by him or by any Associate of
himself;
5.1.2. return to the Company any item of property of the Company in the
possession or control of himself or any Associate of himself;
<PAGE>
10
5.1.3. confirm and procure that such of his Associates as the Purchaser may
specify prior to Completion confirm, to the Company and to the
Purchaser in writing, and will procure that:
a. neither he nor any such Associate has any claim, entitlement or
rights whatsoever (whether contractual, tortuous, statutory or
otherwise howsoever) against the Company or in respect of any of
the Shares safe those agreed to be sold by him hereunder;
b. the Company is not in any way obliged or indebted to him or to
any such Associate;
c. neither he nor any such Associate of his has any entitlement to
carry out work for the Company after Completion, and without
limiting the foregoing the Company is entirely free to carry out
or have carried out by any person, free from obligation to him or
to any Associate of his, of any pre-press or origination or
reprographic work; and
d. neither he nor any such Associate owns or has any interest in any
item which is then or has been at any time during the six months
preceding Completion used in the business of the Company;
5.1.4. assign and procure that such of his Associates as the Purchaser may
specify assign, to the Company or to such person as the Purchaser
specifies, any rights in any Intellectual Property now or then held by
him or such Associate which is used by or is relevant to any business
of the Company;
5.1.5. acknowledge and undertake that neither he nor any Associate of his
then has, or at any time during the six months preceding Completion
has had, any rights to use or any other right or interest in or
relating to any such Intellectual Property;
5.1.6. procure that any Guarantee or other obligation of any kind incurred by
the Company to any person for the account of any of the Vendor and /
or Mr. Lamme or any Associate of any of the Vendor and / or Mr. Lamme
is effectively discharged and released to the satisfaction of the
Purchaser;
and each of the Vendor and Mr. Lamme shall indemnify the Company against any
loss or liability incurred by it which would not have incurred had the foregoing
paragraphs been wholly complied with and (in the cases of articles 5.1.3. and
5.1.4) all Associates of each of the Vendor and Mr. Lamme had been specified in
accordance therewith.
5.2. EXCLUSIONS
- ---------------
Nothing in article 5.1. or in any document entered into pursuant thereto shall
apply to any contract, claim, entitlement, right, obligation, indebtness or
interest disclosed in the Disclosure Letter with express reference to this
article 5.2.
<PAGE>
11
5.3. OTHER INTERESTS
- ---------------------
Upon or before Completion Mr. Lamme shall deliver or procure to be delivered to
the Purchaser a complete and correct list of all other companies, businesses or
undertakings in which he has any direct or indirect financial interest
(disregarding interests which are limited to investments in companies listed or
quoted on a recognized stock exchange or investments in or through independently
managed pension schemes or units trusts or managed funds or similar investments)
and such list shall contain a full description of the businesses respectively
carried on by them.
ARTICLE 6: OTHER TRANSACTIONS
6.1. CONSULTANCY AGREEMENT
- --------------------------
Upon completion the Vendor and Mr. Lamme shall enter into with the Company and
the parties shall cause the Company to enter into with them a Consultancy
Agreement in agreed form and a counter-part of such agreement duly signed by
each party shall be delivered to each of them.
Schedule 9.
- -----------
6.2. AGREEMENTS WITH ASSOCIATES
- -------------------------------
6.2.1. Upon Completion Mr. Lamme shall cause his Associates as mentioned in
the Printing and Production Work Agreement attached hereto under
Schedule 10, to enter into that Agreement with the Company and the
-----------
Purchaser.
6.2.2. Mr. Lamme shall cause any other undertaking which becomes an Associate
of his during the three years following Completion for the remaining
term thereof which has interests in the production or supply of Products
to enter into an agreement in the like form to that required by the
preceding article 6.2.1., as soon as practicable following his
acquisition of such interest.
6.3. VACATION OF THE PROPERTIES
- -------------------------------
Each of the Vendor and Mr. Lamme shall procure that they and all their
Associates which previously used or occupied any part of the Properties cease to
use or occupy the same and vacate the same in good order and without causing
damage within six months or lesser period as agreed, when asked to do so by
Purchaser, or in case each of the Vendor and Mr. Lamme and any of their
Associates would so desire.
<PAGE>
12
6.4. WILLIAM VERWEIJ
- --------------------
Each of the Vendor and Mr. Lamme shall cause the employment of Mr. William
Verweij by the Company to terminate on or before Completion by mutual agreement
with him and for him to become employed by the Vendor or an Associate of the
Vendor and each of the Vendor and Mr. Lamme shall indemnify the Company against
any cost, claim, liability or expense to William Verweij which it may incur.
6.5. PACKAGING PERSONNEL
- ------------------------
Each of the Vendor and Mr. Lamme shall cause Messrs. H. Versteeg, M.A.M.
Vesters, A.R. Dirks, M. van Roomen and Mrs. M. Lamme to become employed by the
Vendor or an Associate of the Vendor and each of the Vendor and Mr. Lamme shall
indemnify the Company against any cost, claim, liability or expense to the
aforementioned persons which it may incur.
ARTICLE 7: WARRANTIES AND INDEMNITIES
7.1. THE WARRANTIES
- -------------------
The provisions of Schedule 6 shall have effect as if set out herein at length.
----------
7.2. LIMITATIONS
- ----------------
Except where any claim arises by reason of fraud or wilful concealment or
dishonesty or deliberate non-disclosure on the part of the Vendor or of any
representative of the Vendor (in which case Schedule 8 shall not apply) the
----------
provisions of Schedule 8 shall have effect as if herein set out at length in
----------
order to limit the liability of the Vendor in respect of the Warranties.
7.3. QUANTIFICATION OF LOSS
- ---------------------------
Without limiting the rights of the Purchaser or otherwise affecting its ability
to claim and recover damages on any other basis available to it, if any of the
Warranties is or proves to be incorrect, incomplete or misleading (a "Breach"),
the Vendor shall at the request of the Purchaser pay to the Purchaser or (if so
directed by the Purchaser) to the Company:
7.3.1. such amount as will put the Company into the position which would have
existed if there had been no Breach and without limiting this
paragraph:
a. if any asset of the Company is extinguished or is not owned by it
or is worth less than its value would have been if the Breach had
not occurred, the amount to be paid by the Vendor at the request
of the Purchaser shall be the amount of the loss or shortfall in
value of such asset;
<PAGE>
13
b. if the Company has or will have a liability or an increased
or substituted liability which would not have been the case
had the Breach not occurred, the amount to be paid by the
Vendor at the request of the Purchaser shall be the amount
of the increase in liabilities which would not have been the
case but for the Breach;
c. if the effect of the Breach is that there does not accrue to the
Company a benefit, gain or profit which it might reasonably have
been expected would accrue, the amount to be paid by the Vendor
at the request of the Purchaser shall be the amount equal to the
capitalized value of such benefit, gain or profit;
d. in any case there shall be paid such further amount (if any)
as may be necessary to put the Company into the same
position in financial terms as it would have been had the
Breach not occurred;
7.3.2. all costs and expenses incurred by the Purchaser or the Company as a
result of any of the Warranties being untrue, incomplete or misleading
and any costs (including legal costs on a full Indemnity basis),
expenses and other liability which any of them may incur either before
or after commencement of any action in connection with any legal
proceedings in pursuit of any claim under the Warranties in which
judgement is given for the Purchaser or in connection with the
enforcement of any settlement or judgement relating to such claim.
7.4. FURTHER DISCLOSURE
- -----------------------
Immediately that either of the Vendor or Mr. Lamme or the Purchaser become aware
of the same he shall disclose in writing to the Purchaser respectively the
Vendor any matter, thing or occurrence whatever and whenever it arose or
occurred or became known to him (and whether before, on or after Completion)
which is inconsistent with any of the Warranties and might be material to the
Company or to the Purchaser, and such disclosure shall be without prejudice to
any rights or remedies of the Purchaser.
7.5. INDEMNITIES
- ----------------
The Vendor shall indemnify the Company and the Purchaser and each of them
against the following, save to the extent provided for in the Accounts and shall
pay to the Purchaser or (if the Purchaser so requests, shall pay to the Company)
an amount equal to:
7.5.1. any liability to any person in respect of any Environmental Claim or
for any environmental damage (whether damage to ground or surface,
water, air, soil, buildings, animals, chattels, or otherwise) or for
damage to human health, whether or not such liability is based on
fault and weather or not it comprises penalties, cleaning costs,
compensation, other costs, or other liability, where the damage or
other matter the subject of the claim occurred or arose wholly or
partly prior to Completion;
<PAGE>
14
7.5.2. any liability to any person arising from or relating to any product
manufactured, produced or supplied or service rendered by the Company
prior to Completion;
7.5.3. any liability to any employee or former employee of the Company in
respect of any illness contracted or injury suffered in the course of
his employment wholly or partly before Completion;
7.5.4. all costs, claims, proceedings and expense (including legal fees on
the basis of a full indemnity) suffered or incurred by the Company or
the Purchaser in dealing with, disputing or otherwise in relation to
any liability referred to in the preceding paragraphs of this article
7.5.;
7.5.5. all costs (including labour costs, calculated with the full burden of
overhead costs, of the Company) incurred in carrying out, in legal or
reasonable commercial response (taking into account the nature and
circumstances of the claim, the general commercial interests of the
Company and the passed practice of the Company) to claim for such
action, any replacement of goods or services supplied by the Company
prior to Completion, whether or not such replacement was effected
pursuant to a warranty commitment given by the Company (and the
certificate of the Purchaser's auditors shall be conclusive as to
costs so incurred but not of whether the work was reasonably carried
out);
7.5.6. any liability of the Company to any third party under any Guarantee or
other commitment given to support or secure the obligation of either
of the Vendor or any Associate of either of the Vendor or Mr. Lamme.
7.6. LIABILITY TO TAX
- ---------------------
If any sum payable by the Vendor under the preceding provisions of this article
7.5. is subject to payment of any Tax in the hands of the recipient (whether by
deduction, withholding or direct assessment) such payment shall be increased to
such amount as after deduction, withholding or payment of such Tax leaves clear
in the hands of the recipient a net amount equal to the payment otherwise
required to be made by the relevant provision.
7.7. INDEMNITIES IN RESPECT OF TAX LIABILITIES
- ----------------------------------------------
The provisions of Schedule 7 shall have affect as if set out herein at length.
----------
<PAGE>
15
ARTICLE 8: COVENANTS
8.1 SPECIFIC COVENANTS
- ----------------------
Each of the Vendor and Mr. Lamme undertake with the Purchaser and (as separate
undertaking) with the Company that, save with the prior written consent of the
Purchaser, neither of them will, directly or indirectly and whether alone or
jointly with or as proprietor, shareholder, officer, manager, servant,
consultant or agent to or for or on behalf of any person, firm or company:
8.1.1. at any time:
a. disclose or permit to be disclosed to any third party any
Confidential Information;
b. use or allow to be used any Confidential Information for its own
benefit or for the benefit of any other person or persons except
the Company or in a manner which might injure or cause loss or
otherwise be detrimental to the Company;
c. use or permit the use of any name, style logo or image of the
Company;
8.1.2. at any time during the three years from the date of Completion be
engaged, concerned or interested in the production or supply of
printing for any Products at or from any location in the Netherlands,
Belgium, Germany or France in competition with the Company or any
member of the Purchaser's Group;
8.1.3. at any time during the three years from the date of Completion be
engaged, concerned or interested in the production or supply of
printing for any Products which is directly or indirectly to be
supplied:
a. to any Material Customer; or
b. to any Associate of any Material Customer in the Netherlands,
Belgium, Germany or France;
8.1.4. except on behalf of the Company or the Purchaser's Group, attempt to
seek orders for the supply of printing for Products from any person,
firm or company which has been a customer or client of the Company at
any time within the period of eighteen months ending with the date of
Completion;
8.1.5. at any time persuade or attempt to persuade or do anything else
calculated to cause or induce any person who or which purchases goods
from or supplies goods or services to the Company to seize doing so or
to take any action that may result in the impairment of any such
relationship;
8.1.6. persuade or attempt to persuade any employee or sales representative
or agent of the Company to terminate his or her or their relationship
with the
<PAGE>
16
Company or for a period of three years from the date of
Completion employ or engage any such person or take any such
action that may result in the impairment of the relationship
between such person and the Company;
8.1.7. use or permit the use of any name, mark, get-up, style, label or
image which is now or at any time in the two years preceding the
date of Completion has been used by the Company which causes or
might cause confusion with the name, style, logo or image of or
to imply a connection with the Company;
8.1.8. this Article 8 does not apply to Kreon B.V., whilst no other
limitation than contained in this Article 8 shall apply to the
businesses of DMSI G.m.b.H. and Music Print Packaging B.V.
8.2. COMPENSATION FOR INFRINGEMENT
- ----------------------------------
If there occurs any breach of the obligations of each of the Vendor and Mr.
Lamme contained in the preceding article 8.1., each of the Vendor of Mr. Lamme
shall immediately without any action or formality being required to be taken or
fulfilled by the Purchaser, forfeit for the benefit of the Purchaser (or at the
discretion of the Purchaser for the benefit of the Company) an immediately
payable penalty of ONE MILLION DUTCH GUILDERS (Dfls. 1.000.000) for each such
infringement and of ONE HUNDRED THOUSAND DUTCH GUILDERS (Dfls. 100.000) for each
day that such infringement continues, without any damage or loss being required
to be proven and without prejudice to the right of the Purchaser to claim
additional damages if there are grounds for so doing.
8.3. BENEFIT OF UNDERTAKING
- ---------------------------
Each of the Vendor and Mr. Lamme acknowledge and agree that for the purpose of
article 8.1., the Purchaser contracts, not only for itself, but also on behalf
of the Company, to the intent that such covenants shall be enforceable by any
person to whom any of the business or undertaking of the Company is from time to
time transferred or by whom it is carried on after the date of this Agreement.
ARTICLE 9: FURTHER ASSURANCE
9.1. VESTING OWNERSHIP AND ENSURING BENEFIT
- -------------------------------------------
Each of the Vendor and Mr. Lamme shall do, execute and perform and procure to be
done, executed and performed such further acts, deeds, documents and things as
the Purchaser may from time to time reasonably require effectively to vest the
full legal and beneficial ownership of the Shares in the Purchaser or as it
directs free from all Encumbrances and otherwise to ensure to the Purchaser the
full benefit of this Agreement.
<PAGE>
17
9.2 INFORMATION
- ----------------
Each of the Vendor and Mr. Lamme shall cause to be made available to the
Purchaser all Information in the possession or under the control of themselves
or their Associates which the Purchaser may from time to time reasonably require
(before of after Completion) relating to the business and the affairs of the
Company.
ARTICLE 10: GENERAL
10.1 COSTS
- ----------
Each party hereto shall pay his own costs of and incidental hereto and to the
sale and purchase hereby contracted and other matters herein provided for,
including in particular but without limiting the foregoing all legal and
accountancy fees relating to this Transaction or the negotiations therefore or
matters arising in the course of the same notwithstanding that any of the
Companies may be legally liable for the same and the Warrantors shall indemnify
the Company against any costs incurred by it before Completion which it would
not have incurred but for matters referred to in this article.
10.2 SUCCESSORS
- ---------------
Subject as hereinafter provided, this Agreement and all Warranties, undertakings
and provisions contained herein shall be binding upon and endure for the benefit
of the successors and assigns of the parties hereto including their legal
personal representatives and estates and without limiting the foregoing the
Purchaser may from time to time assign in whole or in part the benefit of all or
any of this Agreement, the Warranties and the Indemnities.
10.3 COLLATERAL AGREEMENTS AND VARIATIONS
- -----------------------------------------
This Agreement and the attached Schedules (including any documents referred to
herein) constitutes the entire agreement between the parties and no variation
hereof shall be effective unless in writing signed by the parties hereto or on
their behalf by their respective lawyers above defined.
10.4 CONTINUING EFFECT
- ----------------------
The provisions of this Agreement and of the Schedules (in sofar as the same has
not been wholly performed at Completion) shall remain in full force and effect
for so long as may be necessary to give full effect thereto and in particular
the Warranties and the representations given by each of the Vendor and / or
Mr. Lamme shall continue to have effect after Completion whether or not the
Purchaser is then aware of any breach or circumstance which might be or give
rise to a Breach. Completion shall in no circumstances whatsoever constitute a
waiver of any of the rights or remedies of the Purchaser.
<PAGE>
18
10.5. NON-WAIVER
- -----------------
No time or other indulgence granted by any party to another shall constitute any
waiver of or otherwise affect any right or remedy hereunder. Subject as herein
provided all rights and remedies shall be cumulative and not mutually exclusive.
10.6. SEVERAL DEALINGS
- -----------------------
The Purchaser may deal separately with, grant time or other indulgence to, and
enter into separate agreements or compromises with or release the liability of
either the Vendor or Mr. Lamme and no action or inaction whatsoever of the
Purchaser in relation to either the Vendor or Mr. Lamme shall affect the
liability of the other.
10.7. CIRCULARS AND ANNOUNCEMENTS
- ----------------------------------
Any announcements, reports, circulars and other documents which any party hereto
shall be required or wish to have prepared in connection with or resulting from
this transaction within six months from Completion shall be subject to the
approval of the other parties hereto (which shall not be unreasonably withheld)
safe that any party (after consultation with the other parties hereto) may make
or issue any announcements, circulars and other communications which it or its
holding company is required to make by law or by the London Stock Exchange.
10.8. PREVIOUS AGREEMENTS
- --------------------------
This Agreement replaces any previous agreement, understanding or arrangement in
the matter between the parties all of which shall by mutual consent cease to
have affect on the signing hereof.
10.9. COUNTER-PARTS
- --------------------
This Agreement may be executed in any number of counter-parts each bearing the
signature of one or more of the parties hereto and each such counter-part shall
be original and shall be effective once a party hereto has executed one or more
such counter-parts (whether the same or different counter-part) and together
shall constitute a single agreement.
10.10. FRAUD
- ------------
Nothing in this Agreement shall prevent or restrict liability for Fraud.
<PAGE>
19
10.11. NO RECISION
- ------------------
The parties hereto waive their rights under Sections 6:265 et seq of the
Netherlands Civil Code to claim recision ("on binding") of this Agreement,
unless such recision is claimed pursuant to article 4.1. hereof.
ARTICLE 11: NOTICES
11.1. AUTHORIZED ADDRESSES
- --------------------------
Any notice or other communication hereunder shall be given in writing in the
English language and (without prejudice to service in any other manner) shall be
validly served:
11.1.1. on each of the Vendor or Mr. Lamme if addressed to them and given to
the Vendor's lawyers, or if given to them at their respective
addresses stated at the beginning of this Agreement;
11.1.2. to the Purchaser if given to it at its address stated with a copy
given to the Purchaser's lawyers;
PROVIDED THAT any party may by notice to each other change its address for
service of notices and such new address shall therefrom be substituted for that
previously applicable.
11.2. SERVICE
- -------------
Any notice so given shall be deemed to have been given as follows:
11.2.1. if given personally to the addressee or to a director or of a
corporate addressee or if left at the address for the addressee for
the time being authorized as stated above (and any such notice or
communication shall be deemed served when so delivered);
11.2.2. if sent within the Netherlands, if sent by registered mail to the
address for the time being authorized for the addressee as stated in
article 11.1. (and any such communication so sent shall be deemed
delivered at noon on the second day following the date of registered
mail).
ARTICLE 12: LAW AND PROCEEDINGS
12.1. GOVERNING LAW
- -------------------
This Agreement shall be governed and construed in accordance with the laws of
the Netherlands.
<PAGE>
20
12.2 PROCEEDINGS
- ----------------
The parties irrevocably submit to the exclusive jurisdiction of the Court of
Rotterdam, the Netherlands.
THUS AGREED AND SIGNED IN TWO ORIGINAL COPIES IN WEESP ON 20TH NOVEMBER 1998.
/s/ Johan Dirk Herman Lamme
- ---------------------------------------
For and on behalf of J.L.B. Holding B.V.:
Mr. Johan Dirk Herman Lamme
/s/ Nicholas Toms
- ---------------------------------------------
For and on behalf of James Upton Holding B.V.:
Mr. Nicholas Toms.
/s/ Johan Dirk Herman Lamme
- --------------------------------------
For and on behalf of Music Print B.V.:
Mr. Johan Dirk Herman Lamme.
/s/ Johan Dirk Herman Lamme
- ---------------------------
Mr. Johan Dirk Herman Lamme.
<PAGE>
Schedules to the Investment Agreement (Omitted Herein)
Schedule 1 Draft Notary Deed
Schedule 2a Excerpt from the Registers of the Chamber of Commerce concerning
the Company
Schedule 2b Articles of Association of the Company
Schedule 3 Employees
Schedule 4
Schedule 5 Properties
Schedule 6 The Warranties
Schedule 7 Indemnity against Taxation Liability
Schedule 8 Limitations on Claims
Schedule 9 Consultancy Agreement
Schedule 10 Printing and Production Work Agreement
Schedule 11 Disclosure
The Company will furnish supplementally a copy of any omitted schedule to the
Securities and Exchange Commission upon request.
<PAGE>
EXHIBIT 3.3
IMPAC GROUP, INC.
-----------------
SECOND AMENDED AND RESTATED BY - LAWS
-------------------------------------
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
Article I. - General....................................................... 1
1.1. Offices........................................................ 1
1.2. Seal........................................................... 1
1.3. Fiscal Year.................................................... 1
Article II. - Stockholders................................................. 1
2.1. Place of Meetings.............................................. 1
2.2. Annual Meeting................................................. 1
2.3. Quorum......................................................... 2
2.4. Right to Vote; Proxies......................................... 2
2.5. Voting......................................................... 2
2.6. Notice of Annual Meetings...................................... 3
2.7. Stockholders' List............................................. 3
2.8. Special Meetings............................................... 3
2.9. Notice of Special Meetings..................................... 3
2.10. Inspectors..................................................... 4
2.11. Stockholders' Consent in Lieu of Meeting....................... 4
Article III. - Directors................................................... 5
3.1. Number of Directors............................................ 5
3.2. Change in Number of Directors; Vacancies....................... 5
3.3. Resignation.................................................... 6
3.4. Removal........................................................ 6
3.5. Place of Meetings and Books.................................... 6
3.6. General Powers................................................. 6
3.7. Committees..................................................... 6
3.8. Powers Denied to Committees.................................... 7
3.9. Expenses and Compensation of Directors......................... 7
3.10. Annual Meeting................................................. 7
3.11. Regular Meetings............................................... 8
3.12. Special Meetings............................................... 8
3.13. Quorum......................................................... 8
3.14. Telephonic Participation in Meetings........................... 8
3.15. Action by Consent.............................................. 9
Article IV. - Officers..................................................... 9
4.1. Selection; Statutory Officers.................................. 9
4.2. Additional Officers............................................ 9
4.3. Terms of Office................................................ 9
4.4. Compensation of Officers....................................... 9
</TABLE>
<PAGE>
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<TABLE>
<S> <C>
4.5. Chairman of the Board.......................................... 9
4.6. President...................................................... 9
4.7. Executive Vice Presidents and Vice Presidents.................. 10
4.8. Treasurer...................................................... 10
4.9. Secretary...................................................... 10
4.10. Assistant Secretary............................................ 11
4.11. Assistant Treasurer............................................ 11
4.12. Subordinate Officers........................................... 11
Article V. - Stock......................................................... 11
5.1. Stock.......................................................... 11
5.2. Fractional Share Interests..................................... 12
5.3. Transfers of Stock............................................. 12
5.4. Record Date.................................................... 13
5.5. Transfer Agent and Registrar................................... 13
5.6. Dividends...................................................... 13
5.7. Lost, Stolen or Destroyed Certificates......................... 14
5.8. Inspection of Books............................................ 14
Article VI. - Miscellaneous Management Provisions.......................... 14
6.1. Checks, Drafts and Notes....................................... 14
6.2. Notices........................................................ 14
6.3. Conflict of Interest........................................... 15
6.4. Voting of Securities owned by this Corporation................. 16
Article VII. - Indemnification............................................. 16
7.1. Right to Indemnification....................................... 16
7.2. Right of Indemnitee to Bring Suit.............................. 17
7.3. Non-Exclusivity of Rights...................................... 18
7.4. Insurance...................................................... 18
7.5. Indemnification of Employees and Agents of the Corporation..... 18
Article VIII. - Amendments................................................. 18
8.1. Amendments..................................................... 18
Article 9. -
9.1. Definition.....................................................
9.2. Restrictions on Transfer.......................................
9.3. Obligation to Sell in Approved Sale............................
9.4. Co-Sale Rights in a Majority Sale Event........................
</TABLE>
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<TABLE>
<S> <C>
9.5. Right of Corporation to Repurchase Shares Upon Termination of
Employment.....................................................
9.6. Transfers of B Shares in Breach of this Article 9..............
9.7. Restrictive Legend.............................................
</TABLE>
<PAGE>
IMPAC GROUP, INC.
-----------------
SECOND AMENDED AND RESTATED BY - LAWS
-------------------------------------
Notwithstanding any provision of Articles 1 through 8 of these by-laws to
the contrary, Articles 1 through 8 of these by-laws shall be subject to, and in
the case of any conflict or inconsistency, shall be controlled and overridden
by, the terms of that certain First Amended and Restated Stockholder Agreement
dated as of March 12, 1998, and amended and restated as of September 10, 1998,
by and among the Corporation and its stockholders (as amended and in effect from
time to time, the "Stockholder Agreement"), and by the terms of the Other
Agreements as defined therein. Notwithstanding anything to the contrary stated
therein, the Stockholder Agreement shall be subject to, and in the case of any
conflict or inconsistency, shall be controlled and overridden by, the terms of
Article 9 of these by-laws.
Article I - General.
-------------------
1.1. Offices. The registered office shall be in the City of Wilmington,
County of New Castle, State of Delaware. The Corporation may also have offices
at such other places both within and without the State of Delaware as the Board
of Directors may from time to time determine or the business of the Corporation
may require.
1.2. Seal. The seal of the Corporation, if any, shall be in the form of a
circle and shall have inscribed thereon the name of the Corporation, the year of
its organization and the words "Corporate Seal, Delaware".
1.3. Fiscal Year. The fiscal year of the Corporation shall be the period
from January 1 through December 31.
Article - Stockholders.
----------------------
2.1. Place of Meetings. All meetings of the stockholders shall be held
wherever the Board of Directors shall from time to time determine, upon notice
as hereinafter provided.
2.2. Annual Meeting. The annual meeting of the stockholders shall be held
each year on such date and at such time as the Board of Directors may determine.
At each annual meeting the stockholders
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entitled to vote shall elect a Board of Directors in accordance with the
provisions of Section 3.1 of the Stockholder Agreement applicable at the time of
such meeting and they may transact such other corporate business as may properly
be brought before the meeting. At the annual meeting any business may be
transacted, irrespective of whether the notice calling such meeting shall have
contained a reference thereto, except where notice is required by law, the
Corporation's Restated Certificate of Incorporation (as amended and in effect
from time to time, the "Certificate of Incorporation"), or these by-laws.
2.3. Quorum. At all meetings of the stockholders the holders of a
majority of the stock issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall constitute a quorum requisite
for the transaction of business except as otherwise provided by law, by the
Certificate of Incorporation or by these by-laws. If, however, such majority
shall not be present or represented at any meeting of the stockholders, the
stockholders entitled to vote thereat, present in person or by proxy, by a
majority vote, shall have power to adjourn the meeting from time to time without
notice other than announcement at the meeting until the requisite amount of
voting stock shall be present. If the adjournment is for more than thirty (30)
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder of
record entitled to vote at the meeting. At such adjourned meeting, at which the
requisite amount of voting stock shall be represented, any business may be
transacted which might have been transacted if the meeting had been held as
originally called.
2.4. Right to Vote; Proxies. Each holder of a share or shares of capital
stock of the Corporation having the right to vote at any meeting shall be
entitled to one vote for each such share of stock held by him. Any stockholder
entitled to vote at any meeting of stockholders may vote either in person or by
proxy, but no proxy which is dated more than three years prior to the meeting at
which it is offered shall confer the right to vote thereat unless the proxy
provides that it shall be effective for a longer period. A proxy may be granted
by a writing executed by the stockholder or his authorized officer, director,
employee or agent or by transmission or authorization of transmission of a
telegram, cablegram, or other means of electronic transmission to the person who
will be the holder of the proxy or to a proxy solicitation firm, proxy support
service organization or like agent duly authorized by the person who will be the
holder of the proxy to receive such transmission, subject to the conditions set
forth in Section 212 of the Delaware General Corporation Law, as it may be
amended from time to time (the "Delaware GCL").
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2.5. Voting. At all meetings of stockholders, except as otherwise
expressly provided for by law, the Certificate of Incorporation, these by-laws
or binding agreement among the stockholders, (a) in all matters other than the
election of directors, the affirmative vote of a majority of shares present in
person or represented by proxy at the meeting and entitled to vote on such
matter shall be the act of the stockholders, and (b) directors shall be elected
by a plurality of the votes of the shares present in person or represented by
proxy at the meeting and entitled to vote on the election of directors. Except
as otherwise expressly provided by law, the Certificate of Incorporation, these
by-laws, or binding agreement among the stockholders, at all meetings of
stockholders the voting shall be by voice vote, but any stockholder qualified to
vote on the matter in question may demand a stock vote, by shares of stock, upon
such question, whereupon such stock vote shall be taken by ballot, each of which
shall state the name of the stockholder voting and the number of shares voted by
him, and, if such ballot be cast by a proxy, it shall also state the name of the
proxy.
2.6. Notice of Annual Meetings. Written notice of the annual meeting of
the stockholders shall be mailed to each stockholder entitled to vote thereat at
such address as appears on the stock books of the Corporation at least ten (10)
days (and not more than sixty (60) days) prior to the meeting. It shall be the
duty of every stockholder to furnish to the Secretary of the Corporation or to
the transfer agent, if any, of the class of stock owned by him, his post-office
address and to notify said Secretary or transfer agent of any change therein.
2.7. Stockholders' List. A complete list of the stockholders entitled to
vote at any meeting of stockholders, arranged in alphabetical order and showing
the address of each stockholder, and the number of shares registered in the name
of each stockholder, shall be prepared by the Secretary and filed either at a
place within the city where the meeting is to be held, which place shall be
specified in the notice of the meeting, or, if not so specified, at the place
where the meeting is to be held, at least ten days before such meeting, and
shall at all times during the usual hours for business, and during the whole
time of said election, be open to the examination of any stockholder for a
purpose germane to the meeting.
2.8 Special Meetings. Special meetings of the stockholders for any
purpose or purposes, unless otherwise provided by law, the Certificate of
Incorporation, these by-laws, or binding agreement among the stockholders, may
be called by (a) the Board of Directors, (b) the President, (c) the Majority
Klearfold Holders (as defined in the Stockholder Agreement), (d) the Majority
AGI Holders (as defined in the
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Stockholder Agreement), or (e) the Majority Heritage Holders (as defined in the
Stockholder Agreement).
2.9. Notice of Special Meetings. Written notice of a special meeting of
stockholders, stating the time and place and object thereof shall be mailed,
postage prepaid, not less than ten (10) nor more than sixty (60) days before
such meeting, to each stockholder entitled to vote thereat, at such address as
appears on the books of the Corporation, and, if such special meeting is called
pursuant to clauses (c)-(e) of (S)2.8 of these by-laws, also to the Corporation.
No business may be transacted at such meeting except that referred to in said
notice, or in a supplemental notice given also in compliance with the provisions
hereof, or such other business as may be germane or supplementary to that stated
in said notice or notices.
2.10. Inspectors.
(a) One or more inspectors may be appointed by the Board of Directors
before or at any meeting of stockholders, or, if no such appointment shall
have been made, the presiding officer may make such appointment at the
meeting. At the meeting for which the inspector or inspectors are
appointed, he or they shall open and close the polls, receive and take
charge of the proxies and ballots, and decide all questions touching on the
qualifications of voters, the validity of proxies and the acceptance and
rejection of votes. If any inspector previously appointed shall fail to
attend or refuse or be unable to serve, the presiding officer shall appoint
an inspector in his place.
(b) At any time at which the Corporation has a class of voting stock
that is (i) listed on a national securities exchange, (ii) authorized for
quotation on an inter-dealer quotation system of a registered national
securities association, or (iii) held of record by more than 2,000
stockholders, the provisions of Section 231 of the Delaware GCL with
respect to inspectors of election and voting procedures shall apply, in
lieu of the provisions of paragraph (a) of this (S)2.10.
2.11. Stockholders' Consent in Lieu of Meeting. Unless otherwise provided
in the Certificate of Incorporation, any action required by law to be taken at
any annual or special meeting of stockholders of the Corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote, if a consent
or consents in writing, setting forth the action so taken, shall be signed by
the holders of outstanding
<PAGE>
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stock having not less than the minimum number of votes (in total numbers and by
class and by Type of shares, within the meaning of the Stockholder Agreement),
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted and shall be
delivered to the Corporation by delivery to its registered office in the State
of Delaware, or its principal place of business, or an officer or agent of the
Corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to the Corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
Every written consent shall bear the date of signature of each stockholder who
signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days of the
earliest dated consent delivered in the manner required by this (S)2.11 to the
Corporation, written consents signed by a sufficient number of stockholders to
take action under this (S)2.11 are delivered to the Corporation in the manner
required by this (S)2.11. The Corporation shall give prompt notice of the taking
of action without a meeting by less than unanimous written consent to those
stockholders who have not consented in writing.
Article III - Directors.
-----------------------
3.1. Number of Directors; Vacancies. The property and business of the
Corporation shall be managed by or under the direction of a board (the "Board of
Directors" or "Board") comprising eleven (11) directors, unless such number
shall have been increased pursuant to and in accordance with Sections 3.1(b),
3.1(c) or 3.1(e) of the Stockholder Agreement. Directors need not be
stockholders, residents of Delaware or citizens of the United States. The
directors shall be elected at the annual meeting of the stockholders in
accordance with the provisions of Section 3.1 of the Stockholder Agreement
applicable at the time of such meeting, and each director shall be elected to
serve until his successor shall be elected and shall qualify or until his
earlier resignation or removal; provided that in the event of failure to hold
such meeting or to hold such election at such meeting, such election may be held
at any special meeting of the stockholders called for that purpose or by
stockholders' written consent or consents in lieu of a meeting, in each case in
accordance with the provisions of Section 3.1 of the Stockholder Agreement
applicable either (a) at the time of such special meeting, or (b) on the date
upon which written consents signed by a sufficient number of stockholders to
take action are delivered to the Corporation, as the case may be. If the office
of any director becomes vacant by reason of death, resignation,
disqualification, removal, or otherwise, such director's replacement shall
<PAGE>
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be designated and elected in accordance with the provisions of Section 3.1(d) of
the Stockholder Agreement.
3.2. Change in Number of Directors. The number of directors may be
increased in accordance with Sections 3.1(b), 3.1(c) or 3.1(e) of the
Stockholder Agreement, and may otherwise only be changed by an amendment to
these by-laws adopted in writing in accordance with Section 8.1 hereof. If the
number of directors is increased by an amendment to these by-laws adopted in
writing in accordance with Section 8.1 hereof, then, unless otherwise specified
in such amendment, the additional directors may be elected at the annual meeting
of the stockholders, at a special meeting of the stockholders called for that
purpose, or by written consent of the stockholders holding a majority of the
shares of the Corporation's capital stock entitled to vote for such directors.
3.3. Resignation. Any director of this Corporation may resign at any time
by giving written notice to the President or the Secretary of the Corporation.
Such resignation shall take effect at the time specified therein, at the time of
receipt if no time is specified therein and at the time of acceptance if the
effectiveness of such resignation is conditioned upon its acceptance. Unless
otherwise specified therein, the acceptance of such resignation shall not be
necessary to make it effective.
3.4. Removal. Any director shall be removed, with or without cause, by
action of the stockholders in accordance with Section 3.1(d) of the Stockholder
Agreement if so instructed or requested by the stockholder or stockholders
entitled to designate such director or a replacement for such director pursuant
to Section 3.1(d) of the Stockholder Agreement, provided that written notice of
such removal shall be given to such director and to the President or the
Secretary of the Corporation.
3.5. Place of Meetings and Books. The Board of Directors may hold their
meetings and keep the books of the Corporation outside the State of Delaware, at
such places as they may from time to time determine.
3.6. General Powers. In addition to the powers and authority expressly
conferred upon them by these by-laws, the Board of Directors may exercise all
such powers of the Corporation and do all such lawful acts and things as are not
by law or by the Certificate of Incorporation or by these by-laws directed or
required to be exercised or done by the stockholders.
<PAGE>
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3.7. Committees. The Board of Directors may designate one or more
committees by resolution or resolutions passed by unanimous consent of the whole
Board of Directors; such committee or committees shall consist of one or more
directors of the Corporation, and to the extent provided in the resolution or
resolutions designating them, shall have and may exercise specific powers of the
Board of Directors in the management of the business and affairs of the
Corporation to the extent permitted by law and shall have power to authorize the
seal of the Corporation to be affixed to all papers which may require it. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors. The act of a
majority of the members of such committee shall be the act of the committee.
Such committee may meet at stated times or on notice to all members of such
committee by any of their own number. Vacancies in the membership of any such
committee shall be filled by the Board of Directors at a regular meeting or at a
special meeting called for that purpose. Any committee shall keep regular
minutes of its proceedings and report the same to the Board of Directors as may
be required by the Board.
3.8. Powers Denied to Committees. Committees of the Board of Directors
shall not, in any event, have any power or authority to amend the Certificate of
Incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares adopted by the
Board of Directors as provided in Section 151(a) of the Delaware GCL, fix the
designations and any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
Corporation or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the same or any other class
or classes of stock of the Corporation or fix the number of shares of any series
of stock or authorize the increase or decrease of the shares of any series),
adopt an agreement of merger or consolidation, recommend to the stockholders the
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommend to the stockholders a dissolution of the
Corporation or a revocation of a dissolution or to amend the by-laws of the
Corporation. Further, no committee of the Board of Directors shall have the
power or authority to declare a dividend, to authorize the issuance of stock or
to adopt a certificate of ownership and merger pursuant to Section 253 of the
Delaware GCL, unless the resolution or resolutions of the whole Board of
Directors designating such committee expressly so provides.
3.9. Expenses and Compensation of Directors. The Board of Directors, acting
on the recommendation of the President, shall have the
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power to fix the compensation, if any, to be paid to directors and members of
committees of the Board. Directors shall be reimbursed their expenses, if any,
of attendance at each meeting of the Board or committee of the Board.
3.10. Annual Meeting. The newly elected Board of Directors may meet at such
place and time as shall be fixed and announced by the presiding officer at the
annual meeting of stockholders, for the purpose of organization or otherwise,
and no further notice of such meeting shall be necessary to the newly elected
directors in order legally to constitute the meeting, provided a quorum shall be
present, or they may meet at such place and time as shall be stated in a notice
given to such directors two (2) days prior to such meeting, or as shall be fixed
by the consent in writing of all the directors.
3.11. Regular Meetings. Regular meetings of the Board of Directors may be
held without notice at such time and place as shall from time to time be
determined by the Board.
3.12. Special Meetings. Special meetings of the Board of Directors may be
called by the Chairman of the Board or the President on at least forty-eight
(48) hours notice to each of the directors, or such shorter period of time
before the meeting as will nonetheless be sufficient for the convenient assembly
of all of the directors; special meetings of the Board of Directors shall be
called by the Secretary in like manner and on like notice, on the written
request of two or more directors.
3.13. Quorum. Unless otherwise required pursuant to the Stockholder
Agreement, at all meetings of the Board of Directors, one less than the then-
applicable aggregate number of directors shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the act of a majority
of the directors present at any meeting at which there is a quorum shall be the
act of the Board of Directors, except as may be otherwise specifically permitted
or provided by law, by the Certificate of Incorporation, or by these by-laws. If
at any meeting of the Board of Directors there shall be less than a quorum
present, such meeting shall be adjourned and each of the directors notified by
telephone and written telecommunication of the date and time of which such
meeting is to be reconvened, which shall be not less than forty-eight (48) hours
following the time of the originally-scheduled meeting of the Board of
Directors, and at such reconvened meeting the quorum of the Board of Directors
shall constitute one-half of the then-applicable aggregate number of directors,
rounded up, if necessary, to the next whole number, provided that, if at the
time of such meeting the Board of Directors is constituted pursuant to
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and in accordance with the provisions of Section 3.1(b) of the Stockholder
Agreement, then, in order to constitute a quorum, the number of Heritage I
Directors and Heritage II Directors (as defined in the Stockholder Agreement)
present at any such meeting (including any such reconvened meeting) must exceed
the number of Non-Heritage Directors (as defined in the Stockholder Agreement)
so present.
3.14. Telephonic Participation in Meetings. Members of the Board of
Directors or any committee designated by the Board may participate in a meeting
of the Board of Directors or such committee by means of conference telephone or
similar communications equipment by means of which all persons participating in
the meeting can hear each other, and participation in a meeting pursuant to this
(S)3.14 shall constitute presence in person at such meeting.
3.15. Action by Consent. Unless otherwise restricted by law, the
Certificate of Incorporation or these by-laws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if written consent thereto is signed by all
members of the Board of Directors or of such committee, as the case may be, and
such written consent is filed with the minutes of proceedings of the Board or
committee.
Article IV. - Officers.
----------------------
4.1. Selection; Statutory Officers. The officers of the Corporation shall
be chosen by the Board of Directors, based on the recommendation of the
President (other than with respect to the office of President). There shall be a
President, a Secretary and a Treasurer, and there may be one or more Executive
Vice Presidents, one or more Vice Presidents, one or more Assistant Secretaries,
and one or more Assistant Treasurers, as the Board of Directors may elect. Any
number of offices may be held by the same person. None of said officers need be
a director.
4.2. Additional Officers. The Board of Directors based on the
recommendation of the President may appoint such other officers and agents as it
shall deem necessary, who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the Board based on the recommendation of the President.
4.3. Terms of Office. Each officer of the Corporation shall hold office
until his successor is chosen and qualified, or until his earlier resignation or
removal. Any officer elected or appointed by the Board of Directors may be
removed at any time by the Board of Directors, based on
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the recommendation of the President (other than with respect to the office of
President).
4.4. Compensation of Officers. The Board of Directors, based on the
recommendation of the President (other than with respect to the office of
President), shall have power to fix the compensation of all officers of the
Corporation, and may authorize the President to fix the compensation of
subordinate officers.
4.5. President. The President shall be the chief executive officer of the
Corporation and shall preside at all meetings of stockholders and all meetings
of the Board of Directors. Under the supervision of the Board of Directors, the
President shall have the general control and management of the business and
affairs of the Corporation, subject, however, to the right of the Board of
Directors to confer any specific power, except such as may be by statute or
contract exclusively conferred on the President, upon any other officer or
officers of the Corporation. The President shall perform and do all acts and
things incident to the position of President of the Corporation, and such other
duties as may be assigned to him from time to time by the Board of Directors.
4.6. Executive Vice Presidents and Vice Presidents. The Executive Vice
Presidents and Vice Presidents shall perform such of the duties of the President
on behalf of the Corporation as may be respectively assigned to them from time
to time by the Board of Directors or by the President. The Board of Directors
may, upon recommendation of the President, designate any Vice President as an
Executive Vice President.
4.7. Treasurer. The Treasurer shall be the Chief Financial Officer and
shall have the care and custody of all the funds and securities of the
Corporation which may come into his hands as Treasurer, and the power and
authority to endorse checks, drafts and other instruments for the payment of
money for deposit or collection when necessary or proper and to deposit the same
to the credit of the Corporation in such bank or banks or depository as the
Board of Directors, or the President may designate, and he may endorse all
commercial documents requiring endorsements for or on behalf of the Corporation.
He may sign all receipts and vouchers for the payments made to the Corporation.
He shall render an account of his transactions to the Board of Directors as
often as the Board shall require the same. He shall enter regularly in the books
to be kept by him for that purpose full and adequate account of all moneys
received or paid on account of the Corporation. He shall perform all acts
incident to the position of Treasurer of a corporation, subject to the control
of the Board of Directors and the President. He shall, when requested pursuant
to a
<PAGE>
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vote of the Board of Directors, give a bond to the Corporation to secure the
faithful performance of his duties, the expense of which bond shall be borne by
the Corporation. In the absence or inability to act of the President, the
Treasurer shall have and possess all of the power and discharge all of the
duties of the President, subject to the control of the Board of Directors.
4.8. Secretary. The Secretary shall keep the minutes of all meetings of
the Board of Directors and of the stockholders; he shall attend to the giving
and serving of all notices of the Corporation. Except as otherwise ordered by
the Board of Directors, he shall attest the seal of the Corporation upon all
contracts and instruments executed under such seal and shall affix the seal of
the Corporation thereto, and may affix the seal of the Corporation to
certificates of shares of capital stock of the Corporation. He shall have charge
of the stock certificate book, transfer book and stock ledger, and such other
books and papers as the Board of Directors may direct. He shall, in general,
perform all of the duties of the Secretary of a corporation, subject to the
control of the Board of Directors and the President.
4.9. Assistant Secretary. The Board of Directors, based on the
recommendation of the President, or the President and any one other officer of
the Corporation, acting jointly, may appoint or remove one or more Assistant
Secretaries of the Corporation. Any Assistant Secretary upon his appointment
shall perform such duties of the Secretary, and also any and all such other
duties, as any of the Board, the President, the Treasurer, or the Secretary may
designate.
4.10. Assistant Treasurer. The Board of Directors, based on the
recommendation of the President, or the President and any one other officer of
the Corporation, acting jointly, may appoint or remove one or more Assistant
Treasurers of the Corporation. Any Assistant Treasurer upon his appointment
shall perform such of the duties of the Treasurer, and also any and all such
other duties, as any of the Board, the President, the Treasurer, or the
Secretary may designate.
4.11. Subordinate Officers. The Board of Directors, based on the
recommendation of the President, may select such subordinate officers of the
Corporation as it may deem desirable. Each such officer shall hold office for
such period, have such authority, and perform such duties as the Board of
Directors may prescribe. The Board of Directors may authorize the President to
appoint and remove subordinate officers and to prescribe the powers and duties
thereof.
<PAGE>
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Article V. - Stock.
------------------
5.1. Stock. Each stockholder shall be entitled to a certificate or
certificates of stock of the Corporation in such form as the Board of Directors
may from time to time prescribe. The certificates of stock of the Corporation
shall be numbered and shall be entered in the books of the Corporation as they
are issued. They shall certify the holder's name and number and class of shares
and shall be signed by both of (a) either the President or a Vice President, and
(b) any one of the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary. The corporate seal of the Corporation may, but is not
required to, be affixed to such certificate. If such certificate is
countersigned (i) by a transfer agent other than the Corporation or its
employee, or (ii) by a registrar other than the Corporation or its employee, the
signature of the officers of the Corporation and the corporate seal may be
facsimiles. In case any officer or officers who shall have signed, or whose
facsimile signature or signatures shall have been used on, any such certificate
or certificates shall cease to be such officer or officers of the Corporation,
whether because of death, resignation or otherwise, before such certificate or
certificates shall have been delivered by the Corporation, such certificate or
certificates may nevertheless be adopted by the Corporation and be issued and
delivered as though the person or persons who signed such certificate or
certificates or whose facsimile signature shall have been used thereon had not
so ceased to be such officer or officers of the Corporation.
5.2. Fractional Share Interests. The Corporation may, but shall not be
required to, issue fractions of a share. If the Corporation does not issue
fractions of a share, it shall (a) arrange for the disposition of fractional
interests by those entitled thereto, (b) pay in cash the fair value of fractions
of a share as of the time when those entitled to receive such fractions are
determined, or (c) issue scrip or warrants in registered or bearer form which
shall entitle the holder to receive a certificate for a full share upon the
surrender of such scrip or warrants aggregating a full share. A certificate for
a fractional share shall, but scrip or warrants shall not unless otherwise
provided therein, entitle the holder to exercise voting rights, to receive
dividends thereon, and to participate in any of the assets of the Corporation in
the event of liquidation. The Board of Directors may cause scrip or warrants to
be issued subject to the conditions that they shall become void if not exchanged
for certificates representing full shares before a specified date, or subject to
the conditions that the shares for which scrip or warrants are exchangeable may
be sold by the Corporation and the proceeds thereof distributed to the
<PAGE>
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holders of scrip or warrants, or subject to any other conditions which the Board
of Directors may impose.
5.3. Transfers of Stock. Subject to any transfer restrictions then in
force, the shares of stock of the Corporation shall be transferable only upon
its books by the holders thereof in person or by their duly authorized attorneys
or legal representatives and upon such transfer the old certificates shall be
surrendered to the Corporation by the delivery thereof to the person in charge
of the stock and transfer books and ledgers or to such other person as the
directors may designate by whom they shall be cancelled and new certificates
shall thereupon be issued. The Corporation shall be entitled to treat the holder
of record of any share or shares of stock as the holder in fact thereof and
accordingly shall not be bound to recognize any equitable or other claim to or
interest in such share on the part of any other person whether or not it shall
have express or other notice thereof save as expressly provided by the laws of
Delaware.
5.4. Record Date. For the purpose of determining the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, or to express consent to corporate action in writing without a meeting,
or entitled to receive payment of any dividend or other distribution or the
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion, or exchange of stock or for the purpose of any other lawful
action, the Board of Directors may fix, in advance, a record date, which shall
not be more than sixty (60) days nor less than ten (10) days before the date of
such meeting, nor more than sixty (60) days prior to any other action. If no
such record date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held; the record date for
determining stockholders entitled to express consent to corporate action in
writing without a meeting, when no prior action by the Board of Directors is
necessary, shall be the day on which the first written consent is expressed; and
the record date for determining stockholders for any other purpose shall be at
the close of business on the day on which the Board of Directors adopts the
resolution relating thereto. A determination of stockholders of record entitled
to notice of or to vote at any meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
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5.5. Transfer Agent and Registrar. The Board of Directors may appoint one
or more transfer agents or transfer clerks and one or more registrars and may
require all certificates of stock to bear the signature or signatures of any of
them.
5.6. Dividends.
(a) Power to Declare. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation,
if any, may be declared by the Board of Directors at any regular or special
meeting, pursuant to law. Dividends may be paid in cash, in property, or in
shares of capital stock, subject to the provisions of the Certificate of
Incorporation and the laws of Delaware.
(b) Reserves. Before payment of any dividend, there may be set aside
out of any funds of the Corporation available for dividends such sum or
sums as the Board of Directors from time to time, in its absolute
discretion, thinks proper as a reserve or reserves to meet contingencies,
or for equalizing dividends, or for repairing or maintaining any property
of the Corporation, or for such other purpose as the Board shall think
conducive to the interests of the Corporation, and the Board may modify or
abolish any such reserve in the manner in which it was created.
5.7. Lost, Stolen or Destroyed Certificates. No certificates for shares of
stock of the Corporation shall be issued in place of any certificate alleged to
have been lost, stolen or destroyed, except upon production of such evidence of
the loss, theft or destruction and upon indemnification of the Corporation and
its agents to such extent and in such manner as the Board of Directors may from
time to time prescribe.
5.8. Inspection of Books. The stockholders of the Corporation, by a
majority vote at any meeting of stockholders duly called, or in case the
stockholders shall fail to act, the Board of Directors shall have power from
time to time to determine whether and to what extent and at what times and
places and under what conditions and regulations the accounts and books of the
Corporation (other than the stock ledger) or any of them, shall be open to
inspection of stockholders; and no stockholder shall have any right to inspect
any account or book or document of the Corporation except as conferred by
statute or authorized by the Board of Directors or by a resolution of the
stockholders.
<PAGE>
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Article VI. - Miscellaneous Management Provisions.
--------------------------------------------------
6.1. Checks, Drafts and Notes. All checks, drafts or orders for the payment
of money, and all notes and acceptances of the Corporation, shall be signed by
such officer or officers, agent or agents as the Board of Directors may
designate.
6.2. Notices.
(a) All notices, requests, payments, instructions, or other documents
to be given to directors or officers may, and all notices, requests,
payments, instructions, or other documents to be given to stockholders
shall, be in writing or by written telecommunication, and shall be deemed
to have been duly given if (i) delivered personally (effective upon
delivery), (ii) mailed by registered or certified mail, return receipt
requested, postage prepaid (effective five (5) business days after
dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or
(iv) sent by telecopier followed within 24 hours by confirmation by one of
the foregoing methods (effective upon receipt of the telecopy in complete,
readable form), addressed, if to the Corporation or to a director or
officer of the Corporation, to the Corporation's then principal executive
office, or if to any stockholder, to such stockholder at his or its address
as it appears in the stock records of the Corporation (or to such other
address as the recipient party may have furnished to the sending party for
the purpose of receiving notices). Notice to directors or officers may also
be given orally, by telephone or in person.
(b) Whenever any notice is required to be given under the provisions
of law, of the Certificate of Incorporation or of these by-laws, a written
waiver of notice, signed by the person or persons entitled to said notice,
whether before or after the time stated therein for the meeting or action
to which such notice relates, shall be deemed equivalent to notice.
Attendance of a person at a meeting shall constitute a waiver of notice of
such meeting except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction
of any business because the meeting is not lawfully called or convened.
6.3. Conflict of Interest. No contract or transaction between the
Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association, or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
<PAGE>
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this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof which
authorized the contract or transaction, or solely because his or their votes are
counted for such purpose, if: (a) the material facts as to his relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board of Directors or the committee, thereof which authorized the contract or
transaction and the Board or such committee in good faith authorizes the
contract or transaction by the affirmative vote of a majority of the
disinterested directors or committee members, even though the disinterested
directors or committee members constitute less than a quorum; or (b) the
material facts as to his relationship or interest and as to the contract or
transaction are disclosed or are known to the stockholders of the Corporation
entitled to vote thereon, and the contract or transaction as specifically
approved in good faith by vote of such stockholders; or (c) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified, by the Board of Directors, a duly-authorized committee
thereof or the stockholders. Interested directors may be counted in determining
the presence of a quorum at a meeting of the Board of Directors or a committee
thereof which authorizes the contract or transaction.
6.4. Voting of Securities owned by this Corporation. Subject always to the
specific directions, if any, of the Board of Directors, (i) any shares or other
securities issued by any other corporation and owned or controlled by this
Corporation may be voted in person at any meeting of security holders of such
other corporation by the President of this Corporation, if he is present at such
meeting, or in his absence by the Treasurer of this Corporation, if he is
present at such meeting, and (ii) whenever, in the judgment of the President, it
is desirable for this Corporation to execute a proxy or written consent in
respect of any shares or other securities issued by any other corporation and
owned by this Corporation, such proxy or consent shall be executed in the name
of this Corporation by the President, without the necessity of any authorization
by the Board of Directors, affixation of corporate seal or countersignature or
attestation by another officer, provided that if the President is unable to
execute such proxy or consent by reason of sickness, absence from the United
States or other similar cause, the Treasurer may execute such proxy or consent.
Any person or persons designated in the manner above stated as the proxy or
proxies of this Corporation shall have full right, power and authority to vote
the shares or other securities issued by such other corporation and owned by
this Corporation the same as such shares or other securities might be voted by
this Corporation.
<PAGE>
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Article VII. - Indemnification.
7.1. Right to Indemnification. Each person who was or is made a party or is
threatened to be made a party to or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding"), by reason of being or having been a director or officer of the
Corporation or serving or having served at the request of the Corporation as a
director, trustee, officer, employee or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to an employee benefit plan (an "Indemnitee"), whether the basis of such
proceeding is alleged action or failure to act in an official capacity as a
director, trustee, officer, employee or agent or in any other capacity while
serving as a director, trustee, officer, employee or agent, shall be indemnified
and held harmless by the Corporation to the fullest extent authorized by the
Delaware General Corporation Law, as the same exists or may hereafter be amended
(but, in the case of any such amendment, only to the extent that such amendment
permits the Corporation to provide broader indemnification rights than permitted
prior thereto) (as used in this Article 7, the "Delaware Law"), against all
expense, liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such Indemnitee in connection therewith and such indemnification
shall continue as to an Indemnitee who has ceased to be a director, trustee,
officer, employee or agent and shall inure to the benefit of the Indemnitee's
heirs, executors and administrators; provided, however, that, except as provided
in (S)7.2 hereof with respect to Proceedings to enforce rights to
indemnification, the Corporation shall indemnify any such Indemnitee in
connection with a Proceeding (or part thereof) initiated by such Indemnitee only
if such Proceeding (or part thereof) was authorized by the Board of Directors.
The right to indemnification conferred in this Article 7 shall be a contract
right and shall include the right to be paid by the Corporation the expenses
(including attorneys' fees) incurred in defending any such Proceeding in advance
of its final disposition (an "Advancement of Expenses"); provided, however,
that, if the Delaware Law so requires, an Advancement of Expenses incurred by an
Indemnitee shall be made only upon delivery to the Corporation of an undertaking
(an "Undertaking"), by or on behalf of such Indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (a "Final Adjudication") that such
Indemnitee is not entitled to be indemnified for such expenses under this
Article 7 or otherwise.
<PAGE>
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7.2. Right of Indemnitee to Bring Suit. If a claim under (S)7.1 hereof is
not paid in full by the Corporation within sixty days after a written claim has
been received by the Corporation, except in the case of a claim for an
Advancement of Expenses, in which case the applicable period shall be twenty
days, the Indemnitee may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim. If successful in whole or
in part in any such suit, or in a suit brought by the Corporation to recover an
Advancement of Expenses pursuant to the terms of an Undertaking, the Indemnitee
shall be entitled to be paid also the expense of prosecuting or defending such
suit. In (i) any suit brought by the Indemnitee to enforce a right to
indemnification hereunder (but not in a suit brought by the Indemnitee to
enforce a right to an Advancement of Expenses) it shall be a defense that, and
(ii) in any suit by the Corporation to recover an Advancement of Expenses
pursuant to the terms of an Undertaking the Corporation shall be entitled to
recover such expenses upon a Final Adjudication that, the Indemnitee has not met
the applicable standard of conduct set forth in the Delaware Law. Neither the
failure of the Corporation (including the Board of Directors, its independent
legal counsel, or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the Indemnitee is proper in
the circumstances because the Indemnitee has met the applicable standard of
conduct set forth in the Delaware Law, nor an actual determination by the
Corporation (including the Board of Directors, its independent legal counsel, or
its stockholders) that the Indemnitee has not met such applicable standard of
conduct, shall create a presumption that the Indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to
enforce a right to indemnification or to an Advancement of Expenses hereunder,
or by the Corporation to recover an Advancement of Expenses pursuant to the
terms of an Undertaking, the burden of proving that the Indemnitee is not
entitled to be indemnified, or to such Advancement of Expenses, under this
Article 7 or otherwise shall be on the Corporation.
7.3. Non-Exclusivity of Rights. The rights to indemnification and to the
Advancement of Expenses conferred in this Article 7 shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, the Certificate of Incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
7.4. Insurance. The Corporation may maintain insurance, at its expense, to
protect itself and any director, officer, employee or agent of the Corporation
or another corporation, partnership, joint venture, trust or
<PAGE>
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other enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under this Article 7 or under the Delaware Law.
7.5. Indemnification of Employees and Agents of the Corporation. The
Corporation may, to the extent authorized from time to time by the Board of
Directors, grant rights to indemnification, and to the Advancement of Expenses,
to any employee or agent of the Corporation to the fullest extent of the
provisions of this Article 7 with respect to the indemnification and Advancement
of Expenses of directors and officers of the Corporation.
Article VIII. - Amendments.
8.1. Amendments. The by-laws of the Corporation may be altered, amended or
repealed only with the written consent of the Majority Heritage Holders, the
Majority AGI Holders, and the Majority Klearfold Holders (each as defined in the
Stockholder Agreement), provided, however, that (a) the consent of the Majority
Klearfold Holders shall not be required for any such alteration or amendment
which either (i) increases or reduces the number of directors under Section 3.1
hereof to conform to any amendment of the Stockholder Agreement requiring such
increase or reduction, where the consent of the Majority Klearfold Holders to
such amendment of the Stockholder Agreement is not required by the terms
thereof, or (ii) arises from the creation and issuance of shares of Series B
Common Stock in connection with the conversion of options for the purchase of
shares of Tinsley Robor plc into options for the purchase of shares of Series B
Common Stock, and of shares of preferred stock and warrants for the purchase of
shares of Series A Common Stock pursuant to the Equity Recapitalization
Agreement (as defined in the Stockholder Agreement), so long as any such
alteration or amendment does not restrict any rights of any of the Klearfold
Management Stockholders (as defined in the Stockholder Agreement) or grant any
additional rights to any other existing Stockholders (as defined in the
Stockholder Agreement), and (b) any amendment to the provisions of Article 9
shall require the consent of the holders of at least three-quarters of all
shares of the Corporation's Series B Common Stock calculated on a Fully-Diluted
Basis (as defined in Section 9.1 below).
Article IX. - Class B Common Stock; Repurchase Rights.
9.1. Definitions. The following defined terms when used in this Article 9
shall have the meaning set forth in this (S)9.1:
<PAGE>
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"Act" means the Securities Act of 1933, as amended.
"Affiliate" shall mean any entity controlling, controlled by or under
common control with a designated Person. For the purposes of this definition
"control" shall have the meaning presently specified for that word in Rule 405
promulgated by the Securities and Exchange Commission under the Act. With
respect to any Person who is a limited partnership, Affiliate shall also mean
any general or limited partner of such limited partnership, or any Person which
is a general partner in a general partner of such limited partnership. With
respect to any individual, Affiliate shall also mean such a Person's spouse and
lineal descendants and their respective Affiliates.
"B Shares" means all shares of Series B Common Stock.
"Board" means the Corporation's Board of Directors.
"Charter" means the Corporation's Amended and Restated Certificate of
Incorporation and all amendments thereto.
"Common Stock" means the Series A Common Stock and Series B Common Stock,
collectively.
"Effective Date" means September 10, 1998.
"Fair Market Value" means, as of any date, the fair market value of the
entire common stock equity of the Corporation (without premium for control or
discounts for minority interests, restrictions on transfer or lack of voting
rights), as determined as of such date in good faith by the Board, or, if
greater, the value placed upon the entire common stock equity of the Corporation
in the most recently received arm's length, unsolicited offer to purchase the
entire common stock equity of the Corporation received by the Board from any
Person who is not an Affiliate of the Corporation within the thirty (30) day
period prior to such date. In determining Fair Market Value in good faith, the
Board shall act promptly to correct any manifest error notified to it in
writing.
"Family Members" means, with respect to any Person, any Related Person or
Family Trust of such Person.
"Family Trust" means, with respect to any Person, any trust created for the
benefit of such Person and/or one or more of such Person's Related Persons, and
controlled by such Person.
<PAGE>
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"Fully Diluted Basis" shall mean, with respect to any calculation to be
made at any time pursuant to this Article 9 or with respect to the amendment of
this Article 9 pursuant to Section 8.1 above, that such calculation shall be
made by treating as outstanding all shares of Common Stock issuable upon
exercise of all outstanding warrants, options, and/or other rights to acquire
shares of Common Stock, but excluding any such warrants, options, and/or other
rights (or any portions thereof) as are not then capable of being exercised or
capable of being exercised thereafter on account of the Majority Sale Event with
respect to which such calculation is being made.
"Majority Sale Event" shall mean any transaction pursuant to which a
majority of the outstanding shares of Common Stock (on a Fully Diluted Basis)
are sold to a purchaser who is not an Affiliate of the Corporation and, as a
result of such transaction, 80% or more (on a Fully Diluted Basis) of the shares
of Common Stock held by management immediately prior to such transaction cease
to be owned by management immediately following such transaction.
"Management" shall mean any present or former director, officer or employee
of the Corporation or any of its Subsidiaries (including any Permitted
Transferee of such persons within the meaning of (S)9.2).
"Market Value Per Share" means, with respect to any date, the quotient
obtained by dividing (a) the sum of (i) the Fair Market Value of the Corporation
as of such date, plus (ii) an amount equal to the aggregate consideration which
would then be payable to the Corporation, assuming the exercise at such time of
all then outstanding and exercisable warrants, options, or convertible
securities pursuant to which the Corporation would, upon exercise, then be
obligated to issue Common Stock, other than warrants or options the strike or
exercise price of which at such time is greater than the Market Value Per Share
determined without including any then outstanding and exercisable warrants or
options, by (b) the sum of (i) the number of shares of Common Stock then
outstanding, plus (ii) the number of shares of Common Stock then issuable upon
exercise of all then outstanding and exercisable warrants, options, or
convertible securities pursuant to which the Corporation would, upon exercise,
then be obligated to issue Common Stock, other than warrants or options the
strike or exercise price of which at such time is greater than the Market Value
Per Share determined without including any then outstanding and exercisable
warrants or options.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, joint venture, unincorporated
<PAGE>
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organization, or any government, governmental department or agency or political
subdivision thereof.
"Personal Representative" means the successor or legal representative
(including without limitation, a guardian, executor, administrator or
conservator) of a dead or incompetent Person.
"Related Persons" means any Person's parents, spouse, children and
grandchildren.
"Series A Common Stock" means the Series A Common Stock, $0.001 par value
per share of the Corporation, and any shares (other than shares of Series B
Common Stock) into which such common stock may hereafter be converted or
exchanged.
"Series B Common Stock" means the Series B Common Stock, $0.001 par value
per share of the Corporation, and any shares (other than shares of Series A
Common Stock) into which such common stock may hereafter be converted or
exchanged.
"Series B Holder" means any holder, as of the relevant time of reference,
of any of the B Shares.
9.2. Restrictions on Transfer.
No Series B Holder may sell, assign, pledge, or otherwise dispose of or
transfer, either voluntarily, involuntarily, by operation of law, or otherwise
(a "Transfer"; or to effect any such Transfer, to "Transfer") either
voluntarily, involuntarily, by operation of law or otherwise any B Shares or any
interest in B Shares, except any Transfer:
(a) to the Corporation;
(b) to such Series B Holder's Family Members, provided that such Series B
Holder retains exclusive voting control over the Transferred B Shares;
(c) to such Series B Holder's Personal Representative;
(d) if the B Shares to be Transferred are Heritage Securities, as defined
in the Stockholder Agreement, (i) to either Heritage Fund I, L.P., a
Delaware limited partnership ("Heritage I"), or Heritage Fund II,
L.P., a Delaware limited partnership ("Heritage II"; together with
Heritage I, the "Heritage
<PAGE>
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Funds"), (ii) to a successor entity of any holder of any of the
Heritage Securities, as a result of a merger, consolidation, or sale
of all or substantially all of the assets of such holder, and (iii) by
Heritage I, to the extent required pursuant to the terms of the First
Amended and Restated Agreement of Limited Partnership of Heritage I
dated as of December 14, 1994, or by Heritage II, to the extent
required pursuant to the terms of the Agreement of Limited Partnership
of Heritage II dated as of January 28, 1997, as in effect on the
Effective Date, provided that each of such limited partnership
agreements may be further amended from time to time after the
Effective Date in accordance with their respective terms, but that
notwithstanding any such amendment, a Transfer of Heritage Securities
by a Heritage Fund will be permitted under this (S)9.2(d) only to the
extent that such Transfer would have been required pursuant to the
terms of such Heritage Fund's limited partnership agreement as in
effect on the Effective Date; or
(e) pursuant to an Approved Sale (as defined in (S)9.3 below) or Majority
Sale Event;
provided, however, that in the case of any such Transfer described in clauses
(b), (c) or (d) above, the restrictions contained in this (S)9.2 shall continue
to be applicable to the Transferred B Shares after such Transfer, and no such
Transfer shall be permitted unless the transferee of such B Shares shall first
have executed and delivered to the Corporation an instrument confirming such
transferee's acknowledgment of the transfer restrictions set forth herein, in
form and substance acceptable to the Corporation which, if such Transfer is
otherwise in compliance with this (S)9.2, shall be accepted in writing by the
Corporation (such duly signed instrument, upon acceptance in writing by the
Corporation, being referred to herein as an "Effective Instrument of
Accession"). Any transferee of B Shares permitted by any of clauses (b), (c) or
(d) of this (S)9.2 who is a party to an Effective Instrument of Accession is
referred to herein as "Permitted Transferee".
9.3. Obligation to Sell in Approved Sale. If, pursuant to the requirements
(if any) of applicable law, the Charter or the Stockholder Agreement, the Board
at any time approves the sale, disposition or transfer (an "Approved Sale") of
the Corporation or its business, whether by merger, consolidation, sale of all
or substantially all of the assets or capital stock of the Corporation and/or
one or more of its Subsidiaries, or otherwise, and if stockholders owning such
number of shares of issued and outstanding Common Stock as is required to
approve such transaction
<PAGE>
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(whether by applicable law, contract or otherwise, whichever number is highest
(such holders being called the "Required Stockholders")) have approved or agreed
to such transaction (or have provided notice to the Series B Holders that the
foregoing conditions will be met), then:
(a) each Series B Holder shall cooperate fully in any Approved Sale and
shall not take any action that is prejudicial to or inconsistent with
such Approved Sale; and
(b) each Series B Holder (i) shall vote or cause to be voted all B Shares
that are owned by such Series B Holder or over which such Series B
Holder has voting control to approve the terms of any such Approved
Sale and such matters ancillary thereto as may be necessary or
appropriate, in the judgment of the Board or the Required
Stockholders, to effect such Approved Sale, (ii) hereby irrevocably
waives and relinquishes, to the fullest extent permitted by applicable
law, all rights to object to or dissent from such Approved Sale
(including, without limitation, any appraisal or similar rights), and
agrees to raise no objections against, such Approved Sale, and (iii)
with respect to any Approved Sale structured as a sale of stock, (A)
shall sell all of such Series B Holder's B Shares on the terms and
conditions applicable to all other holders of Common Stock in the
Approved Sale (including, without limitation, the per share price of
Common Stock (which shall not include any compensation paid for
services to holders of Common Stock) and the execution of all
agreements relating thereto, which agreements may contain
representations, warranties, indemnification obligations, covenants
and releases, and (B) upon the Corporation's request, shall deliver
the certificates representing all B Shares owned or controlled by such
Series B Holder (duly endorsed, or accompanied by duly executed
instruments of transfer) in escrow (pending receipt of the purchase
price therefor) to the Corporation's counsel in such sale.
If any Series B Holder becomes obligated to sell any B Shares under this
(S)9.3 and fails to deliver such B Shares in accordance herewith, the purchaser
of such B Shares may, at its option, in addition to all other remedies it may
have, send to such Series B Holder the purchase price for such B Shares.
Thereupon, the Corporation upon written notice to such Series B Holder shall (x)
cancel on its books the certificate or certificates representing the B Shares to
be sold, and (y) issue, in lieu thereof, in the name of such purchaser a new
certificate or certificates representing such
<PAGE>
-25-
B Shares, and thereupon all of such Series B Holder's rights in and to such B
Shares shall terminate.
9.4. Co-Sale Rights in a Majority Sale Event. In the event of a proposed
Majority Sale Event, the Corporation shall cause each Series B Holder to receive
a notice of such Majority Sale Event (a "Sale Notice") setting forth the per-
share price to be paid for shares of Common Stock (which shall exclude any
compensation paid for services to holders of Common Stock) and the terms of such
transaction, including the maximum number of Shares of Common Stock which the
prospective purchaser is willing to buy. Each Series B Holder shall have the
right to participate in the proposed Majority Sale Event by delivering a written
notice of his, her or its election to the Corporation within 15 days from the
date of such Sale Notice and otherwise complying with this (S)9.4. If any Series
B Holder elects to participate in such sale, such Series B Holder shall be
entitled to sell in the proposed Majority Sale Event that number of B Shares
bearing the same proportion (rounded to the nearest whole share) to the maximum
number of Shares of Common Stock which the prospective purchaser is willing to
buy in such Majority Sale Event as such Series B Holder's aggregate holdings of
B Shares (calculated on a Fully Diluted Basis) then bears to the total number of
shares of Common Stock of all holders of Common Stock (on a Fully Diluted Basis)
who have elected to participate in such Majority Sale Event. Any Series B
Holder's right to participate in a Majority Sale Event shall be exercised by
tender to the Corporation (which shall act as agent for purposes of such
Majority Sale Event) of the maximum number of shares of Common Stock which such
Series B Holder may sell in accordance with the terms of this (S)9.4, endorsed
and in transferable form, free and clear of all liens, claims, security
interests and other encumbrances. If a Series B Holder tenders to the
Corporation certificates representing more B Shares than the number of B Shares
which such Series B Holder may sell pursuant to the terms of this (S)9.4, then
the Corporation shall return to such Series B Holder certificates representing
such excess B Shares. As a further condition to the participation in any
Majority Sale Event, any participating Series B Holder shall be required to sign
all agreements and provide such representations, warranties and indemnities as
are applicable generally to all stockholders of the Corporation selling stock in
such Majority Sale Event.
9.5. Right of Corporation to Repurchase B Shares Upon Termination of
Employment. At such time as (a) any Series B Holder employed by the Corporation
or any of its Subsidiaries ceases to be so employed for any reason, or (b) any
Series B Holder who is a Director of the Corporation or any of its Subsidiaries,
and is not otherwise employed
<PAGE>
-26-
by the Corporation or any of its Subsidiaries, ceases to hold office as a
Director of the Corporation or any such Subsidiary, as applicable, for any
reason, then the Corporation (or its designee) shall have the right to
repurchase all B Shares then owned by such Series B Holder and his or her
Permitted Transferees, at a price equal to the Fair Market Value of such B
Shares as of the last day of the month ending immediately prior to the date of
termination of such Series B Holder's employment or directorship, as applicable.
The Corporation may exercise this right at any time within 180 days after the
date of termination of such Series B Holder's employment or directorship by
providing such Series B Holder with written notice of the Corporation's election
(which notice shall set forth the Fair Market Value of the B Shares and the
closing date for such repurchase, which date shall be not more than 30 days
following the date of such notice). The closing of such repurchase shall take
place at the office of the Corporation or any of its Subsidiaries at which such
Series B Holder regularly provided services. At such closing, such Series B
Holder shall deliver to the Corporation, upon receipt of the purchase price
(which shall be payable by cashier's check or wire transfer of same day funds),
stock certificates representing the B Shares being transferred (the "Repurchase
B Shares") duly endorsed to the Corporation, free and clear of all liens and
encumbrances of every kind, together with a stock transfer agreement signed by
such Series B Holder, and if applicable, any Permitted Transferees, satisfactory
to the Corporation and pursuant to which such Series B Holder and/or Permitted
Transferees, as the case may be, represents, warrants and agrees, among other
things, that he or she is the sole owner of the Repurchase B Shares, that such
Repurchase B Shares are owned by such Series B Holder and/or Permitted
Transferee, as the case may be, free and clear of all liens and encumbrances of
every kind, that such Series B Holder and/or Permitted Transferee is authorized
to Transfer the Repurchase B Shares as required by this (S)9.4, that such
transfer does not violate any agreement, court order or the like to which such
Series B Holder and/or Permitted Transferee, as the case may be, is subject,
that such Series B Holder and/or Permitted Transferee has no claims against the
Corporation, any of its Subsidiaries or any of their respective officers,
directors, employees, stockholders and agents in his or her capacity as a
stockholder, and that such Series B Holder and/or Permitted Transferee agrees
not to assert any such claims against the Corporation, any of its Subsidiaries
or any of their respective officers, directors, employees, stockholders and
agents after the consummation of such repurchase transaction.
9.6. Other Rights of Corporation to Repurchase B Shares. In the event that
(a) any Series B Holder is also the holder of any shares of Series A Common
Stock, and (b) such Series B Holder is Transferring all
-26-
<PAGE>
-27-
or any portion of such Series B Holder's shares of Series A Common Stock,
subject to and in accordance with any restriction on such Transfer imposed from
time to time by the Stockholder Agreement or any other agreement or instrument
restricting such holder's ability to Transfer such shares, but such Series B
Holder is not entitled to Transfer any of such Series B Holder's B Shares in
such Transaction as a result of the restrictions on transfer set forth in this
Article 9, then the Corporation (or its designee) shall have the right to
repurchase a Pro Rata Amount (as defined below) of the B Shares then owned by
such Series B Holder and his, her or its Permitted Transferees, as applicable,
at a price equal to the Fair Market Value of such B Shares as of the date of the
proposed Transfer of such Series B Holder's shares of Series A Common Stock. As
used in this (S)9.6, a "Pro Rata Amount" shall mean that number of B Shares as
bears the same proportion to the total number of B Shares held by a Series B
Holder as the number of shares of Series A Common Stock proposed to be
transferred by such Series B Holder bears to the total number of shares of
Series A Common Stock held by such Series B Holder.
9.7. Transfers of B Shares in Breach of By-Laws. Any attempted or purported
Transfer of B Shares (or interests therein) in breach of this Article 9 shall be
wholly void. Effective immediately upon the date of any such attempted or
purported Transfer of B Shares (a) no dividend or distribution of any kind shall
be paid by the Corporation in respect of such B Shares (all rights to any such
payment being hereby irrevocably waived and relinquished by each Series B
Holder, for both such Series B Holder and any purported transferee), (b) the
voting rights of such B Shares shall terminate, and (c) neither a Series B
Holder nor a purported transferee shall be entitled to any rights in respect of
such B Shares unless and until such attempted or purported Transfer in breach of
this Agreement has been rescinded.
9.7. Restrictive Legend. So long as any B Shares are subject to the
provisions of this Article 9, all certificates representing such B Shares shall
have imprinted on them a restrictive legend in substantially the following form:
"The securities represented by this certificate are subject to the terms of
the By-Laws of the Corporation, which contain certain restrictive
provisions relating to the voting and transfer of the securities
represented hereby and certain rights of the Corporation to repurchase such
securities. A copy of the By-Laws is on file and may be inspected for any
proper purpose at the Corporation's principal executive office."
<PAGE>
EXHIBIT 3.5
FOURTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
IMPAC GROUP, INC.
Dated
January 11, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 NAME...................................................................1
ARTICLE 2 REGISTERED OFFICE......................................................1
ARTICLE 3 PURPOSES...............................................................2
ARTICLE 4 COMMON STOCK...........................................................2
SECTION 4.1 NUMBER OF SHARES................................................2
SECTION 4.2 VOTING RIGHTS...................................................2
SECTION 4.3 CONVERSION......................................................2
ARTICLE 5 SERIES A REDEEMABLE PREFERRED STOCK....................................2
SECTION 5.1 NUMBER OF SHARES AND RANKING....................................3
SECTION 5.2 DIVIDENDS.......................................................3
SECTION 5.3 LIQUIDATION PREFERENCE..........................................7
SECTION 5.4 REDEMPTION BY THE COMPANY.......................................8
SECTION 5.5 VOTING RIGHTS..................................................12
SECTION 5.6 CHANGE OF CONTROL..............................................14
SECTION 5.7 CERTAIN COVENANTS..............................................16
SECTION 5.8 EXCLUSION OF OTHER RIGHTS AND REMEDIES.........................20
SECTION 5.9 SEVERABILITY OF PROVISIONS.....................................20
ARTICLE 6 MANAGEMENT............................................................20
ARTICLE 7 INDEMNIFICATION.......................................................21
ARTICLE 8 COMPROMISE OR ARRANGEMENTAND REORGANIZATION...........................22
ARTICLE 9 MISCELLANEOUS.........................................................23
SECTION 9.1 TRANSFERS......................................................23
SECTION 9.2 REPLACEMENT OF LOST CERTIFICATES...............................23
SECTION 9.3 NOTICES........................................................23
ARTICLE 10 CERTAIN DEFINITIONS...................................................24
</TABLE>
<PAGE>
FOURTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
IMPAC GROUP, INC.
IMPAC Group, Inc. (the "Company") is a company organized and existing under
-------
and by virtue of the Delaware General Corporation Law. Pursuant to the
provisions of Section 242 and Section 245 of the Delaware General Corporation
Law, the Company adopts the following Fourth Amended and Restated Certificate of
Incorporation (this "Fourth Amended and Restated Certificate"). The original
------ ------- --- -------- -----------
Certificate of Incorporation of the Company was filed with the Delaware
Secretary of State on May 9, 1996, as amended and restated by the Amended and
Restated Certificate of Incorporation dated as of May 21, 1996 (the "Original
--------
Certificate of Incorporation"). The Original Certificate Of Incorporation was
- ----------- -- -------------
amended and restated by the Amended and Restated Certificate of Incorporation
dated as of March 11, 1998 (the "Amended and Restated Certificate"). The
------- --- -------- -----------
Amended and Restated Certificate was amended and restated by an additional
Amended and Restated Certificate of Incorporation dated as of December 18, 1998
(the "Second Amended and Restated Certificate of Incorporation").
--------------------------------------------------------
This Fourth Amended and Restated Certificate of Incorporation, which
restates and amends the Amended and Restated Certificate in its entirety, was
duly adopted as of January 8, 1999 in accordance with the provisions of Sections
228, 242 and 225 of the Delaware General Corporation Law (the "DGCL"). The
----
provisions of the Original Certificate Of Incorporation are hereby further
amended and restated, such amendment and restatement to be effective on January
8, 1999, to read in their entirety as follows:
ARTICLE 1
NAME
The name of the Company is IMPAC Group, Inc.
ARTICLE 2
REGISTERED OFFICE
The address of the Company's registered office in the State of Delaware is
1013 Center Road, in the City of Wilmington, County of New Castle (Zip Code
19805). The name of the Company's registered agent at such address is
Corporation Service Company.
ARTICLE 3
PURPOSES
The purpose of the Company is to engage in any lawful act or activity for
which corporations may be organized under the Delaware General Corporation Law.
1
<PAGE>
ARTICLE 4
COMMON STOCK
SECTION 4.1 NUMBER OF SHARES.
The total number of shares of common stock that the Company shall have
authority to issue is 1,100,000, consisting solely of 1,000,000 shares of Series
A Common Stock, $0.001 par value per share ("Series A Common Stock"), and
------ - ------ -----
100,000 shares of Series B Common Stock, $0.001 par value per share ("Series B
------ -
Common Stock," and together with the Series A Common Stock, the "Common Stock").
- ------ ----- ------ -----
SECTION 4.2 VOTING RIGHTS.
Except as otherwise required by law, the holders of each share of Series A
Common Stock and Series B Common Stock shall be entitled to vote on all matters
and shall be entitled to one vote for each such share held; and the holders of
Series A Common Stock and Series B Common Stock will vote together as the
holders of a single class of stock.
SECTION 4.3 CONVERSION.
At the option of the Company, upon the closing of a Public Offering (as
defined below), all shares of Series B Common Stock then issued and outstanding
shall be converted into shares of Series A Common Stock. Except as otherwise
provided in the preceding sentence, the holders of shares of Series B Common
Stock shall not be entitled to convert any shares of Series B Common Stock into
shares of Series A Common Stock. "Public Offering" shall mean an underwritten
------ --------
public offering pursuant to an effective registration statement under the
Securities Act of 1933, as amended, covering the offer and sale of shares of any
series of Common Stock.
ARTICLE 5
SERIES A REDEEMABLE PREFERRED STOCK
The Redeemable Preferred Stock shall have the following rights,
preferences, powers, privileges and restrictions, qualifications and
limitations:
SECTION 5.1 NUMBER OF SHARES AND RANKING
(a) The total number of shares of preferred stock the Company shall have
authority to issue is 50,000, consisting solely of 50,000 shares of Series A
Redeemable Preferred Stock, $0.001 par value per share (the "Series A Preferred
------ - ---------
Stock").
- -----
(b) The Series A Preferred Stock shall, with respect to dividend
distributions and distributions upon the liquidation, winding-up or dissolution
of the Company, rank (i) senior to all classes of common stock of the Company
(including the Series A Common Stock and the
2
<PAGE>
Series B Common Stock) and to each other class or series of Capital Stock of the
Company established after the Preferred Issue Date by the Board of Directors of
the Company, the terms of which do not expressly provide that such other class
or series of Capital Stock ranks on a parity with the Series A Preferred Stock
as to dividend distributions and distributions upon the liquidation, winding-up
or dissolution of the Company (collectively referred to, together with all
classes of common stock of the Company, as "Junior Securities"); and (ii) on a
-----------------
parity with any class or series of Capital Stock established after the Preferred
Issue Date by the Board of Directors of the Company, the terms of which
expressly provide that such class or series will rank on a parity with the
Series A Preferred Stock as to dividend distributions and distributions upon the
liquidation, winding-up or dissolution of the Company (collectively referred to
as "Parity Securities").
-----------------
SECTION 5.2 DIVIDENDS
(a) The Holders of the outstanding shares of the Series A Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds of the Company legally available therefor, dividends on the Series
A Preferred Stock, which shall accrue at a rate per annum equal to 14.0% (the
"Dividend Rate") of the Liquidation Preference; provided, however, that (i)
- --------- ---- -------- -------
unless previously consented to in writing by the Holders of shares of Series A
Preferred Stock representing 66 2/3% of the aggregate Liquidation Preference
then outstanding, upon the occurrence and during the continuance of an Event of
Non-Compliance, (ii) unless previously consented to in writing by the Holders of
shares of Series A Preferred Stock representing 66 2/3% of the aggregate
Liquidation Preference then outstanding, if at any time and so long as the
Control Parties are not the Beneficial Owners, in the aggregate, of more than
50.0% of the total voting power in the aggregate of all classes of Capital Stock
of the Company then outstanding normally entitled to vote in elections of
directors (a "50% Ownership Event"), or (iii) unless previously consented to in
--- --------- -----
writing by the Holders of shares of Series A Preferred Stock representing 66
2/3% of the aggregate Liquidation Preference then outstanding, if at any time
and so long as Affiliates of Heritage Partners Management Co. Inc. d/b/a
Heritage Partners, Inc. are not the Beneficial Owners of shares of Common Stock
representing 90% of the Heritage Ownership Amount (as defined in the Securities
Purchase Agreement) (as appropriately adjusted from time to time to reflect
stock splits, stock dividends or reverse stock splits) (a "Heritage Transfer"),
-------- --------
the Dividend Rate shall be 24.0% (such increased rate, the "Increased Dividend
--------- --------
Rate"). All dividends on Series A Preferred Stock will be cumulative, whether
- ----
or not earned or declared on a daily basis, from the Preferred Issue Date
(provided that, with respect to Dividend Shares, dividends shall be cumulative
from "date of issuance" of such Dividend Shares), and will be payable semi-
---- -- --------
annually in arrears on July 1 and January 2 of each year, commencing on July 1,
1999, or, if any such date is not a Business Day, on the next succeeding
Business Day (each a "Dividend Payment Date") to the Holders on the June 15 or
-------- ------- ----
December 15 immediately preceding the relevant Dividend Payment Date (each, a
"Record Date"). Dividends on each share of Series A Preferred Stock will accrue
- ------- ----
from and including the date of issuance of such share to and including the date
on which the Liquidation Preference (plus all then accrued but unpaid dividends
thereon) of such share is paid. Except as provided below with respect to shares
of Series A Preferred Stock issued pursuant to a PIK Dividend, the Preferred
Issue Date
3
<PAGE>
will be deemed to be the "date of issuance" of any shares of Series A
---- -- --------
Preferred Stock, regardless of the number of times transfer of such share is
made on the stock records maintained by or for the Company and regardless of the
number of certificates which may be issued to evidence such share.
(b) Subject to Section 5.2(c), with respect to all periods prior to and
including the tenth Dividend Payment Date, the Company shall pay all dividends
on the Series A Preferred Stock by issuance of a PIK Dividend. Subject to
Section 5.2(c), with respect to all periods after the tenth Dividend Payment
Date and prior to and including the twelfth Dividend Payment Date (the "Sixth
-----
Year"), the Company shall pay all dividends on the Series A Preferred Stock by
- ----
issuance of a PIK Dividend; provided, however, that the Dividend Rate shall
-------- -------
increase to 15.0% during the Sixth Year. With respect to all periods after the
twelfth Dividend Payment Date, the Company shall pay all dividends on the Series
A Preferred Stock in cash, but only to the extent the payment of such cash
dividends is then permitted under the terms of the Credit Agreements, the
Indenture and any other indenture, agreement or instrument relating to
Indebtedness Incurred by the Company or any Subsidiary (collectively, the
"Financing Arrangements"), and if not so permitted, (i) the Company will pay
- -----------------------
such dividend by issuance of a PIK Dividend and (ii) the Dividend Rate shall
increase to 15.0% with respect to such semi-annual period (and any subsequent
semi-annual period) for which the Company does not pay dividends on the Series A
Preferred Stock in cash.
(c) On or after any date on which the Company redeems all of the
outstanding Dividend Shares pursuant to Section 5.4(e), the Company shall pay
all dividends on the Series A Preferred Stock in cash, but only to the extent
the payment of such cash dividends is then permitted under the terms of the
Financing Arrangements and if not so permitted, (i) the Company will pay such
dividend by issuance of a PIK Dividend and (ii) the Dividend Rate shall increase
to 15.0% with respect to such semi-annual period (and any subsequent semi-annual
period) for which the Company does not pay dividends on the Series A Preferred
Stock in cash.
(d) With respect to any share of Series A Preferred Stock issued pursuant
to a PIK Dividend in accordance with this Section 5.2 ("Dividend Shares"), the
---------------
Dividend Payment Date giving rise to such PIK Dividend shall be deemed to be its
"date of issuance", regardless of the number of times transfer of such share is
---- -- --------
made on the stock records of the Company and regardless of the number of
certificates which may be issued to evidence such share. All Dividend Shares
will upon issuance in accordance with this Section 5.2 be duly authorized,
validly issued, fully paid and non-assessable. Each such PIK Dividend shall be
made pro rata with respect to the outstanding shares of Series A Preferred Stock
--- ----
in accordance with the respective dividends then due and payable thereon.
Dividends with respect to such Dividend Shares shall accrue at the rates and be
due and payable on the Dividend Payment Dates and on the other terms set forth
in this Section 5.2. If at any time the Company pays less than the total amount
of dividends then accrued with respect to the Series A Preferred Stock, such
payment will be distributed ratably among the Holders of the Series A Preferred
Stock based upon the aggregate accrued but unpaid dividends on the shares of
Series A Preferred Stock held by each such Holder.
4
<PAGE>
(e) No full dividends shall be declared or paid or funds set apart for the
payment of dividends on any Parity Securities (a "Parity Securities
------ ----------
Distribution") for any period unless (i) full cumulative dividends on all shares
- ------------
of Series A Preferred Stock from the applicable date of issuance until the most
recent Dividend Payment Date shall have been or contemporaneously are declared
and paid and (ii) either (A) full unpaid cumulative dividends on all shares of
Series A Preferred Stock from the most recent Divided Payment Date are or have
been paid in cash or (B) all dividends declared on all shares of Series A
Preferred Stock and all dividends declared upon shares of Parity Securities
shall be declared pro rata so that the amount of cash and non-cash dividends
declared per share of Series A Preferred Stock and the amount of cash and non-
cash dividends declared per share of such Parity Securities shall bear to each
other the same ratio that accrued dividends per share on the Series A Preferred
Stock and such Parity Securities bear to each other (for the purposes of such
calculation, cash dividends will be compared to cash dividends and non-cash
dividends will be compared to non-cash dividends).
(f) Unless (i) full unpaid cumulative dividends on all shares of Series A
Preferred Stock from the applicable date of issuance shall have been or
contemporaneously are declared and paid in cash and (ii) the aggregate
Liquidation Preference of the Series A Preferred Stock then outstanding is no
greater than the amount of such Liquidation Preference on the Preferred Issue
Date: (a) no dividend (other than a dividend on Junior Securities payable
solely in shares of any Junior Securities) shall be declared or paid upon (or
deemed paid), or any sum set apart for the payment of dividends upon, any shares
of Junior Securities; (b) no shares of Junior Securities or Parity Securities
shall be repurchased, redeemed or otherwise acquired or retired by the Company
or any of its Subsidiaries; and (c) no monies shall be paid into or set apart or
made available for a sinking or other like fund for the purchase, redemption or
other acquisition or retirement for value of any shares of Junior Securities or
Parity Securities by the Company or any of its Subsidiaries. Notwithstanding
the foregoing, the Company may, at any time, repurchase, redeem or otherwise
acquire or retire for value (each a "Junior Security Repurchase") Junior
------ -------- ----------
Securities of the Company held by any current or former member of the Company's
(or any of its Subsidiaries') management pursuant to (i) any agreement listed in
Schedule 5.2(f) (the "Existing Repurchase Agreements"), (ii) any agreement
-------- ---------- ----------
between the parties to an Existing Repurchase Agreement which terminates and
replaces or supersedes any such agreement (each, a "Renewal Repurchase
------- ----------
Agreement") or (iii) an agreement between the Company and any member of
- ---------
management of the Company or any of its Subsidiaries in the future, other than
the Existing Repurchase Agreements and Renewal Repurchase Agreements (no more
than four of which are executed and delivered by the Company, each, a "New
---
Repurchase Agreement"); provided that, in any such case:
- ---------- ---------
(A) the aggregate price paid for all such Junior Security Repurchases
by the Company shall not exceed $2.5 million in any twelve-month period,
without giving effect to any such Junior Security Repurchases with the
proceeds paid to the Company from key man life or disability insurance
policies purchased by the Company specifically to finance a possible Junior
Security Repurchase or the proceeds from the issuance and sale of any
Equity Interests which constitute Junior Securities;
5
<PAGE>
(B) the Company is, at the time of such Junior Security Repurchase and
after giving pro forma effect thereto as if (i) such repurchase had
occurred at the beginning of the applicable four-quarter period and (ii)
the payment of the purchase price for such repurchase is an Incurrence of
Indebtedness, able to Incur at least $1.00 of additional Indebtedness
pursuant to the test set forth in Section 5.7(a);
(C) the Company is required to make such Junior Security Repurchase
pursuant to the terms of an Existing Repurchase Agreement, a Renewal
Repurchase Agreement or a New Repurchase Agreement; provided, however, that
-------- -------
this clause (C) will not restrict the Company from making Junior Security
Repurchases pursuant to the terms of any Repurchase Agreement at the option
of the Company in an aggregate amount not exceeding (i) $100,000 in any
twelve-month period and (ii) $500,000 in the period beginning with the
Preferred Issue Date and ending on the applicable repurchase date; and
(D) at the time of such Junior Security Repurchase, the Consolidated
EBITDA of the Company for the four most recent full fiscal quarters for
which internal financial information of the Company is available, meets or
exceeds the levels specified below:
Consolidated
Repurchase Period EBITDA
----------------- --------------
Prior to March 31, 2000 $50.0 million
On or after March 31, 2000 $55.0 million
but prior to March 31, 2001
On or after March 31, 2001 $60.0 million
but prior to March 31, 2002
(g) Notwithstanding the provisions of Section 5.2(f) above:
(i) the Company may repurchase on or immediately after the Preferred
Issue Date shares of Common Stock as contemplated by the Heritage
Repurchase Agreement;
(ii) the Company may effect, at any time, Junior Security
Repurchases, with the cash proceeds paid to the Company (A) from key man
life or disability insurance policies purchased by the Company specifically
to finance a possible Junior Security Repurchase or (B) from the issuance
and sale of any Equity Interests which constitute Junior Securities; and
(iii) the Company may effect, at any time, Junior Security
Repurchases required by the terms of any Repurchase Agreement in an
aggregate amount not
6
<PAGE>
exceeding (a) $1,000,000 in any twelve-month period and (b) $2.5 million in
the period beginning with the Preferred Issue Date and ending on the
applicable repurchase date.
(h) Dividends on account of arrears for any past dividend period and
dividends in connection with any optional redemption may be declared and paid at
any time, without reference to any regular Dividend Payment Date, to Holders of
record of the Series A Preferred Stock on such date, not more than 30 days prior
to the payment thereof, as may be fixed by the Board of Directors of the
Company.
SECTION 5.3 LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding-up of
the Company, Holders of Series A Preferred Stock shall be entitled to payment,
out of the assets of the Company available for distribution to stockholders, of
the Liquidation Preference per share of Series A Preferred Stock, plus, without
duplication, an amount in cash equal to all accumulated and unpaid dividends
thereon to but excluding the date fixed for liquidation, dissolution or winding-
up (including an amount equal to a prorated dividend for the period from the
last Dividend Payment Date to the date fixed for liquidation, dissolution or
winding-up), before any distribution is made on any Junior Securities,
including, without limitation, Common Stock of the Company. If, upon any
voluntary or involuntary liquidation, dissolution or winding-up of the Company,
the amounts payable with respect to the Series A Preferred Stock and all other
Parity Securities are not paid in full, the Holders of the Series A Preferred
Stock and the Parity Securities shall share equally and ratably in any
distribution of assets of the Company in proportion to the full liquidation
preference to which each is entitled. After payment of the full amount of the
Liquidation Preference and accumulated and unpaid dividends to which they are
entitled, the Holders of shares of Series A Preferred Stock shall not be
entitled to any further participation in any distribution of assets of the
Company. However, neither the sale, conveyance, exchange or transfer (for cash,
shares of stock, securities or other consideration) of all or substantially all
of the property or assets of the Company nor the consolidation or merger of the
Company with or into one or more Persons shall be deemed to be a liquidation,
dissolution or winding-up of the Company, unless such sale, conveyance, exchange
or transfer shall be in connection with a liquidation, dissolution or winding-up
of the business of the Company.
SECTION 5.4 REDEMPTION BY THE COMPANY
(a) Commencing on the third anniversary of the Preferred Issue Date, the
Company may (at any time), at the Company's option, redeem in whole or in part
(provided, that the aggregate Liquidation Preference of shares of Series A
Preferred Stock redeemed shall be no less than $5.0 million and in integral
multiples of $1.0 million in excess of such amount) all of the outstanding
shares of Series A Preferred Stock at the prices set forth below (expressed as a
percentage of the then aggregate Liquidation Preference thereof, with the
redemption premium to be paid to be based on the date of the redemption as set
forth below), plus, without
7
<PAGE>
duplication, an amount in cash equal to all accumulated and unpaid dividends, if
any, to but excluding the Redemption Date.
<TABLE>
<CAPTION>
Redemption Date Redemption Price
- --------------- ------------------
<S> <C>
On or after the Third Anniversary but prior to the Fourth Anniversary 104%
On or after the Fourth Anniversary but prior to the Fifth Anniversary 103%
On or after the Fifth Anniversary but prior to the Sixth Anniversary 102%
On the Sixth Anniversary and thereafter 100%
</TABLE>
(b) On or after the consummation of a Public Offering from which the
Company receives at least $25.0 million in proceeds, the Company may, at its
option, redeem, in whole or in part, all of the outstanding shares of the Series
A Preferred Stock during the periods (expressed in relation to anniversaries of
the Preferred Issue Date) and at the redemption prices in cash set forth below
(which are expressed as a percentage of the aggregate Liquidation Preference
thereof, with the redemption premium to be paid to be based on the date of the
redemption as set forth below), plus, without duplication, an amount in cash
equal to accrued and unpaid dividends, if any, to but excluding the Redemption
Date; provided, however, that (i) the Company may not effectuate such a
-------- -------
redemption on any date when the Holders of the Series A Preferred Stock are not
free to (A) exercise the Warrants to purchase shares of Series A Common issued
by the Company to the original Holders in connection with such Holders' purchase
of the Series A Preferred Stock (the "Warrants") and (B) sell the shares of
--------
Series A Common Stock underlying the Warrants (for purposes of this provision,
if such Holders may not sell such stock (A) as a result of a request that they
not sell (for no more than 180 days) by the managing underwriter of any Public
Offering or (B) as a result of limitations imposed by Rule 144 under the
Securities Act, such shares of Series A Common Stock will be deemed to be freely
saleable) and (ii) after giving effect to any such redemption pursuant to this
Section 5.4(b), not less than 50% of the original aggregate Liquidation
Preference of the Series A Preferred Stock shall be outstanding, unless the
Company redeems 100% of the outstanding shares of Series A Preferred Stock. Any
such redemption must be made within 90 days after the date of the closing of
such Public Offering.
<TABLE>
<CAPTION>
Redemption Date Redemption Price
- --------------- ----------------
<S> <C>
On or after the First Anniversary but prior to the Second Anniversary 110%
On or after the Second Anniversary but prior to the Third Anniversary 106%
On or after the Third Anniversary but prior to the Fourth Anniversary 104%
On or after the Fourth Anniversary but prior to the Fifth Anniversary 103%
On or after the Fifth Anniversary but prior to the Sixth Anniversary 102%
On the Sixth Anniversary and thereafter 100%
</TABLE>
(c) In connection with a sale of the Company or its business (whether as a
merger or consolidation or sale of all or substantially all of the Capital Stock
or assets of the Company and its Subsidiaries or otherwise and including the
sale of more than 50% of the outstanding
8
<PAGE>
Common Stock to existing shareholders of the Company or their Affiliates) (a
"Disposition"), the Company may, at its option, redeem all of the outstanding
-----------
shares of the Series A Preferred Stock at the redemption prices set forth below
(which are expressed as a percentage of the aggregate Liquidation Preference
thereof, with the redemption premium to be paid to be based on the date of the
redemption as set forth below), plus, without duplication, an amount in cash
equal to accrued and unpaid dividends, if any, to but excluding the Redemption
Date. Any such redemption that the Company elects to make may only be made
within (i) ten (10) Business Days after the date of the closing of such Change
of Control or (ii) ten (10) Business Days after the Change of Control Payment
Date, in the event the Company (A) makes a Change of Control Offer pursuant to
Section 5.6(a) and (B) immediately after the Change of Control Payment Date, the
aggregate Liquidation Preference of all shares of Series A Preferred Stock which
remain outstanding is less than $5.0 million.
<TABLE>
<CAPTION>
Redemption Date Redemption Price
- --------------- ----------------
<S> <C>
Prior to the First Anniversary 110%
On or after the First Anniversary but prior to the Second Anniversary 108%
On or after the Second Anniversary 106%
</TABLE>
(d) (i) During any period in which the Increased Dividend Rate is in
effect (an "Increased Dividend Period") as a result of a 50% Ownership Event or
--------- -------- ------
a Heritage Transfer, the Company may, at its option, redeem all, but not less
than all, of the outstanding shares of Series A Preferred Stock; provided,
--------
however, that the Company may not redeem shares of Series A Preferred Stock if
- -------
the Holders of such stock have waived (in writing), subject to Section
5.4(d)(ii) below, at any time prior to the date of redemption, their right, to
receive dividends on such stock at the Increased Dividend Rate, at a price equal
to 101% of the then aggregate Liquidation Preference thereof, plus, without
duplication, an amount in cash equal to all accumulated and unpaid dividends, if
any, to but excluding the Redemption Date.
(ii) The Company may, no less than thirty (30) days prior to the possible
occurrence of a 50% Ownership Event or Heritage Transfer, notify the Holders of
such proposed transaction and request the Holders to notify the Company within
thirty (30) days of such notice whether or not such Holders will waive their
right to dividends at the Increased Dividend Rate arising as a result of the
consummation of such transaction. Any such notice shall provide information
reasonably sufficient to make a decision. Each Holder shall respond within
thirty (30) days of such notice and shall be bound by the election made by such
Holder in such notice.
(e) In order to declare and pay dividends on Junior Securities pursuant to
Section 5.2(f), the Company may at its option redeem all, but not less than all,
of the outstanding Dividend Shares at a price in cash equal to 100% of the
aggregate Liquidation Preference thereof; provided, however, that in the event
-------- -------
the Company redeems, in one or a series of related transactions, Dividend Shares
(pursuant to this Section 5.4 (e)) at the same time as a redemption of any other
shares of Series A Preferred Stock (the "Other Shares"), then (i) the Company
----- ------
may not redeem any Dividend Shares pursuant to this Section 5.4(e) at any price
(determined as a
9
<PAGE>
percentage of the aggregate Liquidation Preference of such Dividend Shares, the
"Dividend Share Redemption Price") less than the price (determined as a
-------- ----- ---------- -----
percentage of the aggregate Liquidation Preference of such Other Shares) at
which the Other Shares are being redeemed (the "Other Share Redemption Price"),
----- ----- ---------- -----
and (ii) to the extent any Dividend Shares are redeemed pursuant to this Section
5.4(e) within six (6) months prior to any such redemption of Other Shares, the
Company shall pay, upon the redemption of the Other Shares, to the former
Holders of such Dividend Shares, an amount equal to the difference between (A)
the Other Share Redemption Price and (B) the Dividend Share Redemption Price
actually paid to such former Holders of Dividend Shares on the applicable
Redemption Date.
(f) On December 31, 2008 (the "Mandatory Redemption Date"), the Company
--------- ---------- ----
shall be required to redeem all of the outstanding shares of Series A Preferred
Stock (including any Dividend Shares) at a price equal to 100% of the aggregate
Liquidation Preference thereof, plus, without duplication, an amount in cash
equal to all accumulated and unpaid dividends, if any, to but excluding the
Redemption Date.
(g) In the event of partial redemptions of Series A Preferred Stock
pursuant to this Section 5.4, the shares to be redeemed will be determined pro
rata, as determined by the Company, provided that the Company may redeem such
--------
shares held by any Holders of fewer than 100 shares (or shares held by Holders
who would hold less than 100 shares as a result of such redemption), without
regard to any pro rata redemption requirement.
(h) Notice of any redemption shall be sent by or on behalf of the Company
not less than 20 nor more than 60 days prior to the date specified for
redemption in such notice (including the date of such redemption, the
"Redemption Date"), by first class mail, postage prepaid, to all Holders of
- ----------- ----
record of the Series A Preferred Stock at their registered address. In addition
to any information required by law or by the applicable rules of any exchange
upon which Series A Preferred Stock may be listed or admitted to trading, such
notice shall state: (i) whether such redemption is being made pursuant to the
optional or the mandatory redemption provisions hereof; (ii) the Redemption
Date; (iii) the redemption price; (iv) if less than all the outstanding shares
of Series A Preferred Stock are to be redeemed, the Liquidation Preference of,
and the accrued and unpaid dividends on, the shares of Series A Preferred Stock
to be redeemed; (v) except as provided in the next sentence, that on the
Redemption Date the redemption price shall become due and payable upon each
share of Series A Preferred Stock to be redeemed; and (vii) the place or places
where shares are to be surrendered for payment of the redemption price. In
connection with any redemption pursuant to Section 5.4(b) (a Public Offering) or
Section 5.4(c) (a Disposition) the Company may indicate in the redemption notice
described above that its redemption obligation is contingent upon the
consummation of such Public Offering or Disposition, in which case the Company's
redemption obligation shall be contingent upon such consummation. Upon the
mailing of any such notice of redemption, the Company shall become obligated to
redeem at the time of redemption specified thereon all shares called for
redemption, subject to any contingency described in the preceding sentence.
10
<PAGE>
(i) If notice has been mailed in accordance with Section 5.4(h) above and,
provided that on or before the Redemption Date specified in such notice, all
- --------
funds necessary for such redemption shall have been segregated and irrevocably
set apart by the Company, in trust for the pro rata benefit of the Holders of
the shares so called for redemption, so as to be, and to continue to be
available therefor, then, on and after the Redemption Date, unless the Company
defaults in the payment of the applicable redemption price, dividends on the
shares of the Series A Preferred Stock so called for redemption shall cease to
accumulate and all rights of the Holders of such shares shall terminate except
for the right to receive from the Company the redemption price, without
interest; new certificates of Series A Preferred Stock having an aggregate
Liquidation Preference equal to the unredeemed portion of the Series A Preferred
Stock (including any unredeemed Dividend Shares) shall be issued in the name of
the Holder thereof upon cancellation of the original shares of Series A
Preferred Stock (and any Dividend Shares) without cost to the Holder thereof.
Upon surrender, in accordance with said notice, of the certificates for any
shares so redeemed (properly endorsed or assigned for transfer, if the Company
shall so require and the notice shall so state), such shares shall be redeemed
by the Company at the applicable redemption price.
(j) Any deposit of funds with a bank or trust company for the purpose of
redeeming Series A Preferred Stock shall be irrevocable except that:
(i)) the Company shall be entitled to receive from such bank or trust
company the interest or other earnings, if any, earned on any money so
deposited in trust, and the Holders of any shares redeemed shall have no
claim to such interest or other earnings; and
(ii) any balance of monies so deposited by the Company and unclaimed
by the Holders of the Series A Preferred Stock entitled thereto at the
expiration of two years from the applicable Redemption Date shall be
repaid, together with any interest or other earnings earned thereon, to the
Company, and after any such repayment, the Holders of the shares entitled
to the funds so repaid to the Company shall look only to the Company for
payment without interest or other earnings.
(k) No Series A Preferred Stock may be redeemed except with funds legally
available for the purpose. The Company shall take all actions required or
permitted under the DGCL to permit any redemption which the Company elects to
effect pursuant to clauses (a)-(e) above or is required to effect pursuant to
clause (f) above.
(l) No optional redemption may be made pursuant to Section 5.4(a), 5.4(b),
5.4(c) 5.4(d) or 5.4(e), (i) unless prior thereto or contemporaneously therewith
full unpaid cumulative dividends shall have been paid in cash or a sum set apart
for such payment on the Series A Preferred Stock or (ii) at a price less than
101% of the aggregate Liquidation Preference of the shares of Series A Preferred
Stock to be redeemed if on the applicable Redemption Date the Company is making
or is required to make an offer to purchase shares of Series A Preferred Stock
under a Change of Control Offer in accordance with Section 5.6.
11
<PAGE>
SECTION 5.5 VOTING RIGHTS
(a) The Holders of shares of Series A Preferred Stock shall have no voting
rights, except as required by non-waivable provisions of DGCL and as hereinafter
provided in this Section 5.5.
(b) Except as stated above under Section 5.1, the Company shall not,
without the affirmative vote or consent of Holders of shares of Series A
Preferred Stock representing 66% of the aggregate Liquidation Preference then
outstanding, voting or consenting, as the case may be, as one class:
(i) amend this Fourth Amended and Restated Certificate of
Incorporation so as to adversely affect the specified rights, preferences,
privileges or voting rights of Holders of shares of the Series A Preferred
Stock, or
(ii) increase the number of authorized shares of the Company
designated as Series A Preferred Stock except as may be required to issue
additional Dividend Shares or to satisfy the Company's obligations to issue
additional shares of Series A Preferred Stock to satisfy its obligations
pursuant to Section 7.03(g) of the Securities Purchase Agreement, or
(iii) increase or decrease the par value of the shares of the Series
A Preferred Stock.
(c) Without the consent of each Holder affected, an amendment or waiver of
this Fourth Amended and Restated Certificate of Incorporation may not (with
respect to any shares of Series A Preferred Stock held by a non-consenting
Holder):
(i) alter the voting rights with respect to the Series A Preferred
Stock or reduce the number of shares of Series A Preferred Stock (or the
aggregate Liquidation Preference represented thereby) whose Holders must
consent to an amendment or waiver;
(ii) reduce the aggregate Liquidation Preference of any share of
Series A Preferred Stock, alter the Mandatory Redemption Date or the
applicable redemption price payable pursuant to Section 5.4(a)-(f) or
Section 5.6, alter the circumstances under which the Company is required to
make a Change of Control Offer or entitled or permitted to redeem the
Series A Preferred Stock or alter the amount or form of consideration
payable in connection with any such redemption:
(iii) reduce the rate or change the time for payment of dividends on
any share of Series A Preferred Stock;
12
<PAGE>
(iv) waive the consequences of any failure to pay dividends on the
Series A Preferred Stock; or
(v) make any share of Series A Preferred Stock payable in any form
or currency other than that stated in this Fourth Amended and Restated
Certificate of Incorporation.
SECTION 5.6 CHANGE OF CONTROL
(a) Upon the occurrence of a Change of Control, the Company shall make an
offer (the "Change of Control Offer") to each Holder of shares of Series A
------ -- ------- -----
Preferred Stock to repurchase all, but not less than all, of such Holder's
Series A Preferred Stock at an offer price in cash equal to 101% of the
aggregate Liquidation Preference thereof plus, without duplication, an amount
in cash equal to all accumulated and unpaid dividends, if any, thereon to but
excluding the date of repurchase (the "Change of Control Payment") (subject to
------ -- ------- -------
the right of Series A Preferred Stock Holders of record on the relevant Record
Date to receive dividends due on the relevant Dividend Payment Date); provided,
--------
however, that notwithstanding the occurrence of a Change of Control, the Company
- -------
shall not be obligated to purchase any shares of Series A Preferred Stock
pursuant to this covenant in the event that it has previously exercised its
right to redeem all of the Series A Preferred Stock pursuant to Section 5.4(a),
5.4(b), 5.4(c) or 5.4(d).
(b) The Change of Control Offer shall include all instructions and
materials necessary to enable Holders to tender their shares of Series A
Preferred Stock and a full description of the circumstances and relevant facts
and financial information regarding such Change of Control.
(c) The Company shall comply, to the extent applicable, with the
requirements of Rule 14(e) of the Exchange Act and any other securities laws and
regulations in connection with the repurchase of the Series A Preferred Stock as
a result of a Change of Control. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this Section 5.6, the
Company will comply with the applicable securities laws and regulations and will
not be deemed to have breached its obligations under this Section 5.6 by virtue
thereof. The Change of Control Offer shall contain information concerning the
business of the Company and its Subsidiaries which the Company in good faith
believes will enable such Holders to make an informed decision with respect to
the Change of Control Offer (which at a minimum will include (i) the most recent
available annual and quarterly financial statements, (ii) a description of
material developments in the Company's business subsequent to the date of the
latest of such financial statements referred to in clause (i) (including a
description of the events requiring the Company to make the Change of Control
Offer) and (iii) if applicable, appropriate pro forma financial information
concerning the Change of Control Offer).
(d) Within 30 days following any Change of Control (or at the Company's
option, prior to such Change of Control but after the public announcement
thereof), the Company shall mail a notice to each Holder stating:
13
<PAGE>
(i) that the Change of Control Offer is being made pursuant to this
Section 5.6 and that all shares of Series A Preferred Stock tendered shall
be accepted for payment;
(ii) the amount of the Change of Control Payment, the purchase date,
which shall be not earlier than 30 days or later than 60 days from the date
such notice is mailed (the "Change of Control Payment Date");
------ -- ------- ------- ----
(iii) that any share of Series A Preferred Stock not tendered shall
continue to accumulate dividends;
(iv) the place or places where shares of Series A Preferred Stock
are to be surrendered for tender pursuant to the Change of Control Offer;
(v) that, on the Change of Control Payment Date, the purchase price
shall become due and payable upon the acceptance of each share of Series A
Preferred Stock (including any Dividend Shares) for payment pursuant to the
Change of Control Offer and, unless the Company fails to pay the Change of
Control Payment on the Change of Control Payment Date, all shares of Series
A Preferred Stock accepted for payment pursuant to the Change of Control
Offer shall cease to accumulate dividends after the Change of Control
Payment Date;
(vi) that Holders electing to have their shares of Series A
Preferred Stock purchased pursuant to a Change of Control Offer will be
required to surrender the shares of Series A Preferred Stock, with the form
entitled "Option of Holder to Elect Purchase" which shall be included with
------ -- ------ -- ----- --------
the notice of Change of Control completed, to the Company (or its paying
agent) at the address specified in the notice prior to the close of
business on the third Business Day preceding the Change of Control Payment
Date; and
(vii) that, if such Change of Control Offer is made prior to the
occurrence of such Change of Control, payment is conditioned on the
occurrence of such Change of Control.
(e) On the Change of Control Payment Date, the Company shall, to the extent
lawful (including without limitation, lawful under Section 160 of the DGCL), and
subject to paragraph (g) below, (i) accept, in exchange for payment therefor,
all shares of Series A Preferred Stock (including any Dividend Shares) or
portions thereof properly tendered pursuant to the Change of Control Offer, and
(ii) deliver or cause to be delivered to each Purchaser tendering shares of
Series A Preferred Stock pursuant to the Change of Control Offer an Officers'
Certificate stating the aggregate Liquidation Preference of the shares of Series
A Preferred Stock or portions thereof being purchased by the Company and, (iii)
within three Business Days thereafter, the Company shall cause its transfer
agent to authenticate and mail (or cause to be transferred by book entry) to
each holder a new certificate representing the shares of Series A
14
<PAGE>
Preferred Stock equal in Liquidation Preference amount to any unpurchased
portion of the shares of Series A Preferred Stock represented by the
certificates so surrendered. The Company shall notify each Person that was a
Holder immediately prior to such redemption of the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Payment
Date.
(f) The Company shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in this Section 5.6 applicable to a Change of Control Offer made by the
Company and purchases all shares of Series A Preferred Stock validly tendered
and not withdrawn under such Change of Control Offer.
(g) Notwithstanding the foregoing provision of this Section 5.6, the
Company shall not be obligated to purchase any shares of Series A Preferred
Stock pursuant to a Change of Control Offer to the extent such payment would not
be permitted under (i) any of the Financing Arrangements in effect as of the
Preferred Issue Date (the "Existing Financing Arrangements"), (ii) any of the
-------- --------- ------------
Existing Financing Arrangements, as amended, waived or supplemented after the
Preferred Issue Date, but without giving effect to any such amendments, waivers
or supplements to the extent they have the effect of further restricting in any
material respect, as compared to the restrictions imposed by Section 8.11 of the
Current Credit Agreement and Section 4.07 of the Indenture (the "Existing
--------
Restricted Payment Covenants"), the Company's ability to purchase shares of
- ---------- ------- ---------
Series A Preferred Stock in the event of a Change of Control, as determined in
good faith by the Company's Board of Directors, or (iii) any new Financing
Arrangements entered into by the Company or its Subsidiaries after the Preferred
Issue Date, but only to the extent such new Financing Arrangements do not have
the effect of further restricting in any material respect, as compared to the
restrictions imposed by the Existing Restricted Payment Covenants, the Company's
ability to purchase shares of Series A Preferred Stock in the event of a Change
of Control, as determined in good faith by the Company's Board of Directors.
SECTION 5.7 CERTAIN COVENANTS
(a) Limitation on Incurrence of Indebtedness and Issuance of Disqualified
Stock and of Preferred Stock
So long as any Series A Preferred Stock is outstanding, the Company
will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, create, issue, assume, Guarantee, incur, become
directly or indirectly liable with respect to, or otherwise become
responsible for, contingently or otherwise (individually and collectively,
to "Incur" or, as appropriate, an "Incurrence"), any Indebtedness
----- ----------
(excluding Permitted Indebtedness but including Acquired Debt) or any
Disqualified Stock, and the Company will not permit any of its Restricted
Subsidiaries to issue any Preferred Stock. Notwithstanding the foregoing,
the Company and its Subsidiaries may Incur Indebtedness or Disqualified
Stock if:
15
<PAGE>
(i) no Event of Non-Compliance shall have occurred and be
continuing at the time of, or would occur after giving effect on a pro
forma basis to, such Incurrence of Indebtedness or Disqualified Stock;
and
(ii) prior to the first anniversary of the Preferred Issue
Date, on the date of such Incurrence (the "Incurrence Date"), the
---------- ----
Company's Debt to Consolidated EBITDA Ratio would be no greater than
6.25 to 1;
(iii) on or after the first anniversary of the Preferred Issue
Date, on the Incurrence Date the Company's Debt to Consolidated EBITDA
Ratio would be no greater than 6.0 to 1;
(iv) on or after the second anniversary of the Preferred Issue
Date, on the Incurrence Date the Company's Debt to Consolidated EBITDA
Ratio would be no greater than 5.5 to 1; and
(v) on or after the third anniversary of the Preferred Issue
Date, on the Incurrence Date the Company's Debt to Consolidated EBITDA
Ratio would be no greater than 5.0 to 1.
Indebtedness, Disqualified Stock or Preferred Stock of any Person which is
outstanding at the time such Person becomes a Restricted Subsidiary of the
Company (including upon designation of any Unrestricted Subsidiary or other
Person to be a Restricted Subsidiary) or is merged with or into or consolidated
with the Company or a Restricted Subsidiary of the Company shall be deemed to
have been Incurred at the time such Person becomes such a Restricted Subsidiary
of the Company or is merged with or into or consolidated with the Company or a
Restricted Subsidiary of the Company, as applicable.
(b) Merger, Consolidation, or Sale of Assets
So long as any Series A Preferred Stock is outstanding, the Company may not
consolidate or merge with or into (whether or not the Company is the surviving
corporation), or sell, assign, transfer, lease, convey or otherwise dispose of
all or substantially all of its properties or assets, in one or more related
transactions, to another Person, and the Company may not permit any of its
Restricted Subsidiaries to enter into any such transaction or series of
transactions if such transaction or series of transactions would, in the
aggregate, result in a sale, assignment, transfer, lease, conveyance, or other
disposition of all or substantially all of the properties or assets of the
Company to another Person unless (i) the Company is the surviving corporation or
the Person formed by or surviving any such consolidation or merger (if other
than the Company) or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made (the "Surviving Entity") is a
--------- ------
corporation organized or existing under the laws of the United States, any state
thereof or the District of Columbia; (ii) if the Company is not the Surviving
Entity, the Series A Preferred Stock shall be converted into or exchanged for
and shall become shares of the Surviving Entity, having in respect of such
successor, transferee or
16
<PAGE>
resulting corporation substantially the same powers, preferences and relative
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereon that the Series A Preferred Stock had
immediately prior to such transaction; (iii) immediately after such transaction,
no Event of Non-Compliance, and no event that after the giving of notice or
lapse of time or both would become an Event of Non-Compliance, shall have
occurred and be continuing; and (iv) the Company or the Surviving Entity will,
at the time of such transaction or series of transactions and after giving pro
forma effect thereto as if such transaction or series of transactions had
occurred at the beginning of the applicable four-quarter period, be permitted to
Incur at least $1.00 of additional Indebtedness pursuant to the test set forth
in Section 5.7(a). Notwithstanding the restrictions described in the foregoing
clause (iv), any Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to the Company, and any Wholly
Owned Restricted Subsidiary may consolidate with, merge into or transfer all or
part of its properties and assets to another Wholly Owned Restricted Subsidiary.
Notwithstanding the foregoing provisions of this paragraph (b), the Company and
its Restricted Subsidiaries may engage in any of the transactions otherwise
prohibited by this paragraph (b) if such transaction constitutes a Disposition
and the Company redeems all of the outstanding shares of Series A Preferred
Stock pursuant to Section 5.4(c) or the Company is then permitted to redeem the
Series A Preferred Stock pursuant to Section 5.4(a) and redeems all of the
shares of Series A Preferred Stock pursuant to Section 5.4(a) at the time of the
closing of the applicable transaction.
(c) Designation of Unrestricted Subsidiaries
The Board of Directors of the Company may designate any Restricted
Subsidiary to be an Unrestricted Subsidiary if (i) such designation would not
cause an Event of Non-Compliance, and (ii) such Restricted Subsidiary meets the
definition of an Unrestricted Subsidiary.
(d) Limitations on Transactions with Affiliates and Related Persons
The Company shall not, and shall not permit any Restricted Subsidiary of
the Company to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or Guarantee with, or for the benefit of, any of
its Affiliates (each of the foregoing, an "Affiliate Transaction"), unless (i)
--------- -----------
such Affiliate Transaction is on terms that are no less favorable to the Company
or the relevant Restricted Subsidiary than those that would have been obtained
in a comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (ii) (A) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration in
excess of $1.0 million, such Affiliate Transaction or series of related
Affiliate Transactions has been approved in good faith by a majority of the
members of the Board of Directors who are disinterested with respect to such
Affiliate Transaction or series of related Affiliate Transactions, and (B) with
respect to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $5.0 million, such Affiliate
Transaction or series of related Affiliate Transactions has been approved in
good faith by a resolution adopted by a
17
<PAGE>
majority of the members of the Board of Directors of the Company who are
disinterested with respect to such Affiliate Transaction or series of related
Affiliate Transactions and an opinion as to the fairness of such Affiliate
Transaction or series of related Affiliate Transactions from a financial point
of view has been issued to the Company by an accounting, appraisal, engineering
or investment banking firm of national standing provided that the following
--------
shall not be deemed Affiliate Transactions: (1) transactions contemplated by any
employment agreement or other compensation plan or arrangement entered into by
the Company or any of its Restricted Subsidiaries in the ordinary course of
business and consistent with the past practice of the Company or such Restricted
Subsidiary, (2) transactions between or among the Company and/or its Restricted
Subsidiaries, (3) indemnification payments made to officers, directors and
employees of the Company or any Restricted Subsidiary pursuant to charter,
bylaw, statutory or contractual provisions , (4) payment of reasonable director
fees to Persons who are not otherwise Affiliates of the Company, (5) any
agreement in effect as of the Preferred Issue Date or any transaction
contemplated thereby, (6) the issuance by the Company to any officer or employee
of the Company of (i) any option or options to purchase shares of Common Stock
or (ii) any Junior Securities and (7) any repurchases by the Company of Junior
Securities pursuant to any Repurchase Agreement or as otherwise contemplated by
Section 5.2(f).
(e) Line of Business
So long as any Series A Preferred Stock is outstanding, the Company shall
not, and shall not permit any of its Subsidiaries to, enter a line of business
(whether by stock or asset purchase or otherwise) which is unrelated to the
design, manufacturing and marketing of high-end, value-added specialty packaging
and labels for consumer products (the "Current Business"), as determined in good
----------------
faith by the Company's Board of Directors. This paragraph (e) shall not
prohibit the Company or any Subsidiary from acquiring any business that operates
a line of business unrelated to the Current Business if (A) on the date of such
acquisition, the primary business of such acquired business (i) is related to
the Current Business and (ii) was responsible for more than 50.0% of the gross
revenues of such business for the four most recent full fiscal quarters for
which financial information is available (the "Measuring Period") and (B) within
--------- ------
180 days of such acquisition, the primary business of such acquired business is
(i) related to the Current Business and (ii) after giving effect to divestitures
during such 180-day period of business segments not related to the Current
Business, was responsible for no less than 66 2/3% of the gross revenues
generated by the acquired business during the Measuring Period.
SECTION 5.8 EXCLUSION OF OTHER RIGHTS AND REMEDIES
(a) Except as may otherwise be required by law, the shares of Series A
Preferred Stock shall not have any voting powers, preferences and relative,
participating, optional or other special rights, other than those specifically
set forth in this Fourth Amended and Restated Certificate of Incorporation. The
shares of Series A Preferred Stock shall have no preemptive or subscription
rights.
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(b) Except as set forth in Section 7.03 of the Securities Purchase
Agreement, the Increased Dividend Rate shall be the exclusive remedy of the
holders of Series A Preferred Stock for the Company's breach or failure to
perform or observe any restriction, agreement or covenant set forth in this
Fourth Amended and Restated Certificate.
SECTION 5.9 SEVERABILITY OF PROVISIONS
If any voting powers, preferences and relative, participating, optional and
other special rights of the Series A Preferred Stock and qualifications,
limitations and restrictions thereof set forth in this Fourth Amended and
Restated Certificate of Incorporation (as this Fourth Amended and Restated
Certificate of Incorporation may be amended from time to time) is invalid,
unlawful or incapable of being enforced by reason of any rule of law or public
policy, all other voting powers, preferences and relative, participating,
optional and other special rights of Series A Preferred Stock and
qualifications, limitations and restrictions thereof set forth in this Fourth
Amended and Restated Certificate of Incorporation (as so amended) that can be
given effect without the invalid, unlawful or unenforceable voting powers,
preferences and relative, participating, optional and other special rights of
Series A Preferred Stock and qualifications, limitations and restrictions
thereof, shall, nevertheless, remain in full force and effect, and no voting
powers, preferences and relative, participating, optional or other special
rights of Series A Preferred Stock and qualifications, limitations and
restrictions thereof herein set forth shall be deemed dependent upon any other
such voting powers, preferences and relative, participating, optional or other
special rights of Series A Preferred Stock and qualifications, limitations and
restrictions thereof unless so expressed herein.
ARTICLE 6
MANAGEMENT
The following provisions are inserted for the management of the business
and for the conduct of the affairs of the Company and for defining and
regulating the powers of the Company and its directors and stockholders and are
in furtherance and not in limitation of the powers conferred upon the Company by
statute:
(a) The number of directors of the Company shall be such as from time to
time shall be fixed by, or in the manner provided in, the By-laws of the
Company. The election of directors need not be by written ballot.
(b) Subject to such limitations as may be from time to time be imposed by
other provisions of this Fourth Amended and Restated Certificate of
Incorporation, by the By-laws of the Company, by applicable statutory or other
law, and by any contract or agreement to which the Company is or may become a
party, the Board of Directors shall have the power and authority:
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(i) to adopt, amend, and/or repeal the By-laws of the Company,
provided however that no such adoption, amendment or repeal shall
invalidate any prior act or deed of the directors which was valid when
taken or made;
(ii) to the full extent permitted or not prohibited by law, and
without the consent of or other action by the stockholders, to authorize or
create mortgage, pledges or other liens or encumbrances upon any or all of
the assets, real, personal or mixed, and franchises of the Company,
including after-acquired property, and to exercise all of the powers of the
Company in connection therewith;
(iii) to determine whether, to what extent, at what times and places,
and under what conditions the records, accounts, books, and papers of the
company shall be open for inspection by its stockholders, and no
stockholder shall have any right to inspect any record, account, book, or
paper of the Company except as conferred by statute or authorized by the
By-laws of the Company or by the Board of Directors; and
(iv) to exercise all such other powers and to do all such other acts
and things as may be exercised or done by the Company.
ARTICLE 7
INDEMNIFICATION
The Company shall indemnify, and upon request shall advance expenses to, in
the manner and to the full extent permitted by law, any Person (or the estate of
any person) who was or is a party to, or is threatened to be made a party to,
any threatened, pending or completed action, suit or proceeding, whether or not
by or in the right of the Company, and whether civil, criminal, administrative,
investigative or otherwise, by reason of the fact that such Person is or was a
director or officer of the Company, or is or was serving at the request of the
Company as a director, officer, partner or trustee of another company,
partnership, joint venture, trust or other enterprise. The Company may, to the
full extent permitted by law, purchase and maintain insurance on behalf of any
such Person against any liability which may be asserted against him or her,
whether or not the Company would have the power to indemnify him or her against
such liability pursuant to this Article 7. To the full extent permitted by law,
the indemnification and advances provided for herein shall include expenses
(including attorney's fees), judgments, fines and amounts paid in settlement.
The indemnification provided herein shall not be deemed to limit the right of
the Company to indemnify any other Person for any such expenses to the full
extent permitted by law, nor shall it be deemed exclusive of any other rights to
which any Person seeking indemnification from the Company may be entitled under
any agreement, vote of stockholders or disinterested directors or otherwise,
both as to action in his official capacity and as to action in another capacity
while holding such office.
A director shall not be personally liable to the Company or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (a) for any breach of the
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director's duty of loyalty to the Company or its stockholders, (b) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (c) under Section 174 of the Delaware General Corporation Law,
or (d) for any transaction from which the director derived an improper personal
benefit. If the Delaware General Corporation Law is amended after approval by
the stockholders of the Company of this Section to authorize corporate action
further eliminating or limiting the personal liability of directors, then the
liability of a director of the Company shall be eliminated or limited to the
full extent permitted by the Delaware General Corporation Law, as so amended.
Any repeal or modification of the foregoing portion of this Section by the
stockholders of the Company shall not adversely effect any right or protection
of a director of the Company existing at the time of such repeal or
modification.
ARTICLE 8
COMPROMISE OR ARRANGEMENT
AND REORGANIZATION
Whenever a compromise or arrangement is proposed between the Company and
its creditors or any class of them and/or between the Company and its
stockholders or any class of them, any court of equitable jurisdiction within
the State of Delaware may, on the application in a summary way of the Company or
of any creditor or stockholder thereof or on the application of any receiver or
receivers appointed for the Company under the provisions of Section 291 of Title
8 of the Delaware Code or on the application of trustees in dissolution or of
any receiver or receivers appointed for the Company under the provisions of
Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of the
Company, as the case may be, to be summoned in such a manner as the said court
directs. If at least a majority of the number representing three-fourths
(3/4ths) in value of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of the Company, as the case may be, agree
to any compromise or arrangement and to any reorganization of the Company as a
consequence of such compromise or arrangement, the compromise or arrangement and
the said reorganization shall, if sanctioned by the court to which the said
application has been made, be binding on all creditors or class of creditors,
and/or stockholders or class of stockholders of the Company, as the case may be,
and also on the Company.
ARTICLE 9
MISCELLANEOUS
SECTION 9.1 TRANSFERS. The Company shall keep at its principal office or
at the office of its legal counsel a register for the registration of shares of
Common Stock and Series A Preferred Stock (collectively, the "Stock"). Upon the
-----
surrender at such place of any certificate representing any share of the Stock,
the Company shall, at the request of the record holder of such certificate,
execute and deliver a new certificate or certificates in exchange therefor
representing in the aggregate the number and type of shares of Stock represented
by the surrendered certificate. Each such new certificate shall be registered in
the name of the record holder of the surrendered certificate or (subject to
compliance with applicable securities laws and
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with the provisions of this Fourth Amended and Restated Certificate, the By-laws
of the Company, and any contract or agreement to which such holder is or may
become party) such other name as such holder may request, and shall be
substantially identical in form to the surrendered certificate. The issuance of
new certificates shall be made without charge to the holders of the surrendered
certificates for any issuance tax in respect thereof or other cost Incurred by
the Company in connection with such issuance, unless such issuance is made in
connection with a transfer of shares of Capital Stock, in which case the
transferring holder shall pay all taxes arising from such transfer.
SECTION 9.2 REPLACEMENT OF LOST CERTIFICATES. Upon receipt of evidence
reasonably satisfactory to the Company (for which purpose an affidavit of the
registered holder shall be satisfactory) of the ownership and the loss, theft,
destruction, or mutilation of any certificate evidencing shares of the Company's
Capital Stock, and in the case of any such loss, theft, or destruction, upon
receipt of indemnity reasonably satisfactory to the Company, or in the case of
any such mutilation upon surrender of such certificate, the Company shall (at
its expense) execute and deliver in lieu of such certificate a new certificate
of like kind representing the number and type of shares of Capital Stock
represented by such lost, stolen, destroyed, or mutilated certificate and dated
the date of such lost, stolen, destroyed, or mutilated certificate.
SECTION 9.3 NOTICES. All notices, requests, payments, instructions or
other documents to be given hereunder shall be given in the manner provided in,
and shall be deemed to be effective in accordance with, the By-laws of the
Company.
ARTICLE 10
CERTAIN DEFINITIONS
Unless the context otherwise requires, the terms defined in this Article 10
shall have, for all purposes of this Fourth Amended and Restated Certificate of
Incorporation, the meanings herein specified (with terms defined in the singular
having comparable meanings when used in the plural). In the event that any term
incorporated by reference to the Indenture contains one or more capitalized
terms, such capitalized terms shall have the meanings set forth in the
Indenture.
"Acquired Debt" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or becomes a Subsidiary of such specified Person, including,
without limitation, Indebtedness Incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"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 purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
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direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, that (i)
--------
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control and (ii) the lenders under the Current Credit Agreement
(as amended, restated or refinanced from time to time) shall be deemed not to be
in control of the Company solely as a result of acting in their capacity as
lenders under the Current Credit Agreement.
"Affiliate Transaction" has the meaning set for in Section 5.7(d).
"AGI Management Stockholders" has the meaning set forth in the Second
Amended and Restated Stockholder Agreement, dated as of January 8, 1999, by and
among the Company, the Holders (as of the Preferred Issue Date) and certain
other parties.
"Amended and Restated Certificate" has the meaning set forth in the first
paragraph of the recitals hereof.
"Asset Sales" has the meaning set forth in the Indenture.
"Beneficial Owner" shall be deemed to have the meaning attributed to it in
Rules 13d-3 and 13d-5 under the Exchange Act (as in effect on the Preferred
Issue Date), whether or not applicable, except that a Person shall be deemed to
be the Beneficial Owner of all shares that such Person has the right to acquire
whether such right is exercisable immediately or only after the passage of time;
provided, however, that for the purposes of determining whether a 50% Ownership
- -------- -------
Event has occurred, any current or former officer, director or employee of the
Company holding options to purchase shares of Common Stock shall not be deemed
to be the Beneficial Owner of such shares of Common Stock, until such current or
former officer, director or employee exercises such option or options and
acquires such Common Stock.
"Bidco" has the meaning set forth in the Indenture.
"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.
"Calculation Date" has the meaning set forth in the definition of Debt to
Consolidated EBITDA Ratio.
"Capital Lease Obligation" has the meaning set forth in the Indenture.
"Capital Stock" means (i) in the case of a corporation, corporate stock,
(ii) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (iii) in the case of a partnership, partnership interests
(whether general or limited), (iv) in the case of a limited liability company or
similar entity, any membership or similar interests therein and (v) any other
interest or participation that
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confers on a Person the right to receive a share of the profits and losses of,
or distributions of assets of, the issuing Person.
"Change of Control" means the occurrence of any event defined as a "Change
of Control" under the terms of the Indenture.
"Change of Control Offer" has the meaning set forth in Section 5.6(a).
"Change of Control Payment" has the meaning set forth in Section 5.6(a).
"Change of Control Payment Date" has the meaning set forth in Section
5.6(d)(ii).
"Common Stock" has the meaning set forth in Section 4.1.
"Company" means IMPAC Group, Inc.
"Consolidated EBITDA" means, with respect to any Person, for any period,
the Consolidated Net Income of such Person for such period adjusted to (a) add
thereto (to the extent deducted from net revenues in determining Consolidated
Net Income), without duplication and determined in each case in accordance with
GAAP, the sum of (i) consolidated income tax expense, (ii) consolidated
depreciation and amortization expense, provided that consolidated depreciation
and amortization of a Consolidated Subsidiary that is less than wholly owned
Consolidated Subsidiary shall only be added to the extent of the equity interest
of the Company in such Consolidated Subsidiary, (iii) non-cash restructuring
charges and (iv) cash restructuring charges (to the extent such cash
restructuring charges represent an accrual of or reserve for cash expenses in
any future period or amortization of a prepaid cash restructuring charge that
was paid in a prior period) and (v) cash restructuring charges not included
within clause (iv) of this definition and management consulting fees for cost
reduction projects; provided, however, that (I) the Board of Directors of the
-------- -------
Company shall determine in good faith what expenses constitute management
consulting fees for cost reduction projects and (II) while any share of Series A
Preferred Stock remains outstanding, the aggregate amount added to Consolidated
Net Income pursuant to clause (v) of this definition shall not exceed (A) $2.0
million in any twelve-month period or (B) $5.0 in the period beginning on the
Preferred Issue Date and ending on the date of the calculation, and (b) subtract
therefrom any cash expenses actually paid during the relevant period
representing restructuring charges that were accrued or reserved for in a prior
period or representing a prepaid cash restructuring charge to be amortized in
subsequent periods.
"Consolidated Net Income" has the meaning set forth in the Indenture.
"Consolidated Subsidiary" means, for any Person, each Restricted Subsidiary
of such Person (whether now existing or hereafter created or acquired), the
financial statements of which are consolidated for financial statement reporting
purposes with the financial statements of such Person in accordance with GAAP.
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"Control Parties" means the AGI Management Stockholders, any of such
stockholder's parents, spouse, children or grandchildren (or any trust or
limited partnership formed for their sole benefit) and Affiliates of Heritage
Partners Management Co. Inc. d/b/a Heritage Partners, Inc. collectively.
"Credit Agreements" means, with respect to the Company, one or more debt
facilities or commercial paper facilities with banks or other institutional
lenders providing for revolving credit loans, term loans, production payments,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables), Hedging Obligations or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, replaced or refinanced in whole
or in part from time to time.
"Credit Facilities" has the meaning set forth in the Indenture.
"Current Business" has the meaning set forth in Section 5.7(e).
"Current Credit Agreement" means the Amended and Restated Multicurrency
Credit Agreement, dated as of March 12, 1998, and amended and restated as of
July 7, 1998, among the Company, certain of its Subsidiaries and Bank of America
National Trust & Savings Association and the other lenders party thereto, as
amended through the Fifth Amendment, dated as of January 11, 1999, by and among
the parties to the Amended and Restated Multicurrency Credit Agreement.
"Debt to Consolidated EBITDA Ratio" means, as of any date of determination
(the "Calculation Date"), the ratio of (i) the sum of (A) all Disqualified Stock
----------- ----
and Parity Securities of the Company (each measured at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends), plus (B) the Series A Preferred Stock (measured at the aggregate
Liquidation Preference thereof), plus (C) all obligations (other than contingent
obligations) to repurchase Junior Securities pursuant to the terms of any
Repurchase Agreement, but only to the extent the Company is permitted under the
terms of this Fourth Amended and Restated Certificate to satisfy such obligation
within the twelve-month period beginning on the Calculation Date, plus (D) the
Indebtedness of the Company and its Restricted Subsidiaries to (ii) the
Consolidated EBITDA of the Company for the four most recent full fiscal quarters
for which internal financial information of the Company is available, in each
case determined on a pro forma basis after giving effect to (I) all acquisitions
or dispositions of assets made by the Company and its Subsidiaries from the
beginning of such four-quarter period through and including the Calculation
Date, as if such acquisitions and dispositions had occurred at the beginning of
such four-quarter period and (II) the application of the net proceeds of the
proposed Incurrence. For purposes of making the computation referred to above,
(i) acquisitions that have been made by the Company or any of its Restricted
Subsidiaries, including through mergers or consolidations, during such four-
quarter period or subsequent to such four-quarter period and on or prior to the
Calculation Date shall be deemed to have occurred on the first day of such four-
quarter period and Consolidated EBITDA for such four-quarter period shall be
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calculated without giving effect to clause (iii) of the definition of
Consolidated Net Income, and (ii) Consolidated EBITDA attributable to
discontinued operations, as determined in accordance with GAAP, and operations
or businesses disposed of prior to the Calculation Date, shall be excluded. For
purposes of this definition, whenever pro forma effect is to be given to a
transaction, the pro forma calculations shall be made in good faith by a
responsible financial or accounting officer of the Company consistent with
Article 11 of Regulation S-X under the Securities Act, as such Regulation is in
effect on the Preferred Issue Date.
"DGCL" means the Delaware General Corporation Law.
"Disposition" has the meaning set forth in Section 5.4(c).
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable at the option of the holder thereof), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, is convertible or exchangeable for Indebtedness or
Disqualified Stock or redeemable at the option of the holder thereof, in whole
or in part, on or prior to the date that is 91 days after the Mandatory
Redemption Date, provided however, that any Capital Stock that would constitute
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Disqualified Stock solely because the holders thereof (or of any security into
which it is convertible or for which it is exchangeable) have the right to
require the issuer to repurchase such Capital Stock (or such security into which
it is convertible or for which it is exchangeable) upon the occurrence of any of
the events constituting a Change of Control shall not constitute Disqualified
Stock if such Capital Stock (and all such securities into which it is
convertible or for which it is exchangeable) provides that the issuer thereof
will not repurchase or redeem any such Capital Stock (or any such security into
which it is convertible or for which it is exchangeable) pursuant to such
provisions prior to compliance by the Company with the provisions of Section
5.6.
"Dividend Payment Date" has the meaning set forth in Section 5.2(a).
"Dividend Rate" has the meaning set forth in Section 5.2(a).
"Dividend Share Redemption Price" has the meaning set forth in Section
5.4(e).
"Dividend Shares" has the meaning set forth in Section 5.2(d).
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Event of Non-Compliance" means any of the following events:
(i) the Company fails to pay in cash or, if permitted in accordance
with Section 5.02(a), Dividend Shares, on any Dividend Payment Date, the
full amount of the
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then accrued and unpaid dividends on all outstanding shares of
Series A Preferred Stock and such failure continues for three (3) days
following receipt by the Company of notice of such failure;
(ii) the Company fails to pay, on any date of redemption, the
Liquidation Preference (plus all accrued and unpaid dividends) of each
share which is to be redeemed on such date;
(iii) the Company breaches or otherwise fails to perform or observe
any restriction, agreement or covenant set forth in (A) the Securities
Purchase Agreement or (B) this Fourth Amended and Restated Certificate and
such breach or violation continues for thirty (30) days after any member of
the Company's senior management, executive officer or member of the Board
of Directors of the Company has actual knowledge of such breach or
violation or, if on the thirtieth (30) day such breach of violation is in
the process of cure, then such period shall be for a period of forty-five
(45) days; and
(iv) an "Event of Default" (as such term is defined under the
----- -- -------
Indenture) occurs and is continuing.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Financing Arrangements" has the meaning set forth in Section
5.6(g).
"Existing Indebtedness" means all Indebtedness of the Company and its
Restricted Subsidiaries (other than "Revolving Loans" and "Swing Line Loans" (as
defined under the Current Credit Agreement)) in existence on the Preferred Issue
Date.
"Existing Repurchase Agreements" has the meaning set forth in Section
5.2(f).
"Existing Restricted Payment Covenants" has the meaning set forth in
Section 5.6(g).
"Financing Arrangements" has the meaning set forth in Section 5.2(b).
"Fourth Amended and Restated Certificate" has the meaning set forth in the
introductory paragraph.
"50% Ownership Event" has the meaning set forth in Section 5.2(a).
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the Preferred Issue Date.
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"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"Guarantors" has the meaning set forth in the Indenture.
"Hedging Obligations" has the meaning set forth in the Indenture.
"Heritage Repurchase Agreement" means the letter agreement in the form
attached as Schedule 7 to the Stockholder Agreement.
----------
"Heritage Transfer" has the meaning set forth in Section 5.2(a).
"Holder" means a Person in whose name a share of Series A Preferred Stock
is registered.
"Increased Dividend Period" has the meaning set forth in Section 5.4(d)(i).
"Increased Dividend Rate" has the meaning set forth in Section 5.2(a).
"Incur" has the meaning set forth in Section 5.7(a).
"Incurrence Date" has the meaning set forth in Section 5.7(a)(ii).
.
"Indebtedness" has the meaning set forth in the Indenture.
"Indenture" means the Indenture, dated as of March 12, 1998, by and among
the Company and State Street Bank and Trust Company, as trustee, pursuant to
which the Notes were issued, as supplemented by the First Supplemental
Indenture, dated as of July 21, 1998, in effect on the Preferred Issue Date.
References to the Indenture and incorporation of terms and provisions of the
Indenture shall continue to apply for purposes of this Fourth Amended and
Restated Certificate of Incorporation after the Indenture has been discharged or
otherwise terminated. In addition, except as otherwise expressly noted herein,
references to and incorporation of terms and provisions of the Indenture shall
mean such terms and provisions as in effect on the Preferred Issue Date.
"Junior Securities" has the meaning set forth in Section 5.1(b).
"Junior Securities Repurchase" has the meaning set forth in Section 5.2(f).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention
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agreement, any lease in the nature thereof, any option or other agreement to
sell or give a security interest in and any filing of or agreement to give any
financing statement under the Uniform Commercial Code (or equivalent statutes)
of any jurisdiction other than a precautionary financing statement with respect
to a lease not intended as a security agreement).
"Liquidation Preference" means $1,000 per share of Series A Preferred
Stock.
"Loan Note Guarantees" has the meaning set forth in the Indenture.
"Loan Notes" has the meaning set forth in the Indenture.
"Mandatory Redemption Date" has the meaning set forth in Section 5.4(f).
"Measuring Period" has the meaning set forth in Section 5.7(e).
"Net Proceeds" has the meaning set forth in the Indenture.
"New Repurchase Agreements" has the meaning set forth in Section 5.2(f).
"Non-Guarantor Foreign Subsidiary" has the meaning set forth in the
Indenture.
"Non-Recourse Debt" has the meaning set forth in the Indenture.
"Notes" means the Company's 10 1/8% Senior Subordinated Notes due March 15,
2008, which were issued pursuant to the Indenture.
"Officers' Certificate" means a certificate signed by two officers of the
Company at least one of whom shall be the principal executive officer, principal
accounting officer or principal financial officer of the Company and delivered
to the Holders.
"Option of Holder to Elect Purchase" has the meaning set forth in Section
5.6(d)(vi).
"Original Certificate of Incorporation" has the meaning set forth in the
first paragraph of the recitals hereof.
"Other Shares" has the meaning set forth in Section 5.4(e).
"Other Share Redemption Price" has the meaning set forth in Section 5.4(e).
"Parity Securities" has the meaning set forth in Section 5.1(b).
"Parity Securities Distribution" has the meaning set forth in Section
5.2(e)
"Permitted Indebtedness" means:
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(i) the Incurrence by the Company of Indebtedness and letters
of credit (with letters of credit being deemed to have a principal
amount equal to the stated amount thereof) and other obligations under
Credit Facilities in an aggregate principal amount that does not
exceed at any one time $40.0 million less (1) the aggregate amount of
all Net Proceeds of Asset Sales applied to repay Indebtedness under a
Credit Facility pursuant to Section 4.10 of the Indenture (other than
temporary paydowns pending final application of such Net Proceeds) and
(2) any amount Incurred pursuant to clause (iii) of this definition;
(ii) the Existing Indebtedness and letters of credit (including
reimbursement obligations with respect thereto, but excluding letters
of credit for which the reimbursement obligation would constitute a
"Revolving Loan" or "Swing Line Loan" other than "Specified L/C Loans"
not to exceed $13 million in principal amount at any time outstanding
(each as defined under the Current Credit Agreement, as it may be
amended, supplemented or restated from time to time)) supporting such
Existing Indebtedness whether such letters of credit are Incurred
under the Current Credit Agreement or otherwise;
(iii) the Incurrence by the Company or any of the Guarantors or
Non-Guarantor Foreign Subsidiaries of Indebtedness represented by
mortgage financings, purchase money obligations or Capital Lease
Obligations, Incurred for the purpose of financing all or any part of
the purchase price or cost of construction or improvement of property,
plant or equipment used in the business of the Company or such
Subsidiary, in an aggregate principal amount, not to exceed $5.0
million at any time outstanding;
(iv) the Incurrence by the Company or any of the Guarantors of
Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace (A) any
Indebtedness or Disqualified Stock permitted under clauses (ii) or
(ix) of this definition or (B) any Ratio Debt;
(v) the Incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company
and any Restricted Subsidiary; provided, however, that (i) any
-------- -------
subsequent issuance or transfer of Equity Interests that results in
any such Indebtedness being held by a Person other than the Company or
a Subsidiary thereof and (ii) any sale or transfer of any such
Indebtedness to a Person that is not either the Company or a
Restricted Subsidiary thereof shall be deemed, in each case, to
constitute an Incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be, that was not permitted by
this clause (v);
(vi) the Incurrence by the Company or any of the Guarantors of
Hedging Obligations that are Incurred for the purpose of fixing or
hedging interest
30
<PAGE>
rate risk with respect to any floating rate Indebtedness that is
permitted by the terms of Section 5.7(a) hereof to be outstanding;
(vii) the Guarantee by the Company or any of its Subsidiaries
or any of the Guarantors of the Indebtedness of the Company or another
Subsidiary that was permitted to be Incurred by another provision of
this Fourth Amended and Restated Certificate;
(viii) (A) the Incurrence by the Company's Unrestricted
Subsidiaries of Non-Recourse Debt; provided, however, that if any such
-------- -------
Indebtedness ceases to be Non-Recourse Debt of an Unrestricted
Subsidiary, such event shall be deemed to constitute an Incurrence of
Indebtedness by a Restricted Subsidiary of the Company that was not
permitted by this clause (viii), and (B) the issuance of Preferred
Stock by Unrestricted Subsidiaries; and
(ix) the Incurrence by Bidco of Indebtedness under the Loan Notes
and the Incurrence by the Company of Indebtedness with respect to its
reimbursement obligation to the Issuer of any Loan Notes Guarantees.
Notwithstanding the foregoing, in the event that the Company or any of its
Subsidiaries Incurs any Ratio Debt:
(A) the Company and its Subsidiaries shall thereafter be prohibited
from Incurring Permitted Indebtedness pursuant to clause (i) of this
definition, and
(B) the Company and its Subsidiaries may thereafter Incur as
"Permitted Indebtedness" (I) up to $15.0 million of Indebtedness and
letters of credit (with letters of credit being deemed to have a principal
amount equal to the stated amount thereof) and other obligations under one
or more credit facilities, provided that (a) the Board of Directors of the
Company affirmatively votes to characterize such Indebtedness as seasonal
working capital and (b) the terms of such letters of credit and/or credit
facilities require that there be no Indebtedness outstanding under such
facility for a period of thirty (30) consecutive days in every twelve (12)
month period, and (II) Indebtedness in an aggregate principal amount (or
accreted value, as applicable) at any time outstanding not to exceed $5.0
million (provided that no Indebtedness may be Incurred pursuant to this
provision prior to the date which is fifteen (15) Business Days following
the Incurrence by the Company of such Ratio Debt).
For purposes of determining compliance with this definition, in the event
that an item of Indebtedness meets the criteria of more than one of the
categories of Permitted Indebtedness described in clauses (i) through (ix) above
or is entitled to be Incurred pursuant to Section 5.7(a), the Company shall, in
its sole discretion, classify such item of Indebtedness in any manner that
complies with Section 5.7(a).
31
<PAGE>
"Permitted Refinancing Indebtedness" has the meaning set forth in the
Indenture.
"Person" means any individual, corporation, partnership, joint venture,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"PIK Dividend" means, with respect to the Series A Preferred Stock, the
issuance on any Dividend Payment Date of additional shares of Series A Preferred
Stock having an aggregate Liquidation Preference equal to any accrued and unpaid
dividends thereon.
"Preferred Issue Date" means the date on which the shares of Series A
Preferred Stock (prior to the issuance of any Dividend Shares) representing
$20.0 million in aggregate Liquidation Preference are originally issued.
"Preferred Stock" means, with respect to any Person, any and all shares of
Capital Stock of such Person that have preferential rights to any other Capital
Stock of such Person with respect to dividends or redemptions or upon
liquidation, winding up as dissolution.
"Public Offering" has the meaning set forth in Section 4.3
"Ratio Debt" means Indebtedness (other than Permitted Indebtedness)
Incurred pursuant the Debt to Consolidated EBITDA Ratio set forth in Section
5.7(a).
"Record Date" has the meaning set forth in Section 5.2(a).
"Redemption Date" has the meaning set forth in Section 5.4(h).
"Renewal Repurchase Agreement" has the meaning set forth in Section 5.2(f).
"Repurchase Agreement" means any Existing Repurchase Agreement, Renewal
Repurchase Agreement or New Repurchase Agreement.
"Restricted Subsidiary" means any direct or indirect Subsidiary of the
Company that is not an Unrestricted Subsidiary.
"Second Amended and Restated Certificate of Incorporation" has the meaning
set forth in the first paragraph of the recitals hereof.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Purchase Agreement" means the Securities Purchase Agreement,
dated as of January 11, 1999, by and among the Company, BT Capital Investors
L.P., Phoenix Home Life Mutual Insurance Company.
"Series A Common Stock" has the meaning set forth in Section 4.1.
32
<PAGE>
"Series B Common Stock" has the meaning set forth in Section 4.1.
"Series A Preferred Stock" has the meaning set forth in Section 5.1(a).
"Sixth Year" has the meaning set forth in Section 5.2(b).
"Stock" has the meaning set forth in Section 9.1.
"Stockholder Agreement" means the Second Amended and Restated Stockholder
Agreement, dated as of January 8, 1999, by and among the Company, BT Capital
Investors L.P., Phoenix Home Life Mutual Insurance Company and certain other
stockholders party thereto.
"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, 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 the 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 one or more Subsidiaries
of such Person (or any combination thereof).
"Surviving Entity" has the meaning set forth in Section 5.7(b).
"Unrestricted Subsidiary" means any Subsidiary of the Company that at the
time of determination qualifies as an "Unrestricted Subsidiary" for purposes of
the Indenture and is designated an Unrestricted Subsidiary for purposes of this
Fourth Amended and Restated Certificate of Incorporation. Any such designation
by the Board of Directors of the Company shall be evidenced by a resolution of
the Board of Directors of the Company giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions. If, at any time, any Unrestricted Subsidiary would fail
to meet the foregoing requirements as an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes of this Fourth
Amended and Restated Certificate of Incorporation and any Indebtedness of such
Subsidiary shall be deemed to be Incurred as of such date. The Board of
Directors of the Company may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary, but any Indebtedness of such Subsidiary shall be deemed
to be Incurred as of such date.
"Warrants" has the meaning set forth in Section 5.4(b).
"Wholly Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned, directly or indirectly, by such Person or by one or more
Wholly Owned Restricted Subsidiaries of such Person.
33
<PAGE>
IN WITNESS WHEREOF, I have hereunto met my hand and seal, the 11th day of
January, 1999.
IMPAC Group, Inc.
Name: David C. Underwood
--------------------------
Title: Chief Financial Officer
-------------------------
34
<PAGE>
Schedule 5.2(f)
-------- ------
Existing Equity Repurchase Agreements
-------- ------ ---------- ----------
1. Employment, Non-Competition and Stock Repurchase Agreement, dated as of
March 12, 1998, by and between IMPAC Group, Inc. (the "Company") and David
Underwood, as amended by a First Amendment dated as of January 7, 1999.
2. Employment, Non-Competition and Stock Repurchase Agreement, dated as of
March 12, 1998, by and between the Company and James Oppenheimer, as amended
by a First Amendment dated as of January 7, 1999.
3. Employment, Non-Competition and Stock Repurchase Agreement, dated as of
March 12, 1998, by and between the Company and Richard Oppenheimer, as
amended by a First Amendment dated as of January 7, 1999.
4. Employment, Non-Competition and Stock Repurchase Agreement, dated as of
March 12, 1998, by and between the Company and Dean Henkel, as amended by a
First Amendment dated as of January 7, 1999.
5. Employment, Non-Competition and Stock Repurchase Agreement, dated as of
March 12, 1998, by and between the Company and H. Scott Herrin.
6. Employment, Non-Competition and Stock Repurchase Agreement, dated as of
March 12, 1998, by and between the Company and Melvin Herrin.
7. Employment, Non-Competition and Stock Repurchase Agreement, dated as of
March 12, 1998, by and between the Company and Richard Block.
8. Employment, Non-Competition and Stock Repurchase Agreement, dated as of
March 12, 1998, by and between the Company and Jacqueline Barry.
9. Employment, Non-Competition and Stock Repurchase Agreement, dated as of
March 12, 1998, by and between the Company and Mary Frances Griffin.
10. Employment, Non-Competition and Stock Repurchase Agreement, dated as of
March 12, 1998, by and between the Company and Dennis McGuin.
11. Agreement relating to Employment and Stock Ownership, dated as of March 12,
1998, by and between the Company and John McInerney.
12. Agreement relating to Employment and Stock Ownership, dated as of March 12,
1998, by and between the Company and Robert Eliason.
13. Agreement relating to Employment and Stock Ownership, dated as of March 12,
1998, by and between the Company and Craig Wilson
<PAGE>
-2-
14. Agreement relating to Employment and Stock Ownership, dated as of March 12,
1998, by and between the Company and Daniel Santry.
15. Agreement relating to Employment and Stock Ownership, dated as of March 12,
1998, by and between the Company and Steve Frazier.
16. Agreement relating to Employment and Stock Ownership, dated as of March 12,
1998, by and between the Company and Richard Mazurek
Each of the agreements referred to in Items 1-1 being as modified by the letter
agreement among the Company and the employees referred to in such agreement,
dated as of January 7, 1999.
17. Stock Purchase Agreement dated as of March 12, 1998 by an among the Company,
Melvin B. Herrin, H. Scott Herrin, Matthew H. Kamens, not individually but
as a Trustee under an Indenture of Trust dated June 4, 1996 of Melvin B.
Herrin; and Arthur S. Keyser, not individually but as trustee under an
Irrevocable Deed of Trust dated August 12, 1992 for the benefit of H. Scott
Herrin.
<PAGE>
EXHIBIT 10.61
SECOND AMENDED AND RESTATED
STOCKHOLDER AGREEMENT
This Second Amended and Restated Stockholder Agreement (this "Agreement"),
---------
dated as of March 12, 1998 and amended and restated as of January 11, 1999, is
by and among IMPAC Group, Inc., a Delaware corporation, formerly known as KFI
Holding Corporation ("Holding"); Heritage Fund I L.P., a Delaware limited
-------
partnership ("Heritage I"); Heritage Fund II, L.P., a Delaware limited
-------- -
partnership ("Heritage II"; together with Heritage I, the "Heritage Funds");
-------- -- -------- -----
Melvin B. Herrin and H. Scott Herrin, each of whom is an individual; Matthew H.
Kamens, not individually but as trustee under an Indenture of Trust of Melvin B.
Herrin dated June 4, 1996 (the "Herrin Family Trust"); Arthur S. Keyser, not
-------------------
individually but as trustee under an Irrevocable Deed of Trust dated August 12,
1992, f/b/o H. Scott Herrin (the "Scott Trust") (collectively, Melvin B. Herrin,
-----------
H. Scott Herrin, the Herrin Family Trust and the Scott Trust are sometimes
referred to herein as the "Herrin Stockholders"); each of the stockholders of
------ ------------
Holding named on Schedule 1 hereto (the "Klearfold Managers", and together with
---------- ------------------
the Herrin Stockholders, collectively, the "Klearfold Management Stockholders");
---------------------------------
each of the stockholders of Holding and other Persons named on Schedule 2 hereto
-------- -
(the "AGI Management Stockholders"); the holders of Warrants listed on Schedule
--------------------------- --------
3 hereto (the "Warrant Holders"); and each other Person who becomes a party to
- - ---------------
this Agreement by executing and delivering to Holding an Instrument of Accession
in the form of the attached Exhibit A which is subsequently accepted in writing
------- -
by Holding (an "Instrument of Accession"). Each of the parties to this
---------- -- ---------
Agreement other than Holding is sometimes referred to herein as a
"Securityholder", and all of them, collectively, are sometimes referred to
- ---------------
herein as the "Securityholders." Capitalized terms used herein and not defined
---------------
on their first use shall have the meanings set forth in Section 8 below.
WHEREAS, certain of the Securityholders entered into a Stockholder
Agreement with the Company, dated as of March 12, 1998 (the "Original
--------
Stockholder Agreement"), pursuant to which certain rights and obligations were
- ----------- ---------
established with respect to the outstanding capital stock of Holding and with
respect to the internal affairs of Holding; and
WHEREAS, in connection with the issuance of certain additional shares of
capital stock of Holding pursuant to a Stock Purchase Agreement dated as of
September 10, 1998 (the "Stock Purchase Agreement"), among the Company, the
----- -------- ---------
Heritage Funds and certain other Securityholders, the parties amended and
restated the Original Stockholder Agreement pursuant to a First Amended and
Restated Stockholder Agreement, dated as of September 10, 1998 (the "First
-----
Amended and Restated Stockholder Agreement");
- ------------------------------------------
WHEREAS, pursuant to a Securities Purchase Agreement, dated as of January
11, 1999 (the "Preferred Purchase Agreement"), the Warrant Holders have agreed
----------------------------
to
<PAGE>
-2-
purchase shares of Holding's Redeemable Preferred Stock, par value $.001 per
share (the "Series A Preferred") and the Warrants for a total purchase price of
------------------
$20,000,000;
WHEREAS, in connection with the Preferred Purchase Agreement the parties
desire to amend and restate the First Amended and Restated Stockholder
Agreement;
NOW, THEREFORE, the parties hereto hereby agree to amend and restate the
First Amended and Restated Stockholder Agreement in its entirety to read as
follows:
1. Restrictions on Transfer of Securities.
1.1. Transfer. No Securityholder shall sell, assign, pledge, or otherwise
dispose of or transfer any Securities or any interest (legal, beneficial, or
otherwise) in any Securities (a "Transfer"; or to effect any such Transfer, to
--------
"Transfer"), either voluntarily, involuntarily, by operation of law, or
- ---------
otherwise, except any Transfer:
(a) pursuant to and in accordance with the provisions of Section 1.4
hereof, or the provisions of those certain Employment, Non-Competition and Stock
Repurchase Agreements, Agreements relating to Employment and Stock Ownership, or
Stock Purchase or Stock Repurchase Agreements entered into by each of the
Securityholders who is a natural person and by each natural person whose Family
Trust is a Securityholder, as amended and in effect from time to time (each, a
"Repurchase Agreement"), relating to the repurchase of Securities by Holding or
- ----------- ---------
the purchase of Securities by any "Co-Managers", as defined in any such
Repurchase Agreement;
(b) in the case of any Securityholder who is a natural person, to (i) such
Securityholder's Family Members, provided that such Securityholder retains
exclusive voting control over the Transferred Securities, and (ii) such
Securityholder's Personal Representative, and in the case of any Securityholder
which is a Family Trust, to (A) the individual for whom, or for the benefit of
whose Related Persons, such Family Trust was created, and (B) the Family Members
of such individual, provided that, in the case of any transfer pursuant to
clauses (A) or (B) such individual retains exclusive voting control over the
Transferred Securities, and (C) such individual's Personal Representative;
(c) at any time prior to June 7, 2002, to any Person, provided that (i)
such Transfer shall have been previously approved in writing by Securityholders
holding a majority of the Securities then outstanding, other than the Securities
held by the Securityholder proposing such Transfer and any Affiliate or Family
Member of such Securityholder, provided further that each of the Heritage Funds
and any transferee of a Heritage Fund pursuant to Section 1.1(f)(i)-(iii) below
shall be deemed to be an Affiliate of each Heritage Fund for purposes of this
Section 1.1(c)(i), and (ii) such Transfer, if a Transfer of Heritage Securities
not otherwise permitted under Section 1.1(f) below, shall be subject to the
provisions of Section 1.4 hereof;
(d) pursuant to a Public Offering or an Approved Sale;
<PAGE>
-3-
(e) in the case of any Herrin Stockholder, to another Herrin Stockholder;
in the case of any Block Stockholder, to another Block Stockholder; and in the
case of any Tinsley Management Stockholder, to another Tinsley Management
Stockholder;
(f) in the case of any Heritage Securities, (i) to either of the Heritage
Funds, (ii) to a successor entity of any Heritage Holder, as a result of a
merger, consolidation, or sale of all or substantially all of the assets of such
Heritage Holder, (iii) by Heritage I, to the extent required pursuant to the
terms of the First Amended and Restated Agreement of Limited Partnership of
Heritage I dated as of December 14, 1994, as in effect on the AGI Closing Date,
or by Heritage II, to the extent required pursuant to the terms of the Agreement
of Limited Partnership of Heritage II dated as of January 28, 1997, as in effect
on the Tinsley Closing Date (it being understood and agreed that each of such
limited partnership agreements may be further amended from time to time after
such dates in accordance with their respective terms, but that notwithstanding
any such amendment, a Transfer of Heritage Securities by a Heritage Fund will be
permitted under this Section 1.1(f)(iii) only to the extent that such Transfer
would have been required pursuant to the terms of such Heritage Fund's limited
partnership agreement as in effect on the date referred to above), (iv) to
Holding pursuant to and in accordance with the terms of the letter agreement
dated as of January 11, 1999 (the "Heritage Repurchase Agreement") between
-------- ---------- ---------
certain of the Heritage Holders and Holding in the form attached hereto as
Schedule 7, provided that the aggregate number of shares of Common Stock to be
- -------- -
transferred by the Heritage Funds together pursuant to this Section 1.1(f)(iv)
shall not exceed 33,000 (as such number may be adjusted by way of stock
dividend, stock split, or combination or division of shares) and (v) to officers
and employees of Holding or any of its Subsidiaries of up to 3,300 shares of
Common Stock prior to December 31, 1999; or
(g) in the case of any Warrant Securityholder, (i) to an Affiliate of such
Warrant Securityholder; (ii) to another Warrant Securityholder; or (iii) to a
holder of Series A Preferred, provided that no Warrant Securityholder may
transfer Securities pursuant to this clause (iii) to any Person other than a
financial investor (as compared to an industry investor);
(h) from and after June 7, 2002, to any Person, provided that the
Transferring Securityholder shall first have complied with all of the provisions
of Sections 1.2 and 1.3 below;
provided that, if such Securities are shares of Series B Common Stock, then any
Transfer of such Securities shall be subject to the applicable provisions of
Holding's By-Laws, as in effect from time to time, and not of this Section 1.1,
and provided, further, in the case of any Transfer described in Sections
1.1(a) - 1.1(h) above other than a Transfer to Holding or pursuant to a Public
Offering or an Approved Sale, that (x) the restrictions contained in this
Section 1 shall continue to be applicable to the Transferred Securities after
such Transfer, and (y) the Transferee of such Securities shall either already be
a party hereto or shall first have executed and delivered to Holding an
Instrument of Accession which, if such Transfer is otherwise in compliance with
this Section 1.1, shall be accepted in writing by Holding.
<PAGE>
-4-
1.2. First Refusal Rights.
(a) At least 30 days prior to any Transfer proposed to be made pursuant to
Section 1.1(h) hereof, the Transferring Securityholder (the "Transferring
------------
Securityholder") shall deliver a written notice (the "Transfer Offer Notice") to
- -------------- ---------------------
Holding and, if the Securities proposed to be transferred are AGI Holder
Securities, Klearfold Holder Securities, Tinsley Holder Securities or Heritage
Securities, to each of the Securityholders holding Securities of the Type to be
Transferred (collectively, the "Non-Transferring Same-Type Securityholders") in
------------------------------------------
accordance with the provisions of Section 9(b) hereof. The Transfer Offer
Notice shall disclose in reasonable detail the number of Securities of each Type
that are proposed to be Transferred, the proposed terms and conditions of the
Transfer (including without limitation the consideration to be paid for such
Securities and any deferred payment terms), and the identity of the proposed
Transferee(s). If the Securities proposed to be transferred are AGI Holder
Securities, Klearfold Holder Securities, Tinsley Holder Securities or Heritage
Securities, each of the Non-Transferring Same-Type Securityholders may elect to
purchase any or all of the Securities of the Type proposed to be Transferred, as
specified in the Transfer Offer Notice, at the price and on the terms specified
therein (provided, that each such Non-Transferring Same-Type Securityholder
shall have the option to substitute for any non-cash consideration proposed to
be received in respect of such proposed Transfer, cash in the amount of the fair
market value thereof), by delivering written notice of such election to the
Transferring Securityholder and Holding within 30 days after the delivery of
such Transfer Offer Notice (the "Initial Securityholder Election Period"). If
------- ------------------------------
one or more of such Non-Transferring Same-Type Securityholders duly elect to
purchase all of the Securities of any such Type so offered, the Transfer of such
Securities shall be consummated 30 days after the expiration of the Initial
Securityholder Election Period, or such earlier date as agreed upon by the Non-
Transferring Same-Type Securityholders who will be purchasing not less than a
majority of the Securities to be Transferred, provided that written notice of
such earlier date is delivered not later than ten (10) days prior to such date
to the Transferring Securityholder, Holding and each of the other Non-
Transferring Same-Type Securityholders electing to purchase any of such
Securities pursuant to this Section 1.2(a). If the Non-Transferring Same-Type
Securityholders oversubscribe for the Securities of any such Type being offered,
each Non-Transferring Same-Type Securityholder electing to purchase such
Securities shall be entitled to purchase from the Transferring Securityholder a
pro rata portion (based upon the respective numbers of shares of such Type of
Securities then held by each of the participating Non-Transferring Same-Type
Securityholders (calculated on a Fully Diluted Basis)) of the Securities of such
Type being offered.
(b) If either (i) the Securities proposed to be transferred are AGI Holder
Securities, Klearfold Holder Securities, Tinsley Holder Securities or Heritage
Securities and the Non-Transferring Same-Type Securityholders do not duly elect
to purchase all of such Securities within the Initial Securityholder Election
Period in accordance with Section 1.2(a) hereof then within fifteen (15) days of
the expiration of the Initial Securityholder Election Period, or (ii) the
Securities proposed to be transferred are Other Securityholder Securities, then
within thirty (30) days after the delivery of the Transfer Offer Notice (such
period of fifteen or thirty days
<PAGE>
-5-
pursuant to clauses (i) or (ii) above, as applicable, being referred to herein
as the "Holding Election Period"), Holding may elect to purchase any or all of
------- -------- ------
the Securities specified in the Transfer Offer Notice, at the price and on the
terms specified therein, but excluding any such Securities which Non-
Transferring Same-Type Securityholders shall have elected to purchase pursuant
to Section 1.2(a) hereof, to the extent applicable (provided, that Holding shall
have the option to substitute for any non-cash consideration proposed to be
received in respect of such proposed Transfer, cash in the amount of the fair
market value thereof), by delivering written notice of such election to the
Transferring Securityholder within the applicable Holding Election Period. If
Holding, alone or in combination with the Non-Transferring Same-Type
Securityholders, duly elects to purchase all of the Securities so offered, the
Transfer of such Securities shall be consummated not less than ten (10) nor more
than thirty (30) days after the expiration of the applicable Holding Election
Period. The date of the consummation shall be determined by a majority vote of
the Board of Directors of Holding, on the date it elects to purchase such
Securities, and Holding shall promptly, but not less than ten (10) days prior to
the proposed date of consummation, provide notice thereof to the Non-
Transferring Same-Type Securityholders, if any, which elected to purchase any of
the Securities proposed to be Transferred pursuant to Section 1.2(a) hereof.
(c) If Holding and/or, to the extent applicable, the Non-Transferring Same-
Type Securityholders do not duly elect to purchase all of the Securities being
offered within the applicable Holding Election Period, and/or the Initial
Securityholder Election Period, respectively, the Transferring Securityholder
shall within fifteen (15) days after the end of the applicable Holding Election
Period deliver a further Transfer Offer Notice as to such Securities, in the
same form and substance as the first Transfer Offer Notice delivered pursuant to
Section 1.2(a) hereof or, in the case of a proposed sale by an Other
Securityholder, Section 1.2(b) hereof, above, to each of the Securityholders
other than the Non-Transferring Same-Type Securityholders (if any) entitled to
- ----- ----
receive such first Transfer Offer Notice (collectively, such other
Securityholders being referred to herein as the "Other Non-Transferring
----- ----------------
Securityholders") in accordance with the provisions of Section 9(b) hereof
- ---------------
specifying, in addition, the number of Securities which the Non-Transferring
Same-Type Securityholders and Holding have elected to purchase in accordance
with Sections 1.2(a) and 1.2(b) hereof, and the number of Securities remaining
to be purchased (the "Remaining Securities"). Each of the Other Non-
--------- ----------
Transferring Securityholders may elect to purchase all of the Remaining
Securities specified in the further Transfer Offer Notice delivered to them (but
collectively, not more nor less than all of the Remaining Securities), at the
price and on the terms specified therein (provided, that each such Other Non-
Transferring Securityholder shall have the option to substitute for any non-cash
consideration proposed to be received in respect of such proposed Transfer, cash
in the amount of the fair market value thereof), by delivering written notice of
such election to the Transferring Securityholder within 15 days after the
delivery of such Transfer Offer Notice (the "Second Securityholder Election
------ -----------------------
Period"). If one or more of such Other Non-Transferring Securityholders duly
- ------
elect to purchase all of the Securities so offered, the Transfer of such
Securities shall be consummated 30 days after the expiration of the Second
Securityholder Election Period, or such earlier date as agreed upon by the Other
Non-Transferring Securityholders who or which will, collectively, be purchasing
not less than a majority of the Securities so offered, provided that written
notice of such earlier date is
<PAGE>
-6-
provided not later than ten (10) days prior thereto to the Transferring
Securityholder, Holding, and each of the other Securityholders who or which
shall have elected to purchase Securities pursuant to this Section 1.2. If the
Other Non-Transferring Securityholders oversubscribe for the Securities being
offered, each Other Non-Transferring Securityholder electing to purchase such
Securities shall be entitled to purchase from the Transferring Securityholder a
pro rata portion (based upon the respective numbers of Securities then held by
each of the participating Other Non-Transferring Securityholders (calculated on
a Fully Diluted Basis)) of the Securities being offered.
(d) In the event that, collectively, Holding, the Non-Transferring Same-
Type Securityholders and the Other Non-Transferring Securityholders fail to
purchase all of the Securities specified in any Transfer Offer Notice in
accordance with Sections 1.2(a), (b) and (c) hereof, the elections to so
purchase pursuant to those sections shall be void and of no further effect, and
the Transferring Securityholder may, within 90 days after the expiration of the
Second Securityholder Election Period, complete the Transfer of such Securities
for such consideration and on such other terms as are no more favorable to the
Transferees than the terms offered to the Non-Transferring Same-Type
Securityholders and the Other Non-Transferring Securityholders in their
respective Transfer Offer Notices, provided, that no such Transfer may be
completed except in compliance with Section 1.3, if applicable, and further
provided, that each of such Transferees shall have executed and delivered to
Holding an Instrument of Accession as a condition precedent to such Transfer.
If the Transferring Securityholder fails to consummate such Transfer within the
90-day period after the expiration of the Second Securityholder Election Period,
any subsequent proposed Transfer of such Securities shall be once again subject
to all of the provisions of Section 1.1 above.
(e) In the event that non-cash consideration is proposed to be received in
respect of any proposed Transfer by a Transferring Securityholder, the Initial
Securityholder Election Period (or, if the Transferring Securityholder is an
Other Securityholder, the Holding Election Period) shall be extended by the
period of time necessary to determine the fair market value of such non-cash
consideration.
1.3. General Co-Sale Rights. In connection with any proposed Transfer
pursuant to Section 1.1(h), in the event that, collectively, Holding, the Non-
Transferring Same-Type Securityholders and the Other Non-Transferring
Securityholders fail to purchase all of the Securities specified in any Transfer
Offer Notice delivered by a Transferring Securityholder who immediately prior to
giving effect to the Transfer described in such Transfer Offer Notice holds at
least five percent (5%) of the total number of outstanding shares of Common
Stock, on a Fully Diluted Basis, each of the Non-Transferring Same-Type
Securityholders and the Other Non-Transferring Securityholders (collectively,
the Non-Transferring Securityholders") may elect to participate in the
---------------- ---------------
contemplated Transfer of Securities by delivering written notice to the
Transferring Securityholder before the lapse of 15 days after expiration of the
Second Securityholder Election Period. If any of such Non-Transferring
Securityholders elects to participate in such sale, the Transferring
Securityholder and each of such participating Non-Transferring Securityholders
shall be entitled to sell in the proposed Transfer a number of Securities equal
to the product of (x) a fraction, the numerator of which is the number of
<PAGE>
-7-
Securities (calculated on a Fully Diluted Basis) held by such Person, and the
denominator of which is the aggregate number of Securities (calculated on a
Fully Diluted Basis) owned by the Transferring Securityholder and such
participating Non-Transferring Securityholders, multiplied by (y) the number of
Securities to be Transferred in the contemplated Transfer.
(For example: If the notice from the Transferring Securityholder
contemplated a Transfer of 100 shares of Common Stock by the Transferring
Securityholder, and the Transferring Securityholder at such time owns 300
shares of Common Stock, and if one Non-Transferring Securityholder elects
to participate in such sale pursuant to this Section 1.3 and such Non-
Transferring Securityholder owns 200 shares of Common Stock (calculated on
a Fully Diluted Basis), such Transferring Securityholder would be entitled
to sell 60 shares of Common Stock (300/500 x 100 shares) and such Non-
Transferring Securityholder would be entitled to sell 40 shares of Common
Stock (200/500 x 100 shares).)
In the event any Warrant Securityholder is a participating Non-Tranferring
Securityholder which elects to Transfer Warrants, (i) such Warrants shall be
deemed to be exercised, for purposes of the calculation set forth above, and
(ii) the purchase price to be received by such Warrant Securityholder shall be
reduced by the aggregate exercise price of the Warrants to be Transferred. The
Transferring Securityholder shall use all commercially reasonable efforts to
obtain the agreement of the prospective Transferee(s) to the participation of
the Non-Transferring Securityholders in any proposed sale, and in any event
shall not Transfer any Securities to the prospective Transferee(s) if the
prospective Transferee(s) declines to allow the participation of the Non-
Transferring Securityholders on the terms specified herein. The Transferring
Securityholder may, within 90 days after the expiration of the Second
Securityholder Election Period, complete the Transfer of such Securities (i)
with respect to which the Transferring Securityholder has duly given a Transfer
Offer Notice, (ii) with respect to which neither the Company nor any of the Non-
Transferring Securityholders has duly exercised its rights to acquire such
Securities pursuant to Section 1.2 hereof, and (iii) as constitute the excess of
the Securities described in the applicable Transfer Offer Notice over the
aggregate amount of Securities as to which Non-Transferring Securityholders have
duly elected to sell in such proposed sale pursuant to and in accordance with
this Section 1.3, for such consideration and on such other terms as are no more
favorable to the Transferring Securityholder than the terms offered to the Non-
Transferring Securityholders in the applicable Transfer Offer Notice; provided,
that each of such Transferees shall have executed and delivered to Holding an
Instrument of Accession as a condition precedent to such Transfer. If the
Transferring Securityholder fails to consummate such Transfer within the 90-day
period after the expiration of the Second Securityholder Election Period, any
subsequent proposed Transfer of such Securities shall be once again subject to
all of the provisions of Section 1.1 above.
1.4. Co-Sale Rights of Klearfold Management Holders and Tinsley Management
Holders. In the event that, at any time prior to June 7, 2002, the Heritage
Holders shall have elected to Transfer pursuant to Section 1.1(c) any amount of
Heritage Securities then held by the Heritage Holders other than to Holding
pursuant to Section 1.1(f)(iv) and other than
<PAGE>
-8-
Transfers (in one or a series of transactions), to officers and employees of
Holding or any of its Subsidiaries of less than 5% of the total amount of
Heritage Securities held by the Heritage Holders immediately after giving effect
to the repurchase contemplated by Section 1.1(f)(iv), and such Transfer has been
approved in writing by Securityholders holding a majority of the Securities then
outstanding (other than Securities then held by the Heritage Holders and their
Affiliates) pursuant to and in accordance with Section 1.1(c) hereof, but such
Transfer (a) has not been approved by the Majority Klearfold Holders, then the
Herrin Stockholders may elect to participate in the contemplated Transfer of
Heritage Securities and Transfer a proportionate percentage of their Klearfold
Holder Securities, by delivery of a written notice (a "Klearfold Co-Sale
--------- -------
Notice") from the Herrin Stockholders to Holding, the Heritage Holders, the
- ------
AGI Management Stockholders, the Warrant Securityholders and the Tinsley
Management Stockholders within 15 days after the date of such approval, (b) has
not been approved by the Majority Tinsley Holders, then the Tinsley Management
Stockholders may elect to participate in the contemplated Transfer of Heritage
Securities and Transfer a proportionate percentage of their Tinsley Holder
Securities, by delivery of a written notice (a "Tinsley Co-Sale Notice") from
------- ------- ------
the Tinsley Management Stockholders to Holding, the Heritage Holders, the AGI
Management Stockholders, the Warrant Securityholders and the Klearfold
Management Stockholders, also within 15 days after the date of such approval
and/or (c) has not been approved by the Majority Warrant Holders, then the
Warrant Securityholders may elect to participate in the contemplated Transfer of
Heritage Securities and Transfer a proportionate percentage of their Warrant
Securities, by delivery of a written notice (a "Warrant Co-Sale Notice") from
----------------------
the Warrant Securityholders to Holding, the Heritage Holders, the AGI Management
Stockholders, the Klearfold Management Stockholders and the Tinsley Management
Stockholders within 15 days after the date of such approval. Upon delivery of a
Klearfold Co-Sale Notice, Tinsley Co-Sale Notice, or a Warrant Co-Sale Notice
(each, a "Co-Sale Notice") the provisions of Section 1.3 shall apply, mutatis
--------------
mutandis, to the participation by the Warrant Securityholders, Herrin
Stockholders and/or Tinsley Management Stockholders, as the case may be, who
shall have elected to participate in the contemplated Transfer (together, all
such Warrant Securityholders, Herrin Stockholders and Tinsley Management
Stockholders participating in a contemplated Transfer under this Section 1.4,
the "Co-Selling Securityholders"), as participating Non-Transferring
--------------------------
Securityholders, in the proposed Transfer by the Heritage Holders, as
Transferring Securityholders. Notwithstanding the foregoing, simultaneously
with, and as a condition to, any participation by any Co-Selling Securityholders
in any proposed Transfer by the Heritage Holders, such Co-Selling
Securityholders and the Heritage Holders, pro rata in accordance with the
--------
respective number of shares of Common Stock then held by each of them, shall
offer to the AGI Management Stockholders the opportunity to acquire up to a
maximum number of the Klearfold Holder Securities, Tinsley Holder Securities,
Heritage Securities and Warrant Securities to be Transferred (collectively, the
"Co-Sale Securities") equal to the greater of (a) the aggregate number of Co-
------------------
Sale Securities proposed to be Transferred by the Co-Selling Securityholders,
and (b) that number of Co-Sale Securities, the acquisition of which by the AGI
Management Stockholders would ensure the ownership by the AGI Management
Stockholders, collectively, of fifty percent (50%) plus one of the then
----
outstanding shares of Common Stock (for the purposes of such calculation, any
Warrants proposed to be Transferred by any Co-Selling Securityholders shall be
deemed to be exercised). Any such purchase of Co-Sale Securities
<PAGE>
-9-
shall be at the same price and on the same terms specified for the proposed
Transfer by the Heritage Holders (provided, that (i) each AGI Management
Stockholder electing to acquire any Co-Sale Securities shall have the option to
substitute for any non-cash consideration proposed to be received in respect of
such proposed Transfer, cash in the amount of the fair market value thereof
based on an appraisal by an Independent Appraiser and (ii) the purchase price to
be received in exchange for any Warrant shall be reduced by the aggregate
exercise price of such Warrant). If the AGI Management Stockholders wish to
exercise their right to acquire any Co-Sale Securities, the Majority AGI Holders
shall so indicate by written notice to Holding, the Heritage Holders and, in the
event of a delivery of a Klearfold Co-Sale Notice, the Klearfold Management
Stockholders, in the event of a delivery of a Tinsley Co-Sale Notice, the
Tinsley Management Stockholders, and/or, in the event of a delivery of a Warrant
Co-Sale Notice, the Warrant Securityholders, in each case within 30 days of the
date of such Co-Sale Notice (or such longer period, not to exceed 60 days after
the effective date of delivery of such Co-Sale Notice, as may be required to
determine the value of non-cash consideration, if non-cash consideration is
proposed to be received in respect of such proposed Transfer). Unless such
notice shall have been timely delivered, the Klearfold Management Stockholders,
Tinsley Management Stockholders and Warrant Securityholders shall be free to
participate fully in the proposed Transfer by the Heritage Holders in accordance
with the first sentence of this Section 1.4, provided that no such Transfer
shall be completed until after the end of the period during which a Co-Sale
Notice may be delivered. If such notice is delivered within such 30-day period,
the proposed Transfer by the Heritage Holders shall be delayed for such period,
not to exceed six (6) months from the date of the first Co-Sale Notice, as shall
be reasonably necessary to permit those AGI Management Stockholders who so wish
to acquire any such Co-Sale Securities pursuant to this Section 1.4.
1.5. Closings.
(a) In the event of any exercise by any of the Non-Transferring
Securityholders of their first-refusal rights under Section 1.2 hereof, the
Transferring Securityholder shall Transfer to each such Non-Transferring
Securityholder the Securities to be purchased by such Non-Transferring
Securityholder at a closing to be held at 10:00 a.m. at Holding's principal
executive offices on the date specified in accordance with the applicable
provisions of Section 1.2 hereof. At such closing, the Transferring
Securityholder shall deliver to each such Non-Transferring Securityholder the
certificate(s) representing the Securities to be purchased by such Non-
Transferring Securityholder (properly endorsed or accompanied by duly executed
stock powers or assignments, with signature(s) guaranteed or similar appropriate
documentation of authority to transfer), free and clear of Liens, against
payment therefor as provided herein by certified or bank check payable to the
Transferring Securityholder, or by wire transfer to an account designated by the
Transferring Securityholder.
(b) In the event of any exercise by any of the Non-Transferring
Securityholders of their co-sale rights under Sections 1.3 or 1.4 hereof, the
closing of the sale of the Securities to be sold by such Non-Transferring
Securityholders pursuant to such rights shall take place at the same date, time,
and place at which the Transferring Securityholder is to consummate his, her or
its Transfer of Securities to the prospective Transferee. At such closing, the
<PAGE>
-10-
Transferring Securityholder and each of the Non-Transferring Securityholders
shall deliver the certificate(s) representing the respective Securities to be
sold by him or it (properly endorsed or accompanied by duly executed stock
powers or assignments, with signature(s) guaranteed or similar appropriate
documentation of authority to transfer), free and clear of Liens, against
payment therefor as provided herein by certified or bank check payable to him or
it, or by wire transfer to an account designated by him or it.
(c) In the event of any exercise by any of the AGI Management Stockholders
of their rights under Section 1.4 hereof, the Transferring Klearfold Management
Stockholders, Heritage Holders, Tinsley Management Stockholders and Warrant
Securityholders, as the case may be, shall Transfer to each such AGI Management
Stockholder the Co-Sale Securities to be purchased by such AGI Management
Stockholder at a closing to be held at the same date, time, and place, subject
to the provisions of Section 1.4 above, as that at which the Transferring
Heritage Holders are to consummate the Transfer of their Securities to their
prospective Transferee pursuant to Section 1.1(c). At such closing, the
Transferring Klearfold Management Stockholders, Heritage Holders, Tinsley
Management Stockholders and Warrant Securityholders, as the case may be, shall
deliver to each such AGI Management Stockholder the certificate(s) representing
the Co-Sale Securities to be purchased by such AGI Management Stockholder
(properly endorsed or accompanied by duly executed stock powers or assignments,
with signature(s) guaranteed or similar appropriate documentation of authority
to transfer), free and clear of Liens, against payment therefor as provided
herein by certified or bank check payable to the applicable Transferring
Klearfold Management Stockholder, Tinsley Management Stockholders, Warrant
Securityholders or Heritage Holder, as the case may be, or by wire transfer to
an account designated by such Securityholder.
1.6. Transfers of Securities in Breach of this Agreement. Any attempted or
purported Transfer of Securities in breach of this Agreement shall be wholly
void, and commencing immediately upon the date of such attempted or purported
Transfer (a) no dividend or distribution of any kind shall be paid by Holding in
respect of such Securities (all rights to any such payment being hereby
irrevocably waived and relinquished by the Securityholder attempting such
transfer or purporting so to Transfer Securities, for both himself or itself and
any purported Transferee), (b) the voting rights of such Securities, if any,
shall terminate, and (c) neither the Securityholder attempting such Transfer or
purporting so to Transfer Securities nor the purported Transferee shall be
entitled to any rights in respect of such Securities unless and until such
attempted or purported Transfer in breach of this Agreement has been rescinded.
1.7. Other Holder Co-Sale Rights. Notwithstanding anything to the contrary
stated herein, each of the Securityholders hereby agrees to honor and comply
with any co-sale rights granted to any other holder of any Securities or options
or warrants to acquire Securities with respect to the Transfer of such other
holder's Securities or options or warrants, as the case may be, including any
such rights under employee stock incentive or option plan or any other agreement
with Holding granting co-sale rights to any such holder, provided that such
other holder's co-sale rights are no more extensive or favorable than the rights
of Non-Transferring Securityholders under Section 1.3 hereof.
<PAGE>
-11-
1.8. Additional Covenants.
(a) The Heritage Holders agree that they will not Transfer any shares of
Common Stock if, as a result of such Transfer, under the terms of Section 5.2 of
the Fourth Amended and Restated Certificate of Incorporation Holding would be
required to pay dividends on the Series A Preferred at the "Increased Dividend
Rate" (as defined therein) as a result of the occurrence of a "Heritage
Transfer".
(b) The Heritage Holders and the Block Stockholders agree that they will
not Transfer any shares of Common Stock if, as a result of such Transfer, under
the terms of Section 5.2 of the Fourth Amended and Restated Certificate of
Incorporation Holding would be required to pay dividends on the Series A
Preferred at the Increased Dividend Rate as a result of the occurrence of a "50%
Ownership Event".
(c) The Heritage Holders agree that without the prior written consent of
the Warrant Securityholders they will not Transfer any shares of Common Stock to
Holding pursuant to Section 1.1(c) or Section 1.1(h) unless they either (i)
procure for the Warrant Securityholders the right to sell to Holding on the same
terms a pro rata share of the Securities to be sold to Holding, based on the
total Securities held by the Heritage Holders intending to sell to Holding as
compared to the total Securities held by the Warranty Securityholders electing
to participate in such sale (in each case calculated on a Fully Diluted Basis
and assuming that the Warrants have been exercised) or (ii) offer to purchase
from the Warrant Securityholders that portion of the Warrant Securityholders'
Securities that they would have sold to Holding had the Warrant Securityholders
participated pursuant to clause (i) above. Any such offer shall be at the same
price paid to the Heritage Holders by Holding.
2. Sale of Holding.
2.1 Approved Sale. If at any time Holding's Board of Directors approves
the sale of Holding or its business, whether by merger, consolidation, sale of
all or substantially all of the assets or capital stock of Holding and/or one or
more of its Subsidiaries, or otherwise, and (a) if on or after March 12, 2000,
such approval was made in accordance with Section 3.2 and was permitted pursuant
to Section 2.2(a), and (b) if prior to March 12, 2000, each of the Majority AGI
Holders, the Majority Heritage Holders and the Majority Klearfold Holders have
consented to such sale pursuant to and in accordance with Section 3.3 (any such
proposed sale, or any sale to one or more AGI Prospective Purchasers (as defined
in Section 2.2(a)(vii) below) pursuant to and in accordance with Section 2.2, an
"Approved Sale"), then:
-------- ----
(i) Holding and each of the Securityholders shall cooperate fully in
any Approved Sale and shall not take any action that is prejudicial to or
inconsistent with such Approved Sale.
(ii) Each Securityholder (A) shall vote or cause to be voted all
Securities having voting rights that are owned by such Securityholder or
over which such
<PAGE>
-12-
Securityholder has voting control to approve the terms of any such Approved
Sale and such matters ancillary thereto as may be necessary or appropriate,
in the judgment of the Board of Directors of Holding, to effect such
Approved Sale, (B) hereby irrevocably waives and relinquishes, to the
fullest extent permitted by applicable law, all rights to object to or
dissent from such Approved Sale (including without limitation any appraisal
or similar rights), and agrees to raise no objections against, such
Approved Sale, (C) with respect to any Approved Sale structured as a sale
of stock, shall sell all of such Securityholder's Securities on the terms
and conditions approved by the Board of Directors of Holding, and (D) upon
Holding's request, shall deliver the certificates representing all
Securities owned or controlled by such Securityholder (duly endorsed, or
accompanied by duly executed instruments of transfer) in escrow (pending
receipt of the purchase price therefor) to Holding's counsel in such sale.
(iii) Holding shall cause its officers, employees, agents,
contractors, and other Persons under its control to cooperate in any
Approved Sale and not to take any action that might impede any such sale.
Without limiting the generality of the foregoing, any resignation of any
office of Holding prior to closing of any Approved Sale by a director or
executive officer of Holding shall be a breach of this Section 2.1(iii).
Pending the completion of any Approved Sale, Holding shall operate only in
the ordinary course and shall use all commercially reasonable efforts to
maintain all existing business relationships in good standing.
Notwithstanding the foregoing, the Warrant Securityholders shall not be
obligated under subparagraphs (i)-(iii) above with respect to any particular
Approved Sale if (i) such Approved Sale is to any Securityholder or any
Affiliate of any Securityholder, other than an Approved Sale to the AGI
Prospective Purchasers pursuant to Section 2.2 or as may otherwise be approved
by the Majority Heritage Holders, and (ii) such Approved Sale has not been
approved by the Majority Warrant Holders.
2.2. Right of First Refusal.
(a) Right of First Refusal. If at any time on or after March 12, 2000,
Holding's Board of Directors wishes to approve the sale of Holding or its
business, whether by merger, consolidation, sale of all or substantially all of
the assets or capital stock of Holding and/or one or more of its Subsidiaries,
or otherwise (any such sale, "Qualified Proposed Sale"), whether pursuant to the
--------- -------- ----
terms of a bona fide offer to purchase Holding or its business received by
Holding from a third party not Affiliated to any Securityholder (a "Purchase
--------
Offer"), or, subject to the limitations set forth in Section 2.2(b) below,
- -----
pursuant to a decision by a majority of the members of the Board to offer
Holding or its business for sale (a "Sale Decision"), the Board shall not
---- --------
recommend approval or approve any such Qualified Proposed Sale unless such
recommendation or approval is made in accordance with Section 3.2 and Holding
has complied in full with the terms of this Section 2.2(a).
(i) Immediately following any Sale Decision or the receipt by Holding
of any Purchase Offer, Holding shall provide written notice thereof (a
"Sale Notice") to the
----- ------
<PAGE>
-13-
AGI Prospective Purchasers, setting forth in such Sale Notice in reasonable
detail the nature and the proposed terms and conditions of the Qualified
Proposed Sale, including, without limitation, the aggregate consideration
to be paid (the "Offer Price"), whether such Sale Notice is being delivered
----- -----
pursuant to a Sale Decision or with respect to a Purchase Offer and, in the
case of any Purchase Offer, the identity of the proposed purchaser, details
of any deferred payment terms and other details as to the structure of the
proposed consideration, together with a copy of the Purchase Offer if in
writing.
(ii) By delivery of written notice (an "AGI Purchase Notice") to
--- -------- ------
Holding within 30 days of the effective date of delivery of the Sale Notice
(or such longer period, not to exceed 60 days after the effective date of
delivery of the Sale Notice, as may be required to determine the value of
non-cash consideration, if non-cash consideration is proposed to be
received in respect of such Qualified Proposed Sale), the AGI Prospective
Purchasers may elect to purchase the following (in any such case, the
"Items To Be Sold"): (A) all of the assets, stock or other properties
------ -- -- ----
described in the Sale Notice, at the Offer Price and on the other terms
specified therein; (B) if the Qualified Proposed Sale described in the Sale
Notice is a purchase and sale of all or substantially all of the capital
stock of Holding, all of the shares of capital stock and Convertible
Securities proposed to be sold pursuant to such Qualified Proposed Sale,
other than such shares then owned by the AGI Prospective Purchasers, at a
price per share equivalent to the price per share which the holders of such
capital stock and Convertible Securities would have received in the
Qualified Proposed Sale described in the applicable Sale Notice and on the
other terms specified therein; or (C) if the Qualified Proposed Sale
described in the Sale Notice is a purchase and sale of all or substantially
all the assets of Holding, at the AGI Prospective Purchasers' discretion,
all of the shares of Holding's capital stock (other than shares of Series A
Preferred, with respect to which the holders of Series A Preferred will
retain all their rights and obligations under the Fourth Amended and
Restated Certificate of Incorporation) and Convertible Securities other
than such shares then owned by the AGI Prospective Purchasers, at a price
per share equivalent to the distribution per share which the holders of
Holding's capital stock and Convertible Securities (in either case other
than the AGI Prospective Purchasers) would have received in the event that
Holding had paid out the purchase price, net of expenses and taxes incurred
in connection with such transaction, for all or substantially all of its
assets as a distribution on its capital stock and assuming that all holders
of Convertible Securities had converted into or exercised the rights to
acquire capital stock of Holding prior to such distribution; provided,
however, that if non-cash consideration is proposed to be received in any
such case, the AGI Prospective Purchasers shall have the right to pay cash
in the amount of the fair market value thereof pursuant to an appraisal
obtained by them from an Independent Appraiser; and any such appraisal
shall be included with the applicable AGI Purchase Notice.
(iii) If (x) the AGI Prospective Purchasers do not timely deliver an
AGI Purchase Notice in accordance with paragraph (ii) above, or (y) the AGI
Prospective Purchasers do deliver an AGI Purchase Notice in accordance with
paragraph (ii) above,
<PAGE>
-14-
but fail to consummate an AGI Purchase (as defined below) pursuant to and
in accordance with Section 2.2(a)(vi) below, then Holding shall be free, in
the case of clause (x), for a period of five (5) months from the last date
upon which an AGI Purchase Notice might have been timely delivered pursuant
to paragraph (ii) above, and in the case of clause (y), for a period of 12
months from the applicable AGI Purchase Termination Date (such period, as
determined under clause (x) or clause (y) above, the "Board Sale Period")
-----------------
to pursue and complete the Qualified Proposed Sale, and such sale completed
in accordance herewith shall be an "Approved Sale" hereunder, subject to
the terms and conditions set forth in Sections 2.1 and 2.3 hereof. Holding
shall notify the AGI Prospective Purchasers if at any time during a Board
Sale Period the fair market value of the aggregate consideration being
offered (with any non-cash consideration being valued on the same basis as
employed in the appraisal, if any, obtained by the AGI Prospective
Purchasers pursuant to paragraph (ii) above, and if no such appraisal shall
have been obtained, as valued in accordance with an appraisal obtained by
Holding from an Independent Appraiser reasonably acceptable to the AGI
Prospective Purchasers) shall be less than 92.5% of the Offer Price. At any
such time during a Board Sale Period, or if the Qualified Proposed Sale has
not been consummated within the applicable Board Sale Period and Holding's
Board of Directors determines at the end of such period, subject to the
limitations of Section 2.2(b), that it wishes to continue to pursue a
Qualified Proposed Sale, then and in either such case Holding shall provide
written notice thereof to the AGI Prospective Purchasers (a "Second
------
Sale Notice"), setting forth in such Second Sale Notice the information
---- ------
described in paragraph (i) above with respect to the terms and conditions
of the Qualified Proposed Sale as then proposed, together with any
appraisal obtained by Holding of any non-cash consideration offered in such
Qualified Proposed Sale. If the AGI Prospective Purchasers elect to
purchase the Items To Be Sold as described in such Second Sale Notice, then
they shall so notify Holding by written notice (also an "AGI Purchase
--- --------
Notice") within 30 days of the effective date of delivery of the Second
------
Sale Notice.
(iv) If an AGI Purchase Notice shall have been duly and timely
delivered in accordance with paragraphs (ii) or (iii), then the purchase of
the Items To Be Sold (the "AGI Purchase") shall be consummated, unless
--- --------
otherwise agreed by the AGI Prospective Purchasers, on a pro rata basis
based upon the ratio which the number of shares of AGI Holder Securities
then held by each such electing AGI Prospective Purchaser bears to the
total of AGI Holder Securities held by all of the AGI Prospective
Purchasers who have elected to participate in such purchase (in all cases
calculated on a Fully Diluted Basis). The AGI Purchase shall be
consummated on the terms, as to price and other conditions, referred to in
paragraph (ii) above and such Purchase shall be an "Approved Sale"
hereunder, subject to the terms and conditions set forth in Sections 2.1
and 2.3 hereof. A legally-binding and enforceable agreement to complete
the AGI Purchase on such terms within a period not to exceed 30 days after
the date of such agreement and without a financing contingency (an "AGI
---
Purchase Contract") shall have been entered into on the later of (x) if the
-------- --------
Qualified Proposed Sale were pursuant to a Purchase Offer, the date which
the prospective purchaser proposed to
<PAGE>
-15-
consummate such purchase as described in such Purchase Offer, or (y) the
date five (5) months following the date of the applicable AGI Purchase
Notice, subject in each case to the AGI Prospective Purchasers' compliance
with the provisions of paragraph (v) below.
(v) From and after the delivery of an AGI Purchase Notice, the AGI
Prospective Purchasers shall use their best efforts to inform Holding's
Board of Directors as to their progress or lack thereof in procuring
financing for the completion of the AGI Purchase. Without limiting the
foregoing general obligation, (x) within 60 days of the delivery of the AGI
Purchase Notice, the AGI Prospective Purchasers shall have delivered to
Holding's Board of Directors reasonably detailed expressions of interest
from one or more financing sources regarding financing in the amounts
necessary to complete the AGI Purchase and pay the AGI Prospective
Purchasers' related expenses, and (y) within 120 days of the delivery of
the AGI Purchase Notice, the AGI Prospective Purchasers shall have
delivered to Holding's Board of Directors letter(s) of intent from one or
more reasonably reputable financing sources setting forth reasonably
detailed proposals for the provision to the AGI Prospective Purchasers of
financing in such amounts as shall then be necessary to complete the AGI
Purchase and pay the AGI Prospective Purchasers' related expenses, together
with a reasonably complete draft of an AGI Purchase Contract. In any
event, the AGI Prospective Purchasers shall deliver to Holding's Board of
Directors copies of all such expressions of interest and letters of intent
and copies of the first and last drafts of financing documentation and of
any proposed AGI Purchase Contract, as soon as such documents are received
by such AGI Prospective Purchasers. So long as the AGI Prospective
Purchasers are complying with the provisions of this Section 2.2(a)(v),
Holding and each of the Securityholders other than the AGI Prospective
Purchasers agree to act with respect to the proposed AGI Purchase in
accordance with the provisions of Section 2.1, and such AGI Purchase shall
be deemed to be an Approved Sale hereunder. Holding and each of such other
Securityholders agree to treat as confidential all information regarding
the proposed AGI Purchase pursuant to this Section 2.2(a)(v).
(vi) If (A) at any time following delivery of an AGI Purchase Notice
pursuant to paragraphs (ii) or (iii) above and prior to entering into an
AGI Purchase Contract, (x) the AGI Prospective Purchasers determine in good
faith (provided that if requested in good faith by any director of Holding,
the AGI Prospective Purchasers shall within ten (10) days after such
request send written notice to Holding's Board of Directors of their
determination as to such matters), that the AGI Prospective Purchasers will
either (1) not be able to enter into an AGI Purchase Contract within the
period specified in paragraph (iv) above, or (2) not be able to complete an
AGI Purchase on the terms required by this Section 2.2(a), or (y) the AGI
Prospective Purchasers elect not to proceed with an AGI Purchase, or (B)
the AGI Prospective Purchasers shall have breached or been unable to comply
with the requirements of paragraphs (iv) and/or (v) above, or (C) the AGI
Prospective Purchasers have not, within ten (10) days of being requested to
do so by any director of Holding, delivered to Holding a written
determination as described in clause (A)(x) above, then, in the case of
clause (A)
<PAGE>
-16-
above, the AGI Prospective Purchasers shall immediately so notify Holding's
Board of Directors in writing, and in any such case the rights of the AGI
Prospective Purchasers to pursue an AGI Purchase pursuant to this Section
2.2(a) shall thereupon terminate, and thereafter the AGI Prospective
Purchasers shall only be entitled to pursue an AGI Purchase pursuant to and
in accordance with Section 2.2(b) below.
(vii) The term "AGI Prospective Purchasers" means Richard Block,
--- ----------- ----------
individually, together with his Family Members and Family Trusts. No AGI
Prospective Purchaser may assign any or all of his or its rights to deliver
an AGI Purchase Notice, to pursue an AGI Purchase, or to complete an AGI
Purchase under this Section 2.2(a) without the prior written consent of
Holding, provided that if the proposed assignee is an entity under the
control of ("control", for purposes of this Section 2.2(a)(vii), includes
Richard Block holding a senior executive position with, or membership of
the board of, such entity) or majority-owned by an AGI Prospective
Purchaser, then such consent shall not be unreasonably withheld or delayed.
(b) Subsequent Purchase Rights. In the event that an AGI Purchase Notice
(other than an Exempt Purchase Notice, as defined below) shall have been
delivered in accordance with Sections 2.2(a)(ii) or 2.2(a)(iii) above, and the
period for the AGI Prospective Purchasers to pursue an AGI Purchase pursuant
thereto shall have terminated pursuant to and in accordance with Section
2.2(a)(vi) above (the date of such termination, the "AGI Purchase Termination
------------------------
Date"), then the AGI Prospective Purchasers shall have the right to deliver not
- ----
more than one additional AGI Purchase Notice with respect to any Sale Notices
delivered prior to June 7, 2002, provided that this limitation shall not apply
to limit the AGI Prospective Purchasers' right to deliver AGI Purchase Notices
which are Exempt Purchase Notices under clause (B) of the definition thereof,
and provided further that any AGI Purchase Notice otherwise permitted to be
delivered hereunder and which becomes an Exempt Purchase Notice under clause (A)
of the definition thereof shall not be considered to be an additional AGI
Purchase Notice for purposes of this limitation. If, in response to any Sale
Notice delivered prior to June 7, 2002, the AGI Prospective Purchasers shall
have delivered an AGI Purchase Notice which was not an Exempt Purchase Notice,
then the AGI Prospective Purchasers shall have no right to deliver an AGI
Purchase Notice in response to a Sale Notice delivered after June 7, 2002,
unless such AGI Purchase Notice would be an Exempt Purchase Notice under clause
(B) of the definition thereof, and would be delivered in connection with a Sale
Notice originally delivered prior to June 7, 2002. If the first AGI Purchase
Notice which is not an Exempt Purchase Notice is delivered in response to a Sale
Notice delivered after June 7, 2002, then, except with respect to Exempt
Purchase Notices described in clause (B) of the definition thereof, no other AGI
Purchase Notice may be provided under this Agreement. Notwithstanding anything
herein to the contrary, (i) to the extent that two AGI Purchase Notices shall
have been delivered in response to Sale Notices with respect to Qualified
Proposed Sales, other than Exempt Purchase Notices under clause (B) of the
definition thereof, no further AGI Purchase Notices may be delivered, and (ii)
Exempt Purchase Notices under clause (B) of the definition thereof may be
delivered at any time, including after June 7, 2002, to the extent that any such
Exempt Purchase Notice relates to a Sale Notice with respect to
<PAGE>
-17-
which the AGI Prospective Purchasers originally had the right to deliver an AGI
Purchase Notice under the other terms of this Section 2.2(b).
As used herein, the term "Exempt Purchase Notice" means (A) any AGI
------ -------- ------
Purchase Notice delivered in response to a Sale Decision, if no Qualified
Proposed Sale is consummated either pursuant to such AGI Purchase Notice or
during the applicable Board Sale Period thereafter, or (B) any AGI Purchase
Notice delivered during a Board Sale Period in response to a Second Sale Notice
disclosing an Offer Price which is less than 92.5% of the Offer Price disclosed
in the Sale Notice delivered prior to the commencement of such Board Sale
Period.
In the event that a further AGI Purchase Notice is permitted to be
delivered in accordance with the foregoing provisions of this Section 2.2(b),
the provisions of Section 2.2(a) shall apply to such AGI Purchase Notice and to
the rights and obligations of Holding and the AGI Prospective Purchasers arising
therefrom, except that the period by which an AGI Purchase Contract is to have
been entered into pursuant to Section 2.2(a)(iv)(y) shall be reduced from six
(6) months (or seven (7), as the case may be) to four (4) months (or five (5),
as the case may be), and the periods of 60 and 120 days specified in Section
2.2(a)(v) shall each be reduced by 30 days to 30 and 90 days, respectively.
Subject to the foregoing limitations, Holding shall comply with the provisions
of Section 2.2(a) with respect to any and all Qualified Proposed Sales,
including the requirement to deliver to the AGI Prospective Purchasers Sale
Notices with respect thereto, from and after March 12, 2000, provided, however,
that in the event that a Sale Notice resulting from a Sale Decision has been
delivered and no Qualified Proposed Sale has been consummated within a period of
six months (if no AGI Purchase Notice was delivered in connection therewith) or,
in all other cases, twelve (12) consecutive months following such delivery (as
such period may have been extended to permit the valuation of any proposed non-
cash consideration), then Holding may not deliver another Sale Notice resulting
from a Sale Decision for a period after the end of such 6- or 12-month period,
as the case may be (as so extended), equal to the lesser of (A) six (6) months,
or (B) the period to June 7, 2002 (provided that, for the avoidance of doubt,
this provision shall not limit Holding's obligation to deliver Sale Notices with
respect to Purchase Offers received by Holding).
(c) Delay in Completion of Purchase. If a "Change of Control", as such
term is defined in the Indenture, would occur as a result of an exercise of the
AGI Proposed Purchasers' rights under this Section 2.2, then the closing of the
transaction which would otherwise result in such Change of Control may be
delayed, at the option of the AGI Prospective Purchasers, for a period not to
exceed ninety (90) days beyond the end of the period(s) required for the
completion thereof under the applicable sections above, notwithstanding any
provisions to the contrary in such sections.
2.3. Received Consideration. The obligations of the Securityholders with
respect to any Approved Sale are subject to the satisfaction of the condition
that upon the consummation of such sale, all of the holders of Common Stock
shall receive the same forms and amounts of consideration per share outstanding,
or if any holders are given an option as to the form and amount of consideration
to be received per share, all holders shall be given the same option.
<PAGE>
-18-
In addition, the obligation of the Warrant Securityholders with respect to any
Approved Sale are subject to the satisfaction of the condition that upon
consummation of such sale, all of the holders of Warrants shall receive the same
forms and amounts of consideration per Warrant Share issuable upon exercise of
the Warrants, less any exercise price, or if any holders are given an option as
to the form and amount of consideration to be received per share, all holders of
Warrants shall be given the same option.
3. Voting.
3.1. Board of Directors.
(a) Subject to the provisions of Sections 3.1(b) - (e) hereof, in any and
all elections of directors of Holding, AGI, Klearfold, and any other Domestic
Subsidiary of Holding existing from time to time (whether at a meeting or by
written consent in lieu of a meeting), each Securityholder shall vote or cause
to be voted all Securities having voting rights that are owned by such
Securityholder or over which such Securityholder has voting control, and/or, as
relevant, shall use such Securityholder's best efforts to cause such
Securityholder's designees as directors to vote so as to fix the number of
directors of Holding at eleven, to cause such Securityholder's designees as
directors of Holding to so act as to ensure that Holding, in its capacity as
stockholder of AGI, Klearfold, and any other such Domestic Subsidiary, fixes the
number of directors of each of AGI, Klearfold, and any other such Domestic
Subsidiary at eleven, and, in each case, to nominate and elect, or use its best
efforts to cause to be nominated and elected, such directors of each of Holding,
AGI, Klearfold, and any other such Domestic Subsidiary, respectively, as
follows:
(i) Three individuals (the "AGI Directors") designated as follows:
--- ---------
(A) if Richard Block is both chief executive officer of Holding and holds
at least 75% (on a Fully Diluted Basis) of the number of shares of Common
Stock issued to him pursuant to the Investment Agreement, as adjusted for
splits, combinations, and other recapitalizations from and after the date
thereof, then Richard Block and two individuals designated by Richard
Block; (B) if Richard Block is both chief executive officer of Holding and
holds at least 50% but less than 75% (on a Fully Diluted Basis) of the
numbers of shares of Common Stock issued to him pursuant to the Investment
Agreement, as adjusted for splits, combinations and other recapitalizations
from and after the date thereof, then Richard Block, one individual
designated by Richard Block, and one individual designated by the holders
of a majority of the then outstanding AGI Holder Securities who are then
employed by Holding or its Subsidiaries (the "Majority AGI Employee
---------------------
Holders"); (C) if Richard Block is both chief executive officer of Holding
and holds less than 50% (on a Fully Diluted Basis) of the numbers of shares
of Common Stock issued to him pursuant to the Investment Agreement, as
adjusted for splits, combinations and other recapitalizations from and
after the date thereof, then Richard Block and two individuals designated
by the Majority AGI Employee Holders; (D) if Richard Block is not chief
executive officer of Holding and holds at least 50% (on a Fully Diluted
Basis) of the numbers of shares of Common Stock issued to him pursuant to
the Investment Agreement, as adjusted for splits, combinations and other
<PAGE>
-19-
recapitalizations from and after the date thereof, then one individual
designated by Richard Block and two individuals designated by the Majority
AGI Employee Holders; and (E) if Richard Block is not chief executive
officer of Holding and holds less than 50% (on a Fully Diluted Basis) of
the number of shares of Common Stock issued to him pursuant to the
Investment Agreement, as adjusted for splits, combinations and other
recapitalizations from and after the date thereof, then three individuals
designated by the Majority AGI Employee Holders;
(ii) Two individuals (the "Heritage I Directors") designated by the
-------- - ---------
Majority Heritage I Holders;
(iii) Two individuals (the "Heritage II Directors") designated by the
-------- -- ---------
Majority Heritage II Holders;
(iv) Two individuals (the "Klearfold Directors") designated by the
--------- ---------
Majority Herrin Holders; and
(v) Two individuals (the "Tinsley Directors") designated by the
------- ---------
Majority Tinsley Holders or, if no Tinsley Holder Securities are then
outstanding, designated by the Tinsley Management Stockholders.
and a quorum of the Board of Directors of each of Holding, AGI, Klearfold and
any other Domestic Subsidiary of Holding existing from time to time, shall
consist of ten directors, provided, however that in the event a quorum is not
present at any meeting of the Board of Directors of any such Person, such
meeting shall be adjourned and each director notified by telephone and written
telecommunication of the date and time at which such meeting is to be
reconvened, which shall be not less than 48 hours following the time of the
originally-scheduled meeting of the Board of Directors, and at such reconvened
meeting the quorum of the Board of Directors shall consist of six directors.
(b) Notwithstanding the foregoing Section 3.1(a) and Section 3.1(c) below,
upon delivery of a written notice from the Majority Heritage Holders to Holding
(a "Board Control Notice"), and thereafter until the withdrawal by the Majority
----- ------- ------
Heritage Holders of such Board Control Notice, each Securityholder shall vote or
cause to be voted all Securities having voting rights that are owned by such
Securityholder or over which such Securityholder has voting control, and/or, as
relevant, shall use such Securityholder's best efforts to cause such
Securityholder's designees as directors to vote, so as to fix the number of
directors of Holding at fifteen, and to nominate and elect such fifteen
directors as follows:
(i) Four individuals designated by the Majority Heritage I Holders
(also being referred to herein as "Heritage I Directors");
-------- - ---------
(ii) Four individuals designated by the Majority Heritage II Holders
(also being referred to herein as "Heritage II Directors"); and
-------- -- ---------
<PAGE>
-20-
(iii) Seven individuals designated as follows: three designated in
accordance with Section 3.1(a)(i), also being referred to herein as "AGI
---
Directors"; two designated in accordance with Section 3.1(a)(iv), also
---------
being referred to herein as "Klearfold Directors"; and two designated in
--------- ---------
accordance with Section 3.1(a)(v), also being referred to herein as
"Tinsley Directors"; and all such individuals being referred to herein as
-------- ---------
the "Non-Heritage Directors".
------------ ---------
and each of the Securityholders will use its best efforts to cause Holding so to
act as to make conforming changes to the Boards of Directors of AGI, Klearfold
and each other Domestic Subsidiary of Holding existing at such time, and each of
the Securityholders shall vote or cause to be voted all Securities having voting
rights that are owned by such Securityholder or over which such Securityholder
has voting control in favor of all matters recommended for approval by the
Securityholders by any Board of Directors elected pursuant to this Section
3.1(b). Upon its receipt of a Board Control Notice, Holding shall notify each
of the Securityholders (other than the Heritage Holders) thereof, provided that
the failure to deliver any such notification, or any such Securityholder's
failure to receive any such notification, shall not limit the effectiveness of
this Section 3.1(b). While the Boards of Directors of Holding, AGI, Klearfold,
and any other Domestic Subsidiary are constituted in accordance with this
Section 3.1(b) a quorum of each of such Boards of Directors shall consist of
thirteen directors, provided, however that in the event a quorum is not present
at any meeting of the Board of Directors of any such company, such meeting shall
be adjourned and each director notified by telephone and written
telecommunication of the date and time at which such meeting is to be
reconvened, which shall be not less than 48 hours following the time of the
originally-scheduled meeting of the Board of Directors, and at such reconvened
meeting the quorum of the Board of Directors shall consist of eight directors,
provided, further, that in order to constitute a quorum, the aggregate number of
Heritage I Directors and Heritage II Directors present at any such meeting
(including any such reconvened meeting) shall exceed the number of Non-Heritage
Directors so present.
(c) Subject to the provisions of Sections 3.1(b) and (d) hereof, in the
event that Scott Herrin's employment with Holding and its Subsidiaries is
terminated either (A) by Scott Herrin with Good Reason, at any time after
January 1, 1999, pursuant to clause (i) of the definition of Good Reason in his
Employment, Non-Competition and Stock Repurchase Agreement with Holding, dated
as of March 12, 1998, or (B) pursuant to Section 4(f) of such Agreement, then
and thereafter each Securityholder shall vote or cause to be voted all
Securities having voting rights that are owned by such Securityholder or over
which such Securityholder has voting control, and/or, as relevant, shall use
such Securityholder's best efforts to cause such Securityholder's designees as
directors to vote, so as to fix the number of directors of Holding at thirteen,
and to nominate and elect such thirteen directors as follows:
(i) Eleven individuals designated in accordance with Sections
3.1(a)(i) - (v) hereof;
(ii) One individual, who shall for the purposes hereof also be
referred to herein as an "AGI Director", designated by Richard Block, so
--- --------
long as Richard Block is
<PAGE>
-21-
chief executive officer of Holding, and otherwise by the Majority AGI
Employee Holders, and approved by the Majority Heritage Holders in their
sole discretion (such approval not to be unreasonably withheld or delayed)
but who shall not be an Affiliate or Related Party of any AGI Stockholder
or any Heritage Holder, nor an employee or officer of Holding or any of its
Subsidiaries; and
(iii) One individual, who shall for the purposes hereof also be
referred to herein as a "Heritage Director", designated by the Majority
-------- --------
Heritage Holders, and approved by Richard Block, in his sole discretion, so
long as Richard Block is chief executive officer of Holding, and otherwise
by the Majority AGI Employee Holders, in their sole discretion (such
approval, in either such case, not to be unreasonably withheld or delayed)
but who shall not be an Affiliate or Related Party of any AGI Stockholder
or any Heritage Holder, nor an employee or officer of Holding or any of its
Subsidiaries.
and each of the Securityholders will use its best efforts to cause Holding so to
act as to make conforming changes to the Boards of Directors of AGI, Klearfold
and each other Domestic Subsidiary of Holding existing at such time, and each of
the Securityholders shall vote or cause to be voted all Securities having voting
rights that are owned by such Securityholder or over which such Securityholder
has voting control in favor of all matters recommended for approval by the
Securityholders by any Board of Directors elected pursuant to this Section
3.1(c). Holding shall notify each of the Securityholders (other than the Herrin
Stockholders) of the occurrence of a termination of Scott Herrin's employment
with Holding as described above in this Section 3.1(c), provided that the
failure to deliver any such notice, or any such Securityholder's failure to
receive any such notice, shall not limit the effectiveness of this Section
3.1(c). While the Boards of Directors of Holding, AGI, Klearfold, and any other
Domestic Subsidiary of Holding are constituted in accordance with this Section
3.1(c), a quorum of each of such Boards of Directors shall consist of twelve
directors, provided, however that in the event a quorum is not present at any
meeting of the Board of Directors of any such company, such meeting shall be
adjourned and each director notified by telephone and written telecommunication
of the date and time at which such meeting is to be reconvened, which shall be
not less than 48 hours following the time of the originally-scheduled meeting of
the Board of Directors, and at such reconvened meeting the quorum of the Board
of Directors shall consist of seven directors.
(d) If any vacancy shall occur in any of the Boards of Directors of
Holding, AGI Klearfold or any other Domestic Subsidiary of Holding, whether as a
result of the death, disability, resignation, or removal of any director or
otherwise, such director's replacement shall be designated by the Person or
Persons who, pursuant to subsection (a), (b) or (c) of Section 3.1 hereof, as
the case may be, originally designated such director (unless such subsection
(a), (b) or (c) as the case may be, is not at the time of designation of such
replacement director the operative section governing the election of directors
hereunder). Each Person entitled to designate a director or a replacement for a
director pursuant to this Section 3 shall also be entitled to instruct the
Securityholders to remove such director with or without cause and upon such
instruction the Securityholders shall act to remove such director,
<PAGE>
-22-
whereupon the Person(s) initiating such removal shall be entitled, subject to
the approvals required by Sections 3.1(c)(ii) or 3.1(c)(iii) above, if
applicable, to designate a replacement for any director so removed. Each
Securityholder hereby agrees to vote or cause to be voted all Securities having
voting rights that are owned by such Securityholder or over which such
Securityholder has voting control, and shall use such Securityholder's best
efforts to cause such Securityholder's designees as directors to vote, so as to
comply with this Section 3.1(d).
(e) If at any time Holding or any of its Subsidiaries acquires all or
substantially all of the assets or capital stock of any Person for aggregate
consideration in excess of $10,000,000, then the Securityholders holding a
majority of the then outstanding shares of Common Stock (on a Fully Diluted
Basis) may act to amend this Section 3.1, and any corresponding provision of
Holding's or any of its Subsidiaries' by-laws, so as to permit an increase in
the number of directors required hereby (but not, in any event, to decrease such
number), provided that the additional directors elected pursuant to any such
increase may not be selected by any existing Securityholder with the right
(either individually or collectively with other Securityholders) to designate
directors under this Section 3.1 as in effect immediately prior to such
amendment, or by any Affiliate of any such Securityholder.
(f) Each Securityholder agrees to use such Securityholder's best efforts to
cause such Securityholder's designees as directors pursuant to this Section 3.1
to approve the directors designated by each other Securityholder pursuant to
this Section 3.1, in order to ensure that each such director is and remains a
"Continuing Director" under and as defined in the Indenture.
3.2. Consent to Certain Actions.
(a) Each of the Securityholders hereby irrevocably agrees that such
Securityholder will not vote or permit to be voted any Securities having voting
rights that are owned by such Securityholder or over which such Securityholder
has voting control, and shall use such Securityholder's best efforts to cause
such Securityholder's designees as directors not to vote, in favor of any action
referred to in Schedule 5 that has not been first submitted by written notice to
----------
the Majority Heritage Holders at least ten (10) days' prior to the earlier of
the taking of such action or any Board or stockholder action approving or
ratifying any such action, provided, that such prior notice shall not be
required in the event any such action shall have been approved (by written
consent or by affirmative vote at a meeting of the Board of Directors) by one
director of Holding who was designated as such by the Majority Heritage I
Holders pursuant to any of Sections 3.1(a), (b) or (c) above, as the case may
be, or by one director of Holding who was designated as such by the Majority
Heritage II Holders pursuant to any of such subsections. Notwithstanding the
foregoing or anything stated in Schedule 5 hereto, no such prior written notice
----------
or prior approval shall be required for Holding or any of its Subsidiaries to
perform any of their respective obligations under this Agreement, the Stock
Purchase Agreement, any Repurchase Agreement, Holding's By-Laws, or any employee
stock incentive or option plan or any other agreement to which the Company is a
party or otherwise board approved by the Board of Directors of Holding prior to
the Tinsley Closing Date, or approved by the Board of Directors of Holding after
the Tinsley Closing Date in accordance
<PAGE>
-23-
with the provisions hereof, nor shall any such prior written notice or prior
approval be required in order for any party hereto, or to any of the above
agreements (other than Holding), or any person having rights under any of the
above documents (other than Holding), to exercise any right or benefit provided
to such party therein.
(b) Holding and each of the Securityholders hereby agree with each
Securityholder who is an employee of Holding or any of its Subsidiaries, or
party to an Employment Agreement with Holding or any of its Subsidiaries, that
any wanton and willful breach by any such employee Securityholder of the
foregoing provisions of this Section 3.2 shall constitute grounds for
termination for "Cause" of such Securityholder's employment by Holding or any
such Subsidiary, notwithstanding anything to the contrary stated in such
Securityholder's Employment Agreement, but shall not otherwise create any
personal liability for any breach by such Securityholder of the foregoing
provisions of this Section 3.2.
3.3 Consent to Sale. Until March 12, 2000, and subject to the provisions
of Section 2.3 hereof, each of the Securityholders hereby irrevocably agrees
that such Securityholder shall not vote or permit to be voted any Securities
having voting rights that are owned by such Securityholder or over which such
Securityholder has voting control, and shall use such Securityholder's best
efforts to cause such Securityholder's designees as directors not to vote, in
favor of any sale of Holding or its business (whether by merger, consolidation,
sale of all or substantially all of the assets or capital stock of Holding
and/or one or more of its Subsidiaries, or otherwise), if the proposed sale has
not been previously approved in writing by the Majority AGI Holders, the
Majority Heritage Holders and the Majority Klearfold Holders.
3.4. Proxy. Each Securityholder hereby irrevocably appoints Holding as
such Securityholder's true and lawful proxy and attorney-in-fact, with full
power of substitution, to vote or cause to be voted all Securities having voting
rights that are owned by such Securityholder or over which such Securityholder
has voting control to effectuate the agreements of such Securityholder set forth
in this Agreement in the event of any breach by such Securityholder of its
obligations under this Agreement. The proxies and powers granted by each
Securityholder pursuant to this Section 3.4 are coupled with an interest and are
given to secure the performance of such Securityholder's duties under this
Agreement. Such proxies shall be irrevocable for so long as this Agreement
remains in effect and shall survive the death, incompetence, and/or disability
of any Securityholder who is an individual and the merger, liquidation,
dissolution, and/or winding-up of any Securityholder that is not an individual.
3.5. Action by Securityholders. Each Securityholder further agrees that
such Securityholder shall not vote or permit to be voted any Securities having
voting rights that are owned by such Securityholder or over which such
Securityholder has voting control, or take any other action as a stockholder of
Holding, to circumvent the voting arrangements set forth in this Section 3.
Without limiting the generality of the foregoing, each Securityholder agrees not
to commence, maintain, or participate in any legal action or proceeding
(including without limitation any stockholder's derivative suit) challenging any
action or transaction duly approved by Holding's Board of Directors in
accordance with the terms of this Agreement.
<PAGE>
-24-
4. Preemptive Rights.
4.1. Grant of Rights. Subject to the final sentence of this Section 4.1,
if Holding or any of its Subsidiaries authorizes the issuance or sale of any
shares of any class of capital stock or other securities, Holding shall (or
shall cause such Subsidiary to) first offer to sell to each Securityholder a
portion of such securities equal to the quotient (expressed as a percentage) of
(i) the number of shares of Common Stock held by such Securityholder (calculated
on a Fully Diluted Basis; for purposes of such calculation all outstanding
Warrants shall be deemed to be exercised), divided by (ii) the number of shares
of Common Stock then outstanding (calculated on a Fully Diluted Basis). Each
Securityholder who is an "accredited investor", as defined in Rule 501 of the
regulations promulgated by the Securities and Exchange Commission under the Act
shall be entitled to purchase all or part of such stock or securities at the
same price and on the same terms (including any deferred payment terms) as such
stock or securities are to be offered to any other Persons, provided, that each
such Securityholder shall have the option to substitute for any non-cash
consideration proposed to be received in respect of such proposed issuance or
sale, cash in the amount of the fair market value thereof. Notwithstanding the
foregoing, the provisions of this Section 4.1 shall not apply to the issuance or
sale of any shares of capital stock by any of Holding's Subsidiaries to Holding
or to any of its wholly owned Subsidiaries, or to (a) the issuance of shares of
Common Stock pursuant to a Public Sale, (b) the issuance of shares of Common
Stock as consideration for the acquisition of all or any substantial portion of
the assets or all or any portion of the capital stock of any Person, provided,
for the avoidance of doubt, that the issuance or sale by Holding or any of its
Subsidiaries of any shares of any class of capital stock or other securities to
generate cash funding of the consideration for any such acquisition shall be
subject to the provisions of the first sentence of this Section 4.1, (c) the
issuance of shares of Common Stock pursuant to a management stock option plan or
employee incentive plan approved by the Board of Directors, (d) the issuance of
shares of Common Stock to, or pursuant to warrants or options issued to,
consultants to, vendors to, or joint venture partners of Holding or its
Subsidiaries, in each case as approved by the Board of Directors, (e) the
issuance of shares of Common Stock as a dividend in respect of the outstanding
shares of Common Stock, (f) the sale of the Series A Preferred pursuant to the
Preferred Purchase Agreement, (g) the issuance of the Warrants pursuant to the
Preferred Purchase Agreement and the issuance of Warrant Shares upon exercise of
the Warrants or any other shares of any class of capital stock of Holding issued
pursuant to the terms of the Warrants, (h) the issuance of additional shares of
Series A Preferred as "PIK Dividends" pursuant to Holding's Fourth Amended and
Restated Certificate of Incorporation and the issuance of additional shares of
Series A Preferred pursuant to Section 7.03 of the Preferred Purchase Agreement
and (i) the offering and sale prior to December 31, 1999 of up to 3,300 shares
of Common Stock for a purchase price of not less than $608 per share to officers
and employees of Holding and its Subsidiaries.
4.2. Securityholders' Exercise of Right. Each Securityholder entitled to
exercise purchase rights under Section 4.1 above must exercise such purchase
rights within 30 days after the effective date of delivery to such
Securityholder of written notice from Holding or its Subsidiary, as the case may
be, describing in reasonable detail the stock or other securities
<PAGE>
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being offered, the purchase price thereof, the payment terms, and such
Securityholder's allotted portion thereof, as determined in accordance with
Section 4.1 hereof. If all of such stock or other securities are not fully
subscribed for by the Securityholders within such 30-day period, the stock or
securities that are not so subscribed for shall be re-offered to the
Securityholders purchasing their full allotments upon the terms set forth in
this Section 4, except that (i) such Securityholders must exercise their
purchase rights with respect to such re-offered securities within ten (10) days
after receipt of such re-offer, and (ii) unless such Securityholders so agree,
each such Securityholder shall be offered and shall be entitled to purchase
pursuant to this Section 4.2 a portion of the re-offered securities equal to the
quotient (expressed as a percentage) of (x) the number of shares of Common Stock
held by such Securityholder (calculated on a Fully Diluted Basis), divided by
(y) the number of shares of Common Stock (calculated on a Fully Diluted Basis)
then held by the Securityholders receiving such re-offer.
4.3. Holding's Exercise of Rights. Upon the expiration of the offer and
re-offer (if any) periods described above, Holding or its Subsidiary, as the
case may be, shall be free to sell any stock or other securities that the
Securityholders have not elected to purchase during the ninety (90) days
following such expiration, on terms and conditions no more favorable to the
purchasers thereof than those offered to the Securityholders. Any stock or
other securities offered or sold by Holding or such Subsidiary after such 90-day
period and prior to June 7, 2002 must be re-offered to all of the
Securityholders pursuant to the terms of this Section 4.
5. Restrictive Legend. So long as any Securities are subject to the
provisions hereof, all certificates representing such Securities shall have
imprinted on them a restrictive legend in substantially the following form:
"The securities represented by this certificate are subject to the terms of
a certain Second Amended and Restated Stockholder Agreement, dated as of
March 12, 1998, and amended and restated as of January 11, 1999, among the
registered holder of this certificate (or such holder's predecessor-in-
interest), the issuer of this certificate, and certain others. The Second
Amended and Restated Stockholder Agreement contains certain restrictive
provisions relating to the voting and transfer of the securities
represented hereby. A copy of the Second Amended and Restated Stockholder
Agreement is on file and may be inspected for any proper purpose at the
issuer's principal executive office."
6. Registration Rights.
6.1. Definitions. As used in this Section 6:
"Commission" means the Securities and Exchange Commission.
----------
"Holders" means the Securityholders and all Persons to whom any Registrable
-------
Securities are transferred in accordance with the provisions of this Agreement,
and "Holder" means any one of the Securityholders; provided, in the cases of any
elections to be made by,
<PAGE>
-26-
and any notices or other communications to be made by or to, any Holder pursuant
to this Section 6, that such elections, notices, or other communications shall
be made by or to the Majority Heritage I Holders, in the case of any Holder who
is a Heritage I Holder, by or to the Majority Heritage II Holders, in the case
of any Holder who is a Heritage II Holder, by or to the Majority Klearfold
Holders, in the case of any Holder who is a Klearfold Management Stockholder, by
or to the Majority AGI Holders, in the case of any Holder who is an AGI
Management Stockholder, or by or to the Majority Tinsley Holders, in the case of
any Holder who is a Tinsley Management Stockholder.
"Majority Demanding Holder(s)" means the Demanding Holder or Demanding
-------- --------- ---------
Holders, as the case may be, as defined in Section 6.2(a)(i) below, holding a
majority of the Registrable Securities held by the Demanding Holders.
"Registered" and "registration" (regardless of whether capitalized) refer
---------- ------------
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering by the
Commission of effectiveness of such registration statement.
"Registrable Securities" means the shares of Common Stock issued pursuant
----------- ----------
to the Investment Agreement and the Warrant Shares, together with all shares of
Common Stock issued to Securityholders as a result of any exercise of pre-
emptive rights pursuant to Section 4 hereof, and includes any shares of capital
stock and other securities of Holding issued or issuable with respect to any of
the foregoing shares of Common Stock by way of a stock dividend, stock split,
combination or division of shares, recapitalization, merger, consolidation,
reorganization, or the like, and any shares of capital stock and other
securities of Holding into which any of the foregoing shares of capital stock
and other securities of Holding are (directly or indirectly) converted or for
which any of the foregoing shares of capital stock and other securities of
Holding are (directly or indirectly) exchanged, in each case regardless of
subsequent transfers of such shares of capital stock or other securities of
Holding. Securities shall cease to be Registrable Securities when (i) they have
been sold pursuant to an effective registration statement under the Securities
Act, or distributed to the public through a broker, dealer or market maker
pursuant to Rule 144 under the Securities Act, or any other exemption from the
registration requirements of the Securities Act under which the transferee
receives securities that are not "restricted securities" within the meaning of
that term as defined in Rule 144(a)(3), or (ii) when they may be resold under
Rule 144(k) (or other similar exemption from registration) without volume
limitation.
"Underwriters' Maximum Number" means, with respect to an underwritten
------------ ---------------
registration, that number of securities to which such registration should be
limited, in the reasonable written opinion of the managing underwriters of such
registration in the light of marketing factors.
<PAGE>
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6.2. Demand Registrations.
(a) Request for Demand Registration. Subject to the limitations set forth
in the following paragraphs of this Section 6.2:
(i) The Holders of either (A) not less than a majority of all of the
Heritage Securities at any time outstanding, or (B) at least twenty percent
(20%) (on a Fully Diluted Basis) of the amount of Registrable Securities
outstanding on the AGI Closing Date, as adjusted from time to time for splits,
combinations and other recapitalizations (in any such case, the "Demanding
---------
Holders"), may at any time give to Holding a written request for the
- -------
registration (a "Demand Registration") by Holding under the Securities Act of
------ ------------
all or any part of the Registrable Securities held by such Demanding Holders.
Within five business days after the receipt by Holding of any such written
request, Holding shall give written notice of such request to all Holders of
Registrable Securities.
(ii) After the receipt of a written request for a Demand Registration,
(A) Holding shall be obligated to include in such Demand Registration all of the
Registrable Securities with respect to which Holding shall receive the written
requests of the Holders thereof for inclusion in such Demand Registration,
within 20 days after the date on which Holding shall have given to all Holders a
written notice of registration request pursuant to Section 6.2(a)(i) of this
Agreement, and (B) Holding shall use its best efforts in good faith to effect
promptly the registration of all such Registrable Securities. All written
requests made by Holders of Registrable Securities pursuant to this Section
6.2(a)(ii) shall specify the number of Registrable Securities to be registered
and shall also specify the intended method of disposition thereof. Such method
of disposition shall, in any case, be an underwritten offering unless Holding,
the Majority Heritage Holders, or, if different, the Majority Demanding Holders,
mutually consent otherwise, none of which consents shall be unreasonably
withheld or delayed.
(b) Limitations on Demand Registrations.
(i) Holding shall not be obligated to effect more than three (3)
Demand Registrations pursuant to Section 6.2(a) of this Agreement.
(ii) Holding shall not be obligated to effect any Demand Registration
of any Registrable Securities pursuant to Section 6.2(a) hereof before the
earlier to occur of (A) June 7, 2002, and (B) six months following the
consummation of Holding's initial public offering of shares of Common Stock
registered in an effective registration statement under the Securities Act.
(iii) Any registration initiated as a Demand Registration pursuant to
Section 6.2(a) hereof shall not count as a Demand Registration for purposes of
the limitation set forth in Section 6.2(b)(i) of this Agreement unless such
registration has become effective and at least 75% of the Registrable Securities
of the Demanding Holders requested to be included in such registration have
actually been sold.
<PAGE>
-28-
(iv) Holding shall not be obligated to effect any Demand Registration
during the period commencing on the date falling 90 days prior to Holding's
estimated date of filing of, and ending on the date 180 days following the
effective date of, any registration statement pertaining to any registration
initiated by Holding, for the account of Holding and/or securityholders other
than Holders (other than with respect to securities registered solely in
connection with acquisitions, employee benefit plans, and the like); provided,
however, that Holding shall use its best efforts in good faith to cause any such
registration statement to be filed and to become effective as expeditiously as
shall be reasonably possible.
(v) Holding shall not be obligated to effect any Demand Registration
for any 120-day period following receipt of any written request for
registration, if in the good faith judgment of the Board of Directors of
Holding, or of the managing underwriter of such offering if (A) such managing
underwriter was selected pursuant to Section 6.2(d) hereof by the consent of the
Majority Demanding Holders, and (B) Holding has not withheld its approval of any
managing underwriter proposed by the Majority Demanding Holders in connection
with such Demand Registration, the filing of any registration statement during
such 120-day period would adversely affect a material proposed or pending
acquisition, merger, or similar corporate event to which Holding is or expects
to be party.
(c) Priority in Demand Registrations. If the managing underwriters in any
Demand Registration advise Holding in writing that the number of securities
proposed to be included in such registration exceeds the Underwriters' Maximum
Number, then:
(i) if (x) such registration would not be the first registration of
Common Stock by Holding under the Securities Act (other than with respect to
securities registered solely in connection with acquisitions, employee benefit
plans, and the like), or (y) such registration is the first such registration,
but Holding does not desire to sell shares on its own behalf pursuant thereto,
then (A) Holding shall be obligated to include in such registration that number
of Securities duly requested by the Holders thereof to be included in such
registration as does not exceed the Underwriters' Maximum Number, and such
number of Securities shall be allocated pro rata among such Holders on the basis
of the number of Securities held by each such Holder; (B) if the Underwriters'
Maximum Number exceeds the number of Securities duly requested to be included in
such registration, then Holding shall be entitled to include in such
registration that number of securities as shall have been duly requested by
Holding to be included in such registration for the account of Holding and that
is not greater than such excess; and (C) if the Underwriters' Maximum Number
exceeds the sum of the number of Registrable Securities that are to be included
in such registration pursuant to the foregoing clauses (A) and (B), then Holding
may include in such registration that number of other securities that Persons
other than Holders and Holding have requested be included in such registration
and which is not greater than such excess;
(ii) if (x) such registration would be the first registration of
Common Stock by Holding under the Securities Act (other than with respect to
securities registered solely in connection with acquisitions, employee benefit
plans, and the like) and (y) Holding desires to sell shares on its own behalf
pursuant thereto, then (A) Holding shall be entitled to include in
<PAGE>
-29-
such registration that number of securities as shall have been authorized to be
included by its Board of Directors for its own account, up to the Underwriter's
Maximum Number; (B) if the Underwriters' Maximum Number exceeds the number of
Securities Holding proposes to offer and sell for its own account in such
registration, then Holding shall be obligated to include in such registration
that number of Securities duly requested by the Holders thereof to be included
in such registration that is not greater than such excess, and such number of
Securities shall be allocated pro rata among such Holders on the basis of the
number of Securities held by each such Holder; and (C) if the Underwriters'
Maximum Number exceeds the sum of the number of Securities that are to be
included in such registration pursuant to subclauses (A) and (B) of this clause
(ii), then Holding may include in such registration that number of other
securities that Persons other than such Holders and Holding have requested be
included in such registration and which is not greater than such excess; or
Neither Holding nor any of its other securityholders shall be entitled to
include any securities in any underwritten Demand Registration initiated
pursuant to Section 6.2(a)(i)(A) unless Holding or such securityholders (as the
case may be) agree in writing to sell such securities on the same terms and
conditions as apply to the Heritage Securities to be included in such Demand
Registration.
(d) Selection of Underwriters. If any Demand Registration is an
underwritten offering, the investment bankers and managing underwriters in such
registration shall be selected by Holding, subject to the approval of the
Majority Demanding Holders, which approval shall not be unreasonably withheld or
delayed. If the Majority Demanding Holders reasonably disapprove of such
investment bankers or underwriters, such Holders shall use their best efforts to
select another investment banker or underwriter reasonably acceptable to Holding
(Holding's approval thereof not to be unreasonably withheld or delayed), and
shall continue such process until such investment bankers or underwriters have
been selected.
6.3. Piggyback Registrations.
(a) Rights to Piggyback.
(i) If (and on each occasion that) Holding proposes to register any of
its securities under the Securities Act, for Holding's own account and/or for
the account of any of its security holders (each such registration not withdrawn
or abandoned prior to the effective date thereof, a "Piggyback Registration"),
--------- ------------
Holding shall give written notice of such proposal to each of the Holders not
later than the earlier to occur of (A) the tenth day following the receipt by
Holding of notice of exercise of any registration rights by any Persons, and (B)
30 days prior to the anticipated filing date of such Piggyback Registration.
Notwithstanding the foregoing, Holding shall not be obligated to give such
notice to Holders with respect to, or to include any Registrable Securities in,
any registration statement on Form S-8 or similar limited-purpose form of
registration statement effected solely to implement an employee benefit plan, or
any registration statement on Form S-4 or similar limited-purpose form of
registration statement effected solely to implement an acquisition.
<PAGE>
-30-
(ii) Subject to the provisions contained in paragraph (b) of this
Section 6.3 and in the last sentence of this clause (ii): (A) Holding shall be
obligated to include in each Piggyback Registration all Registrable Securities
with respect to which Holding receives, within 20 days after the date on which
Holding shall have given written notice of such Piggyback Registration to
Holders pursuant to Section 6.3(a)(i) hereof, the written requests of such
Holders for inclusion in such Piggyback Registration, and (B) Holding shall use
its best efforts in good faith to effect promptly the registration of all such
Registrable Securities. Holders shall be permitted to withdraw all or any part
of their Registrable Securities from any Piggyback Registration at any time
prior to the effective date of such Piggyback Registration.
(b) Priority in Piggyback Registrations. If a Piggyback Registration is an
underwritten registration, and the managing underwriters thereof give written
advice to Holding of an Underwriters' Maximum Number, then: (i) Holding shall
be entitled to include in such registration that number of securities which
Holding proposes to offer and sell for its own account in such registration and
which does not exceed the Underwriters' Maximum Number; (ii) if the
Underwriters' Maximum Number exceeds the number of securities which Holding
proposes to offer and sell for its own account in such registration, then
Holding will be obligated and required to include in such registration that
number of Registrable Securities requested by the Holders thereof to be included
in such registration and which does not exceed such excess and such Registrable
Securities shall be allocated pro rata among the Holders thereof on the basis of
the number of Registrable Securities requested to be included therein by each
such Holder; and (iii) if the Underwriters' Maximum Number exceeds the sum of
the number of Registrable Securities which Holding shall be required to include
in such registration pursuant to clause (ii) and the number of securities which
Holding proposes to offer and sell for its own account in such registration,
then Holding may include in such registration that number of other securities
which Persons other than the Holders shall have requested be included in such
registration and which is not greater than such excess.
(c) Selection of Underwriters. In any Piggyback Registration, Holding
shall (unless Holding shall otherwise agree) have the right to select the
investment bankers and managing underwriters in such registration.
6.4. Lockup Agreements.
(a) Restrictions on Public Offering by Holders of Registrable Securities.
If, in connection with any Public Offering, Holding or, if such Public Offering
is pursuant to an underwritten registration, the managing underwriters thereof
so request, each Holder of Registrable Securities, whether or not any of their
Registrable Securities are included in any such Public Offering, shall not,
without the prior written consent of Holding or (if applicable) such
underwriters, effect any Public Offering or other distribution of any equity
securities or Convertible Securities of Holding, including any sale pursuant to
Rule 144, during the seven days prior to, and during the 180-day period
commencing on, the date of such Public Offering, except in each case in
connection with such Public Offering; provided that each officer, director and
other Affiliate of Holding or any of its Subsidiaries who holds any equity
securities or Convertible Securities of Holding shall enter into similar
agreements, and
<PAGE>
-31-
provided, further, that to the extent that any such officer, director, or other
Affiliate is released (in whole or in part) from such lock-up agreement prior to
its scheduled termination date, each Holder bound by a similar lock-up agreement
shall have a proportionate percentage of its securities released from such lock-
up agreement and provided further that the Warrant Securityholders shall not be
bound by this paragraph (a) except (i) in connection with Holding's initial
Public Offering (whether or not they are permitted to participate in such Public
Offering) and (ii) in connection with any secondary Public Offering in which
they participate.
(b) Restrictions on Public Offering by Holding. Holding shall not effect
any Public Offering or other distribution of shares of its capital stock or
other equity securities, or securities exercisable or exchangeable for, or
convertible into, such capital stock or other equity securities, during the
period commencing on the seventh day prior to, and ending on the 180th day
following, the effective date of any underwritten registration, except in
connection with any such registration.
6.5. Registration Procedures. If (and on each occasion that) Holding
becomes obligated to effect any registration of any Registrable Securities
hereunder, Holding shall use its best efforts in good faith to effect promptly
the registration of such Registrable Securities under the Securities Act and to
permit the public offering and sale of such Registrable Securities in accordance
with the Holders' intended methods of disposition thereof, and, in connection
therewith, Holding as expeditiously as possible shall:
(a) prepare and file with the Commission as soon as is practicable, and in
any event within 120 days after a proper request therefor made in accordance
with Section 6.2(a) hereof, a registration statement with respect to such
Registrable Securities, and use its best efforts to cause such registration
statement to become and remain effective as provided in this Agreement;
(b) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus included in such registration
statement as may be necessary or advisable to comply in all material respects
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement or as may be necessary to keep
such registration statement effective and current, but for no longer than nine
months subsequent to the effective date of such registration;
(c) furnish to each seller of Registrable Securities such number of copies
of such registration statement, each amendment and supplement thereto (in each
case including all exhibits thereto), the prospectus included in such
registration statement (including each preliminary prospectus), and such other
documents as any such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities held by such seller;
(d) use its best efforts (i) to list the Registrable Securities to be
registered in such registration on each securities exchange or quotation system
on which similar securities of Holding are then listed (or if none, then at a
minimum on the automated quotations system of
<PAGE>
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the National Association of Securities Dealers, Inc.), and (ii) to register and
qualify the Registrable Securities covered by such registration statement under
such securities or Blue Sky laws of such jurisdictions as any Holder may
reasonably request and do any and all such other acts and things as may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities held by such
seller; provided, however, that Holding shall not be required in connection with
such Blue Sky registration or qualification to qualify generally to do business,
subject itself to taxation, or file a general consent to service of process in
any such jurisdiction;
(e) furnish to each prospective seller and each underwriter a signed
counterpart, addressed to such prospective seller, of (i) an opinion of counsel
for Holding, dated the effective date of the registration statement, and (ii) a
"comfort" letter signed by the independent public accountants who have certified
Holding's financial statements included in the registration statement, covering
substantially the same matters with respect to the registration statement (and
the prospectus included therein) and (in the case of the comfort letter, with
respect to events subsequent to the date of the financial statements), as are
customarily covered (at the time of such registration) in opinions of issuer's
counsel and in comfort letters delivered to the underwriters in underwritten
public offerings of securities;
(f) notify each prospective seller of Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which such
prospectus included in such Registration Statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, Holding will promptly
prepare (and, when completed, give notice to each prospective seller of
Registrable Securities) a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading; provided
that upon such notification by Holding, each prospective seller of such
Registrable Securities will not offer or sell such Registrable Securities until
Holding has notified such seller that it has prepared a supplement or amendment
to such prospectus and delivered copies of such supplement or amendment to such
prospective seller;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into all such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Heritage Securities to be registered (in the case of a Demand
Registration) or the Registrable Securities to be registered (in the case of a
Piggyback Registration) or the underwriters, if any, reasonably request in order
to expedite or facilitate the disposition of such Registrable Securities
(including, without limitation, effecting a stock split or a combination of
shares);
(i) make available for inspection on a confidential basis by any Holder,
any underwriter participating in any disposition pursuant to such registration
statement, or any
<PAGE>
-33-
attorney, accountant, or other agent retained by any such Holder or underwriter
(in each case after reasonable prior notice), all financial and other records,
pertinent corporate documents, and properties of Holding, and cause Holding's
and its respective Subsidiaries' officers, directors, employees, and independent
accountants to supply on a confidential basis all information reasonably
requested by any such Holder, underwriter, attorney, accountant, or agent in
connection with such registration statement; but in each case only to the extent
reasonably required in order to permit such Holder, underwriter, attorney,
accountant, or agent to conduct an investigation sufficient to establish a "due
diligence" defense in accordance with the Securities Act and the rules,
regulations, and case law thereunder;
(j) permit any Holder who, in his or its sole and exclusive judgment,
might be deemed to be an underwriter or a controlling person of Holding within
the meaning of Section 15 of the Securities Act, to participate in the
preparation of such registration statement and to permit the insertion therein
of material, furnished to Holding in writing, which in the reasonable judgment
of such Holder and his or its counsel should be included, subject to the
omission of such portions, if any, of such furnished material that Holding and
its counsel in good faith may determine was unreasonably furnished;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Registrable Securities included in such Registration Statement for sale in
any jurisdiction, use its best efforts promptly to obtain the withdrawal of such
order;
(l) if requested by the managing underwriter or underwriters or any Holder
in connection with any sale pursuant to a registration statement, promptly
incorporate in a prospectus supplement or post-effective amendment such
information relating to such underwriting as the managing underwriter or
underwriters or such Holder reasonably requests to be included therein, subject
to the omission of such portions, if any, of such material that Holding and its
counsel in good faith may determine was unreasonably furnished, and make all
required filings of such prospectus supplement or post-effective amendment as
soon as practicable after being notified of the matters incorporated in such
prospectus supplement or post-effective amendment;
(m) cooperate with the holders of Registrable Securities and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
Registrable Securities to be sold under such registration statement, and enable
such Registrable Securities to be in such denominations and registered in such
names as the managing underwriter or underwriters, if any, or such holders may
request;
(n) use its best efforts to cause the Registrable Securities to be
registered with or approved by such other governmental agencies or authorities
within the United States and having jurisdiction over Holding as may reasonably
be necessary to enable the seller or sellers
<PAGE>
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thereof or the underwriter or underwriters, if any, to consummate the
disposition of such Registrable Securities;
(o) in connection with an underwritten offering, cause the members of its
management to participate, to the extent reasonably requested by the managing
underwriter, in customary efforts to sell the securities under the offering,
including, without limitation, participating in "road shows"; and
(p) otherwise comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders (as contemplated
by Section 11(a) under the Securities Act) an earnings statement satisfying the
provisions of Rule 158 under the Securities Act no later than ninety (90) days
after the end of the twelve month period beginning with the first month of
Holding's first fiscal quarter commencing after the effective date of such
registration statement, which statement shall cover said twelve month period.
6.6. Cooperation by Prospective Sellers, Etc.
(a) Each prospective seller of Registrable Securities shall furnish to
Holding in writing such information as Holding may reasonably require from such
seller, and otherwise reasonably cooperate with Holding in connection with any
registration statement with respect to such Registrable Securities.
(b) The failure of any prospective seller of Registrable Securities to
furnish any information or documents in accordance with any provision contained
in this Section 6 shall not affect the obligations of Holding under this Section
6 to any remaining sellers who furnish such information and documents unless in
the reasonable opinion of counsel to Holding or the underwriters, such failure
impairs or may impair the viability of the offering or the legality of the
registration statement or the underlying offering.
(c) Each Holder of Registrable Securities included in any registration
statement shall not (until further notice) effect sales thereof after receipt of
telegraphic or written notice from Holding to such Holder to suspend sales to
permit Holding to correct or update such registration statement or prospectus
(which Holding shall do as promptly as is practicable); but the obligations of
Holding with respect to maintaining any registration statement current and
effective shall be extended by a period of days equal to the aggregate period
any such suspensions are in effect.
(d) At the end of any period during which Holding is obligated to keep any
registration statement current and effective as provided by Section 6.5 hereof
(and any extensions thereof required by the preceding paragraph (c) of this
Section 6.6), the Holders of Registrable Securities included in such
registration statement shall discontinue sales of shares pursuant to such
registration statement upon notice from Holding to such Holders of its intention
to remove from registration the shares covered by such registration statement
which remain unsold, and such Holders shall notify Holding of the number of
shares registered that remain unsold promptly after receipt of such notice from
Holding.
<PAGE>
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6.7. Registration Expenses.
(a) Holding shall be responsible for and shall pay all costs and expenses
incurred or sustained by any Securityholder in connection with or arising out of
each registration pursuant to this Section 6, including, without limitation, all
registration and filing fees, fees and expenses of compliance with securities or
Blue Sky laws (including reasonable fees and disbursements of counsel for the
underwriters in connection with the Blue Sky qualification of Registrable
Securities), printing expenses, messenger, telephone, and delivery expenses,
fees and disbursements of counsel for Holding, reasonable fees and disbursements
of one counsel representing the Holders of Heritage Securities and one counsel
representing the Holders of other Registrable Securities, fees and disbursements
of all independent certified public accountants (including the expenses relating
to the preparation and delivery of any special audit or comfort letters required
by or incident to such registration), and fees and disbursements of underwriters
(excluding underwriting discounts and commissions), the reasonable fees and
expenses of any special experts retained by Holding on its own initiative or at
the request of the managing underwriters in connection with such registration,
and fees and expenses of all (if any) other Persons retained by Holding (all
such costs and expenses, collectively, "Registration Expenses"). Holding shall,
------------ --------
in any case, pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, and the fees and expenses
incurred in connection with the listing of the securities to be registered on
each securities exchange or quotation system on which similar securities of
Holding are then listed.
(b) Holding shall not bear the cost of nor pay for any stock transfer
taxes imposed in respect of the transfer of any Registrable Securities to any
purchaser thereof by any Holder of Registrable Securities in connection with any
registration of Registrable Securities pursuant to this Section 6.
(c) To the extent that Registration Expenses incident to any registration
are, under the terms of this Section 6, not required to be paid by Holding, each
Holder of Registrable Securities included in such registration shall pay all
Registration Expenses that are clearly solely attributable to the registration
of such Holder's Registrable Securities so included in such registration, and
all other Registration Expenses not so attributable to one Holder shall be borne
and paid by all sellers of securities included in such registration pro rata in
proportion to the number of securities so included by each such seller.
6.8. Indemnification.
(a) Indemnification by Holding. Holding shall indemnify each Holder
joining in a registration and each underwriter of the securities so registered,
the officers, directors, and partners of each such Person and each Person who
controls (within the meaning of the Securities Act) any of the foregoing, and
their respective successors and assigns, against any and all Damages to which
such Person is or may become subject arising out of or based on any untrue
statement (or alleged untrue statement) of any material fact contained in any
prospectus,
<PAGE>
-36-
offering circular or other document incident to any registration, qualification
or compliance (or in any related registration statement, notification or the
like) or any omission (or alleged omission) to state therein any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by Holding of any rule or regulation promulgated
under the Securities Act applicable to Holding and relating to any action or
inaction required of Holding in connection with any such registration,
qualification, or compliance; provided, however, that Holding shall not be
liable in any such case to the extent that any such Damages arise out of or are
based on any untrue statement or omission based upon written information
furnished to Holding in an instrument duly executed by such Holder, underwriter,
officer, director, partner, or controlling person and stated to be specifically
for use in such prospectus, offering circular, or other document.
(b) Indemnification by Each Holder. Each Holder requesting or joining in a
registration shall indemnify each underwriter of the securities so registered,
Holding and its officers and directors and each person, if any, who controls
(within the meaning of the Securities Act) any of the foregoing, and their
respective successors and assigns, against any and all Damages to which such
Person is or may become subject arising out of or based on any untrue statement
(or alleged untrue statement) of any material fact contained in any prospectus,
offering circular, or other document incident to any registration, qualification
or compliance (or in any related registration statement, notification or the
like) or any omission (or alleged omission) to state therein any material fact
required to be stated therein or necessary to make the statement therein not
misleading, but only if and to the extent that such statement or omission was
made in reliance upon written information furnished to such underwriter or
Holding in an instrument duly executed by such Holder and stated to be
specifically for use in such prospectus, offering circular, or other document
(or related registration statement, notification, or the like) or any amendment
or supplement thereto; and provided further that each Holder's liability with
respect to any particular registration shall be limited to an amount equal to
the net cash proceeds received by such Holder from the Registrable Securities
sold by such Holder in such registration.
(c) Indemnification Proceedings. Each party entitled to indemnification
pursuant to this Section 6.8 (the "indemnified party") shall give notice to the
party required to provide indemnification pursuant to this Section 6.8 (the
"indemnifying party") promptly after such indemnified party acquires actual
knowledge of any claim as to which indemnity may be sought, and shall permit the
indemnifying party (at its expense) to assume the defense of any claim or any
litigation resulting therefrom; provided that counsel for the indemnifying
party, who shall conduct the defense of such claim or litigation, must be
acceptable to the indemnified party, and the indemnified party may participate
in such defense at such party's expense; and provided, further, that the failure
by any indemnified party to give notice as provided in this paragraph (c) shall
not relieve any indemnifying party of its obligations under this Section 6.8
except if and to the extent that such failure results in a failure of actual
notice to the indemnifying party and such indemnifying party is actually
prejudiced solely as a result of such failure to give notice. No indemnifying
party, in the defense of any such claim or litigation, shall, except with the
consent of each indemnified party, consent to entry of any judgment or enter
into any settlement that does not include as an unconditional term thereof the
giving by
<PAGE>
-37-
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation. The reimbursement required by
this Section 6.8 shall be made by periodic payments during the course of the
investigation or defense, as and when bills are received or expenses incurred,
and may be conditioned upon an undertaking by the indemnified party to reimburse
the indemnifying party in the event the indemnified party is finally determined
by a court of competent jurisdiction not to be entitled to indemnification.
6.9. Contribution in Lieu of Indemnification. If the indemnification
provided for in Section 6.8 hereof is unavailable to a party that would have
been an indemnified party in respect of any Damages referred to therein, then
each party that would have been an indemnifying party thereunder shall, in lieu
of indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such Damages in such proportion as is
appropriate to reflect the relative fault of the indemnifying party and such
indemnified party, respectively, in connection with the statements or omissions
which resulted in such Damages. Relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or such indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. Holding and each
Holder of Registrable Securities agree that it would not be just and equitable
if contribution pursuant to this Section 6.9 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to above in this Section 6.9. No Person
guilty of fraudulent misrepresentation (within the 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.
6.10. Rule 144 Requirements; Form S-3 Registrations. From time to time
after the earlier to occur of (a) the ninetieth day following the date on which
there shall first become effective a registration statement filed by Holding
under the Securities Act with respect to its Common Stock, or (b) the date on
which Holding shall register a class of equity securities under Section 12 of
the Exchange Act, Holding shall make every effort in good faith to take all
steps necessary to ensure that Holding will be eligible to register securities
on Form S-3 (or any comparable or successor form adopted by the Commission) as
soon thereafter as possible (it being acknowledged that certain aspects of
eligibility to use Form S-3, e.g., the aggregate market value of Holding's
securities held by non-affiliates, are beyond Holding's control), and to make
publicly available and available to the Holders, pursuant to Rule 144 of the
Commission under the Securities Act, such current public information as shall be
necessary to enable the Holders of Registrable Securities to make sales of
Registrable Securities pursuant to that Rule. Holding shall furnish to the
Holders, upon request at any time after the undertaking of Holding in the
preceding sentence shall have first become effective, a written statement signed
by Holding, addressed to each Holder, describing briefly the action Holding has
taken or proposes to take to comply with the current public information
requirements of Rule 144. Upon receipt of a certificate certifying (i) that
such Holder has held such Purchased Securities for a period of not less than two
(2) years (or such lesser period after which the exemption from registration
pursuant to which Rule 144(k) may be available), and (ii) that such Holder
<PAGE>
-38-
has not been an affiliate (as defined in Rule 144) of Holding during the
preceding three months, Holding shall, at the request of any Holder of Purchased
Securities, remove from the stock certificates representing such Purchased
Securities any restrictive legend (or portion thereof) relating to the
registration provisions of the Securities Act. After (and for so long as)
Holding qualifies for the use of Form S-3, then, subject to the provisions of
Sections 6.2(b)(iv) and (v) of this Agreement, any Holder or Holders of
Registrable Securities with an aggregate fair market value of $1,000,000 or
more, shall have the right to require Holding to register Registrable Securities
with not less than such aggregate fair market value on Form S-3, provided, that
Holding shall not be obligated to effect such a registration more frequently
than once in any six-month period.
6.11. Participation in Underwritten Registrations. No Person may
participate in any underwritten registration pursuant to this Section 6 unless
such Person (a) agrees to sell such Person's securities on the basis provided in
any underwriting arrangements approved by the Persons entitled, under the
provisions hereof, to approve such arrangements, and (b) completes and executes
all questionnaires, powers of attorney, custody agreements, indemnities,
underwriting agreements, and other documents reasonably required by the terms of
such underwriting arrangements. Any Holder of Registrable Securities to be
included in any underwritten registration shall be entitled at any time to
withdraw such Registrable Securities from such registration prior to its
effective date in the event that such Holder disapproves of any of the terms of
the related underwriting agreement.
7. Life Insurance. Holding shall maintain and name itself as the
beneficiary of (i) one or more insurance policies on the life of Richard Block
and each other Securityholder who is also an executive employee of Holding and
who has the right under a Repurchase Agreement to require the repurchase by
Holding of his shares of Common Stock upon his death, and (ii) one or more
insurance policies on the lives of Melvin B. Herrin and H. Scott Herrin, payable
upon the later of the deaths of such two individuals. The amount of such
insurance under such policies shall be as set forth on Schedule 6 hereto.
-------- -
Holding shall have the right to obtain insurance upon the lives of other
Securityholders, in such amounts and upon such terms as Holding may deem
appropriate. Once obtained, any such life insurance (including the policies
referred to in clauses (i) and (ii) above) shall be maintained; provided,
however, that Holding's obligation to obtain or maintain any such insurance
shall be limited, in each instance, to Holding's attempting in good faith to
obtain and maintain such insurance at standard rates; if such insurance is
unavailable at standard rates, Holding shall have the discretion not to obtain
or maintain such insurance, or to obtain or maintain less than that provided for
on Schedule 6 hereto. Holding may, but shall not be required to, increase or
----------
decrease the amount of insurance coverage from that described on Schedule 6
----------
hereto commensurate with changes in its equity valuation as reasonably
determined from time to time by its Board of Directors. Holding shall direct
each insurance company that has issued a policy pursuant to this Section 7 to
send duplicate premium notices to the insured. In the event that Holding fails
to pay any premium due on any such policy it has obtained, the insured may pay
the premium and shall be reimbursed by Holding.
<PAGE>
-39-
8. Definitions. As used in this Agreement, the following terms have the
following respective meanings:
"Affiliate" means, with respect to a specified Person, (i) any Person that
---------
directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the specified Person and (ii)
any Person that is an officer, director, trustee, member or general partner of,
or serves in a similar capacity with respect to, the specified Person, or of
which the specified Person is an officer, director, trustee, member or general
partner, or with respect to which the specified Person serves in a similar
capacity or (iii) any Person who is a spouse, parent, sibling or lineal
descendant of such Person or any Person described in clauses (i) or (ii). For
purposes of this definition the term "Control" when used with respect to a
-------
person means (a) the beneficial ownership (as defined in rule 13d-d promulgated
under the Securities and Exchange Act of 1934, as amended) of 50 percent or more
of the voting interests in such person, or (b) 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, by
contract or otherwise.
"AGI" means AGI Incorporated, an Illinois corporation and the surviving
---
corporation of the Merger under and as defined in the Merger Agreement.
"AGI Closing Date" means March 12, 1998.
--- ------- ----
"AGI Holder Securities" means the shares of capital stock of Holding
--- ------ ----------
originally issued and sold pursuant to the Investment Agreement and the Stock
Purchase Agreement to AGI Management Stockholders, any shares of capital stock
or other securities of Holding transferred in accordance with this Agreement or
issued from time to time after the AGI Closing Date to any of the AGI Management
Stockholders, and any shares of capital stock issued to any of the AGI
Management Stockholders as a result of any exercise of pre-emptive rights
pursuant to Section 4 hereof, and includes any shares of capital stock and other
securities of Holding issued or issuable with respect to any of the foregoing
shares of capital stock or other securities of Holding by way of a stock
dividend, stock split, combination or division of shares, recapitalization,
merger, consolidation, reorganization, or the like, and any shares of capital
stock or other securities of Holding into which any of the foregoing shares of
capital stock or other securities of Holding are (directly or indirectly)
converted or for which any of the foregoing shares of capital stock or other
securities are (directly or indirectly) exchanged, in each case regardless of
subsequent transfers of such shares of capital stock or other securities of
Holding; provided, that shares of capital stock and other securities of Holding
shall cease to be AGI Holder Securities when transferred (i) to Holding, (ii)
pursuant to a Public Sale, or (iii) to any Heritage Holder, Klearfold Management
Stockholder, Tinsley Management Stockholder or Other Securityholder.
"Block Stockholders" means, collectively, (i) Richard Block, (ii) Freya
----- ------------
Block, as Trustee of the Richard A. Block Family Trust u/t/a/d 4/1/94, and (iii)
any direct or indirect transferee of Securities from either of them pursuant to
and in accordance with Section 1.1(b) hereof.
<PAGE>
-40-
"Common Stock" means, collectively, the Series A Common Stock and the
------ -----
Series B Common Stock.
"Convertible Securities" means the Warrants and all other options, warrants
----------------------
or other rights to acquire shares of capital stock of Holding.
"Domestic Subsidiary" means any Subsidiary of Holding or any of its
-------- ----------
Subsidiaries organized under the laws of the United States of America, any of
its States or the District of Columbia, provided, however, that so long as KF-
Delaware carries on no business activities other than the holding of title to
certain intellectual properties, the use of which is licensed to Klearfold, KF-
Delaware shall not be deemed for the purposes of this Agreement to be a Domestic
Subsidiary.
"Employment Agreement" means any Employment, Non-Competition and Stock
--------------------
Repurchase Agreement, Agreement with respect to Employment and Stock Ownership,
Employment Agreement, Service Agreement or other similar agreement with respect
to the provisions of services to Holding or any of its Subsidiaries or between
any of Holding or any of its Subsidiaries and any of their employees.
"Family Members" means, with respect to any individual, any Related Person
------ -------
or Family Trust of such individual.
"Family Trust" means, with respect to any individual, any trust created for
------ -----
the benefit of such individual and/or one or more of such individual's Related
Persons, and controlled by such individual.
"Fully Diluted Basis" means, with respect to any calculation to be made at
-------------------
any time pursuant to this Agreement, that such calculation shall be made by
treating as outstanding all shares of Common Stock issuable upon exercise of all
outstanding warrants, options, and/or other rights to acquire shares of Common
Stock, but excluding any such warrants, options, and/or other rights (or any
portions thereof) as are not then capable of being exercised in accordance with
the respective terms thereof.
"Heritage Holders" means, collectively, the holders, as of the relevant
-------- -------
time of reference, of any of the Heritage Securities, and "Heritage Holder"
-------- ------
means any one of the Heritage Holders.
"Heritage I Holders" means, collectively, the holders, as of the relevant
-------- - -------
time of reference, of any of the Heritage I Securities, and "Heritage I Holder "
-------- - ------
means any one of the Heritage I Holders.
"Heritage II Holders" means, collectively, the holders, as of the relevant
-------- -- -------
time of reference, of any of the Heritage II Securities, and "Heritage II
-------- --
Holder" means any one of the Heritage II Holders.
- ------
<PAGE>
-41-
"Heritage Securities" means the Heritage I Securities and the Heritage II
-------- ----------
Securities, collectively.
"Heritage I Securities" means the shares of capital stock and other
-------- - ----------
securities of Holding issued and sold to Heritage I pursuant to the Investment
Agreement and the Stock Purchase Agreement, any shares of capital stock and
other securities of Holding issued or transferred to Heritage I or any permitted
Transferee of Heritage I (other than Heritage II) pursuant to Section 1.1(f)
hereof, and any shares of capital stock issued to Heritage I or any such
permitted Transferee as a result of any exercise of pre-emptive rights pursuant
to Section 4 hereof, and includes any shares of capital stock and other
securities of Holding issued or issuable with respect to any of the foregoing
shares of capital stock or other securities of Holding by way of a stock
dividend, stock split, combination or division of shares, recapitalization,
merger, consolidation, reorganization, or the like, and any shares of capital
stock and other securities of Holding into which any of the foregoing shares of
capital stock and other securities of Holding are (directly or indirectly)
converted or for which any of the foregoing shares of capital stock and other
securities of Holding are (directly or indirectly) exchanged, in each case
regardless of subsequent transfers of such shares of capital stock or other
securities of Holding; provided, that shares of capital stock and other
securities of Holding shall cease to be Heritage I Securities when transferred
(i) to Holding, (ii) pursuant to a Public Sale, (iii) to Heritage II, or (iv) to
any of the Non-Heritage Holders.
"Heritage II Securities" means the shares of capital stock and other
-------- -- ----------
securities of Holding issued and sold to Heritage II pursuant to the Stock
Purchase Agreement, any shares of capital stock and other securities of Holding
issued or transferred to Heritage II or any permitted Transferee of Heritage II
(other than Heritage I) pursuant to Section 1.1(f) hereof, and any shares of
capital stock issued to Heritage II or any such permitted Transferee as a result
of any exercise of pre-emptive rights pursuant to Section 4 hereof, and includes
any shares of capital stock and other securities of Holding issued or issuable
with respect to any of the foregoing shares of capital stock or other securities
of Holding by way of a stock dividend, stock split, combination or division of
shares, recapitalization, merger, consolidation, reorganization, or the like,
and any shares of capital stock and other securities of Holding into which any
of the foregoing shares of capital stock and other securities of Holding are
(directly or indirectly) converted or for which any of the foregoing shares of
capital stock and other securities of Holding are (directly or indirectly)
exchanged, in each case regardless of subsequent transfers of such shares of
capital stock or other securities of Holding; provided, that shares of capital
stock and other securities of Holding shall cease to be Heritage II Securities
when transferred (i) to Holding, (ii) pursuant to a Public Sale, (iii) to
Heritage I, or (iv) to any of the Non-Heritage Holders.
"Indenture" means the Indenture dated of even date herewith between Holding
---------
and State Street Bank and Trust Company, as trustee, as amended by the First
Supplemental Indenture thereto dated as of July 21, 1998.
"Independent Appraiser" shall mean an investment banking or accounting firm
----------- ---------
or independent appraiser of nationally recognized status and at least ten years
of experience in
<PAGE>
-42-
evaluating businesses similar to those of Holding and its Subsidiaries, and
which is not an Affiliate of Holding, any of its Subsidiaries, or any
Securityholder.
"Investment Agreement" means that certain Investment Agreement dated as of
---------- ---------
February 19, 1998, by and among the AGI Management Stockholders, the Klearfold
Management Stockholders, Heritage, Holding and certain other persons named
therein.
"KF-Delaware" means KF-Delaware, Inc. a Delaware corporation.
-----------
"Klearfold" means Klearfold, Inc., a Pennsylvania corporation.
---------
"Klearfold Holder Securities" means the shares of capital stock of Holding
---------------------------
originally issued and sold pursuant to the Investment Agreement and Stock
Purchase Agreement to the Klearfold Management Stockholders, any shares of
capital stock or other securities of Holding transferred in accordance with this
Agreement or issued from time to time after the AGI Closing Date to any of the
Klearfold Management Stockholders, and any shares of capital stock issued to any
of the Klearfold Management Stockholders as a result of any exercise of pre-
emptive rights pursuant to Section 4 hereof, and includes any shares of capital
stock and other securities of Holding issued or issuable with respect to any of
the foregoing shares of capital stock or other securities of Holding by way of a
stock dividend, stock split, combination or division of shares,
recapitalization, merger, consolidation, reorganization, or the like, and any
shares of capital stock or other securities of Holding into which any of the
foregoing shares of capital stock or other securities of Holding are (directly
or indirectly) converted or for which any of the foregoing shares of capital
stock or other securities are (directly or indirectly) exchanged, in each case
regardless of subsequent transfers of such shares of capital stock or other
securities of Holding; provided, that shares of capital stock and other
securities of Holding shall cease to be Klearfold Holder Securities when
transferred (i) to Holding, (ii) pursuant to a Public Sale, or (iii) to any
Heritage Holder, AGI Management Stockholder, Tinsley Management Stockholder or
Other Securityholder.
"Lien" means any lien, claim, mortgage, security interest, charge,
----
encumbrance, or restriction on transfer of any kind.
"Majority AGI Holders" means the holders, as of the relevant time of
--------------------
reference, of at least a majority of the AGI Holder Securities.
"Majority Heritage Holder" means the holder, as of the relevant time of
-------- -------- ------
reference, of at least a majority of the Heritage Securities.
"Majority Heritage I Holders" means the holders, as of the relevant time of
---------------------------
reference, of at least a majority of the Heritage I Securities.
"Majority Heritage II Holders" means the holders, as of the relevant time
-------- -------- -- -------
of reference, of at least a majority of the Heritage II Securities.
<PAGE>
-43-
"Majority Herrin Holders" means the holders, as of the relevant time of
-----------------------
reference, of at least a majority of the Securities then held by the Herrin
Stockholders.
"Majority Klearfold Holders" means the holders, as of the relevant time of
--------------------------
reference, of at least a majority of the Klearfold Holder Securities.
"Majority Non-Heritage Holders" means the holders, as of the relevant time
-----------------------------
of reference, of at least a majority of the Non-Heritage Securities.
"Majority Tinsley Holders" means the Holders, as of the relevant time of
-------- ------- -------
reference, of at least a majority of the Tinsley Holder Securities.
"Majority Warrant Holders" means the holders, as of the relevant time of
------------------------
reference, of at least a majority of the Warrant Securities; provided, however,
that for the purposes of such calculation, any holder of Warrants shall be
deemed to hold the Warrant shares issuable upon the exercise of such Warrants.
"Merger Agreement" means the Agreement and Plan of Merger dated as of
------ ---------
February 19, 1998 by and among Holding, AGI, AGI Acquisition Corporation and
certain stockholders of AGI.
"Non-AGI Holder Securities" means the Heritage Securities, the Klearfold
------- ------ ----------
Holder Securities, the Tinsley Holder Securities and the Other Securityholder
Securities.
"Non-Heritage Holders" means, collectively, the holders, as of the relevant
--------------------
time of reference, of the Non-Heritage Securities, and "Non-Heritage Holder"
-------------------
means any one of the Non-Heritage Holders.
"Non-Heritage Securities" means the AGI Holder Securities, the Klearfold
-----------------------
Holder Securities, the Tinsley Holder Securities and the Other Securityholder
Securities.
"Other Agreements" has the same meaning herein as the Investment Agreement.
----- ----------
"Other Securityholder Securities" means shares of capital stock of Holding
-------------------------------
and the Warrants originally issued and sold to any Securityholder other than an
AGI Management Stockholder, Klearfold Management Stockholder, Tinsley Management
Stockholder or Heritage Holder (any such Securityholder, an "Other
-----
Securityholder"), any shares of capital stock or other securities of Holding
- --------------
transferred in accordance with this Agreement or issued from time to time after
the AGI Closing Date to any of the Other Securityholders, and any shares of
capital stock issued to any of the Other Securityholders as a result of any
exercise of pre-emptive rights pursuant to Section 4 hereof, and includes any
shares of capital stock and other securities of Holding issued or issuable with
respect to any of the foregoing shares of capital stock or other securities of
Holding by way of a stock dividend, stock split, combination or division of
shares, recapitalization, merger, consolidation, reorganization, or the like,
and any shares of capital stock or other securities of Holding into which any of
the
<PAGE>
-44-
foregoing shares of capital stock or other securities of Holding are (directly
or indirectly) converted or for which any of the foregoing shares of capital
stock or other securities are (directly or indirectly) exchanged, in each case
regardless of subsequent transfers of such shares of capital stock or other
securities of Holding; provided, that shares of capital stock and other
securities of Holding shall cease to be Other Securityholder Securities when
transferred (i) to Holding, (ii) pursuant to a Public Sale, or (iii) to any
Heritage Holder, Klearfold Management Stockholder, AGI Management Stockholder or
Tinsley Management Stockholder; and provided further, that Other Securityholder
Securities shall not include any shares of Series A Preferred.
"Person" means any natural person, entity, or association, including
------
without limitation any corporation, partnership, limited liability company,
government (or agency or subdivision thereof), trust, joint venture or sole or
joint proprietorship.
"Personal Representative" means the successor or legal representative
-----------------------
(including without limitation, a guardian, executor, administrator or
conservator) of a dead or incompetent Securityholder.
"Public Offering" means any sale of shares of Common Stock to the public
------ --------
pursuant to a public offering registered under the Securities Act.
"Public Sale" means any Public Offering or any sale of shares of Common
-----------
Stock to the public through a broker or market-maker pursuant to the provisions
of Rule 144 (or any successor rule) adopted under the Securities Act.
"Qualified Public Offering" means an underwritten Public Offering, pursuant
-------------------------
to an effective registration statement under the Securities Act, covering the
offer and sale of shares of Common Stock in which an aggregate of not less than
$25,000,000 of gross proceeds from such Public Offering are received by Holding
and/or one or more of the selling stockholders for its and/or his account, as
the case may be.
"Related Persons" means, with respect to any individual, such individual's
------- -------
parents, spouse, children, and grandchildren.
"Securities" means all shares of the capital stock or other securities of
----------
Holding, including without limitation the Heritage Securities and the Non-
Heritage Securities but excluding shares of Series A Preferred, and all options,
warrants (including the Warrants), and other rights to acquire shares of the
capital stock or other securities of Holding (including without limitation upon
the conversion or exchange of other securities or instruments).
"Series A Common Stock" means the Series A Common Stock, $0.001 par value
------ - ------ -----
per share, of Holding.
"Series B Common Stock" means the Series B Common Stock, $0.001 par value
------ - ------ -----
per share, of Holding.
<PAGE>
-45-
"Securityholders" means, collectively, all of the Persons except Holding
---------------
who are parties to this Agreement as of the relevant time of reference, and
"Securityholder" means any one of the Securityholders.
- ---------------
"Subsidiary" or "Subsidiaries" means, with respect to any Person, any
---------- ------------
corporation a majority (by number of votes) of the outstanding shares of any
class or classes of the capital stock of which shall at the time be owned by
such Person or by a Subsidiary of such Person, if the holders of the shares of
such class or classes of capital stock (a) are ordinarily, in the absence of
contingencies, entitled to vote for the election of at least a majority of the
directors (or persons performing similar functions) of the issuer thereof,
regardless of whether the right so to vote has been suspended by the happening
of such a contingency, or (b) are at the relevant time of reference entitled, as
such holders, to vote for the election of at least a majority of the directors
(or persons performing similar functions) of the issuer thereof, regardless of
whether the right so to vote exists by reason of the happening of a contingency.
"Tinsley Closing Date" means September 10, 1998.
------- ------- ----
"Tinsley Holder Securities" means any shares of capital stock or other
-------------------------
securities of Holding transferred in accordance with this Agreement or issued
from time to time after the Tinsley Closing Date to any of the Tinsley
Management Stockholders, and any shares of capital stock issued to any of the
Tinsley Management Stockholders as a result of any exercise of pre-emptive
rights pursuant to Section 4 hereof, and includes any shares of capital stock
and other securities of Holding issued or issuable with respect to any of the
foregoing shares of capital stock or other securities of Holding by way of a
stock dividend, stock split, combination or division of shares,
recapitalization, merger, consolidation, reorganization, or the like, and any
shares of capital stock or other securities of Holding into which any of the
foregoing shares of capital stock or other securities of Holding are (directly
or indirectly) converted or for which any of the foregoing shares of capital
stock or other securities are (directly or indirectly) exchanged, in each case
regardless of subsequent transfers of such shares of capital stock or other
securities of Holding; provided, that shares of capital stock and other
securities of Holding shall cease to be Tinsley Holder Securities when
transferred (i) to Holding, (ii) pursuant to a Public Sale, or (iii) to any
Heritage Holder, AGI Management Stockholder, Klearfold Management Stockholder or
Other Securityholder.
"Tinsley Management Stockholders" means M. Shaun Lawson, Lee Newbon, and
-------------------------------
each other individual who may become a party hereto by the delivery of an
Instrument of Accession identifying himself or herself as a "Tinsley Management
Stockholder".
"Type" means, as to any Securities, whether such Securities are AGI Holder
----
Securities, Klearfold Holder Securities, Tinsley Holder Securities, Heritage
Securities or Other Securityholder Securities.
<PAGE>
-46-
"vote" as a noun, means any vote, resolution, or action by written consent,
----
as the case may be, and as a verb, means to adopt or cast any vote or resolution
or to take any action by written consent, as the case may be.
"Warrants" means the warrants, issued pursuant to the Preferred Purchase
--------
Agreement, to purchase shares of Common Stock.
"Warrant Securities" means the Warrants and Warrant Shares, any shares of
------- ----------
capital stock and other securities of Holding issued or transferred to any of
the Warrant Securityholders or any permitted Transferee of any of the Warrant
Securityholders as a result of any exercise of pre-emptive rights pursuant to
Section 4 hereof, and includes any shares of capital stock and other securities
of Holding issued or issuable with respect to any of the foregoing shares of
capital stock or other securities of Holding by way of a stock dividend, stock
split, combination or division of shares, recapitalization, merger,
consolidation, reorganization, or the like, and any shares of capital stock and
other securities of Holding into which any of the foregoing shares of capital
stock and other securities of Holding are (directly or indirectly) converted or
for which any of the foregoing shares of capital stock and other securities of
Holding are (directly or indirectly) exchanged, in each case regardless of
subsequent transfers of such shares of capital stock or other securities of
Holding; provided, that shares of capital stock and other securities of Holding
shall cease to be Warrant Securities when transferred (i) to Holding, (ii)
pursuant to a Public Sale, or (iii) to any Holder other than a Warrant
Securityholder; and provided further that Series A Preferred shall not
constitute Warrant Securities.
"Warrant Securityholders" means, collectively, the holders, as of the
-----------------------
relevant time of reference, of any of the Warrant Securities, and "Warrant
Securityholder" means any one of the Warrant Securityholders.
"Warrant Shares" means shares of Common Stock issuable upon exercise of the
--------------
Warrants.
9. Miscellaneous.
(a) Benefits of Agreement; No Assignments; No Third-Party Beneficiaries.
(i) This Agreement shall bind and inure to the benefit of the parties
hereto and their respective heirs, successors, and permitted assigns.
(ii) No party shall assign any rights or delegate any obligations
hereunder without the consent of the other parties, and any attempt to do
so shall be void; provided, that the rights hereunder of the several
parties other than Holding shall also inure to the benefit of any Person
other than Holding to whom Securities are transferred in accordance with
all of the provisions of this Agreement, except any such Person to whom
such securities were transferred pursuant to a Public Sale.
<PAGE>
-47-
(iii) Nothing in this Agreement is intended to or shall confer any
rights or remedies on any Person other than the parties hereto, their
respective heirs and successors, and permitted transferees of the
securities issued pursuant to this Agreement, as referred to in Section
9(a)(ii) hereof.
(b) Notices. All notices, requests, payments, instructions, or other
documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective five business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed as follows (or to such other address as the recipient party may
have furnished to the sending party for the purpose pursuant to this section).
Any reference in this Agreement to the "effectiveness" or the "effective date"
of a notice or other communication means the date as of which such notice or
other communication is effective as determined in accordance with this Section
9(b).
(A) If to any Heritage Holder, in care of:
Heritage Partners Management Company, Inc.
30 Rowes Wharf, Suite 300
Boston, MA 02110
Attention: Michael F. Gilligan, Managing Director
Telecopier No. (617) 439-0689
with a copy sent at the same time and by the same means to:
David L. Engel, Esq.
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Telecopier No. (617) 951-8736
(B) If to any of the Klearfold Management Stockholders, in care of:
Klearfold, Inc.
364 Valley Road
Warrington, Pennsylvania 18976
Attention: H. Scott Herrin
Telecopier No. (215) 343-0484
<PAGE>
-48-
with a copy sent at the same time and by the same means to
Richard J. Braemer, Esq.
Ballard Spahr Andrews & Ingersoll LLP
1735 Market Street, 51st Floor
Philadelphia, Pennsylvania 19103-7599
Telecopier No. (215) 864-8999
(C) If to any of the AGI Management Stockholders, or to the AGI
Prospective Purchasers, in care of:
AGI Incorporated
1950 North Ruby Street
Melrose Park, Illinois 60160-1178
Attention: Richard Block and David Underwood
Telecopier No. (708) 344-9113
with a copy sent at the same time and by the same means to:
Linda Chaplik Harris, Esq.
Sonnenschein Nath & Rosenthal
Suite 8000 Sears Tower
233 South Wacker Drive
Chicago, Illinois 60606
Telecopier No. (312) 876-7934
(D) If to any of the Tinsley Management Stockholders, in care of:
Tinsley Robor Limited
Drayton House
Drayton
Chichester
West Sussex P020 6EW
ENGLAND
Attention: Lee Newbon and Shaun Lawson
Telecopier No. (011-44) (0)-124-377-4567
<PAGE>
-49-
with a copy sent at the same time and by the same means to:
Richard Kennett, Esq.
Laytons
Carmelite
50 Victoria Embankment
Blackfriars
London E4Y OLS
ENGLAND
Telecopier No.: (011-44) (0)-171-330-9999
(E) If to BT Capital Investors, L.P., to:
BT Capital Investors, L.P.
130 Liberty Street
25th Floor
New York, NY 10006
Attention: Joseph Wood
Telecopier No.: (212) 250-7651
with a copy sent at the same time and by the same means to:
Paul, Hastings, Janofsky & Walker LLP
399 Park Avenue
New York, NY 10022
Attention: William F. Schwitter, Esq.
Telecopier No.: (212) 319-4090
(F) If to Phoenix Home Life Mutual Insurance Company, to:
c/o Phoenix Investment Partners Limited
56 Prospect Street
P.O. Box 150480
Hartford, Connecticut 06115
Attention: Private Placements Division
Telecopier: (860) 403-5451
<PAGE>
-50-
with a copy sent at the same time and by the same means to:
Paul, Hastings, Janofsky & Walker LLP
399 Park Avenue
Thirty-First Floor
New York, NY 10022
Attention: William F. Schwitter, Esq.
(G) If to Holding, to:
IMPAC Group, Inc.
1950 North Ruby Street
Melrose Park, Illinois 60160-1178
Attention: Richard Block and David Underwood
Telecopier No. (708) 344-9113
with copies sent at the same time and by the same means to each
of the Persons (including counsel) listed under clauses (A) - (F)
above.
(G) If to any other party to this Agreement, to the most recent
address of such party reflected in the register referred to in Section 7 of
the Investment Agreement, or to such address as such Person may have
furnished to the sending party for such purpose pursuant to this section.
(c) Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all of which together shall constitute one and the same agreement.
In pleading or proving this Agreement, it shall not be necessary to produce or
account for more than one such counterpart.
(d) Captions. The captions of sections or subsections of this Agreement
are for reference only and shall not affect the interpretation or construction
of this Agreement.
(e) Equitable Relief. Each of the parties hereby acknowledges that any
breach by it of its obligations under this Agreement would cause substantial and
irreparable damage to the other parties, and that money damages would be an
inadequate remedy therefor, and accordingly, acknowledges and agrees that each
of the other parties shall be entitled to an injunction, specific performance,
and/or other equitable relief to prevent the breach of such obligations (in
addition to all other rights and remedies to which such party may be entitled in
respect of any such breach).
(f) Construction. The language used in this Agreement is the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party.
<PAGE>
-51-
(g) Waivers. No waiver of any breach or default hereunder shall be valid
unless in a writing signed by the waiving party. No failure or other delay by
any party exercising any right, power, or privilege hereunder shall be or
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege.
(h) Further Assurances. From time to time, each party hereto shall
promptly execute and deliver all such further instruments and other documents,
and shall promptly take all such further actions, as any other party hereto may
reasonably request in order more effectively to effect or confirm the
transactions hereby contemplated and to carry out the purposes of this
Agreement.
(i) Entire Agreement. This Agreement, together with the Merger Agreement,
the Other Agreements and the Stock Purchase Agreement and the Preferred Purchase
Agreement, contains the entire understanding and agreement among the parties,
and supersedes any prior understandings or agreements among them, or between or
among any of them, with respect to the subject matter hereof.
(j) Governing Law. This Agreement shall to the maximum lawful extent be
governed by and interpreted and construed in accordance with the internal laws
of the State of Delaware, as applied to contracts under seal made, and entirely
to be performed, within Delaware, and without reference to principles of
conflicts or choice of law.
(k) Termination. This Agreement may be terminated by written agreement of
all of the parties, and shall automatically terminate upon and concurrently with
the sale to a third party of all or substantially all of Holding's assets or
capital stock, or of all or substantially all of the assets or capital stock of
any Subsidiary or Subsidiaries that constitute all or substantially all of the
assets of Holding (whether pursuant to a merger, consolidation, or otherwise) in
accordance with the terms hereof and the distribution of the net proceeds of
such sale (after payment of creditors of Holding has been made or provided for)
to the stockholders of Holding. Unless earlier terminated in accordance with
the provisions of the preceding sentence, all provisions of this Agreement other
than Sections 6 through 9 hereof shall automatically terminate upon and
concurrently with the closing of an Approved Sale or a Qualified Public
Offering. Any termination of this Agreement shall not affect the rights or
obligations of any party arising, or based on actions or omissions occurring,
before such termination.
(l) Amendment and Waiver. Except as expressly set forth in Section 3.1(e)
above, any modification, amendment, or waiver of any provision of this Agreement
shall be effective if, and only if, it is approved in writing by each of (i) the
Majority Heritage Holders, (ii) the Majority AGI Holders, and (iii) the Majority
Klearfold Holders, provided, however, that (A) any modification, amendment or
waiver of any provision of this Agreement that grants any rights to, or
restricts any rights of, any of the Tinsley Management Holders, whether
individually or collectively, shall be effective if, and only if, it is approved
in writing by the Majority Tinsley Holders (or if no Tinsley Holder Securities
are then outstanding, by the
<PAGE>
-52-
Tinsley Management Stockholders) as well as by the parties referred to in
clauses (i) (iii) above, and (B) the consent of the Majority Klearfold Holders
shall not be required for any such modification or amendment which either (x)
increases or reduces the number of directors under Section 3.1 hereof, or
reallocates the right to designate such directors, so long as the rights of the
Majority Herrin Holders under such Section 3.1 are not thereby modified or
amended, or (y) arises from the creation and issuance of shares of Series B
Common Stock in connection with the conversion of options for the purchase of
shares of Tinsley Robor plc into options for the purchase of shares of Series B
Common Stock, so long as any such modification or amendment does not restrict
any rights of any of the Klearfold Management Stockholders, whether
individually, collectively or in the capacity of any of them as Herrin
Stockholders, or grant any additional rights to any other existing
Securityholders and (c) any modification, amendment or waiver of any provision
of this Agreement that grants any rights to, or restricts any rights of, any of
the Warrant Securityholders, whether individually or collectively, shall be
effective if, and only if, it is approved in writing by the Majority Warrant
Securityholders.
(m) No Rights to Employment. Nothing contained in this Agreement shall
confer on any Securityholder a right to employment or continued employment with
Holding or any of its Subsidiaries, or to employment in the same position or on
the same terms as those currently in effect.
<PAGE>
Signature Page to the Stockholder Agreement
IN WITNESS WHEREOF, each of the parties has executed and delivered this
Agreement to the others as an agreement under seal as of January 11, 1999.
IMPAC GROUP, INC.
/s/ Richard Block
By_________________________
Name: Richard Block
Title: President
HERITAGE FUND I, L.P.
By: HF Partners I, L.P.,
its general partner
/s/ Peter Z. Hermann
By_________________________
Name: Peter Z. Hermann
Title: General Partner
HERITAGE FUND II, L.P.
By: HF Partners II, L.L.C.,
its general partner
/s/ Peter Z. Hermann
By_________________________
Name: Peter Z. Hermann
Title: General Partner
KFI MANAGEMENT STOCKHOLDERS:
/s/ Melvin B. Herrin
___________________________
Melvin B. Herrin
<PAGE>
Signature Page to the Stockholder Agreement
/s/ H. Scott Herrin
___________________________
H. Scott Herrin
/s/ Matthew H. Kamens
___________________________
Matthew H. Kamens, not individually
but as trustee under an Indenture
of Trust of Melvin B. Herrin dated June 4, 1996
/s/ Arthur S. Keyser
___________________________
Arthur S. Keyser, not individually
but as trustee under an Indenture
of Trust dated August 12, 1992
f/b/o H. Scott Herrin
/s/ Daniel Santry
___________________________
Daniel Santry
/s/ Craig Wilson
___________________________
Craig Wilson
/s/ Robert Eliason
___________________________
Robert Eliason
/s/ John McInerney
___________________________
John McInerney
/s/ Steven Frazier
___________________________
Steven Frazier
<PAGE>
Signature Page to the Stockholder Agreement
/s/ Richard Mazurek
___________________________
Richard Mazurek
AGI MANAGEMENT STOCKHOLDERS:
/s/ Richard Block
___________________________
Richard Block
/s/ James Oppenheimer
___________________________
James Oppenheimer
/s/ Richard Oppenheimer
___________________________
Richard Oppenheimer
/s/ David Underwood
___________________________
David Underwood
/s/ Dean J. Henkel
___________________________
Dean J. Henkel
___________________________
John Maranov
<PAGE>
Signature Page to the Stockholder Agreement
/s/ Gary Mankoff
___________________________
Gary Mankoff
/s/ James Ladwig
___________________________
James Ladwig
/s/ Donald W. Kosterka
___________________________
Donald W. Kosterka, as Trustee of the Donald
Kosterka Trust dated 5/17/92
/s/ David Horowitz
___________________________
David Horowitz
/s/ Zenas Block
___________________________
Zenas Block
/s/ Dennis McGuin
___________________________
Dennis McGuin
/s/ Mary Frances Griffin
___________________________
Mary Frances Griffin
/s/ Freya Block
___________________________
Freya Block, as Trustee of the Richard A. Block
Family Trust u/t/a dated 4/1/94
<PAGE>
Signature Page to the Stockholder Agreement
TINSLEY MANAGEMENT STOCKHOLDERS:
_________________________
_________________________
WARRANT HOLDERS:
BT CAPITAL INVESTORS, L.P.
/s/ Joseph Wood
By_______________________
Name:Joseph Wood
Title:Senior Managing Director
PHOENIX HOME LIFE MUTUAL INSURANCE
COMPANY
/s/ Christopher Wilkos
By_______________________
Name:Christopher Wilkos
Title:Vice President
<PAGE>
EXHIBIT A
Instrument of Accession
to
Amended and Restated
Stockholder Agreement
The undersigned, ____________________, in order to become the owner or
holder of certain securities of IMPAC Group, Inc., a Delaware corporation
("Holding"), hereby agrees to become [an] [Heritage] [AGI Management] [Klearfold
- ---------
Management] [Tinsley Management] [Other] Securityholder party to that certain
Second Amended and Restated Stockholder Agreement, dated as of March 12, 1998,
and amended and restated as of January 11, 1999 (the "Stockholder Agreement"), a
---------------------
copy of which is attached. This Instrument of Accession shall be effective and
shall become a part of the Stockholder Agreement upon acceptance by Holding.
Executed under seal as of the date set forth below under the laws of the
State of Delaware.
Dated_____________ ____________________________
(signature)
Print Name:_________________
Address: _________________
_________________
ACCEPTED:
IMPAC Group, Inc.
By______________________
Name:
Title:
<PAGE>
Schedule 1
Klearfold Management Stockholders
---------------------------------
1. Daniel Santry
2. Robert Eliason
3. Richard Mazurek
4. Craig Wilson
5. Steve Frazier
6. John McInerney
7. H. Scott Herrin
8. Melvin Herrin
<PAGE>
Schedule 2
AGI Management Stockholders
---------------------------
1. Richard Block
2. James Oppenheimer
3. Richard Oppenheimer
4. Gary Mankoff
5. Donald W. Kosterka, as Trustee of the Donald
Kosterka Trust dated 5/17/92
6. John Maranov
7. David Horowitz
8. Zenas Block
9. Dean Henkel
10. Dennis McGuin
11. Mary Frances Griffin
12. Freya Block, as Trustee of the Richard A. Block
Family Trust u/t/a dated 4/1/94
<PAGE>
Schedule 3
Warrant Stockholders
BT Capital Investors L.P.
Phoenix Home Life Mutual Insurance Company
<PAGE>
Schedule 4
[Intentionally Omitted]
<PAGE>
Schedule 5
Certain Actions Requiring Consent
---------------------------------
(a) the sale or other disposition of all or substantially all of the assets
or properties of Holding, any of its Subsidiaries, or any business or division
of any of Holding or its Subsidiaries;
(b) the issuance or sale by Holding or any of its Subsidiaries of any
capital stock or other securities of Holding or any of its Subsidiaries
(including without limitation options, warrants, and other rights to acquire any
such stock or other securities), other than (i) pursuant to any options,
warrants or other rights to acquire any such stock or other securities, the
grant of which was previously approved in accordance with the then-applicable
provisions of this Stockholder Agreement and including without limitation any
such grants pursuant to the Company's 1998 Stock Option Plan, the Company's
Second 1998 Stock Option Plan, or the notice dated December 14, 1998 from IMPAC
Europe Limited and Tinsley Robor Limited to the holders of options to purchase
shares of Tinsley Robor Limited's share capital, (ii) the issuance of shares of
Series A Preferred Stock as Dividend Shares (as defined in Holding's Fourth
Amended and Restated Certificate of Incorporation) and (iii) the issuance of
shares of Common Stock to employees of the Company and its Subsidiaries pursuant
to and in accordance with that certain Equity Recapitalization Agreement, dated
as of September 10, 1998, among the Company and the shareholders;
(c) (i) the incurrence by Holding or any of its Subsidiaries of any
indebtedness for borrowed money, or the entry by Holding or any of its
Subsidiaries into any agreement, instrument, obligation, commitment, or
understanding relating thereto (including any guaranty or indemnity with respect
thereto), including without limitation the establishment of any such line of
credit at any bank or other financial institution, in violation of any provision
of Holding's Amended and Restated Multicurrency Revolving Credit Agreement with
Bank of America, N.T. & S.A., as Agent, the Indenture or the Senior Subordinated
Notes outstanding thereunder, or Holding's Fourth Amended and Restated
Certificate of Incorporation, in each case, as amended and in effect from time
to time (as so amended and in effect, the "Material Documents");
------------------
(d) any action to effect the voluntary, or which would precipitate an
involuntary, dissolution, liquidation, or winding-up of Holding or any of its
Subsidiaries;
(e) the approval of any Approved Sale pursuant to Section 2.1(a), the
approval of or recommendation to approve any Qualified Proposed Sale, or the
entering into or consummation of any merger or consolidation of Holding or any
of its Subsidiaries with or into any other Person (other than any merger into
Holding or any such Subsidiary, so long as (i) Holding or such Subsidiary is the
survivor of such merger, and (ii) in the case of a merger into Holding, at
<PAGE>
least a majority of both the capital stock and the voting shares of Holding
outstanding immediately following such merger are held by Persons holding a
majority of such capital stock and voting shares, respectively, immediately
prior to such merger);
(f) unless otherwise permitted or required pursuant to an agreement of
Holding or any such Subsidiary previously approved in accordance with the then-
applicable provisions of this Stockholder Agreement, the acquisition by Holding
or any of its Subsidiaries of any stock or indebtedness of, or any obligations
or liabilities of, or the acquisition by Holding or any of its Subsidiaries of
all or a substantial portion of the properties or assets of, or the making by
Holding or any of its Subsidiaries of any loans, advances, capital
contributions, or investments in or to, any Person (other than any such
transaction among Holding and/or any of its Subsidiaries) which in any such case
is prohibited by any Material Document, or the entry by Holding or any of its
Subsidiaries into any partnership or joint venture;
(g) (i) the entering into by Holding or any of its Subsidiaries of any
transaction with any Affiliate (other than Holding or any such Subsidiary) on
terms less favorable to Holding or such Subsidiary, or more favorable to such
Affiliate, than would have been obtainable on an arms-length basis in the
ordinary course of business, or (ii) the making of any payment (whether in cash,
securities, or other property) to or for the benefit of any Affiliate (other
than Holding or any of its Subsidiaries) of Holding or any of its Subsidiaries
in respect of any indebtedness owed by, or other obligation of, Holding or any
of its Subsidiaries to such Affiliate, in each case other than (A) the
reasonable compensation and reimbursement for out-of-pocket expenses of any
member of the Board of Directors of Holding or any of its Subsidiaries who is
not an employee, officer, or stockholder of Holding or its Subsidiaries, (B) the
reasonable costs and expenses associated with any rights of board or executive
committee attendance or observation or inspection and lodging expenses related
thereto, or (C) any increases in the compensation of any employee of Holding or
any of its Subsidiaries in the ordinary course of business or pursuant to and in
accordance with such employee's employment agreement with Holding or such
Subsidiary as in effect on September 10, 1998;
(h) the appointment or termination of the Chairman of the Board of
Directors, President, Chief Executive Officer or Chief Financial Officer (or
Persons holding equivalent positions) of Holding; or
(i) the entering into by Holding or any of its Subsidiaries of any
agreement obliging, committing or binding the Company or any such Subsidiary to
do any thing or to take any action for which prior notice to the Majority
Heritage Holders would be required pursuant to paragraphs (a) - (h) of this
Schedule 5, and any amendment or modification to any such agreement.
- -------- -
<PAGE>
Schedule 6
Insurance Policies
------------------
Name Amount of Policy
- ---- ----------------
Richard Block $10,000,000
Dean Henkel $ 2,000,000
James Oppenheimer $ 2,000,000
Richard Oppenheimer $ 2,000,000
David Underwood $ 2,000,000
The following people shall have an insurance policy, if any, in an amount
to be determined from time to time:
Melvin Herrin
H. Scott Herrin
Jacqueline Barry
Mary Frances Griffin
Dennis McGuin
John McInerney
Robert Eliason
Craig Wilson
Daniel Santry
Steven Frazier
Richard Mazurek
<PAGE>
Schedule 7
Form of Heritage Repurchase Agreement
See Attached.
<PAGE>
Form of Heritage Share Repurchase Letter
IMPAC GROUP INC.
1950 North Ruby Street
Melrose Park, Illinois 60160-1178
January 11, 1999
To Heritage Fund II Investment
Corporation
c/o Heritage Partners, Inc.
30 Rowes Wharf
Suite 300
Boston, MA 02110
Ladies and Gentlemen:
Reference is hereby made to the letter agreement dated September 10, 1998
among the stockholders of IMPAC Group, Inc., a Delaware corporation (the
"Company"), and the Company (the "September 10th Letter").
- -------- --------- ---- ------
Pursuant to the terms of September 10th Letter, Heritage Fund II
Investment Corporation (referred to herein as the "Stockholder") hereby agrees
-----------
to sell to the Company shares of the Company's Common Stock, par value $0.001
per share (the "Common Stock", with the shares of Common Stock to be sold
------ -----
referred to as the "Shares"), for a purchase price of $625.04 per share (the
------
"Purchase Price") and an aggregate repurchase price as set forth in Annex A. The
-------- ----- ----- -
parties acknowledge that the Purchase Price per share has been increased from
the price contemplated by the September 10th Letter to reflect that the timing
of the "Equity Recapitalization" referred to in the September 10th Letter has
been significantly delayed from the parties' expectations in September. The
number of Shares to be sold and the aggregate Purchase Price to be paid by the
Company for such Shares is set forth in Annex A.
----- -
Immediately after the closing under the Securities Purchase Agreement,
dated as of the date hereof (the "Securities Purchase Agreement"), between the
---------- -------- ---------
Company and the investors named therein, providing for the issuance and sale by
the Company of a new series of preferred stock and warrants for an aggregate
purchase price of $20,000,000,
<PAGE>
- 2 -
each Stockholder shall deliver the certificate(s) representing the Shares to be
purchased by the Company (properly endorsed or accompanied by duly executed
stock powers or assignments), against payment therefor as provided herein by
wire transfer to an account designated by the Stockholder on Annex A. The
-------
Company hereby agrees that it will pay the aggregate Purchase Price out of the
net proceeds received by it pursuant to the Securities Purchase Agreement.
The Stockholder hereby represents and warrants that it has all right, title
and interest in the shares of Common Stock to be sold to the Company pursuant to
this letter agreement, and upon delivery to the Company of certificates
representing the Shares to be sold as provided in the preceding paragraph and
payment of the aggregate Purchase Price, the Company will acquire the Shares,
free from all liens, restrictions, claims and encumbrances.
This letter agreement shall to the maximum lawful extent be governed by and
interpreted and construed in accordance with the internal laws of the State of
Delaware, as applied to contracts under seal made, and entirely to be performed,
within Delaware, and without reference to principles of conflicts or choice of
law.
Please sign where indicated below to confirm your agreement with the
foregoing.
Very truly yours,
IMPAC GROUP, INC.
By:
-------------------------------------
Name:
-------------------------------
Title:
-------------------------------
Agreement Confirmed:
HERITAGE FUND II INVESTMENT
CORPORATION
By
-------------------------------
Name:
---------------------------
Title:
--------------------------
<PAGE>
ANNEX A
----- -
Pursuant to this letter agreement the Stockholder will sell and the Company
will purchase shares of Common Stock as follows:
<TABLE>
<CAPTION>
Shares of Aggregate
Common Stock Purchase Price
---------------- ----------------
<S> <C> <C>
Heritage Fund II Investment Corporation 30,087.37 $18,806,000
</TABLE>
The aggregate Purchase Price should be sent by wire transfer as follows:
Bank Name: BankBoston
Bank Address: 100 Federal Street
Boston, MA 02110
Routing Number: 011 000 390
Account Name: Heritage Fund II, L.P.
Account Number: 503-27931
<PAGE>
EXHIBIT 10.62
=====================================================================
SECURITIES PURCHASE AGREEMENT
among
IMPAC GROUP, INC.,
BT CAPITAL INVESTORS, L.P., and
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
--------------------------
Dated
January 11, 1999
-------------------------
<PAGE>
GLOSSARY
(Not Part of Agreement)
DEFINED TERM SECTION NUMBER PAGE
"accredited investor" 3.06
"Action" 2.08
"Agreement" Introductory Paragraph
"Benefit Arrangement" 2.11(a)
"BTI" Introductory Paragraph
"Certificate" 2.01(ii)
"Closing" 1.02
"Closing Date" 1.02
"Code" 2.11(a)
"Common Stock" 2.02(a)
"Company" Introductory Paragraph
"Confidential Information" 7.01
"Current Credit Agreement" 7.03(g)
"Disclosure Schedule" Recitals
"Employee Benefit Plan" 2.11(a)
"Environmental Laws" 2.15
"ERISA" 2.11(a)
"ERISA Affiliate" 2.11(a)
"Exchange Act" 7.03(b)
"Existing Financing Arrangements" 7.03(g)
"Existing Restricted Payment Covenants" 7.03(g)
"Extended Returns" 2.14(b)
"Financial Statements" 4.05(a)
<PAGE>
DEFINED TERM SECTION NUMBER PAGE
"Financing Arrangements" 7.03(g)
"Foreign Plan" 2.11(a)
"GAAP" 2.09(b)
"group health plan" 2.11(b)(vii)
"Heritage Ownership Amount" 2.02(b)
"Increased Dividend Rate" 7.03(a)
"Indemnification Obligation" 7.03(d)
"Indemnified Party" 7.03(e)
"Indemnifying Party" 7.03(e)
"Indenture" 7.03(g)
"Information Systems and Equipment" 2.29(c)
"Intellectual Property Rights" 2.16(b)
"key person" 4.06
"Liens" 2.12(a)
"Losses" 7.03(b)
"Material Adverse Effect" 2.01(ii)
"Material Contracts" 2.19
"Multiemployer Plan" 2.11(a)
"nonconforming group health plan" 2.11(b)(vii)
"November Balance Sheet" 2.09
"Operative Documents" 2.01(ii)
"Observer" 7.02
"PBGC" 2.11(b)(ii)
"Phoenix" Introductory Paragraph
"Preferred" Recitals
<PAGE>
DEFINED TERM SECTION NUMBER PAGE
"Purchaser" Introductory Paragraph
"registered investment company" 2.32
"Registered Rights" 2.16(a)
"Schedule" Recitals
"Securities" Recitals
"Securities Act" 2.05(a)(iv)
"Securities Purchase" 1.01
"Series A Common Stock" 2.02(a)
"Series B Common Stock" 2.02(a)
"Service" 2.11(b)(i)
"significant" 2.24
"Solvent" 2.21
"Stockholders Agreement" Recitals
"Subsidiary" 2.03(a)
"Tax" 2.14(a)
"Taxes" 2.14(a)
"Tax Returns" 2.14(a)
"Trade Secrets" 2.16(c)
"Transfer" 3.08(a)
"United States real property holding
corporation" 2.14(h)
"Violation" 2.30(b)
"Warrant Shares" Recitals
"Warrants" Recitals
"welfare benefit plan" 2.11(b)(viii)
"Year 2000 Complaint" 2.29(b)
<PAGE>
<TABLE>
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ARTICLE I SALE AND PURCHASE............................................................................ 2
SECTION 1.01. Agreement to Sell and to Purchase; Purchase Price................................ 2
SECTION 1.02. Closing.......................................................................... 2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................ 2
SECTION 2.01. Organization and Standing........................................................ 2
SECTION 2.02. Capital Stock.................................................................... 3
SECTION 2.03. Subsidiaries..................................................................... 3
SECTION 2.04. Authorization.................................................................... 4
SECTION 2.05. Valid Issuances of Shares........................................................ 4
SECTION 2.06. Governmental Consents............................................................ 5
SECTION 2.07. No Violation; Consents........................................................... 5
SECTION 2.08. Litigation....................................................................... 6
SECTION 2.09. Financial Statements; Undisclosed Liabilities.................................... 6
SECTION 2.10. Change in Condition.............................................................. 7
SECTION 2.11. Employee Benefit Plans........................................................... 7
SECTION 2.12. Interests in Real Property....................................................... 9
SECTION 2.13. Compliance with Law.............................................................. 10
SECTION 2.14. Tax Matters...................................................................... 11
SECTION 2.15. Environmental Matters............................................................ 12
SECTION 2.16. Intellectual Property............................................................ 13
SECTION 2.17. Registration Rights.............................................................. 15
SECTION 2.18. Insurance........................................................................ 15
SECTION 2.19. Material Contracts............................................................... 15
SECTION 2.20. Contracts........................................................................ 17
SECTION 2.21. Solvency ........................................................................ 17
SECTION 2.22. Private Offering................................................................. 17
SECTION 2.23. Loans and Advances............................................................... 17
SECTION 2.24. Significant Customers and Suppliers.............................................. 18
SECTION 2.25. Disclosure....................................................................... 18
SECTION 2.26. Officers ........................................................................ 18
SECTION 2.27. Transactions With Affiliates..................................................... 18
SECTION 2.28. Employees........................................................................ 18
SECTION 2.29. Year 2000........................................................................ 19
SECTION 2.30. Labor Relations.................................................................. 19
SECTION 2.31. Absence of Questionable Payments................................................. 20
SECTION 2.32. Investment Company Act........................................................... 21
</TABLE>
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ARTICLE III REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE PURCHASERS............................... 21
SECTION 3.01. Authorization.................................................................... 21
SECTION 3.02. Consents......................................................................... 21
SECTION 3.03. Purchase Entirely for Own Account................................................ 22
SECTION 3.04. Disclosure of Information........................................................ 22
SECTION 3.05. Investment Experience............................................................ 22
SECTION 3.06. Accredited Investor.............................................................. 22
SECTION 3.07. Restricted Securities............................................................ 22
SECTION 3.08. Transfers of Securities.......................................................... 22
ARTICLE IV COVENANTS OF THE COMPANY..................................................................... 23
SECTION 4.01. Operative Documents.............................................................. 23
SECTION 4.02. Compliance with Conditions....................................................... 23
SECTION 4.03. Consents and Approvals........................................................... 24
SECTION 4.04. Filing of Restated Certificate of Incorporation.................................. 24
SECTION 4.05. Reports.......................................................................... 24
SECTION 4.06. Properties, Business, Insurance.................................................. 24
SECTION 4.07. Reserve for Exercise of Warrants................................................. 25
SECTION 4.08. Corporate Existence.............................................................. 25
SECTION 4.09. Restrictive Agreements Prohibited................................................ 25
SECTION 4.10. Year 2000 Reporting.............................................................. 25
SECTION 4.11. Environmental Authorizations..................................................... 25
ARTICLE V COVENANTS OF THE PURCHASERS.................................................................. 26
SECTION 5.01. Agreement to Take Necessary and Desirable Actions................................ 26
SECTION 5.02. Compliance with Conditions; Best Efforts......................................... 26
ARTICLE VI CONDITIONS PRECEDENT TO CLOSING.............................................................. 26
SECTION 6.01. Conditions to the Company's Obligations.......................................... 26
SECTION 6.02. Conditions To Purchasers' Obligations............................................ 27
ARTICLE VII MISCELLANEOUS................................................................................ 28
SECTION 7.01. Confidentiality.................................................................. 28
SECTION 7.02. Board Visitation Rights.......................................................... 28
SECTION 7.03. Survival; Indemnification........................................................ 28
SECTION 7.04. Assignment; Restrictions on Transfer; No Third Party Beneficiaries............... 32
SECTION 7.05. Counterparts..................................................................... 32
SECTION 7.06. Titles and Subtitles............................................................. 32
</TABLE>
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SECTION 7.07. Notices.......................................................................... 32
SECTION 7.08. Payment of Fees and Expenses..................................................... 33
SECTION 7.09. Severability..................................................................... 33
SECTION 7.10. GOVERNING LAW; CONSENT TO JURISDICTION........................................... 33
SECTION 7.11. Entire Agreement................................................................. 34
SECTION 7.12. Waivers and Extensions........................................................... 34
SECTION 7.13. Titles and Headings.............................................................. 34
SECTION 7.14. Exhibits and Schedules........................................................... 34
SECTION 7.15. Press Releases and Public Announcements.......................................... 34
SECTION 7.16. Remedies Cumulative.............................................................. 34
SECTION 7.17. Several Liability of the Purchasers.............................................. 34
SECTION 7.18. Brokers.......................................................................... 35
</TABLE>
-iii-
<PAGE>
EXHIBITS
Exhibit A Form of Warrant
Exhibit B Stockholder Agreement
Exhibit C Certificate
-iv-
<PAGE>
SECURITIES PURCHASE AGREEMENT
-----------------------------
SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of January
---------
11, 1999, by and between IMPAC Group, Inc. (the "Company"), a Delaware
-------
corporation, BT Capital Investors, L.P. ("BTI"), Phoenix Home Life Mutual
---
Insurance Company ("Phoenix" and, together with BTI, each a "Purchaser", and
------- ---------
collectively the "Purchasers").
----------
W I T N E S S E T H:
WHEREAS, the Purchasers desire to purchase (i) shares of the Company's
Redeemable Preferred Stock (the "Preferred") with an aggregate liquidation
---------
preference of $20,000,000 at the issuance thereof and (ii) detachable, ten-year
warrants (in the form attached hereto as Exhibit A, the "Warrants" and together
--------
with the Preferred, the "Securities") to purchase the number of shares of Common
----------
Stock (as defined in 2.02) representing 3.5% of total Common Stock of the
Company (on a fully diluted basis, calculated as provided in Schedule 2.02) on
the Closing Date (the "Warrant Shares") from the Company, and the Company
------- --------
desires to issue and sell the Securities to the Purchasers, in each case upon
the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, the parties desire to set forth the objectives and principles
which will govern their relations and responsibilities with respect to each
other by entering into concurrently with the sale and purchase of securities
hereunder a stockholders agreement, in the form attached hereto as Exhibit B
(the "Stockholders Agreement").
------------ ---------
WHEREAS, in connection with the negotiation and preparation of this
Agreement, the Company has prepared and is separately delivering to the
Purchasers a disclosure schedule dated the date hereof (the "Disclosure
----------
Schedule" with any reference in this Agreement to a "Schedule" being a reference
- -------- --------
to the Disclosure Schedule).
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows.
<PAGE>
ARTICLE I
SALE AND PURCHASE
SECTION 1.01. Agreement to Sell and to Purchase; Purchase Price. On
-------------------------------------------------
the Closing Date (as defined in Section 1.02) and upon the terms and subject to
the conditions set forth in this Agreement, the Company shall issue and sell to
each Purchaser, and each Purchaser shall purchase and accept from the Company,
such amount of Securities for the purchase price payable in immediately
available funds, as is indicated on each Purchaser's signature page attached
hereto (the "Securities Purchase").
---------- --------
SECTION 1.02. Closing. The closing of the sale and purchase of the
-------
Securities (the "Closing") shall take place at 10:00 a.m., local time, on
-------
January 11, 1999, or at such other time and date as the parties hereto shall
agree in writing (the "Closing Date"), at the offices of Paul, Hastings,
------- ----
Janofsky & Walker, 399 Park Avenue, New York, New York 10022, or at such other
place as the parties hereto shall agree in writing. At the Closing, (a) each
Purchaser shall, not later than the Closing Date, deposit into a bank account
designated by the Company, by wire transfer of immediately available funds, an
amount equal to the aggregate purchase price of the Securities being purchased
by such Purchaser from the Company, and (b) the Company shall deliver to each
Purchaser, against payment of the purchase price therefor, stock certificates
and Warrants representing the Securities being purchased by such Purchaser in
definitive form and registered in such Purchaser's name, each in a single
certificate or in such other denominations (including fractional shares) as such
Purchaser shall request not later than three business days prior to the Closing
Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company hereby represents and warrants to each Purchaser as
follows:
SECTION 2.01. Organization and Standing. The Company is duly
-------------------------
incorporated, validly existing and in good standing as a domestic corporation
under the laws of the State of Delaware and has all requisite corporate power
and authority to own its properties and assets and to carry on its business as
it is now being conducted. The Company is duly qualified to transact business
and is in good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of its business makes such
qualification necessary, except where the failure to so qualify or be in good
standing would not have a material adverse effect on (i) the business,
operations, properties, prospects or financial condition of the Company, as the
case may be or (ii) the Company's ability to perform its obligations under this
Agreement, the
2
<PAGE>
Stockholders Agreement, the Fourth Amended and Restated Certificate of
Incorporation of the Company (a copy of which is attached hereto as Exhibit C,
the "Certificate"), or the Warrants (collectively, the "Operative Documents") (a
----------- ------------------
material adverse effect on clauses (i) or (ii), each, a "Material Adverse
----------------
Effect"). The Company has made available to the Purchasers a correct and
- ------
complete copy of its By-Laws, as amended to the date of this Agreement.
SECTION 2.02. Capital Stock.
-------------
(a) The authorized capital stock of the Company consists on the date
hereof, and will consist at the Closing, of 1,000,000 shares of Series A Common
Stock, $0.001 par value (the "Series A Common Stock"), 100,000 shares of Series
---------------------
B Common Stock, par value $0.001 per share (the "Series B Common Stock" and
--------------------
together with the Series A Common Stock, the "Common Stock"), of which
------ -----
166,158.13 shares will be issued and outstanding immediately following the
Closing (after giving effect to the repurchase of shares of Common Stock
contemplated by the Heritage Repurchase Agreement (as defined in the
Certificate), and 50,000 shares of Preferred, of which 20,000 shares will be
issued and outstanding immediately following the Closing. The outstanding
shares of the Company's Common Stock have been duly authorized, validly issued,
and are fully paid and nonassessable. Except as set forth on Schedule 2.02, at
the date hereof, and immediately following the Closing, there are and will be no
outstanding options, warrants, agreements, conversion rights, preemptive rights
or other rights to subscribe for or to purchase any shares of Common Stock or
other capital stock of the Company. Except as contemplated by the Stockholders
Agreement or as set forth on Schedule 2.02, there are no restrictions upon the
voting or transfer of any shares of the Company's Common Stock pursuant to the
Company's Certificate, By-Laws or other governing documents or any agreement or
other instruments to which the Company is a party or by which the Company is
bound.
(b) On the date hereof, Affiliates of Heritage Partners Management Co.
Inc. d/b/a Heritage Partners, Inc. own 125,871.35 shares of Series A Common
Stock and 4,500 shares of Series B Common Stock (prior to giving effect to the
repurchase of shares of Common Stock contemplated by the Heritage Repurchase
Agreement). After giving effect to the repurchase of shares of Common Stock
contemplated by the Heritage Repurchase Agreement, Affiliates of Heritage
Partners Management Co. Inc., d/b/a Heritage Partners, Inc., will own 100,283.98
shares of Common Stock (the "Heritage Ownership Amount").
-------------------------
SECTION 2.03. Subsidiaries.
------------
(a) Schedule 2.03(a) sets forth a complete and correct list of each
corporation (or other entity) of which the Company owns, directly or indirectly,
shares of capital stock (or other shares of equity interests) having in the
aggregate 50% or more of the total combined voting power of the issued and
outstanding shares of capital stock (or other shares of equity interests)
entitled to vote generally in the election of directors (or the analogous
governing body of such an
3
<PAGE>
entity) of such corporation (hereinafter referred to collectively as
"Subsidiaries" and individually as a "Subsidiary") and the percentage of such
------------ ----------
voting power owned by the Company.
(b) Each of the Subsidiaries is duly incorporated, validly existing
and, except as set forth on Schedule 2.03(b), in good standing under the laws of
its jurisdiction of incorporation and has all requisite corporate power and
authority to own its properties and assets and to conduct its business as now
conducted. Each Subsidiary is duly qualified to do business as a foreign
corporation in every jurisdiction in which the character of the properties owned
or leased by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to so qualify would not have a
Material Adverse Effect. The outstanding shares of capital stock of each
Subsidiary have been duly authorized and validly issued, are fully paid and
nonassessable, and except for any directors' qualifying shares and except as set
forth on Schedule 2.03(b) are owned of record and beneficially, directly or
indirectly, by the Company, free and clear of any pledges, liens, claims,
charges, security interests or other encumbrances. Except as contemplated by
the Stockholders Agreement or as set forth on Schedule 2.03(b), there are no
outstanding options, warrants, agreements, conversion rights, preemptive rights
or other rights to subscribe for, purchase or otherwise acquire any issued or
unissued shares of capital stock of any Subsidiaries.
SECTION 2.04. Authorization. Except as noted on Schedule 2.04, (A)
-------------
corporate action on the part of the Company, its directors and shareholders
necessary for the authorization, execution and delivery by the Company of the
Operative Documents, the performance of all obligations of the Company hereunder
and thereunder and the authorization, issuance and delivery of the Securities
being sold hereunder, has been taken or will be taken prior to the Closing, (B)
this Agreement and the other Operative Documents constitute valid and legally
binding obligations of the Company, enforceable in accordance with their terms,
except (i) as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, and other laws of general application affecting enforcement of
creditors' rights generally, and (ii) as limited by laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies and (iii) certain indemnification and contribution provisions in the
Stockholders Agreement may be limited by considerations of public policy and (C)
to the best knowledge of the Company, no party to any Operative Document is in
breach of or in default thereunder and no event or circumstance has occurred
which, with or without the giving of notice or lapse of time or both, could
result in a right of termination in respect thereof.
SECTION 2.05. Valid Issuances of Shares.
-------------------------
(a) The shares of Preferred being purchased hereunder, when issued,
sold and delivered in accordance with the terms hereof for the consideration
expressed herein, will be (i) duly and validly issued, (ii) fully paid and
nonassessable, (iii) free of preemptive or similar rights to subscribe for or to
purchase any capital stock or other securities or equity interests of the
Company, and (iv) free of restrictions on transfer other than those set forth in
this Agreement, the
4
<PAGE>
other Operative Documents or federal and state securities laws. The Warrant
Shares have been duly and validly reserved for issuance and, upon issuance in
accordance with the terms of the Warrants, will be (i) duly and validly issued,
(ii) fully paid and nonassessable, (iii) free of preemptive or similar rights to
subscribe for or to purchase any capital stock or other securities or equity
interests of the Company, and (iv) free of restrictions on transfer other than
those set forth in this Agreement, the other Operative Documents or federal and
state securities laws. Based on the representations and warranties of the
Purchasers herein, at the Closing the Securities will have been issued in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act of 1933, as amended (the "Securities Act") and the
--------------
registration and qualification requirements of all applicable state securities
laws, or in compliance with applicable exemptions therefrom.
(b) Based on the representations and warranties of the holders of the
outstanding capital stock of the Company, such shares of such capital stock, and
all outstanding options and other securities of the Company have been issued in
compliance with the Securities Act and the registration and qualification
requirements of all applicable state securities laws, or in compliance with
applicable exemptions therefrom.
SECTION 2.06. Governmental Consents. Based on the representations and
---------------------
warranties of the Purchasers herein, except as set forth in Schedule 2.06, no
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any federal, state, local or provincial
governmental authority on the part of the Company is required in connection with
the consummation of the transactions contemplated by this Agreement or any other
Operative Document, other than pursuant to applicable federal and state
securities laws, which filings will be made on or before the required deadline
therefor. The foregoing should not be construed as a representation or warranty
as to the capacity of any Purchaser to purchase the Securities or a limitation
of any Purchaser's representation and warranty pursuant to Section 3.02.
SECTION 2.07. No Violation; Consents. Based on the representations
----------------------
and warranties of the Purchase herein, the execution, delivery and performance
by the Company of this Agreement and the other Operative Documents to which it
is a party and the consummation of the transactions contemplated hereby and
thereby does not and will not contravene the applicable provisions of any law,
statute, rule, regulation, order, writ, injunction, judgment or decree of any
court or other governmental or regulatory instrumentality to which the Company
is bound, except for any such contraventions that could not reasonably be
expected to have a Material Adverse Effect. Except as set forth on Schedule
2.07, the execution, delivery and performance by the Company of this Agreement
and other Operative Documents to which it is a party and the consummation of the
transactions contemplated hereby and thereby (i) will not (A) violate, result in
a breach of or constitute (with due notice or lapse of time or both) a default
under any contract, lease, loan agreement, mortgage, security agreement, trust
indenture or other agreement or instrument to which the Company is a party or by
which the Company is bound or
5
<PAGE>
to which the Company's properties or assets is subject, or (B) result in the
creation or imposition of any pledge, lien, charge or encumbrance of any kind
whatsoever upon any of the properties or assets of the Company, except for any
such defaults, pledges, liens, charges or encumbrances that could not reasonably
be expected to have a Material Adverse Effect, and (ii) will not violate any
provision of the Certificate or By-Laws of the Company.
SECTION 2.08. Litigation. Except as set forth in Schedule 2.08, there
----------
is no action, suit, proceeding, claim, arbitration or investigation (each, an
"Action") pending or, to the best of the Company's knowledge, currently
------
threatened against the Company or any of its Subsidiaries, any of their
activities, properties or assets or, to the best of the Company's knowledge,
against any officer, director or employee of the Company or any of its
Subsidiaries in connection with such officer's, director's or employee's
relationship with, or actions taken on behalf of the Company or such Subsidiary,
which, if decided adversely to the Company or such Subsidiary or such officer,
director or employee, would have a Material Adverse Effect. By way of example
but not by way of limitation, there are no Actions pending or, to the best of
the Company's knowledge, threatened relating to the prior employment of any of
the Company's or any of its Subsidiaries' employees or consultants, their use in
connection with the Company's or any of its Subsidiaries' business or any
information, technology or techniques allegedly proprietary to any of their
former employers, clients or other parties, or their obligations under any
agreements with prior employers, clients or other parties, except for any such
pending or threatened Action which, if decided adversely to the Company, would
not have a Material Adverse Effect. Except as set forth in Schedule 2.08, none
of the Company or its Subsidiaries is a party to or subject to the provisions of
any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality and there is no Action by the Company or any of its
Subsidiaries currently pending or which the Company or any of the Subsidiaries
intends to initiate.
SECTION 2.09. Financial Statements; Undisclosed Liabilities.
---------------------------------------------
(a) The Company has heretofore delivered to the Purchasers and
included as Schedule 2.09 are the unaudited balance sheet (the "November Balance
----------------
Sheet") and statement of income of the Company as of and for the one month
- -----
period ended November 30, 1998. Such financial statements (a) were prepared in
accordance with the books and records of the Company; (b) subject to the absence
of notes thereto, were prepared in accordance with United States Generally
Accepted Accounting Principles ("GAAP"); (c) fairly present the Company's
----
financial condition and the results of its operations as of the date thereof and
the period covered thereby; and (d) include all adjustments which the Company
considers necessary for a fair presentation, subject to normal year-end accruals
and adjustments. Except with respect to the transactions disclosed in Schedule
2.09(d), the Company has no material liabilities and there are no material
contingent liabilities not disclosed in the November Balance Sheet, except
current liabilities incurred in the ordinary course of business subsequent to
November 30, 1998 and any obligations arising under contracts entered into since
November 30, 1998 and listed on
6
<PAGE>
Schedule 2.11, Schedule 2.12, Schedule 2.18, Schedule 2.19 or Schedule 2.27 and
any other liabilities (including contingent liabilities) that could not
individually or in the aggregate be reasonably expected to have a Material
Adverse Effect.
(b) Attached as Schedule 2.09 (b) is a combined statement of income
-----------------
of the Company for the eleven month period ended November 30, 1998 (the
"Combined Statement"). The Combined Statement has been prepared by combining
------------------
the Company's historical income statement for the eleven month period ended
November 30, 1998 with the results of operations for AGI Incorporated for the
period from January 1, 1998 through March 12, 1998 and the results of operations
of Tinsley Robor plc for the period from January 1, 1998 through September 10,
1998. No other adjustments have been made. The Combined Statement is not
necessarily indicative of the Company's results of operations that might have
occurred had the acquisitions of AGI Incorporated and Tinsley Robor plc and the
related financing transactions been completed as of January 1, 1998 and do not
purport to represent what the Company's results of operations might be for any
future period.
SECTION 2.10. Change in Condition. Except as set forth in Schedule
-------------------
2.10, since November 30, 1998, the Company has conducted business only in the
ordinary course consistent with past practices and there has been no material
adverse change in the business, operations, properties, prospects or financial
condition of the Company or any of its Subsidiaries, whether or not arising in
the ordinary course of business except as contemplated by this Agreement or any
other Operative Document (including the schedules hereto or thereto).
SECTION 2.11. Employee Benefit Plans.
----------------------
(a) Set forth on Schedule 2.11(a) is a list (or, in the case of the
Company's European Subsidiaries, a general description) of each employee benefit
plan, as defined in section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), maintained by the Company (each, except in the
-----
case of any Multiemployer Plan (as defined below), an "Employee Benefit Plan")
---------------------
or any ERISA Affiliate (as defined below), each multiemployer plan as defined in
section 4001 (a) (3) of ERISA to which the Company or any ERISA Affiliate
contributes (each a "Multiemployer Plan"), each collective bargaining agreement
------------- ----
to which the Company is a party, each employee retirement health, welfare, or
other employee benefit plan, program or scheme subject to the laws of a country
other than the United States (each a "Foreign Plan"), and each other plan,
------------
policy, trust, employment contract, organization or arrangement providing
benefits to employees of the Company (each a "Benefit Arrangement"). For
------- -----------
purposes of this Agreement, "ERISA Affiliate" shall mean any person (within the
----- ---------
meaning of section 3(9) of ERISA) that would be regarded together with the
Company as a single employer under Section 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended (the "Code").
----
7
<PAGE>
(b) Except as disclosed on Schedule 2.11(b):
(i) The Company and each Employee Benefit Plan are in compliance in
all material respects with all applicable provisions of ERISA and the Code with
respect to all Employee Benefit Plans and Benefit Arrangements required to be
disclosed on Schedule 2.11(a), and for each Employee Benefit Plan that is
intended to be qualified under Code section 401(a) either a favorable
determination letter has been issued by the United States Internal Revenue
Service (or any successor agency thereto, the "Service") or a timely
-------
application for such a letter has been or will be submitted. With respect to
each Employee Benefit Plan, the Company has provided the Purchasers with the
following: a copy of the plan document and all amendments; the three most
recently filed Forms 5500; the most recent determination letter; and all
correspondence relating to any Employee Benefit Plan from the Internal Revenue
Service, U.S. Department of Labor or the Pension Benefit Guarantee Corporation.
(ii) No Employee Benefit Plan (i) is the subject of termination
proceedings under ERISA section 4041, 4041A or 4042, has been or will have been,
within 5 years prior to the Closing Date, completely or partially terminated, or
is or has been within 5 years prior to the Closing Date the subject of a
reportable event as to which notice would be required to be filed with the
Pension Benefit Guaranty Corporation ("PBGC"); and (ii) has incurred or is
----
expected to incur any liability to the PBGC, other than for premiums pursuant to
ERISA Section 4007 that are not yet due, that could result in any material
liability to the Company.
(iii) No Employee Benefit Plan is subject to Title IV of ERISA or
the minimum funding standards of section 412 of the Code or section 302 of
ERISA.
(iv) Neither the Company nor any ERISA Affiliate has any withdrawal
liability (within the meaning of Part I of Subtitle E of Title IV of ERISA) with
respect to any Multiemployer Plan that has or would have a Material Adverse
Effect. In addition, neither the Company nor any ERISA Affiliate has any
withdrawal liability (within the meaning of Part I of Subtitle E of Title IV of
ERISA) with respect to any Multiemployer Plan if it were to cease contributions
to any Multiemployer Plan as of the Closing Date, except any such liability that
could not reasonably be expected to have a Material Adverse Effect.
(v) All contributions or payments required to be made by the Company
or any ERISA Affiliate prior to the Closing Date to any Employee Benefit Plan or
Multiemployer Plan have been paid or made by the due date, except where the
failure to make such contribution or payment could not reasonably be expected to
have a Material Adverse Effect. All contributions, transfers and payments in
respect of any Employee Benefit Plan for which a deduction or credit has been
claimed have been or are fully deductible or allowable as a credit under the
Code, except where the failure for such contributions, transfers or payments to
8
<PAGE>
be deductible or allowable as a credit could not reasonably be expected to have
a Material Adverse Effect.
(vi) Except as indicated on Schedule 2.11(b), since January 1, 1998,
there has been no change in any Employee Benefit Plan or adoption of a new
Employee Benefit Plan that materially increases benefits to any employee of the
Company.
(vii) With respect to each Employee Benefit Plan that is a "group
-----
health plan" within the meaning of ERISA section 607(1) or that is subject to
- ------ ----
Code section 4980B, the Company and ERISA Affiliate has complied in all material
respects with the continuation coverage requirements of Code section 4980B and
Part 6 of Title 1 of ERISA. No Company maintains or contributes to a
"nonconforming group health plan," as defined in section 5000(c) of the Code,
- --------------------------------
that has or would have a Material Adverse Effect.
(viii) No Employee Benefit Plan that is a "welfare benefit plan" as
--------------------
defined in section 3(l) of ERISA provides benefits, including without
limitation, death or medical benefits, beyond termination of service or
retirement other than coverage mandated by law.
(ix) The Company and each Foreign Plan are in compliance in all
material respects with all provisions of law applicable to the Foreign Plans,
including non-United States law applicable to the Foreign Plans.
SECTION 2.12. Interests in Real Property.
--------------------------
(a) Schedule 2.12(a) sets forth a list, by deed reference or
otherwise, of all real properties owned or all material real property leased by
the Company and any of its Subsidiaries. Except as set forth on Schedule
2.12(a), each of the Company and any of its Subsidiaries has marketable title in
fee simple to all real properties shown on Schedule 2.12(a) as owned by it and
valid and enforceable leasehold interests in all real estate shown on Schedule
2.12(a) as leased by it, except where the invalidity or unenforceability of such
leasehold interests could not reasonably be expected to have a Material Adverse
Effect. None of the real properties (including improvements thereon) owned by,
or the leasehold estates of, the Company or any of its Subsidiaries is subject
to any liens, mortgages or encumbrances ("Liens") (except for real estate taxes
-----
and other matters as set forth in Schedule 2.12(a) and except for any
encumbrances that do not affect in any material respect the marketability, use
or value of the real property); and none of such real properties is subject to
any easements, rights of way, licenses, grants, building or use restrictions,
exceptions, reservations, limitations or other impediments of record which
materially adversely affect the value thereof, taken as a whole, or which
interfere with or impair the present and continued use thereof, taken as a
whole, in the usual and normal conduct of the business of the Company or any of
its Subsidiaries. Except as set forth in Schedule 2.12(b), no party has any
right of first offer, right of first refusal or other right to purchase all or
any portion of the real properties owned by the Company or its Subsidiaries and
set forth on Schedule 2.12(a) or the
9
<PAGE>
improvements erected thereon. To the Company's best knowledge and except as set
forth on Schedule 2.12(b), there is no pending condemnation or eminent domain
proceeding which affect or would affect all or any portion of the real
properties owned by the Company or its Subsidiaries and set forth on Schedule
2.12(a) or any negotiations for the purchase of all or any portion of thereof in
lieu of condemnation. To the best knowledge of the Company, (A) all improvements
on such real properties and the operations therein conducted conform in all
material respects to all applicable health, fire, environmental, safety, zoning
and building laws, ordinances and administrative regulations (whether through
grandfathering provisions, permitted use exceptions variances or otherwise),
except for possible nonconforming uses or violations (i) which do not and will
not materially interfere with the present use, operation or maintenance thereof
by the Company or any of its Subsidiaries as now used, operated or maintained or
access thereto, and, (ii) in the case of real properties owned by the Company,
which do not and will not materially adversely affect the value thereof and (B)
neither the Company nor any of its Subsidiaries has received written notice of
any violation of or noncompliance with any such laws, ordinances or
administrative regulations from any applicable governmental or regulatory
authority, except for notices of violations or failures so to comply, if any,
that could not reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth on Schedule 2.12(b), (i) neither the Company
nor any of its Subsidiaries is in breach of or default (and no event has
occurred which, with due notice or lapse of time or both, may constitute such a
breach or default) under any lease set forth on Schedule 2.12(a), and (ii) no
party to any Lease has given the Company or any of its Subsidiaries written
notice of or made a claim with respect to any breach or default by the Company
or any of its Subsidiaries party thereto, the consequences of which, in either
case (i) or (ii), individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
SECTION 2.13. Compliance with Law. Except as set forth on Schedule
-------------------
2.13, the operations of the Company and its Subsidiaries have been conducted in
accordance with all applicable laws, regulations, orders and other requirements
of all courts and other governmental or regulatory authorities having
jurisdiction over the Company, any of its Subsidiaries and their respective
assets, properties and operations, including, without limitation, all such laws,
regulations, orders and requirements promulgated by or relating to consumer
protection, currency exchange, equal opportunity, health, environmental
protection, conservation, wetlands, architectural barriers to the handicapped,
fire, zoning and building, occupation safety, pension, securities and trading
with the enemy matters, except for violations or failures so to comply, if any,
that could not, individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. Except as set forth in Schedule 2.13, neither the
Company nor any of its Subsidiaries has received notice of any violation of or
noncompliance with any applicable laws, regulations, orders or other
requirements from any applicable governmental or regulatory authority, except
for notices of violations or failures so to comply, if any, that could not
reasonably be expected to have a Material Adverse Effect.
10
<PAGE>
SECTION 2.14. Tax Matters.
-----------
(a) As used in this Agreement, the term "Taxes" shall mean all taxes,
-----
however denominated, including all charges, fees, imposts, levies, or other
assessments, including, without limiting the generality of the foregoing, all
income taxes, payroll and employee withholding taxes, unemployment insurance,
social security, sales and use taxes, excise taxes, franchise taxes, gross
receipts taxes, occupation taxes, real and personal property taxes, stamp taxes,
transfer taxes, workmen's compensation taxes, estimated taxes, together with any
interest, penalties or additions to tax that may become payable in respect
thereof, imposed by any governmental taxing authority (domestic or foreign) and
other obligations of the same or a similar nature, whether arising before, on or
after the Closing Date; and "Tax" shall mean any one of them. As used in this
---
Agreement, the term "Tax Returns" shall mean any return, report, information
--- -------
return, statement, schedule or other document (including any related or
supporting information) filed or required to be filed with any governmental
taxing authority in connection with the determination, assessment, collection or
administration of any Taxes, and any amendments thereof.
(b) Except as set forth on Schedule 2.14(b), each of the Company and
its Subsidiaries has duly and timely filed, or will duly and timely file (or
there has been, or will be, duly and timely filed on its behalf), with the
appropriate governmental taxing authorities all Tax Returns in respect of Taxes
required to be filed through the date as of which this representation is made
(taking into account extensions). Except as set forth on Schedule 2.14(b), the
information filed on behalf of the Company and its Subsidiaries was complete and
correct in all material respects, other than any such incomplete or incorrect
information which could not, when considered in the aggregate, reasonably be
expected to have a Material Adverse Effect. Except as set forth on Schedule
2.14(b), neither the Company nor any of its Subsidiaries has requested any
extension of time within which to file Tax Returns ("Extended Returns") in
-------- -------
respect of any Taxes, other than Extended Tax Returns which have since been
filed and other than Extended Tax Returns for which the Company has either paid
all Taxes due or created a reserve on its books for all Taxes due, except for
any Taxes where the failure to pay or create a reserve for such Taxes in the
aggregate could not reasonably be expected to have a Material Adverse Effect.
(c) Except as set forth on Schedule 2.14(c), all Taxes of the Company
and its Subsidiaries due to be paid on or prior to the Closing Date (taking into
account extensions) have been paid or will be paid prior to the Closing Date or
an adequate reserve has been (or, with respect to periods for which financial
reports have not yet been prepared, will be) established therefor in accordance
with GAAP. Except as set forth on Schedule 2.14(c), to the best of the
Company's knowledge the Company and its Subsidiaries do not have any material
liability for Taxes in excess of such amounts so paid or reserves so
established.
(d) Except as set forth on Schedule 2.14(d), all Taxes that the
Company and each of its Subsidiaries are or were required by law to withhold or
collect during the period from
11
<PAGE>
January 1, 1998 through the Closing Date have been duly withheld or collected
and, to the extent required, have been paid to the proper governmental body.
Except as set forth on Schedule 2.14(d), there are no Liens (arising during the
period from January 1, 1998 through the Closing Date) with respect to Taxes upon
any of the properties or assets, real or personal, tangible or intangible, of
the Company or any of its Subsidiaries, except for statutory liens for Taxes not
yet due or delinquent.
(e) Except as set forth in Schedule 2.14(e), no waivers or extensions
of a statute of limitations relating to Taxes is currently in effect with
respect to the Company or any of its Subsidiaries, other than any such waivers
or extensions which could not, when considered in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(f) Except as set forth on Schedule 2.14(f), no material deficiencies
for Taxes have been claimed in writing, proposed in writing or assessed in
writing by any governmental taxing authorities against the Company or its
Subsidiaries for any taxable year ended subsequent to December 31, 1993, other
than any which have since been paid. Except as set forth on Schedule 2.14(f),
there are no pending or, to the best of the Company's knowledge, threatened
audits, investigations or claims for or relating to any material additional
liability in respect of Taxes against the Company or its Subsidiaries, and there
are no matters under discussion between the Company or any of its Subsidiaries
or any officers or directors of the Company or any of its Subsidiaries and any
governmental taxing authority with respect to Taxes that are likely to result in
a material additional liability for Taxes for the Company or any of its
Subsidiaries.
(g) Except as set forth in Schedule 2.14(g), neither the Company nor
any of its Subsidiaries has any tax-sharing agreements or similar arrangements
with any person other than any of the Company and its Subsidiaries. Neither the
Company nor any of its Subsidiaries has any liability for Taxes of any person
other than any of the Company and its Subsidiaries under Treasury Regulation
Section 1502-6 (or any similar provision of state, local or foreign law).
(h) Except as set forth on Schedule 2.14(h), the Company is not now
and has never been a "United States real property holding corporation," as
------ ------ ---- -------- ------- -----------
defined in Section 897(c)(2) of the Code and Section 1.897-2(b) of the
Regulations promulgated by the Internal Revenue Service.
SECTION 2.15. Environmental Matters. Except as set forth on Schedule
---------------------
2.15, the Company and each of its Subsidiaries have obtained and maintained in
effect all licenses, permits and other authorizations required under all
applicable laws, regulations and other requirements of governmental or
regulatory authorities relating to pollution or to the protection of the
environment ("Environmental Laws") and, except as set forth on Schedule 2.15,
------------- ----
have been and are in compliance with all Environmental Laws and with all such
licenses, permits and authorizations, except where the failure to obtain and
maintain such licenses, permits and other
12
<PAGE>
authorizations or any such noncompliance could not reasonably be expected to
have a Material Adverse Effect. Except as set forth on Schedule 2.15, neither
the Company nor its Subsidiaries has performed or suffered any act which could
give rise to, or has otherwise incurred or expressly assumed by contract or
operation of law, liability to any person (governmental or not) under the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
(S) 9601 et seq. or any other Environmental Laws, nor has the Company or any of
-- ---
of its Subsidiaries received notice of any such liability or any claim therefor
or submitted written notice pursuant to Section 103 of such Act to any
governmental agency with respect to any of their respective assets, except for
any of the foregoing which could not reasonably be expected to have a Material
Adverse Effect. Except as set forth on Schedule 2.15, to the best knowledge of
the Company no hazardous substance, hazardous waste, contaminant, pollutant or
toxic substance (as such terms are defined in any applicable Environmental Law)
and no asbestos-containing material has been released, placed, dumped or
otherwise come to be located on, at, beneath or adjacent to any of the assets or
properties owned, leased or otherwise operated by the Company or each of its
Subsidiaries, or any other person, or any surface waters or groundwaters thereon
or thereunder, except (i) in compliance with applicable Environmental Law or
(ii) for any of the foregoing which could not reasonably be expected to have a
Material Adverse Effect, considering all of the foregoing individually and in
the aggregate. Except as set forth on Schedule 2.15, none of the Company or any
of its Subsidiaries owns or operates an underground storage tank containing a
regulated substance, as such term is defined in Subchapter IX of the Resource
Conservation and Recovery Act, 42 U.S.C. (S) 6991 et seq. Except as set forth
-- ---
in Schedule 2.15, neither the Company nor any of its Subsidiaries has Treated,
Stored or Disposed of any Hazardous Waste (as such capitalized terms are
respectively defined in the Resource Conservation and Recovery Act, 42 U.S.C.
(S) 6901 et seq.), except where such Treatment, Storage or Disposal (i) was in
-- ---
compliance with applicable Environmental Law or (ii) was in the ordinary course
of business, and then only in such quantities as are reasonable for the ordinary
conduct of the business, and could not reasonably be expected to have a Material
Adverse Effect, considering all such Treatment, Storage or Disposal in the
aggregate.
SECTION 2.16. Intellectual Property.
---------------------
(a) Schedule 2.16(a) contains a true, complete and accurate list and
description of all United States and foreign patents and patent applications;
all United States and foreign trademark, service mark, trade name and copyright
registrations and applications for registration; and all renewals, affidavits of
use, extensions, divisions, continuations, continuations-in-part, issues and
reissues with respect to the foregoing; owned, used, claimed or developed by the
Company or any of its Subsidiaries (collectively, the "Registered Rights"), or
---------- ------
in which the Company or any of its Subsidiaries has an interest. All Registered
Rights are valid and subsisting.
(b) Except as set forth in Schedule 2.16(b), the Company and each of
its Subsidiaries own and/or have the exclusive and unrestricted right to use all
patents, trademarks,
13
<PAGE>
service marks, trade names, copyrights, "Trade Secrets" (as defined below) and
----- -------
other intellectual property rights, including without limitation the Registered
Rights, and licenses and claims for past, present or future infringement under
any thereof, used or developed in the businesses or operations of the Company
and/or each of its Subsidiaries, as such businesses or operations are now
conducted or as heretofore conducted (collectively, the "Intellectual Property
------------ --------
Rights"), except any failures to own and/or have such rights which,
- ------
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect. Except as set forth in Schedule 2.16(b), all
Intellectual Property Rights are free and clear of all liens (other than liens
contemplated by any of the documents or instruments listed in Schedule 2.19),
claims, restrictions and encumbrances (including without limitation of any
former employer of the Company's and/or any of its Subsidiaries' employees), and
do not infringe upon or otherwise act adversely to the right or claimed right of
any third party, except for any of the foregoing which could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Except for the agreements and licenses set forth in Schedule 2.19, neither the
Company nor its Subsidiaries are obligated or under any liability whatsoever to
make any payments by way of royalties, fees or otherwise to any owner or
licensee of, or other claimant to, any patent, trademark, service mark, trade
name, copyright or other intangible asset, with respect to the use of any of the
Intellectual Property Rights, in connection with the ownership of their
respective assets, the conduct of their respective businesses or otherwise,
except for any such obligations or liabilities that could not reasonably be
expected to have a Material Adverse Effect.
(c) The Company and each of its Subsidiaries have taken reasonable
security measures to protect the secrecy, confidentiality and value of all of
their respective trade secrets, "know-how," inventions, discoveries, designs,
processes, formulae, customer lists, supplier lists, marketing strategies,
research and development data, processes, computer programs (including source
code), technical data, confidential data and other information (collectively,
"Trade Secrets"), except where the failure to take such measures could not
----- -------
reasonably be expected to have a Material Adverse Effect. Except as set forth
in Schedule 2.16(c), the Company's and each of its Subsidiaries' employees and
other persons who either alone or in concert with others developed, invented,
discovered, derived, programmed or designed any of the Trade Secrets have
entered into a written agreement with the Company and/or its Subsidiaries
providing that such Trade Secrets and other information are proprietary to the
Company and/or its Subsidiaries and are not to be divulged or misused, and
transferring to the Company and/or its Subsidiaries, without any further
consideration being given therefor, all of such employee's or other person's
right, title and interest in and to such Trade Secrets and other information,
and to all Intellectual Property Rights relating to such Trade Secrets and
information.
(d) Except as set forth on Schedule 2.16(d), neither the Company nor
its Subsidiaries have any knowledge, or have received any communication
alleging, that the Company and/or the Subsidiaries have infringed or violated
or, by using the Intellectual Property Rights or conducting their respective
businesses as now conducted, would infringe or violate any of the patents,
licenses, trademarks, service marks, trade names, copyrights, Trade Secrets or
14
<PAGE>
other proprietary rights of any person or entity. Except as set forth on
Schedule 2.16(d), neither the Company nor its Subsidiaries is aware of any third
party that is infringing upon or violating any of the Company's or any of its
Subsidiaries' Intellectual Property Rights, Trade Secrets or other proprietary
rights.
SECTION 2.17. Registration Rights. Except as contemplated by the
-------------------
Stockholders Agreement and as set forth on Schedule 2.17, the Company is not
under any obligation to register any of its outstanding securities pursuant to
the Securities Act.
SECTION 2.18. Insurance. Schedule 2.18 lists (except as noted on
---------
Schedule 2.18) all policies of title, fire, liability, casualty, business
interruption, workers' compensation and other forms of insurance including, but
not limited to, directors and officers insurance, required to be maintained by
the Company and each of its Subsidiaries by Section 4.07(c) of the Indenture,
and as of the date hereof all such policies are in full force and effect in
accordance with their terms. Neither the Company nor any of its Subsidiaries is
in default in any material respect under any provisions of any such policy of
insurance and neither has received notice of cancellation of any such insurance.
SECTION 2.19. Material Contracts. Except for the agreements
------------------
identified in the Schedule 2.19 (the "Material Contracts"), none of the Company
-------- ---------
or any of its Subsidiaries are party to or otherwise bound by any written or
oral contract or instrument or other restriction of the following type:
(a) contract or agreement which is not terminable on less than ninety
(90) days' notice without cost or other liability to the Company or any of its
Subsidiaries (except for contracts which, in the aggregate, are not material to
the business of the Company or any of its Subsidiaries);
(b) contract with any labor union;
(c) contract or other commitment with any supplier of goods or
services containing any provision permitting any party other than the Company or
one of its Subsidiaries to renegotiate the price or other terms, or containing
any rebate or other similar provision, upon the occurrence of a failure by the
Company or any of its Subsidiaries to meet its obligations under the contract
when due or the occurrence of any other event, except for such contracts or
commitments with suppliers of goods or services entered into in the ordinary
course of business;
(d) contract for the future purchase of fixed assets or for the future
purchase of materials, supplies or equipment, in either case in excess of the
Company's or any of its Subsidiaries' normal operating requirements;
15
<PAGE>
(e) contract for the employment of any officer, employee or other
person (whether of a legally binding nature or in the nature of informal
understandings) on a full-time or consulting basis which is not terminable on
notice without cost or other liability to the Company or any of its
Subsidiaries, except normal severance arrangements and accrued vacation pay;
(f) agreement or indenture relating to the borrowing of money or to
the mortgaging or pledging of, or otherwise placing a lien or security interest
on, any asset of the Company or any of its Subsidiaries;
(g) guaranty of any obligation for borrowed money or otherwise (other
than the endorsement of checks in the ordinary course of business);
(h) voting trust or agreement, stockholders' agreement, pledge
agreement, buy-sell agreement or first refusal or preemptive rights agreement
relating to any securities of the Company or any of its Subsidiaries other than
the Operative Documents;
(i) agreement, or group of related agreements with the same party or
any group of affiliated parties, under which the Company or any of its
Subsidiaries has advanced or agreed to advance money or has agreed to lease any
property as lessee or lessor, except for leases of real or personal property not
requiring the payment of more than $20,000, individually, or $5,000,000, in the
aggregate, in annual lease payments;
(j) agreement or obligation (contingent or otherwise) to issue, sell
or otherwise distribute or to repurchase or otherwise acquire or retire any
share of its capital stock or any of its other equity securities, other than the
Operative Documents;
(k) assignment, license or other agreement with respect to any form of
intangible property other than software licenses pursuant to which the Company
or its Subsidiaries licenses commercially available software;
(l) agreement under which it has limited or restricted its right to
compete with any person in any respect;
(m) except for contractual indemnities provided to customers in
connection with the sale of goods or services in the ordinary course of
business, agreement requiring indemnification by the Company or any of its
Subsidiaries with respect to infringements of proprietary rights; or
(n) any other contract or group of related contracts with the same
party involving more than $250,000 or continuing over a period of more than one
(1) year from the date or dates thereof (including renewals or extensions
optional with another party), which contract or group of contracts is not
terminable by the Company or any of its Subsidiaries without penalty upon
16
<PAGE>
notice of thirty (30) days or less, except for purchase orders and similar
agreements with customers and suppliers entered into in the ordinary course of
business, which may exceed $250,000 individually or when aggregated for a
particular customer or vendor; or
(o) any other contract that would be considered a Material Contract of
the Company as of the date hereof under Item 601(b)(10) of Regulation S-K
promulgated by the Securities Exchange Commission.
SECTION 2.20. Contracts. All Material Contracts to which the Company
---------
and any of its Subsidiaries is a party are in full force and effect on the date
hereof. None of the Company or any of its Subsidiaries is in default in respect
of any Material Contract, and no event has occurred which, with due notice or
lapse of time or both, would constitute such a default, except for any such
defaults which could not reasonably be expected to have a Material Adverse
Effect. To the best knowledge of the Company, no other party to any Material
Contract is in default in respect thereof, and no event has occurred which, with
due notice or lapse of time or both, would constitute such a default, except for
any such defaults which could not reasonably be expected to have a Material
Adverse Effect.
SECTION 2.21. Solvency. The Company and its Subsidiaries on a
--------
consolidated basis are Solvent. For purposes of this Agreement, "Solvent" means,
-------
when used with respect to (A) the Company or a Subsidiary (other than subject to
clause (B)), that (a) the fair saleable value of the assets of the Company or
such Subsidiary is in excess of the total amount of the present value of its
liabilities (including for purposes of this definition all liabilities
(including loss reserves as determined by such person), whether or not reflected
on a balance sheet prepared in accordance with GAAP and whether direct or
indirect, fixed or contingent, secured or unsecured, disputed or undisputed, (b)
the Company or such Subsidiary is able to pay its debts or obligations in the
ordinary course as they mature and (c) the Company or such Subsidiary does not
have unreasonably small capital to carry out its business as conducted and as
proposed to be conducted and (B) for any such Subsidiary incorporated in England
and Wales, on a particular date, on that date such Subsidiary has the ability to
pay its debts as and when they fall due and could not be deemed to be insolvent
for the purposes of the Insolvency Act of 1986 of the United Kingdom.
SECTION 2.22. Private Offering. Based on the Purchasers'
----------------
representations in Article III, the sale of the Company's Securities hereunder
is exempt from the registration and prospectus delivery requirements of the
Securities Act.
SECTION 2.23. Loans and Advances. Except as set forth on Schedule
------------------
2.23, none of the Company or any of its Subsidiaries has any outstanding loans
or advances to any person and is not obligated to make any such loans or
advances, except, in each case, for advances to employees of the Company or any
of its Subsidiaries in respect to reimbursable business expenses anticipated to
be incurred by them in connection with their performance of
17
<PAGE>
services for the Company or any of its Subsidiaries.
SECTION 2.24. Significant Customers and Suppliers. Except as set
-----------------------------------
forth on Schedule 2.24, no customer or supplier which was "significant" to the
-----------
Company or any of its Subsidiaries during the period covered by the eleven-month
period ended November 30, 1998, has terminated, materially reduced or threatened
to terminate or materially reduce its purchases from or provision of products or
services to the Company or any of its Subsidiaries, as the case may be. For the
purposes of this Section 2.24, "significant" customers and suppliers means (i)
-----------
any customer to which five (5) percent or more of the Company's revenues during
the eleven-month period ended November 30, 1998 could be attributed or (ii) any
supplier from which five (5) percent or more of the Company's raw materials
and/or components were purchased during the eleven-month period ended November
30, 1998, respectively.
SECTION 2.25. Disclosure. Neither this Agreement, nor the Schedules
----------
or Exhibits to this Agreement, nor the financial statements referenced in
Section 2.09, nor the statements, documents, certificates, or other items
prepared or supplied by the Company with respect to the transactions
contemplated hereby, considering this Agreement, the Schedules and Exhibits
hereto and all such statements, documents, certificates or other items in the
aggregate and taking into account any information supplied by the Company prior
to the Closing which updates or supersedes earlier information, contain an
untrue statement of a material fact or omit a material fact necessary to make
the statements contained herein or therein not misleading.
SECTION 2.26. Officers. Set forth in Schedule 2.26 is a list of the
--------
names of the officers of the Company, together with the title or job
classification of each such person and the total compensation anticipated to be
paid to each such person by the Company in 1998. Except as set forth on
Schedule 2.26 or Schedule 2.19, none of such persons has an employment agreement
or understanding, whether oral or written, with the Company, which is not
terminable on notice by the Company without cost or other liability to the
Company.
SECTION 2.27. Transactions With Affiliates. Except as set forth on
----------------------------
Schedule 2.27 or Schedule 2.19, no director, officer or 5% stockholder of the
Company, or member of the family of any such person, or any corporation,
partnership, trust or other entity in which any such person, or any member of
the family of any such person, is an officer, director, trustee, partner or
holder of more than 5% of the outstanding equity interests thereof, is a party
to any transaction with the Company, including any contract, agreement or other
arrangement providing for the employment of, furnishing of services by, rental
of real or personal property from or otherwise requiring payments to any such
person or firm, other than employment at will arrangements in the ordinary
course of business.
SECTION 2.28. Employees. Except as set forth on Schedule 2.28, each
---------
of the officers of the Company, each key employee and each other employee now
employed by the Company who to the Company's knowledge has access to
confidential information of the
18
<PAGE>
Company has executed a confidentiality agreement and a non-competition
agreement, and such agreements are in full force and effect. Except as set forth
on Schedule 2.28, none of the officers or key employees of the Company have
advised the Company (orally or in writing) that he intends to terminate
employment with the Company.
SECTION 2.29. Year 2000.
---------
(a) All Information Systems and Equipment (defined below) are either
Year 2000 Compliant (defined below), or any reprogramming, remediation, or any
other corrective action, including the internal testing of all such Information
Systems and Equipment, will be completed by September 30, 1999, except for any
failure to be Year 2000 Compliant and any reprogramming, remediation or other
corrective action not completed by September 30, 1999, that could not reasonably
be expected to have a Material Adverse Effect. Further, to the extent that such
reprogramming/remediation and testing action is required, the cost thereof (in
excess of the Company's budget to address its Y2K issues, as disclosed in
Schedule 2.29(a)), as well as the cost of the reasonably foreseeable
consequences of failure to become Year 2000 Compliant, to the Company and its
Subsidiaries (including, without limitation, reprogramming errors and the
failure of other systems or equipment) could not reasonably be expected to have
a Material Adverse Effect.
(b) "Year 2000 Compliant" means that all Information Systems and
---- ---- ---------
Equipment accurately process date data (including, but not limited to,
calculating, comparing and sequencing), before, during and after the Year 2000,
as well as same and multi-century dates, or between the years 1999 and 2000,
taking into account all leap years, including the fact that the year 2000 is a
leap year, and further, that when used in combination with, or interfacing with,
other Information Systems and Equipment, shall accurately accept, release and
exchange date data, and shall in all material respects continue to function in
the same manner as it performs today and shall not otherwise impair in any
material respect the accuracy or functionality of Information Systems and
Equipment.
(c) "Information Systems and Equipment" shall mean all computer
----------- ------- --- ---------
hardware, firmware and software, as well as other information processing
systems, or any equipment containing embedded microchips, whether directly
owned, licensed, leased, operated or otherwise controlled by the Company or any
of its Subsidiaries, including through third-party service providers, and which,
in whole or in part, are used, operated, relied upon, or integral to, the
Company's or any of its Subsidiaries' conduct of their business; provided that
-------- ----
Information Systems and Equipment does not include any of the foregoing of any
third party customer or vendor which is not owned, licensed, leased, operated or
otherwise controlled by the Company.
SECTION 2.30. Labor Relations.
---------------
(a) Neither the Company nor any of its Subsidiaries nor any person
for whom the
19
<PAGE>
Company or any of its Subsidiaries is responsible by law or contract, is engaged
in any unfair labor practice that would reasonably be expected to have a
Material Adverse Effect. There is (i) no unfair labor practice charge or
complaint pending or, to the best knowledge of the Company or any of its
Subsidiaries, threatened against the Company or any of its Subsidiaries or any
person for whom the Company or any of its Subsidiaries is responsible by law or
contract, before the National Labor Relations Board or any corresponding state,
local or foreign agency, and no grievance or arbitration proceeding arising out
of or under any collective bargaining agreement is so pending or to the best
knowledge of the Company, threatened against the Company or any of its
Subsidiaries or any person for whom the Company or any of its Subsidiaries is
responsible by law or contract, (ii) no union representation claim existing with
respect to the employees of the Company or any of its Subsidiaries or any person
for whom the Company or any of its Subsidiaries is responsible by law or
contract, and (iii) to the best knowledge of the Company, no union organizing
activities taking place. Except as set forth on Schedule 2.30(b), neither the
Company or any of its Subsidiaries nor any person for whom the Company or any of
its Subsidiaries is responsible by law or contract, is a party to any collective
bargaining agreement. To the best knowledge of the Company, no suit, claim,
action, investigation, or proceeding has been instituted or is pending against
the Company or any of its Subsidiaries or any such person for whom they are
responsible by law or contract in connection with any such collective bargaining
agreement described on Schedule 2.30(b), other than any such suit, claim,
action, investigation or proceeding which could not reasonably be expected to
have a Material Adverse Effect.
(b) Except as disclosed on 2.30(b), none of the Company or any of its
Subsidiaries has violated any applicable federal, state, provincial or foreign
law relating to employment or employment practices or the terms and conditions
of employment, including, without limitation, discrimination in the hiring,
promotion or pay of employees, wages, hours of work, plant closings and layoffs,
collective bargaining, immigration and occupational safety and health (each a
"Violation"), except to the extent such a Violation would not reasonably be
---------
expected to have a Material Adverse Effect. Except as set forth in Schedule
2.30(b), to the best knowledge of the Company, no charges with respect to or
relating to the Company or any of its Subsidiaries are pending before the Equal
Employment Opportunity Commission or any other corresponding state agency, and
the Company and each of its Subsidiaries has at all times been in material
compliance with all federal and state laws and regulations prohibiting
discrimination in the workplace including, without limitation, laws and
regulations that prohibit discrimination and/or harassment on account of race,
national origin, religion, gender, disability, age, immigration status, workers
compensation status or otherwise, except to the extent such non-compliance
would not reasonably be expected to have a Material Adverse Effect.
SECTION 2.31. Absence of Questionable Payments. Neither the Company,
--------------------------------
any of its Subsidiaries, or any director, officer, agent, employee or other
person acting on behalf of the Company or any of its Subsidiaries, has used any
corporate or other funds for unlawful contributions, payments, gifts, or
entertainment, or made any unlawful expenditures relating to
20
<PAGE>
political activity to government officials or others or established or
maintained any unlawful or unrecorded funds in violation of Section 30A of the
Exchange Act. Neither the Company nor to the best of the Company's knowledge any
current director, officer, agent, employee, or other person acting on behalf of
the Company or any of its Subsidiaries, has accepted or received any unlawful
contributions, payments, gifts or expenditures.
SECTION 2.32. Investment Company Act. Neither the Company nor any
----------------------
Subsidiary nor any affiliate thereof is a "registered investment company"
---------- ---------- -------
within the meaning of the Investment Company Act of 1940, as amended.
ARTICLE III
REPRESENTATIONS AND WARRANTIES AND COVENANTS OF THE PURCHASERS
Each Purchaser severally as to itself only, and not jointly, hereby
represents and warrants to the Company as follows:
SECTION 3.01. Authorization.
-------------
(a) Such Purchaser has full power and authority to enter into this
Agreement and each other Operative Document to which such Purchaser is a party.
This Agreement and each other Operative Document to which such Purchaser is a
party constitute valid and legally binding obligations of such Purchaser,
enforceable against such Purchaser in accordance with their terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies and (iii) certain
indemnification and contribution provisions in the Stockholders Agreement which
may be limited by considerations of public policy.
(b) The execution, delivery and performance by such Purchaser of the
terms and provisions of this Agreement and each other Operative Document and the
consummation of the transactions contemplated hereby and thereby do not and will
not violate any provision of any agreement or instrument to which such Purchaser
is a party or by which it is bound, or to which any of their respective
properties or assets is subject, or of any law, statute, rule, regulation,
injunction, writ, order, judgment or decree of any court or other governmental
or regulatory authority to which such Purchaser is subject. Such Purchaser has
duly executed and delivered this Agreement and, at the Closing, will have duly
executed and delivered each other Operative Document to which it is a party.
SECTION 3.02. Consents. No consent, authorization or order of, or
--------
filing or registration with, any court or United States governmental agency or
other person is required to
21
<PAGE>
be obtained or made by such Purchaser for the execution, delivery and
performance by such Purchaser of this Agreement or any other Operative Document
to which it is a party or the consummation of any of the transactions
contemplated hereby or thereby.
SECTION 3.03. Purchase Entirely for Own Account. Such Purchaser is
---------------------------------
acquiring the Purchaser's Securities for investment for such Purchaser's own
account, not as a nominee or agent, and not with a view to, or for the resale or
distribution of any part thereof. Such Purchaser has no present intention of
selling, granting any participation in, or otherwise distributing the same. The
Purchaser further represents that such Purchaser does not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
Securities.
SECTION 3.04. Disclosure of Information. Such Purchaser has received
-------------------------
all of the information which such Purchaser considers necessary or appropriate
for deciding whether to purchase the Securities. Such Purchaser further
represents that such Purchaser has had an opportunity to ask questions and
receive answers from the Company regarding the terms and conditions of the
offering of the Securities. The foregoing, however, does not limit or modify
the representations and warranties of the Company in Article II of this
Agreement or the right of such Purchaser to rely thereon.
SECTION 3.05. Investment Experience. Such Purchaser (i) fully
---------------------
understands that an investment in the Company is highly speculative and that
such Purchaser may lose his or its entire investment in the Purchaser's
Securities; (ii) is experienced in evaluating and investing in companies such as
the Company, (iii) is capable of evaluating the merits and risks of such
Purchaser's investment in the Purchaser's Securities; (iv) is able to bear the
economic risk of a loss of the entire amount of its investment in the
Purchaser's Securities; and (v) is prepared to hold the Purchaser's Securities
for an indefinite period of time.
SECTION 3.06. Accredited Investor. Such Purchaser is an "accredited
------------------- ----------
investor" within the meaning of Rule 501 of Regulation D under the Securities
- --------
Act.
SECTION 3.07. Restricted Securities. Such Purchaser acknowledges
---------------------
that, because they have not been registered under the Securities Act, such
Purchaser's Securities must be held indefinitely unless subsequently registered
under the Securities Act or an exemption from such registration is available.
Such Purchaser is aware of and familiar with the provisions of Rule 144 under
the Securities Act which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions.
SECTION 3.08. Transfers of Securities. (a) Each Purchaser agrees
-----------------------
that it will not offer to sell, assign, transfer or otherwise dispose of
("Transfer") any of the Securities except in transactions exempt from
--------
registration under the Securities Act or in a sale registered under the
Securities Act. In connection with any proposed Transfer pursuant to such an
exemption, the
22
<PAGE>
Purchasers agree that the Company may request an opinion of the Purchaser's
counsel that such Transfer is not in violation of the registration requirements
of the Securities Act, or other applicable law.
(b) Each certificate representing the Securities shall bear legends in
or substantially in the following form:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. NO TRANSFER, SALE OR OTHER
DISPOSITION OF THESE SHARES MAY BE MADE UNLESS A REGISTRATION STATEMENT
WITH RESPECT TO THESE SHARES HAS BECOME EFFECTIVE UNDER SAID ACT, OR THE
COMPANY HAS BEEN FURNISHED WITH AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
(c) BTI agrees that so long as any shares of Series A Preferred Shares
are outstanding it will own and retain the right to vote at least a majority of
such shares; provided, however, that BTI may Transfer any shares of Series A
-------- -------
Preferred Stock (and thereby fail to own and retain the right to vote such
shares) to the extent necessary to comply with Regulation Y (12 C.F.R. PART 225)
of the Board of Governors of the Federal Reserve System. Prior to any such
sale, at the request of the Company BTI and its counsel will meet with the
Company to review and discuss BTI's analysis of its non-compliance with
Regulation Y.
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.01. Operative Documents. The Company agrees to execute and
-------------------
deliver the Operative Documents and such other documents, certificates,
agreements and other writings and to take such other actions as may be
necessary, desirable or reasonably requested by the Purchasers in order to
consummate or implement expeditiously the transactions contemplated hereby.
SECTION 4.02. Compliance with Conditions. The Company will use
--------------------------
commercially reasonable efforts to cause all of the obligations imposed upon the
Company or any of its Subsidiaries in this Agreement to be duly complied with
and to cause all conditions precedent to the obligations of the Purchasers to be
satisfied. Upon the terms and subject to the conditions of this Agreement, the
Company will use commercially reasonable efforts to take, or cause to be taken,
all action, and to do, or cause to be done, all things necessary, proper or
advisable consistent with applicable law to consummate and make effective in the
most expeditious manner practicable the transactions contemplated hereby.
23
<PAGE>
SECTION 4.03. Consents and Approvals. The Company (a) shall use
----------------------
commercially reasonable efforts to obtain all necessary consents, waivers,
authorizations and approvals of all governmental and regulatory authorities,
domestic and foreign, and of all other persons, firms or corporations required
in connection with the execution, delivery and performance by them of this
Agreement, any other Operative Document or any of the transactions contemplated
hereby or thereby, and (b) shall diligently assist and cooperate with the
Purchasers in preparing and filing all documents required to be submitted by the
Purchasers to any governmental or regulatory authority, domestic or foreign, in
connection with such transactions and in obtaining any governmental consents,
waivers, authorizations or approvals which may be required to be obtained by the
Purchasers in connection with such transactions (which assistance and
cooperation shall include, without limitation, timely furnishing to the
Purchasers all information concerning the Company which counsel to the
Purchasers determine is required to be included in such documents or would be
helpful in obtaining any such required consent, waiver, authorization or
approval).
SECTION 4.04. Filing of Restated Certificate of Incorporation. The
-----------------------------------------------
Company shall file the Certificate with the Secretary of State of the State of
Delaware.
SECTION 4.05. Reports. So long as any of the Preferred remains
-------
outstanding, (a) within ninety (90) days after the end of each fiscal year, the
Company shall deliver to each Purchaser an audited balance sheet and statements
of income and cash flow (each prepared in accordance with GAAP and,
collectively, the "Financial Statements") for such fiscal year, (b) within
--------- ----------
forty-five (45) days after the end of each fiscal quarter, the Company shall
deliver to each Purchaser unaudited Financial Statements for such fiscal
quarter, (c) no more than twenty (20) days prior to the beginning of each fiscal
year, the Company will provide a copy of such plan to each Purchaser and (d)
such Purchaser shall have the right, upon reasonable notice, during the
Company's regular business hours to inspect, for any purpose reasonably related
to such Purchaser's interest as a holder of Securities of the Company, the
Company's books and records and to make copies thereof at the Company's expense;
provided, however, that any Purchaser acquiring information pursuant to this
- -------- -------
Section 4.05 shall keep such information strictly confidential in accordance
with Section 7.01.
SECTION 4.06. Properties, Business, Insurance. So long as any of the
-------------------------------
Preferred remains outstanding, the Company shall maintain and so long as they
remain Subsidiaries cause each of its Subsidiaries to maintain as to their
respective properties and business, with financially sound and reputable
insurers, insurance against such casualties and contingencies and of such types
and in such amounts as is customary for companies similarly situated, which
insurance shall be deemed by the Company to be sufficient. So long as any
shares of Preferred remain outstanding, the Company shall and shall use
commercially reasonable efforts to cause Richard Block (so long as he remains an
employee of the Company) to (i) execute and deliver all documents, (ii) provide
all information and (iii) take or forbear from all such action as may be
reasonably necessary and appropriate to allow any Purchaser to purchase "key
---
person" life
- ------
24
<PAGE>
insurance policies, payable to such Purchaser, on the life of Richard Block (so
long as he remains an employee of the Company).
SECTION 4.07. Reserve for Exercise of Warrants. The Company shall at
--------------------------------
all times reserve and keep available out of its authorized but unissued shares
of Common Stock, for the purpose of effecting the exercise of the Warrants and
otherwise complying with the terms of this Agreement, such number of its duly
authorized shares of Common Stock as shall be sufficient to effect the exercise
of the Warrants from time to time outstanding or otherwise to comply with the
terms of this Agreement. If at any time the number of authorized but unissued
shares of Common Stock shall not be sufficient to effect the exercise of the
Warrants or otherwise to comply with the terms of this Agreement, the Company
will forthwith take such corporate action as may be necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purposes. The Company will obtain any authorization,
consent, approval or other action by or make any filing with any court or
administrative body that may be required under applicable state securities laws
in connection with the issuance of shares of Common Stock upon exercise of the
Warrants.
SECTION 4.08. Corporate Existence. So long as any of the Preferred
-------------------
remains outstanding, the Company shall maintain, and so long as they remain
Subsidiaries shall cause each of its Subsidiaries to maintain, their respective
corporate existence, rights and franchises in full force and effect.
SECTION 4.09. Restrictive Agreements Prohibited. Except as set forth
---------------------------------
in Schedule 4.09, neither the Company nor any of its Subsidiaries shall become a
party to any agreement which by its terms restricts the Company's performance of
this Agreement or any other Operative Document, other than any agreement, the
terms of which would not be excluded by Section 7.03(g) hereof and Section
5.6(g) of the Certificate.
SECTION 4.10. Year 2000 Reporting. The Company will ensure that its
-------------------
and its Subsidiaries' Information Systems and Equipment are Year 2000 Compliant
at all times after September 30, 1999, except insofar as the failure to do so
could not reasonably be expected to result in a Material Adverse Effect, and
shall notify the Purchasers promptly upon detecting any material failure of the
Information Systems and Equipment to be Year 2000 Compliant. In addition, the
Company shall provide the Purchasers with such information about its year 2000
computer readiness (including, without limitation, information as to contingency
plans, budgets and testing results) as the Purchasers shall reasonably request.
SECTION 4.11. Environmental Authorizations. The Company shall use
----------------------------
commercially reasonable efforts to secure as soon as is reasonably practicable
any authorizations necessary for air emissions to be made in compliance with all
applicable laws by each facility operated by the Company or one of its
Subsidiaries in the following locations: Swindon, England; Slough, England;
Birmingham, England; and Rustington, England.
25
<PAGE>
ARTICLE V
COVENANTS OF THE PURCHASERS
SECTION 5.01. Agreement to Take Necessary and Desirable Actions. Each
-------------------------------------------------
Purchaser agrees to execute and deliver each of the Operative Documents to which
it is party and such other documents, certificates, agreements and other
writings and to take such other actions as may be necessary, desirable or
reasonably requested by the Company in order to consummate or implement
expeditiously the transactions contemplated hereby.
SECTION 5.02. Compliance with Conditions; Best Efforts. Each
----------------------------------------
Purchaser will use its best efforts to cause all of the obligations imposed upon
it in this Agreement to be duly complied with, and to cause all conditions
precedent to the obligations of the Company and the Purchasers to be satisfied.
Upon the terms and subject to the conditions of this Agreement, each Purchaser
will use its best efforts to take, or cause to be taken, all action, and to do,
or cause to be done, all things necessary, proper or advisable consistent with
applicable law to consummate and make effective in the most expeditious manner
practicable the transactions contemplated hereby.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
SECTION 6.01. Conditions to the Company's Obligations. The
---------------------------------------
obligations of the Company hereunder required to be performed on the Closing
Date shall be subject, at their election, to the satisfaction or waiver (which
waiver, if so requested by the Purchasers, shall be made in writing), at or
prior to the Closing, of the following conditions:
(a) The representations and warranties of each Purchaser contained in
this Agreement shall have been true and correct in all material respects when
made and, in addition, shall be repeated and true and correct in all material
respects on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date.
(b) Each Purchaser shall have performed in all material respects all
obligations and agreements, and complied in all material respects with all
covenants, contained in this Agreement, to be performed and complied with by
such Purchaser at or prior to the Closing Date.
(c) Each Purchaser shall have furnished the Company with a certificate
executed by such Purchaser or on its behalf by a duly authorized representative
of such Purchaser, dated the Closing Date, to the effect that such Purchaser has
fulfilled the conditions specified in this Section 6.01.
26
<PAGE>
(d) The Company shall have received such other certificates,
instruments and documents in furtherance of the transactions contemplated by
this Agreement as the Company or their counsel may reasonably request.
SECTION 6.02. Conditions To Purchasers' Obligations. The obligations
-------------------------------------
of each Purchaser hereunder required to be performed at the Closing shall be
subject, at their respective elections, to the satisfaction or waiver (which
waiver, if so requested by the Company, shall be made in writing), at or prior
to the Closing, of the following conditions:
(a) The representations and warranties of the Company contained in
this Agreement shall have been true and correct in all respects when made and,
in addition, shall be repeated and true and correct in all respects on and as of
the Closing Date with the same force and effect as though made on and as of the
Closing Date.
(b) The Company shall have performed in all material respects all
obligations and agreements, and complied in all material respects with all
covenants, contained in this Agreement, to be performed and complied with by
them at or prior to the Closing Date.
(c) There shall be no litigation, proceeding or other action seeking
an injunction or other restraining order, damages or other relief from a court
or administrative agency of competent jurisdiction pending or threatened which,
in the reasonable judgment of the Purchasers, would materially adversely affect
the consummation of the transactions contemplated by the Operative Documents and
there shall be no litigation, proceeding or other action (including, without
limitation, relating to environmental and pension matters) pending or threatened
against the Company which is reasonably likely to have a Material Adverse
Effect.
(d) All governmental and regulatory approvals and clearances and all
third party consents necessary for the Operative Documents shall have been
obtained and shall be in full force and effect, and the Purchasers shall be
reasonably satisfied that the Operative Documents do not and will not contravene
any applicable provision of any law, statute, regulation, order, writ,
injunction or decree of any court or governmental instrumentality, except to the
extent any contravention or contraventions, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect on the
business, operations, prospects, properties, earnings, assets, liabilities or
condition (financial or other) of the Company.
(e) All authorizations, permits and approvals (including Board of
Directors and stockholder approvals) required for the Company's consummation of
the transactions contemplated hereby as of the date of the Closing shall have
been received. The Company shall have delivered an officer's certificate
confirming that the conditions set forth in this Section 6.02(a) and (b) have
been satisfied in all material respects.
27
<PAGE>
(f) The Company shall have filed the Certificate with the Secretary of
State of the State of Delaware.
(g) The Purchasers shall have received such other certificates,
instruments and documents in furtherance of the transactions contemplated by
this Agreement as they may reasonably request.
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Confidentiality. Confidential or proprietary
---------------
information disclosed by any Purchaser or the Company, as well as the terms of
this Agreement, shall be considered confidential information (the "Confidential
------------
Information"). The Confidential Information shall not be disclosed by the
- -----------
Company or any Purchaser or any other party to this Agreement to any third
party; provided that, from and after the Closing Date, (i) such restriction
-------- ----
shall not apply to any Confidential Information required to be disclosed by law
or regulation provided that the disclosing party gives the other party prior
notice and a reasonable opportunity to contest or minimize the requirement for
such disclosure and (ii) the Company may disclose the existence of this
Agreement, the terms of the sale and issuance of the Securities, solely to the
Company's investors, investment bankers, lenders, accountants, legal counsel,
business partners, and bona fide prospective investors, employees, lenders and
business partners, in each case only where such persons or entities are under
appropriate nondisclosure obligations. The Company shall have the right to
disclose to third parties any information disclosed by any Purchaser in a press
release or other public announcement.
SECTION 7.02. Board Visitation Rights. So long as any Preferred
-----------------------
remains outstanding, the Purchasers shall have the right to designate, by the
vote of holders of shares of Preferred representing 662/3% of the aggregate
liquidation preference then outstanding, one person to attend meetings of the
Board of Directors of the Company or any committee thereof as a non-voting
observer (an "Observer"). The Company shall provide such Observer with notice
--------
of the time, place and manner for the holding of any meeting of the Board of
Directors or any committee thereof in the same manner and at the same time as it
provides such notice to the members of such board and committees. The Company
will pay all reasonable out-of-pocket fees and expenses incurred by the
Observer, in connection with the Observer's exercise of its right to observe any
meeting of the Board of Directors or any committee thereof.
SECTION 7.03. Survival; Indemnification.
-------------------------
(a) All representations, warranties, covenants and agreements (except
covenants and agreements which are expressly required to be performed and are
performed in full on or
28
<PAGE>
before the Closing Date) contained in this Agreement or delivered hereunder made
by the Company and the Purchasers shall be deemed represented and made by such
party on the Closing Date as if made at such time and shall survive the Closing
(but shall not in any manner be deemed to be repeated on any other date) for
three years, and other covenants and agreements which, in accordance with their
terms, extend beyond such date shall also survive in accordance with their
terms. With respect to claims asserted by an Indemnifying Party pursuant to this
Section 7.03, before the expiration of the applicable representation or
warranty, such claims shall survive until the date they are finally liquidated
or otherwise resolved. All statements as to factual matters contained in any
certificate executed and delivered by the parties pursuant hereto shall be
deemed to be representations, warranties, covenants and agreements by such party
hereunder. No claim may be commenced with respect to any representation or
warranty under this Section 7.03 (or otherwise) following expiration of the
applicable period of survival, and upon such expiration the Indemnifying Party
(as defined in Section 7.03(e) below) shall be released from all liability with
respect to claims with respect to any representation or warranty under this
Section 7.03 not previously made by the Indemnified Party (as defined in Section
7.03(e) below). No right of indemnity against any claim of a third party shall
arise from any representation, warranty, covenant or agreement of an
Indemnifying Party herein contained, unless such third-party claim is asserted,
served, filed, overtly threatened, or lodged against the Indemnified Party on or
prior to the expiration of the applicable period of survival provided above, and
all other conditions hereunder are satisfied. A claim shall be made or commenced
hereunder by the Indemnified Party by delivering to the Indemnifying Party a
written notice specifying in reasonable detail the nature of the claim, the
amount claimed (if known or reasonably estimable), and the factual basis for the
claim. Except for the availability of dividends at the "Increased Dividend
Rate" as provided in the Certificate, the indemnification provided for in this
Section 7.03 shall be the sole remedy of the Purchasers for breach by the
Company of any such representations, warranties, covenants or agreements
contained in this Agreement, the Warrants, the Stockholders Agreement, the
Certificate or the certificate furnished by the Company pursuant to Section
6.02(e) of this Agreement or in connection with the issuance and sale of the
Preferred and the Warrants to the exclusion of any other remedy at law or equity
(including recision but excluding injunctive relief).
(b) The Company agrees to indemnify and hold harmless each of the
Purchasers and their respective partners, affiliates, officers, directors,
employees and duly authorized agents and each of their affiliates and each other
person controlling the Purchasers or any of their affiliates within the meaning
of either Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and any partner of any of
-------- ---
them against any loss, claim, liability, cost, expense or damage (including,
without limitation, reasonable counsel fees and disbursements and court costs)
(collectively, "Losses") arising from (i) the breach of any of the
------
representations or warranties made by the Company in this Agreement, the
Warrants, the Stockholders Agreement or the certificate furnished by the Company
at the Closing pursuant to Section 6.02(e) of this Agreement or (ii) the breach
or failure of the Company duly to perform or observe any covenant or agreement
on the part of the
29
<PAGE>
Company to be performed or observed by the Company pursuant to the terms of this
Agreement, the Warrants, the Stockholders Agreement, the Certificate or the
certificate furnished by the Company at the Closing pursuant to Section 6.02(e)
of this Agreement or in connection with the issuance and sale of the Preferred
and the Warrants that has not been waived by the other party, whether or not
involving a claim, suit, action or proceeding brought by a third party
(including any governmental entity). The Purchasers acknowledge that, with
respect to any claims for indemnification under this Section 7.03 not involving
a claim, suit, action or proceeding brought by a third party, Losses are
intended to be limited to any decrease in value of the Purchasers' investment in
the Securities allegedly caused by the breach or failure of the Company giving
rise to such claim for indemnification.
(c) The Purchasers, severally and not jointly, agree to indemnify and
hold harmless the Company and its respective partners, affiliates, officers,
directors, employees and duly authorized agents and each of their affiliates and
each other person controlling the Company or any of its affiliates within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act and any partner of any of them against any loss, claim, liability, cost,
expense or damage (including, without limitation, reasonable counsel fees and
disbursements and court costs) accruing from or resulting by reason of (i) the
breach of any of the representations or warranties made by the Purchasers in
this Agreement or in any certificate or other document or instrument furnished
by the Purchasers pursuant to this Agreement or (ii) the breach or failure of
any Purchaser duly to perform or observe any covenant or agreement on the part
of such Purchaser to be performed or observed that has not been waived by the
other party.
(d) If the indemnification provided for in this Section 7.03 (the
"Indemnification Obligation") is unavailable to or insufficient to hold
--------------- ----------
harmless an Indemnified Party under subsection (b) or (c) above in respect of
any loss, claim, liability, cost, expense or damage (or actions in respect
thereof) referred to therein, then each Indemnifying Party that would otherwise
have liability pursuant to subsection (b) or (c) above shall contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
claim, liability, cost, expense or damage in such proportion as is appropriate
to reflect the relative benefits received by the Indemnifying Party on the one
hand and the Indemnified Party on the other from the sale and purchase of the
Securities. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the Indemnified Party failed
to give the notice required under subsection (e) below, then each Indemnifying
Party shall contribute to such amount paid or payable by such Indemnified Party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Indemnifying Party on the one hand and the
Indemnified Party on the other in connection with the statements, omissions or
actions which resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations.
(e) If a person entitled to indemnity hereunder (an "Indemnified
-----------
Party") asserts that any party hereto (the "Indemnifying Party") has become
- ----- ------------ -----
obligated to the Indemnified Party
30
<PAGE>
pursuant to subsection (b) or (c) above, or if any suit, action, investigation,
claim or proceeding is begun, made or instituted as a result of which the
Indemnifying Party may become obligated to the Indemnified Party hereunder, the
Indemnified Party agrees to notify the Indemnifying Party promptly and to
cooperate with the Indemnifying Party, at the Indemnifying Party's expense, to
the extent reasonably necessary for the resolution of such claim or in the
defense of such suit, action or proceeding, including making available any
information, documents and things in the possession of the Indemnified Party
which are reasonably necessary therefor.
Notwithstanding the foregoing notice requirement, the right to
indemnification hereunder shall not be affected by any failure to give, or delay
in giving, notice unless, and only to the extent that, the rights and remedies
of the Indemnifying Party shall have been materially prejudiced as a result of
such failure or delay.
(f) The Indemnifying Party shall have the right to investigate,
defend, settle or otherwise handle, with the aforesaid cooperation, any claim,
suit, action or proceeding brought by a third party in such manner as the
Indemnifying Party may in its sole discretion deem appropriate; provided, that
--------
the Indemnifying Party will not consent to any settlement imposing any material
obligations on any other party hereto other than financial obligations for which
such party will be indemnified hereunder, unless such party has consented in
writing to such settlement. Notwithstanding anything to the contrary contained
herein, the Indemnifying Party may retain one firm of counsel to represent all
Indemnified Parties in such claim, action or proceeding; provided, however, that
-------- -------
in the event that the defendants in, or targets of, any such claim, action or
proceeding include more than one Indemnified Party, and any Indemnified Party
shall have reasonably concluded, based on the opinion of its own counsel, that
there exist one or more legal defenses available to it which are in conflict
with those available to any other Indemnified Party, then such Indemnified Party
may employ separate counsel to represent or defend it or any other person
entitled to indemnification and reimbursement hereunder with respect to any such
claim, action or proceeding in which it or such other person may become involved
or is named as defendant and the Indemnifying Party shall pay the reasonable
fees and disbursement of such counsel. Notwithstanding the Indemnifying Party's
election to assume the defense or investigation of such claim, action or
proceeding, the Indemnified Party shall have the right to employ separate
counsel and to participate in the defense or investigation of such claim, action
or proceeding, and the Indemnifying Party shall bear the expense of such
separate counsel, if (i) the Indemnifying Party shall not have employed counsel
reasonably satisfactory to the Indemnified Party to represent the Indemnified
Party within a reasonable time after notice of the assertion of any such claim
or institution of any such action or proceeding or (ii) the Indemnifying Party
shall authorize the Indemnified Party to employ separate counsel at the
Indemnifying Party's expense.
(g) Notwithstanding the foregoing, in the event the Company is the
Indemnifying Party and is unable, pursuant to the terms of (i) the "Existing
--------
Financing Arrangements" (as defined in the Certificate), (ii) any of the
- --------- ------------
Existing Financing Arrangements, as amended, waived
31
<PAGE>
or supplemented after the Closing Date, but without giving effect to any such
amendments, waivers or supplements to the extent they have the effect of further
restricting in any material respect, as compared to the restrictions imposed by
Section 8.11 of the "Current Credit Agreement" (as defined in the Certificate)
and Section 4.07 of the "Indenture" (as defined in the Certificate) (the
"Existing Restricted Payment Covenants"), as determined in good faith by the
-------------------------------------
Company's Board of Directors, the Company's ability to satisfy its
Indemnification Obligations under this Section 7.03, or (iii) any new "Financing
Arrangements" (as defined in the Certificate) entered into by the Company or its
Subsidiaries after the Closing Date, but only to the extent such new Financing
Arrangements do not have the effect of further restricting in any material
respect, as compared to the restrictions imposed by the Existing Restricted
Payment Covenants, as determined in good faith by the Company's Board of
Directors, the Company's ability to satisfy its Indemnification Obligations
under this Section 7.03, the Company shall satisfy such obligations by issuing
to the Indemnified Party shares of Series A Preferred Stock with an aggregate
Liquidation Preference equal to 115% of the amount finally determined to be owed
with respect to such Indemnification Obligation or other obligation, as
applicable.
SECTION 7.04. Assignment; Restrictions on Transfer; No Third Party
----------------------------------------------------
Beneficiaries. This Agreement and rights, duties and obligations hereunder may
- -------------
not be assigned, delegated or otherwise Transferred by the Company without the
prior written consent of the other parties hereto, except for a grant of
security interest in favor of senior lenders. Subject to compliance with Section
3.08, any Purchaser may assign, delegate or Transfer any or all of the Preferred
and/or Warrants owned by such Purchaser and all of their rights and obligations
hereunder to any transferee of Preferred or Warrants, and the assignee(s),
transferee(s), or recipient(s) shall have, to the extent of such assignment,
delegation or Transfer, the same rights and obligations and benefits as it would
if it (or they) were a Purchaser (or Purchasers) with respect to such Preferred
and/or Warrants. This Agreement and the provisions hereof shall be binding upon
and shall inure to the benefit of each of the parties and their respective
successors and permitted assigns. This Agreement is not intended to confer any
rights or benefits on any persons (other than the parties hereto) other than as
set forth in this Section 7.04.
SECTION 7.05. Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed an original by the party
executing the same, but all of which together shall constitute one and the same
instrument.
SECTION 7.06. Titles and Subtitles. The titles and subtitles used in
--------------------
this Agreement are used for convenience and are not to be considered in
construing or interpreting this Agreement.
SECTION 7.07. Notices. Unless otherwise provided, any notice required
-------
or permitted under this Agreement shall be given in writing and shall be deemed
effectively given (a) upon personal delivery to the party to be notified, (b)
three (3) days after deposit with the United States Post Office, by registered
or certified mail, postage prepaid, or (c) when received if
32
<PAGE>
given by telecopier or email, in each case, addressed to the party to be
notified at the address indicated for each party hereto on the signature pages
hereof, or at such other address or number as such party may designate by ten
(10) days' advance written notice to the other parties.
SECTION 7.08. Payment of Fees and Expenses. The Company will pay (i)
----------------------------
at the Closing Date, all reasonable out-of-pocket fees and expenses, including
all reasonable legal fees of the Purchasers incurred in connection with the
negotiation and preparation of the Operative Documents (including the
transactions contemplated hereby and thereby) and due diligence expenses, (ii)
at the Closing Date, $420,000.00 to BTI and $180,000.00 to Phoenix as placement
fees and (iii) as and when incurred, (a) the reasonable costs and expenses
incurred by the Purchasers in connection with the insolvency or bankruptcy of
the Company or any Subsidiary or in connection with any work-out or
restructuring of the transaction contemplated hereby and by the other Operative
Documents and (b) all reasonable legal fees of the Purchasers, with respect to
any amendment, modification or waiver, at any later date, of any of the terms or
provisions of this Agreement or any other Operative Documents. If any action at
law or in equity is necessary to enforce or interpret the terms of this
Agreement (including Section 7.03), the Warrant or the Certificate, the
prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
SECTION 7.09. Severability. If one or more provisions of this
------------
Agreement is held to be unenforceable under applicable law, such provision shall
be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms unless the effect thereof would be to alter materially
the effect of this Agreement on the parties hereto.
SECTION 7.10. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT
--------------------------------------
SHALL BE GOVERNED BY, INTERPRETED UNDER, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CHOICE-OF-
LAW PROVISIONS THEREOF. THE PARTIES AGREE TO SUBMIT TO THE PERSONAL AND
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SERVING THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK WITH RESPECT TO THE ENFORCEMENT OR
INTERPRETATION OF THIS AGREEMENT OR THE PARTIES' OBLIGATIONS HEREUNDER. EACH
PARTY HERETO IRREVOCABLY WAIVES, TO THE FULL EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
33
<PAGE>
SECTION 7.11. Entire Agreement. This Agreement and the documents
----------------
referred to herein constitute the entire agreement among the parties and no
party shall be liable or bound to any other party in any manner by any
warranties, representations, or covenants except as specifically set forth
herein or therein.
SECTION 7.12. Waivers and Extensions. Any party to this Agreement
----------------------
may waive any right, breach or default which such party has the right to waive,
provided that such waiver will not be effective against the waiving party unless
it is in writing, is signed by such party, and specifically refers to this
Agreement. Waivers may be made in advance or after the right waived has arisen
or the breach or default waived has occurred. Any waiver may be conditional.
No waiver of any breach of any agreement or provision herein contained shall be
deemed a waiver of any preceding or succeeding breach thereof nor of any other
agreement or provision herein contained. No waiver or extension of time for
performance of any obligations or acts shall be deemed a waiver or extension of
the time for performance of any other obligations or acts. Notwithstanding the
foregoing, the Company may, with the affirmative written consent of the holders
of shares of Preferred representing over 66 2/3% of the aggregate liquidation
preference then outstanding, amend any provision of this Agreement.
SECTION 7.13. Titles and Headings. Titles and headings of sections
-------------------
of this Agreement are for convenience only and shall not affect the construction
of any provision of this Agreement.
SECTION 7.14. Exhibits and Schedules. Each of the exhibits and
----------------------
Schedules referred to herein is an integral part of this Agreement and is
incorporated herein by reference.
SECTION 7.15. Press Releases and Public Announcements. Public
---------------------------------------
announcements or disclosures which contain references to the names of the
Purchasers or any of their affiliates or the involvement by the Purchasers or
any of their affiliates in the transactions contemplated by this Agreement shall
be made only if mutually agreed upon by the Company and the Purchasers, except
to the extent required by law or by stock exchange regulation, provided, that
--------
any such required disclosure shall only be made after consultation with the
Purchasers.
SECTION 7.16. Remedies Cumulative. The remedies provided herein
-------------------
shall be cumulative and shall not preclude the assertion by any party hereto of
any other rights or the seeking of any remedies against the other party hereto,
except as provided in Section 7.03.
SECTION 7.17. Several Liability of the Purchasers. Nothing in this
-----------------------------------
Agreement shall be construed to impose on any Purchaser any liability for any
action or failure to act of any other Purchaser.
34
<PAGE>
SECTION 7.18. Brokers. Each of the parties agrees to indemnify and
-------
hold the others harmless from and against any and all claims, liabilities or
obligations with respect to any fees or expenses arising in connection with such
indemnifying party's (or their affiliates') use of a broker or other
intermediary which is asserted by any person.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
35
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
IMPAC GROUP, INC.
/S/ David C. Underwood
--------------------------------
Name: David C. Underwood
Title: Chief Financial Officer
36
<PAGE>
Securities Purchase Agreement Signature Page
BT CAPITAL INVESTORS, L.P.
/S/ Joseph Wood
By: --------------------------
Name: Joseph Wood
Title: Senior Managing Director
The above Purchaser hereby purchases (i) 12,000 shares of Series A Preferred
Stock with an aggregate liquidation preference of $12,000,000.00 and (ii) one
Warrant to purchase 4,147.998 shares of Series A Common Stock at a price of
$12,000,000.00.
Address for Notices:
- -------------------
BT CAPITAL INVESTORS, L.P.
130 Liberty Street
New York, New York 10006
Attention: Joseph Wood
Telephone: (212) 250-1053
Facsimile: (212) 250-7651
with a copy sent to (which copy shall not constitute notice):
Paul, Hastings, Janofsky & Walker LLP
399 Park Avenue
New York, New York 10022
Attention: William F. Schwitter, Esq.
Telephone: (212) 318-6400
Facsimile: (212) 319-4090
37
<PAGE>
Securities Purchase Agreement Signature Page
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
/s/ Christopher Wilkos
By: --------------------------
Name: Christopher Wilkos
Title: Vice President
The above Purchaser hereby purchases (i) 8,000 shares of Series A Preferred
Stock with an aggregate liquidation preference of $8,000,000 and (ii) one
Warrant to purchase 2,765.332 shares of Series A Common Stock at a price of
$8,000,000.00.
Address for Notices:
- -------------------
PHOENIX HOME LIFE MUTUAL INSURANCE COMPANY
c/o Phoenix Investment Partners Limited
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115
Attention: Private Placements Division
Telephone: (860) 403-5758
Facsimile: (860) 403-5451
with a copy sent to (which copy shall not constitute notice):
Paul, Hastings, Janofsky & Walker LLP
399 Park Avenue
New York, New York 10022
Attention: William F. Schwitter, Esq.
Telephone: (212) 318-6400
Facsimile: (212) 319-4090
38
<PAGE>
EXHIBIT 10.63
IMPAC GROUP, INC.
WARRANT FOR THE PURCHASE OF SERIES A COMMON STOCK
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS. THIS WARRANT HAS
--------------
BEEN ACQUIRED FOR INVESTMENT ONLY AND NOT WITH A VIEW TO PUBLIC DISTRIBUTION OR
RESALE THEREOF. NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE OF THIS WARRANT MAY BE OFFERED FOR SALE, SOLD, DELIVERED AFTER
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT COVERING SUCH WARRANT OR SHARES OF COMMON
STOCK, AS THE CASE MAY BE, UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
The securities represented by this certificate are subject to the terms of
a certain Second Amended and Restated Stockholder Agreement, dated as of March
12, 1998, and amended and restated as of January 11, 1999, among the holder of
this certificate (or such holder's predecessor-in-interest), the issuer of this
certificate, and certain others. The Second Amended and Restated Stockholder
Agreement contains certain restrictive provisions relating to the voting and
transfer of the securities represented hereby. A copy of the Second Amended and
Restated Stockholder Agreement is on file and may be inspected for any proper
purpose at the issuer's principal executive office.
No. 0001 Common Stock
FOR VALUE RECEIVED, IMPAC GROUP, INC., a Delaware corporation (the
"Company"), hereby certifies that BT Capital Investors, L.P. or any of its
-------
permitted assignees (the "Holder") is entitled, subject to the provisions of
------
this Warrant, to purchase from the Company, at any time following this 11th day
of January, 1999 (the "Issue Date"), in whole or in part, 4,147.998 shares of
----------
the Company's Series A Common Stock, par value $0.001 per share, representing
approximately 2.1% of the Company's total Common Stock on a fully diluted basis
as of the Issue Date, calculated on the basis of the methodology set forth in
Schedule 2.02 of the Securities Purchase Agreement (the "Warrant Shares").
--------------
<PAGE>
Subject to Section 3, the exercise price (the "Exercise Price") payable
--------------
upon exercise of the Warrant shall be equal to the product of (a) $0.01
multiplied by (b) the number of Warrant Shares to be acquired on exercise.
The Warrant Shares to be received upon the exercise of this Warrant are
subject to adjustment as set forth herein. This Warrant and all other warrants
issued by the Company pursuant to the Securities Purchase Agreement and all
warrants of like tenor which may be issued by the Company in exchange or
substitution for or upon the Transfer of this Warrant or such warrants are
hereinafter collectively referred to herein as the "Warrants."
--------
SECTION 1. EXECUTION OF WARRANTS. The Warrants shall be signed on behalf of the
---------------------
Company by its Chairman of the Board or its Chief Executive Officer, President
or any Vice President.
SECTION 2. WARRANTS; EXERCISE OF WARRANTS
------------------------------
2.1 Exercisability. Subject to the terms of this Warrant, each
--------------
Holder shall have the right, which may be exercised at any time during the
period commencing on the date hereof and ending at 5:00 p.m. New York local time
on January 11, 2009, to receive from the Company the number of fully paid and
nonassessable Warrant Shares (and such other consideration) which the Holder may
at the time be entitled to receive on exercise of such Warrants and payment of
the Exercise Price for such Warrant Shares.
2.2 Surrender of Warrants; Exercise Price. A Warrant may be
-------------------------------------
exercised upon surrender to the Company at its office designated for such
purpose of the Warrant to be exercised with the Purchase Form attached hereto
(the "Purchase Form") duly filled in and signed, and upon payment to the Company
-------------
of the Exercise Price for the number of Warrant Shares in respect of which such
Warrants are then exercised. Payment of the aggregate Exercise Price shall be
made, at the election of the Holder, (a) in cash or by certified or official
bank check payable to the order of the Company, (b) by delivering for surrender
and cancellation to the Company Warrants with an aggregate Surrender Value, as
of the date of such exercise, equal to the Exercise Price for the Warrant being
exercised, (c) by the agreement of the Holder to accept upon exercise of the
Warrant the number of Warrant Shares issuable upon such exercise, less that
number of Warrant Shares with an aggregate Fair Market Value equal to the
Exercise Price, or (d) any combination of (a), (b) and (c) above. For the
purposes of this paragraph, the "Surrender Value" of any Warrant is equal to the
--------- -----
Fair Market Value, as of the date of such surrender, of the Warrant Shares
issuable upon the exercise of such Warrant, minus the Exercise Price of such
Warrant being surrendered.
2.3 Issuance of Warrant Shares. Subject to the provisions of
--------------------------
Section 2.2, upon such surrender of the Warrant and payment of the Exercise
Price, the Company shall
2
<PAGE>
issue and cause to be delivered, as promptly as practicable, pursuant to the
Purchase Form, a certificate or certificates of the number of Warrant Shares
issuable upon the exercise of such Warrants (and such other consideration as may
be deliverable upon exercise of such Warrants), together with cash for
fractional Warrant Shares as provided in Section 9. The certificate or
certificates for such Warrant Shares shall be deemed to have been issued and the
person so named therein shall be deemed to have become a holder of record of
such Warrant Shares as of the date of the surrender of such Warrants and payment
of the Exercise Price, irrespective of the date of delivery of such certificate
or certificates for Warrant Shares.
2.4 Partial Exercise. Each Warrant shall be exercisable, at the
----------------
election of the Holder thereof, either in full or from time to time in part,
and, in the event that a Warrant is exercised in respect of fewer than all of
the Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new Warrant evidencing the remaining Warrant or
Warrants will be issued and delivered pursuant to the provisions of this Section
and Section 1.
2.5 Cancellation of Exercised Warrants. All Warrants surrendered
----------------------------------
upon exercise of Warrants shall be canceled and disposed of by the Company. The
Company shall keep copies of this Warrant and any notices given or received
hereunder available for inspection by the Holder during normal business hours at
its principal executive office.
2.6 Warrant Shares Validity. Upon exercise of the Warrant Shares
-----------------------
and payment of the Exercise Price in accordance with Section 2.2, all Warrant
Shares shall be validly issued, fully paid and non-assessable and free from all
preemptive rights of any stockholder, and from all taxes, liens and charges with
respect to the issue thereof (other than transfer taxes).
2.7 Legend. Each certificate for shares of Series A Common Stock
------
issued upon exercise of this Warrant, unless at the time of exercise such shares
are registered under the Securities Act, shall bear the following legend:
This Common Stock has not been registered under the
Securities Act of 1933, as amended (the "Securities
----------
Act"), or applicable state securities laws. This
---
Common Stock has been acquired for investment only
and not with a view to public distribution or resale
thereof. This Common Stock may not be offered for
sale, sold, delivered after sale, pledged,
hypothecated or otherwise transferred in the absence
of any effective registration statement covering such
Common Stock under the Securities Act and any
applicable
3
<PAGE>
state securities laws or the availability of any exemption from such
registration requirements.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the
Securities Act) shall also bear such legend unless the securities represented
thereby are no longer subject to restrictions on resale under the Securities
Act. Any certificate for shares of Series A Common Stock issued upon exercise of
this Warrant shall also bear the legend required under the Stockholders
Agreement (without duplication of the legend set forth in Section 8), to the
extent then required under the Stockholders Agreement.
2.8 Reservation of Shares. The Company has reserved and will keep
---------------------
available for issuance upon exercise of the Warrants the total number of Warrant
Shares deliverable upon exercise of all Warrants from time to time outstanding.
The issuance of the Warrant Shares has been duly and validly authorized and,
when issued and sold in accordance with the Warrants, the Warrant Shares will be
duly and validly issued, fully paid and non-assessable.
SECTION 3. ANTIDILUTION PROVISIONS
-----------------------
3.1 Adjustments Generally. The Exercise Price and the number of
---------------------
Warrant Shares (or other securities or property) issuable upon exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events, as provided in this Section 3.
3.2 Common Stock Reorganization. If the Company shall subdivide its
---------------------------
outstanding shares of Common Stock into a greater number of shares or
consolidate its outstanding shares of Common Stock into a smaller number of
shares, whether through a stock split, reverse stock split, stock dividend or
otherwise (any such event being called a "Common Stock Reorganization"), then
---------------------------
(a) the Exercise Price shall be adjusted, effective immediately after the record
date at which the holders of shares of Common Stock are determined for purposes
of such Common Stock Reorganization, to a price determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
on such record date before giving effect to such Common Stock Reorganization and
the denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such Common Stock Reorganization, provided
--------
that in no event will the Exercises Price be reduced to an amount less than the
- ----
par value of the Warrant Shares and (b) the number of Warrant Shares shall be
adjusted, effective at such time, to a number determined by multiplying the
number of Warrant Shares immediately before such Common Stock Reorganization by
a fraction, the numerator of which shall be the number of shares
4
<PAGE>
outstanding after giving effect to such Common Stock Reorganization and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately before such Common Stock Reorganization.
The Company agrees that it will not effect a Common Stock
Reorganization that would have the effect of reducing the Exercise Price below
the par value per share of the Warrant Shares in the absence of the limitations
provided in the proviso to clause (a) of the preceding sentence unless (i) the
Holder consents to such a Common Stock Reorganization or (ii) the Company
compensates the Holder for the aggregate increase in the Exercise Price of this
Warrant caused by such Common Stock Reorganization.
3.3 Special Dividends. If the Company shall issue or distribute to
-----------------
all or substantially all holders of shares of Common Stock evidences of
indebtedness, any other securities of the Company or any cash, property or other
assets, and if such issuance or distribution does not constitute a Common Stock
Reorganization, (any such nonexcluded event being herein call a "Special
-------
Dividend" the Company shall distribute to each Holder, on the date of exercise
- --------
of the Warrants, the evidences of indebtedness, other securities, cash, property
or other assets which assets which such Holder would have been entitled to
receive if it had exercised its Warrants for Warrant Shares immediately prior to
the record date with respect to such Special Dividend.
3.4. Capital Reorganization. If there shall be any consolidation or
----------------------
merger to which the Company is a party, other than a consolidation or a merger
in which the Company is a continuing corporation and which does not result in
any reclassification of, or change (other than a Common Stock Reorganization or
a change in par value) in, outstanding shares of Common Stock, or any sale or
conveyance of the property of the Company as an entirety or substantially as an
entirety (any such event being called a "Capital Reorganization"), then,
----------------------
effective upon the effective date of such Capital Reorganization, the Holder
shall have the right to purchase, upon exercise of this Warrant, the kind and
amount of shares of stock and other securities and property (including cash)
which the Holder would have owned or have been entitled to receive after such
Capital Reorganization if this Warrant had been exercised immediately prior to
such Capital Reorganization, assuming such Holder (a) is not a person with which
the Company or to which such sale or conveyance was made, as the case may be
("constituent person"), or an Affiliate of a constituent person and (b) failed
----------- ------
to exercise any rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such Capital Reorganization
(provided that if the kind or amount of securities, cash or other property
receivable upon such Capital Reorganization is not the same for each share of
Common Stock held immediately prior to such consolidation, merger, sale or
conveyance by other than a constituent person or an Affiliate thereof and in
respect of which such rights of election shall not have been exercised
("non-electing share"), then for the purpose of this Section the kind and
------------------
amount of shares of stock and other securities
5
<PAGE>
or other property (including cash) receivable upon such Capital Reorganization
shall be deemed to be the kind and amount so receivable per share by a plurality
of the non-electing shares). As a condition to effecting any Capital
Reorganization, the Company or the successor or surviving corporation, as the
case may be, shall execute and deliver to each Holder an agreement as to such
Holder's rights in accordance with this Section 3.4, providing for subsequent
adjustments as nearly equivalent as may be practicable to the adjustment
provided for in this Section 3. The provisions of this Section 3.4 shall
similarly apply to successive Capital Reorganizations.
3.5 Certain Other Events. If any event occurs as to which the
--------------------
foregoing provisions of this Section 3 are not strictly applicable or, if
strictly applicable, would not, in the good faith judgment of the Board of
Directors of the Company, fairly protect the purchase rights of the Warrants in
accordance with the essential intent and principles of such provisions, then
such Board shall make such adjustments in the application of such provisions, in
accordance with such essential intent and principles, as shall be reasonably
necessary, in the good faith opinion of such Board, to protect such purchase
rights as aforesaid, but in no event shall any such adjustment have the effect
of increasing the aggregate Exercise Price or decreasing the percentage of the
Company's total Common Stock (on a fully diluted basis, as of the date of such
event) represented by the Warrant Shares, or otherwise adversely affect the
Holder.
3.6 Adjustment Rules.
----------------
(a) Any adjustment pursuant to this Section 3 shall be made
successively whenever an event referred to herein shall occur.
(b) If the Company shall set a record date to determine the
holders of shares of Common Stock for purposes of a Common Stock Reorganization,
Special Dividend or Capital Reorganization, and shall legally abandon such
action prior to effecting such Action, then no adjustment shall be made pursuant
to this Section 3 in respect of such action.
(c) No adjustment in the amount of Warrant Shares or in the
Exercise Price shall be made hereunder unless such adjustment increases or
decreases such amount or price by one percent or more, but any such lessor
adjustment shall be carried forward and shall be made at the time and together
with the next subsequent adjustment which together with any adjustments so
carried forward shall serve such amount or price by one percent or more.
(d) No adjustment in the Exercise Price shall be made hereunder
if such adjustment would reduce the Exercise Price to an amount below par value
of the Series A Common Stock, which par value shall initially be $0.001 per
share.
6
<PAGE>
3.7 Proceedings Prior to Any Action Requiring Adjustment. As a
----------------------------------------------------
condition precedent to the taking of any action which would require an
adjustment pursuant to this Section 3, the Company shall take any action which
may be necessary, including obtaining regulatory approvals or exemptions, in
order that the Company may thereafter validly and legally issue as fully paid
and nonassessable all shares of Common Stock which the Holders are entitled to
receive upon exercise thereof.
3.8 Notice of Adjustment. Not later than twenty days after the
--------------------
record date or effective date, as the case may be, of any action which requires
or might require an adjustment or readjustment pursuant to this Section 3, the
Company shall give notice to the Holder of such event, describing such event in
reasonable detail and specifying the record date or effective date, as the case
may be, and, if determinable, the required adjustment and the computation
thereof. If the required adjustment is not determinable at the time of such
notice, the Company shall give notice to the Holder of such adjustment and
computation promptly after such adjustment becomes determinable.
SECTION 4. PRIVATE OFFERING
----------------
4.1 By acceptance hereof, the Holder represents, agrees and
certifies that the Holder is acquiring this Warrant for the purpose of
investment only and not with a view to public resale or distribution. If the
Holder exercises this Warrant at a time when there is not in effect under the
Securities Act, a registration statement relating to the Warrant Shares and a
prospectus meeting the requirements of Section 10(a)(3) of the Securities Act
(a "Prospectus") available for delivery to the Holder, the exercise shall be
----------
for the purpose of investment and not with a view to public resale or
distribution.
4.2 Any person or persons entitled to exercise this Warrant under
the provisions of this Section 4 shall be bound by and obligated under the
provisions of this Section 4 to the same extent as is the original Holder.
SECTION 5. STOCKHOLDERS AGREEMENT The Holder of this Warrant is entitled to
----------------------
the benefits and subject to the obligations of the Second Amended and Restated
Stockholders Agreement dated as of January 11, 1999 between the Company, the
Holder hereof and certain other parties (the "Stockholders Agreement"). The
----------------------
Company shall keep a copy of the Stockholders Agreement and any Amendments
thereto, at the Company's principal office and shall furnish copies thereof to
the Holder upon request.
SECTION 6. PAYMENT OF TAXES The Company will pay all documentary stamp taxes
----------------
and other governmental charges (excluding all foreign, federal or state income,
franchise, property, estate, inheritance, gift or similar taxes) in connection
with the issuance or delivery of the Warrants hereunder, as well as all such
taxes attributable to the initial issuance or delivery of Warrant Shares upon
the exercise of Warrants and payment of the Exercise Price.
7
<PAGE>
The Company shall not, however, be required to pay any tax that may be payable
in respect of any subsequent Transfer of the Warrants or any Transfer involved
in the issuance and delivery of Warrant Shares in a name other than that in
which the Warrants to which such issuance relates were registered, and, if any
such tax would otherwise be payable by the Company, no such issuance or delivery
shall be made unless and until the person requesting such issuance has paid to
the Company the amount of any such tax, or it is established to the reasonable
satisfaction of the Company that any such tax has been paid.
SECTION 7. MUTILATED OR MISSING WARRANT CERTIFICATES If a mutilated Warrant
-----------------------------------------
is surrendered to the Company, or if the Holder of a Warrant claims and submits
an affidavit or other evidence satisfactory to the Company to the effect that
the Warrant has been lost, destroyed or wrongfully taken, the Company shall
issue a replacement Warrant. If reasonably requested by the Company, such Holder
must provide an indemnity bond, or other form of indemnity, sufficient in the
reasonable judgment of the Company to protect the Company from any loss which it
may suffer if a Warrant is replaced. If any Holder (or nominee thereof) that
qualifies as a "qualified institutional buyer", as such term is defined in Rule
144A under the Securities Act, is the owner of any such lost, stolen or
destroyed Warrant, then the affidavit of an authorized officer of such owner,
setting forth the fact of loss, theft or destruction and its ownership of the
Warrant at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and no further indemnity shall be required as a
condition to the execution and delivery of a new Warrant other than the
unsecured written agreement of such owner to indemnify the Company.
SECTION 8. TRANSFER
--------
(a) No Holder may offer to sell, assign, transfer or otherwise
dispose of ("Transfer") any Warrant or Warrant Share except in transactions
--------
exempt from registration under the Securities Act or in a sale registered under
the Securities Act. In connection with any proposed Transfer pursuant to such an
exemption, the Purchasers agree that the Company may request an opinion of the
Purchaser's counsel that such Transfer is not in violation of the registration
requirements of the Securities Act or other applicable law.
(b) Each certificate representing Warrant Shares shall bear a
legend in or substantially in the following form:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NO TRANSFER, SALE OR
OTHER DISPOSITION OF THESE SHARES MAY BE MADE UNLESS A REGISTRATION
STATEMENT WITH RESPECT TO THESE SHARES HAS BECOME EFFECTIVE UNDER SAID
ACT, OR THE COMPANY HAS BEEN FURNISHED WITH AN OPINION
8
<PAGE>
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
SECTION 9. FRACTIONAL INTERESTS. The Company shall not be required to issue
--------------------
fractional Warrant Shares on the exercise of Warrants. If more than one Warrant
shall be presented for exercise in full at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon the exercise thereof
shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of the Warrants so presented. If any fraction of a
Warrant Share would, except for the provisions of this Section 9, be issuable on
the exercise of any Warrants (or specified portion thereof), the Company shall
pay an amount in cash equal to the Fair Market Value of the Warrant Share so
issuable, multiplied by such fraction, unless such payment shall exceed $1,000,
in which case the Company may at its option issue Fractional Warrant Shares.
SECTION 10. DEFINITIONS Capitalized terms used but not defined herein shall
-----------
have the meanings set forth in the Securities Purchase Agreement, dated as of
the same date hereof, by and among the Company, BT Capital Investors, L.P. and
Phoenix Home Life Mutual Insurance Company (the "Securities Purchase
-------------------
Agreement"). The following terms, as used in this Warrant, have the following
- ---------
respective meanings:
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York City
are authorized or obligated by law or executive order to close.
"Capital Reorganization" shall have the meaning set forth in
Section 3.4.
"Closing Price" with respect to any security on any day means (a)
if such security is listed or admitted for trading on a national securities
exchange, the reported last sales price regular way or, if no such reported sale
occurs on such day, the average of the closing bid and asked prices regular way
on such day, in each case as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such class of security is listed or admitted to
trading, or (b) if such security is not listed or admitted to trading on any
national securities exchange, the last quoted sales price, or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market
on such day as reported by NASDAQ or any comparable system then in use or, if
not so reported, as reported by any New York Stock Exchange member firm
reasonably selected by the Company for such purpose.
"Common Stock" means the Company's Series A Common Stock, par
value $0.001, and Series B Common Stock, par value $0.001.
"Common Stock Distribution" shall have the meaning set forth in
Section 3.3.
9
<PAGE>
"Company" shall have the meaning set forth in the first paragraph of
this Warrant.
"constituent person" shall have the meaning set forth in Section 3.4.
"Exercise Price" shall have the meaning set forth in the second
paragraph of this Warrant.
"Fair Market Value" means the fair market value of the business or
property in question, as determined in good faith by the agreement of the
Holders of Warrants representing a majority of the Warrant Shares outstanding
and the Company, provided, however, that the Fair Market Value of any security
-------- -------
for which a Closing Price is available shall be the Market Price of such
security. The Fair Market Value of the Company shall be the Fair Market Value of
the Company and its subsidiaries as a going concern. Notwithstanding the
foregoing, if, (a) no such agreement can be reached, the Company shall appoint
an independent appraiser to make such a determination (provided, that such
appointment shall be subject to the consent, which shall not be unreasonably
withheld, of the Holders of Warrants representing a majority of the Warrant
Shares), at the Company's sole expense and (b) at any date of determination of
the Fair Market Value of the Company, the Common Stock of any class shall then
be publicly traded, the Fair Market Value of the Company on such date shall be
the Market Price on such date multiplied by the number of shares of Common Stock
then outstanding on a fully diluted basis.
"Holder" shall have the meaning set forth in the first paragraph of
this Warrant.
"Issue Date" shall have the meaning set forth in the first paragraph
of this Warrant.
"Market Price" with respect to any security on any day means the
average of the daily Closing Prices of a share or unit of such security for the
20 consecutive Business Days ending on the most recent Business Day for which a
Closing Price is available; provided, however, that in the event that, in the
case of Common Stock, the Market Price is determined during a period following
the announcement by the Company of (A) a dividend or distribution of Common
Stock, or (B) any subdivision, combination or reclassifications of Common Stock
and prior to the expiration of 20 Business Days after the ex-dividend date
for such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the Market Price
shall be appropriately adjusted to reflect the current Market Price per share
equivalent of Common Stock.
"NASDAQ" means The National Association of Securities Dealers, Inc.
Automated Quotation System.
10
<PAGE>
"non-electing share" shall have the meaning set forth in Section
3.4.
"Prospectus" shall have the meaning set forth in Section 4.1.
"Purchase Form" shall have the meaning set forth in Section 2.2.
"Securities Purchase Agreement" shall have the meaning set forth
in Section 10.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and any similar or successor federal statute, and the rules and
regulations of the Securities and Exchange Commission (or its successor)
thereunder, all as the same shall be in effect at the time.
"Special Dividend" shall have the meaning set forth in Section
3.3.
"Stockholders Agreement" shall have the meaning set forth in
Section 5.
"Surrender Value" shall have the meaning set forth in Section
2.2.
"Transfer" shall have the meaning set forth in Section 8(a).
"Warrants" shall have the meaning set forth in the third
paragraph of this Warrant.
"Warrant Shares" shall have the meaning set forth in the first
paragraph of this Warrant.
SECTION 11. NOTICES. All notices and other communications given or made
-------
pursuant to this Warrant shall be in writing and shall be deemed to have been
duly given or made if (a) sent by registered or certified mail, return receipt
requested, or (b) hand delivered, or (c) sent by prepaid overnight carrier,
with a record of receipt, or (d) sent by cable, telegram, facsimile or telex
(with a copy simultaneously sent by registered or certified mail, return receipt
requested), to the parties at the following addresses (or at such other
addresses as shall be specified by the parties by like notice):
11
<PAGE>
If to the Company:
IMPAC Group, Inc.
1950 North Ruby Street
Melrose Park, Illinois 60160
Attn: David Underwood
Tel: (708) 344-9100
Fax: (708) 344-0083
If to Holder:
BT Capital Investors, L.P.
130 Liberty Street
New York, New York 10006
Attn: Joseph Wood
Tel: (212) 250-1053
Fax: (212) 250-7651
with copies to (which shall not constitute sufficient notice for purposes of
this Section 11):
Paul, Hastings, Janofsky & Walker LLP
399 Park Avenue
New York, New York 10022
Attn: William F. Schwitter, Esq.
Tel: (212) 318-6000
Fax: (212) 319-4090
SECTION 12. HEADINGS.
--------
The headings contained in this Warrant are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Warrant.
SECTION 13. GOVERNING LAW; CONSENT TO JURISDICTION. THIS WARRANT SHALL BE
GOVERNED BY, INTERPRETED UNDER, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
WITHIN THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CHOICE-OF-LAW
PROVISIONS THEREOF. THE HOLDER AND THE COMPANY AGREE TO SUBMIT TO THE PERSONAL
AND EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SERVING THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK
12
<PAGE>
WITH RESPECT TO THE ENFORCEMENT OR INTERPRETATION OF THIS WARRANT OR THE
OBLIGATIONS HEREUNDER. EACH OF THE HOLDER AND THE COMPANY IRREVOCABLY WAIVES, TO
THE FULL EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
SECTION 14. CERTAIN SUPPLEMENTS AND AMENDMENTS. The Company may from time to
----------------------------------
time supplement or amend this Warrant without the approval of any Holders in
order to cure any ambiguity or to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provision herein;
provided that any such supplement or amendment shall not in any way adversely
- --------
affect the interests of the Holders.
SECTION 15. SUCCESSORS. All the covenants and provisions of this Warrant by
----------
or for the benefit of the Company shall bind and inure to the benefit of its
respective successors and assigns hereunder.
SECTION 16. TERMINATION. This Warrant shall terminate if all Warrants have
-----------
been exercised or shall have expired or been canceled pursuant to this Warrant.
SECTION 17. MISCELLANEOUS
-------------
17.1 Waivers; Amendments. No failure or delay of the Holder in
-------------------
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and the Holders of Warrants, voting as
a single class, entitling such Holders to purchase 66 2/3% of the aggregate
Warrant Shares (exclusive of Warrants then owned by the Company or any
Subsidiary thereof); provided, however, that no such amendment, modification or
waiver shall, with the written consent of each Holder whose interest might be
adversely affected by such amendment, modification or waiver, (a) change the
number of shares of Common Stock subject to purchase upon exercise of this
Warrant, the Exercise Price or provisions for payment thereof or (b) amend,
modify or waive the provisions of this Section 17.1. The provisions of the
Securities Purchase Agreement and the Stockholders Agreement may be amended,
modified or waived only in accordance with the respective provisions thereof.
13
<PAGE>
Any such amendment, modification or waiver effected pursuant to this
Section or the applicable provisions of the Securities Purchase Agreement or the
Stockholders Agreement shall be binding upon the Holders of all Warrants and
Warrant Shares, upon each future Holder thereof and upon the Company. In the
event of any such amendment, modification or waiver the Company shall give
prompt notice thereof to all Holders and, if appropriate, notation thereof shall
be made on all Warrants thereafter surrendered for registration of Transfer or
exchange.
No notice or demand on the Company in any case shall entitle the Company to
any other or further notice or demand in similar or other circumstances.
17.2 Survival of Agreements. Representations and Warranties.
------------------------------------------------------
All representations, warranties, covenants and agreements (except covenants
and agreements which are expressly required to be performed and are performed in
full on or before the Issue Date) contained in this Warrant, delivered hereunder
or made by the Company shall be deemed represented and made by the Company on
the Issue Date as if made at such time and shall survive the Issue Date (but
shall not in any manner be deemed to be repeated on any other date) for three
years, and other covenants and agreements which, in accordance with their terms,
extend beyond such date shall also survive in accordance with their terms.
17.3 Exclusion of Remedies. The indemnification provided for under
---------------------
Section 7.03 of the Securities Purchase Agreement shall be the Holders' sole
remedy for breach by the Company of any representation, warranty or covenant of
the Company under this Warrant to the exclusion of any other remedy at law or
equity (including recission but excluding injunctive relief).
17.4 Severability. In case any one or more of the provisions contained in
------------
the Securities Purchase Agreement, the Stockholders Agreement or this Warrant
shall be invalid, illegal or unenforceable in any respect, the validity,
legality or enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provision.
17.5 No Rights as Stockholder. This Warrant shall not entitle the Holder
------------------------
to any rights as a stockholder of the Company.
14
<PAGE>
17.6 No Impairment. The Company shall not by any action, including,
-------------
without limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder under this Warrant. Without limiting the generality of the
foregoing, the Company will (a) except as permitted under Section 3.2, not
increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise of
this Warrant, and (c) use its best efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under this Warrant.
15
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
Chief Financial Officer as of the date first above written.
IMPAC GROUP, INC.
By: /s/ David C. Underwood
--------------------------
Name: David C. Underwood
Title: Chief Financial Officer
16
<PAGE>
PURCHASE FORM
-------------
Dated_______________,____
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing _____________ shares of Series A Common
Stock and hereby makes payment of _________ in payment of the Exercise Price
thereof.
_______________
INSTRUCTIONS FOR REGISTRATION OF STOCK
------------ --- ------------ -- -----
Name
(please typewrite or print in block letters)
Address
Signature
_______________
ASSIGNMENT FORM
---------- ----
FOR VALUE RECEIVED, hereby sells,
assigns and transfers unto
Name
(please typewrite or print in block letters)
Address
its right to purchase __________________ shares of Series A Common Stock
represented by this Warrant and does hereby irrevocably constitute and appoint
_____________ Attorney, to transfer the same on the books of the Company, with
full power of substitution in the premises.
Date ,____
Signature
17
<PAGE>
EXHIBIT 10.64
IMPAC GROUP, INC.
WARRANT FOR THE PURCHASE OF SERIES A COMMON STOCK
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS
WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR APPLICABLE STATE SECURITIES LAWS. THIS WARRANT HAS
--------------
BEEN ACQUIRED FOR INVESTMENT ONLY AND NOT WITH A VIEW TO PUBLIC DISTRIBUTION OR
RESALE THEREOF. NEITHER THIS WARRANT NOR THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE OF THIS WARRANT MAY BE OFFERED FOR SALE, SOLD, DELIVERED AFTER
SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT COVERING SUCH WARRANT OR SHARES OF COMMON
STOCK, AS THE CASE MAY BE, UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR THE AVAILABILITY OF AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
The securities represented by this certificate are subject to the terms of
a certain Second Amended and Restated Stockholder Agreement, dated as of March
12, 1998, and amended and restated as of January 11, 1999, among the holder of
this certificate (or such holder's predecessor-in-interest), the issuer of this
certificate, and certain others. The Second Amended and Restated Stockholder
Agreement contains certain restrictive provisions relating to the voting and
transfer of the securities represented hereby. A copy of the Second Amended and
Restated Stockholder Agreement is on file and may be inspected for any proper
purpose at the issuer's principal executive office.
No. 0002 Common Stock
FOR VALUE RECEIVED, IMPAC GROUP, INC., a Delaware corporation (the
"Company"), hereby certifies that Phoenix Home Life Mutual Insurance Company or
-------
any of its permitted assignees (the "Holder") is entitled, subject to the
------
provisions of this Warrant, to purchase from the Company, at any time following
this 11th day of January, 1999 (the "Issue Date"), in whole or in part,
----------
2,765.332 shares of the Company's Series A Common Stock, par value $0.001 per
share, represented approximately 1.4% of the Company's total Common Stock on a
fully diluted basis as of the Issue Date, calculated on the basis of the
<PAGE>
methodology set forth in Schedule 2.02 of the Securities Purchase Agreement (the
"Warrant Shares").
--------------
Subject to Section 3, the exercise price the (the "Exercise Price") payable
--------------
upon exercise of the Warrant shall be equal to the product of (a) $0.01
multiplied by (b) the number of Warrant Shares to be acquired on exercise.
The Warrant Shares to be received upon the exercise of this Warrant are
subject to adjustment as set forth herein. This Warrant and all other warrants
issued by the Company pursuant to the Securities Purchase Agreement and all
warrants of like tenor which may be issued by the Company in exchange or
substitution for or upon the Transfer of this Warrant or such warrants are
hereinafter collectively referred to herein as the "Warrants."
--------
SECTION 1. EXECUTION OF WARRANT. The Warrants shall be signed on behalf of the
--------------------
Company by its Chairman of the Board or its Chief Executive Officer, President
or any Vice President.
SECTION 2. WARRANTS; EXERCISE OF WARRANTS
------------------------------
2.1 Exercisability. Subject to the terms of this Warrant, each Holder
--------------
shall have the right, which may be exercised at any time during the period
commencing on the date hereof and ending at 5:00 p.m. New York local time on
January 11, 2009, to receive from the Company the number of fully paid and
nonassessable Warrant Shares (and such other consideration) which the Holder may
at the time be entitled to receive on exercise of such Warrants and payment of
the Exercise Price for such Warrant Shares.
2.2 Surrender of Warrants; Exercise Price. A Warrant may be exercised
-------------------------------------
upon surrender to the Company at its office designated for such purpose of the
Warrant to be exercised with the Purchase Form attached hereto (the "Purchase
--------
Form") duly filled in and signed, and upon payment to the Company of the
- ----
Exercise Price for the number of Warrant Shares in respect of which such
Warrants are then exercised. Payment of the aggregate Exercise Price shall be
made, at the election of the Holder, (a) in cash or by certified or official
bank check payable to the order of the Company, (b) by delivering for surrender
and cancellation to the Company Warrants with an aggregate Surrender Value, as
of the date of such exercise, equal to the Exercise Price for the Warrant being
exercised, (c) by the agreement of the Holder to accept upon exercise of the
Warrant the number of Warrant Shares issuable upon such exercise, less that
number of Warrant Shares with an aggregate Fair Market Value equal to the
Exercise Price, or (d) any combination of (a), (b) and (c) above. For the
purposes of this paragraph, the "Surrender Value" of any Warrant is equal to the
---------------
Fair Market Value, as of the date of such surrender, of the Warrant Shares
issuable upon the exercise of such Warrant, minus the Exercise Price of such
Warrant being surrendered.
2
<PAGE>
2.3 Issuance of Warrant Shares. Subject to the provisions of Section
--------------------------
2.2, upon such surrender of the Warrant and payment of the Exercise Price, the
Company shall issue and cause to be delivered, as promptly as practicable,
pursuant to the Purchase Form, a certificate or certificates for the number of
Warrant Shares issuable upon the exercise of such Warrants (and such other
consideration as may be deliverable upon exercise of such Warrants), together
with cash for fractional Warrant Shares as provided in Section 9. The
certificate or certificates for such Warrant Shares shall be deemed to have been
issued and the person so named therein shall be deemed to have become a holder
of record of such Warrant Shares as of the date of the surrender of such
Warrants and payment of the Exercise Price, irrespective of the date of delivery
of such certificate or certificates for Warrant Shares.
2.4 Partial Exercise. Each Warrant shall be exercisable, at the
----------------
election of the Holder thereof, either in full or from time to time in part,
and, in the event that a Warrant is exercised in respect of fewer than all of
the Warrant Shares issuable on such exercise at any time prior to the date of
expiration of the Warrants, a new Warrant evidencing the remaining Warrant or
Warrants will be issued and delivered pursuant to the provisions of this Section
and Section 1.
2.5 Cancellation of Exercised Warrants. All warrants surrendered upon
----------------------------------
exercise of Warrants shall be canceled and disposed of by the Company. The
Company shall keep copies of this Warrant and any notices given or received
hereunder available for inspection by the Holder during normal business hours at
its principal executive office.
2.6 Warrant Shares Validity. Upon exercise of the Warrant Shares and
-----------------------
payment of the Exercise Price in accordance with Section 2.2, all Warrant Shares
shall be validly issued, fully paid and non-assessable and free from all
preemptive rights of any stockholder, and from all taxes, liens and charges with
respect to the issue thereof (other than transfer taxes).
2.7 Legend. Each certificate for shares of Series A Common Stock
------
issued upon exercise of this Warrant, unless at the time of exercise such shares
are registered under the Securities Act, shall bear the following legend:
This Common Stock has not been registered under the
Securities Act of 1933, as amended (the "Securities
----------
Act"), or applicable state securities laws. This
---
Common Stock has been acquired for investment only
and not with a view to public distribution or resale
thereof. This Common Stock may not be offered for
sale, sold, delivered after sale, pledged,
hypothecated or otherwise transferred in the absence
of any effective registration statement covering such
3
<PAGE>
Common Stock under the Securities Act and any
applicable state securities laws or the availability
of any exemption from such registration requirements.
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public distribution pursuant to a registration statement under the
Securities Act) shall also bear such legend unless the securities represented
thereby are no longer subject to restrictions on resale under the Securities
Act. Any certificate for shares of Series A Common Stock issued upon exercise of
this Warrant shall also bear the legend required under the Stockholders
Agreement (without duplication of the legend set forth in Section 8), to the
extent then required under the stockholders Agreement.
2.8 Reservation of Shares. The Company has reserved and will
---------------------
keep available for issuance upon exercise of the Warrants the total number of
Warrant Shares deliverable upon exercise of all Warrants from time to time
outstanding. The issuance of the Warrant Shares has been duly and validly
authorized and, when issued and sold in accordance with the Warrants, the
Warrant Shares will be duly and validly issued, fully paid and non-assessable.
SECTION 3. ANTIDILUTION PROVISIONS
-----------------------
3.1 Adjustments Generally. The Exercise Price and the number of
---------------------
Warrant Shares (or other securities or property) issuable upon exercise of this
Warrant shall be subject to adjustment from time to time upon the occurrence of
certain events, as provided in this Section 3.
3.2 Common Stock Reorganization. If the Company shall subdivide
---------------------------
its outstanding shares of Common Stock into a greater number of shares or
consolidate its outstanding shares of Common Stock into smaller number of
shares, whether through a stock split, reverse stock split, stock dividend or
otherwise (any such event being called a "Common Stock Reorganization"), then
------ ----- --------------
(a) the Exercise Price shall be adjusted, effective immediately after the record
date at which the holders of shares of Common Stock are determined for purposes
of such Common Stock Reorganization, to a price determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Common Stock outstanding
on such record date before giving effect to such Common Stock Reorganization and
the denominator of which shall be the number of shares of Common Stock
outstanding after giving effect to such Common Stock Reorganization, provided
--------
that in no event will the Exercises Price be reduced to an amount less than par
- ----
value of the Warrant Shares and (b) the number of Warrant Shares shall be
adjusted, effective at such time, to a number determined by multiplying the
number of Warrant Shares immediately before such Common Stock
4
<PAGE>
Reorganization by a fraction, the numerator of which shall be the number of
shares outstanding after giving effect to such Common Stock Reorganization and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately before such Common Stock Reorganization.
The Company agrees that it will not effect a Common Stock
Reorganization that would have the effect of reducing the Exercise Price below
the par value per share of the Warrant Shares in the absence of the limitations
provided in the proviso to clause (a) of the preceding sentence unless (i) the
Holder consents to such a Common Stock Reorganization or (ii) the Company
compensates the Holder for the aggregate increase in the Exercise Price of this
Warrant caused by such Common Stock Reorganization.
3.3 Special Dividends. If the Company shall issue or distribute to
-----------------
all or substantially all holders of shares of Common Stock evidences of
indebtedness, any other securities of the Company or any cash, property or other
assets, and if such issuance or distribution does not constitute a Common Stock
Reorganization, (any such nonexcluded event being herein called a "Special
-------
Dividend") the Company shall distribute to each Holder, on the date of exercise
- --------
of the Warrants, the evidences of indebtedness, other securities, cash, property
or other assets which such Holder would have been entitled to receive if it had
exercised its Warrants for Warrant Shares immediately prior to the record date
with respect to such Special Dividend.
3.4 Capital Reorganization. If there shall be any consolidation or
----------------------
merger to which the Company is a party, other than a consolidation or a merger
in which the Company is a continuing corporation and which does not result in
any reclassification of, or change (other than a Common Stock Reorganization or
a change in par value) in, outstanding shares of Common Stock, or any sale or
conveyance of the property of the Company as an entirety or substantially as an
entirety (any such event being called a "Capital Reorganization"), then,
------- --------------
effective upon the effective date of such Capital Reorganization, the Holder
shall have the right to purchase, upon exercise of this Warrant, the kind and
amount of shares of stock and other securities and property (including cash)
which the Holder would have owned or have been entitled to receive after such
Capital Reorganization if this Warrant had been exercised immediately prior to
such Capital Reorganization, assuming such Holder (a) is not a person with which
the Company consolidated or into which the Company merged or which merged into
the Company or to which such sale or conveyance was made, as the case may be
("constitute person"), or an Affiliate of a constituent person and (b) failed
---------- ------
to exercise any rights of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such Capital Reorganization
(provided that if the kind or amount of securities, cash or other property
receivable upon such Capital Reorganization (provided that if the kind or amount
of securities, cash or other property receivable upon such Capital
Reorganization is not the same for each share of Common Stock held immediately
prior to such consolidation, merger, sale or conveyance by other than a
constituent person or an Affiliate thereof and in respect of which such rights
of election shall not have been exercised ("non-electing share"), then
------------ -----
5
<PAGE>
for the purposes of this Section the kind and amount of shares of stock and
other securities or other property (including cash) receivable upon such Capital
Reorganization shall be deemed to be the kind and amount so receivable per share
by a plurality of the non-electing shares). As a condition to effecting any
Capital Reorganization, the Company or the successor or surviving corporation,
as the case may be, shall execute and deliver to each Holder an agreement as to
such Holder's rights in accordance with this Section 3.4, providing for
subsequent adjustments as nearly equivalent as may be practicable to the
adjustments provided for in this Section 3. The provisions of this Section 3.4
shall similarly apply to successive Capital Reorganizations.
3.5 Certain Other Events. If any event occurs as to which the foregoing
--------------------
provisions of this Section 3 are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Board of Directors of
the Company, fairly protect the purchase rights of the Warrants in accordance
with the essential intent and principles of such provisions, then such Board
shall make such adjustments in the application of such provisions, in accordance
with such essential intent and principles, as shall be reasonably necessary, in
the good faith opinion of such Board, to protect such purchase rights as
aforesaid, but in no event shall any such adjustment have the effect of
increasing the aggregate Exercise Price or decreasing the percentage of the
Company's total Common Stock (on a fully diluted basis, as of the date of such
event) represented by the Warrant Shares, or otherwise adversely affect the
Holder.
3.6 Adjustment Rules.
----------------
(a) Any adjustments pursuant to this Section 3 shall be made successively
whenever an event referred to herein shall occur.
(b) If the Company shall set a record date to determine the holders of
share of Common Stock for purposes of a Common Stock Reorganization, Special
Dividend or Capital Reorganization, and shall legally abandon such action prior
to effecting such Action, then no adjustment shall be made pursuant to this
Section 3 in respect of such action.
(c) No adjustment in the amount of Warrant Shares or in the Exercise Price
shall be made hereunder unless such adjustment increases or decreases such
amount or price by one percent or more, but any such lesser adjustment shall be
carried forward and shall be made at the time and together with the next
subsequent adjustment which together with any adjustments so carried forward
shall serve to adjust such amount or price by one percent or more.
(d) No adjustment in the Exercise Price shall be made hereunder if such
adjustment would reduce the Exercise Price to an amount below par value of the
Series A Common Stock, which par value shall initially be $0.001 per share.
6
<PAGE>
3.7 Proceedings Prior to Any Action Requiring Adjustment. As a
----------------------------------------------------
condition precedent to the taking of any action which would require an
adjustment pursuant to this Section 3, the Company shall take any action which
may be necessary, including obtaining regulatory approvals or exemptions, in
order that the Company may thereafter validly and legally issue as fully paid
and nonassessable all shares of Common Stock which the Holders are entitled to
receive upon exercise thereof.
3.8 Notice of Adjustment. Not later than twenty days after the record
--------------------
date or effective date, as the case may be, of any action which requires or
might require an adjustment or readjustment pursuant to this Section 3, the
Company shall give notice to the Holder of such event, describing such event in
reasonable detail and specifying the record date or effective date, as the case
may be, and, if determinable, the required adjustment and the computation
thereof. If the required adjustment is not determinable at the time of such
notice, the Company shall give notice to the Holder of such adjustment and
computation promptly after such adjustment becomes determinable.
SECTION 4. PRIVATE OFFERING
----------------
4.1 By acceptance hereof, the Holder represents, agrees and
certifies that the Holder is acquiring this Warrant for the purpose of
investment only and not with a view to public resale or distribution. If the
Holder exercises this Warrant at a time when there is not in effect under the
Securities Act, a registration statement relating to the Warrant Shares and a
prospectus meeting the requirements of Section 10(a)(3) of the Securities Act (a
"Prospectus") available for delivery to the Holder, the exercise shall be for
----------
the purpose of investment and not with a view to public resale or distribution.
4.2 Any person or persons entitled to exercise this Warrant
under the provisions of this Section 4 shall be bound by and obligated under the
provisions of this Section 4 to the same extent as is the original Holder.
SECTION 5. STOCKHOLDERS AGREEMENT The Holder of this Warrant is entitled to
----------------------
the benefits and subject to the obligations of the Second Amended and Restated
Stockholders Agreement dated as of January 11, 1999 between the Company, the
Holder hereof and certain other parties (the "Stockholders Agreement"). The
------------ ---------
Company shall keep a copy of the Stockholders Agreement and any Amendments
thereto, at the Company's principal office and shall furnish copies thereof to
the Holder upon request.
SECTION 6. PAYMENT OF TAXES The Company will pay all documentary stamp
----------------
taxes and other governmental charges (excluding all foreign, federal or state
income, franchise, property, estate, inheritance, gift or similar taxes) in
connection with the issuance or delivery of the Warrants hereunder, as well as
all such taxes attributable to the initial issuance or delivery of Warrant
Shares upon the exercise of Warrants and payment of the Exercise Price.
7
<PAGE>
The Company shall not, however, be required to pay any tax that may be payable
in respect of any subsequent Transfer of the Warrants or any Transfer involved
in the issuance and delivery of Warrant Shares in a name other than that in
which the Warrants to which such issuance relates were registered, and, if any
such tax would otherwise by payable by the Company, no such issuance or delivery
shall be made unless and until the person requesting such issuance has paid to
the Company the amount of any such tax, or it is established to the reasonable
satisfaction of the Company that any such tax has been paid.
SECTION 7. MUTILATED OR MISSING WARRANT CERTIFICATES If a mutilated Warrant
-----------------------------------------
is surrendered to the Company, or if the Holder of a Warrant claims and submits
an affidavit or other evidence satisfactory to the Company to the effect that
the Warrant has been lost, destroyed or wrongfully taken, the Company shall
issue a replacement Warrant. If reasonably requested by the Company, such Holder
must provide an indemnity bond, or other form of indemnity, sufficient in the
reasonable judgment of the Company to protect the Company from any loss which it
may suffer if a Warrant is replaced. If any Holder (or nominee thereof) that
qualifies as a "qualified institutional buyer", as such term is defined in Rule
144A under the Securities Act, is the owner of any such lost, stolen or
destroyed Warrant, then the affidavit of an authorized officer of such owner,
setting forth the fact of loss, theft or destruction and its ownership of the
Warrant at the time of such loss, theft or destruction shall be accepted as
satisfactory evidence thereof and no further indemnity shall be required as a
condition to the execution and delivery of a new Warrant other than the
unsecured written agreement of such owner to indemnify the Company.
SECTION 8. TRANSFER
--------
(a) No Holder may offer to sell, assign, transfer or otherwise
dispose of ("Transfer") any Warrant or Warrant Share except in transactions
--------
exempt from registration under the Securities Act or in a sale registered under
the Securities Act. In connection with any proposed Transfer pursuant to such an
exemption, the Purchaser's agree that the Company may request an opinion of the
Purchaser's counsel that such Transfer is not in violation of the registration
requirements of the Securities Act or other applicable law.
(b) Each certificate representing Warrant Shares shall bear a
legend in or substantially in the following form:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, NO TRANSFER, SALE OR OTHER DISPOSITION
OF THESE SHARES MAY BE MADE UNLESS A REGISTRATION STATEMENT WITH RESPECT TO
THESE SHARES HAS BECOME EFFECTIVE UNDER SAID ACT, OR THE COMPANY HAS BEEN
FURNISHED WITH AN OPINION
8
<PAGE>
OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.
SECTION 9. FRACTIONAL INTERESTS. The Company shall not be required to issue
--------------------
fractional Warrant Shares on the exercise of Warrants. If more than one Warrant
shall be presented for exercise in full at the same time by the same Holder, the
number of full Warrant Shares which shall be issuable upon the exercise thereof
shall be computed on the basis of the aggregate number of Warrant Shares
purchasable on exercise of the Warrants so presented. If any fraction of a
Warrant Share would, except for the provisions of this Section 9, be issuable on
the exercise of any Warrants (or specified portion thereof), the Company shall
pay an amount in cash equal to the Fair Market Value of the Warrant Share so
issuable, multiplied by such fraction, unless such payment shall exceed $1,000,
in which case the Company may at its option issue Fractional Warrant Shares.
SECTION 10. DEFINITIONS. Capitalized terms used but not defined herein shall
-----------
have the meanings set forth in the Securities Purchase Agreement, dated as of
the same date hereof, by and among the Company, BT Capital Investors and Phoenix
Home Life Mutual Insurance Company (the "Securities Purchase Agreement"). The
---------- -------- ---------
following terms, as used in this Warrant, have the following respective
meanings;
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in New York City are
authorized or obligated by law or executive order to close.
"Capital Reorganization" shall have the meaning set forth in
Section 3.4.
"Closing Price" with respect to any security on any day means (a)
if such security is listed or admitted for trading on a national securities
exchange, the reported last sales price regular way or, if on such reported sale
occurs on such day, the average of the closing bid and asked prices regular way
on such day, in each case as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal national
securities exchange on which such class of security is listed or admitted to
trading, or (b) if such security is not listed or admitted to trading on any
national securities exchange, the last quoted sales price, or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market
on such day as reported by NASDAQ or any comparable system then in use or, if
not so reported, as reported by any New York Stock Exchange member firm
reasonably selected by the Company for such purpose.
"Common Stock" means the Company's Series A Common Stock, par
value $0.001, and Series B Common Stock, par value $0.001.
"Common Stock Distribution" shall have the meaning set forth in
Section 3.3.
9
<PAGE>
"Company" shall have the meaning set forth in the first paragraph of
this Warrant.
"constituent person" shall have the meaning set forth in Section 3.4.
"Exercise Price" shall have the meaning set forth in the second
paragraph of this Warrant.
"Fair Market Value" means the fair market value of the business or
property in question, as determined in good faith by the agreement of the
Holders of Warrants representing a majority of the Warrant Shares outstanding
and the Company, provided, however, that the Fair Market Value of any security
-------- -------
for which a Closing Price is available shall be the Market Price of such
security. The Fair Market Value of the Company shall be the Fair Market Value of
the Company and its subsidiaries as a going concern. Notwithstanding the
foregoing, if, (a) no such agreement can be reached, the Company shall appoint
an independent appraiser to make such a determination (provided, that such
appointment shall be subject to the consent, which shall not be unreasonably
withheld, of the Holders of Warrants representing a majority of the Warrant
Shares), at the Company's sole expense and (b) at any date of determination of
the Fair Market Value of the Company, the Common Stock of any class shall then
be publicly traded, the Fair Market Value of the Company on such date shall be
the Market Price on such date multiplied by the number of shares of Common Stock
then outstanding on a fully diluted basis.
"Holder" shall have the meaning set forth in first paragraph of this
Warrant.
"Issue Date" shall have the meaning set forth in the first paragraph
of this Warrant.
"Market Price" with respect to any security on any day means the
average of the daily Closing Prices of a share or unit of such security for the
20 consecutive Business Days ending on the most recent Business Day for which a
Closing Price is available; provided, however, that in the event that, in the
case of Common Stock, the Market Price is determined during a period following
the announcement by the Company of (A) a dividend or distribution of Common
Stock, or (B) any subdivision, combination or reclassification of Common Stock
and prior to the expiration of 20 Business Days after the ex-dividend date for
such dividend or distribution, or the record date for such subdivision,
combination or reclassification, then, and in each such case, the Market Price
shall be appropriately adjusted to reflect the current Market Price per share
equivalent of Common Stock.
"NASDAQ" means The National Association of Securities Dealers, Inc.
Automated Quotation System.
10
<PAGE>
"non-electing share" shall have the meaning set forth in Section
3.4.
"Prospectus" shall have the meaning set forth in Section 4.1.
"Purchase Form" shall have the meaning set forth in Section 2.2.
"Securities Purchase Agreement" shall have the meaning set forth
in Section 10.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and any similar or successor federal statute, and the rules and
regulations of the Securities and Exchange Commission (or its successor)
thereunder, all as the same shall be in effect at the time.
"Special Dividend" shall have the meaning set forth in Section
3.3.
"Stockholders Agreement" shall have the meaning set forth in
Section 5.
"Surrender Value" shall have the meaning set forth in Section
2.2.
"Transfer" shall have meaning set forth in Section 8(a).
"Warrants" shall have the meaning set forth in the third
paragraph of this Warrant.
"Warrant Shares" shall have the meaning set forth in the first
paragraph of this Warrant.
SECTION 11. NOTICES. All notices and other communications given or made
-------
pursuant to this Warrant shall be in writing and shall be deemed to have been
duly given or made if (a) sent by registered or certified mail, return receipt
requested, or (b) hand delivered, or (c) sent by prepaid overnight carrier, with
a record of receipt, or (d) sent by cable, telegram, facsimile or telex (with a
copy simultaneously sent by registered or certified mail, return receipt
requested), to the parties at the following addresses (or at such other
addresses as shall be specified by the parties by like notice):
11
<PAGE>
If to the Company:
IMPAC Group, INC.
1950 North Ruby Street
Melrose Park, Illinois 60160
Attn: David Underwood
Tel: (708) 344-9100
Fax: (708) 344-0083
If to Holder:
Phoenix Home Life Mutual Insurance Company
c/o Phoenix Investment Partners Limited
56 Prospect Street
P.O. Box 150480
Hartford, Connecticut 06115
Attn: Private Placements Division
Tel: (860) 403-5758
Fax: (860) 403-5451
with copies to (which shall not constitute sufficient notice for purposes of
this Section 11):
Paul, Hastings, Janofsky & Walker LLP
399 Park Avenue
New York, New York 10022
Attn: William F. Schwitter, Esp.
Tel: (212) 318-6000
Fax: (212) 319-4090
SECTION 12. HEADINGS.
--------
The headings contained in this Warrant for reference purposes only and
shall not affect in any way the meaning or interpretation of this Warrant.
SECTION 13. GOVERNING LAW; CONSENT TO JURISDICTION. THIS WARRANT SHALL BE
GOVERNED BY, INTERPRETED UNDER, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL
LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED
WITHIN THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CHOICE-OF-LAW
PROVISIONS THEREOF. THE HOLDER AND THE COMPANY AGREE TO SUBMIT TO THE PERSONAL
AND
12
<PAGE>
EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SERVING THE BOROUGH OF
MANHATTAN IN THE CITY OF NEW YORK WITH RESPECT TO THE ENFORCEMENT OR
INTERPRETATION OF THIS WARRANT OR THE OBLIGATIONS HEREUNDER. EACH OF THE HOLDER
AND THE COMPANY IRREVOCABLY WAIVES, TO THE FULL EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 14. CERTAIN SUPPLEMENTS AND AMENDMENTS. The Company may from time to
----------------------------------
time supplement or amend this Warrant without the approval of any Holders in
order to cure any ambiguity or to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provision herein;
provided that any such supplement or amendment shall not in any way adversely
- --------
affect the interests of the Holders.
SECTION 15. SUCCESSORS. All the covenants and provisions of this Warrant by
----------
or for the benefit of the Company shall bind and inure to the benefit of its
respective successors and assigns hereunder.
SECTION 16. TERMINATION. This Warrant shall terminate if all Warrants have
-----------
been exercised or shall have expired or been canceled pursuant to this Warrant.
SECTION 17. MISCELLANEOUS
-------------
17.1 Waivers; Amendments. No failure or delay of the Holder in
-------------------
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Holder are cumulative and not
exclusive of any rights or remedies which it would otherwise have. The
provisions of this Warrant may be amended, modified or waived with (and only
with) the written consent of the Company and the Holders of Warrants, voting as
a single class, entitling such Holders to purchase 66 2/3% of the aggregate
Warrant Shares (exclusive of Warrants then owned by the Company or any
Subsidiary thereof); provided, however, that no such amendment, modification or
waiver shall, with the written consent of each Holder whose interest might be
adversely affected by such amendment, modification or waiver, (a) change the
number of shares of Common Stock subject to purchase upon exercise of this
Warrant, the Exercise Price or provisions for payment thereof or (b) amend,
modify or waive the provisions of this Section 17.1. The provisions of the
Securities Purchase Agreement and the Stockholders
13
<PAGE>
Agreement may be amended, modified or waived only in accordance with the
respective provisions thereof.
Any such amendment, modification or waiver effected pursuant to this
Section or the applicable provisions of the Securities Purchase Agreement or the
Stockholders Agreement shall be binding upon the Holders of all Warrants and
Warrant Shares, upon each future Holder thereof and upon the Company. In the
event of any such amendment, modification or waiver the Company shall give
prompt notice thereof to all Holders and, if appropriate, notation thereof shall
be made on all Warrants thereafter surrender for registration of Transfer or
exchange.
No notice or demand on the Company in any case shall entitle the
Company to any other or further notice or demand in similar or other
circumstances.
17.2 Survival of Agreements, Representations and Warranties.
------------------------------------------------------
All representations, warranties, covenants and agreements (except
covenants and agreements which are expressly required to be performed and are
performed in full on or before the Issue Date) contained in this Warrant,
delivered hereunder or made by the Company shall be deemed represented and made
by the Company on the Issue Date as if made at such time and shall survive the
Issue Date (but shall not in any manner be deemed to be repeated on any other
date) for three years, and other covenants and agreements which, in accordance
with their terms, extend beyond such date shall also survive in accordance with
their terms.
17.3 Exclusion of Remedies. The indemnification provided for under
---------------------
Section 7.03 of the Securities Purchase Agreement shall be the Holders' sole
remedy for breach by the Company of any representation, warranty or covenant of
the Company under this Warrant to the exclusion of any other remedy at law or
equity (including recission but excluding injunctive relief).
17.4 Severability. In case any or more of the provisions contained
------------
in the Securities Purchase Agreement, the Stockholders Agreement or this
Warrant shall be invalid, illegal or unenforceable in any respect, the validity,
legality or enforceability of the remaining provisions contained herein and
therein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
17.5 No Rights as Stockholder. This Warrant shall not entitle the
------------------------
Holder to any rights as a stockholder of the Company.
14
<PAGE>
17.6 No Impairment. The Company shall not by any action, including,
-------------
without limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all
times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder under this Warrant. Without limiting the generality of the
foregoing, the Company will (a) except as permitted under Section 3.2, not
increase the par value of any shares of Common Stock receivable upon the
exercise of this Warrant above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (b) take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and nonassessable shares of Common Stock upon the exercise of
this Warrant, and (c) use its best efforts to obtain all such authorizations,
exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations
under this Warrant.
15
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its
Chief Financial Officer as of the date first above written.
IMPAC GROUP, INC.
BY: /s/ David C. Underwood
--------------------------
NAME: David C. Underwood
TITLE: Chief Financial Officer
16
<PAGE>
PURCHASE FORM
-------------
Dated _____________,____
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing _____________ shares of Series A Common
Stock and hereby makes payment of ________ in payment of the Exercise Price
thereof.
__________________
INSTRUCTIONS FOR REGISTRATION OF STOCK
--------------------------------------
Name
(please typewrite or print in block letters)
Address
Signature
__________________
ASSIGNMENT FORM
---------------
FOR VALUE RECEIVED, hereby sells,
assigns and transfers unto
Name
(please typewrite or print in block letters)
Address
its right to purchase _____________________ shares of Series A Common Stock
represented by this Warrant and does hereby irrevocably constitute and appoint
__________________ Attorney, to transfer the same on the books of the Company,
with full power of substitution in the premises.
Date ,___
Signature
17
<PAGE>
Exhibit 10.65
FIRST AMENDMENT
----- ---------
This First Amendment (this "Amendment") is entered into as of this
11th day of September, 1998 among IMPAC GROUP, INC., a Delaware corporation (the
"Company") AGI INCORPORATED, an Illinois corporation ("AGI"), KLEARFOLD, INC., a
-------
Pennsylvania corporation ("Klearfold", and together with AGI, each a "L/C
--------- ---
Borrower" and collectively, the "L/C Borrowers"), Bank of America National Trust
- -------- -------------
& Savings Association, as Agent (the "Agent"), and the financial institutions
-----
from time to time party thereto (the "Lenders"). Unless otherwise specified
-------
herein, capitalized terms used in this Amendment shall have the meanings
ascribed to them by the Credit Agreement (as defined below).
RECITALS
--------
WHEREAS, the Company, the L/C Borrowers, the Agent and the Lenders are
party to the Amended and Restated Multicurrency Credit Agreement, dated as of
March 12, 1998 and as amended and restated as of July 7, 1998 (as amended,
supplemented, restated or otherwise modified from time to time, the "Credit
------
Agreement");
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WHEREAS, the Company, the L/C Borrowers, the Agent and the Lenders
wish to enter into certain amendments to the Credit Agreement to, among other
things, reduce the Term Loan B Commitment to $64,000,000 and provide that the
Lenders with a Term Loan A Commitment purchase a risk participation in the Bidco
Loan Note Credit Support, all as more fully set forth herein;
NOW THEREFORE, in consideration of the mutual execution hereof and
other good and valuable consideration, the parties hereto agree as follows:
Section 1. Amendments.
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(a) Section 1.01 of the Credit Agreement is hereby amended by deleting
the definitions "Agent-Related Persons", "Aggregate Term Loan B Commitment",
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"Bidco Loan Notes Credit Support Commitment", "Bidco Loan Notes Credit Support
- ------------------------------------------- -------------------------------
Advance", Bidco Loan Notes Credit Support Borrowing", "Borrowing Base",
- ------- ----------------------------------------- --------------
"Borrowing Base Deficiency", "Commitment Fee", "Dollar Equivalents", "FX
- -------------------------- -------------- ------------------ --
Trading Office", "L/C Obligations", "Lender", "Majority Lenders", "Offshore
- -------------- -------------- ------ ---------------- --------
Currency", "Offshore Currency Loan", "Offshore Currency Loan Sublimit",
- -------- ---------------------- -------------------------------
"Offshore Rate Loan", "Relevant Undertakings", "Revolving Loan Termination
- ------------------- --------------------- --------------------------
Date", "Spot Rate", "Swing Line Lender", "Swing Line Loan", "Swing Line Rate"
- ---- --------- ----------------- --------------- --------------
and "Term Loan Commitment Fee" in their entirety and inserting each of the
------------------------
following definitions in appropriate alphabetical order:
"Adjusted Cost of Funds Rate" means for any Interest Period, a rate
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per annum (rounded upwards, if necessary, to the next 1/16th of 1%) equal
to the rate obtained by dividing (a) the Cost of Funds Rate (similarly
rounded) for such Interest Period by (b) a
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<PAGE>
percentage equal to 1 minus the aggregate of all applicable reserve
requirements in effect from time to time during such Interest Period as
determined by the Swing Line Lender.
"Agent-Related Persons" means the initial Agent and any successor
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agent arising under Section 10.09 or any successor letter of credit issuing
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bank or Swing Line lender hereunder, together with their respective
Affiliates, and the officers, directors, employees, agents and attorneys-
in-fact of such Persons and Affiliates.
"Aggregate Term Loan B Commitment" means the aggregate Term Loan B
--------------------------------
Commitments of the Lenders equal to Sixty-Four Million Dollars
($64,000,000).
"Bidco Loan Notes Credit Support Commitment" means the commitment of
------------------------------------------
the Issuing Bank to Issue, and the Term Loan A Lenders and the Revolving
Lenders to participate in, the Bidco Loan Notes Credit Support Issued or
outstanding under Article III, in an aggregate amount not to exceed on any
date the Dollar Equivalent of (Pounds)8,909,991, as the same may be reduced
as a result of a reduction in the Bidco Loan Notes Credit Support pursuant
to Section 2.07(f).
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"Bidco Loan Notes Credit Support Advance" means each Term Loan A
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Lender's and each Revolving Lender's participation in any Bidco Loan Notes
Credit Support Borrowing in accordance with its Pro Rata Share, with
respect to the Term Loan A Lenders, or Pro Rata Revolving Share, with
respect to the Revolving Lenders.
"Bidco Loan Notes Credit Support Borrowing" means extension of credit
---------- -------------------- ---------
resulting from a drawing under the Bidco Loan Notes Credit Support which
shall not have been reimbursed on the date when made nor converted into a
Borrowing of a Term Loan A or a Revolving Loan under Section 3.03(e).
--------------
"Blocked Amount" means, (a) at any time on or prior to the Squeeze-Out
--------------
Date, an amount equal to (i) the Dollar Equivalent of (Pounds)3,871,393,
as such amount is automatically reduced during the Squeeze-Out Period by
the Dollar Equivalent of the Bidco Loan Notes Credit Support issued during
the Squeeze-Out Period, plus (ii) an amount equal to the Dollar equivalent
----
of 5% of the stated amount of the Bidco Loan Notes Credit Support, and (b)
after the Squeeze-Out Date, (i) at any time prior to the termination of the
Bidco Loan Notes Credit Support, an amount equal to the Dollar Equivalent
of 5% of the Stated Amount of the Bidco Loan Notes Credit Support and (ii)
thereafter, zero.
"Borrowing Base" means, as at any date on which the amount thereof is
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being determined, an amount equal to the sum of(a)(i) 85% of Eligible
Receivables plus (ii) 65% of Eligible Inventory plus (b) S10,000,000 minus
---- ---- -----
(c) the Blocked Amount. The Borrowing Base in effect at any given time
shall be the Borrowing Base derived from the Borrowing Base Certificate
most recently delivered in compliance with Section 7.02(g); provided, that
---------------- --------
so long as the most recent Borrowing Base Certificate required to be
delivered has not been so delivered the Borrowing Base in effect will be
zero.
2
<PAGE>
"Borrowing Base Deficiency" means at any time, the amount, if any, by
-------------------------
which the sum of the Effective Amount of Revolving Loans, Swing Line Loans,
L/C Obligations at such time exceeds the Borrowing Base then in effect.
"Commitment Fee" means, collectively, the Revolving Commitment Fee and
--------------
the Term Loan A Commitment Fee and the Term Loan B Commitment Fee.
"Cost of Funds Rate" means for any Interest Period in respect of any
------------------
Swing Line Loan denominated in a currency other than Sterling, the rate per
annum determined by the Swing Line Lender or the Designated Local Lender
advancing such Swing Line Loan in accordance with its customary procedures
in the applicable local bank market as its cost of funds for such Swing
Line Loan during such Interest Period.
"Designated Local Lender" means an agency, branch office or other
-----------------------
Affiliate of the Swing Line Lender, or another bank or financial
institution, designated from time to time by the Swing Line Lender as its
lending office for purposes of making Swing Line Loans in a particular
country and/or currency; provided, however, that any such Designated Local
-------- -------
Lender shall not at any time assume the duties of the Swing Line Lender
under this Agreement, and shall act only in its capacity of providing a
particular currency in a particular country where the Swing Line Lender
does not have an independent banking presence.
"Dollar Equivalent" means, at any time, (a) as to any amount
------ ----------
denominated in Dollars, the amount thereof at such time, (b) as to any
amount denominated in an Offshore Currency (other than a Swing Line
Offshore Currency), the equivalent amount in Dollars as determined by the
Agent at such time on the basis of the Spot Rate for the purchase of
Dollars with such Offshore Currency on the most recent Computation Date and
(c) as to any amount denominated in a Swing Line Offshore Currency, the
equivalent amount in Dollars as determined by the Swing Line Lender or the
Designated Local Lender, as the case may be, at such time on the basis of
the Spot Rate for the purchase of Dollars with such Swing Line Offshore
Currency at such time.
"Excess Bidco Credit Support Amount" has the meaning specified in
----------------------------------
Section 3.01(d).
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"L/C Obligations" means, collectively, (a) Specified L/C Obligations
---------------
plus (b) the amount of the Bidco Loan Notes Credit Support Obligations not
----
supported by the Term Loan A Commitment, plus (c) the sum of (i) the
aggregate undrawn amount of all Letters of Credit (other than the AGI
Letter of Credit, the Klearfold Letter of Credit and the Bidco Loan Notes
Credit Support) then outstanding, plus (ii) the amount of all unreimbursed
drawings under all Letters of Credit (other than the AGI Letter of Credit,
the Klearfold Letter of Credit and the Bidco Loan Notes Credit Support,
including all outstanding L/C Borrowings.
"Lender" has the meaning specified in the introductory clause hereto.
------
References to the "Lenders" shall include BofA, including in its capacity
as Issuing Bank and Swing Line
3
<PAGE>
Lender, any Designated Local Lender and any other Lender assuming such
capacity in the future, and for purposes of clarification only, to the
extent that BofA may have any rights or obligations in addition to those of
the Lenders due to its status as Issuing Bank or Swing Line Lender, its
status as such will be specifically referenced.
"Majority Lenders" means (a) prior to the termination of the
----------------
Commitment, Lenders holding at least 51% of the then aggregate unpaid
principal amount of Term Loans (including the obligations of the Term Loan
A Lenders under the Bidco Loan Note Credit Support) plus the Revolving Loan
----
Commitments or, (b) if the Commitments have been terminated, Lenders
holding at least 51% of the then unpaid principal amount of Loans. L/C
Obligations and the obligations of the Term Loan A Lenders under the Bidco
Loan Note Credit Support.
"Offshore Currency" means, at any time, (a) with respect to Swing Line
-----------------
Loans, any Swing Line Offshore Currency and (b) with respect to any
Offshore Currency Loan, Sterling, German Deutsche Marks, Dutch Guilders,
euros and/or euro units; provided, that on the Commencement Date, each
--------
obligation under this Agreement denominated in a national currency unit
will, forthwith (but otherwise in accordance with EMU Legislation), be
redenominated into the euro. Following redenomination described in the
proviso contained in the preceding sentence, (i) all Loans requested in the
currency of a Participating Member State shall, subject to the terms of
this Agreement, be made in euro units; and (ii) payments by the Agent to
the Lenders in the currency of a Participating Member State shall be made
in euro units.
"Offshore Currency Loan" means any Revolving Loan (other than a
----------------------
Specified L/C Loan) that is an Offshore Rate Loan denominated in an
Offshore Currency.
"Offshore Currency Loan Sublimit" means, as to all Loans denominated
-------------------------------
using Offshore Currencies in the aggregate, the Dollar Equivalent of
$40,000,000.
"Offshore Rate Loan" means a Loan (other than (i) Specified L/C Loans
------------------
and (ii) for all purposes other than the application of Article IV hereof
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to the Swing Line Loans, the Swing Line Loans) that bears interest based on
the Offshore Rate.
"Relevant Undertakings" means each of the undertakings and covenants
---------------------
of the Company contained in Sections 7.04(a), 7.12(d), 7.13 (excluding
---------------- ------- ----
consideration of Target and its Subsidiaries), and 7.16(a), (c), (f) and
---------------------
(m).
----
"Revolving Loan Termination Date" means the earlier to occur of:
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(a) March 31, 2004; and
(b) the date on which the Revolving Loan Commitments terminate in
accordance with the provisions of the Agreement.
4
<PAGE>
"Spot Rate" for a currency means the rate generally quoted by BofA or
---------
a Designated Local Lender, as the case may be, as the spot rate for the
purchase by BofA or such Designated Local Lender, as the case may be, of
such currency with another currency through its foreign exchange trading
office on the date two Business Days prior to the date as of which the
foreign exchange computation is made.
"Swing Line Lender" means BofA, in its capacity as provider of the
------------------
Swing Line Loans. With respect to Swing Line Loans, BofA may designate a
Designated Local Lender to make such Swing Line Loans and such Designated
Local Lender shall be deemed to be the Swing Line Lender for the purposes
of this Agreement to the extent provided in the definition of Designated
Local Lender.
"Swing Line Loan" means a Loan made by the Swing Line Lender,
---------------
denominated in an Offshore Currency, pursuant to Section 2.01(e).
---------------
"Swing Line Offshore Currency" means, at any time, Sterling, Dutch
----------------------------
Guilders, Irish Punts (so long as the aggregate principal amount of Swing
Line Loans outstanding at any time with respect to Irish Punts shall not
exceed the Dollar Equivalent of $1,500,000), Austrian Schillings (so long
as the aggregate principal amount of Swing Line Loans outstanding at any
time with respect to Austrian Schillings shall not exceed the Dollar
Equivalent of $3,000,000), euros and/or euro units; provided, that on the
--------
Commencement Date, each obligation under this Agreement denominated in a
national currency unit will, forthwith (but otherwise in accordance with
EMU Legislation), be redenominated into the euro. Following redenomination
described in the proviso contained in the preceding sentence, (i) all Loans
requested in the currency of a Participating Member State shall, subject to
the terms of this Agreement, be made in euro units; and (ii) payments by
the Agent to the Lenders in the currency of a Participating Member State
shall be made in euro units.
"Swing Line Rate" means, for any day, (i) for Swing Line Loans
---------------
denominated in Sterling, the rate of interest in effect for such day as
publicly announced from time to time by BofA in London as its "reference
rate" and (ii) for Swing Line Loans denominated in other currencies, the
Adjusted Cost of Funds Rate. The "reference rate" is a rate set by BofA
based upon various factors including BofA's costs and desired return,
general economic conditions and other factors, and is used as a reference
point of pricing some loans, which may be priced at, above, or below such
announced rate. Any change in the reference rate announced by BofA shall
take effect at the opening of business on the day specified in the public
announcement of such change.
"Term Loan A Commitment Fee" has the meaning specified in Section
-------------------------- -------
2.l0(c)(i).
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"Term Loan A Lenders" means each Lender with a Term Loan A Commitment.
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"Term Loan B Commitment Fee" has the meaning specified in Section
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2.l0(c)( ii).
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5
<PAGE>
(b) the definition of Pro Rata Share shall be amended to add the
following phrase after each place when the words "L/C Obligations" appear:
"and the obligations under the Bidco Loan Notes Credit Support
related to Term Loan A"
(c) Clauses (a), (b), (c), and (e)(i) and (ii) of Section 2.01 of the
Credit Agreement are hereby amended by deleting said clauses in their entirety
and inserting in lieu thereof the following new clauses (a), (b), (c), and
(e)(i) and (ii):
"(a) Term Loan A
----------
Each Lender with a Term Loan A Commitment severally agrees, on
the terms and conditions set forth herein, to make loans to the Company
(each such loan, a "Term Loan A") from time to time on any Business Day
-------------
during the period from the Initial Funding Date to the Revolving Loan
Termination Date, in an aggregate amount not to exceed such Lender's Term
Loan A Commitment as set forth on Schedule 2.01 (as such amount is reduced
-------------
as a result of the making of any Term Loan A during such period or pursuant
to Section 2.07); provided, however, that after giving effect to any
------------- -------- -------
Borrowing of a Term Loan A, the Effective Amount of Term Loan A shall not
at any time exceed the Aggregate Term Loan A Commitment; and provided
--------
further, that the Effective Amount of a Term Loan A of any Term Loan A
-------
Lender plus the participation of such Term Loan A Lender in the Dollar
Equivalent of the Bidco Loan Notes Credit Support Obligations shall not at
any time exceed such Term Loan A Lender's Term Loan A Commitment. Amounts
borrowed as a Term Loan A which are repaid or prepaid by the Company may
not be reborrowed.
(b) Term Loan B
-----------
Each Lender with a Term Loan B Commitment severally agrees, on
the terms and conditions set forth herein, to make a loan to the Company
(each such loan, a "Term Loan B") on the Initial Funding Date in an amount
------------
not to exceed such Lender's Term Loan B Commitment as set forth on Schedule
--------
2.01 (as such amount may be reduced under Section 2.05). Amounts borrowed
---- ------------
as a Term Loan B which are repaid or prepaid by the Company may not be
reborrowed.
(c) The Revolving Credit
--------------------
Subject to Section 2.01(e), each Revolving Lender severally
---------------
agrees, on the terms and conditions set forth herein, to make loans to the
Company (each such loan, a "Revolving Loan") from time to time on any
---------------
Business Day during the period from the Initial Funding Date to the
Revolving Loan Termination Date, in an aggregate amount not to exceed at
any one time outstanding the amount set forth on Schedule 2.01 (such
-------------
amount, as the same may be reduced under Section 2.07 or reduced or
------------
increased as a result of one or more assignments under Section 11.08, the
-------------
Revolving Lender's "Revolving Loan
--------------
6
<PAGE>
Commitment"); provided, however, that, after giving effect to any Borrowing
------------ -------- -------
of Revolving Loans, the Effective Amount of Revolving Loans, Swing Line
Loans and L/C Obligations at such time shall not at any time exceed an
amount equal to the Aggregate Revolving Loan Commitment at such time minus
the Blocked Amount: and provided further, that the Effective Amount of
--- -------- -------
Revolving Loans of any Revolving Lender plus the participation of such
Revolving Lender in the Effective Amount of all L/C Obligations and such
Revolving Lender's Pro Rata Revolving Share of the Effective Amount of Swing
Line Loans shall not at any time exceed such Revolving Lender's Revolving
Loan Commitment minus such Revolving Lender's Pro Rata Revolving Share of
the Blocked Amount (to the extent not utilized in connection with the Excess
Bidco Credit Support Amount); and provided further, that the Effective
--- -------- -------
Amount of the Revolving Loans, the Effective Amount of Swing Line Loans and
L/C Obligations shall not at any time exceed the Borrowing Base. Within the
limits of each Revolving Lender's Commitment, and subject to the other terms
and conditions hereof, the Company may borrow under this Section 2.01,
------------
prepay under Section 2.06 and reborrow under this Section 2.01(c).
------------ ---------------
* * *
(e) Swing Line Loans
----------------
(i) Subject to the terms and conditions hereof, the Swing Line
Lender agrees to make Swing Line Loans to the Company from time to time
prior to the Swing Line Termination Date in an aggregate principal amount
at any one time outstanding not to exceed $15,000,000 (or the Dollar
Equivalent thereof) (the "Swing Line Loan Commitment"); provided, that
---------------------------- --------
after giving effect to any such Swing Line Loan, the Effective Amount of
Revolving Loans, Swing Line Loans and L/C Obligations at such time would
not exceed an amount equal to the Aggregate Revolving Loan Commitment at
such time minus the Blocked Amount (to the extent not utilized in
connection with the Excess Bidco Credit Support Amount); and provided
--------
further that the Effective Amount of all Revolving Loans, Swing Line Loans,
-------
L/C Obligations at such time would not exceed the Borrowing Base at such
time. Prior to the Swing Line Termination Date, the Company may use the
Swing Line Commitment by borrowing, prepaying the Swing Line Loans in whole
or in part, and reborrowing, all in accordance with the terms and
conditions hereof.
(ii) The Company may borrow under the Swing Line Commitment on
any Business Day after the Initial Funding Date but on or prior to the
Swing Line Termination Date; provided, that the Company shall give the
--------
Swing Line Lender irrevocable written notice signed by a Responsible
Officer or an authorized designee (which notice must be received by the
Swing Line Lender prior to 11:00 a.m. (London time)) with a copy to the
Agent specifying the amount of the requested Swing Line Loan, which shall
be in a minimum amount of $100,000 (or the Dollar Equivalent thereof) (or
such lesser amount as is acceptable to the Swing Line Lender) and the
applicable Swing Line Offshore Currency (which, in any event, cannot exceed
any sublimit on such currency set forth in the definition of Swing Line
Offshore Currency). The proceeds of the Swing Line Loan will be made
7
<PAGE>
available by the Swing Line Lender in London to the Company in immediately
available funds at the office of the Swing Line Lender by 1:00 p.m. (London
time) on the date of such notice with respect to Swing Line Loans
denominated in Sterling, and on the third (3rd) Business Day thereafter with
respect to Swing Line Loans denominated in any other currency. The Company
may at any time and from time to time, prepay the Swing Line Loans, in whole
or in part, without premium or penalty, by notifying the Swing Line Lender
prior to 11:00 a.m. (London time) on any Business Day of the date and amount
of prepayment with a copy to the Agent. If any such notice is given, the
amount specified in such notice shall be due and payable on the date
specified therein. Partial prepayments shall be in an aggregate principal
amount of $100,000 (or the Dollar Equivalent thereof) or a whole multiple
of $100,000 (or the Dollar Equivalent thereof) in excess thereof."
(d) Clause (e)(iii) of Section 2.01 of the Credit Agreement is hereby
amended by deleting the "or" at the end of clause (c) and adding the following
proviso at the end of the first sentence thereof immediately before the period:
"provided, further, that should any portion of the Swing Line Loan be
outstanding in a currency which is not covered under the definition of
Offshore Currency Loan as it applies to Revolving Loans, then the Lenders
shall repay the Swing Line Lender with the Dollar Equivalent of such Swing
Line Loan as so denominated."
(e) Clause (a) of Section 2.05 of the Credit Agreement is hereby
amended by inserting the following immediately at the end of clause (d)
contained therein:
"or (e) with respect to reductions to the Term Loan A Commitment, the
Dollar Equivalent of all Bidco Loan Notes Credit Support would exceed the
combined Term Loan A Commitments of all Term Loan A Lenders then in
effect."
(f) Clauses (a), (b) and (iii) of Section 2.06 of the Credit Agreement
are hereby amended by deleting said clauses in their entirety and inserting in
lieu thereof the following:
"(a) at least three Business Days in advance of the prepayment date
if the Loans to be prepaid are Offshore Currency Loans or Swing Line Loans
denominated in a currency other than Sterling, (b) at least two Business
Days in advance of the prepayment date if the Loans to be prepaid are
Offshore Rate Loans in Dollars, and (c) on the date of the prepayment date
if the Loans to be prepaid are Base Rate Loans or Swing Line Loans
denominated in Sterling."
(g) Clauses (f), (h), and (m) of Section 2.07 of the Credit Agreement
are hereby amended by deleting said clauses in their entirety and inserting in
lieu thereof the following new clauses (f), (h), and (m):
8
<PAGE>
"(f)(i) The Bidco Loan Notes Credit Support Commitment shall be
automatically reduced from time to time on the date, and in the amount,
that the amount available to be drawn under the Bidco Loan Notes Credit
Support is reduced pursuant to the terms of the Bidco Loan Notes Credit
Support (but after giving effect to any Borrowing of a Term Loan A or
Revolving Loan used to repay drawings thereunder on such date).
(ii) The Term Loan A Commitment shall be automatically reduced from
time to time on the date, and in the amount, of any reduction in the Stated
Amount of the Bidco Loan Notes Credit Support in the event such reduction
is not accompanied by a Borrowing of a Term Loan A.
(h) If on any Computation Date, the Agent shall have determined
that the aggregate Dollar Equivalent principal amount of all (I) Revolving
Loans and Swing Line Loans then outstanding plus (II) the aggregate amount
of outstanding L/C Obligations and plus (III) the amount of the Excess
----
Bidco Credit Support Amount and the Blocked Amount, exceeds the Aggregate
Revolving Credit Commitment, due to a change in applicable rates of
exchange between Dollars and Offshore Currencies, then the Agent shall give
notice to the Company that a prepayment is required under this Section
-------
2.07(h), and the Company agrees thereupon to make prepayments of Revolving
-------
Loans, subject to Section 4.04, such that, after giving effect to such
------------
prepayment, the aggregate Dollar Equivalent amount of all amounts under
clauses (I), (II) and (III) above does not exceed the Aggregate Revolving
Credit Commitment.
(m) The Aggregate Term Loan A Commitment, and the Term Loan A
Commitment of each Lender, shall be reduced on the Initial Funding Date
(after giving effect to the Term Loan A made on the initial Funding Date
and the Dollar Equivalent of the amount of the Bidco Loan Credit Support
issued on the initial Funding Date) in an amount equal to the unutilized
Aggregate Term Loan A Commitment, and the unutilized Term Loan A Commitment
of each Lender, as of such date. For the purpose of calculating utilization
under this clause (m), the Term Loan A Commitments shall be deemed used to
the extent of the Effective Amount of Term Loan A then outstanding after
giving effect to the Initial Funding Date and the Dollar Equivalent of the
Bidco Loan Notes Credit Support issued on the initial Funding Date."
(h) Clause (j), (k) and (1) of Section 2.07 are hereby amended by
adding the following sentence at the end of each such clause:
"To the extent a prepayment would otherwise be required under this clause,
but the outstanding principal balance of Term Loan A has been repaid in
full and the only remaining portion of the Aggregate Term Loan A Commitment
remaining is being utilized for the Bidco Loan Notes Credit Support, then
the aggregate amount of such prepayment shall be applied to prepay Term
Loan B as otherwise required pursuant to this clause and without giving
effect to Section 2.07(o)."
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9
<PAGE>
(i) New clauses (p) and (q) are hereby added to Section 2.07 to read
----------- --- ------------
as follows:
"(p) If any portion of the Term Loan A Commitment remains unutilized
on the date that the Bidco Loan Notes Credit Support Commitment is
terminated and the Bidco Loan Notes Instrument is released, then such
portion of the Term Loan A Commitment shall be automatically deemed to be
reduced and the amount of such reduction shall also decrease any remaining
Term Loan A payments under Section 2.08(d) hereof on a ratable basis among
all remaining payments of Term Loan A."
(q) If on any date the Dollar Equivalent of all Offshore Currency
Loans and Swing Line Loans exceeds the Offshore Currency Loan Sublimit, the
Company shall immediately without notice or demand prepay the outstanding
principal amount of Swing Line Loans and/or Revolving Loans by an amount
equal to such applicable excess."
(j) Clause (d) of Section 2.08 is hereby amended by adding the
following sentence at the end of such clause:
"To the extent a repayment would otherwise be required under this clause,
but the outstanding principal balance of Term Loan A has been repaid in
full and the only remaining portion of the Aggregate Term Loan A Commitment
remaining is being utilized for the Bidco Loan Notes Credit Support, then
the aggregate amount of such repayment shall be applied to repay Term Loan
B on a ratable basis among all remaining payments of Term Loan B."
(k) Clause (c) of Section 2.10 of the Credit Agreement is hereby
amended by deleting said clause in its entirety and inserting in lieu thereof
the following new clause (c):
"(c) Term Loan Commitment Fees
-------------------------
(i) The Company shall pay to the Agent for the account of each
Term Loan A Lender a commitment fee ("Term Loan A Commitment Fee") on the
--------------------------
actual daily unused portion of such Term Loan A Lender's Term Loan A
Commitment computed on a quarterly basis in arrears on the last Business
Day of each calendar quarter based upon the daily utilization for that
quarter as calculated by the Agent, equal to the Applicable Margin per
annum applicable to the Commitment Fee. For purposes of calculating
utilization under this clause (i), the Term Loan A Commitments shall be
deemed used to the extent of the Effective Amount of Term Loan A then
outstanding and the Dollar Equivalent of the Bidco Loan Notes Credit
Support that has been Issued. Such Term Loan A Commitment Fee shall accrue
from the Announcement Date to the Revolving Loan Termination Date or such
earlier date as the Term Loan A Commitment is reduced to zero (such date,
"the Term Loan A Commitment Termination Date"), and shall be due and
payable quarterly in arrears on the last Business Day of each March, June,
September and December through the Term Loan A Commitment Termination Date,
with the final payment to be made on the Term Loan A
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<PAGE>
Commitment Termination Date. The Term Loan A Commitment Fee shall accrue at
all times after the above-mentioned commencement date until the Term Loan A
Commitment Termination Date, including at any time during which one or more
conditions in Article V are not met.
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(ii) The Company shall pay to the Agent for the account of each
Lender with a Term Loan B Commitment a commitment fee ("Term Loan B
-----------
Commitment Fee") on the actual daily unused portion of such Term Loan B
--------------
Lender's Term Loan B Commitment computed on a quarterly basis in arrears on
the last Business Day of each calendar quarter based upon the daily
utilization for that quarter as calculated by the Agent, equal to the
Applicable Margin per annum applicable to the Commitment Fee. Such Term
Loan B Commitment Fee shall accrue from the Announcement Date to the
Initial Funding Date and shall be due and payable in arrears on the Initial
Funding Date; provided, that in connection with any reduction or
--------
termination of Term Loan B Commitments, as the case may be, under Section
-------
2.05 or pursuant to that certain First Amendment to this Agreement, dated
----
as of September 11, 1998, the accrued Term Loan B Commitment Fee calculated
for the period ending on such date shall also be paid on the date of such
reduction or termination, with the following quarterly payment being
calculated on the basis of the period from such reduction or termination
date to such quarterly payment date. The Term Loan B Commitment Fee shall
accrue at all times after the above-mentioned commencement date until the
Initial Funding Date, including at any time during which one or more
conditions in Article V are not met."
---------
(l) Clause (d) of Section 3.01 is hereby amended by deleting said
clause in its entirety and inserting in lieu thereof the following new clause
(d):
"(d) On the terms and conditions set forth herein:
(i) the Issuing Bank agrees, (A) on the Initial Funding Date to
issue an irrevocable bank guarantee for the account of the Company in form
and substance satisfactory to the Issuing Bank and in an amount not to
exceed the Bidco Loan Notes Credit Support Commitment for the benefit of
the holders of Bidco Loan Notes (the "Bidco Loan Notes Credit Support") in
-------------------------------
support of the principal and interest payment obligations of Bidco pursuant
to the Bidco Loan Notes, and subject to the satisfaction of the conditions
in Section 5.03, to amend or renew the Bidco Loan Notes Credit Support in
------------
accordance with Sections 3.02(c) and (d), and (B) to honor drawings under
---------------- ---
the Bidco Loan Notes Credit Support;
(ii) the Term Loan A Lenders and the Revolving Lenders severally
agree to participate in the Bidco Loan Notes Credit Support; provided that
--------
the participation by the Revolving Lenders in the Bidco Loan Notes Credit
Support shall be limited to the amount, if any, by which the Dollar
Equivalent of the Bidco Loan Notes Credit Support exceeds the Term Loan A
Commitment then in effect for which no Term Loan A Loans are then
outstanding (such amount, the "Excess Bidco Credit Support Amount"); and
----------------------------------
11
<PAGE>
(iii) the Issuing Bank shall not be obligated to Issue, and no
Term Loan A Lender or Revolving Lender shall be obligated to participate
in, the Bidco Loan Notes Credit Support if, as of any Issuance Date of the
Bidco Loan Notes Credit Support (whether on the Initial Funding Date or any
increase thereafter), the Dollar Equivalent of the Bidco Loan Notes Credit
Support Obligations exceeds the Bidco Loan Notes Credit Support
Commitment."
(m) Clauses (a), (d)(i), (e) and (f) of Section 3.03 of the Credit
Agreement are hereby amended by deleting said clauses in their entirety and
inserting in lieu thereof the following new clauses (a), (d)(i), (e) and (f):
"(a)(i) Immediately upon the Issuance of each Letter of Credit
(other than the Bidco Loan Notes Credit Support), each Revolving Lender
shall be deemed to, and hereby irrevocably and unconditionally agrees to,
purchase from the Issuing Bank a participation in such Letter of Credit and
each drawing thereunder in an amount equal to the product of (A) the Pro
Rata Revolving Share of such Revolving Lender, times (B) the maximum amount
available to be drawn under such Letter of Credit and the amount of any
such drawing thereunder, respectively. For purposes of Section 2.01(d), the
---------------
Issuance of the AGI Letter of Credit shall be deemed to utilize the AGI L/C
Sublimit of each Revolving Lender. For purposes of Section 2.01(d), the
---------------
Issuance of the Klearfold Letter of Credit shall be deemed to utilize the
Pro Rata Revolving Share of the Klearfold L/C Sublimit of each Revolving
Lender.
(ii) Immediately upon the Issuance of the Bidco Loan Notes Credit
Support, each Term Loan A Lender and each Revolving Lender shall be deemed
to, and hereby irrevocably and unconditionally agrees to, purchase from the
Issuing Bank a participation in the Bidco Loan Notes Credit Support and
each drawing thereunder in an amount equal to the product of (I) with
respect to Term Loan A Lenders, (A) the Pro Rata Share of such Term Loan A
Lender, times (B) the maximum amount available to be drawn under such Bidco
Loan Notes Credit Support (exclusive of the Excess Bidco Credit Support
Amount, if any) and the amount of any such drawing thereunder (exclusive of
the Excess Bidco Credit Support Amount, if any), respectively, less any
amounts previously drawn to pay off holders of Bidco Loan Notes and (II)
with respect to Revolving Lenders, (i) the Pro Rata Revolving Share of such
Revolving Lender, times (ii) the Excess Bidco Credit Support Amount and the
amount of such drawing attributable to the Excess Bidco Credit Support
Amount, respectively. For the purposes of Sections 2.01 (a) and (c), the
----------------- ---
Issuance of the Bidco Loan Notes Support shall be deemed to utilize the
Bidco Loan Notes Credit Support Commitment of each Term Loan A Lender and
each Revolving Lender.
* * *
(d)(i) In the event of any request for a drawing under a Letter
of Credit (other than the AGI Letter of Credit, the Klearfold Letter of
Credit and any Bidco Loan Notes Credit Support) by the beneficiary or
transferee thereof, the Issuing Bank will
12
<PAGE>
promptly notify the Company. The Company shall reimburse the Issuing Bank
(by an L/C Borrowing or otherwise) prior to 12:00 Noon (Chicago time), on
the Honor Date, in an amount equal to the amount so paid by the Issuing
Bank. In the event the Company fails to reimburse the Issuing Bank for the
full amount of any drawing under any Letter of Credit by 12:00 Noon
(Chicago time) on the Honor Date, the Issuing Bank will promptly notify the
Agent and the Agent will promptly notify each Revolving Lender thereof, and
the Company shall be deemed to have requested that Base Rate Loans in an
aggregate amount equal to the unreimbursed drawing be made by the Revolving
Lenders to be disbursed on the Honor Date under such Letter of Credit,
subject to the amount of the unutilized portion of the Revolving Loan
Commitment and subject to the conditions set forth in Section 5.03. Any
------------
notice given by the Issuing Bank or the Agent pursuant to this clause
------
(d)(i) may be oral if immediately confirmed in writing (including by
------
facsimile); provided, that the lack of such an immediate confirmation shall
--------
not affect the conclusiveness or binding effect of such notice.
* * *
(e)(i) In the event of any request for a drawing under the Bidco
Loan Notes Credit Support by any beneficiary or transferee thereof, the
Issuing Bank will promptly notify the Company. The Company shall reimburse
the Issuing Bank (first, through a Term Loan A Borrowing, and then to the
extent the Term Loan A Commitment has been fully utilized, through a
Revolving Loan Borrowing) prior to 12:00 Noon (London time), on the Honor
Date, in an amount equal to the amount so paid by the Issuing Bank. In the
event the Company fails to reimburse the Issuing Bank for the full amount
of any drawing under the Bidco Loan Notes Credit Support by 12:00 Noon
(London time) on the Honor Date, the Issuing Bank will promptly notify the
Agent and the Agent will promptly notify each Term Loan A Lender and each
Revolving Lender thereof, and the Company shall be deemed to have requested
that Base Rate Loans in an aggregate amount equal to the unreimbursed
drawing to be made first by the Term Loan A Lenders and then to the extent
the Term Loan A Commitment has been fully utilized, through a Revolving
Loan by the Revolving Lenders to be disbursed on the Honor Date under such
Bidco Loan Notes Credit Support and subject to the conditions set forth in
Section 5.03. Any notice given by the Issuing Bank or the Agent pursuant to
------------
this clause (e)(i) may be oral if immediately confirmed in writing
-------------
(including by facsimile); provided, that the lack of such an immediate
--------
confirmation shall not affect the conclusiveness or binding effect of such
notice.
(ii) Each Term Loan A Lender and, if applicable, each Revolving
Lender shall upon any notice pursuant to Section 3.03(e)(i) make available
------------------
to the Agent for the account of the Issuing Bank an amount in Same Day
Funds equal to its Pro Rata Share, in the case of Term Loan A Lenders, and
its Pro Rata Revolving Share, in the case of Revolving Lenders, of the
amount of the drawing for which they are required to provide reimbursement,
whereupon each participating Term Loan A Lender and, if applicable,
Revolving Lender shall (subject to Section 3.03(e)(iii)) be deemed to have
--------------------
made a Term Loan A and/or Revolving Loan, if applicable, consisting of a
Base Rate Loan to the Company in that amount. If any Term Loan A Lender
and, if applicable, Revolving Lender
13
<PAGE>
so notified fails to make available to the Agent for the account of the
Issuing Bank the amount of such Term Loan A Lender's Pro Rata Share or such
Revolving Lender's Pro Rata Revolving Share of the amount of the drawing by
2:00 p.m. (Chicago time) on the Honor Date, then interest shall accrue on
such Term Loan A Lender's and, if applicable, Revolving Lender's obligation
to make such payment, from the Honor Date to the date such Lender makes
such payment, at a rate per annum equal to the Federal Funds Rate in effect
from time to time during such period. The Agent will promptly give notice
of the occurrence of the Honor Date, but failure of the Agent to give any
such notice on the Honor Date or in sufficient time to enable any Term Loan
A Lender and, if applicable, any Revolving Lender to effect such payment on
such date shall not relieve such Term Loan A Lender or Revolving Lender, as
the case may be, from its obligations under this Section 3.03(e).
---------------
(iii) With respect to any unreimbursed drawing that is not
converted into Loans consisting of Base Rate Loans to the Company in whole
or in part, because of the Company's failure to satisfy the conditions set
forth in Section 5.03 or for any other reason, the Company shall be deemed
------------
to have incurred from the Issuing Bank a Bidco Loan Notes Credit Support
Borrowing in the amount of such drawing which Bidco Loan Notes Credit
Support Borrowing shall be due and payable on demand (together with
interest) and shall bear interest at a rate per annum equal to the Base
Rate plus the Applicable Margin for a Term Loan A maintained as Base Rate
Loans plus 2% per annum, and each Lender's payment to the Issuing Bank
pursuant to Section 3.03(e)(ii) shall be deemed payment in respect of its
-------------------
participation in such Bidco Loan Notes Credit Support Borrowing and shall
constitute a Bidco Loan Notes Credit Support Advance from such Lender in
satisfaction of its participation obligation under this Section 3.03(e).
---------------
(f) Each Lender's obligation in accordance with this Agreement to
make the Specified L/C Loans, an L/C Advance, Revolving Loans, a Term Loan
A or Bidco Loan Notes Credit Support Advance, as contemplated by this
Section 3.03, as a result of a drawing under a Letter of Credit, shall be
------------
absolute and unconditional and without recourse to the Issuing Bank and
shall not be affected by any circumstance, including (i) any set-off,
counterclaim, recoupment, defense or other right which such Lender or any
Credit Party may have against the Issuing Bank, a Credit Party or any other
Person for any reason whatsoever; (ii) the occurrence or continuance of a
Default, an Event of Default, a Material Adverse Effect or any failure to
satisfy the conditions under Article V; or (iii) any other circumstance,
---------
happening or event whatsoever, whether or not similar to any of the
foregoing."
(n) Section 3.04 of the Credit Agreement is hereby amended by deleting
said clause in its entirety and inserting in lieu thereof the following new
Section 3.04:
3.04 Repayment of Participations
---------------------------
(a) Upon (and only upon) receipt by the Agent for the account of
the Issuing Bank of immediately available funds from the relevant Credit
Party (i) in reimbursement of any payment made by the Issuing Bank under
the Letter of Credit with
14
<PAGE>
respect to which any Lender has paid the Agent for the account of the
Issuing Bank for such Lender's participation in the Letter of Credit
pursuant to Section 3.03 or (ii) in payment of interest thereon, the Agent
------------
will pay to each Revolving Lender and/or Term Loan A Lender, as the case
may be, in the same funds as those received by the Agent for the account of
the Issuing Bank, the amount of such Revolving Lender's Pro Rata Revolving
Share and such Term Loan A Lender's Pro Rata Share, as the case may be, of
such funds, and the Issuing Bank shall receive the amount of the Pro Rata
Revolving Share of such funds of any Revolving Lender and the Pro Rata
Share of such funds of any Term Loan A Lender, as the case may be, that did
not so pay the Agent for the account of the Issuing Bank.
(b) If the Agent or the Issuing Bank is required at any time to
return to a Credit Party, or to a trustee, receiver, liquidator, custodian,
or any official in any Insolvency Proceeding, any portion of the payments
made by such Credit Party to the Agent for the account of the Issuing Bank
pursuant to Section 3.04(a) in reimbursement of a payment made under the
--------------
Letter of Credit or interest or fee thereon, each Revolving Lender and Term
Loan A Lender, as the case may be, shall, on demand of the Agent, forthwith
return to the Agent or the Issuing Bank the amount of its Pro Rata
Revolving Share, with respect to Revolving Lenders, or Pro Rata Share, with
respect to Term Loan A Lenders, of any amounts so returned by the Agent or
the Issuing Bank plus interest thereon from the date such demand is made to
the date such amounts are returned by such Revolving Lender and/or such
Term Loan A Lender, as the case may be, to the Agent or the Issuing Bank,
at a rate per annum equal to the Federal Funds Rate in effect from time to
time."
(o) The lead-in text of Section 3.06 of the Credit Agreement is
hereby amended by deleting said text in its entirety and inserting in lieu
thereof the following new text:
"The obligations of each Credit Party under this Agreement and any
L/C-Related Document to reimburse the Issuing Bank for a drawing under a
Letter of Credit, and to repay any L/C Borrowing or Bidco Loan Notes Credit
Support Borrowing and any drawing under a Letter of Credit converted into
Revolving Loans, Specified L/C Loans and/or a Term Loan A, as the case may
be, shall be unconditional and irrevocable, and shall be paid strictly in
accordance with the terms of this Agreement and each such other L/C-
Related Document under all circumstances (unless due to gross negligence or
wilful misconduct of the Issuing Bank), including the following:"
(p) Section 3.08 of the Credit Agreement is hereby amended by deleting
clause (a) contained therein in its entirety and inserting in lieu thereof the
following new clause (a) and the following new clause (d) immediately at the end
of said Section:
"(a) The Company shall pay to the Agent for the account of each of
the Revolving Lenders a letter of credit fee with respect to the Letters of
Credit (it being understood and agreed that for the purpose of this clause
(a), Letters of Credit comprised of Bidco Loan Notes Credit Support shall
be included only to the extent of the Excess
15
<PAGE>
Bidco Credit Support Amount) equal to the Applicable Margin per annum
specified for Revolving Loans maintained as Offshore Rate Loans on the
daily maximum amount available to be drawn on the outstanding Letters of
Credit, computed on a quarterly basis in arrears on the last Business Day
of each March, June, September and December based upon Letters of Credit
outstanding for that quarter as calculated by the Agent. Such letter of
credit fees shall be due and payable quarterly in arrears on the last
Business Day of each calendar quarter during which Letters of Credit are
outstanding, commencing on the first such quarterly date to occur after the
Initial Funding Date, through the Revolving Termination Date (or such later
date upon which the outstanding Letters of Credit shall expire), with the
final payment to be made on the Revolving Termination Date (or such later
expiration date).
* * *
(d) The Company shall pay to the Agent for the account of each of the
Term Loan A Lender a fee with respect to the Bidco Loan Notes Credit
Support obligations equal to the Applicable Margin per annum specified for
a Term Loan A maintained as Offshore Rate Loans on the daily maximum amount
of all Bidco Loan Notes Credit Support obligations which are outstanding
and are supported by the Term Loan A Commitment, computed on a quarterly
basis in arrears on the last Business Day of each March, June, September
and December based upon the Bidco Loan Notes Credit Support outstanding for
that quarter as calculated by the Agent. Such fee shall be due and payable
quarterly in arrears on the last Business Day of each calendar quarter
during which the Bidco Loan Notes Credit Support is outstanding, commencing
on the first such quarterly date to occur after the Initial Funding Date,
through the date upon which the Bidco Loan Notes Credit Support shall
expire, with the final payment to be made on such expiration date."
(q) Section 6.03 of the Credit Agreement is hereby amended by deleting
the phrase "Section 395" the second time such phrase appears therein and
inserting in lieu thereof the phrase "Sections 55 through 158, inclusive, and
Section 395."
(r) Section 7.12 of the Credit Agreement is hereby amended by deleting
such section in its entirety the replacing it with the following:
"7.12 Use of Proceeds
------ --------
(a) The Company shall use the proceeds of the Revolving Loans, the
Bidco Note Credit Support supported by the Revolving Loan Commitment (and
related portion of any Bidco Note Credit Support Borrowing supported by the
Revolving Loan Commitment) and Swing Line Loans for working capital and
other general corporate purposes (other than for the purpose of financing a
hostile Acquisition), the refinancing or prepayment of certain Indebtedness
on the Initial Funding Date in connection with the Transaction and the
payment of fees and expenses relating thereto and towards the financing, in
part, of the consideration
16
<PAGE>
to be paid by Bidco for the Target Shares pursuant to the Offer, in each
case not in contravention of any Requirement of Law or of any Loan
Document.
(b) Each L/C Borrower shall use the proceeds of Specified L/C Loans
solely for the purpose of financing a reimbursement obligation owing to the
Issuing Bank in connection with a drawing under the Klearfold Letter of
Credit or the AGI Letter of Credit.
(c) The Company shall apply the proceeds of all Term Loan A and Term
Loan B towards the refinancing of certain Indebtedness of the Target and
certain Target Subsidiaries as provided in Section 5.02(b), to repay any
---------------
Bidco Loan Notes to the extent the holder thereof has demanded payment or
payment is otherwise due, towards financing, in part, the cash
consideration to be paid by Bidco for the Target Shares pursuant to
acceptances of the Offer, including, the amount of any cash payable to
Target's shareholders whose Target Shares are acquired by Bidco pursuant to
Sections 428-430F of the Companies Act, and towards the payment of fees and
expenses relating thereto. On the Initial Funding Date, the Company shall
be permitted to borrow no more than amount equal to the Aggregate Term Loan
Commitment, less the Dollar Equivalent, as determined by the Agent on
----
September 10, 1998, of (Pounds)5,038,598 (such Dollar Equivalent
representing the amount of the Term Loan A Commitment being utilized to
support the Bidco Loan Notes Credit Support issued on the Initial Funding
Date).
(d) The Company hereby acknowledges and agrees that the aggregate
Dollar Equivalent of Loans, obligations related to the Bidco Loan Note
Credit Support related to the Term Loan A Commitment and L/C Obligations
incurred in connection with the purchase of Target Shares payment of fees,
and Indebtedness to be refinanced in connection with the acquisition of
Target pursuant to the Offer shall not exceed $134,000,000.
(s) Clause (j)of Section 8.01 of the Credit Agreement is hereby
amended by deleting the reference to "Section 8.05(h)" therein and inserting
in lieu thereof "Section 8.05(i)".
---------------
(t) Section 8.05 of the Credit Agreement is hereby amended by deleting
clauses (h) and (i) as they appear therein and replacing them with the
following:
(h) Indebtedness under the Bidco Loan Notes owing to the sellers of
the Target Shares and secured by the Bidco Loan Notes Credit Support:
(i) other indebtedness in addition to indebtedness permitted above
in an aggregate amount outstanding not to exceed $5,000,000 (including
Indebtedness secured by Liens permitted by Section 8.01(i) and (j)) on and
--------------
before December 31, 1998 and thereafter $3,500,000; and"
(u) The proviso contained at the end of Section 8.05 is hereby amended
by deleting said proviso in its entirety and inserting in lieu thereof the
following new proviso:
17
<PAGE>
"provided, however, that in no event will any Credit Party or any of
--------- -------
its Subsidiaries incur more than (x) at any time on and before
December 31, 1998, $5,000,000 and (y) thereafter, $3,500,000, of
Indebtedness under Section 4.09(x) of the Senior Subordinated Note
Indenture as in effect on the Announcement Date (whether or not
permitted by this Section 8.05) except Indebtedness incurred pursuant
------------
to this Agreement."
(v) Clause (a) of Section 8.11 of the Credit Agreement is hereby
------------
amended by deleting the phrase "the Contributing Shareholders" appearing in
subclause (z) contained therein and inserting in lieu thereof the phrase "its
shareholders".
(w) Section 8.16 of the Credit Agreement is hereby amended by deleting
the second period test therein for the coverage ratio of 3.50:1.00 and replacing
it with the following new period:"
"From and including December 31, 1999 3.50:1.00"
through and including December 30, 2000
(x) Section 10.07 of the Credit Agreement is hereby amended by
-------------
deleting the word "solely" contained therein.
(y) Section 11.05 of the Credit Agreement is hereby amended by
-------------
deleting the phrase "and sole" contained therein.
(z) Clause (a) of Section 11.08 of the Credit Agreement is hereby
amended by inserting the phrase "or delayed" immediately after the phrase
"unreasonably withheld" contained therein.
(aa) Schedules 1(b), 2.01, 2.08(d), 6.05, 6.12, 6.19, 8.01 and 8.04
to the Credit Agreement are hereby amended by deleting said Schedules in their
entirety and inserting in lieu thereof Schedules 1(b), 2.01, 2.08(d), 6.05,
6.12, 6.19, 8.01 and 8.04 attached to this Amendment.
(bb) The Lenders hereby (i) waive the requirement contained in Section
-------
5.02(c) for the delivery of a solvency certificate with respect to James Upton-
- -------
Swindon, Limited and James Upton B.V. and (ii) confirm that the condition
contained in (x) Section 5.02(a) of the Credit is satisfied by virtue of Section
1(aa) of this Amendment and (y) Section 5.02(f) of the Credit Agreement is
satisfied so long as the Equity Investment on the Initial Funding Date is in an
aggregate amount of at least $58,525,000.
18
<PAGE>
Section 2. Reference to and Effect Upon the Agreement.
-------------------------------------------
(a) Except as specifically amended above, the Agreement shall
remain in full force and effect and are hereby ratified and confirmed.
(b) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the Bank
under the Agreement, nor constitute a waiver of any provision of the
Agreement, except as specifically set forth herein. Upon the effectiveness
of this Amendment, each reference in the Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of similar import shall mean
and be a reference to the Agreement as amended hereby.
(c) Notwithstanding anything to the contrary set forth in this
Amendment, the Credit Agreement (including without limitation Sections
--------
2.03(a) and 2.04(h) thereof), any Loan Document or otherwise, neither the
-------------------
Company nor any L/C Borrower may on or before September 14, 1998 request
that any Loan be maintained other than as a Base Rate Loan, and as such all
Loans shall be Base Rate Loans until at least September 17, 1998.
Section 3. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
Section 4. Headings. Section headings in this Amendment are included
--------
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.
Section 5. Counterparts. This Amendment may be executed in any number
------------
of counterparts, each of which when so executed shall be deemed an original but
all such counterparts shall constitute one and the same instrument.
Section 6. Effectiveness. This Amendment shall become effective as of
-------------
the date first written above upon the delivery of executed signature pages for
this Amendment signed by the Company, the L/C Borrowers and each Lender.
Section 7. Representations and Warranties. Each of the Company and
------------------------------
each L/C Borrower hereby represents and warrants as to itself that:
(a) The execution, delivery and performance by each such Person of
this Amendment have been duly authorized by all necessary corporate action
and that this Amendment constitutes the legal, valid and binding obligation
of such Person, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws
19
<PAGE>
affecting the enforcement of creditors' rights generally or by equitable
principles relating to enforceability;
(b) Each of the representations and warranties contained in the Credit
Agreement is true and correct in all material respects on and as of the
date hereof as if made on the date hereof (except to the extent such
representations and warranties expressly refer to an earlier date, in which
case they are true and correct as of such earlier date); and
(c) After giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing.
Section 8. Reaffirmation of Guaranties. The Company and each L/C
---------------------------
Borrower as a guarantor of the Obligations under the Guaranties and other Loan
Documents, hereby reaffirms its continuing obligations and liabilities
thereunder, and agrees that such Guaranties remain in full force and effect and
cover and extend to all Obligations (whether under the Prior Loan Document or
the Credit Agreement (as amended hereby).
[Signature Pages Follow]
20
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment by its
duly authorized officer as of the date first written above.
IMPAC GROUP, INC.
By: /s/ David C. Underwood
-----------------------------------------
Title: CHIEF FINANCIAL OFFICER
--------------------------------------
AGI INCORPORATED
By: /s/ David C. Underwood
-----------------------------------------
Title: CHIEF FINANCIAL OFFICER
--------------------------------------
KLEARFOLD, INC.
By: /s/ David C. Underwood
-----------------------------------------
Title: CHIEF FINANCIAL OFFICER
--------------------------------------
BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION, as Agent
By: /s/ David A. Johanson
-----------------------------------------
Title: VICE PRESIDENT
--------------------------------------
BANK OF AMERICA NATIONAL TRUST & SAVINGS
ASSOCIATION, Individually as a Lender,
the Swing Line Lender and the Issuing Bank
By: /s/
-----------------------------------------
Title: VICE PRESIDENT
--------------------------------------
[TO FIRST AMENDMENT]
21
<PAGE>
SCHEDULE 1(b)
-------------
SCHEDULE OF TARGET UK SUBSIDIARIES
----------------------------------
<TABLE>
<S> <C>
Tinsley Robor Labels Limited 3117491
James Upton Limited 1117887
Tinsley Robor Audio & Computer Services Limited 785427
Sonicon Limited 1430722
Pinepoint Limited 1216789
Tinsley Robor Sales Limited 1113287
Tophurst Properties Limited 1016278
Admat Labels Limited 962640
S. Tinsley & Co Limited 131709
TRG Graphics Limited 1636929
Arun Labels Limited 1465536
R&B Litho Reprographics Limited 1388295
Icon Communications Limited 1836634
Tinsley Robor Packaging Limited 1077131
TR Displayprint Limited 1611415
Pinepoint Colour Response Limited 1459838
TR ESOP Trustee Limited 03031446
Tinsley-Robor (Overseas) Limited 904654
</TABLE>
<PAGE>
SCHEDULE 2.01
-------------
COMMITMENTS
-----------
AND PRO RATA SHARES
-------------------
<TABLE>
<CAPTION>
Revolving
Loan Pro Rata Term Loan Pro Rata Term Loan Pro Rata
Lender Commitment Share A Share B Share
------ ---------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Bank of
America
National
Trust &
Savings
Association $53,000,000 100% $37,000,000 100% $64,000,000 100%
----------- -------- ----------- -------- ----------- --------
TOTAL $53,000,000 100% $37,000,000 100% $64,000,000 100%
----------- -------- ----------- -------- ----------- --------
</TABLE>
<PAGE>
SCHEDULE 2.08(d)
---------------
<TABLE>
<CAPTION>
On the Last
Business Day of each
Fiscal Quarter
Ending After the
Initial Funding Date
Commencing with
the First Full Fiscal
Quarter Occurring
after the Initial
Funding Date Term Loan A Payment Term Loan B Payment Total Payment
<S> <C> <C> <C>
1st $ 92,500 $ 160,000 $ 252,500
2nd 92,500 160,000 252,500
3rd 92,500 160,000 252,500
4th 92,500 160,000 252,500
5th 92,500 160,000 252,500
6th 92,500 160,000 252,500
7th 1,500,000 160,000 1,820,000
8th 1,500,000 160,000 1,820,000
9th 1,500,000 160,000 1,820,000
10th 1,500,000 160,000 1,820,000
11th 2,000,000 160,000 2,160,000
12th 2,000,000 160,000 2,160,000
13th 2,000,000 160,000 2,160,000
14th 2,000,000 160,000 2,160,000
15th 2,500,000 160,000 2,660,000
16th 2,500,000 160,000 2,660,000
17th 2,500,000 160,000 2,660,000
18th 2,500,000 160,000 2,660,000
19th 3,111,250 160,000 3,271,250
20th 3,111,250 160,000 3,271,250
21st 3,111,250 160,000 3,271,250
22nd 3,111,250 160,000 3,271,250
or such other amount as
shall then be outstanding
23rd 15,120,000 15,120,000
24th 15,120,000 15,120,000
25th 15,120,000 15,120,000
26th 15,120,000 15,120,000
or such other amount or such other amount
as shall then as shall then
be outstanding be outstanding
TOTAL $37,000,000 $64,000,000 $101,000,000
</TABLE>
<PAGE>
SCHEDULE 6.05
-------------
Litigation
See attached letter to Office of U.S. Trustee regarding PTP Industries,
Inc. Bankruptcy from Schlossberg & Associates, dated February 27, 1998 and the
possible claims referred to therein.
There is a claim for DM 500,000 by Euro Carton against Tins1ey Robor's
Dutch operating company for an alleged breach of patent. We are advised by
Tins1ey Robor's solicitors that management and legal counse1 believe that this
claim will not succeed. However, a court hearing in Germany is set for October
1998.
Aside from this instance no other findings have been made and subject to
the above the Tinsley Robor Group is not engaged in any dispute which is
presently the subject of or which is expected to lead to litigation giving rise
to liability exceeding (Pounds)100,000.
<PAGE>
SCHEDULE 6.12
-------------
Environmental Matters
As of March 15, 1996, there were two underground storage tanks
1ocated at the Louisa, Virginia facility, one 10,000 gallon tank containing
diesel fuel and one 550 ga11on tank containing waste oil, both of which have
since been removed.
Adjacent properties on the east and north in the vicinity of the
Melrose Park facility are listed as leaking underground storage tank (LUST)
sites.
Asbestos containing materials may be present at the Melrose Park
facility and the Franklin Park facility.
AGI did not maintain detailed records of any fountain solution and
blanket wash usage and formulation for its Melrose Park facility.
AGI may have used isopropyl alcohol as a blanket wash at its Melrose
Park facility after March 15, 1996.
Certain customer specifications include the use of isopropyl alcohol
as a blanket wash for certain materials produced at the Melrose Park facility.
The property located immediately west of AGI's Jacksonville facility
reportedly contains a leaking underground tank.
AGI formerly discharged press washwaters from its Jacksonville
facility to the local Publicly Operated Treatment Works.
According to ENSR's report entitled "Environmental Due Diligence
Evaluation" of three AGI sites 1ocated in Illinois, dated February 1998, a prior
occupant of the Franklin Park facility reportedly removed a 1eaking underground
tank from the premises.
All matters in the following environmental reports delivered to the
Agent:
1. Evaluation of Three AGI sites in Illinois performed by
ENSR - February 1998;
2. Phase I ESA Klearfold property, Louisa, VA by RT
Environmental Services, Inc. - March 15, 1996; and
<PAGE>
3. Environmental Due Diligence Report relating to Target
and its Subsidiaries prepared by ENSR International Ltd.
on July 6, 1998.
are deemed to be disclosed herein.
SCHEDULE 6.19
-------------
Capitalization; Subsidiaries and Minority Interests
(a) Subsidiaries
(i) IMPAC Group, Inc.:
-----------------
Klearfold, Inc. - all of the issued and outstanding shares (100)
of common stock of Klearfold, Inc. are owned by the Company.
AGI Incorporated - all of the issued and outstanding shares (100)
of common stock of AGI Incorporated are owned by the Company.
IMPAC Europe Public Limited Company, a public limited company
incorporated under the laws of England and Wales - ninety-nine (99) shares
of capital stock of IMPAC Europe Public Limited Company are owned by the
Company, and one (1) share of capital stock of IMPAC Europe Public Limited
Company is owned by Levelprompt Limited.
Levelprompt Limited, a private limited company incorporated under
the laws of England and Wales - all of the issued and outstanding shares of
capital stock of Levelprompt Limited are owned by IMPAC.
(ii) Klearfold, Inc.:
---------------
KF-Delaware, Inc. - all of the issued and outstanding shares
(100) of common stock of KF-Delaware, Inc. are owned by Klearfold, Inc.
KF-International, Inc. - all of the issued and outstanding shares
(1,000) of common stock of KF-International, Inc. are owned by Klearfold,
Inc.
(iii) IMPAC Europe PLC
----------------
Upon completion of the Acquisition of Target, including the
Squeeze-Out, IMPAC Europe Public Limited Company will own all of the issued
and outstanding shares of capital stock of Tinsley Robor PLC, a public
limited company incorporated under the laws of
<PAGE>
England and Wales. Tins1ey Robor PLC is the beneficial owner of one hundred
percent of the shares of capital stock of each of its subsidiary companies
as shown on Attachment A to the Schedule 6.19. In addition, James Upton
------------ -------------
Holding B.V., a limited company organized under the laws of the Netherlands
and a wholly-owned subsidiary of Tinsley Robor plc, is the beneficial owner
of all of the issued and outstanding shares of capital stock of Van De
Steeg Packaging BV, a limited company organized under the laws of the
Netherlands, James Upton GmbH, a limited company organized under the laws
of Austria, and Printing Resources Limited, a corporation organized under
the laws of Ireland.
(b) Equity Investments
None
(c) Capitalization
Upon completion of the investments pursuant to the Stock Purchase Agreement
dated on September 10, 1998 among the Company, Heritage Fund I, L.P. Heritage
Fund II, L.P., Richard Block and certain other investors, the capitalization of
the Company will be as follows:
(i) Authorized: 1,000,000 shares of Series A Common Stock
(ii) Issued and Outstanding: 196,245.5 shares of Series A Common Stock, held
as set forth below:
<TABLE>
<CAPTION>
Number of
Name of Holder Shares
- ------------------------------------ ---------
<S> <C>
Heritage Fund II, L.P. 72,297.08
Heritage Fund I, L.P. 58,074.27
Richard Block 19,005.35
Arthur B. Keyser, Matthew H. 7,958.5
Kamens, and H. Scott Herrin, as
Trustees under an Irrevocable Deed
of Trust dated 08/12/92 f/b/o H.
Scott Herrin
James Oppenheimer 6,227
Melvin B. Herrin 4,964
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number of
Name of Holder Shares
- ------------------------------------ ---------
<S> <C>
Richard Oppenheimer 4,440
Freya Block, as Trustee of the 4,024
Richard A. Block Family Trust
u/t/a dated 4/1/94
Matthew H. Kamens and Arthur S. 3,916
Kayser, as Trustees under an
Irrevocable Deed of Trust dated
06/04/96 of Melvin B. Herrin
Dean Henkel 3,782
David Underwood 3,318.47
Gary Mankoff 2,941
Donald W. Kosterka, as Trustee of 1,551.94
the Donald Kosterka Trust dated
5/17/92
John Maranov 1,029
David Horowitz 588
John McInerney 499.39
Dennis McGuin 484
Mary Frances Griffin 484
Robert Eliason 220.5
Zenas Block 147
Daniel Santry 73.5
Steven Frazier 73.5
Craig Wilson 73.5
Richard Mazurek 73.5
---------
TOTAL 196,245.5
</TABLE>
<PAGE>
(iii) Options:
The following options for the purchase of shares of the Company's Series A
Common Stock have been granted pursuant to the Company's 1998 Stock Option Plan:
<TABLE>
<CAPTION>
Options for
following
Number of
Optionees Shares
- --------- -----------
<S> <C>
Daniel Santry 152
Robert Eliason 152
Richard Mazurek 152
Craig Wilson 152
Walter Lawhead 152
Steve Frazier 152
John McInerney 152
</TABLE>
Stock to be issued under these options is to be acquired by the Company from the
Herrins and their respective trusts, pursuant to the Stock Purchase Agreement
dated as of March 12, 1998, which is listed as item (e) in Schedule 8.06 hereto.
-------------
Pursuant to a 1etter agreement regarding equity recapitalization, dated as of
September 10, 1998, entered into among the Company and its stockholders, and on
the terms and conditions set forth therein, the Company has agreed to offer
certain shares of its common stock to its employees and to adopt a stock option
plan providing for the issuance of options representing 10% of its outstanding
common stock (on a fully-diluted basis).
<PAGE>
ATTACHMENT F1
TO SCHEDULE 6.19
COPY UNREADABLE
<PAGE>
SCHEDULE 8.01
-------- ----
Existing Liens
Liens disclosed in lien searches conducted by the Agent, copies of
which have been delivered to the Agent as set forth below.
Liens in connection with hire purchase and finance leases of Target
and its Subsidiaries.
(SEE ATTACHED)
<PAGE>
SCHEDULE 8.01
<TABLE>
<CAPTION>
FILING SECURED COLLATERAL/OTHER FILING
JURISDICTION DEBTOR UCC NUMBER PARTY INFORMATION DATE
<S> <C> <C> <C> <C> <C> <C>
Sec of State, Illinois AGI, Inc. X 3216642 Scitex America Corp. One (1) Doley 400 PS 1/28/94
8 Oak Park Drive One (1) Automatic Trapping
Bedford, MA 01730 Option; One (1) 32 MB to 64MB
RAM Upgrade; One (1) IRIS 3024
with FRP; One (1) PS/2 to MS
3000 Interface; One (1) PS Link
Sec of State, Illinois AGI, Inc. X 3223646 Fuji Photo Film U.S.A., Inc. PSI 300H Processor, serial 2/17/94
555 Taxler Road #81741054; DUI300 Dryer Unit
Elmsford, NY 10523 serial #81745475
Sec of State, Illinois AGI, Inc. X 3231176 Leasetec Corp. Leased Equipment; Dataram 3/11/94
1401 Pearl Street 128MB; Memory for VAX 65XX
Boulder, CO 80302
Sec of State, Illinois AGI, Inc. X 3231177 Leasetec Corp. Leased Equipment 3/11/94
1401 Pearl Street
Boulder, CO 80302
Sec of State, Illinois AGI, Inc. X 3240453 Canon Financial Services, Inc. Canon Fax L700 Serial 4/4/94
200 Commerce Sq. Blvd. #UBF56079; Lease #31184.05
Burlington, NJ 08016
Sec of State, Illinois AGI, Inc. X 3298783 MLP U.S.A., Inc. One (1) Mitsubishi 5PC-71D, 37" 8/25/94
600 Barclay Blvd. x 51"; seven (7) color sheetfed
Lincolnshire, IL 60069 printing press, together with
auxiliary equipment
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Sec of State, Illinois AGI, Inc. X *3350647 Leasetec Corporation Electronic, data processing 1/10/95
1401 Pearl Street equipment, including all
Boulder, CO 80302 equipment and proceeds covered
by MLA #LA-1138 and Schedule
1.4-1138 for AGI, Inc.
Sec of State, Illinois AGI, Inc. X 3354976 DuPont Printing & Publishing Two (2) Mark V 85 Plate 1/23/95
One Pierce Place 500W Processors; One (1) DuPont 37C
Itasca, IL 60143 Mark II Film Processor; One (1)
DuPont Waterproof Laminator,
One (1) DuPont Waterproof
Washoff Unit
Sec of State, Illinois AGI, Inc. X 3378615 Security Pacific Equipment Various equipment under lease 3/21/95
Leasing, Inc.
4 Embarcadero Center, Ste.
1200
San Francisco, CA 94111
Sec of State, Illinois AGI, Inc. X 3399474 DuPont Printing & Publishing One (1) DuPont 49C Mark II Film 5/12/95
1 Pierce Place, 500W Processor, complete with all
Itasca, IL 60143 present and future attachments,
replacements, substitutions and
additions
Sec of State, Illinois AGI, Inc. X 3408938 Canon Financial Services, Inc. Various equipment; copiers 6/6/95
200 Commerce Square Blvd.
Burlington, NJ 08016
Sec of State, Illinois AGI, Inc. X 3417819 Security Pacific Equipment Various equipment under lease 6/28/95
Leasing, Inc.
4 Embarcadero Center, Ste.
1200
San Francisco, CA 94111
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Sec of State, Illinois AGI, Inc. X 3431192 Digital Financial Services, a Various equipment under lease 8/2/95
division of General Electric
Capital Corporation
400 Computer Dr.
Westborough, MA 01581
Sec of State, Illinois AGI, Inc. X 3451493 Bobst Group, Inc. One (1) Bobst Model SP 130 ER 9/27/95
146 Harrison Ave. 11 Die Cutter/Blanker S/N 057702
Roseland, NJ 07068 101, with all parts, accessories
and attachments
Sec of State, Illinois AGI, Inc. X 3471665 Canon Financial Services, Inc. Various equipment under lease 11/17/95
200 Commerce Square Blvd.
Burlington, NJ 08016
Sec of State, Illinois AGI, Inc. X 3541204 MAN Roland, Inc. One (1) new MAN Roland 700 5/15/96
Sheetfed Press Division Series; Six Color Offset
800 E. Oak Hill Drive Printing Press, S/N:
Westmont, IL 60559 26087B/7820, including all
accessories and components
Sec of State, Illinois AGI, Inc. X 3555334 Security Pacific Equipment Equipment generally described 6/18/96
Leasing, Inc. as personal property leased
555 California St., 4th Fl. under lease agreement
San Francisco, CA 94104
Sec of State, Illinois AGI, Inc. X 3567055 The CIT Group/Equipment (3) Hanagata HP-1021; (2) JD 7/18/96
Financing, Inc. 2012 Shrinktunnel; (1) Weldotron
900 Ashwood Parkway 7221 Tunnel (various equipment
Atlanta, GA 30339 under lease)
Sec of State, Illinois AGI, Inc. X 3596793 Sanwa Business Credit Corp. Six (6) new 1996 Kalmar AC 10/9/96
One S. Wacker Dr. Forklift Model C30BL, including
Chicago, IL 60606 parts, repairs, attachments, etc.
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Sec of State, Illinois AGI, Inc. X 3603236 Canon Financial Services, Inc. Equipment; copiers under lease 10/25/96
200 Commerce Square Blvd.
Burlington, NJ 08016
Sec of State, Illinois AGI, Inc. X 3607664 LMA Capital Group, LLC 01 Great Lakes TS-37 Lease 11/6/96
2000 Powell St., Ste. 1203 No. Z07962493
Emeryville, CA 91608
Sec of State, Illinois AGI, Inc. X 3611981 LMA Capital Group, LLC 01 Great Lakes TS-37 11/14/96
2000 Powell St., Ste. 1203
Emeryville, CA 94608
Assignee:
CTT Group/Equipment
Financing, Inc.
900 Ashwood Parkway
Atlanta, GA 30338
Sec of State, Illinois AGI, Inc. X 3662338 Digital Financial Services, Various equipment under lease 3/12/97
a division of General Electric
Capital Corporation
1400 Computer Dr.
Westborough, MA 01581
Sec of State, Illinois AGI, Inc. X 3675586 Sanwa Business Credit Corp. One 1997 Kalmar AC Forklift, 4/10/97
One S. Wacker Dr. including replacements, parts,
Chicago, IL 60606 repairs, attachments, accessories
Sec of State, Illinois AGI, Inc. X 3677481 DuPont Printing & Publishing One waterproof system 4/15/97
1 Pierce Place, 500W
Itasca, IL 60141
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Sec of State, Illinois AGI, Inc. X 3683359 Patriot Printing Ink Co. All printing ink materials, 4/28/97
2842 S. 17th Ave. supplies and equipment bearing
Broadview, IL 60153 the label Patriot Printing
Assignee: Patriot Ink Co.
Printing Ink Company, LLC
2842 South 17th Avenue
Broadview, IL 60153
Sec of State, Illinois AGI, Inc. X 3683360 Patriot Printing Ink Co. All printing ink materials, 4/28/97
2842 S. 17th Ave. supplies and equipment bearing
Broadview, IL 60153 the label Patriot Printing
Assignee: Patriot Ink Co.
Printing Ink Company, LLC
2842 South 17th Avenue
Broadview, IL 60153
Sec of State, Illinois AGI, Inc. X 3704210 Security Pacific Equipment Various equipment under lease 6/17/97
Leasing, Inc.
555 California St., 4th Fl.
San Francisco, CA 94104
Sec of State, Illinois AGI, Inc. X 3737139 Security Pacific Equipment Various equipment under lease 9/9/97
Leasing, Inc.
555 California St., 4th Fl.
San Francisco, CA 94104
Sec of State, Illinois AGI, Inc. X 3748725 Canon Financial Services, Inc. Copier under lease 10/8/97
200 Commerce Square Blvd.
Burlington, NJ 08016
Sec of State, Illinois AGI, Inc. X 3872858 Summit Funding Group, Inc. Various equipment under lease 6/29/98
Sec of State, Illinois AGI, Inc. X 3875853 Relational Funding Corp. Various equipment under lease 7/7/98
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Cook County, Illinois AGI, Inc. X 97U12944 Security Pacific Equipment Various equipment under lease 10/27/97
Leasing, Inc.
555 California St., 4th Floor
San Francisco, CA 94104
Cook County, Illinois AGI, Inc. 95-656324 Bobst Group, Inc. Fixture statement
146 Harrison Ave. -----------------
Roseland, NJ 07068 That certain real property
located at
1950 North Ruby Street,
Melrose Park, IL 60160
Morgan County, Illinois AGI, Inc. X 445847 Security Pacific Equipment Equipment generally described 3/20/95
Leasing, Inc. as personal property leased
4 Embarcadero Center, under lease agreement
Ste. 1200
San Francisco, CA 94111
Morgan County, Illinois AGI, Inc. X 448061 Security Pacific Equipment Equipment generally described 3/26/95
Leasing, Inc. as personal property leased
4 Embarcadero Center, under Lease Agreement
Ste. 1200 #950018
San Francisco, CA 94111
Morgan County, Illinois AGI, Inc. X 457466 Security Pacific Equipment Fixture filing
Leasing, Inc.
4 Embarcadero Center,
Ste. 1200
San Francisco, CA 94111
Morgan County, Illinois AGI, Inc. X 473907 Security Pacific Equipment Equipment generally described 3/23/98
Leasing, Inc. as personal property leased
555 California Street, under Lease Agreement
4th Floor #950018
San Francisco, CA 94104
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Dept of State, AGI, Inc. X 110048 Lessor: Various equipment under lease 5/29/97
New York Canon Financial Services, Inc.
200 Commerce Square Blvd.
Burlington, NJ 08016
Dept of State, AGI, Inc. X 139308 Summit Funding Group, Inc. Various equipment under lease 6/29/98
New York
New York County, AGI, Inc. X 97PN250l3 Lessor: One Copier, Model NP6035 6/6/97
New York Canon Financial Services, Inc.
200 Commerce Square Blvd.
Burlington, NJ 080l6
New York County, AGI, Inc. ref no: Plaintiff: Interstate Amount: $3,574.00
New York E603577 Industrial Supplies of
Suit: SC
06044490-90
New York County, AGI, Inc. ref no: Plaintiff: Mastrix Amount: $8,315.00
New York E309443 Graphics, Inc.
Suit: SC-
04678888-88
New York County, AGI, Inc. X 98PN34996 Summit Funding Group, Inc. Various equipment under lease 7/7/98
New York
Dept of State, Klearfold, X 232100 Atlantic Commercial Alliance (1) Reconditioned 1992 Yale 11/4/93
New York Inc. Inc. Doubel Reach truck
109 Bedford Avenue
Bellmore, NY 11710
Assignee:
First Bank Richmond, SB
P.O. Box 1145
Richmond, IN 47375
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Sec of Commonwealth, Klearfold, X 21440469 MetLife Capital Corp Bobst Model SP I 120-BR Die 12/8/92
Pennsylvania Inc. C97550 Cutter; Bobst Model SP 1260-
Bellevue, WA 98009 EGC Die Cutter; equipment
under lease
Sec of Commonwealth, Klearfold, X 21611634 Phoenixcor, Inc. One Model KP Royal 33" high 2/4/93
Pennsylvania Inc. 65 Water St. speed, high productive 180 pre
South Norwalk, CT 06854 folder/gluer/w/standard factory
equipment inclusive of main
drive and controls
Sec of Commonwealth, Klearfold, X 22591308 Tilden Financial Corp. Various equipment under lease 11/18/93
Pennsylvania Inc. 190 Motor Parkway
Hauppauge, NY 11788
Assignee:
TransFinancial Leasing Corp.
898 Airport Park Road,
Ste. 204
Glen Burnie, MD 21061
Sec of Commonwealth, Klearfold, X 22670897 Lessor: Various equipment under lease 12/15/93
Pennsylvania Inc. Bobst Group, Inc.
146 Harrison Ave.
Roseland, NJ 07068
Sec of Commonwealth, Klearfold, X 22730094 UJB Leasing Corporation Model KF Royal folder/gluer 1/4/94
Pennsylvania Inc. 25 East Salem St. as described on the attached
Hackensack, NJ 07602 schedule; leased equipment
Sec of Commonwealth, Klearfold, X 22730097 UJB Leasing Corporation Model KF Royal folder/gluer 1/4/94
Pennsylvania Inc. 25 East Salem St. as described on the attached
Hackensack, NJ 07602 schedule; leased equipment
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Sec of Commonwealth, Klearfold, X 22750441 General Electric Capital Corp. One Royal Zenith Planeta 1/11/94
Pennsylvania Inc. 18 Sentry Park/West, Ste. 450 Variant 6 Color 40" Press as
1787 Sentry Parkway West described on Annex A
Blue Bell, PA 19422
Sec of Commonwealth, Klearfold, X 23180063 General Electric Capital Corp. Various equipment as more 5/31/94
Pennsylvania Inc. 18 Sentry Park/West, Ste. 450 fully described on
1787 Sentry Parkway West Annex A
Blue Bell, PA 19422
Sec of Commonwealth, Klearfold, X 23481416 General Electric Capital Corp. One new Kohmann Window 9/6/94
Pennsylvania Inc. 18 Sentry Park/West, Ste. 450 Patching and lining machine
1787 Sentry Parkway West including Timed Belt feed.
Blue Bell, PA 19422
Sec of Commonwealth, Klearfold, X 23650699 CIT Group Equipment Leased property more fully 10/26/94
Pennsylvania Inc. Financing, Inc. described on Exhibit A
1620 W. Fountainhead Pkwy,
Ste. 600
Tempe, AZ 85282-0000
Sec of Commonwealth, Klearfold, X 23950409 E.I. DuPont De Nemours & Co. **no attachment 1/20/95
Pennsylvania Inc. Rte. 141 & Lancaster Pike
Barley Mill Plaza 15-2282
Wilmington, DE 19880-0015
Sec of Commonwealth, Klearfold, X 24091702 Raymond Leasing Corp One Raymond Eaal-R30TT; One 3/20/95
Pennsylvania Inc. 20 S. Canal St Trojan Battery; One Mac Charger
Greene, NY 13778
Sec of Commonwealth, Klearfold, X 24390784 Tilden Financial Corp. Various equipment under lease 6/15/95
Pennsylvania Inc. 190 Motor Pkwy
Hauppauge, NY 11788-0000
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Sec of Commonwealth, Klearfold, X 24550400 New England Capital Corp Various equipment under lease 8/7/95
Pennsylvania Inc. 30 Avon Meadow Lane
Avon, CT 06001
Sec of Commonwealth, Klearfold, X 24640556 New England Capital Corp Various equipment under lease 9/5/95
Pennsylvania Inc. 30 Avon Meadow Lane
Avon, CT 06001
Sec of Commonwealth, Klearfold, X 24670503 General Electric Capital Corp One Wide Web Vinyl 9/14/95
Pennsylvania Inc. 18 Sentry Park/West Ste. 450 Cutting Machine and any and
1787 Sentry Parkway West all attachments
Blue Bell, PA 19422
Sec of Commonwealth, Klearfold, X 24670504 General Electric Capital Corp Four HVAC Model DBHB- 9/14/95
Pennsylvania Inc. 18 Sentry Park/West, Ste. 450 W240A 20, Rooftop, Cooling
1787 Sentry Parkway West Only Systems, with any and all
Blue Bell, PA 19422 attachments
Sec of Commonwealth, Klearfold, X 24981542 Advanta Business Services Corp. All of debtors right, title & 12/10/95
Pennsylvania Inc. P.O. Box 4228 interest in and to that certain
Voorhees, NJ 08043-0000 software license agreement
between equipment vendor and
debtor
Sec of Commonwealth, Klearfold, X 25001386 Secured Party: Various manufacturing 12/22/95
Pennsylvania Inc. FSG Leasing, Inc. machines
329 Prince George St.
Laurel, MD 20707
Assignee:
CIT Group Equipment
Financing, Inc.
900 Ashwood Parkway
Atlanta, GA 30338-0000
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Sec of Commonwealth, Klearfold, X 25001390 CIT Group Equipment Various manufacturing machines 12/22/95
Pennsylvania Inc. Financing, Inc.
900 Ashwood Parkway
Atlanta, GA 30338-0000
Sec of Commonwealth, Klearfold, X 25110970 Advanta Business Services Various equipment 1/30/96
Pennsylvania Inc. Corp.
P.O. Box 1228
Voorhees, NJ 08043-0000
Sec of Commonwealth, Klearfold, X 25260441 Associates Leasing, Inc. One used Nissan Forklift 3/18/96
Pennsylvania Inc. 8001 Ridgepoint Dr. Model C50Y
Irving, TX 75063-3117
Sec of Commonwealth, Klearfold, X 25580668 Norwest Equipment Finance Inc. Various equipment 6/21/96
Pennsylvania Inc. 733 Marquette Ave. under lease
Minneapolis, MN 55479-0000
Sec of Commonwealth, Klearfold, X 25580670 Norwest Equipment Finance Inc. Various equipment 6/21/96
Pennsylvania Inc. 733 Marquette Ave. under lease
Minneapolis, MN 55479-0000
Sec of Commonwealth, Klearfold, X 25890516 Canon Financial Services, Inc. Copiers 9/25/96
Pennsylvania Inc. 200 Commerce Square Blvd.
Burlington, NJ 08016-0000
Sec of Commonwealth, Klearfold, X 26020089 E.I. Dupont De Nemours & Co. Waterproof Wash-off Unit; 10/31/96
Pennsylvania Inc. 1007 Market St. Waterproof Laminator; Howson
Wilmington, DE 19898 MKIV 105 Plate Processor
Sec of Commonwealth, Klearfold, X 26551354 E.I. DuPont De Nemours & Co. One used 40" Autoneg 4/10/97
Pennsylvania Inc. Rte. 141 & 48 MKIV Plate Proc
Barley Mill Plaza 30-2221
Wilmington, DE 19805
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Sec of Commonwealth, Klearfold, X 26830166 Man Roland Inc. One Man Roland 706LTLV 40" 6/26/97
Pennsylvania Inc. Sheetfed Press Division Double Coated Offset Printing
800 E. Oak Hill Dr. Press with standard equipment and
Westmont, IL 60559-0000 optional accessories
Sec of Commonwealth, Klearfold, X 28610265 INX International Ink Little Joe Proofing and Press, 2/27/98
Pennsylvania Inc. Company various scales, curing unit,
mixers and office and other
specific equipment
Sec of Commonwealth, Klearfold, X 29291429 Associates Leasing, Inc. Used NISSAN Model C50K 8/19/98
Pennsylvania Inc.
Buck County, Klearfold, X 92-63929 Bobst Equipment Finance Bobst Model SP 1 120-ER Die 12/8/92
Pennsylvania Inc. Company, Inc. Cutter; Bobst Model SP 1260-
146 Harrison Ave. EGC Die Cutter, leased equipment
Roseland, NJ 07068
Assignee: MetLife Capital
Corporation C-97550
Bellevue, Washington 98009
Bucks County, Klearfold, X 93-60252 Phoenixcor, Inc. One model IKF Royal 33" high 1/27/93
Pennsylvania Inc. 65 Water Street speed, high productive 180
Glen Burnie, MD 21061 prefold folder/gluer w/standard
factory equipment inclusive of
main drive motor & controls,
including all replacements,
parts, repair, additions and
attachments. Location of equip:
364 Valley Road, Warrington,
PA 18976
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Bucks County, Klearfold, X 93-63766 Bobst Equipment Finance Various equipment under lease 12/15/93
Pennsylvania Inc. Company, Inc.
146 Harrison Ave.
Roseland, NJ 07068
Bucks County, Klearfold, X 94-60001 UJB Leasing Corp Model KF Royal folder/gluer 1/3/94
Pennsylvania Inc. 25 E. Salem St. as described on the attached
Hackensack, NJ 07602 schedule; Location of equipment:
Louisa Industrial Air Park, Rte.
780, Louisa, Virginia 23093
Bucks County, Klearfold, X 94-60086 General Electric Capital Corp. One Royal Zenith Planeta Variant 1/14/94
Pennsylvania Inc. 18 Sentry Park/West, Ste. 450 6 Color 40" Press S/N 148953.
1787 Sentry Parkway/West Location: 364 Valley Rd.,
Blue Bell, PA 19422 Warrington, PA 18976
Bucks County, Klearfold, X 94-61595 General Electric Capital Corp. Various equipment 5/19/94
Pennsylvania Inc. 18 Sentry Park/West, Ste 450 under lease
1787 Sentry Parkway/West
Blue Bell, PA 19422
Bucks County, Klearfold, X 94-63495 CIT Group/Equipment Leased property more fully 10/26/94
Pennsylvania Inc. Financing, Inc. described on Exhibit A
1620 West Fountainhead
Ste. 600, Tempe, AZ 85282
Bucks County, Klearfold, X 95-61946 Tilden Financial Corp. Various equipment under lease 6/15/95
Pennsylvania Inc. 190 Motor Parkway
Hauppauge, NY 11788
Bucks County, Klearfold, X 95-62612 New England Capital Corp. Various equipment under lease 8/7/95
Pennsylvania Inc. 30 Avon Meadow Lane
Avon, CT 06001
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Bucks County, Klearfold, X 95-62982 New England Capital Corp Various equipment under lease 9/6/95
Pennsylvania Inc 30 Avon Meadow Lane
Avon, CT 06001
Bucks County, Klearfold, X 95-63158 General Electric Capital Four (4) HVAC Model DBHB- 9/22/95
Pennsylvania Inc. Corporation W240A; 20 Ton, Rooftop,
1787 Sentry Parkway West Cooling only system
Bldg 16/Ste. 2007
Blue Bell, PA 19422
Bucks County, Klearfold, X 95-67087 Advanta Business Various equipment under lease; 12/19/95
Pennsylvania Inc. Services Corp. All of the debtor's right,
P.O. Box 1228-UCC title and interest in and to
Voorhees, NJ 08043 that certain software license
agreement between the equipment
vendor and the debtor
Bucks County, Klearfold, X 96-60090 CIT Group/Equipment Various manufacturing machines 1/11/96
Pennsylvania Inc. Financing Inc.
900 Ashwood Pkwy
Atlanta, GA 30338
Bucks County, Klearfold, X 96-60091 CIT Group/Equipment Various manufacturing machines 1/11/96
Pennsylvania Inc. Financing Inc.
900 Ashwood Pkwy
Atlanta, GA 30338
Bucks County, Klearfold, X 96-60289 Advanta Business Services Various equipment including: 1/30/96
Pennsylvania Inc. Corp. DMP 1912, DMP 670 KEY, DMP
P.O. Box 1228-UCC 893 DUAL LINE, DMP 881
Voorhees, NJ 08043 ZONE B...
Bucks County, Klearfold, X 96-60816 Associates Leasing Inc. One used Nissan Forklift 3/18/96
Pennsylvania Inc. 8001 Ridgepoint Drive Model C50Y
Irving, TX 75063-3117
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Bucks County, Klearfold, X 97-62236 Man Roland Inc. One Man Roland 706LTLV 40" 6/27/97
Pennsylvania Inc. Sheetfed Press Division Double Coater Offset Printing
800 East. Oak M Drive Press, with all the standard
Westmont, IL 60559 equipment and the following
accessories: Power Plate Loading,
Computer Controlled Inker, Tri-
Services Single Xone Cooling
System, Ternes PPL Punch,
Electronic Plate Scanner,
Register Quality magnifier
Bucks County, Klearfold, X 120850/16- MetLife Capital Corp Bobst Model SP 1120 ER Die Cutter
Pennsylvania Inc. 359-2 C-97550 **Copy of original is unavailable
Bellevue, WA 98009
Bucks County, Klearfold, X 67923 G.E. Capital Corp (4) H.V.C. Model DBHB-W240A
Pennsylvania Inc. 1787 Sentry Pkwy W. 20 Ton.....
Blue Bell, PA 19422 ***Copy of original financing
statement is unavailable
Bucks County, Klearfold, X 53258 G.E. Capital Corp Various types of equipment
Pennsylvania Inc. 1797 Sentry Pkwy W. ***Copy of original financing
Blue Bell, PA 19422 statement is unavailable
Bucks County, Klearfold, X 6201 G.E. Capital Corp I Royal Zenith Planeta Variant 6
Pennsylvania Inc. l787 Sentry Pkwy W. Color 40" Press #148953
Blue Bell, PA 19422 ***Copy of original financing
statement is unavailable
Bucks County, Klearfold, X 134307 Bobst Equipment Finance Model SP 103 ER Die Cutter,
Pennsylvania Inc. Co., Inc. Parts & Model SP 1260, EGC
46 Harrison Ave. Die Cutter
Roseland, NJ 07068 ***Copy unavailable
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
State Corporation Klearfold, X 9401037390 UJB Leasing Corp Model KF Royal Folder/Gluer as 1/3/94
Commission, Virginia Inc. 26 E. Salem St. described on the attached
Hackensack NJ 07602 schedule
State Corporation Klearfold, X 9409067057 GE Capital Corp One Kohmann New Window 9/6/94
Commission, Virginia Inc. l787 Sentry Parkway/West Patching and Lining Machine
16 Sentry Park/West Ste 200 Model F-1050/2 (two-stream)
Blue Bell, PA 19422 including timed belt feeder with
any and all attachments and
additions; equip location:
Louisa Industrial Airpark,
Louisa, VA 23093
State Corporation Klearfold, X 9410267151 The CIT Group/Equipment Leased equipment 10/26/94
Commission, Virginia Inc. Financing, Inc.
1620 W. Fountainhead Pkwy,
#500
Tempe, AZ 85282
State Corporation Klearfold, X 9509057103 New England Capital Corp Various equipment under lease 9/5/95
Commmission, Virginia Inc. 30 Avon Meadow Lane agreement
Avon, CT 06001
State Corporation Klearfold, X 9509147716 GE Capital Corp One wide web vinyl cutting 9/14/95
Commission, Virginia Inc. 1787 Sentry Parkway/West machine plus any and all
Building 16, Ste. 200 attachments
Blue Bell, PA 19422
State Corporation Klearfold, X 9512287814 CIT Group/Equipment Various manufacturing machines 12/22/95
Commission, Virginia Inc. Financing, Inc.
900 Ashwood Parkway
Atlanta, GA 30338
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Louisa County, Klearfold, X 7092 TransFinancial Leasing Corp. Various equipment under lease
Virginia Inc. 898 Airport Park Rd., Ste. 204
Glen Burnie, MD 21061-2558
Louisa County, Klearfold, X 7117 UJB Leasing Corp Various equipment under lease
Virginia Inc. 25 East Salem St.
Hackensack, NJ 07602
Louisa County, Klearfold, X 7279 G.E. Capital Corp. One Kohmann New Window Patching
Virginia Inc. 1787 Sentry Parkway/West and Lining Machine Model P-1050/2
16 Sentry Park/West, Ste. 200 (two-stream) incl. Timed Belt
Blue Bell, PA 19422 Feeder S/N 15372-58 with any and
all attachments and additions.
Location: Louisa Industrial
Airpark, Louisa, VA 23093
Louisa County, Klearfold, X 7280 G.E. Capital Corp. One Kohmann New Window Patching
Virginia Inc. 1787 Sentry Parkway/West and Lining Machine Model F-1 050/2
16 Sentry Park/West, Ste. 200 (two-stream) incl. Timed Belt
Blue Bell, PA 19422 Feeder S/N 15372-58 with any and
all attachments and additions.
Location: Louisa Industrial
Airpark, Louisa, VA 23093
Louisa County, Klearfold, X 7325 The CIT Group Equipment Leased equipment
Virginia Inc. Financing, Inc.
1620 West Fountainhead
Parkway, Ste. 600
Tempe, AZ 85282
Louisa County, Klearfold, X 7519 FSG Leasing, Inc. Leased equipment
Virginia Inc. 329 Prince George Street
Laurel, MD 20707
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Louisa County, Klearfold, X 7525 G.E. Capital Corp. Fixture filing
Virginia Inc. 1787 Sentry Parkway/West --------------
16 Sentry Park/West Ste. 200 One Wide Web Vinyl Cutting
Blue Bell PA 19422 Machine plus any attachments
Louisa County, Klearfold, X 7526 G.E. Capital Corp. One Wide Web Vinyl Cutting
Virginia Inc. 1787 Sentry Parkway/West Machine plus any and all
16 Sentry Park/West, Ste. 200 attachments
Blue Bell, PA 19422
Louisa County, Klearfold, X 7603 The CIT Group Equipment Various Manufacturing Machines
Virginia Inc. Financing, Inc.
900 Ashwood Parkway
Atlanta, GA 30338
</TABLE>
<PAGE>
SCHEDULE 8.01
[Pages 52, 53 & 54 UNREADABLE]
<PAGE>
SCHEDULE 8.04
-------------
Existing Investments
Investments by the Credit Party and each of its Subsidiaries existing on
the Initial Funding Date in those Subsidiaries listed on Schedule 6.19 hereto.
----
Investments by Target in an amount of (Pounds)784,100 in B.H. Matthews
Limited incurred in connection with the sale by Target of Howards Labels Limited
as set forth in an agreement for sale and purchase of the entire issued share
capital of Howards Labels Limited.
<PAGE>
Exhibit 10.66
SECOND AMENDMENT
----------------
This Second Amendment (this "Amendment") is entered into as of this
13th day of November, 1998 among IMPAC GROUP, INC., a Delaware corporation (the
- ----
"Company"), AGI INCORPORATED, an Illinois corporation ("AGI"), KLEARFOLD, INC.,
------- ---
a Pennsylvania corporation ("Klearfold", and together with AGI, each a "L/C
--------- ---
Borrower" and collectively, the "L/C Borrowers"), Bank of America National Trust
- -------- -------------
& Savings Association, as Agent (the "Agent"), and the financial institutions
-----
from time to time party thereto (the "Lenders"). Unless otherwise specified
-------
herein, capitalized terms used in this Amendment shall have the meanings
ascribed to them by the Credit Agreement (as defined below).
RECITALS
--------
WHEREAS, the Company, the L/C Borrowers, the Agent and the Lenders are
party to the Amended and Restated Multicurrency Credit Agreement, dated as of
March 12, 1998 and as amended and restated as of July 7, 1998 (as amended by
that certain First Amendment dated September 11, 1998, and as the same may be
further amended, supplemented, restated or otherwise modified from time to time
in accordance with its terms and in effect, the "Credit Agreement");
----------------
WHEREAS, the Company, the L/C Borrowers, the Agent and the Lenders
wish to enter into certain amendments to the Credit Agreement;
NOW THEREFORE, in consideration of the mutual execution hereof and
other good and valuable consideration, the parties hereto agree as follows:
Section 1. Amendments.
-----------
(a) Clause (j) of Section 2.07 of the Credit Agreement is hereby
amended by deleting said clause in its entirety and inserting in lieu thereof
the following new clause (j)(i) and (ii):
"(j) (i) The Company shall prepay the Term Loans in an amount
equal to 100% of the insurance proceeds received by the Company or any
Subsidiary following a casua1ty involving such Person's Property, to the
extent not applied (or committed to be applied) within 90 days after the
consummation or receipt thereof, as applicable, to the purchase of
replacement assets that are not classified as current assets under GAAP and
are used or useful in the business of the Company and its Subsidiaries.
Such prepayment shall be made on the 90th day after receipt of such
insurance proceeds and the amount of such prepayment shall be applied
(i) subject to paragraph (o) below, on a ratable basis among the then
outstanding Term Loans, and (ii) on a ratable basis among all remaining
payments in each such Term Loan with such proceeds to be applied first, to
the extent possible, to prepay
<PAGE>
Base Rate Loans and then to prepay Offshore Rate Loans. The Company shall
use its commercially reasonable efforts to notify the Agent and each Lender
holding a Term Loan of the amount of any required prepayment at least three
(3) Business Days before it is made. To the extent a prepayment would
otherwise be required under this clause, but the outstanding principal
balance of Term Loan A has been repaid in full and the only remaining
portion of the Aggregate Term Loan A Commitment remaining is being utilized
for the Bidco Loan Notes Credit Support, then the aggregate amount of such
prepayment shall be applied to prepay Term Loan B as otherwise required
pursuant to this clause and without giving effect to Section 2.07(o).
---------------
(ii) The Company shall prepay the Loans in an amount equal to
100% of the proceeds received by the Company or any Subsidiary from any
incurrence of any Indebtedness by the Company or any of its Subsidiaries
(other than Indebtedness permitted by Section 8.05 as said Section is in
effect on the Initial Funding Date). Such prepayment shall be made on the
receipt of such proceeds and the amount of such prepayment shall be applied
(i) subject to paragraph (o) below, on a ratable basis among the then
outstanding Term Loans, and (ii) on a ratable basis among all remaining
payments in each such Term Loan with such proceeds to be applied first, to
the extent possible, to prepay Base Rate Loans and then to prepay Offshore
Rate Loans. The Company shall use its commercially reasonable efforts to
notify the Agent and each Lender holding a Term Loan of the amount of any
required prepayment at least three (3) Business Days before it is made. To
the extent a prepayment would otherwise be required under this clause, but
the outstanding principal balance of Term Loan A has been repaid in full
and the only remaining portion of the Aggregate Term Loan A Commitment
remaining is being utilized for the Bidco Loan Notes Credit Support, then
the aggregate amount of such prepayment shall be applied to prepay Term
Loan B as otherwise required pursuant to this clause and without giving
effect to Section 2.07(o)."
---------------
(b) Clause (d) of Section 9.03 of the Credit Agreement is hereby
amended by deleting said clause in its entirety and inserting in lieu thereof
the following new clause (d):
"(d) Notwithstanding the foregoing, upon the occurrence of any event
specified in Sections 9.0l(f) or (g) (in the case of clause (i) of Section
---------------- --- -------
9.01(g) upon the expiration of the 60-day period mentioned therein), the
- -------
commitment and obligation of each Lender to make Loans and any obligation of the
Issuing Bank to Issue Letters of Credit shall automatically terminate and the
unpaid principal amount of all outstanding Loans and all interest and other
amounts and obligations as aforesaid (including, without limitation, under
clause (c) above) shall automatically become due and payable without further act
- ----------
of the Agent, the Issuing Bank or any Lenders."
(c) Clause (b) of Section 11.01 of the Credit Agreement is
hereby amended by deleting said clause in its entirety and inserting in lieu
thereof the following new clause (b):
2
<PAGE>
"(b) postpone or delay any scheduled amortization payment date fixed
by this Agreement or any other Loan Document for any payment of principal,
interest, fees, or other amounts due to the Lenders (or any of them) hereunder
or under any other Loan Document;"
(d) The proviso contained at the end of Section 11.01 is hereby
amended by deleting said proviso in its entirety and inserting in lieu thereof
the following new proviso:
"and, provided further, that (i) no amendment, waiver or consent
shall, unless in writing and signed by the Issuing Bank in addition to the
Majority Lenders or all the Lenders, as the case may be, affect the rights or
duties of the Issuing Bank under this Agreement or any L/C-Re1ated Document
relating to any Letter of Credit Issued or to be Issued by it, (ii) no
amendment, waiver or consent shall, unless in writing and signed by the Agent in
addition to the Majority Lenders or all the Lenders, as the case may be, affect
the rights or duties of the Agent under this Agreement or any other Loan
Document, (iii) no amendment, waiver or consent shall unless in writing and
signed by the Swing Line Lender in addition to the Majority Lenders or all
Lenders, as the case may be, affect the rights or duties of the Swing Line
Lender under this Agreement, (iv) without limiting clauses (a) through (f)
above, no amendment, waiver or consent shall, unless signed by Lenders holding a
majority of a particular Loan (determined by reference to outstanding
Commitments or, if no Commitments are then outstanding, outstanding principal
amount), affect the rights of such Lenders to receive or defer payment in
respect of such Loan, and (v) the Fee Letter may be amended, or rights or
privileges thereunder waived, in a writing executed by the parties thereto."
Section 2. Reference to and Effect Upon the Agreement.
-------------------------------------------
(a) Except as specifically amended above, the Agreement
shall remain in full force and effect and are hereby ratified and
confirmed.
(b) The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right power or
remedy of the Bank under the Agreement, nor constitute a waiver of
any provision of the Agreement, except as specifically set forth
herein. Upon the effectiveness of this Amendment, each reference
in the Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of similar import shall mean and be a reference
to the Agreement as amended hereby.
Section 3. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
Section 4. Headings. Section headings in this Amendment are included
--------
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.
3
<PAGE>
Section 5. Counterparts. This Amendment may be executed in any number
------------
of counterparts, each of which when so executed shall be deemed an original but
all such counterparts shall constitute one and the same instrument.
Section 6. Effectiveness. This Amendment shall become effective as of
-------------
the date first written above upon the delivery of executed signature pages for
this Amendment signed by the Company, the L/C Borrowers and each Lender.
Section 7. Representations and Warranties. Each of the Company and
------------------------------
each L/C Borrower hereby represents and warrants as to itself that:
(a) The execution, delivery and performance by each such
Person of this Amendment have been duly authorized by all
necessary corporate action and that this Amendment constitutes the
legal, valid and binding obligation of such Person, enforceable
against such Person in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating
to enforceability;
(b) Each of the representations and warranties contained in
the Credit Agreement is true and correct in all material respects
on and as of the date hereof as if made on the date hereof (except
to the extent such representations and warranties expressly refer
to an earlier date, in which case they are true and correct as of
such earlier date); and
(c) After giving effect to this Amendment, no Default or
Event of Default has occurred and is continuing.
Section 8. Reaffirmation of Guaranties. The Company and each L/C
------------- -- ----------
Borrower as a guarantor of the Obligations under the Guaranties and other Loan
Documents, hereby reaffirms its continuing obligations and liabilities
thereunder, and agrees that such Guaranties remain in full force and effect and
cover and extend to all Obligations under the Credit Agreement (as amended
hereby).
[Signature Pages Follow]
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment and
Consent by its duly authorized officer as of the date first written above.
IMPAC GROUP, INC.
By: /s/ David C. Underwood
-------------------------------
Title: Chief Financial Officer
---------------------------
AGI INCORPORATED
By: /s/ David C. Underwood
-------------------------------
Title: Chief Financial Officer
---------------------------
KLEARFOLD, INC.
By: /s/ David C. Underwood
-------------------------------
Title: Chief Financial Officer
---------------------------
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
as Agent
By:
-------------------------------
Title:
---------------------------
[TO SECOND AMENDMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment and
Consent by its duly authorized officer as of the date first written above.
IMPAC GROUP, INC.
By:
-----------------------------------
Title:
--------------------------------
AGI INCORPORATED
By:
-----------------------------------
Title:
--------------------------------
KLEARFOLD, INC.
By:
-----------------------------------
Title:
--------------------------------
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
as Agent
By: /s/ David A. Johanson
-----------------------------------
Name: David A. Johanson
--------------------------------
Title: Vice President
--------------------------------
[TO SECOND AMENDMENT]
<PAGE>
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
individually as a Lender, the Swing Line
Lender and the Issuing Bank
By: /s/ George C. Lyman
-----------------------------------
Name:
---------------------------------
Title: Vice President
---------------------------------
SOCIETE GENERALE, as a Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ABN AMRO BANK, N.V., as a Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[TO SECOND AMENDMENT]
<PAGE>
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION
individually as a Lender, the Swing Line
Lender and the Issuing Bank
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SOCIETE GENERALE as a Lender
By: /s/ [illegible signature]
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ABN AMRO BANK N.V., as a Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[TO SECOND AMENDMENT]
<PAGE>
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION
individually as a Lender, the Swing Line
Lender and the Issuing Bank
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SOCIETE GENERALE as a Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
ABN AMRO BANK N.V., as a Lender
By: /s/ Bernard J. McGuigan
------------------------------------
Name: Bernard J. McGuigan
----------------------------------
Title: Director
---------------------------------
By: /s/ Joann L. Holman
------------------------------------
Name: Joann L. Holman
----------------------------------
Title: Vice President
---------------------------------
[TO SECOND AMENDMENT]
<PAGE>
DRESDNER BANK AG NEW YORK
AND GRAND CAYMAN BRANCHES,
as a Lender
By: /s/ John W. Sweeney
------------------------------------
Name: John W. Sweeney
----------------------------------
Title: Assistant Vice President
---------------------------------
By: /s/ [illegible signature]
------------------------------------
Name:
----------------------------------
Title: Assistant Vice President
---------------------------------
BANK OF NOVA SCOTIA, as a Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE FUJI BANK, LIMITED, as a Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[TO SECOND AMENDMENT]
<PAGE>
DRESDNER BANK AG BANK YORK
AND GRAND CAYMAN BRANCHES,
as a Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
BANK OF NOVA SCOTIA as a Lender
By: [illegible signature]
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE FUJI BANK LIMITED, as a Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[TO SECOND AMENDMENT]
<PAGE>
DRESDNER BANK AG NEW YORK
AND GRAND CAYMAN BRANCHES,
as a Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
BANK OF NOVA SCOTIA, as a Lender
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THE FUJI BANK LIMITED, as a Lender
By: /s/ Peter L. Chinnici
------------------------------------
Name: Peter L. Chinnici
----------------------------------
Title: Joint General Manager
---------------------------------
[TO SECOND AMENDMENT]
<PAGE>
Exhibit 10.67
THIRD AMENDMENT
This Third Amendment (this "Amendment") is entered into as of this
----------
16th day of November, 1998 among IMPAC GROUP, INC., a Delaware corporation (the
"Company"), AGI INCORPORATED, an Illinois corporation ("AGI"), KLEARFOLD, INC, a
------- ---
Pennsylvania corporation ("Klearfold", and together with AGI, each a "L/C
--------- ---
Borrower" and collectively, the "L/C Borrowers"), Bank of America National Trust
- -------- -------------
& Savings Association, as Agent (the "Agent"), and the financial institutions
-----
from time to time party thereto (the "Lenders"). Unless otherwise specified
-------
herein, capitalized terms used in this Amendment shall have the meanings
ascribed to them by the Credit Agreement (as defined below).
RECITALS
--------
WHEREAS, the Company, the L/C Borrowers, the Agent and the Lenders
are party to the Amended and Restated Multicurrency Credit Agreement, dated as
of March 12, 1998 and as amended and restated as of July 7, 1998 (as amended by
that certain First Amendment dated September 11, 1998, and that certain Second
Amendment dated November 13, 1998, and as the same may be further amended,
supplemented restated or otherwise modified from time to time in accordance with
its terms and in effect, the "Credit Agreement");
----------------
WHEREAS, the Company, the L/C Borrowers, the Agent and the Lenders
wish to enter into certain further amendments to the Credit Agreement to
facilitate the Company's acquisition of a corporation in the Nether1ands;
NOW THEREFORE, in consideration of the mutual execution hereof and
other good and valuable consideration, the parties hereto agree as follows:
Section 1. Amendments. The proviso at the end of paragraph (b) of
----------
Section 8.03 of the Credit Agreement is hereby amended by deleting said proviso
- ------------
in its entirety and inserting in lieu thereof the following new proviso at the
end of such paragraph (b):
-------------
"provided however, that Wholly-Owned Subsidiaries which are not Credit
-------- -------
Parties or Subsidiary Guarantors shall not enter into any Acquisition if
the aggregate consideration of all such Acquisitions exceeds $5,000,000;
and provided, further that up to an aggregate amount of $5,000,000 is
-------- -------
exempt from the requirements set forth in clause (vi) that the target of
-----------
such Acquisition shall be merged with or into a Credit Party or Subsidiary
and the requirements set forth in clause (viii), except that the amounts
-------------
set forth in both provisos above will be increased from $5,000,000 to the
Dollar Equivalent of up to $8,500,000 in the aggregate to permit the
Company (indirectly through a Wholly-Owned Subsidiary) to purchase
substantially all of the assets and business of Music Print B.V. whether or
not the Squeeze-Out Date has occurred, so long as (I) such transaction is
consummated on or before November 30,1998 except for the purchase of the
related real estate which must occur on or before January 30, 1999, (II)
no other Acquisitions are consummated pursuant to or
<PAGE>
utilizing such provisos before the Music Print B.V. Acquisition is
completed, and (III) the Music Print B.V. Acquisition shall be deemed to
use - up and exhaust the full amount for Acquisitions permitted under such
provisos."
Section 2. Reference to and Effect Upon the Credit Agreement.
---------------- ------ -------- ------ ---------
(a) Except as specifically amended above, the Credit Agreement
shall remain in full force and effect and is hereby ratified and confirmed.
(b) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the Agent or
any Lenders under the Credit Agreement, nor constitute a waiver of any
provision of the Credit Agreement, except as specifically set forth herein.
Upon the effectiveness of this Amendment, each reference in the Agreement
to "this Agreement", "hereunder", "hereof", "herein" or words of similar
import shall mean and be a reference to the Credit Agreement as amended
hereby.
Section 3. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
--------------
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
Section 4. Headings. Section headings in this Amendment are included
--------
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.
Section 5. Counterparts. This Amendment may be executed in any number
------------
of counterparts each of which when so executed shall be deemed an original but
all such counterparts shall constitute one and the same instrument.
Section 6. Effectiveness. This Amendment shall become effective as of
-------------
the date first written above upon the delivery of executed signature pages for
this Amendment signed by the Company, the L/C Borrowers, the Subsidiary
Guarantors, the Agent and each Lender.
Section 7. Representations and Warranties. Each of the Company and
------------------------------
each L/C Borrower hereby represents and warrants as to itself that:
(a) The execution, delivery and performance by each such Person of
this Amendment have been duly authorized by all necessary corporate action
and that this Amendment constitutes the legal, valid and binding obligation
of such Person, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar 1aws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability;
(b) Each of the representations and warranties contained in the Credit
Agreement is true and correct in all material respects on and as of the
date hereof as if made on the date
2
<PAGE>
hereof (except to the extent such representations and warranties expressly
refer to an earlier date, in which case they are true and correct as of such
earlier date); and
(c) After giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing.
Section 8. Reaffirmation of Guaranties. The Company and each L/C
---------------------------
Borrower and Subsidiary Guarantor as a guarantor of the Obligations under each
Guaranty and the other Loan Documents, hereby reaffirms its continuing
obligations and liabilities thereunder, and agrees that each such Guaranty and
the other Loan Documents shall remain in full force and effect and cover and
extend to all Obligations under the Credit Agreement (as amended hereby).
[Signature Pages Follow]
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment by its duly
authorized officer as of the date first written above.
IMPAC GROUP, INC.
By: /s/ David C. Underwood
-----------------------------------
Title: Chief Financial Officer
--------------------------------
AGI INCORPORATED
By: /s/ David C. Underwood
-----------------------------------
Title: Chief Financial Officer
--------------------------------
KLEARFOLD, INC.
By: /s/ David C. Underwood
-----------------------------------
Title: Chief Financial Officer
--------------------------------
KF - INTERNATIONAL, INC.
By: /s/ David C. Underwood
-----------------------------------
Title: Chief Financial Officer
--------------------------------
KF - DELAWARE, INC.
By: /s/ David C. Underwood
-----------------------------------
Title: Chief Financial Officer
--------------------------------
[TO THIRD AMENDMENT]
<PAGE>
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
as Agent
By: /s/ David A. Johanson
-----------------------------------
Title: Vice President
--------------------------------
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
individually as a Lender, the Swing Line
Lender and the Issuing Bank
By: /s/ George C. Lyman
-----------------------------------
Title: Vice President
--------------------------------
SOCIETE GENERALE, as a Lender
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
ABN AMRO BANK, N.V., as a Lender
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
By:
-----------------------------------
Name:
---------------------------------
Title:
---------------------------------
[TO THIRD AMENDMENT]
<PAGE>
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION, as Agent
By:
------------------------------------
Title:
---------------------------------
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
individually as a Lender, the Swing Line
Lender and the Issuing Bank
By:
------------------------------------
Title:
---------------------------------
SOCIETE GENERALE, as a Lender
By: [illegible signature]
------------------------------------
Name:
-----------------------------------
Title: Director
---------------------------------
ABN AMRO BANK, N.V., as a Lender
By:
------------------------------------
Name:
-----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
-----------------------------------
Title:
---------------------------------
[TO THIRD AMENDMENT]
<PAGE>
DRESDNER BANK AG NEW YORK
AND GRAND CAYMAN BRANCHES,
as a Lender
By: /s/ John W. Sweeney
------------------------------------
Name: John W. Sweeney
-----------------------------------
Title: Assistant Vice President
---------------------------------
By: /s/ Brigitte Sacin
------------------------------------
Name: Brigitte Sacin
-----------------------------------
Title: Assistant Treasurer
---------------------------------
BANK OF NOVA SCOTIA, as a Lender
By:
------------------------------------
Name:
-----------------------------------
Title:
---------------------------------
THE FUJI BANK, LIMITED, as a Lender
By:
------------------------------------
Name:
-----------------------------------
Title:
---------------------------------
[TO THIRD AMENDMENT]
<PAGE>
DRESDNER BANK AG NEW YORK
AND GRAND CAYMAN BRANCHES,
as a Lender
By:
------------------------------------
Name:
-----------------------------------
Title:
---------------------------------
By:
------------------------------------
Name:
-----------------------------------
Title:
---------------------------------
THE BANK OF NOVA SCOTIA, as a Lender
By: [illegible signature]
------------------------------------
Name:
-----------------------------------
Title:
---------------------------------
THE FUJI BANK, LIMITED, as a Lender
By:
------------------------------------
Name:
-----------------------------------
Title:
---------------------------------
[TO THIRD AMENDMENT]
<PAGE>
EXHIBIT 10.68
FOURTH AMENDMENT
----------------
This Fourth Amendment (this "Amendment") to the Credit Agreement (as
---------
defined below) is entered into as of this 10th day of December, 1998 among IMPAC
GROUP, INC., a Delaware corporation (the "Company"), AGI INCORPORATED, an
-------
Illinois corporation ("AGI"), KLEARFOLD, INC., a Pennsylvania corporation
---
("Klearfold", and together with AGI, each a "L/C Borrower" and collectively,
--------- ------------
the "L/C Borrowers"), Bank of America National Trust & Savings Association, as
-------------
Agent (the "Agent"), and the financial institutions from time to time party
-----
thereto (the "Lenders"). Unless otherwise specified herein, capitalized terms
-------
used in this Amendment shall have the meanings ascribed to them by the Credit
Agreement (as defined below).
RECITALS
--------
WHEREAS, the Company, the L/C Borrowers, the Agent and the Lenders are
party to the Amended and Restated Multicurrency Credit Agreement, dated as of
March 12, 1998 and as amended and restated as of July 7, 1998 (as amended by
that certain First Amendment dated September 11, 1998, that certain Second
Amendment dated November 13th 1998 and that certain Third Amendment dated
November 16, 1998, and as the same may be further amended, supplemented restated
or otherwise modified from time to time in accordance with its terms and in
effect, the "Credit Agreement");
----------------
WHEREAS, the Company, the L/C Borrowers, the Agent and the Lenders now
wish to enter into certain further amendments to the Credit Agreement;
NOW THEREFORE, in consideration of the mutual execution hereof and
other good and valuable consideration, the parties hereto agree as follows:
Section 1. Amendments. A. Paragraph (j) of Section 7.16, the lead-
---------- ------- ----
in clause to paragraph (k) of Section 7.16 and clauses (iii), (iv) and (v) of
------- ---- ------------------ ---
paragraph (k) of Section 7.16 of the Credit Agreement are hereby amended by
- ------------- ------- ----
deleting said paragraphs and clauses in their entirety and inserting in lieu
thereof the following new paragraphs and clauses:
"(j) The Company shall procure that, as soon as practicable after the
Unconditional Date (subject to compliance with all applicable laws), but in
any event not later than December 23, 1998 (except with respect to Target
Ireland for which the date shall be January 31, 1999), the obligations of
the Credit Parties hereunder are guaranteed by Bidco Holding, Bidco, the
Target, each Target UK Subsidiary and Target Ireland, as the case may be,
and secured on all the assets of each such Person.
(k) To effect paragraph (j) above the Company shall or shall cause
-------------
Bidco Holding, Bidco, the Target, Target UK Subsidiaries and Target Ireland
to, without limitation, procure that (subject to compliance with all
applicable laws) on or prior to December 23, 1998 (except with respect to
clauses (ii)(y) (iii)(B), (iv)(B) and (v)(B). for which the date shall be
--------------------------------- ------
January 31, 1999):
<PAGE>
***
(iii) (A) Bidco Holding and Bidco to enter into the Bidco Security
Documents, the Target to enter into the Target Security Document, each Target UK
Subsidiary enters into a Target UK Subsidiary Security Document, and (B) Target
Ireland to enter into the Target Ireland Security Document;
(iv) a certified copy of (A) the Bidco Security Documents, the Target
Security Document and each Target UK Subsidiary Document, in each case together
with prescribed particulars thereof are delivered to the Registrar of Companies
in accordance, where applicable, with Section 395 of the Companies Act, and (B)
the Target Ireland Security Document, together with such additional
documentation as in the reasonable opinion of the Agent is required, are
registered pursuant to Irish law;
(v) each of (A) Bidco Holding, Bidco, the Target, each Target UK
Subsidiary and (B) Target Ireland, shall in the case of both clauses (A) and (B)
----------- ---
at their own expense, execute and do all such assurances, acts and things as the
Agent may require to ensure the valid, lawful and binding giving of such
guarantee, granting, perfecting and protecting of such security and the
distribution of such proceeds, including, where required by the Agent, entering
into pledges over shares in their Subsidiaries;"
B. The lead-in clause to Section 7.18 of the Credit Agreement is
------------
hereby amended by deleting said clause in its entirety and inserting in lieu
thereof the following new paragraph:
"On or before January 31, 1999, the Company shall cause, or cause the
relevant Credit Party to, deliver Mortgages with respect to each fee interest
and, to the extent requested by the Agent, any leasehold interest of all real
property held by a Credit Party, executed by each Credit Party, in appropriate
form for recording, together with:"
C. Paragraph (p) of Section 9.01 of the Credit Agreement is hereby
------------- ------------
amended by deleting said paragraph in its entirety and inserting in lieu thereof
the following new paragraph:
"(p) Collateral Documents
--------------------
Bidco Holding, Bidco, the Target, Target Ireland or any Target UK
Subsidiary shall have failed for any reason (including, without limitation, as a
result of applicable law) to deliver the documents and otherwise take the
actions referred to by Section 7.16(j) and (k) by December 23, 1998 or with
--------------- ---
respect to Target Ireland, by January 31, 1999; or"
D. The proviso contained at the end of Section 11.01 of the Credit
Agreement is hereby amended by deleting said proviso in its entirety and
inserting in lieu thereof the following new proviso:
2
<PAGE>
"and, provided further, that (i) no amendment, waiver or consent
shall, unless in writing and signed by the Issuing Bank in addition to the
Majority Lenders or all the Lenders, as the case may be, affect the rights or
duties of the Issuing Bank under this Agreement or any L/C-Related Document
relating to any Letter of Credit Issued or to be Issued by it, (ii) no
amendment, waiver or consent shall, unless in writing and signed by the Agent in
addition to the Majority Lenders or all the Lenders, as the case may be, affect
the rights or duties of the Agent under this Agreement or any other Loan
Document, (iii) no amendment, waiver or consent shall, unless in writing and
signed by the Swing Line Lender in addition to the Majority Lenders or all
Lenders, as the case may be, affect the rights or duties of the Swing Line
Lender under this Agreement, (iv) without limiting clauses (a) through (f)
----------- ---
above, no amendment, waiver or consent shall, unless signed by Lenders holding
85% of Term Loan B or a majority of any other Loan (determined by reference to
outstanding Commitments or, if no Commitments are then outstanding, outstanding
principal amount), affect the rights of such Lenders to receive or defer payment
in respect of such Loan, and (v) the Fee Letter may be amended, or rights or
privileges thereunder waived in a writing executed by the parties thereto."
Section 2. Reference to and Effect Upon the Credit Agreement.
--------------------------------------- ---------
(a) Except as specifically amended above. the Credit Agreement
shall remain in full force and effect and is hereby ratified and confirmed.
(b) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the Agent or
any Lenders under the Credit Agreement, nor constitute a waiver of any
provision of the Credit Agreement, except as specifically set forth herein.
Upon the effectiveness of this Amendment, each reference in the Agreement
to "this Agreement", "hereunder", "hereof", "herein" or words of similar
import shall mean and be a reference to the Credit Agreement as amended
hereby.
(c) The parties hereto acknowledge that the letter which was
originally attached to Schedule 6.05 to the Credit Agreement was
-------------
inadvertently left out when the Schedules were amended pursuant to the
First Amendment referenced in the recitals hereto, and such letter in the
form originally delivered is hereby deemed to be included and incorporated
as part of Schedule 6.05.
-------------
Section 3. GOVERNING LAW. THIS AMENDMENT SHALL BE
--------------
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
ILLINOIS.
Section 4. Headings. Section headings in this Amendment are included
--------
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.
Section 5. Counterparts. This Amendment may be executed in any
------------
number of counterparts, each of which when so executed shall be deemed an
original but all such counterparts shall constitute one and the same instrument.
3
<PAGE>
Section 6. Effectiveness. This Amendment shall become effective with
-------------
respect to (a) Sections 1A , 1B and 1(C) above as of the date first written
-------- -- -- ----
above upon the delivery of executed signature pages for this Amendment signed by
the Company, the L/C Borrowers, the Subsidiary Guarantors, the Agent and the
Majority Lenders and (b) Section 1D above as of the date first written above
----------
upon the delivery of executed signature pages for this Amendment signed by the
Company, the L/C Borrowers, the Subsidiary Guarantors, the Agent and all of the
Lenders; provided, however, that if the signatures of all Lenders are not
-------- -------
received on or before December 31, 1998, Section 1D above shall be null and void
----------
and of no further force or effect, but this Amendment shall otherwise continue
to be a valid and binding agreement of the parties hereto and otherwise
effective.
Section 7. Representations and Warranties. Each of the Company and
------------------------------
each L/C Borrower hereby represents and warrants as to itself that:
(a) The execution, delivery and performance by each such Person of
this Amendment have been duly authorized by all necessary corporate action
and that this Amendment constitutes the legal, valid and binding
obligation of such Person, enforceable against such Person in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the
enforcement of creditors' rights generally or by equitable principles
relating to enforceability;
(b) Each of the representations and warranties contained in the Credit
Agreement is true and correct in all material respects on and as of the
date hereof as if made on the date hereof (except to the extent such
representations and warranties expressly refer to an earlier date, in which
case they are true and correct as of such earlier date);
(c) After giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing; and
(d) Attached hereto as Exhibit A is the conclusion section of the
------- -
draft report of PricewaterhouseCoopers, as auditors to Bidco, Bidco
Holding, the Target and their Subsidiaries, which permits such entities to
conclude that they can grant financial assistance to and liens on their
assets in favor of the obligations owed by the Credit Parties to the Agent
and the Lenders as of the date hereof in accordance with Section 156 of the
Companies Act, and nothing has come to the attention of the Company or
any of its Subsidiaries that would lead them to conclude that such report
could not be executed and delivered as of the date hereof.
Section 8. Reaffirmation of Guaranties. The Company and each L/C
---------------------------
Borrower and Subsidiary Guarantor as a guarantor of the Obligations
under each Guaranty and the other Loan Documents, hereby reaffirms its
continuing obligations and liabilities thereunder, and agrees that each such
Guaranty and the other Loan Documents shall remain in full force and effect and
cover and extend to all Obligations under the Credit Agreement (as amended
hereby).
[Signature Pages Follow]
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment by its duly
authorized officer as of the date first written above.
IMPAC GROUP, INC.
By: /s/ David C. Underwood
-------------------------------------
Title: Chief Financial Officer
----------------------------------
AGI INCORPORATED
By: /s/ David C. Underwood
-------------------------------------
Title: Chief Financial Officer
----------------------------------
KLEARFOLD, INC.
By: /s/ David C. Underwood
-------------------------------------
Title: Chief Financial Officer
----------------------------------
KF - INTERNATIONAL, INC.
By: /s/ David C. Underwood
-------------------------------------
Title: Chief Financial Officer
----------------------------------
KF - DELAWARE, INC.
By: /s/ David C. Underwood
-------------------------------------
Title: Chief Financial Officer
----------------------------------
[TO FOURTH AMENDMENT]
5
<PAGE>
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION, as Agent
By: /s/ David A. Johanson
----------------------------
Title: Vice President
-------------------------
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
individually as a Lender, the Swing Line Lender
and the Issuing Bank
By:
----------------------------
Title:
-------------------------
SOCIETE GENERALE, as a Lender
By:
----------------------------
Name:
-------------------------
Title:
------------------------
ABN AMRO BANK, N.V., as a Lender
By:
----------------------------
Name:
-------------------------
Title:
------------------------
By:
----------------------------
Name:
-------------------------
Title:
------------------------
[TO FOURTH AMENDMENT]
6
<PAGE>
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION, as Agent
By:
----------------------------
Title:
-------------------------
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
individually as a Lender, the Swing Line Lender
and the Issuing Bank
By: /s/ (Illegible)
----------------------------
Title: Senior Vice President
-------------------------
SOCIETE GENERALE, as a Lender
By:
----------------------------
Name:
-------------------------
Title:
------------------------
ABN AMRO BANK, N.V., as a Lender
By:
----------------------------
Name:
-------------------------
Title:
------------------------
By:
----------------------------
Name:
-------------------------
Title:
------------------------
[TO FOURTH AMENDMENT]
7
<PAGE>
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
as Agent
By:
----------------------------
Title:
------------------------
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
individually as a Lender, the Swing Line Lender
and the Issuing Bank
By:
----------------------------
Title:
------------------------
SOCIETE GENERALE, as a Lender
By: /s/ (Illegible)
----------------------------
Name:
-------------------------
Title: Director
------------------------
ABN AMRO BANK, N.V., as a Lender
By:
----------------------------
Name:
-------------------------
Title:
------------------------
By:
----------------------------
Name:
-------------------------
Title:
------------------------
[TO FOURTH AMENDMENT]
8
<PAGE>
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCLATION,
as Agent
By:
----------------------------
Title:
-------------------------
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
individually as a Lender, the Swing Line
Lender and the Issuing Bank
By:
----------------------------
Title:
-------------------------
SOCIETE GENERALE, as a Lender
By:
----------------------------
Name:
-------------------------
Title:
------------------------
ABN AMRO BANK, N.V., as a Lender
By: /s/ ILLEGIBLE
----------------------------
Name: ILLEGIBLE
-------------------------
Title: Group Vice President
------------------------
By: /s/ Joann L. Holman
----------------------------
Name: Joann Holman
-------------------------
Title: Vice President
------------------------
[TO FOURTH AMENDMENT]
9
<PAGE>
DRESDNER BANK AG NEW YORK
AND GRAND CAYMAN BRANCHES,
as a Lender
By: /s/ Beverly G. Cason
----------------------------
Name: Beverly G. Cason
-------------------------
Title: Vice President
------------------------
By: /s/ Christopher E. Sarisky
----------------------------
Name: Christopher E. Sarisky
-------------------------
Title: Vice President
------------------------
THE BANK OF NOVA SCOTIA, as a Lender
By:
----------------------------
Name:
-------------------------
Title:
------------------------
THE FUJI BANK LIMITED, as a Lender
By:
----------------------------
Name:
-------------------------
Title:
------------------------
10
<PAGE>
DRESDNER BANK AG NEW YORK
AND GRAND CAYMAN BRANCHES
as a Lender
By:
----------------------------
Name:
-------------------------
Title:
------------------------
By:
----------------------------
Name:
-------------------------
Title:
------------------------
THE BANK OF NOVA SCOTIA, as a Lender
By: /s/ ILLEGIBLE
----------------------------
Name: ILLEGIBLE
-------------------------
Title: Agent Operations
------------------------
THE FUJI BANK LIMITED, as a Lender
By:
----------------------------
Name:
-------------------------
Title:
------------------------
11
<PAGE>
DRESYMAL BANK AG NEW YORK AND GRAND CAYMAN
BRANCHES, as a Lender
By:
----------------------------
Name:
-------------------------
Title:
------------------------
THE BANK OF NOVA SCOTIA, as a Lender
By:
----------------------------
Name:
-------------------------
Title:
------------------------
THE FUJI BANK LIMITED, as a Lender
By: /s/ Peter L. Chinnici
----------------------------
Name: Peter L. Chinnici
-------------------------
Title: Joint General Manager
------------------------
12
<PAGE>
Exhibit 10.69
FIFTH AMENDMENT
----- ---------
This Fifth Amendment (this "Amendment") to the Credit Agreement (as
---------
defined below) is entered into as of this 11th day of January, 1999 among IMPAC
GROUP, INC., a Delaware corporation (the "Company"), AGI INCORPORATED, an
-------
Illinois corporation ("AGI"), KLEARFOLD, INC., a Pennsylvania Corporation
---
("Klearfold" and together with AGI, each a "L/C Borrower" and collectively, the
--------- ------------
"L/C Borrowers"), Bank of America National Trust & Savings Association, as Agent
-------------
(the "Agent"), and the financial institutions from time to time party thereto
-----
(the "Lenders"). Unless otherwise specified herein, capitalized terms used in
-------
this Amendment shall have the meanings ascribed to them by the Credit Agreement
(as defined below).
RECITALS
--------
WHEREAS, the Company, the L/C Borrowers, the Agent and the Lenders are
party to the Amended and Restated Multicurrency Credit Agreement dated as of
March 12, 1998 and as amended and restated as of July 7, 1998 (as amended by
that certain First Amendment dated September 11, 1998, that certain Second
Amendment dated November 13th, 1998, that certain Third Amendment dated November
16, l998 and that certain Fourth Amendment dated December 10, 1998 and as the
same may be further amended, supplemented, restated or otherwise modified from
time to time in accordance with its terms and in effect, the "Credit
------
Agreement"),
- ---------
WHEREAS, the Company, the L/C Borrowers, the Agent and the Lenders now
wish to enter into certain further amendments to the Credit Agreement to
permit the Company to issue $20 million of preferred stock (the " Preferred
---------
Stock") and to use the proceeds thereof to redeem the common stock held by
- -----
certain of its current shareholders, all as more specifically set forth herein;
NOW THEREFORE, in consideration of the mutual execution hereof and
other good and valuable consideration, the parties hereto agree as follows:
Section 1. Amendments. A. Section 1.01 of the Credit Agreement is
---------- ------------
hereby amended by inserting the following new definitions in a1phabetical
order as appropriate:
"Preferred Stock" shall have the meaning specified in Section
--------------- -------
8.20(iv).
- --------
"Preferred Stock Documents" shall mean (i) the Securities Purchase
-------------------------
Agreement among the Company, BT Capital Investors, L.P. ("BT") and Phoenix
--
Home Mutual Life Insurance Company ("Phoenix"), (ii) the Fourth Amended and
-------
Restated Certificate of Incorporation of the Company, (iii) the
Warrants for the Purchase of Series A Common Stock ("Warrants") issued by
--------
the Company to BT and Phoenix, (iv) that certain letter agreement between
the Company and Heritage Fund II Investment Corporation (with respect to
the redemption of common stock) and (v) the other documents, agreements and
closing certificates required thereby (in any event excluding the Second
Amended and Restated Stockholder Agreement of the Company, as further
amended), as all of such agreements and
<PAGE>
documents listed above are in effect on the date of the effectiveness of
that certain Fifth Amendment to the Credit Agreement.
"Warrants" shall have the meaning specified in the definition of
--------
Preferred Stock Documents.
B. Section 8.05 of the Credit Agreement is hereby amended by adding
------------
the following new proviso to the end or such section:
"provided, further, however, that notwithstanding anything to the
--------- ----------------
contrary set forth above, in no event shall the Company or any of its
Subsidiaries be permitted to incur "Ratio Debt" (as defined in the Fourth
Amended and Restated Certificate of Incorporation of the Company (as
amended, the "Charter")) or any other Indebtedness otherwise permitted
-------
under the Preferred Stock Documents or the Charter which would result in or
cause the $40 million basket amount in clause (i) of the definition of
---------
Permitted Indebtedness in the Charter to be reduced except, and only to the
extent that, the Company is then permitted to and irrevocably elects to
permanently reduce the Aggregate Revolving Loan Commitment in accordance
with this Agreement to an amount (which assuming all of the Commitments are
fully drawn, borrowed and utilized at all times under this Agreement) such
that all Revolving Loans and other Obligations hereunder would nonetheless
constitute Permitted Indebtedness under clauses (i), (ii) and (ix) of the
----------- ---- ----
definition thereof in the Charter and otherwise be permitted under the
Charter and the Preferred Stock Documents."
C. Section 8.06 of the Credit Agreement is hereby amended by
------------
deleting such section in its entirety and inserting in lieu thereof the
following new section:
"Except as set forth on Schedule 8.06, no Credit Party shall, nor
-------------
shall suffer or permit any of its Subsidiaries to, enter into any
transaction with any Affiliate (other than a Wholly-Owned Subsidiary) of a
Credit Party, except upon fair and reasonable terms no less favorable to
such Credit Party or such Subsidiary than would obtain in a comparable
arm's length transaction with a Person not an Affiliate of such Credit
Party or such Subsidiary, except (a) the Offer shall be permitted, (b)
the redemption of certain shares of the Company's common stock as set forth
in Section 8 11(c)(i) shall be permitted and (c) in connection with
------------------
granting liens on the assets of its Subsidiaries in the United Kingdom and
Ireland, the Company and its Subsidiaries may enter into (but may not
further amend, modify or waive without the consent of the Agent) that
certain Support Agreement in substantially the form presented to the Agent
and dated December 15, 1998,"
D. Section 8.11 of the Credit Agreement is hereby amended by adding a
------------
new paragraph (c) at the end of such section as follows:
-------------
"(c) Notwithstanding anything else herein to the contrary, (i) so long
as no Default or Event of Default has occurred and is continuing or would
result after giving effect thereto and no Change of Control would occur,
the Company may on or before January 15, 1999
2
<PAGE>
redeem up to $20 million of the common stock currently held by Heritage
Fund II Investment Corporation using the net proceeds received by the
Company from the issuance of the Preferred Stock provided that the Company
has received all required shareholder approvals and the redemption is done
substantially simultaneously with the receipt of such proceeds from the
Preferred Stock, and (ii) in no event or circumstance whatsoever may the
Company or any of its Subsidiaries redeem any of the Preferred Stock or
Warrants or pay any dividends, distributions, fees or other payments of any
kind (including, without limitation, in connection with the settlement of
any dispute with the purchasers of such Preferred Stock and Warrants, or
their assigns) with respect to such Preferred Stock or Warrants and
whether such payment is made pursuant to an optional or mandatory
redemption obligation, any required offer after a Change of Control or
other similar event (as described in the Preferred Stock Documents) or any
claim, liability or expense under the Preferred Stock Documents or
otherwise as a claim at law or in equity without the prior written consent
of the Lenders (which they may withhold in their sole discretion) other
than (I) the 3% fee payable to the purchasers of the Preferred Stock
payable in connection with the issuance thereof and other out of pocket
fees and expenses of the purchasers of the Preferred Stock payable in
connection with the issuance thereof and other out of pocket fees and
expenses of the purchasers of the Preferred Stock payable in accordance
with the terms of Section 7.08 of the Securities Purchase Agreement which
------------
is referred to in clause (j) of the definition of Preferred Stock Documents
----------
and (II) dividends or other indemnification payments made solely through
the issuance of additional shares of Preferred Stock or common stock of the
Company to the holders of the Preferred Stock in accordance with the
terms of the Preferred Stock Documents."
E. Section 8.20 of the Credit Agreement is hereby amended by deleting
------------
paragraph (iv) in its entirety and inserting in lieu thereof the following new
- -------------
paragraphs (iv) and (v):
- --------------- ---
"(iv) make any amendment or modification to any terms or provisions
of its Organization Documents which is materially adverse to the Agent or
the Lenders or issue any preferred stock except that on or before January
l5, 1999 the Company may issue shares of Series A Redeemable Preferred
Stock, par value $.001 per share (the "Preferred Stock") with a liquidation
--------- ------
preference of $20 million pursuant to the Preferred Stock Documents, and in
connection therewith may (I) amend and restate its Certificate of
Incorporation pursuant to the terms of that certain Fourth Amended and
Restated Certificate of Incorporation in form and substance acceptable to
the Agent to permit the issuance of such Preferred Stock and to set forth
the rights. preferences, powers, privileges and restrictions,
qualifications, limitations, terms and conditions of the such Preferred
Stock, (II) issue after the date hereof additional shares of Preferred
Stock or common stock of the Company in accordance with the terms of the
Preferred Stock Documents as dividends or indemnification payments to the
holders of such Preferred Stock and (III) amend and restate the First
Amended and Restated Stockholder Agreement pursuant to the terms of that
certain Second Amended and Restated Stockholder Agreement in form and
substance acceptable to the Agent.
3
<PAGE>
(v) The Company shall not amend or modify (i) the rights, preferences,
powers, privileges and restrictions, qualifications, limitations, terms and
conditions of the Preferred Stock or (ii) Preferred Stock Documents without
the prior written consent of the Lenders."
F. Section 9.01 of the Credit Agreement is hereby amended by deleting
------------
the period at the end of paragraph (q) of such section and inserting in lieu
------------
thereof the word ";or" at the end of such paragraph (q), and further adding a
-------------
new paragraph (r) at the end of such Section 9.01 as follows:
-------------
"(r)(i) one or more judgments, orders, decrees, or arbitration awards
is entered against any Credit Party or any of their Subsidiaries involving
or with respect to the Preferred Stock or the rights of any holders thereof
except only a judgment requiring delivery of additional shares of common
stock or Preferred Stock of the Company, or (ii) any event shall occur that
gives any holder of any shares of Preferred Stock a mandatory right of
redemption, repurchase or other payment or redemption right of any kind
with respect thereto or otherwise obligates any Credit Party or any of
their Subsidiaries to repurchase or offer to repurchase any shares of
Preferred Stock unless such redemption, payment or repurchase obligation is
waived in full in writing within ten (10) days after the date such
redemption, repayment or other obligation first arises."
G. Schedule 6.19 to the Credit Agreement is hereby amended by
-------------
replacing such schedule in its entirety with the Schedule 6.19 attached hereto
-------------
as Exhibit A.
---------
Section 2. Acknowledgment on Extent of Tinsley Robor Collateral. The
----------------------------------------------------
Lenders hereby acknowledge and agree that they have received copies of the
closing memo delineating the closing deliveries in connection with the
transactions contemplated by the Target Security Document and the Target UK
Subsidiaries Security Documents, and a memo dated December 30, 1998 from the
Agent outlining generally the type and extent of the Collateral and Liens which
were granted to the Agent (on behalf of the Lenders) in the assets and
properties of Target and its Subsidiaries, and the Lenders hereby approve the
extent of the Collateral on which Liens were granted and the types of Liens
granted, and while all of the available assets have not been pledged to the
Agent on behalf of the Lenders, the properties in which Liens have been granted
to date are acceptable. This acknowledgment is solely for the benefit of the
Agent and none of the Company or its Subsidiaries will have any rights under
this Section 2 nor shall anything set forth herein constitute a waiver or
---------
modification of the obligations of such Persons under the Loan Documents or
their agreement to grant future Liens should they be requested to do so by the
Agent.
Section 3. Reference to and Effect Upon the Credit Agreement.
-------------------------------------------------
(a) Except as specifically amended above, the Credit Agreement
shall remain in full force and effect and is hereby ratified and confirmed.
(b) The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the Agent or
any Lenders under the
4
<PAGE>
Credit Agreement nor constitute a waiver of any provision of the Credit
Agreement, except as specifically set forth herein. Upon the effectiveness
of this Amendment, each reference in the Agreement to "this Agreement",
"hereunder", "thereof", "herein" or words of similar import shall mean and
be a reference to the Credit Agreement as amended hereby.
Section 4. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS.
Section 5. Headings. Section headings in this Amendment are included
--------
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purposes.
Section 6. Counterparts. This Amendment may be executed in any number
------------
of counterparts, each of which when so executed shall be deemed an original but
all such counterparts shall constitute one and the same instrument.
Section 7. Amendment Fee. In connection with the approval of this
-------------
Amendment, the Company hereby agrees to pay to the Agent on behalf of the
Lenders an aggregate fee of $75,000 (the "Amendment Fee") to be shared among the
--------------
Lenders by paying $10,000 to each Lender (other than BofA) listed on the
signature page hereof and paying $15,000 to BOFA as Lender and as Agent.
Section 8. Effectiveness.
-------------
This Amendment shall become effective as of the date first written
above after receipt by the Agent of the following:
(a) delivery of executed signature pages for this Amendment signed by
the Company, the L/C Borrowers, the Subsidiary Guarantors, the Agent and
Majority Lenders;
(b) receipt by the Agent of an executed legal opinion from the
Company's counsel in form and substance acceptable to the Agent opining to,
among other things, the legality of the issuance of the Preferred Stock and
that no conflicts exist with respect to the Credit Agreement, the Senior
Subordinated Note Documents or any other material contracts in connection
with such issuance and the redemption of the common stock from the Heritage
funds;
(c) payment in cash of all outstanding and invoiced legal fees and
expenses of the Agent's US and UK legal counsel;
(d) payment in cash of the Amendment Fee to the Agent on behalf of the
Lenders: and
5
<PAGE>
(e) receipt by the Agent of certified copies of (i) the Securities
Purchase Agreement among the Company, BT Capital Investors, L.P. ("BT") and
--
Phoenix Home Mutual Life Insurance Company ("Phoenix"), (ii) the Fourth
-------
Amended and Restated Certificate of Incorporation of the Company, (iii) the
Warrant for the Purchase of Series A Common Stock among the Company, BT and
Phoenix, (iv) that certain letter agreement between the Company and Heritage
Fund II Investment Corporation (with respect to the redemption of common
stock), (v) the Second Amended and Restated Stockholder Agreement among the
Company and its shareholders and (vi) the other documents, agreements and
closing certification contemplated thereby, as in effect on the date hereof,
and all in form and substance acceptable to the Agent.
Section 9. Representations and Warranties. Each of the Company and each
------------------------------
L/C Borrower hereby represents and warrants as to itself that:
(a) The execution, delivery and performance by each such Person of this
Amendment have been duly authorized by all necessary corporate action and
that this Amendment constitutes the legal, valid and binding obligation of
such Person, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability;
(b) Each of the representations and warranties contained in the Credit
Agreement is true and correct in all material respects on and as of the date
hereof as if made on the date hereof (except to the extent such
representations and warranties expressly refer to an earlier date, in which
case they are true and correct as of such earlier date);
(c) After giving effect to this Amendment and the Preferred Stock
issuance and the redemption of the common stock owned by the Heritage funds
(and, the other transactions contemplated thereby), no Default or Event of
Default has occurred and is continuing; and
(d) All of the representations and warranties given under the Preferred
Stock Documents (as such term is defined in Section 1(A) of this Amendment)
------------
are true and correct as of the date hereof.
Section 10. Reaffirmation of Guaranties. The Company and each L/C
---------------------------
Borrower and Subsidiary Guarantor as a guarantor of the Obligations under each
Guaranty and the other Loan Documents, hereby reaffirms its continuing
obligations and liabilities thereunder. and agrees that such Guaranty and the
other Loan Documents shall remain in full force and effect and cover and extend
to all Obligations under the Credit Agreement (as amended hereby).
[Signature Pages Follow]
6
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their
duly authorized officers as of the date first written above.
IMPAC GROUP, INC.
By: /s/ David C. Underwood
--------------------------------------
Title: Chief Financial Officer
----------------------------------
AGI INCORPORATED
By: /s/ David C. Underwood
--------------------------------------
Title: Chief Financial Officer
----------------------------------
KLEARFOLD, INC.
By: /s/ David C. Underwood
--------------------------------------
Title: Chief Financial Officer
----------------------------------
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
as Agent:
By:
--------------------------------------
Title:
----------------------------------
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
individually as a Lender, the Swing Line
Lender and the Issuing Bank
By:
--------------------------------------
Title:
----------------------------------
[TO FIFTH AMENDMENT]
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Amendment by their
duly authorized officers as of the date first written above.
IMPAC GROUP, INC.
By:
--------------------------------------
Title:
----------------------------------
AGI INCORPORATED
By:
--------------------------------------
Title:
----------------------------------
KLEARFOLD, INC.
By:
--------------------------------------
Title:
----------------------------------
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
as Agent
By: /s/ David A. Johanson
--------------------------------------
Title: Vice President
----------------------------------
BANK OF AMERICA NATIONAL
TRUST & SAVINGS ASSOCIATION,
individually as a Lender, the Swing Line
Lender and the Issuing Bank
By: /s/ Illegible
--------------------------------------
Title:
----------------------------------
[TO FIFTH AMENDEMENT]
8
<PAGE>
SOCIETE GENERALE, as a Lender
By: /s/ Michael Lincoln
--------------------------------------
Name: Michael Lincoln
-----------------------------------
Title: Director
----------------------------------
ABN AMRO BANK, N.V. as a Lender
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
DRESDNER BANK AG NEW YORK
AND GRAND CAYMAN BRANCHES,
as a Lender
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
9
<PAGE>
SOCIETE GENERALE, as a Lender
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
ABN AMRO BANK, N.V. as a Lender
By: /s/ Bernard J. McGuigan
--------------------------------------
Name: Bernard J. McGuigan
-----------------------------------
Title: Group Vice President and Director
----------------------------------
By: /s/ Joann L. Holman
--------------------------------------
Name: Joann L. Holman
-----------------------------------
Title: Vice President
----------------------------------
DRESDNER BANK AG NEW YORK
AND GRAND CAYMAN BRANCHES,
as a Lender
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[TO FIFTH AMENDMENT]
10
<PAGE>
SOCIETE GENERALE, as a Lender
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
ABN AMRO BANK, N.V. as a Lender
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
DRESDNER BANK AG NEW YORK
AND GRAND CAYMAN BRANCHES,
as a Lender
By: /s/ Brigitte Sagin
--------------------------------------
Name: Brigitte Sagin
-----------------------------------
Title: Assistant Treasurer
----------------------------------
By: /s/ Beverly G. Cason
--------------------------------------
Name: Beverly G. Cason
-----------------------------------
Title: Vice President
----------------------------------
[TO FIFTH AMENDMENT]
11
<PAGE>
THE BANK OF NOVA SCOTIA, as a Lender
By: /s/ P.C.H. Ashby
--------------------------------------
Name: P.C.H. Ashby
-----------------------------------
Title: Senior Manager Loan Operations
----------------------------------
THE FUJI BANK LIMITED, as a Lender
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
SENIOR DEBT PORTFOLIO
By: Boston Management and Research, as
Investment Advisor
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[TO FIFTH AMENDMENT]
12
<PAGE>
THE BANK OF NOVA SCOTIA, as a Lender
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
THE FUJI BANK LIMITED, as a Lender
By: /s/ Peter L. Chinnici
--------------------------------------
Name: Peter L. Chinnici
-----------------------------------
Title: Joint General Manager
----------------------------------
SENIOR DEBT PORTFOLIO
By: Boston Management and Research, as
Investment Advisor
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
[TO FIFTH AMENDMENT]
13
<PAGE>
THE BANK OF NOVA SCOTIA, as a Lender
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
THE FUJI BANK LIMITED, as a Lender
By:
--------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
SENIOR DEBT PORTFOLIO
By: Boston Management and Research, as
Investment Advisor
By: /s/ Scott H. Page
--------------------------------------
Name: Scott H. Page
-----------------------------------
Title: Vice President
----------------------------------
[TO FIFTH AMENDMENT]
14
<PAGE>
Acknowledged and Agreed to by the undersigned as of the date first set forth
above.
KF - INTERNATIONAL, INC.
By: David C. Underwood
--------------------------------------
Title: Chief Financial Officer
----------------------------------
KF - DELAWARE, INC.
By: David C. Underwood
--------------------------------------
Title: Chief Financial Officer
----------------------------------
IMPAC EUROPE LIMITED
By:
--------------------------------------
Title:
----------------------------------
LEVELPROMPT LIMITED
By:
--------------------------------------
Title:
----------------------------------
TINSLEY ROBOT LIMITED
By:
--------------------------------------
Title:
----------------------------------
[TO FIFTH AMENDMENT]
15
<PAGE>
Acknowledged and Agreed to by the undersigned as of the date first set forth
above.
KF - INTERNATIONAL, INC.
By:
--------------------------------------
Title:
----------------------------------
KF - DELAWARE, INC.
By:
--------------------------------------
Title:
----------------------------------
IMPAC EUROPE LIMITED
By: Illegible
--------------------------------------
Title:
----------------------------------
LEVELPROMPT LIMITED
By: Illegible
--------------------------------------
Title:
----------------------------------
TINSLEY ROBOR LIMITED
By: Illegible
--------------------------------------
Title:
----------------------------------
[TO FIFTH AMENDMENT]
16
<PAGE>
TINSLEY ROBOR LABELS LIMITED
By: Illegible
--------------------------------------
Title:
----------------------------------
JAMES UPTON LIMITED
By: Illegible
--------------------------------------
Title:
----------------------------------
SONICON LIMITED
By: Illegible
--------------------------------------
Title:
----------------------------------
TINSLEY ROBOR AUDIO AND COMPUTER
SERVICES LIMITED
By: Illegible
--------------------------------------
Title:
----------------------------------
TINSLEY ROBOR SALES LIMITED
By: Illegible
--------------------------------------
Title:
----------------------------------
TOPHURST PROPERTIES LIMITED
By: Illegible
--------------------------------------
Title:
----------------------------------
[TO FIFTH AMENDMENT]
17
<PAGE>
TINSLEY ROBOR (OVERSEAS) LIMITED
By: Illegible
--------------------------------------
Title:
----------------------------------
18
<PAGE>
SCHEDULE 6.19
-------- ----
Capitalization; Subsidiaries and Minority Interests
(a) Subsidiaries
(i) IMPAC Group, Inc.:
Klearfold, Inc., a Pennsylvania corporation - all of the issued and
outstanding shares (100) of common stock of Klearfold, Inc. are owned by
the Company.
AGI Incorporated, an Illinois corporation - all of the issued and
outstanding shares (100) of common stock of AGI Incorporated are owned by
the Company.
IMPAC Europe Limited, a private limited company incorporated under the
laws of England and Wales, formerly known as IMPAC Europe Public Limited
Company or IMPAC Europe PLC -ninety-nine (99) shares of capital stock of
IMPAC Europe Limited are owned by the Company, and one (1) share of capital
stock of IMPAC Europe Limited is owned by Levelprompt Limited.
Levelprompt Limited, a private limited company incorporated under the
laws of England and Wales - all of the issued and outstanding shares of
capital stock of Levelprompt Limited are owned by IMPAC.
(ii) Klearfold, Inc.:
KF-Delaware, Inc., a Delaware corporation - all of the issued and
outstanding shares (100) of common stock of KE-Delaware, Inc. are owned by
Klearfold, Inc.
KF-International, Inc., a U.S. Virgin Islands corporation - all of the
issued and outstanding shares (1,000) of common stock of KF-International,
Inc. are owned by Klearfold, Inc.
19
<PAGE>
(iii) IMPAC Europe Limited:
Subject to exercise of options for the acquisition of shares of
Tinsley Robor Limited's ordinary share capital pursuant to the Option
Conversion Notice referred to in section (c)(iii) of this Schedule 6.19,
-------- ----
IMPAC Europe Limited owns all of the issued and outstanding shares of
capital stock of Tinsley Robor Limited, a private limited company
incorporated under the laws of England and Wales and formerly known as
Tinsley Robor PLC. Tinsley Robor Limited is the beneficial owner of one
hundred percent of the shares of capital stock of each of its Subsidiaries,
as shown on Attachment A to this Schedule 6.19. In addition, James Upton
---------- - -------- ----
Holding B.V., a limited company organized under the laws of the Netherlands
and a wholly-owned subsidiary of Tinsley Robor Limited, is the beneficial
owner of all of the issued and outstanding shares of capital stock of Van
De Steeg Packaging BV, James Upton B.V. and Music Print B.V., each limited
companies organized under the laws of the Netherlands, James Upton GmbH, a
limited company organized under the laws of Austria, and Printing Resources
Limited, a corporation organized under the laws of Ireland.
(b) Equity Investments
TR ESOP Limited, a Subsidiary of Tinsley Robor Limited, owns a nominal
amount (in most instances, 1 share) of the capital stock of certain competitors
of the Company and its Subsidiaries.
(c) Capitalization
Upon the effectiveness of the Fourth Amended and Restated Certificate of
Incorporation of the Company and completion of the investments pursuant to the
Securities Purchase Agreement dated as of January 8, 1999 among the Company and
the Purchasers, as defined therein (the "Preferred Stock Purchase Agreement"),
--------- ----- -------- -----------
the capitalization of the Company will be as follows:
(i) Authorized:
1,000,000 shares of Series A Common Stock, $0.001 par value per share.
100,000 shares of Series B Common Stock, $0.001 par value per share.
50,000 shares of Series A Redeemable Preferred Stock, $0.001 par value
per share.
20
<PAGE>
(ii) Issued and Outstanding:
A: Series A Common Stock
191,745.5 shares of Series A Common Stock, held as set forth below:
Name of Holder Number of
- ------------------------------------ ---------
Shares
------
Heritage Fund I, L.P. 58,074.27
Heritage Fund II, L.P. 34,934.77
Heritage Fund II Investment 32,862.31/1/
Corporation
Richard Block 19,005.35
Arthur S. Keyser, Matthew H. 7,958.5
Kamens, and H. Scott Herrin, as
Trustees under an Irrevocable Deed
of Trust dated 08/12/92 f/b/o H.
Scott Herrin
James Oppenheimer 6,227
Melvin B. Herrin 4,964
Richard Oppenheimer 4,440
Freya Block, as Trustee of the 4,024
Richard A. Block Family Trust
u/t/a dated 4/1/94
- --------------------------
1. Pursuant to a Stock Repurchase Agreement to be dated as of January 8, 1999,
the Company will repurchase 30,087.37 shares of its Series A Common Stock from
Heritage Fund II Investment Corporation with the net proceeds from the issuance
of shares of Preferred Stock.
21
<PAGE>
Name of Holder Number of
- ------------------------------------ ---------
Shares
------
Matthew H. Kamens and Arthur S. 3,916
Kayser, as Trustees under an
Irrevocable Deed of Trust dated
06/04/96 of Melvin B. Herrin
Dean Henkel 3,782
David Underwood 3,318.47
Gary Mankoff 2,941
Donald W. Kosterka, as Trustee of 1,551.94
the Donald Kosterka Trust dated
5/17/92
John Maranov 1,029
David Horowitz 588
John Mclnerney 499.39
Dennis McGuin 484
Mary Frances Griffin 484
Robert Eliason 220.5
Zenas Block 147
Daniel Santry 73.5/2/
Steven Frazier 73.5
- --------------------------------
2. Mr. Santry's employment with the Company was terminated on October 11, 1998.
Pursuant to an Agreement relating to Employment and Stock Repurchase dated as of
March 12, 1998, the Company intends to repurchase the shares of Series A Common
Stock currently owned by Mr. Santry.
22
<PAGE>
Name of Holder Number of
- ------------------------------------ ---------
Shares
------
Craig Wilson 73.5
Richard Mazurek 73.5
---------
TOTAL 191,745.5
B: Series B Common Stock:
4,500 shares of Series B Common Stock, held by Heritage Fund II, L.P.
C: Series A Redeemable Preferred Stock:
20,000 shares of Series A Redeemable Preferred Stock, held as follows:
Name of Holder Number of Shares
- -------------- ----------------
BT Capital Investors, L.P. 12,000
Phoenix HomeLife Insurance Company 8,000
(iii) Options:
A: The following options for the purchase of shares of the Company's Series A
Common Stock have been granted pursuant to the Company's 1998 Stock Option
Plan:
Options for following
-----------------------
Optionees Number of Shares
- ----------------------- ----------------
Robert Eliason 152
Richard Mazurek 152
Craig Wilson 152
Steve Frazier 152
John McInerney 152
23
<PAGE>
Stock to be issued under these options is to be acquired by the
Company from Melvin Herrin, Scott Herrin and their respective
trusts, pursuant to the Stock Purchase Agreement, dated as of
March 12, 1998, which is listed as item (e) in Schedule 8.06 hereto.
-------- ----
In addition, a similar option had been issued to Daniel Santry, whose
employment was terminated by the Company on October 11, 1998. As a result
of that termination, his unvested options were cancelled, and the Herrins
have agreed to make a cash payment to Mr. Santry to discharge his vested
options (for 15.2 shares of Series A Common Stock).
B. Second 1998 Stock Option Plan of the Company, approved by the Company's
Board of Directors on December 14, 1998: provides for issuance of up to
20,000 shares of Series A Common Stock to employees or directors of, or
consultants to, the Company or any of its Subsidiaries. No options have yet
been granted under this Plan, but the Company has discussed with certain of
its employees the possibility of making available to such employees options
for at least 18,500 shares of Series A Common Stock.
C. Tinsley Robor Limited Stock Options: By written notice dated December 14,
1998 (the "Option Conversion Notice") to the holders of options under
------ ---------- -------
Tinsley Robor Limited's Executive Share Option Scheme 1988 and Senior
Executive Incentive Scheme 1994 (the "Tinsley Optionholders"), IMPAC Europe
------- ---------------
Limited offered to the Tinsley Optionholders the opportunity either (i) to
convert their outstanding options for the purchase of shares of Tinsley
Robor Limited into options to acquire shares of the Company's Class B
Common Stock, or (ii) to exercise their existing options and acquire shares
of Tinsley Robor Limited, which could then be tendered to IMPAC Europe
Limited pursuant to the Offer. The offer under the Option Conversion Notice
will remain open for acceptance until February 27, 1999. At December 14,
1998, the Tinsley Optionholders held options to acquire 1,205,578 shares of
Tinsley Robor Limited's ordinary share capital. If all such options were
converted pursuant to the Option Conversion Notice, the converted options
would be exercisable for 7,125.31 shares of the Company's Series B Common
Stock. Based on information supplied to the Company by representatives of
the Tinsley Optionholders prior to the date hereof, the Company does not
expect the number of shares of its Series B Common Stock issuable upon
exercise in full of all such converted options to exceed 4,500.
24
<PAGE>
D: Pursuant to a letter agreement regarding equity recapitalization, dated as
of September 10, 1998, entered into among the Company and its stockholders,
and on the terms and conditions set forth therein, the Company has agreed
to offer certain shares of its common stock to its employees.
(iv) Warrants:
Warrants for the purchase of 6,913.33 shares of the Company's Series A
Common Stock, held as follows:
Warrants for Following
----------------------
Name of Holder Number of Shares
- -------------- ----------------
BT Capital Investors, L.P. 4,148
Phoenix Home Life Mutual 2,765.33
Insurance Company
25
<PAGE>
ATTACHMENT A
Tinsley Robor Group Structure
(each organized in England and Wales,
unless otherwise stated)
<TABLE>
<CAPTION>
-------------
Tinsley Robor (100% shareholding in all
Limited subsidiary companies)
-------------
|
-------------------------------------------------------------------------------------------------------------------------------
<C> <S> <S> <S> <S> <S> <S> <S> <S>
| | | | | | | | |
Tinsley Tinsley James Upton Tinsley
Robor James Upton Robor Audio TR ESOP Pinepoint Tophurst Sonicon Holding B.V. Robor
Sales Limited and Trustee Limited + Properties Limited Holding of Labels
Limited Printing & Computer Limited Design and Limited Design and shares in Limited
Sales Finishing Services Employee litho Holding of litho overseas Labels
Limited* Benefit reproduction group reproduction subsidiaries printing
Packaging Plan properties
and Trustee Netherlands
fulfilment
services
|
-----------------------------------------------------------------
<S> <S> <S> <S>
Van de Steeg James Upton Printing James Upton
Packaging B.V. Resources GmbH
B.V. Printing & Printing & Limited Printing &
Finishing Finishing Printing & Finishing
Finishing
-----------------------------------------------------------------
Netherlands Netherlands Ireland Austria
|
<S>
Music Print B.V.
-----------------
Netherlands
</TABLE>
* became non-trading from 1 July 1998
+ became non-trading from 1 April 1998
The following companies are dormant companies, all of whose
shares are held by Tinsley Robor Limited:
Tinsley-Robor (Overseas) Limited
Admat Labels Limited
S. Tinsley & Company Limited
TRG Graphics Limited
Arun Labels Limited
R&B Litho Reproductions Limited
Icon Communications Limited
TR Displayprint Limited
Pinepoint Colour Response Limited
Tinsley Robor Packaging Limited
26
<PAGE>
EXHIBIT 10.70
LAND REGISTRY
COUNTY DUBLIN FOLIO 75165L
[GRAPHIC]
This LEASE made the 11th day of March One thousand nine hundred ninety six
BETWEEN FRIENDS PROVIDENT LIFE ASSURANCE COMPANY LIMITED having its registered
office at Friends Provident House, 29/30, [ILLEGIBLE] Road, Dublin 2
(hereinafter called "the Landlord") of the first part AND PRINTING RESOURCES
LIMITED having its registered office at White Heather [ILLEGIBLE] Estate, South
Circular Road, Dublin 8 (hereinafter called "the Tenant") of the second part AND
TINSLEY ROBOR PLC having its registered office at Drayton House, Drayton,
Chichester West Sussex PO2O 6FW England (hereinafter called "the Surety") of the
third part.
WITNESSETH as follows:
1. IN THIS LEASE where the context so admits
(A) the following expressions shall have the following meanings:
(1) "Act" means any Act of the Oireachtas now or hereafter to be passed
and references to any Act include references to any statutory
modification or re-enactment thereof for the time being in force and
any order instrument regulation or byelaw made or issued thereunder
(2) "approved" "authorised" and "allocated" mean as the case may be
1
<PAGE>
in any year
(21) "Review Date" "Market Rent" "Chairman" "Surveyor" "agree or agreed"
"Assumed Matters" "Disregarded Matters" have the meaning given to
them in the Third Schedule
(22) "Sub-Station Site" means the site on the ground floor of the
premises shown outlined and hatched in blue on Plans No. I and II
and are more particularly described on Plan No. III and thereon
outlined in blue.
(23) "Superior Lease" means the Lease dated 19th May 1989 between Drumlee
Estates Limited of the one part and the Landlord of the other part
(24) "Superior Landlord" includes the person or persons for the time
being entitled to the reversion immediately expectant on the
determination of the Superior Lease
(25) "Tenant" includes the successors in title and assigns of the Tenant
(26) "Term" means the term hereby granted
(27) "underlease" and "sub-underlease" include an agreement for
5
<PAGE>
Tenant Together with the rights granted in Part I of the Second Schedule but
Reserving to the Landlord and subject to the rights set out in Part II of the
Second Schedule and subject to all rights and easements (if any) enjoyed by any
adjoining or neighbouring property over or in respect of the Premises To Hold
the same for the term of twenty years and seven days from and including 1st day
of January 1996 to and including 7th day of January 2016 (determinable as herein
provided) Yielding and Paying during the Term the following Rents namely:
(1) Until 31st day of December 2001 the yearly rent of One Hundred and Forty
One Thousand Pounds ((pound)141,000) and thereafter the yearly rent
payable under the Third Schedule hereof such rent to be paid without any
deduction (except as required by any Act) by four equal quarterly payments
in advance on the Quarter Days the first payment (for the period beginning
on 1st day of January 1996 and ending 31st day of March 1996) to be made
on or before the date hereof and
(2) A yearly rent equal to the sum or sums paid or expended by the Landlord in
performance of the Landlord's covenant for insurance in Clause 4(2) such
yearly rent to be paid on demand
3. THE TENANT hereby covenants with the Landlord:
(1) To pay the Rents at the times and in manner aforesaid without any
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deduction (except as aforesaid) and if so required by bankers standing
order.
(2) (A) To defray (or in the absence of direct assessment on the Premises to
pay to the Landlord a fair proportion of) all existing and future
rates taxes assessments charges and outgoings payable in respect of
the Premises or any part thereof by any estate owner landlord tenant
or occupier thereof.
(B) If before the termination of the Term the Tenant or any undertenant
or occupier of the Premises or any part thereof shall cease to
occupy the same or to use the same for the purpose for which the
same was constructed or has been adapted and the Landlord shall pay
any rates or surcharge additional to rates to pay to the Landlord a
sum equal to the amount of such payments attributable to such
cessation of occupation or use.
(C) To pay and keep the Landlord indemnified against all VAT which may
from time to time be charged on the Rents or any other monies
payable by the Tenant under this Lease and to pay and keep the
Landlord indemnified against all VAT charged on the granting of this
Lease.
(3) To pay to the suppliers thereof all charges for gas electricity telephone
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(C) To enter into agreements with the manufacturers or with approved
maintenance contractors for the regular inspection and servicing of
all apparatus plant and machinery serving any heating system in the
Premises.
(5) (A) In every third year of the Term and in the last year of the Term in
a proper and workmanlike manner to clean all the outside surfaces of
the Premises and thereafter prepare and paint all outside surfaces
usually painted with three coats of paint of an approved colour and
quality.
(B) In every fifth year of the Term and in the last three months of the
last year of the Term in a proper and workmanlike manner to prepare
and paint all inside surfaces of the Premises usually painted with
two coats of best quality paint and to strip and repaper all inside
surfaces usually papered and to restore all other inside surfaces to
their proper condition and appearance.
(C) In complying with this covenant in the last three months of the last
year of the Term to use only materials of an approved colour quality
and finish and to ensure that any part of the Premises so painted
and decorated shall not thereafter be damaged.
(D) To keep the Landscaped Area at all times in a neat and tidy
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condition and without prejudice to the generality of the foregoing
to cut the grass during the growing season at least once every week
and to keep the same properly treated against weeds and to keep the
flower beds properly planted and weeded and to keep all trees and
shrubs properly pruned and to replace the same if ever they shall be
blown down or die.
(6) To permit the Landlord and/or the Superior Landlord and any authorised
person at all reasonable times upon previous notice to enter and inspect
the Premises.
(7) (A) Forthwith to comply with any notice given by the Landlord requiring
the Tenant to remedy any breach of the Tenant's covenants found upon
any such inspection.
(B) If the Tenant shall not within a reasonable time comply with any
such notice to permit the Landlord and any authorised person to
enter the Premises to remedy any such breach.
(C) To pay to the Landlord on demand all the costs and expenses incurred
by the Landlord under the provisions of this sub-clause.
(8) To clean the windows in the Premises at least once in every month.
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(9) At the expiration or sooner determination of the Term:
(A) to yield up the Premises (tenant's or trade fixtures only excepted)
in good and substantial repair and condition and fully in accordance
with the foregoing Tenant's covenants.
(B) to make good any damage caused to the Premises by the removal of the
Tenant's fixtures fittings furniture and effects and by the
reinstatement of the Premises pursuant to any covenant with the
Landlord.
(10) To reimburse to the Landlord all expenditure reasonably incurred by the
Landlord after the termination of the Term in repairing painting and
decorating the Premises so as to put them into the condition required by
the foregoing Tenant's covenants.
(11) To pay a fair proportion (to be conclusively determined by the Landlord's
Surveyor (save in the case of manifest error)) of the expenses incurred in
respect of any repairing rebuilding renewing maintaining cleansing and
(where necessary) lighting any party walls fences Conducting Media
passageways entrances ways roads pavements and other things the use of
which is common to the Premises and to other property together with the
cost of managing agents and/or the reasonable cost (not exceeding ten per
centum of the amount of the said expenses) of management by
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the Landlord.
(12) To permit the Landlord and/or the Superior Landlord and any authorised
person at all reasonable times upon prior notice save in cases of
emergency to enter the Premises to repair renew cleanse or alter any
adjoining or neighbouring property.
(13) (A) Not without the consent of the Landlord to erect any partitioning
within the Premises PROVIDED ALWAYS that the Tenant shall be
entitled to erect stud partitioning or demountable office
partitioning within the ancillary office area subject to such
partitioning complying with all Local Authority Statutory and Fire
Officer requirements and subject also to the requirement of the
Landlord to remove any such partitioning if requested so do to at
the expiration or sooner determination of the Term.
(B) Save as permitted pursuant to (A) above not to erect or permit or
suffer to be erected any other building structure Conducting Media
mast or post upon the Premises nor to make or permit or suffer to be
made any alteration therein or addition thereto nor to commit or
permit or suffer any waste spoil or destruction in or upon the
Premises nor to cut injure or remove or suffer to be cut injured or
removed any of the roofs walls (whether outside or inside) floors
joists timbers Conducting Media drains appurtenances or fixtures
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thereof.
(14) Not to affix or display or permit or suffer to be affixed or displayed
upon any part of the exterior of the Premises or to or through any window
thereof any placard poster notice advertisement name or sign whatsoever
PROVIDED ALWAYS that the Tenant may with the consent of the Landlord and
subject to the Tenant complying with the Planning Acts exhibit the Tenants
name and business upon or near to the main entrance doorway of the
Premises and in such other reasonable places as the Landlord shall agree.
(15) Within seven days of the receipt by the Tenant of any notice order
requisition direction or plan given made or issued to or by a competent
authority affecting the Premises or the occupation or user thereof to
supply a copy thereof to the Landlord and to make or join in making such
objections or representations against or in respect thereof as the
Landlord may reasonably require.
(16) (A) To comply in every respect with the provisions of any Act or the
requirements of any competent authority in respect of the Premises
or any part thereof or in respect of the occupation or user thereof
and to indemnify the Landlord against all claims demands expenses
and liability in respect thereof and to pay all costs charges and
expenses incurred by the Landlord in connection with any such
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provision or requirement
(B) Without prejudice to the generality of the preceding sub-clause (A)
to install in the Premises and thereafter repair maintain and keep
in good working order if necessary renewed from time to time such
fire extinguishers and other equipment as may be required by the
appropriate Fire Authority.
(17) Without prejudice to the generality of the last preceding sub-clause (16)
in relation to the Planning Acts not without the consent of the Landlord
(A) to make any application for planning permission in respect of the
Premises or any part thereof whether in respect of the carrying out
of any operations works acts or things or the user of the Premises
or any part thereof
(B) to carry out any operations works acts or things in the Premises or
any part thereof or make any change of use of the same for which
planning permission needs to be obtained
(C) to make any agreement or arrangement as to the user of the Premises
with the local planning authority.
(18) Not to use or permit or suffer to be used the Premises or any part thereof
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for any purpose other than the Permitted User.
(19) (A) Not to store or bring upon the Premises any materials or liquid of a
specially combustible inflammable explosive dangerous or offensive
nature and to procure that the storage and use of all materials or
liquids (a) shall at all times conform to any restrictions or
conditions imposed by statute or by regulations made thereunder and
(b) shall not take place without the Tenant first ascertaining and
complying with the requirements of the insurers of the Premises.
(B) Not to do any act or thing whereby any insurance effected on the
Premises or any neighbouring property may be rendered void or
voidable or the rate of premium thereon may be increased and to
comply with all recommendations of the insurers as to fire
precautions relating to the Premises.
(C) Not to do on the Premises any act or thing whatsoever which may or
tend to the nuisance annoyance inconvenience damage or disturbance
of the Superior Landlord the Landlord or its/their tenants or the
owners or occupiers of any adjoining or neighbouring property.
(D) Not to use the Premises for any illegal or immoral purposes or for
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the production sale distribution hire or storage of pornographic
material.
(E) Not to use the Premises for the sale of excisable or intoxicating
liquors or for the purpose of a club wherein alcoholic liquors are
supplied or consumed or for gambling or for the purpose of any
betting transaction within the meaning of the Gaming and Lotteries
Act 1956/1979 with or between persons resorting to the Premises or
for any purpose connected with betting or gambling or football or
other pools.
(F) Not to use the Premises for residential purposes.
(G) Not to hold in the Premises any sale by auction public exhibition or
political meeting.
(H) Not to bring into or upon the Premises or do anything which might
throw on the Premises any load or weight in excess of that which the
Premises are designed or constructed to bear with due margin for
safety nor to cause any undue vibration to the Premises by machinery
or otherwise.
(I) Not to suspend from any of the roof trusses or use the roof or roof
trusses of the building or buildings for the time being comprised in
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the Premises for the storage of goods or to place or permit any
person or persons to enter thereon save with a view to the execution
of necessary repairs and then only in such manner as to subject the
roof and roof trusses to the least possible strain.
(J) Not to install set up or in any way affix or permit to be installed
set up or affixed in or upon the Premises in any manner whatsoever
any engine machinery or mechanical devise or plant other than the
machinery normally operated in respect of the Permitted User.
(K) Not to allow to pass into the sewers drains or watercourses serving
the Premises any noxious or deleterious effluent or other substance
which will cause an obstruction or deposit in or injure the said
sewers drains or watercourses.
(L) Not to block up or interfere with any ventilating or heating louvres
wherever situate.
(M) Not to keep or allow to accumulate on or outside the buildings which
comprise or form part of the Premises any rubbish or refuse of any
kind but to remove the same as often as practicable but not less
often than once in every week provided that all perishables are
removed daily.
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(N) Not to permit any vehicles to remain for an unreasonable time nor
any packing cases goods or materials to be unpacked or deposited
outside the buildings which comprise or form part of the Premises or
otherwise cause obstruction or annoyance to the Landlord or to the
tenants or occupiers of any adjoining or neighbouring premises.
(0) Not to park or permit to be parked any trucks or to store or permit
to be stored or display or permit to be displayed any goods or
materials in that area of the Premises situate between the buildings
constructed on the Premises and the Public Road.
(P) Not to allow the electricity supply to the Premises to become
overloaded.
(Q) Not to use the Premises as agricultural land or an agricultural
holding within the meaning of these words as used in the Land
Purchase Acts or the Land Acts.
(R) Not to carry on or permit to be carried on upon the Premises any
offensive noisy or dangerous business manufacture or occupation
PROVIDED that it shall be a breach of this sub-clause for the Tenant to permit
or suffer any act expressly prohibited in this sub-clause and any reference to
"the Premises" in this Clause includes a reference to any part
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(D) Not to underlet the whole of the Premises without the consent of the
Landlord Provided that:
(i) the rent to be reserved by the Tenant shall not be less then
the Rents for the time being payable by the Tenant under this
Lease and shall be the best rent obtainable without taking a
fine or premium, and
(ii) any underlease shall contain an absolute prohibition against
charging or assigning part of the Premises parting with
possession or sharing occupation of the Premises or part
thereof or sub-underletting the whole or part of the Premises
(E) To incorporate or procure the incorporation in every permitted
mediate or immediate underlease of such provisions as are necessary
to ensure that any such underlease is in all respects consistent
with the provisions of this Lease and that the rent thereunder is
reviewed on the dates provided for review of rent hereunder and that
(subject to Clause 3(20)(D) above) any further dealing with the
premises thereby demised shall be subject to the consent of the
Landlord.
(F) Not upon a review of the rent reserved by any such underlease to
agree the amount of any such reviewed rent without the consent of
the Landlord.
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(G) Not to effect any transaction which this sub-clause (20) allows
subject to the consent of the Landlord more than one calendar month
after the date of the consent unless it shall otherwise provide.
(21) Within one month after any assignment underlease assignment of underlease
mortgage charge transfer disposition or devolution of the Premises or any
part thereof or any devolution in the estate of the Tenant therein or of
this Lease and every surrender of any derivative mediate or immediate
estate in the Premises or part thereof or any devolution of such estate to
give notice thereof in duplicate to the Landlord's solicitors and to
produce to them the original or a certified copy of the instrument or
instruments (including any relevant probate letters of administration or
assent) and also to deliver to the same solicitors for retention by the
Landlord a copy thereof and to pay to the same solicitors for the
registration of such transaction a reasonable fee (but not less than
(pound)100).
(22) Within one month after any written request by the Landlord to notify the
Landlord in writing:
(A) Whether the Tenant occupies the Premises wholly or in part and if so
for what purpose each part of the Premises is occupied, and
(B) Whether the Tenant has a sub-tenant and if so then:
(i) the description of the sub-let premises
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(ii) for what purpose the sub-let premises are occupied
(iii) if the subtenancy is for a fixed term what is the term and if
terminable by notice by what notice it can be terminated
(iv) the rent payable under the subtenancy
(v) the full name of the subtenant
(vi) whether to the best of the Tenant's knowledge and belief the
subtenant is in occupation of the premises sublet to him or
any part of them and if not what is the subtenant's address,
and Provided that the Landlord shall not be entitled to make
such a request more often than once in any period of twelve
months.
(23) Upon making an application for any consent which is required under this
Lease and as a condition precedent to the validity of such application to
disclose to the Landlord such information as the Landlord may reasonably
require.
(24) (A) 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 Premises by the consent of such third party nor to pay any
sum of money to or 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
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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 to the Landlord
on the same coming to the knowledge of the Tenant.
(B) To take all reasonable steps to prevent and not to suffer any
encroachment upon the Premises or the acquisition of any right to
light or air passage drainage or other easement over upon or under
the Premises and forthwith on the same coming to the knowledge of
the Tenant to give notice in writing to the Landlord of any
threatened encroachment or attempt to acquire any such easement.
(C) To use its best endeavours to prevent any easement or right at any
time belonging to or used with the Premises from being obstructed or
lost.
(25) (A) In the event of the Premises being destroyed or damaged to give
notice thereof immediately to the Landlord stating (if possible) the
cause of such destruction or damage.
(B) In the event of the Premises or any part thereof being destroyed or
damaged from or by any of the insured Risks and of the Landlord
being unable to recover the whole or part of the insurance money in
respect of the same by reason solely or in part of any act
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omission neglect or default of the Tenant its servants agents or
licensees or any sub-tenant its servants agents or licensees then
and in every such case the Tenant shall forthwith pay to the
Landlord the whole or (as the case may require) a fair proportion of
the cost of rebuilding and reinstating the Premises and any other
premises in respect of which the Landlord's insurance shall be
vitiated by the said act omission neglect or default.
(C) To give notice to the Landlord forthwith of any defect in the
Premises of which the Tenant is aware.
(26) (A) To indemnify the Landlord against all costs and expenses including
professional fees properly incurred by the Landlord in connection
with all and every loss and damage whatsoever incurred or sustained
by the Landlord as a consequence of every breach of the covenants by
the Tenant set out herein or implied PROVIDED that such indemnity
shall extend to and cover all costs and expenses incurred by the
Landlord in connection with any steps which the Landlord may (at its
absolute discretion but without being in any way obliged so to do)
take to remedy any such breach and be without prejudice to any
rights or remedies of the Landlord in respect of any such breach.
(B) To indemnify the Landlord against all actions claims liabilities
costs
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and expenses alleged or demanded by the owners or occupiers of any
adjoining or neighbouring property or other parties arising through
the use or occupation of the Premises the existence of any article
in or upon the Premises or the execution or omission of any works
upon the Premises except insofar as the same may be due solely to
the Landlord's own act or default or the act or default of the
Landlord's employees or agents.
(27) To permit the Landlord during the Term to affix and retain without
interference upon any suitable and conspicuous part of the Premises (but
not so as materially to affect the access of light and air to the
Premises) a notice for reletting the same (if the termination of the Term
is a prospective possibility) or selling the Landlord's interest in the
Premises and to permit persons with written authority of the Landlord or
the Landlord's agents at reasonable times of the day to view the Premises.
(28) To pay to the Landlord on demand all costs charges and expenses (including
legal and surveyors' fees and costs) of and incidental to:
(A) every application made by the Tenant for the Landlord's consent or
approval whether the same be granted or refused or proffered subject
to any lawful qualification or condition or whether the application
be withdrawn.
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(B) the preparation and service of notices under the terms hereof
(whether during at the end of or after the expiry of the Term) and
any notices or proceedings under Section 14 of the Conveyancing Act
1881 notwithstanding that forfeiture is avoided otherwise than by
relief granted by the Court.
(C) any schedule relating to wants of repair to the Premises whether
served during or after the termination of the Term.
(D) the stamp duty payable on this Lease and the Counterpart thereof.
(29) If any sum payable by the Tenant to the Landlord under this Lease shall
not be paid on the same becoming due to pay to the Landlord interest
thereon at the rate of three per cent. above Base Rate from time to time
calculated on a day to day basis from the date of the same becoming due
down to the date of payment and the aggregate amount for the time being so
payable shall at the option of the Landlord be recoverable by action or as
rent in arrear.
(30) To do such things and execute such documents as may be necessary for the
purposes of the grant of a Lease to the ESB for any sub-station to be
erected within the Premises and to allow the ESB its servants and agents
at reasonable times to enter upon the Premises for the purposes of
inspecting maintaining and repairing all electrical installations.
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4. THE LANDLORD covenants with the Tenant:
(1) That the Tenant paying the Rents and performing and observing the
covenants and stipulations on the part of the Tenant herein shall
peaceably hold and enjoy the Premises during the Term without any
interruption by the Landlord or any person rightfully claiming under or in
trust for the Landlord.
(2) To insure the Premises and (unless such insurance shall become void or
payment of the insurance monies shall be refused wholly or in part by
reason of any act omission neglect or default by or on the part of the
Tenant its servants agents or licensees or any subtenant its servants
agents or licensees) keep the same insured against:
(A) loss or damage by the Insured Risks in such amount (determined by
the Landlord from time to time) as the Landlord shall in its
absolute discretion from time to time deem sufficient to cover the
full amount of the costs (including reasonable provision for
escalation of such costs between the date of destruction or damage
and the date of rebuilding or reinstating the Premises and including
all applicable VAT) of completely rebuilding or reinstating the
Premises or in such higher amount as the Tenant shall by notice to
the Landlord from time to time specify.
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(B) professional fees on such amount assessed according to the scales or
other method for the time being adopted by the Royal Institute of
the Architects of Ireland and the Society of Chartered Surveyors in
the Republic of Ireland and other professional fees the cost of site
clearance (including demolition and debris removal) and all other
fees and payments of whatever nature necessary or in contemplation
in respect of the effecting of the said rebuilding or re-instatement
of the Premises including VAT on all or any part thereof including
all planning fees payable on any planning application and all stamp
duties exigible on any Building or like Contract entered into
relative to such rebuilding or re-instatement and three years rent
of the Premises at the rate for the time being payable or
prospectively payable.
(3) (Unless as aforesaid) to apply all such monies (except monies received in
respect of loss or damage of or to such adjoining or neighbouring premises
or fixtures and fittings therein or thereon or liability to third parties
or loss of rent) as the Landlord may receive under or by virtue of such
insurance in rebuilding or reinstating the Premises or such parts thereof
as may have been damaged or destroyed as expeditiously as possible
(subject always to the Landlord being able to obtain all such approvals
consents licences permits and permissions and all such materials and
labour as may be necessary for such rebuilding and reinstatement) and
(unless as aforesaid) to make up any shortfall in
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insurance monies from the Landlords own funds.
(4) On all reasonable occasions when so requested by the Tenant to give or
procure that there be given to the Tenant at the Tenant's expense full
details of the insurance or insurances so effected by the Landlord and a
copy of the policy or policies and full details of the premium or premiums
payable therefor and evidence of payment of such premiums.
5. PROVIDED as follows:
(1) If:
(A) the Rents or any part thereof shall be in arrear for 14 days next
after becoming payable (whether formally demanded or not) or
(B) there shall be any breach non-performance or non-observance of any
of the Tenant's covenants or
(C) the Tenant (being an individual) shall become bankrupt or (being a
company) shall enter into liquidation whether compulsory or
voluntary (save for the purpose of amalgamation or reconstruction of
a solvent company) or shall cease for any reason to be registered
with the Registrar of Companies or have a receiver or examiner
appointed over the whole or any part of its undertaking or
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(D) the Tenant shall enter into any composition or scheme of arrangement
for the benefit of the Tenant's creditors or shall suffer any
distress or execution to be levied on the Tenant's goods.
It shall be lawful for the Landlord at any time thereafter to
re-enter the Premises or any part thereof in the name of the whole
and thereupon the Term shall absolutely determine but without
prejudice to any rights of action of the Landlord or the Tenant in
respect of any antecedent breach by the other of any of the
covenants herein
(2) if any part of the Rents shall be in arrear for fourteen days whether
legally demanded or not:
(A) It shall be lawful for the Landlord to enter into and upon the
Premises or any part thereof and distrain and to dispose of the
distress there found in due course of law and to apply the produce
thereof in or towards payment of the Rents and all costs charges and
expenses occasioned by the non-payment thereof and the Landlord's
power to distrain upon the Premises for rent in arrear shall extend
to and include any tenant's fixtures or fittings not otherwise by
law distrainable which may from time to time be on the Premises and
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(B) If the said Rents 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 on demand
the Landlord's Solicitors' reasonable costs incurred by reason of
the foregoing including but without prejudice to the generality of
the foregoing Sheriff's commission.
(3) If at such time as the Tenant has vacated the Premises after the
determination of the Term either by effluxion of time or otherwise any
property of the Tenant shall remain in or on the Premises and the Tenant
shall fail to remove the same within twenty-eight days after being
requested by the Landlord so to do by a Notice in that behalf addressed to
the Tenant at its last known address or affixed to the entrance door to
the Premises then and in such case the Landlord may as the agent of the
Tenant (and the Landlord is hereby appointed by the Tenant to act in that
behalf) sell such property and shall then hold the proceeds of sale after
deducting the costs and expenses of removal storage and sale reasonably
and properly incurred by it to the order of the Tenant PROVIDED THAT the
Tenant will indemnify the Landlord against any liability incurred by it to
any third party whose property shall have been sold by the Landlord in the
bona fide mistaken belief (which shall be presumed unless the contrary be
proved) that such property belonged to the Tenant and was liable to be
dealt with as such pursuant to this sub-clause.
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(4) If the Premises shall at any time during the Term be so damaged or
destroyed by any of the Insured Risks as to be unfit for occupation and
use then (unless the insurance money shall be wholly or partly
irrecoverable by reason solely or in part of any act omission neglect or
default by or on the part of the Tenant its servants agents or licensees
or any sub-tenant its servants agents or licensees) the Rents or a fair
proportion thereof according to the nature and extent of the damage
sustained shall be suspended until the date when the Premises shall again
be rendered fit for occupation and use or until the date three years from
the date of such damage or destruction whichever date shall be the earlier
and any dispute with reference to this proviso shall be referred to
arbitration in accordance with the Arbitration Acts 1956 to 1980.
(5) In case the Premises or any part thereof shall be destroyed or become
ruinous and uninhabitable or incapable of beneficial occupation or
enjoyment by or from any of the Insured Risks the Tenant hereby absolutely
waives and abandons its rights (if any) to surrender this Lease under the
provisions of Section 40 of the Landlord & Tenant Law Amendment Act
Ireland 1860 or otherwise.
(6) If during the Term the Premises shall be destroyed or so damaged by any of
the insured Risks as to be substantially unfit for occupation and use
(A) The Landlord may by not less than six months notice expiring at
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any time determine the Term and upon the expiry of such notice the
Term shall determine without prejudice to any remedy of either party
against the other in respect of any antecedent breach of covenant.
(B) if the Term is determined under paragraph (A) of this sub-clause the
Landlord shall be entitled to retain the Insurance monies received
by the Landlord.
(7) Nothing herein shall be deemed to constitute any warranty by the Landlord
that the Premises or any part thereof are under the Planning Acts
authorised for use for any specific purpose.
(8) The Landlord shall not be responsible to the Tenant (save as and to the
extent hereinbefore expressly provided) or its employees or visitors for
any injury death damage destruction or financial or consequential loss
whether to person property or goods sustained on or by reason of the
condition of the Premises.
(9) Notwithstanding that the Premises forms portion of the lands which may be
developed by the Landlord as an industrial estate in accordance with any
plan and scheme of development the Landlord shall not be obliged to carry
out or complete any plan or scheme of development or any other plan or
scheme of development and accordingly may vary abandon or
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alter the same and make Leases Transfers and Conveyances of any part or
parts of the said other lands free from any stipulations or conditions
contained in any Lease or transfer of any other portion of the said land
or any part thereof without regard to any such plan or scheme of
development.
(10) The Tenant having complied with all covenants on its part and conditions
in this Lease contained may determine this Lease on the 31st day of
December 2006 having first given written notice to the Landlord of its
intention so to determine on or before the 31st day of December 2005 and
the Tenant shall pay all Rents and perform and observe all the covenants
and conditions herein contained and on its part to be performed and
observed up to the 31st day of December 2006 and shall further pay to the
Landlord on or before the 31st day of December 2006 a sum equivalent to
six months Principal Rent and shall further deliver to the Landlord on the
31st day of December 2006 a Deed of Surrender and Transfer under the seal
of the Tenant together with the original of this Lease and the Tenant's
Land Certificate (if issued) and stamp duty and registration fees
associated with such surrender whereupon this Lease shall cease to exist
and be void but without prejudice to any claim by either party against the
other in respect of any antecedent breach of any covenant or condition
herein contained.
(11) In addition to any other prescribed modes of service any notices requiring
35
<PAGE>
to be served on the Tenant hereunder shall be validly served if left
addressed or sent by post to the Tenant (or if there shall be more than
one of them to any one or more of them) at the Premises or at the last
known address or addresses of the Tenant or Tenants or any of them in the
Republic of Ireland and any notice required to be served on the Landlord
shall be validly served if left at or posted to the registered office of
the Landlord and any such notices may be served by the Landlord's servants
or agents and may be served on the Tenant's servants or agents and all
notices by post shall be deemed to be served from four days after posting.
(12) The Landlord hereby consents to the registration of this Lease as a burden
on the Premises comprised in Folio 75165L of the Register County Dublin
and to the registration of the rights granted to the Tenant specified in
Part I of the Second Schedule as a burden on the said Folio AND THE Tenant
hereby consents to the registration of the easements and rights excepted
and reserved to the Landlord and others specified in Part II of the Second
Schedule as a burden on the Tenant's new Folio when opened.
IT IS HEREBY CERTIFIED by the Tenant that it is the person becoming entitled to
the entire beneficial interest hereby demised and that it is a qualified person
within the meaning of Section 45 of the Land Act 1965 namely a person acquiring
an interest in land which is situate in a non-municipal town specified
36
<PAGE>
in Part II of the First Schedule to the Local Government (Planning and
Development) Act 1963 that is the Town of Tallaght.
IT IS HEREBY FURTHER CERTIFIED by the parties hereto that the transaction hereby
effected does not form part of a larger transaction or of a series of
transactions in respect of which the amount or value or the aggregate amount or
value of the consideration other than rent exceeds (pound)1,000.
IT IS HEREBY FURTHER CERTIFIED by the parties hereto that this is an instrument
to which the provisions of Section 112 of the Finance Act 1990 do not apply for
the reason that the Premises hereby demised comprise a factory/warehouse
building.
6. THE SURETY in consideration of this Lease having been granted at the
request of the Surety covenants with the Landlord:
(1) That throughout the Term the Tenant will pay the Rents and all other sums
or payments herein covenanted to be paid by the Tenant at the respective
times and in manner herein appointed for the payment thereof and will also
duly perform and observe all the Tenant's covenants herein (as well after
as before any disclaimer of the Lease).
(2) That the Surety will pay and make good to the Landlord all losses costs
and expenses sustained by the Landlord through the default of the Tenant
in respect of any of the before mentioned matters PROVIDED ALWAYS
37
<PAGE>
that none of the Excepted Matters shall release or in any way lessen or affect
the liability of the Surety under this guarantee.
In this Sub-clause "Excepted Matters" means:
(A) any neglect or forbearance of the Landlord in endeavouring to obtain
payment of the Rents and payments as and when the same become due,
(B) any delay by the Landlord in taking any steps to enforce performance or
observance by the Tenant of any of the Tenant's covenants,
(C) any time which may be given by the Landlord to the Tenant,
(D) any variation in the terms of this Lease agreed between the Landlord and
the Tenant from time to time,
(E) any refusal by the Landlord to accept rent 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 14 of the Conveyancing Act 1881 be
entitled) to re-enter the Premises,
(F) the transfer of the reversion expectant upon the Term,
38
<PAGE>
of rent) as are reserved by and contained in the Lease and in such case
the Surety shall execute and deliver to the Landlord a counterpart thereof
and shall pay to the Landlord the costs thereof.
(4) The Surety agrees and declares that the terms of this Lease shall be
governed by and construed for all purposes in accordance with the laws of
the Republic of Ireland and the Surety hereby agrees to submit to the
jurisdiction and competence of the Courts of the Republic of Ireland and
hereby irrevocably appoints L.K. Shields & Partners Solicitors of 39/40,
Upper Mount Street, Dublin 2 for the purposes of accepting service of
proceedings on its behalf.
IN WITNESS whereof the parties hereto have caused their Common Seals to be
affixed the day month and year first herein WRITTEN.
40
<PAGE>
THE FIRST SCHEDULE
The Premises
ALL THAT piece or parcel of land situate at Broomhill Road in the town and
parish of Tallaght and County of Dublin with the buildings and erections thereon
or on some part thereof which are edged red on the Plan No. 1 and form part of
the premises comprised in Folio 75165L of the Register County Dublin excluding
therefrom the Sub-Station Site on the ground floor of the said premises outlined
and hatched in blue on Plan No. 1.
THE SECOND SCHEDULE
PART I
Rights Granted to the Tenant
The right in common with the Landlord and all others entitled thereto to the
free passage and running of gas electricity water and soil and other services
through and along the Conducting Media built or placed in through over or under
the adjoining property of the Landlord.
41
<PAGE>
THE SECOND SCHEDULE
PART II
Easements and Rights Excepted and Reserved
to the Landlord
1. The free and uninterrupted passage and running of gas water soil
electricity telephone or other services to and from any adjoining or
neighbouring premises through all Conducting Media which now are or may
hereafter during the Term be in upon over under or passing through the
Premises.
2. The right to enter upon the Premises at any time during the Term with or
without contractors and others and all necessary equipment and materials
for the purpose of inspecting repairing renewing or building on or into
any party walls of adjoining or neighbouring premises or for the purpose
of connecting up to any such Conducting Media or of inspecting laying
renewing repairing cleansing maintaining replacing relaying or altering
any such Conducting Media.
3. Full right and liberty for the Landlord and all other persons who shall
now have or may hereafter be granted similar rights
(1) to rebuild or alter or to build upon or use any adjoining or
neighbouring premises now or hereafter belonging to the Landlord
42
<PAGE>
at any time or times and for any purpose whatever notwithstanding
any interference with the access or enjoyment of light or air to or
in respect of the Premises (which access or enjoyment of light and
air whether to the existing or to any future windows or apertures or
structures of any description for the time being of the Premises is
hereby agreed to be enjoyed under the express consent of the
Landlord who may interfere with such access or enjoyment in manner
aforesaid without any formal revocation of such consent)
(2) at all reasonable times to enter upon the Premises for the purpose
of inspecting or executing repairs decorations or alterations to or
upon any adjoining or neighbouring premises or repairing cleansing
emptying or renewing any Conducting Media belonging to the same or
constructing any building or erection on any adjoining or
neighbouring premises all such works being carried out as
expeditiously as possible.
4. All rights of light and air and all other easements or rights which may
interfere with the full user of any adjoining or neighbouring premises now
or hereafter belonging to the Landlord for building purposes and
development generally.
5. All mines and minerals in or upon the Premises with full powers of working
and taking the same.
43
<PAGE>
6. Full right and liberty to erect ladders cradles or scaffolding against or
before the external walls or windows of the Premises for the purpose of
executing any repairs or decorations to any adjoining or neighbouring
premises or for cleaning windows of any such premises.
7. Full right and liberty for the Electricity Supply Board to go pass and
repass along over and upon the Avenue coloured yellow on Plan Number 1
annexed hereto from and to the Substation Site at all times of the day and
night with or without vehicles.
8. The right of the Electricity Supply Board to lay relay maintain and keep
in repair and to have access to any underground cables and other
distribution lines leading to and from the Substation Site which are now
or shall at any time be laid in under over or upon the Premises.
THE THIRD SCHEDULE
Review of Principal Rent
1. In this Schedule:
"Review Date" means the last day of each period of five years
calculated from the commencement of the Term (and not
from the date hereof if different) and
44
<PAGE>
the penultimate day of the last year of the Term and
any other date that becomes a Review Date pursuant to
paragraph 6
"Market Rent" means the best yearly rent at which the Premises might
be expected to be let:
(a) without premium
(b) by a willing lessor
(c) to a willing lessee
(d) in the open market
(e) at the relevant Review Date
(f) for a term equal to the Term
(g) at a rent which is subject to review at the same
intervals and in the same manner as the Principal
Rent under this Lease
(h) upon the same terms (other than the amount of
Rent) as are contained in this Lease
(i) with vacant possession
(j) fully fitted out and serviced
(k) ready for immediate occupation and use
(l) for the use permitted by this Lease
(m) assuming the Assumed Matters but
(n) disregarding the Disregarded Matters
45
<PAGE>
"Assumed Matters" means the assumptions that:
(a) all the Tenant's covenants in the Lease have been
complied with
(b) in case the Premises have been destroyed or
damaged by any of the Insured Risks they have been
completely rebuilt and reinstated
"Disregarded
Matters" means:
(a) any goodwill attached to the Premises by reason of
the carrying on thereat by the Tenant and/or any
authorised subtenant of any business
(b) any effect on rent of any approved alteration or
improvement to the Premises made by the Tenant
and/or any authorised subtenant during the Term at
the sole expense of the Tenant PROVIDED that the
following works shall not be Disregarded Matters
namely any works carried out pursuant to any
obligation on the Tenant or any authorised
subtenant to carry out such work and/or wholly or
partially in
46
<PAGE>
consideration of or during a rent free period
granted by the Landlord
(c) the fact that the Tenant or its predecessors in
title or any subtenant or subtenants of the Tenant
or its predecessors in title have been in
occupation of the Premises or any part thereof
"Chairman" means the Chairman for the time being of the Society of
Chartered Surveyors in the Republic of Ireland or his
duly appointed deputy
"Surveyor" means a surveyor agreed upon by the Landlord and the
Tenant or in default of agreement appointed by the
Chairman
"agree" or
"agreed" means agree or agreed in writing between the Landlord
and the Tenant
2. From each Review Date the Principal Rent shall be such as may at any time
be agreed as the Principal Rent payable from that Review Date or (in
default of such agreement) whichever is the greater of
(a) the Market Rent, or
47
<PAGE>
(b) the Principal Rent contractually payable immediately before that
Review Date
3. If by a date three months before a Review Date the rent payable from that
Review Date has not been agreed the Landlord and the Tenant may agree upon
a person to act as the Surveyor who shall determine the Market Rent but in
default of such agreement then the Landlord or the Tenant may at any time
whether before or after the Review Date make application to the Chairman
to appoint a Surveyor to determine the Market Rent and such application
shall request that the surveyor to be appointed shall if practicable be a
specialist in the letting of factory/warehouse premises in the area in
which the Premises are situate.
4. (1) Unless the Landlord and the Tenant otherwise agree the Surveyor
shall act as an expert and not as an arbitrator and unless the
Surveyor shall otherwise direct the Landlord and the Tenant shall
each be responsible for one half of his fees and if either shall pay
the whole thereof he shall be entitled to recover one half thereof
from the other
(2) In deciding upon the manner in which the costs of the determination
shall be borne the Surveyor may have regard to the contents of any
notice served or offers made by either party to the other and the
nature and content of any representations made to
48
<PAGE>
virtue of any Act a restriction upon the right of the Landlord to recover
the Principal Rent otherwise payable then upon the ending removal or
modification of such restriction the Landlord may at any time thereafter
give to the Tenant not less than one month's written notice requiring an
additional rent review upon a quarter day specified therein which quarter
day shall for the purposes of this Schedule be a Review Date.
7. A memorandum of the Principal Rent ascertained from time to time in
accordance with this Schedule shall be prepared by the Landlord in two
parts one part to be signed (by the Tenant if an individual and otherwise
on his behalf) and annexed to the Counterpart and the other part to be
signed on behalf of the Landlord and annexed to the Lease.
8. Time shall not be of the essence in relation to any paragraph of this
Schedule.
50
<PAGE>
PRESENT when the Common Seal
of FRIENDS PROVIDENT LIFE
ASSURANCE COMPANY LIMITED
was affixed hereto:-
/s/ [ILLEGIBLE]
/s/ [ILLEGIBLE]
Authorised Officials
PRESENT when the Common Seal
of PRINTING RESOURCES LIMITED
was affixed hereto:-
/s/ [ILLEGIBLE]
C.M. Manz
38 Wentworth Close
Barnham
P022 0HS
Secretary
/s/ [ILLEGIBLE]
PRESENT when the Common Seal
of TINSLEY ROBOR PLC
was affixed hereto:-
/s/ [ILLEGIBLE]
C.M. Manz
38 Wentworth Close
Barnham
P022 0HS
Secretary
/s/ [ILLEGIBLE]
51
<PAGE>
EXHIBIT 10.71
SUPPLEMENT
----------
to
LEASE AGREEMENT
---------------
entered into on 14 August 1996, filed under ERFNR. 327530/96
entered into by and between
a) Walter Reischl, businessman
5020 Salzburg, Glaser Strabe 24
b) W.R. Druck Medien Ges.m.b.H. & Co. KG (formerly Reischl - Druck Ges.m.b.H &
Co. KG), Gewerbehofstrabe 394, A-5071 Siezenheim
as landlord, hereinafter referred to as "Landlord"
and
1. Reischl-Druck Ges.m.b.H. (formerly James Upton GmbH), Gewerbehofstrabe 394,
A-5071 Siezenheim,
2. Tinsley Robor plc, Drayton House, Drayton, Chichester, West Sussex PO 206 EW
as tenant, hereinafter referred to as "Tenant"
as follows:
(section) 1
Preamble
--------
On 14 August 1996, the Parties concluded a lease agreement on the real estate,
land register 56542 Siezenheim I, File No. 1060, Salzburg District Court,
consisting of the plot of land No. 434/21 with a total surface of 3,237 (square
meters) together with the buildings existing thereon or to be erected in
accordance with the map of the planning office Reinhartshuber of 9 April 1990.
It was stated that the extension marked blue on the map drawn up by the above
mentioned planning office was not to be covered by the Lease Agreement. However,
"Landlord" has agreed to erect also this extension and to lease it to "Tenant"
at the same terms if the relevant government approvals would be obtained and if
"Tenant" so requests.
<PAGE>
-2-
According to (section) 6 Rent, the agreed rent for the entire premises was ATS
212,530 per month plus maintenance costs within the meaning of the Austrian
Tenancy Act (MRG) excluding applicable V.A.T. Until completion of the extension,
the rent was fixed at ATS 158,530 plus maintenance costs and excluding
applicable V.A.T.
The building and the extension as defined in (section) 1 No. 1 (2) of the Lease
Agreement have been completed in the meantime and were delivered to "Tenant" as
of 11 November 1996. The extension marked blue (Reinhartshuber map of 9 April
1990) has a surface of 108 (square meters).
(section) 2
Rent
----
1. The parties agree by unanimous consent to supplement No. 1 of (section) 6
Rent as follows:
The rent for the entire premises in accordance with (section) 1 shall be as
of 11 November 1996.....................................................ATS
223,330 per month plus maintenance costs within the meaning of the Austrian
Tenancy Act and excluding applicable V.A.T.
(section) 3
Addition
--------
The Parties have agreed as follows:
1. One storey will be added to the existing office building so that the office
space will be increased by 215 (square meters).
2. The addition shall correspond to the style of the office building.
3. The Parties will reach a separate agreement on the timing of the addition.
4. The sum to be paid upon completion and delivery of the extended office
space shall be ATS 130,00 per square meter, that is the sum of
...................................................................ATS 27,950
<PAGE>
-3-
per month for 215 (square meters) plus maintenance costs within the meaning of
the Austrian Tenancy Act and excluding applicable V.A.T. The addition will thus
increase the monthly rent to total.............................ATS 251,280 plus
maintenance costs within the meaning of the Austrian Tenancy Act and excluding
applicable V.A.T.
(section) 4
General
-------
Any costs and stamp duties which arise in connection with the execution of this
supplement shall be borne by "Tenant". This supplement shall not affect the
remaining provisions of the Lease Agreement dated 14 August 1996.
Salzburg, this...
- ------------------------ -----------------------------------
Walter Reischl W.R. Druck Medien GesmbH & Co KG
(formerly Reischl-Druck GmbH & Co KG)
- ------------------------ -------------------------
Reischl Druck GmbH Tinsley Robor plc
(formerly James Upton GmbH)
<PAGE>
EXHIBIT 10.72
- --------------------------------------------------------------------------------
lease for business premises
- --------------------------------------------------------------------------------
According to the model decided upon by the Raad voor Onroerende Zaken (Council
for Real Estate Matters) in October 1988
Reference to this model is only permitted if the inserted, added or divergent
text can easily be recognized as such. Additions and divergences should
preferably be included in the article "Exceptional Conditions".
- --------------------------------------------------------------------------------
The undersigned: De stichting: "Stichting Administratiekantoor
Kinderen van den Nieuwenhuizen en Daandels",
legal represented by mister L.P.M. van den
Nieuwenhuizen
registered/residing at WEVERSTRAAT 15, UDEN, NEDERLAND
, hereinafter referred to as "the lessor",
and TINSLEY ROBOR PLC, LEGAL REPRESENTED BY HER CHAIRMAN
MISTER JOHN ROSE
registered/residing at DRAYTON HOUSE, DRAYTON, CHICHESTER, WEST SUSSEX PO20 6EW
, hereinafter referred to as "the lessee",
have agreed to the following lease:
Property, Purpose and Floor Load
1.1 This agreement concerns the property, hereinafter referred to as "the leased
property", known locally as WEVERSTRAAT 13, UDEN, NEDERLAND
CADASTRAL: MUNICIPAL : UDEN SEKTOR : T NUMBER : 532
PARTIALY
and further identified by the drawing or description of the leased property
attached to this document certified by the parties.
1.2 The lessee will use the leased property exclusively as
PRINTING FACTORY-OFFICE AND 50
PARKING PLACES.
1.3 The highest permissible load on the floor of the leased property is:
a. on the ground floor 3,000 kg/square meter
b. in the other areas n.v.t. kg/square meter
Conditions
2.1 The following are deemed to be integral parts of this agreement:
a. The general conditions for the leasing of business premises, deposited with
the Clerk of the Court in The Hague on 12 April 1989 and registered under
number 58/1989, hereinafter referred to as "the general conditions". The
parties are fully informed of these general conditions. The lessee has
received a copy of these conditions.
b. The conditions of the property division agreement, the accompanying
regulations governing division of property and any standing rules agreed to,
in so far as these conditions are applicable and if the leased property is
part of a building or a complex divided into apartment titles.
2.2 The rules arising from 2.1 are applicable excepting to the extent to which
the conditions mentioned hereinafter are expressly at variance with them or
applicability in relation to the leased property is not possible.
<PAGE>
Term, Extension and Termination of the Lease
3.1 This agreement is entered into for the period of FIVE year(s),
beginning on 1 OCTOBER 1995
and ending on 30 SEPTEMBER 2000
3.2 During the period referred to in 3.1 the parties to the lease may not
terminate the lease by giving notice. Notice must be given in accordance with
3.4 in the case of termination at end of this period.
3.3 If the period referred to in 3.1 elapses without notice being given in
compliance with 3.2., the lease will be extended for a contiguous period of FIVE
year(s), that is until 30 SEPTEMBER 2005. The lease will only terminate at that
point in time, however, if notice has been given in accordance with 3.4 If such
notice is not given, the lease will be extended for a contiguous period of FIVE
year(s) and so on, excepting, however, that in each case the lease may be
terminated in accordance with 3.4 towards the end of each extension.
3.4 Termination of the lease may only occur by means of writ of execution or by
registered mail with due observance of a period of notice of at least TWELVE
months prior to the expiry of the current period.
3.5 This article has no effect on the conditions set out in article 7 of the
general conditions.
Payment Obligations and Period of Payment
4.1 The lessee is obligated to make the following payments:
- -- the rent ANY THREE MONTHS, BEFOREHAND
- -- payment for additional supplies and services referred to in 6.
- -- the value added tax payable by law on the rent and such payment, or a
corresponding sum as referred to in 5.
4.2 The rent will amount to an annual sum of f 218.590,64 in words TWO HUNDRED
EIGHTEEN THOUSAND FIVE HUNDRED AND NINETY GUILDERS AND SIXTY-FOUR CENTS.
The rent will increase annually on 1 OCTOBER, for the first time on 1-10-1996,
and so on in accordance with article 4 of the general conditions.
4.3 The payment for additional supplies and services will be determined in
accordance with article 11 of the general conditions and, as is stipulated
therein, a system of payment in advance with settlement at a later date will be
applied.
4.4 The rent and the advance payment for additional supplies and services and
the value added tax or a sum corresponding to this will be payable in advance,
in each case before or on the first day of the period to which the payment
applies.
4.5 For each term of payment of THREE months the following amounts are payable
for
- -- rent f 54.647,66
- -- advance payment for the provision of heating and hot water f
- -- advance payment for additional supplies and services f__________
so that the lessee is required to pay the total sum of f54.647,66
in words FOURTHY FIVE THOUSAND SIX HUNDRED SEVEN FOUR GUILDERS AND SIXTY SIX
CENTS to be increased by the value added tax payable by law or the
corresponding amount referred to in article 5.
4.6 With a view to the date of commencement of this lease, the first term of
payment is the period and the sum payable for this first
period is f 54.647,66, to be increased by the legally payable value added tax or
a corresponding agreed sum as referred to in article 5. The lessee will make
payment of this sum before or on 1 OCTOBER 1995
Value Added Tax (BTW)
5.1 All amounts mentioned in this agreement exclude value added tax. The lessee
is required to pay value added tax on the rent and the payments for additional
supplies and services. Value added tax will be charged by the lessor and is
required to be paid together with the rent and the settlement for additional
supplies and services, or the advance payment for these.
5.2 The lessee provides the lessor herewith with the irrevocable power of
attorney to submit, in part on his behalf, an application as referred to in
section 11, paragraph 1, subsection b, 5 of the Turnover Tax Act of 1968 (Wet op
de omzetbelasting 1968) (with regard to opting for taxed leasehold). If so
required, the lessee will endorse this application and return it to the lessor
within 14 days of receiving it.
5.3 If the application is not submitted within the period stipulated in the
Act, or if it is not acceded to, the lessee will be required to pay over and
above the rent and the payment for additional supplies and services or the
advance payment of this, an amount equivalent to the amount payable in value
added tax if the application had been acceded to. The same applies if the
application is acceded to as of a later date than that applied for, but only
during the period ending on the date of commencement of the taxed leasehold.
5.4 If the lessee provides that it is due to the lessor that the application was
not submitted in time or was not acceded to, the lessee will not be required to
pay the sum equivalent to the value added tax referred to in 5.3.
5.5 In the event that the lessor disposes of the leased property or the building
or the complex of which the leased property is a part and the new owner opts for
taxed leasehold, the lessee will equally be bound by the conditions in this
article.
<PAGE>
Supplies and Services
6. The parties are agreed that the following additional supplies and services
will be provided by or on behalf of the lessor:
ALL COSTS OF SUPPLIES AND SERVICES WILL BE FOR ACCOUNT OF THE LESSEE.
Bank Guarantee
7.1 The conditions of article 8 of the general conditions apply in relation to
the security to be provided by the lessee.
7.2 The amount referred to in subsection 8.1 of the general conditions is
herewith set by the parties at f A PERMANENT AMOUNT OF SIX MONTHS RENT,
STARTING WITH f.110.000.--. in words STARTING WITH ONE HUNDRED TEN THOUSAND
GUILDERS.
Supervisor
8. Until the lessor announces otherwise, the supervisor will be MISTER L.P.M.
VAN DEN NIEUWENHUIZEN.
<PAGE>
Addenda
9. The following addenda accompany this lease:
- -- the general conditions as referred to in 2.1.a
- -- the drawing of the leased property certified by the parties and attached to
this lease
- -- the description of the leased property certified by the parties and attached
to this lease
- -- the bank guarantee as referred to in article 7.
Exceptional Conditions
10. This lease is subject to Dutch law.
11. This translation of the lease is only to be used in combination with and as
an explanation of the corresponding Dutch text, namely, Huurovereenkomst
bedrijfsruimte volgens het model door de Raad voor Onroerende Zaken in oktober
1988 vastgesteld.
12.- Lessee will be held responsible if he or any one of his staff will cause
ground pollution or any other environmental damage to the building, the
foundation of the building or the premises.
13.- Lessee will take care by himself for all necessary licenses which he needs
for the exercise of his industry.
14.- At the end of the lease, when ever that may be, all changes and
improvements on building and installations will be automatically lessor's
property.
15.- This agreement takes the place of the one that was made earlier on the
first of October 1993, which is automatically canceled now.
16.- In all cases in which this agreement will not give a pronunciation, the
rules of the Nieuw Burgelijk Wetboek will be used automatically.
Drawn up and signed in two fold.
Town Uden Date 22-1-1996 Town Chichester, England Date 17 Nov
[illegible] Tinsley Robor plc [illegible]
[illegible signature] /s/ John Rose
(Lessor) (Lessee)
<PAGE>
EXHIBIT 10.73
DATED 31st January 1985
PENSION FUNDS SECURITIES LIMITED
- and -
MINIPACK SYSTEMS LIMITED
- and -
TINSLEY-ROBOR GROUP PLC
- --------------------------------------------------------------------------------
Original/
LEASE
of
Unit 7 Waterloo Industrial Estate Hedge End Eastleigh
Southampton in the County of Hants
- --------------------------------------------------------------------------------
<PAGE>
[GRAPHIC]
THIS LEASE is made the Thirty-first day of January One thousand nine hundred and
eighty-five BETWEEN PENSION FUNDS SECURITIES LIMITED whose registered office is
situate at Imperial Chemical House Millbank London SWlP 3JF of the first part
MINIPACK SYSTEMS LIMITED whose registered office is situate at Rolls House 7
Rolls Buildings Fetter Lane London EC4A 1NH of the second part and TINSLEY-ROBOR
GROUP PLC whose registered office is also at Rolls Rouse 7 Fetter Lane aforesaid
of the third part
WITNESSETH as follows:-
Definitions
1.0 In this Lease (which shall include any Schedule hereto) unless the context
otherwise requires the terms defined in Schedule A hereto shall have the
meanings specified therein
Interpretation
2.0 This Lease shall unless the context otherwise requires be construed as
hereinafter provided:
2.1 Where there is more than one person for the time being included in the
expression "the Tenant" covenants and obligations at any time expressed to
be made or assumed by the party in question are made and are to be
construed as made by all such persons
<PAGE>
2
jointly and each of them severally
2.2 Covenants and obligations made or assumed by any party shall be binding on
and enforceable against his personal representatives
2.3 Any covenant by the Tenant not to do any act or thing shall be deemed to
include an obligation not knowingly to permit or suffer such act or thing
to be done
2.4 Any reference to any Act of Parliament shall include any Act or Acts for
the time being in force amending or replacing the same or of a similar
nature and shall include any order instrument circular regulation
direction or plan made or issued thereunder or deriving validity therefrom
and any future legislation or matter as aforesaid of a like nature or
effect which may from time to time be substituted for such Acts or
implement or supplement or affect the same
2.5 Words denoting the masculine gender shall include the feminine gender
2.6 Words denoting persons shall include corporations and partnerships
2.7 Any Index annexed hereto and the Clause headings contained herein are
included purely for ease of reference and shall not affect the
interpretation hereof
<PAGE>
3
Demise and Rents
3.0 In consideration of the rents hereby reserved and the covenants on the
part of the Tenant and the conditions hereinafter contained the Landlord
HEREBY DEMISES unto the Tenant the Demised Premises TOGETHER WITH such
rights and easements specified in Part II of Schedule B hereto EXCEPTING
AND RESERVING unto the Landlord (and any person authorised or approved by
the Landlord) such rights and easements as are more particularly specified
and set out in Part III of the said Schedule B TO HOLD the Demised
Premises unto the Tenant subject to the matters referred to in Part IV of
Schedule B if and so far as the Demised Premises are affected thereby for
the Term subject to all rights easements quasi-easements and privileges
belonging to or enjoyed by any adjoining or neighbouring property
3.1 YIELDING AND PAYING therefor unto the Landlord yearly during the Term and
so in proportion for any less period than a year but without any
deductions FIRST the Basic Rent AND SECONDLY by way of further rent an
amount equal to the expenditure incurred by the Landlord from time to time
in accordance with the covenant in Schedule E hereto under the heading
"Insurance" by way of premiums for the insurance of the Demised Premises
such further rent to be paid on the quarter day which occurs next after
the expenditure of the said amount by the Landlord
3.2 The Basic Rent shall be paid in advance by equal quarterly payments
<PAGE>
4
on the usual quarter days in each year the first of such payments being in
respect of the period from the 14th day of July 1985 to the 28th September
1985 to be paid on the 14th day of July next
3.3 IT IS HEREBY AGREED and declared that the Basic Rent shall be reviewed and
(if appropriate) increased but not decreased at the times and in manner
set out in Schedule C hereto
Tenant's Covenants
4. The Tenant HEREBY COVENANTS with the Landlord to observe and perform the
Tenant's covenants at all times during the Term in manner set out in
Schedule D hereto
Landlord's Covenants
5. The Landlord HEREBY COVENANTS with the Tenant to observe and perform the
Landlord's covenants at all times during the Term in manner set out in
Schedule E hereto
Proviso
6. It is Hereby AGREED AND DECLARED as provided in Schedule F hereto
Surety's Covenants
7. The Surety HEREBY COVENANTS with the Landlord in manner set out
<PAGE>
5
in Schedule G hereto
IN WITNESS whereof these Presents have hereunto been entered into the day
and year first above written
<PAGE>
6
SCHEDULE A
Definitions (Clause 1)
1. "Landlord" means the party of the first part and shall include the estate
owner for the time being of the reversion immediately expectant on the
termination of the Term
2. "Tenant" means the party of the second part and includes the successors in
title and assigns of that party
3. "Surety" means the party of the third part (if any) and any party at any
time joined as Surety for the Tenant
4. "Demised Premises" means the premises more particularly described in Part
I of Schedule B hereto or any part or parts thereof and includes the
appurtenances thereof the Landlord's fixtures and fittings therein any and
all additions and improvements thereto
5. "This Lease" means this Lease and includes any Schedule hereto any Licence
granted pursuant to and any deed of variation of the provisions hereto and
any deed or instrument made supplemental here to
6. "Plan" means the plan or plans annexed hereto and specified in Part 1 of
Schedule B hereto
<PAGE>
7
7. "Planning Acts" means the Town and Country Planning Act 1971 and all other
matters included by virtue of Clause 2.4 hereof
8. "Term" means the term of 25 years commencing on the Twenty-fifth day of
December One thousand nine hundred and eighty-four
9. "Commencement Date" means the thirty-first day of January One thousand
nine hundred and eighty-five
10. "Basic Rent" means the clear yearly rent of Twenty-nine thousand five
hundred pounds ((pound)29,500) reserved under this Lease as increased from
time to time during the term pursuant to the provisions of Schedule C
hereto
11. "Insured Risks" means loss or damage by fire explosion storm tempest
aircraft riot civil commotion malicious damage earthquake flood burst
pipes impact and includes cover in respect of architects surveyors and
other professional fees on re-instatement and three years loss of rent and
such other risks as the Landlord shall reasonably think fit
12. "Review Date" means the Twenty-fifth day of December One thousand nine
hundred and eighty-nine and each successive fifth anniversary of such date
during the Term but shall also be construed in accordance with the
provisions of paragraph 8 of Schedule C hereto and the expression
"Relevant Review Date" shall be construed accordingly
<PAGE>
8
13. "Rental Period" means the period between a Review Date and the next
succeeding Review Date and the expression "Relevant Rental Period" shall
be construed accordingly
14. "Specified Use" means as accommodation for Industrial use within the
meaning of Class III of the Town and Country Planning Act (Use Classes)
Order 1972 together with ancillary offices
15. "Lettable Area" means the area of the Demised Premises available as
accommodation for the Specified Use calculated in accordance with the
normal practice for assessing lettable areas of premises used for the
Specified Use
16. "Open Market Rent" means the best clear yearly rent at which the Demised
Premises together with the rights hereby granted and all rights and
privileges which are at the Relevant Review Date appurtenant thereto or
enjoyed thereunder might reasonably be expected to be let as a whole
(including Landlords fixtures and fittings) at the Relevant Review Date by
a willing landlord to a willing tenant in the open market with vacant
possession and without premium or any other consideration for the grant
thereof for a term from the Relevant Review Date equal to the original
length of the Term assuming if not the fact
(i) that the Demised Premises remain in existence and fit for use and
occupation as provided in this Lease
<PAGE>
9
(ii) that the Tenant has performed and observed the covenants and
conditions on its part herein contained and
(iii) that the Lettable Area of the Demised Premises is Twelve thousand
four hundred square feet (12,400 sq.ft.) or such greater area as is
at the Relevant Review Date available as accommodation for the
Specified Use with the consent of the Landlord and
(iv) that the Demised Premises are available to be let for any one or
more of the following uses :-
(a) the Specified Use or
(b) any other user for which the Demised Premises are at the time
of the Relevant Review Date used in accordance with any
consent given by the Landlord or
(c) any other user being a user falling within the same class of
uses specified in any current Use Glasses Order made under the
Planning Acts as either of the uses mentioned in (a) or (b)
above which the Landlord in the course of the review may
specify in writing as being a use for which the Landlord would
be willing to grant consent either unconditionally or subject
to
<PAGE>
10
such conditions as the Landlord may specify
and on a lease which shall otherwise contain the same terms and provisions
in all respects as this Lease (including the provisions for review of
rent) PROVIDED THAT the Landlord may prior to or in the course of the
review specify in writing such waivers of or consents under any of the
covenants herein contained and the conditions (if any) to be attached to
such waivers or consents which the Landlord would be willing to make or
agree to and in that event such waivers or consents shall henceforth apply
to the Demised Premises and for the purposes of the review it shall be
assumed that any such waiver had been made or consent given prior to the
Relevant Review Date in the manner and on the terms specified by the
Landlord there being disregarded
(i) any effect on rent of the Tenants occupation of the Demised Premises
and
(ii) any goodwill attached to the Demised Premises by the reason of the
business carried on thereat by the Tenant and
(iii) any improvements to the Demised Premises carried out by the Tenant
since the commencement of the term hereby granted with the Landlords
written consent (where needed) and otherwise than in pursuance of an
obligation owed by law to the Landlord and
<PAGE>
11
(iv) any effect on rent of the Statutory Rent Restrictions
17. "The Surveyor" means the independent Chartered Surveyor (having not less
than ten years experience in the valuation and/or letting of premises for
uses of the same type as the Specified Use in the same area as the Demised
Premises) appointed from time to time to determine the Open Market Rent
pursuant to the provisions of Schedule C hereto
18. "Landlord's Surveyor means the Landlord's Surveyor or Managing Agents for
the time being including any such in the full time employment of the
Landlord
19. "Statutory Rent Restrictions" means the restrictions imposed by any
statute for the control of rent in force on a Review Date or on the date
on which any increased rent is ascertained in accordance with Schedule C
hereto and any regulations or orders made thereunder which operate to
impose any limitation whether in time or amount on the ascertainment or
collection of an increase in the Basic Rent or any part thereof
20. "Prescribed Rate" means two per centum per annum above the Barclays Bank
plc Base Rate or in the event of the said Base Rate ceasing to exist such
other reasonable rate of interest as the Landlord may from time to time
agree in writing and failing such agreement such reasonable rate of
interest as shall be determined by a single Arbitrator appointed in
default of agreement by the
<PAGE>
12
President for the time being of the Royal Institute of Chartered Surveyors
under the Arbitration Acts 1950 to 1979
21. "Registration Fee" means the sum of twenty five pounds which shall be
increased pro rata with any increase from time to time in the amount of
the Basic Rent above that specified herein
22. "Development" means the premises situate and known as Waterloo Industrial
Estate Hedge End Eastleigh Southampton in the County of Hants shown edged
blue on the Plan annexed hereto
23. "Common Parts" means all those roadways car parks amenity areas and
footpaths (if any) within the Development shown edged brown on the Plan
annexed hereto and the parking spaces hatched green and hatched yellow on
the said plan
<PAGE>
13
SCHEDULE B
Part I - The Demised Premises (Clause 3.0)
ALL THOSE premises being the area of the existing building and the buildings
thereon and the loading and unloading areas situate and known as Unit 7 Waterloo
Industrial Estate Hedge End Eastleigh Southampton in the County of Hampshire as
the same are shown for the purpose of identification only edged red on the Plan
annexed hereto
<PAGE>
14
SCHEDULE B
Part II - Rights and Easements (Clause 3.0)
Benefit of Easements
1. The right in common with the Landlord and all other persons entitled to
use and enjoy the benefit of all easements and quasi-easements and
services subsisting or maintained for the benefit of the Demised Premises
in over under or against any adjoining or adjacent premises of the
Landlord to the extent that the same are necessary for the reasonable
enjoyment of the Demised Premises but excluding any rights of light and
air which are and to the extent to which the same are specifically
excepted and reserved herein
Shared Rights
2. Subject to the Tenant's observance and performance of the covenants on its
part herein contained the Landlord hereby grants to the Tenant the rights
so far as is necessary and as the Landlord may lawfully grant the same for
the Tenant :-
(a) to pass with or without vehicles for the purpose only for access to
and egress from the Demised Premises in over and along the roadways
comprised in the Common Parts
(b) to use the car parking spaces as shall be designated
<PAGE>
15
by the Landlord from time to time for the purpose only as
appropriate of parking motor vehicles belonging to the Tenant its
employees and visitors and shown for identification hatched yellow
on the plan annexed hereto and
(c) the exclusive use of the car parking spaces for purpose of parking
motor cars belonging to the Tenant its employees and visitors shown
for identification hatched green on the Plan annexed hereto
<PAGE>
16
SCHEDULE B
Part III - Exceptions and Reservations (Clause 3.0)
Rights and Easements over Adjoining Land
1. All rights of light air and easements (but without prejudice to those
expressly hereinbefore granted to the Tenant) now or hereafter belonging
to or enjoyed by the Demised Premises from or over any adjacent or
neighbouring land or building
Building on adjacent land
2. The right to build or rebuild or alter any adjacent or neighbouring land
or building of the Landlord in any manner whatsoever and to let the same
for any purpose or otherwise deal therewith notwithstanding the light or
air to the Demised Premises is in any such case thereby diminished or any
other liberty easement right or advantage belonging to the Tenant is
thereby diminished or prejudicially affected
Support and Shelter
3. The right of support and shelter and all other easements and rights now or
hereafter belonging to or enjoyed by all adjacent or neighbouring land or
buildings an interest wherein in possession or reversion is at any time
during the term vested in the Landlord
<PAGE>
17
Services for adjoining premises
4. The free passage and running of air gas electricity water and soil
telephone and other services through or along the pipes wires channels
drains and watercourses already or hereafter during the Term to be built
or placed in through over or under the Demised Premises to and from all
other parts of any premises belonging to the Landlord or in which it has
an interest and the right to connect up to the same
<PAGE>
18
SCHEDULE B
Part IV - Matters to which the Demised Premises are subject (Clause 3.0)
The matters contained or referred to in the Property Register and the Charges
Register of the Landlord's Title Number HP 181433
<PAGE>
19
SCHEDULE C
Rent Review (Clause 3.4)
1. The Basic Rent payable for each Rental Period shall be whichever is the
greater of (a) the Basic Rent which was or but for the Statutory Rent
Restrictions would have been payable in accordance with the provisions of
this Lease for the period immediately preceding the Relevant Review Date
or (b) the Open Market Rent at such Review Date as agreed between the
Landlord and the Tenant or determined by the Surveyor in accordance with
the provisions of this Schedule
2. If the Open Market Rent shall not have been agreed in writing between the
Landlord and the Tenant one month before the Relevant Review Date either
party may (whether before or at any time after the Relevant Review Date)
by notice in writing to the other party require the Open Market Rent to be
determined by the Surveyor who shall be appointed jointly by agreement
between the parties
3. In default of agreement between the Landlord and the Tenant on the
appointment of the Surveyor the Surveyor shall be appointed by the
President (or other Chief Officer) for the time being of the Royal
Institution of Chartered Surveyors on the written application of either of
them which (subject to any agreement in writing between the Landlord and
the Tenant to the contrary) may be at any time after notice has been given
in accordance with paragraph 2 of this Schedule
<PAGE>
20
4. The Surveyor shall act as an arbitrator under the Arbitration Acts 1950 to
1979
5. The Surveyor shall give notice to the Landlord and the Tenant in writing
of the Open Market Rent as determined by him (such determination being
final and binding on the parties) and the Open Market Rent so determined
shall be payable from the commencement of the Relevant Rental Period
6. The Surveyor's fees and charges shall be borne by the Landlord and the
Tenant in such proportions as the Surveyor shall determine and in default
of such determination in equal shares
7. If the Open Market Rent has not been ascertained (by agreement or
determination) by any Relevant Review Date in accordance with the
provisions of this Schedule the Tenant shall pay to the Landlord for any
period between such Relevant Review Date and the usual quarter day
immediately following the ascertainment of the Open Market Rent the Basic
Rent at the yearly rate payable for the period immediately preceeding such
Relevant Review Date and on the usual quarter day immediately following
the ascertainment of the Open Market Rent shall (in addition to the Basic
Rent then payable) pay to the Landlord at a yearly rate equal to the
difference (if any) between the Basic Rent payable immediately before such
Relevant Review Date and the new Basic Rent determined in accordance with
the provisions of this Schedule additional rent in respect of the period
between such Relevant
<PAGE>
21
Review Date and such quarter day together with interest thereon at the
Prescribed Rate from the date or dates from which such additional rent
became payable until payment
8. If the Statutory Rent Restrictions would at any Relevant Review Date
restrict or prohibit the review of the Basic Rent or the collection
recovery or retention of the same then the Landlord shall be entitled once
only following such removal or modification of the Statutory Rent
Restrictions to serve notice (hereinafter called "an interim notice") on
the Tenant and from and after the service of such interim notice until the
next Relevant Review Date or the service of the next interim notice
(whichever shall first occur) the rent shall be whichever is higher of the
Open Market Rent at the date of service of such interim notice and the
Basic Rent payable immediately prior thereto and the provisions of this
Schedule shall apply to the ascertainment of such Open Market Rent as if
the date of service of such interim notice were a Relevant Review Date
9. On each occasion that the Basic Rent is ascertained (whether by agreement
or determination in accordance with the provisions of this Schedule) the
Landlord and the Tenant shall cause a memorandum of the amount thereof
payable for the Relevant Rental Period to be endorsed on or annexed to
this Lease and the counterpart thereof and the same shall be signed by or
on behalf of the Landlord the Tenant and the Surety
<PAGE>
22
10. Time shall not be of the essence of any of the provisions of this Schedule
save the provision for payment by the Tenant of additional rent and
interest in paragraph 8 hereof
<PAGE>
23
SCHEDULE D
Tenant's Covenants (Clause 4)
Rent
1. To pay
(a) the Basic Rent and other rents payable or to become payable under
this Lease and
(b) any and all interest to become payable pursuant to this Lease
at the times and in manner aforesaid without any deduction except as
aforesaid
Outgoings
2.1 To pay and discharge all existing and future rates taxes duties charges
assessments impositions and outgoings whatsoever (whether parliamentary
parochial local or of any other description and whether or not of a
revenue or non-recurring nature and even though of a wholly novel
character) which are now or may at any time hereafter be assessed charged
levied or imposed upon or payable (a) in respect of the Demised Premises
or (b) on or by any estate owner landlord tenant or occupier in respect
thereof (except any tax payable by the Landlord in respect of any
reversionary interest
<PAGE>
24
in the demised premises or as a result of any dealing or deemed dealing
with any such reversionary interest or in respect of the receipt by the
Landlord of the Basic Rent or other sums payable by the Tenant hereunder)
PROVIDED THAT if the Demised Premises shall have been left unoccupied
during the whole or part of the period of three months immediately
preceding the termination of the Term the Tenant shall in respect of an
equivalent period thereafter pay and keep the Landlord indemnified in
respect of any general or other rate or similar charge which may arise
because the Demised Premises remain unoccupied
2.2 To repay to the Landlord in the absence of direct assessment on the Tenant
the proportion properly attributable to the Demised Premises of such of
the aforesaid rates taxes duties charges assessments impositions and
outgoings as may be payable in respect of any property of which the
Demised Premises form a part
Insurance
3.1 To repay to the Landlord on demand a proportion as determined in
accordance with sub-clause .2 of this Clause of the sums which the
Landlord shall from time to time pay by way of premiums (and all of any
increased premiums payable by reason of any act or omission on the part of
the Tenant) for keeping the Development insured under the covenant on the
part of the Landlord contained in the paragraph headed " Insurance" in
Schedule E
3.2 The proportion referred to in the preceding sub-clause shall be
<PAGE>
25
determined under the Clause of Part II of Schedule F headed "Service
Charge"
3.3 Not to do in or on the Demised Premises anything whereby the insurance of
the Demised Premises or of any premises of which the Demised Premises form
part against the Insured Risks may be vitiated or prejudiced nor without
the consent of the Landlord do anything whereby any additional premium may
become payable for the insurance of the Demised Premises or of any
premises of which the Demised Premises form part such consent not to be
unreasonably withheld upon agreement of the Tenant accepting liability for
any such additional premium
3.4 In the event of any Landlord's insurance policy or policies for the
Demised Premises or of any premises of which the Demised Premises form
part or of any part thereof being vitiated in consequence of any act
action or omission of the Tenant fully and effectually to indemnify the
Landlord against all costs claims proceedings or losses resulting from any
damage or injury to the Demised Premises or other premises or any part
thereof in respect of which compensation is not forthcoming from the
Landlord's insurance company and against all costs of any increased or
additional premiums incurred by the Landlord
3.5 If at any time the Tenant shall be entitled to the benefit of any
insurance on the Demised Premises (which is not effected or maintained in
pursuance of any obligation herein contained) then
<PAGE>
26
to apply all moneys received by virtue of such insurance in making good
the loss or damage in respect of which the same shall have been received
3.6 To notify the Landlord forthwith of any damage to or destruction of the
Demised Premises or any part thereof occasioned by the occurence of any of
the Insured Risks
Value Added Tax
4. To pay to the Landlord or (as the case may be) to its Solicitors Surveyors
or other agents to whom any payment is due under the covenants agreements
and provisions herein contained or implied which is a payment whereon
Value Added Tax or other similar fiscal charge is chargeable the amount of
Value Added Tax or similar fiscal charge chargeable in respect of the
payment at the rate applicable to that payment as and when due
Gas Electricity and Water Charges
5. To pay for all gas and electricity and water consumed on the Demised
Premises and all telephone charges and to observe and perform at the
Tenant's expense all present and future regulations and requirements of
the Gas and Electricity and Water Supply Authorities and British Telecom
concerning the Demised Premises and to keep the Landlord indemnified in
respect thereof and to reimburse to the Landlord a reasonable portion (to
be determined
<PAGE>
27
by the Landlord's Surveyor) of all sums paid by the Landlord from time to
time to the Electricity Gas or Water supply Authorities or to British
Telecom in respect of any connection to or alteration or repair of the
wiring or piping or other machinery or equipment in or about the
Development used for electricity or water supply or gas or telephone which
benefits the Tenant or the Demised Premises or any part thereof
Repairs
6.1 At all times during the Term when and as often as need shall require well
and substantially to cleanse repair support and uphold and from time to
time when necessary rebuild and renew to the reasonable satisfaction of
the Landlord all present and future buildings forming part of the Demised
Premises (except damage by the insured risks PROVIDED that such damage is
not excluded by the Landlord's policy or policies of insurance and such
policy or policies shall not have become vitiated or payment of the policy
monies refused in whole or in part in consequence of some act neglect or
default of the Tenant) and to renew and replace from time to time all
Landlord's fixtures fittings and appurtenances in the Demised Premises
which nay become or be beyond repair at any time during or at the
expiration or sooner determination of the Term AND PROVIDED THAT the
Tenant shall not be liable under this Clause for remedying any defect in
the land or buildings which shall give rise to a valid claim by the
Landlord or the Tenant against any third party in relation to the
surveying design or
<PAGE>
28
construction of the Demised Premises any dispute as to the existence of
any such claim being referred to the decision of a single arbitrator to be
agreed between the parties and failing agreement to a single arbitrator to
be appointed by the President for the time being of the Royal Institution
of Chartered Surveyors on the application of either party alone and the
cost of such arbitration shall be borne by the parties equally
6.2 Without prejudice to the generality of the foregoing :-
(a) to keep and maintain all exterior parts of the Demised Premises in a
clean and tidy condition and not to cause or permit any rubbish to
be deposited thereon other than in any area designated for that
purpose by the Landlord and to arrange for collection of the rubbish
at intervals not less than once a week Provided that the Tenant
shall not be deemed in breach if collection is prevented by the
default of the relevant authority
(b) to keep any landscaped areas within the Demised Premises properly
cultivated and maintained in a clean and tidy condition
(c) to clean repair maintain and renew all materials used in the
construction or decoration of the Demised Premises or any part
thereof in a good and workmanlike manner and in accordance with the
appropriate approved or
<PAGE>
29
recommended practices procedures and standards
6.3 In so far as such matters are not expressly included in or provided for
by the provisions hereinafter contained at all times to contribute and
pay a rateable or proper proportion of the costs charges and expenses of
making repairing maintaining rebuilding and cleansing all ways roads
pavements car parks landscaped areas sewers drains pipes watercourses
party-walls party-structures party-fences walls or other conveniences
which may belong to or be used for the Demised Premises in common with
other premises near or adjoining thereto such proportion in case of
difference to be settled by the Landlord's Surveyor acting in a reasonable
manner whose decision shall be final (except in the case of manifest
error) and to be paid by the Tenant within 21 days of a demand and to keep
the Landlord indemnified against such proportion of such costs charges and
expenses as aforesaid
Decoration
7. Without prejudice to the generality of the foregoing to the reasonable
satisfaction of the Landlord's Surveyor :
7.1 In every Third year of the said term (but not during the penultimate
year) and in the last year thereof (howsoever determined) to paint in a
proper and workmanlike manner all the external parts heretofore or usually
painted and all additions thereto with at least two coats of good quality
paint the tints
<PAGE>
30
or colours on each occasion to be approved in writing by the Landlord such
approval not to be unreasonably withheld or delayed AND to wash down all
tiles cladding glazed bricks or polished stone or similar washable
surfaces and repoint all brick work as and when required and to keep the
windows of the Demised Premises properly cleaned inside and outside
7.2 In every fifth year of the said term and also in the last year thereof
(howsoever determined) to paint in a proper and workmanlike manner all the
inside wood metal and other parts heretofore or usually painted of the
Demised Premises with at least two coats of good quality paint and so that
such internal painting in the last year of the said term shall be of a
tint or colour approved in writing by the Landlord not to be unreasonably
withheld or delayed and also with every such internal painting to clean
wash stop whiten distemper and otherwise decorate and treat in a proper
and workmanlike manner all such internal parts of the Demised Premises
that have been or ought properly to be so treated and so that in the last
year of the said term the tints and colours of all such works of internal
decoration shall be approved by the Landlord in writing (such approval not
to be unreasonably withheld)
Yield Up
8.1 At the expiration or sooner determination of the Term quietly to yield up
to the Landlord the Demised Premises duly painted repaired cleaned
maintained amended and renewed and kept in
<PAGE>
31
accordance with the covenants in that behalf herein contained PROVIDED
however that the Tenant may prior to the date of such expiration or
determination remove all Tenant's or trade fixtures making good
nevertheless at the expense of the Tenant and to the reasonable
satisfaction of the Landlord's Surveyor any damage to the Demised Premises
caused by such removal and shall remove all the Tenant's furniture
fittings papers and refuse and so that the Landlord may treat as abandoned
by the Tenant and may arrange for the removal and disposal of any such
fixtures and other items not removed by the Tenant prior to the said
expiration or determination and the cost of such removal and disposal
shall be paid by the Tenant to the Landlord on demand provided always that
the Landlord shall be under no obligation to arrange such removal and
disposal
8.2 In the event of any alterations having been made to the Demised Premises
during the Term to reinstate the Demised Premises (if so reasonably
required by the Landlord but not otherwise) to the condition in which the
same were prior to the making of such alterations and in any event to
remove any moulding sign writing or painting of the name or business of
the Tenant and other persons from the Demised Premises and
8.3 PROVIDED THAT if the Tenant shall fail to leave the Demised Premises in
such condition as aforesaid then and in such case the Landlord may do or
effect all such repairs renovations and decorations for which the Tenant
shall be liable hereunder and
<PAGE>
32
the reasonable cost thereof shall be paid by the Tenant to the Landlord on
demand and the Tenant will also pay to the Landlord mesne profits at the
rate of the rent payable hereunder immediately prior to the said
expiration or determination during the period reasonably required for
carrying out such work and the amount of such mesne profits shall be added
to the cost of carrying out such work as aforesaid and the certificate of
the Landlord's Surveyor certifying the cost to the Landlord of such work
and the period reasonably required for carrying out the same shall be
final and binding on the Tenant Provided that the Tenant shall be deemed
to have complied with its obligations hereunder if it shall have complied
in every respect with a schedule of delapidations prepared by the Landlord
at the specific request of the Tenant giving at least 6 months notice
before the date of determination of the Term
Fire Precautions
9.0 To keep the Demised Premises sufficiently supplied and equipped with fire
alarms fire fighting and extinguishing apparatus and installations and
appliances which shall be and remain open to the inspection and maintained
to the reasonable satisfaction of the Landlord and of the Local Fire
Authority and also not to obstruct the access to or means of working of
such apparatus and appliances
9.1 At all times during the Term at the expense of the Tenant to comply
<PAGE>
33
with all requirements and regulations from time to time of
(a) the appropriate authority in relation to fire precautions affecting
the Demised Premises
(b) the appropriate supply authorities with regard to the electrical
wiring installation and equipment and gas system (if any) within and
exclusively serving the Demised Premises
9.2 Not to use on any account except in case of fire or other emergency any
doors or special exits provided for escape in case of fire
Inspection and Repairs
10.1 To permit the Landlord and any person authorised by it upon reasonable
prior appointment (except in emergency) to enter upon the Demised Premises
at all reasonable hours during the day time to view the state and
condition and user of the same and the fixtures and fittings therein and
of all defects decays and wants of reparation there found for which the
Tenant shall be responsible hereunder
10.2 Within six months after every notice in writing to the Tenant (or
immediately in case of need) to commence and thereafter diligently to
proceed to repair well and substantially and make good all such defects
decays and wants of reparation to the Demised
<PAGE>
34
Premises and the fixtures and fittings therein for which the Tenant is
liable hereunder
10.3 PROVIDED ALWAYS that if the Tenant shall make default in the execution of
the repairs and works referred to in such notice it shall be lawful for
the Landlord and any persons authorised by the Landlord (but without
prejudice to the right of re-entry hereinafter contained) to enter upon
the Demised Premises and execute such repairs and works and the reasonable
cost thereof (including any surveyors' or other fees incurred and whether
or not such repairs and works are executed by the Landlord) shall be
repaid by the Tenant to the Landlord on demand together with interest
thereon from the date of demand to the date of payment at the Prescribed
Rate
10.4 To permit the Landlord and the Landlord's Surveyor and tenants and other
persons authorised by the Landlord with all necessary workmen upon
reasonable prior appointment (except in emergency) to enter upon the
Demised Premises to inspect maintain and execute repairs additions or
alterations to any adjoining premises or for inspecting making repairing
maintaining renewing connecting or cleansing any pipes drains channels
watercourses sewers wires or cables belonging to or leading to or from the
same all damage to the Demised Premises thereby occasioned being made good
by the person so entering upon the Demised Premises
<PAGE>
35
Inventories
11. During the last six months of the Term (howsoever determined) to permit
the Landlord and any person authorised by the Landlord to enter upon the
Demised Premises at all reasonable hours during the day time to take
schedules or inventories of fixtures and fittings and things to be yielded
up at the determination of the Term
Acts of Parliament
12. To observe and comply with the provisions and requirements of every
enactment including without prejudice to the generality of the foregoing
the Factories Acts the Offices Shops and Railway Premises Act 1963 the
Health and Safety at Work etcetera Act 1974 so far as they relate to or
affect the Demised Premises and including the cost of installing any new
fixtures therein and maintain all arrangements which by or under any
enactment or bye-law are or may be required at any time during the Term
to be executed provided or maintained whether by the Landlord or the
Tenant 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 required as aforesaid and
not at any time during the Term to do or omit to be done or omitted in 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
<PAGE>
36
any penalty damages compensation costs charges or expenses
Planning Acts
13. To comply with all respects during the currency of this Lease with the
provisions and requirements of the Planning Acts and all licences consents
permissions and conditions (if any) granted or imposed thereunder so far
as the same respectively relate to or affect the Demised Premises or any
part thereof or any operations works acts or things already or hereafter
during the Term to be carried out executed done or omitted thereon or the
use thereof for any purpose and to pay any development charge or other
charge imposed in respect of any such matter arising from any act
commission or omission whatsoever of the Tenant or any party under the
control of or on behalf of the Tenant and indemnify the Landlord against
all proceedings expenses claims and demands in respect of any
contravention by the Tenant of any provision of the said Acts
Copies of Notices
14. Within fourteen days of the receipt by the Tenant of the same to supply a
copy to the Landlord of any notice order or proposal for a notice or order
or licence consent permission or direction given or made under any
enactment and any regulations orders and instruments made thereunder and
relating to the Demised Premises AND to permit the Landlord and all
persons authorised by it at
<PAGE>
37
all reasonable times having given reasonable notice (except in case of
emergency) to enter upon the Demised Premises to inspect the same for any
purpose in connection with any such notice order proposal licence consent
permission or direction
Appeals
15. At the reasonable request of the Landlord to make or join with the
Landlord in making any objection representation or appeal in respect of
any such notice order proposal or direction as aforesaid or any refusal of
or condition imposed under any such licence consent or permission as
aforesaid
Applications for Planning Permission
16. Not without the Landlord's prior approval (such approval not to be
unreasonably withheld) to make any application for consent or permission
to carry out or commence any development (within the meaning of the
Planning Acts) on or by reference to the Demised Premises
Fulfillment of Conditions
17. Unless the Landlord shall otherwise direct to carry out before the
determination of the Term (however determined) any works (the carrying out
of which is otherwise permitted hereunder) required to be carried out in
or on the Demised Premises as a condition
<PAGE>
38
of any planning permission which may have been granted to the Tenant
during the Term
Purchase Notice
18. Not to serve any purchase notice under the Planning Acts requiring any
Local Authority to purchase the Tenant's interest in the Demised Premises
or any part thereof
Compensation
19. If the Tenant shall receive any compensation because of any restriction
placed upon the user of the Demised Premises or any part thereof under or
by virtue of the Planning Acts then if and when its interest hereunder
shall be determined under the power of re-entry herein contained or
otherwise forthwith to make such provision as is just and equitable for
the Landlord to receive its due benefit from such compensation unless the
compensation authority shall otherwise order
Assignment and Underletting
20.0 Not to assign underlet or otherwise part with or share possession of any
part of the Demised Premises (here meaning a portion only and not the
whole thereof) otherwise to a subsidiary (as defined by section 154 of the
Companies Act 1948) which shall occupy as licensee only and whose right of
occupation shall cease and
<PAGE>
39
determine with that of the Tenant
20.1 Not to part with possession (otherwise than by way of assignment or
underletting) or share possession of the whole of the Demised Premises
20.2 Not to assign the Demised Premises as a whole :-
(i) without the previous consent in writing of the Landlord which
shall not be unreasonably withheld in the case of an assignment to
a respectable and responsible assignee intending to use the Demised
Premises in accordance with the provisions hereof and
(ii) without first procuring the execution by the proposed assignee and
the delivery to the Landlord of a deed to be prepared by the
Solicitor of the Landlord at the cost of the Tenant containing a
covenant by the proposed assignee directly with the Landlord to pay
the Basic Rent and all other sums payable hereunder and to perform
and observe during the Term all the covenants (including this
covenant) by the Tenant and conditions contained in this Lease as if
they were repeated in the said deed mutatis mutandis and
(iii) (if such proposed assignee shall be a private limited liability
company and if the Landlord shall so require)
<PAGE>
40
without first procuring the execution by at least two directors of
satisfactory standing or by an insurance company accepted by the
Landlord and the delivery to the Landlord of a deed to be prepared
by the Solicitor of the Landlord at the cost of the Tenant
containing just and several covenants as sureties for such proposed
assignee in the same terms mutatis mutandis as the covenants
contained in Schedule G hereto
20.3 Not to underlet the Demised Premises as a whole save at a full rack rent
without a premium nor without the previous consent in writing of the
Landlord which shall not be unreasonably withheld in the case of an
underletting to a respectable and responsible tenant intending to use the
Demised Premises in accordance with the provisions hereof
20.4 On the grant of any permitted underlease the Tenant shall obtain therein
and at all times thereafter enforce performance and observance of the
covenants on the part of the underlessee as follows :-
(i) an absolute covenant not to assign underlet or otherwise part with
or share possession of any part of the sub-demised premises (here
meaning a portion only and not the whole thereof) or to part with
possession or share occupation of the whole thereof for all or any
part of the sub-term (otherwise than by way of assignment
<PAGE>
41
of underletting)
(ii) a qualified covenant not to assign or underlet the whole of the
sub-demised premises without the licence in writing of the Landlord
(the grant of which shall be subject to the same provisos as
contained in this sub-clause)
(iii) a covenant that the underlessee will cause to be inserted in every
sub-underlease whether immediate or derivative covenants on the part
of the relevant sub-underlessee corresponding to the covenants
numbered (i) and (ii) above and that the underlessee will at all
time thereafter enforce the same
20.5 Notwithstanding anything herein contained the Tenant shall not create or
permit the creation of any interest derived out of the term hereby granted
howsoever remote or inferior upon the payment of a fine or premium or at
a rent less than the Basic Rent or the full market rent of the Demised
Premises obtainable without taking a fine or premium (whichever shall be
the greater) and shall not create or permit the creation of any such
derivative interest as aforesaid save by instrument in writing containing
such absolute prohibition as aforesaid on the part of the underlessee and
those that may derive title under such underlessee
<PAGE>
42
Registration of Document
21. Within one month after assignment or underletting or sub-underletting of
the Demised Premises or any devolution of any interest therein to give
notice thereof in writing to the Landlord or its Solicitors and to
produce to them the Assignment Transfer Counterpart Underlease
sub-Underlease or other instrument duly stamped under which such
devolution shall have occurred together with a copy of such instrument
certified by a Solicitor and pay to the Landlord's Solicitors the
Registration Fee
User
22.1 To use and occupy the Demised Premises only for the Specified Use or for
any such other use as the Landlord may have permitted or specified in
writing pursuant to the paragraph of Schedule A headed "Open Market Rent"
(para 16) and for no other purpose whatsoever
22.2 Not to use the Demised Premises or any part thereof
(i) (save and except as may be herein expressly provided) for
residential purposes or as sleeping accommodation
(ii) for any noisy noisome offensive or dangerous trade art manufacture
business or occupation
<PAGE>
43
(iii) for any illegal or immoral purpose
22.3 Not to use any part of the Demised Premises greater in area than the
Lettable Area specified in the Clause headed "Open Market Rent" in
Schedule A of this Lease without the prior written consent of the Landlord
Alterations
23. Not at any time during the Term to damage interfere with or make any
addition to or alteration in the Demised Premises or any party wall or any
service conduit duct apparatus or installation therein but nothing herein
contained shall prevent the Tenant with the prior written consent of the
Landlord (which shall not be unreasonably withheld) from erecting or
removing from time to time such temporary partitioning as may be necessary
for the reasonable occupation of the Demised Premises PROVIDED ALWAYS that
at the expiration or sooner determination of the Term the Tenant shall at
the reasonable request of the Landlord dismantle and remove all temporary
partitioning then in the demised premises and make good any damage caused
by the partitioning or its removal and Provided also that nothing shall be
done which reduces the Lettable Area
Advertisements
24. Not to exhibit affix to or display on or from the exterior of
<PAGE>
44
the Demised Premises or of the external walls rails or fences any sign
signboard fascia placard lettering notice price label blind flag pennant
sky-sign or any advertisement of any kind whatsoever except such as shall
have been previously approved in writing by the Landlord (such approval
not to be unreasonably withheld or delayed) and in the event of any such
approval being given to observe the terms thereof and at the expiry or
sooner termination of the Term to remove every such thing so approved and
to make good the Demised Premises
Floor Loading
25. Not to impose (whether directly or indirectly or by using machinery or
otherwise) on any part of the floors ceilings or walls or of roof roof
trusses or the structure of the Building a load or weight greater than
that which the said floors ceilings or walls or roof roof trusses or
structure are designed or constructed to bear with due margin for safety
nor to cause or permit any undue vibration to the Demised Premises or the
Building by machinery or otherwise
Nuisance
26.0 Not to carry on upon the Demised Premises or any part thereof the business
to be carried on thereon in a noisy noisome offensive or dangerous manner
or do in or upon the Demised Premises or any part thereof any act matter
or thing which may in the opinion
<PAGE>
45
of the landlord be or grow to be or become a nuisance or annoyance or a
disturbance to or to the prejudice of the Landlord or its tenants or
lessees or the owners lessees or occupiers for the time being of any
premises in the neighbourhood
26.1 For the purposes of sub-clauses 22.2(ii) and 26.0 hereof any dispute or
difference of opinion shall be referred to an independent surveyor to be
appointed by the parties hereto or failing agreement by the President for
the time being of the Royal Institution of Chartered Surveyors to act as
an Arbitrator under the provisions of The Arbitration Acts 1950-1979
Auctions
27. Not at any time during the Term to hold any sale by auction to be held
upon the Demised Premises or any part thereof
Encroachments Etcetera
28. Not to stop up darken or obstruct any windows or other openings belonging
to the Demised Premises nor to permit any encroachment or easement to be
made or acquired on or over the Demised Premises and that in case any
encroachment or easement shall be made or acquired or attempted to be made
or acquired the Tenant will give immediate notice thereof to the Landlord
and at the request of the Landlord will adopt such means as may be
reasonably required or deemed proper for preventing any such encroachment
or the acquisition of any such easement
<PAGE>
46
Let or Sale Boards
29. To permit the Landlord and any persons authorised by it to enter upon the
Demised Premises and affix and retain without interference upon some part
or parts thereof (but not so as to obstruct the access of light and air to
the Demised Premises) notice for reletting or selling the same and to
permit all persons with authority from the Landlord at all reasonable
hours during the day time upon prior appointment to enter and view the
Demised Premises
Pollution
30.1 To take such measures as may be necessary to ensure that any effluent
discharged from the Demised Premises into the drains or sewers which
belong or are used for the Demised Premises whether or not in common with
other premises will not be corrosive or in any way harmful to the said
drains or sewers or cause any obstruction or deposit therein and to keep
all pipes watercourses gullies and drains belonging to the Demised
Premises properly flushed cleansed and free from obstruction and if any
such obstruction shall occur forthwith to remove the same and make good
any damage caused thereby whether to the structure of the Demised Premises
or otherwise and to indemnify the Landlord against any claims arising from
damage caused by such obstruction to adjoining or neighbouring premises
<PAGE>
47
30.2 Not to discharge or allow to be discharged from the Demised Premises any
fluid or anything of a poisonous or noxious nature of a kind that might or
will contaminate or pollute the air or water and to indemnify the Landlord
against any reasonable claims arising from damage caused by such
contamination or pollution
30.3 To take at all times throughout the Term all such steps as are necessary
and proper to prevent the emanation from the Demised Premises of excessive
noise fumes heat or excessive vibration especially but not only where such
emanation will or might be to the detriment of the Landlord or any other
owners or occupiers of the adjoining or nearby lands
Repair of Adjoining Premises
31.1 To permit agents or workmen with or without plant or machinery engaged or
authorised by the Landlord to enter and remain upon the Demised Premises
at all reasonable times on 7 days previous written notice (except in case
of emergency) so far as may be necessary or useful in order to build walls
(including the building or repair of party walls) or to stop up any
openings in walls dividing the Demised Premises from other parts of the
Development or deny adjoining or contiguous premises or to repair or
rebuild any part of the Development or any adjoining or contiguous
premises belonging to the Landlord or to cleanse lay re-lay maintain renew
empty or repair any of the sewers drains conduits gutters watercourses
pipes cables wire machinery equipment apparatus and
<PAGE>
48
mains belonging to the same and for all purposes connected with the
Landlord's obligations hereunder the Landlord doing as little damage as
reasonably practicable and making good as soon as reasonably possible all
damage to the Demised Premises or any chattels thereon occasioned by the
exercise of such rights and causing as little interference as is
reasonably possible to the Tenant's use of the Demised Premises during the
time that such work is being carried out
31.2 In case any dispute or controversy shall at any time or times arise
between the Tenant and the tenants or occupiers of any adjoining or
contiguous premises belonging to the Landlord the same shall from time to
time be settled and determined by the Landlord's Surveyor who shall act
reasonably in such manner as it in writing shall direct in that behalf but
which determination the Tenant shall from time to time submit and which
determination shall be conclusive and binding upon the Tenant
Cost of Notices
32. To pay all costs charges and expenses (including Solicitors' costs and
Surveyors' fees) incurred by the Landlord for the purpose or in
contemplation of or incidental to the preparation and service of a notice
under Section 146 or 147 of the Law of Property Act 1925 requiring the
Tenant to remedy a breach of any of the covenants herein contained
notwithstanding forfeiture for such breach shall be avoided otherwise than
by relief granted by the
<PAGE>
49
Court or the preparation and service of any notice or schedule relating to
want of repair of the Demised Premises and whether served during or after
the determination of the Term or for the purpose or in contemplation of or
incidental to all applications by the Tenant for any consent of the
Landlord required by this Lease and also the proper and reasonable legal
charges and the Landlord's Surveyors' fees actually incurred by the
Landlord in cases where consent is refused or the application is withdrawn
Cost of this Lease
33. To pay to the Landlord's Solicitors their solicitors charges for the
preparation of this Lease and the Counterpart thereof and any renewal or
renewals thereof and the Stamp Duties thereon
Indemnity - Encumbrances
34. By way of indemnity only and only in so far as the same are still
subsisting and capable of taking effect and affect the Demised Premises at
all times hereafter to duly observe and perform the matters (if any)
referred to in Part IV of Schedule B hereto and to keep the Landlord
effectually indemnified against all actions proceedings costs claims and
demands in respect thereof or any of them
<PAGE>
50
Indemnity - breaches
35. To pay and make good to the Landlord all costs and expenses including
professional fees incurred by the Landlord in connection with all and
every loss and damage whatsoever incurred or sustained by the Landlord as
a consequence of every breach non-performance or non-observance of the
covenants by the Tenant herein contained or implied and the conditions
herein contained and on the part of the Tenant to be complied with and to
indemnify the Landlord from and against all actions claims liabilities
costs and expenses thereby arising
PROVIDED that such indemnity shall be deemed (a) to extend to and cover
all costs and expenses incurred by the Landlord in connection with any
steps which the Landlord may take to remedy any breach of covenant by the
Tenant herein contained or failure of the Tenant to observe and perform
any covenant condition or obligation on the part of the Tenant herein
contained or implied and (b) to be without prejudice to any rights or
remedies of the Landlord hereunder in respect of any and every such breach
non-performance or non-observance
Indemnity - use and occupation
36. To keep the Landlord fully and effectually indemnified at all times and
the Tenant hereby indemnifies the Landlord accordingly against all costs
claims liabilities actions and expenses (whether
<PAGE>
51
alleged or demanded by the owners or occupiers of any adjoining or
neighbouring properties or other parties) arising through the use or
occupation of the Demised Premises the existence of any article in or
about the Demised Premises or the execution or omission of any works upon
the Demised Premises
Regulations
37. At all times to observe and perform any reasonable regulation made by the
Landlord and notified to the Tenant in writing governing the good order
and management of any premises of which the Demised Premises form part and
to ensure that the same are made known to and are complied with by the
Tenants employees visitors and sub-tenants
<PAGE>
52
SCHEDULE E
Landlord's Covenants (clause 5)
Insurance
1.1 To keep the Demised Premises insured with an office of repute against the
Insured Risks to the full cost of their reinstatement and in the event of
the Demised Premises being destroyed or damaged by any of the Insured
Risks during the Term forthwith (as soon as the necessary labour materials
and permits are obtained) to rebuild or reinstate the same and to lay out
in or towards such rebuilding or reinstating in a good and substantial
manner all monies received under or by virtue of any insurance effected
thereon (other than monies received in respect of loss of rents) and all
such further sums of money as shall be requisite in rebuilding and
reinstating the Demised Premises
1.2 To provide the Tenant with particulars of the Policy of insurance from
time to time effected by the Landlord under the provisions of Clause 1.1
hereof as the Tenant may require to inform themselves of the nature and
extent of the cover provided thereby and to notify the Tenant of any
proposed modification in or addition to the terms and conditions of such
policy forthwith following the Landlords decision to effect such
modification or addition or the intimation by the insurers of the making
by them of such modification or addition
<PAGE>
53
Quiet Enjoyment
2. That the Tenant paying Basic Rent and the further rents hereby reserved
and observing performing the Tenant's covenants herein contained shall and
may peaceably hold and enjoy the Demised Premises during the term without
any interruption or disturbance from or by the Landlord or any person
lawfully claiming through under or in trust for it
<PAGE>
54
SCHEDULE F
Part I - Agreements and Declaration between the parties (clause 6)
Re-entry
1. If the Basic Rent and the further rents hereby reserved or any part
thereof shall at any time be in arrear and unpaid for twenty-eight days
after the same shall have become due (whether any formal or legal demand
therefore shall have been made or not) or if there shall be any breach of
any of the covenants conditions or agreements herein contained and on the
part of the Tenant to be performed and observed or if the Tenant or other
person or persons in whom for the time being the said term shall be vested
(being an individual or individuals) or any of them shall become bankrupt
or have a receiving order made against him her or them or make any
arrangement or composition with or for the benefit of his her or their
conditions or suffer any execution to be levied on the Demised Premises or
if the Tenant being a company shall enter into liquidation whether
compulsory or voluntary (not being merely a voluntary liquidation for the
purpose of amalgamation or reconstruction) or suffer any execution to be
levied on the Demised Premises then and in such case it shall be lawful
for the Landlord or any person or persons duly authorised by the Landlord
in that behalf into or upon the Demised Premises or any part thereof in
the name of the whole to peaceably re-enter and the Demised Premises
peaceably to hold and enjoy thenceforth as if this Lease has not been made
without prejudice to any right
<PAGE>
55
of action or remedy of either party against the other in respect of any
antecedent breach of any covenant or condition herein contained
Notices
2. Any notice required to be given or served under this Lease and not
otherwise provided for shall be served or deemed to be served on the
Tenant if served in accordance with Section 196 of the Law of Property Act
1925
Suspension of Rent
3. In case the Demised Premises or any part thereof shall at any time be
destroyed or so damaged by any of the Insured Risks as to be unfit for
occupation or use then and in any such case (unless the insurance of the
Demised Premises shall have been vitiated by the act neglect default or
omission of the Tenant) the rents hereby reserved or a fair and just
proportion thereof according to the nature and extent of the damage
sustained shall be suspended and cease to be payable until the Demised
Premises shall have been rebuilt or reinstated and made fit for use and
occupation or for a period not exceeding three years (whichever shall be
shorter) and such proportion in case of disagreement shall be referred to
a single arbitrator to be appointed by the parties hereto but failing
approval to be appointed by the President for the time being of the Royal
Institution of Chartered Surveyors on the application of either party
above in accordance with and subject to the provisions of the Arbitration
Acts 1950 to 1979
<PAGE>
56
Acceptance of Rent
4. Notwithstanding the acceptance of or demand for rent by the Landlord or
its agent with knowledge of a breach of any of the covenants on the part
of the Tenant herein contained the Landlord's right to forfeit this Lease
on the ground of such breach shall remain in force AND the Tenant shall
not in any proceedings for forfeiture be entitled to rely upon any such
acceptance or demand as aforesaid as a defence PROVIDED THAT this
provision shall have effect in relation only to any acceptance of or
demand for rent made during such period (if any) as may in all the
circumstances be reasonable for enabling the Landlord to conduct any
negotiations with the Tenant for remedying the breach which shall have
been commenced by either party upon the Landlord becoming aware of the
said breach
Statutory Compensation
5. Except to the extent that any statutory provision prohibits the Tenant's
right to compensation being reduced or excluded by agreement the Tenant
shall not be entitled to claim from the Landlord on quitting the Demised
Premises or any part thereof any compensation under the Landlord and
Tenant Act 1954 or any statute modifying or re-enacting the same
<PAGE>
57
Exclusion of any Warranty of Fitness
6. Neither the granting of this Lease nor any provision herein contained
shall operate or be construed as warranting that the use to which the
Tenant proposes nor or hereafter to put the Demised Premises or any use to
which (whether subject to conditions or not) the Tenant may be at liberty
or may be required under the provisions of this Lease to put the Demised
Premises is or may be or become legally permitted whether under the
provisions of the Planning Acts or otherwise
Party Walls
7. Each and every wall separating the Demised Premises from any adjoining
premises of the Landlord shall be deemed to be a party wall severed
medially
Interest on Arrears etc
8. If the Basic Rent or any other sum payable by the Tenant to the Landlord
under this Lease shall not be paid to the Landlord within twenty one days
of the same being due the Tenant shall pay to the Landlord with any such
sums (but without prejudice to all or any rights or remedies of the
Landlord hereunder) interest thereon at the Prescribed Rate calculated on
a day to day basis from the date the same became due and payable down to
the date of payment or re-imbursement by the Tenant and the aggregate
amount for the time being so payable shall at the option of the Landlord
<PAGE>
58
be recoverable by action or as rent in arrear
Set Off
9. The Tenant shall not be entitled to set off any counterclaim or exercise a
right of retention against rent unless the existence and maturity of such
claim have been accepted by the Landlord or are established by a final
decision of a Court or an arbitrator
Rent Review Waivers and Consents
10. In the event of the Landlord specifying any waiver or consent under the
Clause headed "Open Market Rent" in Schedule A of this Lease which the
Landlord is willing to make or give any covenant to which such waiver or
consent relates shall thereafter be modified accordingly as from the
Relevant Review Date
<PAGE>
59
SCHEDULE F
Part II - Provisions re Services
Service Charge
1. The Tenant hereby agrees and covenants with the Landlord that it will pay
by way of further rent a service charge contribution in accordance with
the following paragraph of this Schedule (together with any Value Added
Tax due and payable thereon) such contribution to be such proportion of
the total service charge for the Development as the Landlord's Surveyor
shall from time to time conclusively determine during the Term to be
properly attributable to the Demised Premises
Provisions as to Service Charge
2.0 The total service charge shall be the aggregate of :-
(a) The reasonable cost to the Landlord of the provision by it of the
services and matters mentioned in paragraph 3 of this Schedule
during the relevant year (due allowance being made where any
expenditure is met out of the reserve hereinafter mentioned) and
(b) A reasonable sum being the annual depreciation over a fair and
proper period (to be conclusively determined by the Landlord's
Surveyor) of all the capital plant
<PAGE>
60
and equipment used in or for the provision of such services and
(c) All other reasonable expenditure incurred by the Landlord as
mentioned in paragraph 3 of this Schedule during the relevant year
PROVIDED THAT the Landlord may in its discretion include in any year a sum
which the Landlord's surveyor determines to be reasonable by way of
reserve against anticipated future expenditure on the said services such
determination to be conclusive
2.1 The Tenant shall pay to the Landlord on account of the annual service
charge contribution on each quarter day in advance such a sum as shall in
the discretion of the Landlord be demanded by it not exceeding one equal
fourth part of the anticipated annual service charge contribution for the
current year to be determined by the Landlord's Surveyors
2.2 At the end of each year the Landlord shall as soon as practicable within
the following three months cause an account to be prepared of the total
service charge for that year and send a copy thereof to the Tenant
together with a statement showing the annual service charge contribution
payable by the Tenant and the amount paid on account by the Tenant in such
year Any difference due from the Tenant shall be paid to the Landlord
within fourteen days of the receipt of such statement (whether or not the
same is received within or after the expiration of the said period of
<PAGE>
61
three months) and any balance due to the Tenant shall be allowed against
the next payment on account of service charge contribution due from it
2.3 For the purpose of this Schedule "year" shall mean the period of twelve
months from the First day of January to the next ensuing Thirty-first day
of December (both dates inclusive and insofar as the annual service charge
contribution has to be calculated for any period other than a year or a
payment on account for any period other than a quarter the same shall be
calculated by apportionment on a daily basis
2.4 The certificate of the Landlord's Surveyor acting in a reasonable manner
as to the total service charge and the service charge contribution due
from the Tenant in any year shall be final and conclusive as between the
Landlord and the Tenant
2.5 Provided that in the provision of such services mentioned in the next
following paragraph the Landlord shall act in all respects in a reasonable
manner for the benefit of the Lessees of the Development
Services
3.0 The Landlord hereby covenants with the Tenant that subject to payment by
the Tenant of the Basic Rent and the further rents herein reserved and
provided that the Tenant has complied with
<PAGE>
62
all the covenants and obligations on the part of the Tenant to be
performed and observed to use its best endeavours to provide the following
services :-
The maintenance amendment repair renewal cleansing decorating and
otherwise keeping in good and tenantable condition of :-
(a) the Common Parts and
(b) the boundary walls fences and gates of and within the curtilage of
the Development
3.1 The repair renewal replacement cleansing and maintenance in good working
order and repair of the equipment apparatus and appliances (if any) in the
Common Parts including (without prejudice to the generality of the
foregoing) the watercourses channels pipes drains sewers cables wires
meters ducts and other conducting media the electrical installation and
light fittings
3.2 Any lighting to the Common Parts
3.3 Grassing and tending and keeping tidy and planting with such flora trees
and shrubs as the landlord shall deem at its absolute discretion to be
appropriate the landscaped areas on the Development
3.4 Providing maintaining renewing replacing repairing and keeping in good
order and condition all installations appurtenances
<PAGE>
63
appointments fixtures fittings bins receptacles tools appliances materials
and other things which the Landlord may deem desirable or necessary for
the maintenance upkeep or cleanliness of the Development and the supply of
services to the Development
3.5 Employing and determining (as and when the Landlord considers it
expedient) the employment of such agents managers contractors and staff as
the Landlord may deem reasonably desirable or necessary to enable or
assist it to provide the said services or any of them and for the general
conduct management and security of the Development and all parts thereof
and to pay all incidental costs fees compensation premiums and other
expenditure in relation to such employment (including but without limiting
the generality of such provision) payment in respect of the statutory and
such other insurance health pension welfare and other payments
contributions compensation claims or liability of any kind and premiums as
the Landlord may at its absolute discretion deem desirable or necessary
and the provision of uniforms working clothes and other equipment for the
proper performance of their duties the rental value of any caretaker's
accommodation within the Development and the cost of providing the same
and any other accommodation provided by the Landlord for management
purposes and the expenses incurred from time to time in the management of
the Development
3.6 Paying all rates taxes charges assessments impositions and other outgoings
payable by the Landlord in respect of the Common Parts
<PAGE>
64
of the Development except insofar as the Tenant or any other occupier of
the Development may be liable for the same under the terms of this or
their lease or occupation
3.7 Keeping the Common Parts insured upon similar terms (including the
Landlords covenant to reinstate) as those set forth in the Landlord's
covenant headed "insurance (Clause 1.1 of Schedule E)
3.8 Taking all steps reasonably deemed desirable or expedient by the Landlord
for complying with making representations against or otherwise contesting
the incidence of the provisions of any legislation or orders or statutory
requirements thereunder concerning employment town planning public health
highways streets drainage or other matters reasonably relating to or
alleged to relate to the Development for which the Tenant is not directly
liable hereunder
3.9 Re-marking as required the car and lorry parking spaces loading bays and
turning areas (if any)
3.10 If the Landlord reasonably considers it expedient removing from the
Demised Premises to a central collection point all usual refuse and
rubbish
3.11 As and when the Landlord shall in its absolute discretion consider it
appropriate enforcing or attempting to enforce against :-
<PAGE>
65
(a) Any other tenant of the Development the observance of any covenant
in that tenant's lease the non-observance of which is or may be
detrimental to the Landlord or the Tenant or any of the other
tenants of the Development and
(b) Any owner or occupier of adjoining or neighbouring premises the
payment of any contribution towards anything used in common with the
Development
3.12 Paying a contribution towards the expense of repairing renewing and
maintaining all ways roads pavements sewers drains pipes watercourses
party walls party structures party fences walls or other conveniences
which may belong to or be used by the occupiers of the Development in
common with others and in common with other premises near or adjoining
thereto and not forming part of the Demised Premises
3.13 Executing any works as are or at any time during the term shall under or
by virtue of any enactment for the time being in force or by any Local or
other competent Authority be directed or required to be done or executed
in respect of the Development and for which none of the occupiers of the
Development are liable
3.14 The general supervision and management of the Development and the
Landlord's interest therein by the Landlord or its Agent
<PAGE>
66
3.15 The costs and expenses of preparing and supplying the accounts and
statements mentioned in paragraph 2 of this Part of this Schedule and the
costs and expenses of the Landlord's Surveyor in exercising any of his
functions under this Schedule
3.16 The preparation and supply of copies of regulations made by the Landlord
under the foregoing provisions hereof and copies of all amendments or
additions made from time to time thereto
Savings
4.0 The Landlord shall not be liable to the Tenant for any defects or want of
repair unless and until the Landlord has had notice thereof
4.1 The Landlord may from time to time reasonably withhold add to extend vary
reduce or make any alterations in the rendering of the service upon giving
notice aforesaid or any of them in any manner and to any extent that the
Landlord deems desirable in the interest of good estate management but so
that the use and enjoyment of the Demised Premises shall not thereby be
prejudicially or adversely affected
4.2 The Tenant shall have no claim against the Landlord arising out of or in
respect of the failure of the Landlord to provide any of the said services
by reason directly or indirectly of circumstances outside the reasonable
control of the Landlord and in particular (but without prejudice to the
generality of the
<PAGE>
67
foregoing) by reason directly or indirectly of any act of God or of third
parties or any strike lockout or labour dispute or any shortage of labour
fuel water gas electricity or other supplies or of any material or other
defect or breakdown arising in or occuring to any part of the service
installations or other equipment in the Development used for or in
connection with the furnishing of any service
4.3 The Landlord shall not be responsible for or incur any liability in
respect of:-
(a) Any damage to any person or property by reason of any defect in the
structure of any part of the Development (other than such defect
comprised within the proviso to clause 6.1 of Schedule D hereof) or
by reason of the defective working stoppage or breaking of any
machinery power or appliance in connection therewith or
(b) Any loss or inconvenience which may be occasioned by any delay or
want of supply of water (including heated water) electric current
gas or other fuel or conditioned air caused by any Service
installation or other equipment connected with the supply thereof
being defective or out of repair or by the closing down or temporary
withdrawal from use of any service installations or boiler or other
services equipment for periodic inspection repairs or other
necessary purposes
<PAGE>
68
(c) The act or default of any caretaker or any other servant or agent of
the Landlord or of any other tenant or any servant or agent of any
other tenant or any servant or agent of any other tenant or occupant
of the Development nor for any loss occasioned by theft negligence
of such servants or otherwise
(d) Any letter parcel or property which may be left with or entrusted to
any Caretaker or any other servant of the Landlord or for the act or
default of any such person or anything arising therefrom
<PAGE>
69
SCHEDULE G
Surety's Covenant (Clause 7)
1. The Tenant will throughout the Term pay the rents and all increases
therein reserved (whether such increased are effected in accordance with
Schedule C hereto or as otherwise agreed or settled between the Landlord
and the Tenant) and made payable by this Lease in the manner and at the
respective times herein appointed for payment and shall observe and
perform all the covenants provisions and conditions on the part of the
Tenant herein contained AND FURTHER the Surety covenants to pay and make
good to the Landlord on demand all losses costs damages and expenses
occasioned to the Landlord arising out of or by reason of the default of
the Tenant in respect of any of the said covenants provisions and
conditions AND that any neglect or forbearance on the part of the Landlord
in enforcing or giving time (a) for payment of the Basic Rent (and other
rents) and all increases therein or any part thereof or (b) the observance
or performance of any of the said covenants provisions and conditions
shall not release the Surety from its ability under the covenant or
guarantee on its part contained in this Clause
2. That :-
(i) if the Tenant (being a Company) shall go into liquidation and the
Liquidator disclaim this Lease or
(ii) if the Tenant (being a Company) is dissolved or struck off the
register and the Crown disclaims this Lease or
<PAGE>
70
(iii) if the Tenant (being an individual) becomes bankrupt and the Trustee
in Bankruptcy disclaims this Lease or
(iv) if this Lease shall be forfeited by the Landlord under the right or
power in that behalf contained or referred to herein the Landlord
may within three months following the disclaimer or forfeiture (as
the case may be) by notice in writing require the Surety to accept a
new Lease of the Demised Premises in their then actual state and
condition (and subject to any underlease or tenancy or other
interest created by the Tenant for the time being affecting the same
or any part thereof) for a term equivalent to the residue which if
there had been no disclaimer or forfeiture would have remained of
the Term at the rents last payable under the Lease and subject to
the said covenants provisions and conditions with the exception of
this sub-clause and the immediately preceding sub-clause And so that
if a disclaimer or forfeiture shall occur after the completion of a
rent review carried out in accordance with the provisions of
Schedule C to this Lease the Basic Rent to be reserved by the new
Lease shall be the Basic Rent last previously payable before the
disclaimer or forfeiture the new Lease and the rights and
liabilities thereunder to take effect as from the date of such
disclaimer or forfeiture (as the case may be) and in such case the
Surety shall pay the Landlord's Solicitors charges and disbursements
of
<PAGE>
71
and shall accept the new Lease and will execute and deliver to the
Landlord a Counterpart thereof
3. If and as often as the Landlord or the Tenant may by notice in writing to
require to sign the memorandum of the Basic Rent in accordance with the
provisions of paragraph 9 of Schedule C hereto
4. In the event of the Tenant being granted at the expiration of the Term a
new lease of the Demised Premises or any part thereof pursuant to the
provisions of the Landlord and Tenant Act 1954 or any other statute for
the time being in force the covenants aforesaid of the Surety shall apply
to such new lease to the same extent as they apply to this Lease
THE COMMON SEAL of PENSION )
FUNDS SECURITIES LIMITED was )
hereunto affixed in the )
presence of : )
[GRAPHIC]
/s/ [ILLEGIBLE] Director
/s/ [ILLEGIBLE] Secretary
<PAGE>
EXHIBIT 10.74
- --------------------------------------------------------------------------------
DATED 19th March 1984
PENSION FUNDS SECURITIES LIMITED
- and -
MINIPACK SYSTEMS LIMITED
- and -
TINSLEY-ROBOR GROUP P.L.C.
LEASE
OF
Unit 8 Waterloo Industrial
Estate Hedge End Eastleigh
Southampton in the County
of Hants
Laytons
16 Lincoln's Inn Fields
London
WC2A 3ED
- --------------------------------------------------------------------------------
<PAGE>
INDEX (LEASE 2)
This does not form part of this Lease and is included purely for ease of
reference.
Page No Clause No Main Clause Heading Sub Clause Heading
- ------- --------- ------------------- ------------------
1.0 Definitions
2.0 Interpretation
3.0 Demise and Rents
4.0 Tenants Covenants
5.0 Landlords Covenants
6.0 Proviso
7.0 Surety
Schedule A Definitions
1 Landlord
2 Tenant
3 Surety
4 Demised Premises
5 This Lease
6 Plan
7 Planning Acts
8 Term
9 Commencement Date
10 Basic Rent
11 Insured Risks
12 Review Date
13 Rental Period
14 Specified Use
15 Lettable Area
16 Open Market Rent
17 Surveyor
18 Landlords Surveyor
19 Statutory Rent
Restrictions
20 Prescribed Rate
21 Registration Fee
22 Development
23 Common Parts
<PAGE>
Page No Clause No Main Clause Heading Sub Clause Heading
- ------- --------- ------------------- ------------------
Schedule B
Part I The Demised Premises
Part II Rights and Easements
" " 1 Benefits of Easements
" " 2 Shared Rights
Part III Exceptions &
Reservations
" " 1 Rights & Easements
over adjoining land
2 Building on adjacent
land
3 Support & Shelter
4 Services for
adjoining premises
Part IV Matters to which
the Demised
Premises are
subject
Schedule C Rent Review
Schedule D Tenant's Covenants
" " 1 Rent
2.1 Outgoings
3.1 Insurance
4. VAT
5.1 Gas Electricity &
Water Charges
6.1 Repairs
7 Decoration
8.1 Yield Up
9 Fire Precautions
10.1 Inspection & Repairs
11 Inventories
12 Acts of Parliament
13 Planning Acts
14 Copies of Notices
<PAGE>
Page No Clause No Main Clause Heading Sub Clause Heading
- ------- --------- ------------------- ------------------
15 Appeals
16 Applications for
Planning Permission
17 Fulfilment of
Conditions
18 Purchase Notice
19 Compensation
20 Assignment and
Underletting
21 Registration of
Documents
22.1 User
23 Alterations
24 Advertisements
25 Floor Loading
26 Nuisance
27 Auctions
28 Encroachments Etc
29 Let or Sale Boards
30.1 Pollution
31.1 Repair of Adjoining
Premises
32 Cost of Notices
33 Cost of Licences
34 Cost of this Lease
35 Indemnity - Encumbrances
36 Indemnity - Breaches
37 Indemnity - Use &
Occupation
38 Indemnity DLT
39 Indemnity Costs
40 Regulations
39 Fencing
Schedule E Landlord's Covenants
1.1 Insurance
2. Quiet Enjoyment
<PAGE>
Page No Clause No Main Clause Heading Sub Clause Heading
- ------- --------- ------------------- ------------------
Schedule F Agreements &
Part I Declarations between
the parties
1 Re-entry
2 Notices
3 Suspension of Rent
4 Acceptance of Rent
5 Statutory Compensation
6 Exclusion of any
Warranty of fitness
7 Power to deal with Landlords
Property
8 Exclusion of implied rights
9 Party Wall
10 Interest on Arrears etc
11 Set Off
Schedule F Provisions re Services
Part II
1 Service Charge
2 Provisions as to
Service Charge
3 Services
Schedule G Surety's Covenant
<PAGE>
[GRAPHIC]
THIS LEASE made the Nineteenth day of March One thousand nine hundred and
eighty-four BETWEEN PENSION FUNDS SECURITIES LIMITED whose registered
office is situate at Imperial Chemical House Millbank London SW1P 3JF of
the first part MINIPACK SYSTEMS LIMITED whose registered office is situate
at Rolls House 7 Rolls Buildings Fetter Lane London EC4A 1NH of the second
part and TINSLEY-ROBOR GROUP PLC whose registered office is situate at
Rolls House 7 Rolls Buildings Fetter Lane London EC4A 1NH of the third
part
WITNESSETH as follows:-
Definitions
1.0 IN this Lease (which shall include any Schedule hereto) unless the
otherwise requires the terms defined in Schedule A hereto shall have
meanings specified therein
Interpretation
2.0 THIS Lease shall unless the context otherwise requires be construed as
hereinafter provided:
2.1 Where there is more than one person for the time being included in the
expression "the Tenant" covenants and obligations at any time expressed to
be made or assumed by the party in question are made and are to be
construed as made by all such persons jointly and each of them severally
2.2 Covenants and obligations made or assumed by any party shall be binding on
and enforceable against his personal representatives
2.3 Any covenant by the Tenant not to do any act or thing shall be deemed to
include an obligation not knowingly to permit or suffer such act or thing
to be done
2.4 Any reference to any Act of Parliament shall include any Act or Acts for
the
<PAGE>
- 2 -
time being in force amending or replacing the same or of a similar nature
and shall include any order instrument circular regulation direction or
plan made or issued thereunder or deriving validity therefrom and any
future legislation or matter as aforesaid of a like nature or effect which
may from time to time be substituted for such Acts or implement or
supplement or affect the same
2.5 Words denoting the masculine gender shall include the feminine gender
2.6 Words denoting persons shall include corporations and partnerships
2.7 The Index annexed hereto and the Clause headings contained herein are
included purely for ease of reference and shall not affect the
interpretating hereof
Demise and Rents
3.0 IN consideration of the rents hereby reserved and the covenants on the
part of the Tenant and the conditions hereinafter contained the Landlord
HEREBY DEMISES unto the Tenant the Demised Premises TOGETHER WITH such
rights and easements (if any) specified in Part II of Schedule B hereto
EXCEPTING AND RESERVING unto the Landlord (and any person authorised or
approved by the Landlord) such rights and easements (if any) as are more
particularly specified and set out in Part III of the said Schedule B TO
HOLD the Demised Premises unto the Tenant subject to the matters (if any)
referred to in Part IV of Schedule B if and so far as the Demised Premises
are affected thereby for the Term subject to all rights easements
quasi-easements and privileges belonging to or enjoyed by any adjoining or
neighboring property
3.1 YIELDING AND PAYING therefor unto the Landlord yearly during the Term and
so in proportion for any less period than a year but without any
deductions FIRST the Basic Rent AND SECONDLY by way of further rent an
amount
<PAGE>
- 3 -
equal to the expenditure incurred by the Landlord from time to time in
accordance with the covenant in the Schedule E hereto under the heading
"Insurance" by way of premiums for the insurance of the Demised Premises
such further rent to be paid on the quarter day which occurs next after
the expenditure of the said amount by the Landlord
2. The Basic Rent shall be paid in advance by equal quarterly payments on the
usual quarter days in each year the first of such payments being in
respect of the period from the 19th day of March 1984 until the quarter
day next occurring after that date
3. IT IS HEREBY AGREED and declared that the Basic Rent shall be reviewed and
(if appropriate) increased but not decreased at the times and in manner
set out in Schedule C hereto
Tenants Covenants
THE Tenant HEREBY COVENANTS with the Landlord to observe and perform the
Tenant's covenants at all times during the Term in manner set out in
Schedule D hereto
Landlords Covenants
SUBJECT to the Tenants observing and performing its covenants and
obligations hereunder the Landlord HEREBY COVENANTS with the Tenant to
observe and perform the Landlord's covenants at all times during the Term
in manner set out in Schedule E hereto
Proviso
IT is HEREBY AGREED AND DECLARED as provided in Schedule F hereto
Surety
THE Surety HEREBY COVENANTS with the Landlord in manner set out Schedule G
hereto
<PAGE>
- 4 -
IN WITNESS whereof these Presents have hereunto been entered into the day
and year first above written
<PAGE>
- 5 -
SCHEDULE A
Definitions (Clause 1)
1. "Landlord" means the party of the first part and shall include the estate
owner for the time being of the reversion immediately expectant on the
termination of the Term
2. "Tenant" means the party of the second part and includes the successors in
title and assigns of that party
3. "Surety" means the party of the third part (if any) and any party at any
time joined as Surety for the Tenant
4. "Demised Premises " means the premises more particularly described in Part
I of Schedule B hereto or any part or parts thereof and includes the
appurtenances thereof the Landlord's fixtures and fittings therein any and
all additions and improvements thereto
5. "This Lease" means this Lease and includes any Schedule hereto any licence
granted pursuant to and any deed of variation of the provisions hereof and
any deed or instrument made supplemental hereto
6. "Plan" means the plan or plans annexed hereto and specified in Part I of
Schedule B hereto
7. "Planning Acts" means the Town and Country Planning Act 1971 and all other
matters included by virtue of Clause 2.4 hereof
8. "Term" means the term of 25 years commencing on the 1st day of December
one thousand nine hundred and eighty-three
9. "Commencement Date" means the First day of December One thousand nine
hundred and eighty-three
10. Basic Rent" means the clear yearly rent of Twenty-nine thousand seven
hundred and sixty pounds ((pound)29,760.00) reserved under this Lease as
<PAGE>
- 6 -
increased from time to time during the Term pursuant to the provisions of
Schedule C hereto
11. "Insured Risks" means loss or damage by fire explosion storm tempest
aircraft riot civil commotion malicious damage earthquake flood burst
pipes impact and includes cover in respect of architects surveyors and
other professional fees on re-instatement and three years loss of rent and
such other risks as the Landlord shall reasonably think fit
12. "Review Date" means the 1st day of December one thousand nine hundred and
eighty-eight and each successive fifth anniversary of such date during the
Term but shall also be construed in accordance with the provisions of
paragraph 8 of Schedule C hereto and the expression "Relevant Review Date"
shall be construed accordingly
13. "Rental Period" means the period between a Review Date and the next
succeeding Review Date and the expression "Relevant Rental Period" shall
be construed accordingly
14. "Specified Use" means as accommodation for Industrial use within the
meaning of Class III of the Town and Country Planning (Use Classes) Order
1972 together with ancillary offices
15. "Lettable Area " means the area of the Demised Premises available as
accommodation for the Specified Use calculated in accordance with the
normal practice for assessing lettable areas of premises used for the
Specified Use
16. "Open Market Rent" means the best clear yearly rent at which the Demised
Premises together with the rights hereby granted and all rights and
privileges which are at the Relevant Review Date appurtenant thereto or
<PAGE>
- 7 -
enjoyed thereunder might reasonably be expected to be let as a whole
(including Landlords fixtures and fittings) at the Relevant Review Date by
a willing landlord to a willing tenant in the open market with vacant
possession and without premium or any other consideration for the grant
thereof for a term from the Relevant Review Date equal to the original
length of the Term assuming if not the fact
(i) that the Demised Premises remain in existence and fit for use and
occupation as provided in the Lease
(ii) that the Tenant has performed and observed the covenants and
conditions on its part herein contained and
(iii) that the Lettable Area of the Demised Premises comprises twelve
thousand four hundred square feet (12400 sq.ft.) or such greater
area as is at the Relevant Review Date available as accommodation
for the Specified Use with the consent of the Landlord and
(iv) that the Demised Premises are available to be let for any one or
more of the following uses :-
(a) the Specified Use or
(b) any other user for which the Demised Premises are at the time of the
Relevant Review Date used in accordance with any consent given by
the Landlord or
(c) any other user being a user falling within the same class of uses
specified in any current Use Classes Order made under the Planning
Acts as either of the uses mentioned in (a) or (b) above which the
Landlord in the course of the review may specify in writing as being
a use for which the Landlord would be willing to grant consent
<PAGE>
- 8 -
either unconditionally or subject to such conditions as the Landlord
may specify
and on a lease which shall otherwise contain the same terms and provisions
in all respects as this Lease (including the provisions for review of
rent) PROVIDED THAT the Landlord may prior to or in the course of the
review specify in writing such waivers of or consents under any of the
covenants herein contained and the conditions (if any) to be attached to
such waivers or consents which the Landlord would be willing to make or
agree to and in that event such waiver or consent shall apply to the
Demised Premises and for the purposes of the review it shall be assumed
that any such waiver had been made or consent given prior to the Relevant
Review Date in the manner and on the terms specified by the Landlord there
being disregarded:-
(i) any effect on rent of the Tenants occupation of the Demised Premises
and
(ii) any goodwill attached to the Demised Premises by the reason of the
business carried on thereat by the Tenant and
(iii) any improvements to the Demised Premises carried out by the Tenant
since the commencement of the term hereby granted with the Landlords
written consent (where needed) and otherwise than in pursuance of an
obligation owed by law to the Landlord and
(iv) any effect on rent of the Statutory Rent Restrictions
17. "The Surveyor" means the independent Chartered Surveyor (having not less
than ten years experience in the valuation and/or letting of premises for
uses of the same type as the Specified Use in the same area as the Demised
Premises) appointed from time to time to determine the Open Market Rent
pursuant to the provisions of Schedule C hereto
<PAGE>
- 9 -
18. "Landlord's Surveyor" means the Landlord's Surveyor or Managing Agents for
the time being including any such in the full time employment of the
Landlord
19. "Statutory Rent Restrictions" means the restrictions imposed by any
statute for the control of rent in force on a Review Date or on the date
on which any increased rent is ascertained in accordance with Schedule C
hereto and any regulations or orders made thereunder which operate to
impose any limitation whether in time or amount on the ascertainment or
collection of an increase in the Basic Rent or any part thereof
20. "Prescribed Rate" means two per centum per annum the above Barclays Bank
Limited Base Rate or in the event of the said Base Rate ceasing to exist
such other reasonable rate of interest as the Landlord may from time to
time agree in writing and failing such agreement such reasonable rate of
interest as shall be determined by a single Arbitrator appointed in
default of agreement by the President for the time being of the Royal
Institute of Chartered Surveyors under the Arbitration Acts 1950 to 1979
21. "Registration Fee" means the sum of twenty five pounds which shall be
increased pro rata with any increase from time to time in the amount of
the Basic Rent above that specified herein
22. "Development" means the premises situate and known as Waterloo Industrial
Estate Hedge End Eastleigh Southampton in the County of Hants shown edged
on the Plan annexed hereto
23. "Common Parts" means all those roadways car parks amenity areas and
footpaths (if any) within the Development shown edged brown on the plan
annexed hereto and the car parking spaces hatched green and hatched yellow
<PAGE>
- 10 -
SCHEDULE B
Part I - The Demised Premises (Clause 3.0)
ALL THOSE premises situate and known as Unit 8 Waterloo Industrial Estate
Hedge End Eastleigh Southampton in the County of Hants as the same are
shown for the purpose of identification only edged red on the Plan annexed
hereto
<PAGE>
- 11 -
SCHEDULE B
Part II - Rights and Easements (Clause 3.0)
Benefit of Easements
1. The right in common with the Landlord and all other persons entitled to
use and enjoy the benefit of all easements and quasi-easements and
services subsisting or maintained for the benefit of the Demised Premises
in over under or against any adjoining or adjacent premises of the
Landlord to the extent that the same are necessary for the reasonable
enjoyment of the Demised Premises but excluding any rights of light and
air which are and to the extent to which the same are specifically
excepted and reserved herein
Shared Rights
2. Subject to the Tenant's observance and performance of the covenants and
agreements on its part herein contained the Landlord hereby grants to the
Tenant the rights so far as is necessary and as the Landlord may lawfully
grant the same for the Tenant :-
(a) to pass with or without vehicles for the purpose only of access to
and egress from the Demised Premises in over and along the roadways
comprised in Common Parts and
(b) to use the car parking spaces as shall be designated by the Landlord
from time to time for the purpose only as appropriate of parking
motor vehicles belonging to the Tenant its employees and visitors
and shown for identification hatched yellow on the Plan annexed
hereto and
(c) the exclusive use of the car parking spaces for purpose of parking
motor cars belonging to the Tenant its employees and visitors shown
for identification hatched green on the Plan annexed hereto
<PAGE>
- 12 -
SCHEDULE B
Part III - Exceptions and Reservations (Clause 3.0)
Rights and Easements over Adjoining Land
1. All rights of light air and easements (but without prejudice to those
expressly hereinbefore granted to the Tenant) now or hereafter belonging
to or enjoyed by the Demised Premises from or over any adjacent or
neighbouring land or building
Building on adjacent land
2. The right to build or rebuild or alter any adjacent or neighbouring land
or building of the Landlord in any manner whatsoever and to let the same
for any purpose or otherwise deal therewith notwithstanding the light or
air to the Demised Premises is in any such case thereby diminished or any
other liberty easement right or advantage belonging to the Tenant is
thereby diminished or prejudicially affected
Support and Shelter
3. The right of support and shelter and all other easements and rights now or
hereafter belonging to or enjoyed by all adjacent or neighbouring land or
buildings an interest wherein in possession or reversion is at any time
during the term vested in the Landlord
Services for adjoining premises
4. The free passage and running of air gas electricity water and soil
telephone and other services through or along the pipes wires channels
drains and watercourses already or hereafter during the Term to be built
or placed in through over or under the Demised Premises to and from all
other parts of any premises belonging to the Landlord or in which it has
an interest and the right to connect up to the same
<PAGE>
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SCHEDULE B
PART IV - Matters to which the Demised Premises are subject (Clause 3.0)
The matters contained or referred to in the Property Register and the
Charges Register of the Landlord's Title Number HP 181433
<PAGE>
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SCHEDULE C
Rent Review (Clause 3.4)
1. The Basic Rent payable for each Rental Period shall be whichever is the
greater of (a) the Basic Rent which was or but for the Statutory Rent
Restrictions would have been payable in accordance with the provisions of
this Lease for the period immediately preceding the Relevant Review Date
or (b) the Open Market Rent at such Review Date as agreed between the
Landlord and the Tenant or determined by the Surveyor in accordance with
the provisions of this Schedule
2. If the Open Market Rent shall not have been agreed in writing between the
Landlord and the Tenant one month before the Relevant Review Date either
party may (whether before or at any time after the Relevant Review Date)
by notice in writing to the other party require the Open Market Rent to be
determined by the Surveyor who shall be appointed jointly by agreement
between the parties
3. In default of agreement between the Landlord and the Tenant on the
appointment of the Surveyor the Surveyor shall be appointed by the
President (or other the Chief Officer) for the time being of the Royal
Institution of Chartered Surveyors on the written application of either of
them which (subject to any agreement in writing between the Landlord and
the Tenant to the contrary) may be made at any time after notice has been
given in accordance with paragraph 3 of this Schedule
4. The Surveyor shall act as an arbitrator under the Arbitration Acts 1950 to
1979
5. The Surveyor shall give notice to the Landlord and the Tenant in writing
<PAGE>
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of the Open Market Rent as determined by him (such determination being
final and binding on the parties) and the Open Market Rent so determined
shall be payable from the commencement of the Relevant Rental Period
6. The Surveyor's fees and charges shall be borne by the Landlord and the
Tenant in such proportions as the Surveyor shall determine and in default
of such determination in equal shares
7. If the Open Market Rent has not been ascertained (by agreement or
determination) by any Relevant Review Date in accordance with the
provisions of this Schedule the Tenant shall pay to the Landlord for any
period between such Relevant Review Date and the usual quarter day
immediately following the ascertainment of the Open Market Rent the Basic
Rent at the yearly rate payable for the period immediately preceding such
Relevant Review Date and on the usual quarter day immediately following
the ascertainment of the Open Market Rent shall (in addition to the Basic
Rent then payable) pay to the Landlord at a yearly rate equal to the
difference (if any) between the Basic Rent payable immediately before the
such Relevant Review Date and the new Basic Rent determined in accordance
with the provisions of this Schedule additional rent in respect of the
period between such Relevant Review Date and such quarter day together
with interest thereon at the the Prescribed Rate from the Relevant Review
Date or from the date of the Landlord's notice under paragraph 2 hereof
(whichever shall be the later) until payment
8. If the Statutory Rent Restrictions would at any Relevant Review Date
restrict or prohibit the review of the Basic Rent or the collection
recovery or retention of the same then the Landlord shall be entitled once
only following each removal or modification of the Statutory
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Rent Restrictions to serve notice (hereinafter called "an interim notice")
on the Tenant and from and after the service of such interim notice until
the next Relevant Review Date or the service of the next interim notice
(whichever shall first occur) the rent shall be whichever is higher of the
Open Market Rent at the date of service of such interim notice and the
Basic Rent payable immediately prior thereto and the provisions of this
Schedule shall apply to the ascertainment of such Open Market Rent as if
the date of service of such interim notice were a Relevant Review Date
9. On each occasion that the Basic Rent is ascertained (whether by agreement
or determination in accordance with the provisions of this Schedule) the
Landlord and the Tenant shall cause a memorandum of the amount thereof
payable for the Relevant Rental Period to be endorsed on or annexed to
this Lease and the counterpart thereof and the same shall be signed by or
on behalf of the Landlord the Tenant and the Surety
10. Time shall not be of the essence of any of the provisions of this Schedule
save the provision for payment by the Tenant of additional rent and
interest in paragraph 8 hereof
<PAGE>
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SCHEDULE D
Tenant's Covenants (Clause 4)
Rent
1. To pay
(a) the Basic Rent and other rents payable or to become payable under
this Lease and
(b) any and all interest to become payable pursuant to this Lease
at the times and in manner aforesaid without any deduction except as
aforesaid
Outgoings
2.1 To pay and discharge all existing and future rates taxes duties charges
assessments impositions and outgoings whatsoever (whether parliamentary
parochial local or of any other description and whether or not of a
revenue or non-recurring nature and even though of a wholly novel
character) which are now or may at any time hereafter be assessed charged
levied or imposed upon or payable (a) in respect of the Demised Premises
or (b) on or by any estate owner landlord tenant or occupier in respect
thereof (except any tax payable by the Landlord in respect of any
reversionary interest in the Demised Premises or as a result of any
dealing or deemed dealing with any such reversionary interest or in
respect of the receipt by the Landlord of the Basic Rent or other sums
payable by the Tenant hereunder) PROVIDED THAT if the Demised Premises
shall have been left unoccupied during the whole or part of the period of
three months immediately preceding the termination of the Term the Tenant
shall in respect of an equivalent period thereafter pay and keep the
Landlord indemnified in respect of any general or other rate or similar
charge which may arise because the Demised Premises remain unoccupied
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2.2 To repay to the Landlord in the absence of direct assessment on the Tenant
the proportion properly attributable to the Demised Premises of such of
the aforesaid rates taxes duties charges assessments impositions and
outgoings as may be payable in respect of any property of which the
Demised Premises form a part
Insurance
3.1 To repay to the Landlord on demand a proportion as determined in
accordance with sub-clause .2 of this Clause of the sums which the
Landlord shall from time to time pay by way of premiums (and all of any
increased premiums payable by reason of any act or omission on the part of
the Tenant) for keeping the Development insured under the covenant on the
part of the Landlord contained in the paragraph headed "Insurance" in
Schedule E
3.2 The proportion referred to in the preceding sub-clause shall be determined
under the Clause of Part II of Schedule F headed "Service Charge")
3.3 Not to do in or on the Demised Premises anything whereby the insurance of
the Demised Premises or of any premises of which the Demised Premises form
part against the Insured Risks may be vitiated or prejudiced nor without
the consent of the Landlord do anything whereby any additional premium may
become payable for the insurance of the Demised Premises or of any
premises of which the Demised Premises form part such consent not to be
unreasonably withheld upon agreement of the Tenant accepting liability for
such additional premium
3.4 In the event of any Landlord's insurance policy or policies for the
Demised
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Premises or of any premises of which the Demised Premises form part or of
any part thereof being vitiated in consequence of any act action or
omission of the Tenant fully and effectually to indemnify the Landlord
against all costs claims proceedings or losses resulting from any damage
or injury to the Demised Premises or other premises or any part thereof in
respect of which compensation is not forthcoming from the Landlord's
insurance company and against all costs of any increased or additional
premiums incurred by the Landlord
3.5 If at any time the Tenant shall be entitled to the benefit of any
insurance on the Demised Premises (which is not effected or maintained in
pursuance of any obligation herein contained) then to apply all moneys
received by virtue of such insurance in making good the loss or damage in
respect of which the same shall have been received
3.6 To notify the Landlord forthwith of any damage to or destruction of the
Demised Premises or any part thereof occasioned by the occurence of any of
the Insured Risks
Value Added Tax
4. To pay to the Landlord or (as the case may be) to its Solicitors Surveyors
or other agents to whom any payment is due under the covenants agreements
and provisions herein contained or implied which is a payment whereon
Value Added Tax or other similar fiscal charge is chargeable the amount of
Value Added Tax or other similar fiscal charge chargeable in respect of
the payment at the rate applicable to that payment as and when due
Gas Electricity and Water Charges
5. To pay for all gas and electricity and water consumed on the Demised
Premises
<PAGE>
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and all telephone charges and to observe and perform at the Tenant's
expense all present and future regulations and requirements of the Gas and
Electricity and Water Supply Authorities and the Post Office concerning
the Demised Premises and to keep the Landlord indemnified in respect
thereof and to reimburse to the Landlord a reasonable portion (to be
determined by the Landlord's Surveyor) of all sums paid by the Landlord
from time to time to the Electricity Gas or Water Supply Authorities or to
the British Telecom in respect of any connection to or alteration or
repair of the wiring or piping or other machinery or equipment in or about
the Development used for electricity or water supply or gas or telephone
which benefits the Tenant or the Demised Premises or any part thereof
Repairs
6.1 At all times during the Term when and as often as need shall require well
and substantially to cleanse repair support and uphold and from time to
time when necessary rebuild and renew to the reasonable satisfaction of
the Landlord all present and future buildings forming part of the Demised
Premises (except damage by the insured risks PROVIDED that such damage is
not excluded by the Landlord's policy or policies of insurance and such
policy or policies shall not have become vitiated or payment of the policy
monies refused in whole or in part in consequence of some act neglect or
default of the Tenant) and to renew and replace from time to time all
Landlord's fixtures fittings and appurtenances in the Demised Premises
which may become or be beyond repair at any time during or at the
expiration or sooner determination of the Term AND PROVIDED THAT the
Tenant shall not be liable under this Clause for remedying any defect in
the land or buildings which shall give rise to a valid claim by the
<PAGE>
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Landlord or the Tenant against any third party in relation to the
surveying design or construction of the Demised Premises any dispute as to
the existence of any such claim being referred to the decision of a single
arbitrator to be agreed between the parties and failing agreement to a
single arbitrator to be appointed by the President for the time being of
the Royal Institution of Chartered Surveyors on the application of either
party alone and the cost of such arbitration shall be borne by the parties
equally
6.2 Without prejudice to the generality of the foregoing :-
(a) to keep and maintain all exterior parts of the Demised Premises in a
clean and tidy condition and not to cause or permit any rubbish to
be deposited thereon other than in any area designated for that
purpose by the Landlord and to arrange for collection of the rubbish
at intervals not less than once a week Provided that the Tenant
shall not be deemed in breach if collection is prevented by the
default of the relevant authority
(b) to keep any landscaped areas within the Demised Premises properly
cultivated and maintained in a clean and tidy condition
(c) to clean repair maintain and renew all materials used in the
construction or decoration of the Demised Premises or any part
thereof in a good and workmanlike manner and in accordance with the
appropriate approved or recommended practices procedures and
standards
6.3 In so far as such matters are not expressly included in or provided for by
the provisions hereinafter contained at all times to contribute and pay a
rateable or proper proportion of the costs charges and expenses
<PAGE>
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of making repairing maintaining rebuilding and cleansing all ways roads
pavements car parks landscaped areas sewers drains pipes watercourses
party-walls party-structures party-fences walls or other conveniences
which may belong to or be used for the Demised Premises in common with
other premises near or adjoining thereto such proportion in case of
difference to be settled by the Landlord's Surveyor whose decision shall
be final and to be paid by the Tenant on demand and to keep the Landlord
indemnified against such proportion of such costs charges and expenses as
aforesaid
Decoration
7. Without prejudice to the generality of the foregoing to the reasonable
satisfaction of the Landlord's Surveyor :
7.1 In every third year of the said term (but not during the penultimate year)
and in the last year thereof (howsoever determined) to paint in a proper
and workmanlike manner all the external parts heretofore or usually
painted and all additions thereto with at least two coats of good quality
paint the tints or colours on each occasion to be approved in writing by
the Landlord such approval not to be unreasonably withheld or delayed AND
to wash down all tiles cladding glazed bricks or polished stone or similar
washable surfaces and repoint all brickwork as and when required and to
keep the windows of the Demised Premises properly cleaned inside and
outside
7.2 In every fifth year of the said term and also in the last year thereof
(howsoever determined) to paint in a proper and workmanlike manner all the
inside wood metal and other parts heretofore or usually painted of the
Demised Premises with at least two coats of good quality paint and so
<PAGE>
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that such internal painting in the last year of the said term shall be of
a tint or colour approved in writing by the Landlord and also with every
such internal painting to clean wash stop whiten distemper and otherwise
decorate and treat in a proper and workmanlike manner all such internal
parts of the Demised Premises that have been or ought properly to be so
treated and so that in the last year of the said term the tints and
colours of all such works of internal decoration shall be approved by the
Landlord in writing (such approval not to be unreasonably withheld)
Yield Up
8.1 At the expiration or sooner determination of the Term quietly to yield up
to the Landlord the Demised Premises duly painted repaired cleaned
maintained amended and renewed and kept in accordance with the covenants
in that behalf herein contained PROVIDED however that the Tenant may prior
to the date of such expiration or determination remove all Tenant's or
trade fixtures making good nevertheless at the expense of the Tenant and
to the reasonable satisfaction of the Landlord's Surveyor any damage to
the Demised Premises caused by such removal and shall remove all the
Tenant's furniture fittings papers and refuse and so that the Landlord may
treat as abandoned by the Tenant and may arrange for the removal and
disposal of any such fixtures and other items not removed by the Tenant
prior to the said expiration or determination and the cost of such removal
and disposal shall be paid by the Tenant to the Landlord on demand
provided always that the Landlord shall be under no obligation to arrange
such removal and disposal
8.2 In the event of any alterations having been made to the Demised Premises
during the Term to reinstate the Demised Premises (if so reasonably
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required by the Landlord but not otherwise) to the condition in which the
same were prior to the making of such alterations and in any event to
remove any moulding sign writing or painting of the name or business of
the Tenant and other persons from the Demised Premises and
8.3 PROVIDED THAT if the Tenant shall fail to leave the Demised Premises in
such condition as aforesaid then and in such case the Landlord may do or
effect all such reasonable repairs renovations and decorations for which
the Tenant shall be liable hereunder and the reasonable cost thereof shall
be paid by the Tenant to the Landlord on demand and the Tenant will also
pay to the Landlord mesne profits at the rate of the rent payable
hereunder immediately prior to the said expiration or determination during
the period reasonably required for carrying out such work and the amount
of such mesne profits shall be added to the cost of carrying out such work
as aforesaid and the certificate of the Landlord's Surveyor certifying the
cost to the Landlord of such work and the period reasonably required for
carrying out the same shall be final and binding on the Tenant Provided
that the Tenant shall be deemed to have complied with its obligations
hereunder if it shall have complied in every respect with a schedule of
delapidations prepared by the Landlord at the specific request of the
Tenant giving at least six months notice before the date of determination
of the term
Fire Precautions
9.0 To keep the Demised Premises sufficiently supplied and equipped with fire
alarms fire fighting and extinguishing apparatus and installations and
appliances which shall be and remain open to the inspection and maintained
to the reasonable satisfaction of the Landlord and of the Local Fire
<PAGE>
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Authority and also not to obstruct the access to or means of working of
such apparatus and appliances
9.1 At all times during the Term at the expense of the Tenant to comply with
all requirements and regulations from time to time of
(a) the appropriate authority in relation to fire precautions affecting
the Demised Premises
(b) the appropriate supply authorities with regard to the electrical
wiring installation and equipment and gas system (if any) within and
exclusively serving the Demised Premises
9.2 Not to use on any account except in case of fire or other emergency any
doors or special exists provided for escape in case of fire
Inspection and Repairs
10.1 To permit the Landlord and any person authorised by it upon reasonable
prior appointment (except in emergency) to enter upon the Demised Premises
at all reasonable hours during the day time to view the state and
condition and user of the same and the fixtures and fittings therein and
of all defects decays and wants of reparation there found for which the
Tenant shall be responsible hereunder
10.2 Within six months next after every notice in writing to the Tenant (or
immediately in case of need) to commence and thereafter diligently to
proceed to repair well and substantially and make good all such defects
decays and wants of reparation to the Demised Premises and the fixtures
and fittings therein for which the Tenant is liable hereunder
10.3 PROVIDED ALWAYS that if the Tenant shall make default in the execution of
the repairs and works referred to in such notice it shall be lawful for
the Landlord and any persons authorised by the Landlord (but without
<PAGE>
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prejudice to the right of re-entry hereinafter contained) to enter upon
the Demised Premises and execute such repairs and works and the reasonable
cost thereof (including any surveyors' or other fees incurred and whether
or not such repairs and works are executed by the Landlord) shall be
repaid by the Tenant to the Landlord on demand together with interest
thereon from the date of demand to the date of payment at the Prescribed
Rate
10.4 To permit the Landlord and the Landlord's Surveyor and tenants and other
persons authorised by the Landlord with all necessary workmen upon
reasonable prior appointment (except in emergency) to enter upon the
Demised Premises to inspect maintain and execute repairs additions or
alterations to any adjoining premises or for inspecting making repairing
maintaining renewing connecting or cleansing any pipes drains channels
watercourses sewers wires or cables belonging to or leading to or from the
same all damage to the Demised Premises thereby occasioned being made good
by the person so entering upon the Demised Premises
Inventories
11. During the last year of the Term (howsoever determined) to permit the
Landlord and any person authorised by the Landlord to enter upon the
Demised Premises at all reasonable hours during the day time having given
reasonable notice to take schedules or inventories of fixtures and
fittings and things to be yielded up at the determination of the Term
Acts of Parliament
12. To observe and comply with the provisions and requirements of every
enactment including without prejudice to the generality of the foregoing
the Factories Acts the Offices Shops and Railway Premises Act 1963 the
<PAGE>
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Health and Safety at Work etcetera Act 1974 so far as they relate to or
affect the Demised Premises and including the cost of installing any new
fixtures therein and maintain all arrangements which by or under any
enactment or bye-law are or may be required at any time during the Term to
be executed provided or maintained whether by the Landlord or the Tenant
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 required as aforesaid and not at any
time during the Term to do or omit to be done or omitted in 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
Planning Acts
13. To comply in all respects during the currency of this Lease with the
provisions and requirements of the Planning Acts and all licenses consents
permissions and conditions (if any) granted or imposed thereunder so far
as the same respectively relate to or affect the Demised Premises or any
part thereof or any operations works acts or things already or hereafter
during the Term to be carried out executed done or omitted thereon or the
use thereof for any purpose and to pay any development charge or other
charge imposed in respect of any such matter arising from any act
commission or omission whatsoever of the Tenant or any party under the
control of or on behalf of the Tenant and indemnify the Landlord against
all proceedings expenses claims and demands in respect of any
contravention by the Tenant of any provision of the said Acts
<PAGE>
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Copies of Notices
14. Within fourteen days of the receipt by the Tenant of the same to supply a
copy to the Landlord of any notice order or proposal for a notice or order
or licence consent permission or direction given or made under any
enactment and any regulations orders and instruments made thereunder and
relating to the Demised Premises AND to permit the Landlord and all
persons authorised by it at all reasonable times (except in case of
emergency) to enter upon the Demised Premises to inspect the same for any
purpose in connection with any such notice order proposal licence consent
permission or direction
Appeals
15. At the reasonable request of the Landlord to make or join with the
Landlord in making any objection representation or appeal in respect of
any such notice order proposal or direction as aforesaid or any refusal of
or condition imposed under any such licence consent or permission as
aforesaid
Applications for Planning Permission
16. Not without the consent of the Landlord (such consent not to be
unreasonably withheld) to make any application for consent or permission
to carry out or commence any development (within the meaning of the
Planning Acts) on or by reference to the Demised Premises
Fulfillment of Conditions
17. Unless the Landlord shall otherwise direct to carry out before the
determination of the Term (however determined) any works (the carrying out
of which is otherwise permitted hereunder) required to be carried out in
or on the Demised Premises as a condition of any planning permission which
may have been granted to the Tenant during the Term
<PAGE>
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Purchase Notice
18. Not to serve any purchase notice under the Planning Acts requiring any
Local Authority to purchase the Tenant's interest in the Demised Premises
or any part thereof
Compensation
19. If the Tenant shall receive any compensation because of any restriction
placed upon the user of the Demised Premises or any part thereof under or
by virtue of the Planning Acts then if and when its interest hereunder
shall be determined under the power of re-entry herein contained or
otherwise forthwith to make such provision as is just and equitable for
the Landlord to receive its due benefit from such compensation unless the
compensation authority shall otherwise order
Assignment and Underletting
20.0 Not to assign underlet or otherwise part with or share possession of any
part of the Demised Premises (here meaning a portion only and not the
whole thereof) otherwise to a subsidiary (as defined by section 154 of the
Companies Act 1948) which shall occupy as licensee only and whose right of
occupation shall cease and determine with that of the Tenant
20.1 Not to part with possession (otherwise than by way of assignment or
underletting) or share possession of the whole of the Demised Premises
20.2 Not to assign the Demised Premises as a whole :-
(i) without the previous consent in writing of the Landlord which shall
not be unreasonably withheld in the case of an assignment to a
respectable and responsible assignee intending to use the Demised
Premises in accordance with the provisions hereof and
<PAGE>
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(ii) without first procuring the execution by the proposed assignee and
the delivery to the Landlord of a deed to be prepared by the
Solicitor of the Landlord at the cost of the Tenant containing a
covenant by the proposed assignee directly with the Landlord to pay
the Basic Rent and all other sums payable hereunder and to perform
and observe during the Term all the covenants (including this
covenant) by the Tenant and conditions contained in this Lease as if
they were repeated in the said deed mutatis mutandis and
(iii) (if such proposed assignee shall be a private limited liability
company and if the Landlord shall so require) without first
procuring the execution by at least two directors of satisfactory
standing or by an insurance company accepted by the Landlord and the
delivery to the Landlord of a deed to be prepared by the Solicitor
of the Landlord at the cost of the Tenant containing just and
several covenants as sureties for such proposed assignee in the same
terms mutatis mutandis as the covenants contained in Schedule G
hereto
20.3 Not to underlet the Demised Premises as a whole save at a full rack rent
without a premium nor without the previous consent in writing of the
Landlord which shall not be unreasonably withheld in the case of an
underletting to a respectable and responsible tenant intending to use the
Demised Premises in accordance with the provisions hereof
20.4 On the grant of any permitted underlease the Tenant shall obtain therein
and at all times thereafter enforce performance and observance of the
covenants on the part of the underlessee as follows :-
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(i) an absolute covenant not to assign underlet or otherwise part with
or share possession of any part of the sub-demised premises (here
meaning a portion only and not the whole thereof) or to part with
possession or share occupation of the whole thereof for all or any
part of the sub-term (otherwise than by way of assignment or
underletting)
(ii) a qualified covenant not to assign or underlet the whole of the
sub-demised premises without the licence in writing of the Landlord
(the grant of which shall be subject to the same provisos as
contained in this sub-clause)
(iii) a covenant that the underlessee will cause to be inserted in every
sub-underlease whether immediate or derivative covenants on the part
of the relevant sub-underlessee corresponding to the covenants
numbered (i) and (ii) above and that the underlessee will at all
times thereafter enforce the same
20.5 Notwithstanding anything herein contained the Tenant shall not create or
permit the creation of any interest derived out of the term hereby granted
howsoever remote or inferior upon the payment of a fine or premium or at a
rent less than the Basic Rent or the full market rent of the Demised
Premises obtainable without taking a fine or premium (whichever shall be
the greater) and shall not create or permit the creation of any such
derivative interest as aforesaid save by instrument in writing containing
such absolute prohibition as aforesaid on the part of the underlessee and
those that may derive title under such underlessee
Registration of Documents
21. Within one month after assignment or underletting or sub-underletting of
<PAGE>
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the Demised Premises or any devolution of any interest therein to give
notice thereof in writing to the Landlord or its Solicitors and to produce
to them the Assignment Transfer Counterpart Underlease sub-Underlease or
other instrument duly stamped under which such devolution shall have
occurred together with a copy of such instrument certified by a Solicitor
and pay to the Landlord's Solicitors the Registration Fee
User
22.1 To use and occupy the Demised Premises only for the Specified Use or for
any such other use as the Landlord may have permitted or specified in
writing pursuant to the paragraph of Schedule A headed "Open Market Rent"
(para 16) and for no other purpose whatsoever
22.2 Not to use the Demised Premises or any part thereof
(i) (save and except as may be herein expressly provided) for
residential purposes or as sleeping accommodation
(ii) for any noisy noisome offensive or dangerous trade art manufacture
business or occupation
(iii) for any illegal or immoral purpose
22.3 Not to use any part of the Demised Premises greater in area than the
Lettable Area specified in the Clause headed "Open Market Rent" in
Schedule A of this Lease without the prior written consent of the Landlord
Alterations
23. Not at any time during the Term to damage interfere with or make any
addition to or alteration in the Demised Premises or any party wall or any
service conduit duct apparatus or installation therein but nothing
<PAGE>
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herein contained shall prevent the Tenant with the prior written consent
of the Landlord (which shall not be unreasonably withheld) from erecting
or removing from time to time such temporary partitioning as may be
necessary for the reasonable occupation of the Demised Premises PROVIDED
ALWAYS that at the expiration or sooner determination of the Term the
Tenant shall at the request of the Landlord dismantle and remove all
temporary partitioning then in the Demised Premises and make good any
damage caused by the partitioning or its removal and Provided also that
nothing shall be done which reduces the Lettable Area
Advertisements
24. Not to exhibit affix to or display on or from the exterior of the Demised
Premises or of the external walls rails or fences any sign signboard
fascia placard lettering notice price label blind flag pennant sky-sign or
any advertisement of any kind whatsoever except such as shall have been
previously approved in writing by the Landlord (such approval not to be
unreasonably withheld) and in the event of any such approval being given
to observe the terms thereof and at the expiry or sooner termination of
the Term to remove every such thing so approved and to make good the
Demised Premises
Floor Loading
25. Not to impose (whether directly or indirectly or by using machinery or
otherwise) on any part of the floors ceilings or walls or of roof roof
trusses or the structure of the Building a load or weight greater than
that which the said floors ceilings or walls or roof roof trusses or
structure are designed or constructed to bear with due margin for safety
<PAGE>
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nor to cause or permit any undue vibration to the Demised Premises or the
Building by machinery or otherwise
Nuisance
26.0 Not to carry on upon the Demised Premises or any part thereof the business
to be carried on thereon in a noisy noisome offensive or dangerous manner
or do in or upon the Demised Premises or any part thereof any act matter
or thing which may in the opinion of the Landlord be or grow to be or
become a nuisance or annoyance or a disturbance to or to the prejudice of
the Landlord or its tenants or lessees or the owners lessees or occupiers
for the time being of any premises in the neighbourhood
26.1 For the purposes of subclauses 22.2 (ii) and 26.0 hereof any dispute or
difference of opinion shall be referred to an independent surveyor to be
appointed by the parties hereto or failing agreement by the President for
the time being of the Royal Institution of Chartered Surveyors to act as
an Arbitrator under the provisions of The Arbitration Acts 1950-1979
Auctions
27. Not at any time during the Term to hold any sale by auction to be held
upon the Demised Premises or any part thereof
Encroachments Etcetera
28. Not to stop up darken or obstruct any windows or other openings belonging
to the Demised Premises not to permit any encroachment or easement to be
made or acquired on or over the Demised Premises and that in case any
encroachment shall be made or acquired or attempted to be made or acquired
the Tenant will give immediate notice thereof to the Landlord and at the
request of the Landlord will adopt such means as may be reasonably
<PAGE>
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required or deemed proper for preventing any such encroachment or the
acquisition of any such easement
Let or Sale Boards
29. To permit the Landlord and any persons authorised by it to enter upon the
Demised Premises and affix and retain without interference upon some part
or parts thereof (but not so as to obstruct the access of light and air to
the Demised Premises) notice for reletting or selling the same and to
permit all persons with authority from the Landlord at all reasonable
hours during the day time upon prior appointment to enter and view the
Demised Premises
Pollution
30.1 To take such measures as may be necessary to ensure that any effluent
discharged from the Demised Premises into the drains or sewers which
belong or are used for the Demised Premises whether or not in common with
other premises will not be corrosive or in any way harmful to the said
drains or sewers or cause any obstruction or deposit therein and to keep
all pipes watercourses gullies and drains belonging to the Demised
Premises properly flushed cleansed and free from obstruction and if any
such obstruction shall occur forthwith to remove the same and make good
any damage caused thereby whether to the structure of the Demised Premises
or otherwise and to indemnify the Landlord against any reasonable claims
arising from damage caused by such obstruction to adjoining or
neighbouring premises
30.2 Not to discharge or allow to be discharged from the Demised Premises any
fluid or anything of a poisonous or noxious nature of a kind that might
<PAGE>
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or will contaminate or pollute the air or water and to indemnify the
Landlord against any claims arising from damage caused by such
contamination or pollution
30.3 To take at all times throughout the Term all such steps as are necessary
and proper to prevent the emanation from the Demised Premises of noise
fumes heat or excessive vibration especially but not only where such
emanation will or might be to the detriment of the Landlord or any other
owners or occupiers of the adjoining or nearby lands
Repair of Adjoining Premises
31.1 To permit agents or workmen with or without plant or machinery engaged or
authorised by the Landlord to enter and remain upon the Demised Premises
at all reasonable times on seven days previous written notice (except in
case of emergency) so far as may be necessary or useful in order to build
walls (including the building or repair of party walls) or to stop up any
openings in walls dividing the Demised Premises from other parts of the
Development or any adjoining or contiguous premises or to repair or
rebuild any part of the Development or any adjoining or contiguous
premises belonging to the Landlord or to cleanse lay re-lay maintain renew
empty or repair any of the sewers drains conduits gutters watercourses
pipes cables wire machinery equipment apparatus and mains belonging to the
same and for all purposes connected with the Landlord's obligations
hereunder the Landlord doing as little damage as reasonably practicable
and making good as soon as reasonably possible all damages to the Demised
Premises or any chattels thereon occasioned by the exercise of such rights
and causing as little interference as is reasonably possible to
<PAGE>
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the Tenant's use of the Demised Premises during the time that such work is
being carried out
31.2 In case any dispute or controversy shall at any time or times arise
between the Tenant and the tenants or occupiers of any adjoining or
contiguous premises belonging to the Landlord the same shall from time to
time be settled and determined by the Landlord's Surveyor who shall act
reasonably in such manner as it in writing shall direct in that behalf to
which determination the Tenant shall from time to time submit and which
determination shall be conclusive and binding upon the Tenant
Cost of Notices
32. To pay all costs charges and expenses (including Solicitors' costs and
Surveyors' fees) incurred by the Landlord for the purpose or in
contemplation of or incidental to the preparation and service of a notice
under Section 146 or 147 of the Law of Property Act 1925 requiring the
Tenant to remedy a breach of any of the covenants herein contained
notwithstanding forfeiture for such breach shall be avoided otherwise than
by relief granted by the Court or the preparation and service of any
notice or schedule relating to want of repair of the Demised Premises and
whether served during or after the determination of the Term or for the
purpose or in contemplation of or incidental to all applications by the
Tenant for any consent of the Landlord required by this Lease and also the
proper and reasonable legal charges and the Landlord's Surveyors' fees
actually incurred by the Landlord in cases where consent is refused or the
application is withdrawn
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Cost of this Lease
33. To pay to the Landlord's Solicitors their solicitors charges for the
preparation of this Lease and the Counterpart thereof and any renewal or
renewals thereof and the Stamp Duties thereon
Indemnity - Encumbrances
34. By way of indemnity only and only in so far as the same are still
subsisting and capable of taking effect and affect the Demised Premises at
all times hereafter to duly observe and perform the matters (if any)
referred to in Part IV of Schedule B hereto and to keep the Landlord
effectually indemnified against all actions proceedings costs claims and
demands in respect thereof or any of them
Indemnity - breaches
35. To pay and make good to the Landlord all reasonable costs and expenses
including professional fees incurred by the Landlord in connection with
all and every loss and damage whatsoever incurred or sustained by the
Landlord as a consequence of every breach non-performance or
non-observance of the covenants by the Tenant herein contained or implied
and the conditions herein contained and on the part of the Tenant to be
complied with and to indemnify the Landlord from and against all actions
claims liabilities costs and expenses thereby arising
PROVIDED that such indemnity shall be deemed (a) to extend to and cover
all reasonable costs and expenses incurred by the Landlord in connection
with any steps which the Landlord may take to remedy any breach of
covenant by the Tenant herein contained or failure of the Tenant to
observe and perform any covenant condition or obligation on the part of
the Tenant herein contained or implied and (b) to be without prejudice to
<PAGE>
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any rights or remedies of the Landlord hereunder in respect of any and
every such breach non-performance or non-observance
Indemnity - use and occupation
36. To keep the Landlord fully and effectually indemnified at all times and
the Tenant hereby indemnifies the Landlord accordingly against all costs
claims liabilities actions and expenses (whether alleged or demanded by
the owners or occupiers of any adjoining or neighbouring properties or
other parties) arising through the use or occupation of the Demised
Premises the existence of any article in or about the Demised Premises or
the execution or omission of any works upon the Demised Premises
Regulations
37. At all times to observe and perform any regulation reasonably made by the
Landlord and notified to the Tenant in writing governing the good order
and management of any premises of which the Demised Premises form part and
to ensure that the same are made known to and are complied with by the
Tenants employees visitors and sub-tenants
<PAGE>
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SCHEDULE E
Landlord's Covenants (Clause 5)
Insurance
1.1 To keep the Demised Premises insured against the Insured Risks to the full
cost of their reinstatement and in the event of the Demised Premises being
destroyed or damaged by any of the Insured Risks during the Term forthwith
(as soon as the necessary labour materials and permits are obtained) to
rebuild or reinstate the same and to lay out in or towards such rebuilding
or reinstating in a good and substantial manner all monies received under
or by virtue of any insurance effected thereon (other than monies received
in respect of loss of rents) and all such further sums of money as shall
be requisite in rebuilding and reinstating the Demised Premises
1.2 To provide the Tenant with particulars of the Policy of insurance from
time to time effected by the Landlord under the provisions of Clause 1.1
hereof as the Tenant may require to inform themselves of the nature and
extent of the cover provided thereby and to notify the Tenant of any
proposed modification in or addition to the terms and condition of such
policy forthwith following the Landlords decision to effect such
modification or addition or the intimation by the insurers of the making
by them of such modification or addition
Quiet Enjoyment
1.3 That the Tenant paying Basic Rent and the further rents hereby reserved
and observing performing the Tenant's covenants herein contained shall and
may peaceably hold and enjoy the Demised Premises during the term without
any interruption or disturbance from or by the Landlord or any person
lawfully claiming through under or in trust for it
<PAGE>
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SCHEDULE F
Part I - Agreements and Declaration between the parties (Clause 6)
Re-entry
1. If the Basic Rent and the further rents hereby reserved or any part
thereof shall at any time be in arrear and unpaid for twenty-eight days
after the same shall have become due (whether any formal or legal demand
therefor shall have been made or not) or if there shall be any breach of
any of the covenants conditions or agreements herein contained and on the
part of the Tenant to be performed and observed or if the Tenant or other
person or persons in whom for the time being the said term shall be vested
or the Surey (being an individual or individuals) or any of them shall
become bankrupt or have a receiving order made against him her or them or
make any arrangement or composition with or for the benefit of his her or
their creditors or suffer any execution to be levied on the Demised
Premises or if the Tenant or the Surety being a company shall enter into
liquidation whether compulsory or voluntary (not being merely a voluntary
liquidation for the purpose of amalgamation or reconstruction) or suffer
any execution to be levied on the Demised Premises then and in such case
it shall be lawful for the Landlord or any person or persons duly
authorised by the Landlord in that behalf into or upon the Demised
Premises or any part thereof in the name of the whole to re-enter
peaceably to hold and enjoy thenceforth as if this Lease had not been made
without prejudice to any right of action or remedy of either party against
the other in respect of any antecedent breach of any covenant or condition
herein contained
<PAGE>
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Notices
2. Any notice required to be given or served under this Lease and not
otherwise provided for shall be served or deemed to be served on the
Tenant if served in accordance with Section 196 of the Law of Property Act
1925
Suspension of rent
3. In case the Demised Premises or any part thereof shall at any time be
destroyed or so damaged by any of the Insured Risks as to be unfit for
occupation or use then and in any such case (unless the insurance of the
Demised Premises shall have been vitiated by the act neglect default or
omission of the Tenant) the rents hereby reserved or a fair and just
proportion thereof according to the nature and extent of the damage
sustained shall be suspended and cease to be payable until the Demised
Premises shall have been rebuilt or reinstated and made fit for use and
occupation or for a period not exceeding three years (whichever shall be
shorter) and such proportion in case of disagreement shall be referred a
single arbitrator to be appointed by the parties hereto but failing
approval to be appointed by the President for the time being of the Royal
Institution of Chartered Surveyors on the application of either party
above in accordance with and subject to the provisions of the Arbitration
Acts 1950 to 1979
Acceptance of Rent
4. Notwithstanding the acceptance of or demand for rent by the Landlord or
its agent with knowledge of a breach of any of the covenants on the part
of the Tenant herein contained the Landlord's right to forfeit this Lease
on the ground of such breach shall remain in force AND the Tenant shall
<PAGE>
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not in any proceedings for forfeiture be entitled to rely upon any such
acceptance or demand as aforesaid as a defence PROVIDED THAT this
provision shall have effect in relation only to any acceptance of or
demand for rent made during such period (if any) as may in all the
circumstances be reasonable for enabling the Landlord to conduct any
negotiations with the Tenant for remedying the breach which shall have
been commenced by either party upon the Landlord becoming aware of the
said breach
Statutory Compensation
5. Except to the extent that any statutory provision prohibits the Tenant's
right to compensation being reduced or excluded by agreement the Tenant
all not be entitled to claim from the Landlord on quiting the Demised
Premises or any part thereof any compensation under the Landlord and
Tenant Act 1954 or any statute modifying or re-enacting the same
Exclusion of any Warranty of Fitness
6. Neither the granting of this Lease nor any provision herein contained
shall operate or be construed as warranting that the use to which the
Tenant proposes now or hereafter to put the Demised Premises or any use to
which (whether subject to conditions or not) the Tenant may be at liberty
or may be required under the provisions of this Lease to put the Demised
Premises is or may be or become legally permitted whether under the
provisions of the Planning Acts or otherwise
Party Walls
7. Each and every wall separating the Demised Premises from any adjoining
Premises of the Landlord shall be deemed to be a party wall severed
medially
<PAGE>
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Interest on Arrears etc
8. If the Basic Rent or any other sum payable by the Tenant to the Landlord
under this Lease shall not be paid to the Landlord within fourteen days of
the same being due and whether or not demanded the Tenant shall pay to the
Landlord with any such sums (but without prejudice to all or any rights or
remedies of the Landlord hereunder) interest thereon at the Prescribed
Rate calculated on a day to day basis from the date the same became due
and payable down to the date of payment or re-imbursement by the Tenant
and the aggregate amount for the time being so payable shall at the option
of the Landlord be recoverable by action or as rent in arrear
Set Off
9. The Tenant shall not be entitled to set off any counterclaim or exercise a
right of retention against rent unless the existence and maturity of such
claim have been accepted by the Landlord or are established by a final
decision of a Court or an arbitrator
Rent Review Waivers and Consents
10. In the event of the Landlord specifying any waiver or consent under the
Clause headed "Open Market Rent" in Schedule A of this Lease which the
Landlord is willing to make or give any covenant to which such waiver or
consent relates shall thereafter be modified accordingly as from the
Relevant Review Date
<PAGE>
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SCHEDULE F
Part II - Provisions re Services
Service Charge
1. The Tenant hereby agrees and covenants with the Landlord that it will pay
by way of further rent a service charge contribution in accordance with
the following paragraph of this Schedule (together with any Value Added
Tax due and payable thereon) such contribution to be such proportion of
the total service charge for the Development as the Landlord's Surveyor
shall from time to time conclusively determine during the Term to be
properly attributable to the Demised Premises
Provisions as to Service Charge
2.0 The total service charge shall be the aggregate of :-
(a) The reasonable cost to the Landlord of the provision by it of the
services and matters mentioned in paragraph 4 of this Schedule
during the relevant year (due allowance being made where any
expenditure is met out of the reserve hereinafter mentioned) and
(b) A reasonable sum being the annual depreciation over a fair and
proper period (to be conclusively determined by the Landlord's
Surveyor) of all the capital plant and equipment used in or for the
provision of such services and
(c) All other reasonable expenditure incurred by the Landlord as
mentioned in paragraph 4 of this Schedule during the relevant year
PROVIDED THAT the Landlord may in its discretion include in any year a sum
which the Landlord's Surveyor determines to be reasonable by way of
reserve against anticipated future expenditure on the said services such
determination to be conclusive
<PAGE>
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2.1 The Tenant shall pay to the Landlord on account of the annual service
charge contribution on each quarter day in advance such a sum as shall in
the discretion of the Landlord be demanded by it not exceeding one equal
fourth part of the anticipated annual service charge contribution for the
current year to be determined by the Landlord's Surveyors
2.2 At the end of each year the Landlord shall as soon as practicable within
the following three months cause an account to be prepared of the total
service charge for that year and send a copy thereof to the Tenant
together with a statement showing the annual service charge contribution
payable by the Tenant and the amount paid on account by the Tenant in such
year. Any difference due from the Tenant shall be paid to the Landlord
within fourteen days of the receipt of such statement (whether or not the
same is received within or after the expiration of the said period of
three months) and any balance due to the Tenant shall be allowed against
the next payment on account of service charge contribution due from it
2.3 For the purpose of this Schedule "year" shall mean the period of twelve
months from the First day of January to the next ensuing Thirty-first day
of December (both dates inclusive and insofar as the annual service charge
contribution has to be calculated for any period other than a year or a
payment on account for any period other than a quarter the same shall be
calculated by apportionment on a daily basis
2.4 The certificate of the Landlord's Surveyor as to the total service charge
and the service charge contribution due from the Tenant in any year shall
be final and conclusive as between the Landlord and the Tenant
<PAGE>
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Landlord's covenant to provide services
3.0 The Landlord hereby covenants with the Tenant that subject to payment by
the Tenant of the Basic Rent and the further rents herein reserved and
provided that the Tenant has complied with all the covenants and
obligations on the part of the Tenant to be performed and observed to use
its best endeavours to provide the services specified in the next
following paragraph
3.1 Provided that in the provision of such services the Landlord shall act in
all respects in a reasonable manner for the benefit of the Lessees of the
Development
Services
4.0 The maintenance amendment repair renewal cleansing decorating and
otherwise keeping in good and tenantable condition of :-
(a) the Common Parts and
(b) the boundary walls fences and gates of and within the curtilage of
the Development
4.1 The repair renewal replacement cleansing and maintenance in good working
order and repair of the equipment apparatus and appliances (if any) in the
Common Parts including (without prejudice to the generality of the
foregoing) the watercourses channels pipes drains sewers cables wires
meters ducts and other conducting media the electrical installation and
light fittings
4.2 Any lighting to Common Parts
4.3 Grassing and tending and keeping tidy and planting with such flora trees
and shrubs as the Landlord shall deem to be appropriate the landscaped
areas on the Development
<PAGE>
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4.4 Providing maintaining renewing replacing repairing and keeping in good
order and condition all installations appurtenances appointments fixtures
fittings bins receptacles tools appliances materials and other things
which the Landlord may deem desirable or necessary for the maintenance
upkeep or cleanliness of the Development and the supply of services to the
Development
4.5 Employing and determining (as and when the Landlord considers it
expedient) the employment of such agents managers contractor and staff as
the Landlord may at its absolute discretion deem desirable or necessary to
enable or assist it to provide the said services or any of them and for
the general conduct management and security of the Development and all
parts thereof and to pay all incidental costs fees compensation premiums
and other expenditure in relation to such employment (including but
without limiting the generality of such provision) payment in respect of
the statutory and such other insurance health pension welfare and other
payments contributions compensation claims or liability of any kind and
premiums as the Landlord may at its absolute discretion deem desirable or
necessary and the provision of uniforms working clothes and other
equipment for the proper performance of their duties the rental value of
any caretaker's accommodation within the Development and the cost of
providing the same and any other accommodation provided by the Landlord
for management purposes and the expenses incurred from time to time in the
management of the Development
4.6 Paying all rates taxes charges assessments impositions and other outgoings
payable by the Landlord in respect of the Common Parts of the Development
<PAGE>
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except insofar as the Tenant or any other occupier of the Development may
be liable for the same under the terms of this or their lease or
occupation
4.7 Keeping the Common Parts insured upon similar terms (including the
Landlords covenant to reinstate) as those set forth in this Landlords
covenant headed "Insurance" (Clause 1.1 of Schedule E)
4.8 Taking all steps reasonably deemed desirable or expedient by the Landlord
for complying with making representations against or otherwise contesting
the incidence of the provisions of any legislation or orders or statutory
requirements thereunder concerning employment town planning public health
highways streets drainage or other matters relating to or alleged to
relate to the Development for which the Tenant is not directly liable
hereunder
4.9 Re-marking as required the car and lorry parking spaces loading bays and
turning areas (if any)
4.10 If the Landlord reasonably considers it expedient removing from the
Demised Premises to a central collection point all usual refuse and
rubbish
4.11 As and when the Landlord shall in its absolute discretion consider it
appropriate enforcing or attempting to enforce against :-
(a) Any other tenant of the Development the observance of any covenant
in that tenant's lease the non-observance of which is or may be
detrimental to the Landlord or the Tenant or any of the other
tenants of the Development and
(b) Any owner or occupier of adjoining or neighbouring premises the
payment of any contribution towards anything used in common with the
Development
4.12 Paying a contribution towards the expense of repairing renewing and
maintaining
<PAGE>
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all ways roads pavements sewers drains pipes watercourses party walls
party structures party fences walls or other conveniences which may belong
to or be used by the occupiers of the Development in common with others
and in common with other premises near or adjoining thereto and not
forming part of the Demised Premises
4.13 Executing any works as are or at any time during the term shall under or
by virtue of any enactment for the time being in force or by any Local or
other competent Authority be directed or required to be done or executed
in respect of the Development and for which none of the occupiers of the
Development are liable
4.14 The general supervision and management of, the Development and the
Landlord's interest therein by the Landlord or its Agent
4.15 The costs and expenses of preparing and supplying the accounts and
statements mentioned in paragraph 2 of this Part of this Schedule and the
costs and expenses of the Landlord's Surveyor in exercising any of his
functions under this Schedule
4.16 The preparation and supply of copies of regulations made by the Landlord
under the foregoing provisions hereof and copies of all amendments or
additions made from time to time thereto
Savings
5.0 The Landlord shall not be liable to the Tenant for any defects or want of
repair unless and until the Landlord has had notice thereof
5.1 The Landlord may from time to time reasonably withhold add to extend vary
reduce or make any alterations in the rendering of the services aforesaid
or any of them in any manner and to any extent that the Landlord deems
desirable in the interest of good estate management but so that the use
and enjoyment
<PAGE>
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of the Demised Premises shall not be prejudiced or adversely affected
5.2 The Tenant shall have no claim against the Landlord arising out of or in
respect of the failure of the Landlord to provide any of the said services
by reason directly or indirectly of circumstances outside the reasonable
control of the Landlord and in particular (but without prejudice to the
generality of the foregoing) by reason directly or indirectly of any act
of God or of third parties or any strike lockout or labour dispute or any
shortage of labour fuel water gas electricity or other supplies or of any
material or other defect or breakdown arising in or occuring to any part
of the service installations or other equipment in the Development used
for or in connection with the furnishing of any service
5.3 The Landlord shall not be responsible for or incur any liability in
respect of :-
(a) Any damage to any person or property by reason of any defect in the
structure of any part of the Development other than any such defect
comprised within the proviso to Clause 6.1 of Schedule D hereof or
by reason of the defective working stoppage or breaking of any
machinery power or appliance in connection therewith other than for
any which may be caused by reason of any act neglect default or
misfeasance or nonfeasance of the Landlord or of any servant or
employee or agent of the Landlord or by reason of any breach of any
obligation herein contained whether expressed or implied
(b) Any loss or inconvenience which may be occasioned by any delay or
want of supply of water (including heated water) electric current
gas or other fuel or conditioned air caused by any service
installation
<PAGE>
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or other equipment connected with the supply thereof being defective
or out of repair or by the closing down or temporary withdrawal from
use of any service installations or boiler or other services
equipment for periodic inspection repairs or other necessary
purposes
(c) The act or default of any Caretaker or any other servant or agent of
the Landlord or of any other tenant or any servant or agent of any
other tenant or any servant or agent of any other tenant or occupant
of the Development nor for any loss occasioned by theft negligence
of such servants or otherwise
(d) Any telegram letter parcel or property which may be left with or
entrusted to any Caretaker or any other servant of the Landlord or
for the act or default of any such person or anything arising
therefrom
<PAGE>
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SCHEDULE G
Surety's Covenant (Clause 7)
1. The Tenant will throughout the Term pay the rents and all increases
therein reserved (whether such increases are effected in accordance with
Schedule G hereto or as otherwise agreed or settled between the Landlord
and the Tenant) and made payable by this Lease in the manner and at the
respective times herein appointed for payment and shall observe and
perform all the covenants provisions and conditions on the part of the
Tenant herein contained AND FURTHER the Surety covenants to pay and make
good to the Landlord on demand all losses costs damages and expenses
occasioned to the Landlord arising out of or by reason of the default of
the Tenant in respect of any of the said covenants provisions and
conditions AND that any neglect or forbearance on the part of the Landlord
in enforcing or giving time (a) for payment of the Basic Rent (and other
rents) and all increases therein or any part thereof or (b) the observance
or performance of any of the said covenants provisions and conditions
shall not release the Surety from its ability under the covenant or
guarantee on its part contained in this Clause
2. That :-
(i) if the Tenant (being a Company) shall go into liquidation and the
Liquidator disclaim this Lease or
(ii) if the Tenant (being a Company) is dissolved or struck off the
register and the Crown disclaims this Lease or
(iii) if the Tenant (being an individual) becomes bankrupt and the Trustee
in Bankruptcy disclaims this Lease or
<PAGE>
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(iv) if this Lease shall be forfeited by the Landlord under the right or
power in that behalf contained or referred to herein the Landlord
may within three months following the disclaimer or forfeiture (as
the case may be) by notice in writing require the Surety to accept a
new Lease of the Demised Premises in their then actual state and
condition (and subject to any underlease or tenancy or other
interest created by the Tenant for the time being affecting the same
or any part thereof) for a term equivalent to the residue which if
there had been no disclaimer or forfeiture would have remained of
the Term at the rents last payable under the Lease and subject to
the said covenants provisions and conditions with the exception of
this sub-clause and the immediately preceding sub-clause And so that
if a disclaimer or forfeiture shall occur after the completion of a
rent review carried out in accordance with the provisions of
Schedule C to this Lease the Basic Rent to be reserved by the new
Lease shall be the Basic Rent last previously payable before the
disclaimer or forfeiture the new Lease and the rights and
liabilities thereunder to take effect as from the date of such
disclaimer or forfeiture (as the case may be) and in such case the
Surety shall pay the Landlord's Solicitors charges and disbursements
of and shall accept the new Lease and will execute and deliver to
the Landlord a Counterpart thereof
3. If and as often as the Landlord or the Tenant may by notice in writing to
require to sign the memorandum of the Basic Rent in accordance with the
provisions of paragraph 10 of Schedule G hereto
<PAGE>
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4. In the event of the Tenant being granted at the expiration of the Term a
new lease of the Demised Premises or any part thereof pursuant to the
provisions of the Landlord and Tenant Act 1954 or any other statute for
the time being in force the covenants aforesaid of the Surety shall apply
to such new lease to the same extent as they apply to this Lease
[GRAPHIC]
THE COMMON SEAL of PENSION )
FUNDS SECURITIES LIMITED was )
hereunto affixed in the )
presence of : )
/s/ [ILLEGIBLE] Director
/s/ [ILLEGIBLE] Secretary
THE COMMON SEAL of MINIPACK )
SYSTEMS LIMITED was hereunto )
affixed in the presence of : )
THE COMMON SEAL of TINSLEY- )
ROBOR GROUP P.L.C. was )
hereunto affixed in the )
presence of : )
CLF-63 (D1 & 2)
<PAGE>
EXHIBIT 10.75
DATED 16th June 1993
(1) ORLINWORTH PLC
(2) MESSRS T WALKER-ARNOTT & I RACKLEY
(3) CONDUIT COMMUNICATIONS LIMITED (Tenant)
(4) VERULAM INVESTMENTS LIMITED (Guarantor)
----------------------------------------
LEASE
- of -
Unit 17 Berghem Mews
Blythe Road London W14
----------------------------------------
FLADGATE FIELDER
Walgate House
25 Church Street
Basingstoke
Hants RG21 1QQ
Tel: (0256) 463044
Fax: (0256) 471600
<PAGE>
INDEX
Clause Headings Page
1. PARTICULARS
2. DEFINITIONS AND INTERPRETATION
3. DECLARATION BY RECEIVERS AND LEASE
3.1 Declaration
3.2 Demise
3.3 Rents
4. THE TENANT'S COVENANTS
4.1 To Pay Rent and Service Charge
4.2 Outgoings
4.3 Statutory Services
4.4 Interest on Arrears
4.5 Fit out Repair Decoration and Maintenance
4.6 Maintenance
4.7 to Maintain Party Walls
4.8 To Repair on Notice
4.9 To comply with statutory requirements
4.10 To Permit Entry
4.11 To Permit Disposal Board
4.12 Dealings
4.13 Registration of Dealings
4.14 Alterations
4.15 Advertisements and Signs
4.16 Plant Machinery and Apparatus
4.17 Gas and Electrical Installations
4.18 General Restrictions concerning use of
Demised Premises
4.19 Restrictions and Regulations concerning
use of Common Parts
4.20 Use of Demised premises
4.21 Not to Invalidate Insurance
4.22 Fire Requirements
4.23 Tenant's Insurances
4.24 Notices
4.25 As to the Planning Acts
4.26 To Preserve Easements
4.27 Costs
4.28 VAT
4.29 New Guarantor
4.30 Indemnity
4.31 Observe Third Schedule Matters
4.32 Interest during Breach of Covenant
4.33 Security
4.34 Information as to Keyholders
<PAGE>
5. LANDLORD'S COVENANTS
5.1 Quiet Enjoyment
5.2 To Insure
5.3 To Provide Services
6. PROVISOS
6.1 Landlord's Right to Forfeit Lease
6.2 Insolvency
6.3 Suspension of Rent in case if damage by Insured Risks
6.4 Determination on Destruction
6.5 Landlord to have Insurance Moneys on Frustration
6.6 Landlord's right to alter the Estate and Adjoining Property
6.7 No liability in damages
6.8 As to goods left on the Demised Premises
6.9 Compensation under 1954 Act
6.10 Exclusion of planning warranty
6.11 Service of Notices
6.12 Commission on Insurance
6.13 Exclusion of liability
7. ARBITRATION
8. JURISDICTION
9. GUARANTEE
10. BREAK RIGHT
FIRST SCHEDULE
Rights Benefitting the Demised Premises
SECOND SCHEDULE
Rights Excepted and Reserved
THIRD SCHEDULE
Matters to which the Demised Premises are subject
FOURTH SCHEDULE
Provisions for Rent Review
FIFTH SCHEDULE
The Service Charge
SIXTH SCHEDULE
Form of Guarantee
<PAGE>
LEASE
DATED 1993
1. PARTICULARS
[GRAPHIC]
1.1 The Landlord ORLINWORTH PLC
Registered Office : PO Box 55
Surrey Street London [Illegible]
1.2 The Receivers TIMOTHY WALKER-ARNOTT and IAIN
RACKLEY both of 12-20 Camomile
Street London EC3A 7PT
1.2.1 The Tenant CONDUIT COMMUNICATIONS LIMITED
whose registered office is at 12 Great
James Street London WC1N 3DR
1.2.2 The Guarantor VERULAM INVESTMENTS LIMITED whose
registered office is at 12 Great James
Street London WC1N 3DR
1.3 The Demised Premises Unit 17 Berghem Mews Blythe Road
London W14 shown edged red on Plans
No 1A and 1B
1.4 Date of Commencement 28th April 1993
of Term
[GRAPHIC]
1.5 Term 10 years
1.6 Expiry Date of Term 27 April 2003
1.7 The Rent (pound)49,200 per annum payable by equal
quarterly payments in advance on
the usual quarter days the first
payment for the period from the
16th May 1994 to the 23rd June 1994
to be made on the 25th March 1994
1.8 Review Dates The Rent is subject to review in
accordance with the provisions of
the Fourth Schedule on the 25th March
1998
1.9 The Insurance Rent Such sum as is referred to in clause 2.17
payable yearly in advance within 10 working
days of demand therefor
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1.10 The Permitted User A business use within Class B1 of the Town
and Country Planning (Use Classes) Order
1987 (as originally enacted)
1.11 The Service Charge (pound)8,440 per annum payable in
accordance with the provisions of the Fifth
Schedule to this Lease; the first payment
for the period from the 28 April 1993 to
the 24th March 1994 to be made on the
execution hereof
The Landlord's Account Year ends on the
31st March in each year
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[COPY MISSING]
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2.8.1 the entirety of the windows window-frames
roof-lights doors and door-frames (if any)
thereof (except for the external decorative
surfaces of any such window-frames and of
any door between such premises and the
internal common parts of the Building and of
the frame of any such door) and all glass
therein
2.8.2 the finishes (including plaster) on the
faces of any load-bearing or external walls
beams and columns within or enclosing such
premises (but not the remainder of such
walls beams or columns)
2.8.3 the inner surface of any non-load-bearing
walls separating such premises from other
internal parts of the Building (but not the
remaining half of such walls)
2.8.4 the whole of all internal non-load-bearing
walls within such premises
2.8.5 the ceilings and ceiling finishes of such
premises (but not the structural beams
joists or slabs above the ceilings)
2.8.6 the floors and floor finishes of such
premises (but not the structural beams or
joists or structural floor slabs supporting
the floors or on which floor finishes have
been laid)
2.8.7 all stairs situated entirely within such
premises and all other internal surfaces and
partitions therein
2.8.8 all water ventilation sanitary and
central-heating and air-conditioning plant
equipment and apparatus (if any) exclusively
serving such permises and other Landlord's
fixtures and fittings in such premises from
time to time
2.8.9 all Conduits exclusively serving the Demised
Premises whether or not within the same
2.8.10 all additions alterations and improvements
thereto which may be effected during the
Term
2.9 "the Lettable means the units or parts thereof within the
Premises" Mews which are intended to be let or are let
(including the Demised Premises)
2.10 "the Retained means all and every part of the Mews other
Premises" than the Lettable Premises
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2.11.1 "the Common means the access ways the access road paths
Parts" staircases roadways emergency exits
courtyards bin store area and other areas
within the Mews which do not form part of
the Lettable Premises and which are intended
for the passage of persons or vehicles or
for the common use and enjoyment of the
Landlord and the Tenants or occupiers of the
Lettable Premises
2.11.2 "the Internal means the entrance hall staircases landings
Common Parts" and all other parts of the Building
(if any) available for use by the Tenant and
other occupiers of the Building
2.12 "the Access Road" means the private road giving access to
Blythe Road
2.13 "Conduits" means sewers drains channels watercourses
gutters grooves pipes ducts wires cables and
other apparatus associated therewith and any
other conducting medium for the passage of
soil water gas electricity telephone
telecommunication and other services and
supplies
2.14 "the Term" means the term specified in item 1.5 of the
Particulars
2.15 "the Termination means the date of expiration or sooner
Date" determination of the Term
2.16 "the Rent" means the sums specified as the Rent in item
1.7 of the Particulars or such other sum as
shall for the time being be the Rent under
the provisions of the Fourth Schedule
2.17 "the Insurance Rent" means :
2.17.1 a fair and reasonable proportion (to be
determined by the Surveyor in his absolute
discretion) of the amount which the Landlord
expends for insuring the Mews against the
Insured Risks (and on the basis that the
Landlord will be entitled to full recovery
of the total amount expended in respect of
such insurance of the Mews from all the
tenants of the Lettable Premises if all the
Lettable Premises are let or occupied)
2.17.2 the additional cost of insuring or causing
to be insured any part of the Mews which is
reasonably attributable to the use or
occupation or any activity carried on upon
the Demised Premises
2.17.3 the cost of insuring against the risk of the
loss for the Loss of Rent Period of the Rent
and the Service Charge (and such loss of
rent insurance shall allow for and include
provision for
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reasonable and proper anticipated increases
in Rent and Service Charge from their
respective dates of review)
2.18 "the Insured means such of the following risks as may
Risks" from time to time be included in any policy
of insurance effected under the terms of the
Lease fire lightning explosion (so long as
such risks can be insured against with
United Kingdom insurance offices of repute
or at Lloyds of London) and such other risks
as the Landlord reasonably deems necessary
to insure against which shall include if the
Landlord reasonably deems appropriate at its
discretion
2.19 "the Service means the sum by way of additional rent
Charge" specified as the Service Charge in item 1.11
of the Particulars or such other sum (if
any) as shall for the time being the Service
Charge under the provisions of the Fifth
Schedule
2.20 "Requisite means a notice in writing to the Tenant
Notice" seven (7) days before any entry is made on
the Demised Premises PROVIDED THAT in the
case of an emergency such notice as may be
possible shall be given
2.21 "Interest" means
2.21.1 interest at the rate of 4% above Barclays
Bank PLC's Base Rate for the time being
(which interest rate shall still apply after
and notwithstanding any judgment of the
Court) payable from the date when the sum is
due in respect of the Rent and the Insurance
Rent and in the case of any other sum the
date of demand for the sum upon which
interest is to be paid to the Landlord in
each case until the date of payment to the
Landlord
2.21.2 In the event of the Base Rate of Barclays
Bank PLC (in this sub-clause called "Base
Rate") being abolished then any references
in this Lease to Base Rate shall have effect
as if there had been substituted from time
to time for Base Rate the base or nearest
equivalent rate of such other clearing bank
as shall from time to time be notified by
the Landlord to the Tenant in writing
2.22 "Person" includes a company corporation or other body
legally capable of holding land
2.23 "the Planning means the Town and Country Planning Act 1990
Acts" and any future legislation of similar nature
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2.24 "Decorate" means in a good and workmanlike manner and
to the reasonable satisfaction of the
Surveyor to prepare and paint with two coats
at least of good quality paint and to
prepare make good clean treat and restore
with paper varnish stain polish or other
suitable good quality decorative materials
all parts of the Demised Premises as are
usually so dealt with
2.25 "the Landlord's means and includes the Landlords workmen
Agents" servants agents lawful visitors mortgagees
prospective purchasers and lessees and all
other persons authorised by the Landlord
whose authorisation is evidenced in writing
to the Tenant if the Tenant reasonably
requests
2.26 "the Surveyor" means any person or firm appointed by the
Landlord (including an employee of the
Landlord or a Group Company of the Landlord)
to manage the Mews or to perform any of the
functions of the Surveyor under this Lease
whose appointment is evidenced in writing to
the Tenant if the Tenant reasonably requests
2.27 "the Loss of Rent means the period of three years calculated
Period" from the date upon which the Demised
Premises shall have been destroyed or so
damaged by any of the Insured Risks so as to
render them unfit for occupation and use
(including if applicable any period
subsequent to the Termination Date)
2.28 "Working Day" means a day upon which Clearing Banks in the
City of London are open for normal business
2.29 "the 1954 Act" means Part II of the Landlord and Tenant Act
1954
2.30 "Group Company" means a company which is within the same
group of companies as the Tenant or if a
holding company of the Tenant (being for
these purposes a company which owns more
than 50% of the issued share capital
directly or indirectly of the Tenant) or if
a subsidiary of the Tenant or such holding
company
2.31 Any reference to an Act of Parliament shall include any modification
extension or re-enactment thereof for the time being in force and
shall include all instruments notices order plans regulations consents
permissions and directions for the time being made issued or given
thereunder or drawing validity therefrom
2.32 The masculine includes the feminine and the singular the plural and
vice versa
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2.33 Where the Tenant or the Guarantor for the time being are two or more
persons obligations expressed or implied to be made by or with such
party are deemed to be made by or with such persons jointly and
separately
2.34 References to any right of the Landlord to have access to the Demised
Premises shall be construed as extending to any superior landlord and
any mortgagee of the Demised Premises and to all persons properly
authorised by the Landlord and any superior landlord or mortgagee
(including agents professional advisers contractors workmen and
others) whose authorisation is evidence in writing to the Tenant if
the Tenant reasonably requests
2.35 Any covenant by the Tenant not to do an act or thing shall be deemed
to include an obligation not to permit such act or thing to be done
and use its reasonable endeavours to prevent such act or thing being
done by a third party
2.36 The Terms "the parties" or "party" mean the Landlord and/or the Tenant
but except where there is an express indication to the contrary
exclude the Receivers and the Guarantor
2.37 References in this Lease to any clause sub-clause paragraph or
Schedule without further designation shall be construed as a reference
to the clause sub-clause paragraph or Schedule to this Lease so
numbered or lettered
2.38 Paragraph and schedule headings (if any) in and the front cover and
Index to this Lease shall be deemed not to form part of this Lease and
shall not be taken into account in the construction of interpretation
thereof
3. DECLARATION BY RECEIVERS AND LEASE
3.1 Declaration
The Receivers declare:
3.1.1 The Landlord charged the Mews by way of legal mortgage by a Legal
Charge dated 30th June 1987 and made between the Landlord (1) and
Gamlestaden Limited(2) and a further Legal Charge dated 15th November
1989 made between the Landlord (1) and Gamlestaden Plc (2) and under
the power conferred by those legal charges the Receivers were
appointed and powers of leasing delegated by a deed dated 15th June
1992 between Skandinaviska Enskilda Banken (1) Gamlestaden Plc (2) and
the Receivers (3)
3.1.2 The Receivers are acting for the Landlord in the grant of this lease
3.1.3 The Receivers are exercising the leasing powers conferred by the Law
of Property Act 1925 and otherwise
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3.2 Demise
THE LANDLORD LETS the Demised Premises to the Tenant TOGETHER WITH the
rights specified in the First Schedule BUT EXCEPT AND RESERVING the
rights specified in the Second Schedule from and including the Date of
Commencement of the Term for the Term SUBJECT TO and where applicable
with the benefit of the covenants and other matters specified in the
Third Schedule so far as they still subsist and are capable of being
enforced and relate to or affect the Demised Premises
3.3 Rents
THE TENANT PAYING yearly and proportionately for any fraction of a
year
3.3.1 First the Rent the Insurance Rent and the Service Charge at the times
and in the manner specified in items 1.7, 1.9 and 1.11 of the
Particulars respectively and
3.3.2 Secondly Interest which becomes due pursuant to clause 4.4 and all
other sums whatsoever as shall become payable by the Tenant to the
Landlord under the provisions of this Lease
ALL which payments are hereby reserved as rent
4. THE TENANT'S COVENANTS
THE TENANT COVENANTS WITH THE LANDLORD as follows:-
4.1 To pay Rent and Service Charge
To pay the Rent the Insurance Rent and the Service Charge at the times
and in the manner described in items 1.7, 1.9 and 1.11 of the
Particulars and without any deduction (except only such as a lessee
may by law be entitled to make notwithstanding any contract to the
contrary)
4.2 Outgoings
4.2.1 To pay all existing and future rates taxes assessments impositions and
outgoings assessed or imposed on or in respect of the Demised Premises
(whether assessed in imposed on the Landlord or the Tenant) except any
tax in respect of:-
4.2.1.1 the rents payable under this Lease
4.2.1.2 the grant of this Lease
4.2.1.3 any dealing disposal of deemed disposal by the Landlord or any
superior landlord with the reversion (whether immediate or not) to
this Lease
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4.3 Statutory services
To pay for all gas electricity and water consumed on the Demised
Premises including all meter rents in connection therewith and to
observe and perform all the terms and conditions of supply thereof
and to keep the Landlord indemnified in respect thereof
4.4 Interest on Arrears
If the Rent shall not be paid on the date when it is due or if the
Insurance Rent the Service Charge or other sums payable by the Tenant
to the Landlord under this Lease shall be due but unpaid for 21 days
to pay on demand to the Landlord (if the Landlord shall so require)
Interest Provided that this sub-clause shall not prejudice any other
right or remedy in respect of such money
4.5 Fit out Repair decoration and maintenance
4.5.1 Repair
At all times during the Term to repair and to keep the demised
Premises in good and substantial repair and condition save that:-
4.5.1.1 the Landlord will carry out and covenants with the Tenant so
to do at its own cost the items of work detailed in Annexure
"A" within 6 months of completion of this Lease to the
reasonable satisfaction of the Tenant's Surveyor
4.5.1.2 the Tenant shall not be liable to remedy the defects in the
demised premises and other areas detailed in Annexure "B"
nor to contribute towards the cost of any remedial works or
repairs so mentioned or arising from such defects
4.5.2 To decorate interior
4.5.2.1 to Decorate the interior of the Demised Premises during the fifth year
of the Term
4.5.2.2 to Decorate the interior of the Demised Premises in the last six
months of the tenth year of the Term
4.5.3 Repair and replace Landlord's fixtures and fittings
To repair or replace forthwith by articles of similar kind and quality
any fixtures fittings or equipment (other than Tenant's fixtures and
fittings) in the Demised Premises which shall become in need of repair
or replacement
4.5.4 To yield up
At the Termination Date to yield up the Demised Premises duly repaired
and decorated in accordance with the provisions of this clause 4.5 and
clear of any furniture equipment goods and refuse to remove every
moulding sign writing or painting of the name or business of the
Tenant or other occupiers (if any) and to make
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good all damage caused by the removal thereof and of the Tenant's
fixtures fitting furniture and effects to the Demised Premises
PROVIDED THAT:-
(a) all work referred to in this clause 4.5 shall be done with
good and suitable materials of their several kinds in a good
and workmanlike manner and to the reasonable satisfaction of
the Landlord's surveyor and in relation to external
maintenance and repair using such materials as may in the
reasonable opinion of the Surveyor be necessary or desirable
in order to maintain a high standard of maintenance and repair
to the Estate as a whole
(b) damage by any of the Insured Risks is excepted from the
Tenant's liability under this clause 4.5 save to the extent
that the whole or any part of the insurance money is
irrecoverable by reason of any act or default of the Tenant
its servants agents or lawful visitors and the Tenant fails to
make up the deficiency pursuant to clause 4.21.3 or by reason
of some limitation or condition properly imposed by the
insurers
(c) the Tenant shall pay the Landlord's proper legal and
surveyor's fees incurred as a result of any breach of this
clause 4.5
4.6 Maintenance
4.6.1 To keep the Conduits which solely serve the Demised Premises clear and
unobstructed
4.6.2 To keep clean both the interior and exterior faces of the windows and
any glass in the doors of the Demised Premises
4.7 To maintain party walls
To maintain at the equally shared expense of the Tenant and the
tenants of the adjoining Lettable Premises within the Building the
walls that divide the Demised Premises from the adjoining Lettable
Premises within the Building (if any) (which walls shall be deemed to
be party walls within the meaning of Section 38 of the Law of Property
Act 1925)
4.8 To repair on notice
4.8.1 To make good any defect in repair or decoration of the Demised
Premises for which the Tenant is liable in accordance with the
Tenant's covenants and of which the Landlord has given notice in
writing such making good to be commenced within a period of two months
from the date of the Landlord's notice (or sooner if considered
necessary by the Landlord or the Landlord's surveyor) and to be
completed as soon as reasonably possible
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4.8.2 If the Tenant shall not comply with clause 4.8.1 hereof the Landlord
may (but shall not be obliged to) enter the Demised Premises and make
good such defects and the proper expense of doing so (including
surveyor's or architect's fees) shall be repaid by the Tenant on
demand
4.9 To comply with statutory requirements
4.9.1 To execute all works and to do all things on or in respect of the
Demised Premises which are required by the Offices Shops and Railway
Premises Act 1963 the Fire Precautions Act 1971 the Health and Safety
at Work Act 1974 or any other present or future Act of Parliament and
at all times to keep the Landlord indemnified against all costs claims
demands and liability in respect thereof
4.9.2 To comply with all requirements of any present or future Act of
Parliament as to the use of or otherwise concerning the Demised
Premises
4.9.3 Upon receipt of any notice order proposal requisition direction or
other thing from any competent authority affecting or likely to affect
the Landlord's interest in the Demised Premises or the use thereof at
the Tenant's own expense forthwith to deliver to the Landlord a copy
of such notice order requisition direction or other thing AND at the
request and cost of the Landlord to make or join the Landlord in
making such reasonable representations in respect thereof as the
Landlord shall in its reasonable discretion deem expedient Provided
always that notwithstanding any other provision contained in this
Lease to the contrary the Landlord's consent shall not be unreasonably
withheld or delayed to any works required to be carried out pursuant
to this clause 4.9
4.10 To permit entry
To permit the Landlord and such of the Landlord's Agents as shall be
proper for the purpose at all reasonable hours upon Requisite Notice
and to the extent that such matters cannot reasonably be effected
without such entry to enter and remain upon the Demised Premises with
all necessary appliances for the purpose of:-
4.10.1 viewing and recording the condition of the Demised Premises and to
take schedules of dilapidations or of the Landlord's fixtures and
fittings
4.10.2 repairing maintaining altering or cleaning the Retained Premises or
the Mews
4.10.3 complying with any of its obligations or exercising any of its rights
under this Lease or for any other reasonable purpose connected with
the Demised Premises
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PROVIDED that the Landlord and the Landlord's Agents shall cause as
little damage or disturbance as is reasonably possible in exercising
such right and the Landlord shall as soon as is reasonably practicable
make good all damage to the Demised Premises and any fixtures and
fittings caused by such entry
4.11 To permit disposal board
4.11.1 During the last six months of the Term to allow a letting board or
notice to be displayed on the Demised Premises (unless the Tenant is
in course of renewing this Lease pursuant to the 1954 Act) and during
the Term to allow a sale board or notice to be displayed on the
Demised Premises (but not so that any board or notice unnecessarily
obstructs the light or access to the Demised Premises) and to allow
such of the Landlord's Agents as shall be proper for the purpose to
view the Demised Premises at all reasonable times by prior appointment
4.11.2 During the Term at all convenient hours in the daytime to permit all
prospective purchasers of or dealers in the Landlord's reversionary
interest by order in writing of the Landlord or the Landlord's Agents
to view the Demised Premises without interruption subject to Requisite
Notice being given
4.12 Dealings
4.12.1 The Demised Premises shall not be held on trust for another and there
shall not at any time be any assignment transfer sub-letting parting
with or sharing of possession or occupation of the whole or any part
of the Demised Premises (whether by the Tenant or any person deriving
title through or under the Tenant) PROVIDED THAT if all the following
relevant conditions of this clause 4.12 are complied with the
following transactions will be permitted with the previous consent in
writing of the Landlord which shall not be unreasonably withheld or
delayed:-
4.12.1.1 an assignment of the whole of the Demised Premises by the Tenant on
terms which comply with the conditions set out in clause 4.12.2
4.12.1.2 a sub-lease of the whole of the Demised Premises by the Tenant on
terms which comply with the conditions set out in clause 4.12.3
4.12.1.3 a sub-lease of part of the Demised Premises by the Tenant or by a
sub-lessee of the whole of the Demised Premises on terms which comply
with the conditions set out in clause 4.12.4
4.12.1.4 The Tenant or a permitted sub-lessee of the whole of the Demised
Premises being a company shall be entitled to share occupation of the
Demised Premises or any part thereof with a Group Company of the
Tenant or the permitted sub-lessee on condition that
(i) no tenancy is thereby created
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(ii) the Tenant shall give to the Landlord prior notice of such
occupation and written notice of the cessation of such
occupation within one month after such cessation and
(iii) any such occupation of the Demised Premises or any part
thereof shall cease upon the company in occupation ceasing
to be a Group Company of the Tenant or the permitted
sub-lessee as the case may be hereupon such company shall
forthwith vacate the Demised Premises or such part thereof
of which it is in occupation
4.12.2 On a permitted assignment of the whole of the demised Premises the
following conditions shall apply:-
4.12.2.1 the intended assignee shall covenant with the Landlord during the
residue of the Term to observe and perform all the covenants on the
part of the Tenant and the conditions contained in this Lease
4.12.2.2 if the intended assignee shall be a limited liability company then if
the Landlord shall reasonably so require there shall be provided a
guarantor or guarantors or a reasonable rent deposit sufficient in the
opinion of the Landlord (acting reasonably) for such company and
4.12.2.3 such guarantor or guarantors shall prior to such assignment (jointly
and severally if more than one) but with effect therefrom enter into
covenants with the Landlord in the form set out in the Sixth Schedule
4.12.3 On a permitted sub-lease of the whole of the Demised Premises the
following conditions shall apply:-
4.12.3.1 the sub-lease shall be granted without any fine or premium at a rent
not less than the open market rental value of the premises to be
sublet such rent being payable in advance on the days on which rent is
payable under this Lease
4.12.3.2 (if for a term of more than 5 years or for a term which bridges a Rent
Review Date under this Lease) the sub-lease will contain provisions
for the review of the rent reserved by such sub-lease on the basis and
on the date on which the Rent is to be reviewed in this Lease
4.12.3.3 the sub-lease will prohibit the sub-lessee from doing or allowing any
act or thing in relation to the sub-let premises inconsistent with or
in breach of the provisions of this Lease
4.12.3.4 the sub-lease will contain provisions for re-entry and forfeiture on
breach of any covenant by the sub-lessee
4.12.3.5 prior to any permitted sub-letting the Tenant will procure that the
sub-lessee enters into a direct covenant with the Landlord to observe
and perform the covenants on the part of the Tenant contained in this
Lease (other than as to the payment of the
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Rent) so far as the same are not inconsistent with the other
provisions of this clause 4.12.3
4.12.3.6 the sub-lease will contain an absolute prohibition against all
dispositions of or other dealings whatever with the premises sub-let
other than the following transactions with the Landlord's consent not
to be unreasonably withheld
(i) an assignment of the whole of the premises sublet on the
conditions set out in clause 4.12.2
(ii) a sub-letting of part of the Demised Premises on the
conditions set out in clause 4.12.4
4.12.4 On a permitted sub-lease of part of the Demised Premises the following
conditions will apply:-
4.12.4.1 the sub-lease will contain provisions identical to those listed in
sub-clause 4.12.3.1 to 4.12.3.4 above
4.12.4.2 the sub-lease will contain an absolute prohibition against all
dispositions of or other dealings whatever with the premises sub-let
other than with the previous consent in writing of the Landlord which
shall not be unreasonably withheld or delayed in the case of any
assignment of the whole of the premises sub-let which complies with
the conditions contained in clause 4.12.2
4.12.4.3 prior to any permitted sub-letting the Tenant will procure that the
sub-lessee enters into a direct covenant with the Landlord to observe
and perform the covenants on the part of the Tenant contained in this
Lease (other than as to the payment of the Rent and the Insurance Rent
and the Service Charge) so far as the same relate to the premises
sub-let and are not inconsistent with the other provisions of this
clause 4.12.4
4.12.5 The Tenant will enforce the performance and observance by every
sub-lessee of the provisions of every sub-lease and not at any time
either expressly or by implication waive any breach of the covenants
or conditions on the part of any sub-lessee or assignee of any
sub-lessee nor (without the consent of the Landlord such consent not
to be unreasonably withheld or delayed) vary the terms or accept a
surrender of any permitted sub-lease
4.12.6 Not to be party or privy to any agreement or arrangement for the
commutation in whole or in part of any annual rent to be reserved and
made payable by any sub-lease and no rent reserved by a sub-lease
shall be payable more than one quarter in advance Provided always that
this clause 4.12.6 shall not preclude the Tenant from agreeing with
any sub-lessee any rent-free period or period at a concessionary rent
as a term of the grant and acceptance of a sub-lease
4.12.7 To observe and perform all the obligations imposed on the Tenant as
sub-lessor under any sub-lease and to use all reasonable
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endeavours to ensure the due performance by any sub-lessee of all the
obligations under any sub-lease
4.12.8 Upon every application for consent required by this clause 4.12 to
disclose to the Landlord such information as to the terms of the
proposed transaction as the Landlord shall reasonably require in order
to satisfy itself that this clause 4.12 is being complied with
4.12.9 From time to time on reasonable demand during the Term to furnish the
Landlord with particulars of any derivative interest of or in the
Demised Premises including particulars of the rents payable in respect
thereof and such copy documents as the Landlord may reasonably require
in respect thereof
4.12.10 Not to grant any sub-lease for a term in excess of 5 years and not to
grant any sub-lease which is not excluded by agreement of the
sub-tenant from the security provisions of Part II of the 1954 Act
4.13 Registration of Dealings
4.13.1 Within twenty eight days after its date to provide the Landlord's
solicitors with a true copy of every assignment charge sub-lease or
document evidencing a devolution of this Lease the Demised Premises or
any part thereof paying a reasonable fee not being less than
(pound)30 plus Value Added Tax for each such registration
4.13.2 To include in every sub-lease of the Demised Premises or any part
thereof a covenant by the sub-lessee to register such documents as are
described in paragraph 4.13.1 with the solicitors for the Landlord
under this Lease in the manner described and to take all necessary
steps to enforce such covenant
4.14 Alterations
4.14.1 Not to erect any new or additional buildings or other structures upon
the Demised Premises
4.14.2 Not to make any alterations or additions to the structure or exterior
of the Demised Premises and not to puncture cut or pierce the
structural walls or floor slabs bounding or within the Demised
Premises and not to knock through to or unite the Demised Premises
with any adjoining unit in the Mews Provided that if the Tenant is
unable to accommodate pipe or cable runs within the vertical duct
provision of the Demised Premises then the Tenant shall be entitled to
create (subject to the Tenant obtaining the prior written consent of
the Landlord which shall not be unreasonably withheld or delayed) pipe
or cable runs vertically between the floors notwithstanding that such
alterations or additions may be of a structural nature
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4.14.3 Not to make any alterations or additions or to carry out any works in
or to the Demised Premises which in the reasonable opinion of the
Landlord may affect the efficient operation of the heating and
ventilating system and apparatus within the Demised Premises
4.14.4 Subject to the foregoing provisions of this clause not to make any
non-structural alterations or additions to the interior of the Demised
Premises or to alter or replace the entrance doors to the Demised
Premises or to affix any aerial or telecommunication dish to the
exterior of the Demised Premises except with the Landlord's written
consent (which shall not be unreasonably withheld or delayed) and (if
required by the Landlord) in accordance with drawings and
specifications previously submitted to and approved in writing by the
Landlord (such approval not to be unreasonably withheld or delayed)
4.14.5 The Tenant may carry out the erection alteration or removal of non
structural demountable partitioning without obtaining the consent of
the Landlord subject to
4.14.5.1 the submission of drawings to the Landlord prior to the commencement
of such work detailing the said alteration or removal and showing the
proposed layout after any such work is completed
4.14.5.2 the strict condition that such work will not and does not affect the
efficient or designed use operation and maintenance of the services in
or to the Demised Premises
4.15.5.3 an obligation to reinstate the Demised Premises at the Termination
Date to the state and condition in which the same were prior to such
erection alteration or removal (if so required by the Landlord)
4.14.5.4 the obtaining by the Tenant of all necessary consents whether
statutory or otherwise
4.14.5.5 all such works being carried out at the Tenant's sole risk
4.14.6 By the Termination Date if so required by the Landlord to reinstate
the Demised Premises to the same condition as they were in at the date
of the grant of this Lease such reinstatement to be carried out to the
reasonable satisfaction of the Landlord
4.15 Advertisements and Signs
4.15.1 Not to affix to or exhibit on the outside of the Demised Premises or
to or through any window of the Demised Premises any figure or letter
or any pole flag signboard advertisement inscription bill placard or
sign whatsoever
4.15.2 Within fourteen days of the occupation of the Demised Premises to
supply to the Landlord or the Surveyor full details of the
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Tenant's name and business for the purpose of the preparation by the
Landlord's contractor of a sign or signs to the Landlord's
specification to be placed in a position designated by the Landlord
and to reimburse to the Landlord on demand all costs incidental to the
making and installation of the same
4.16 Plant Machinery and apparatus
4.16.1 Not to install or use in or upon the Demised Premises any machinery or
apparatus which causes noise or vibration which can be heard or felt
in any adjoining unit or in the remainder of the Mews
4.16.2 Not to load or use the floors ceilings and structure of the Demised
Premises beyond its design capacity or in any manner which will cause
strain or damage thereto
4.16.3 To make good all damage caused to the Demised Premises by the
installation operation or removal of any plant machinery or apparatus
4.17 Gas and Electrical installations
4.17.1 Not to alter or extend the electrical or gas installations or
electrical wiring in the Demised Premises save in accordance with the
standards of the Institution of Electrical Engineers or the
Institution of Gas Engineers (as the case may be) and with the
Landlord's written consent such consent not be unreasonably withheld
or delayed
4.17.2 Not to use any apparatus which overloads the electrical or gas
installations in the Demised Premises
4.18 General restrictions concerning the use of Demised Premises
4.18.1 Not to use any part of the Demised Premises for the repair of machines
or apparatus of any kind or for any noxious noisy or offensive trade
or business nor for any illegal or immoral act or purpose nor for any
sale by auction nor for gaming and not to commit any nuisance or do
anything which may be or become a nuisance annoyance or inconvenience
or cause damage or disturbance to the Landlord or the lessees or
occupiers of the remainder of the Mews
4.18.2 Not to allow empty containers or rubbish or refuse of any description
to accumulate upon the Demised Premises and provide facilities within
the bin store within the Mews for the keeping of refuse in proper
receptacles readily accessible for collection by the public cleansing
department of the local authority and as regulated by the department
4.18.3 Not to discharge into any Conduit any deleterious matter or any
substance which might damage or be or become a source of danger or
injury to the drainage system of the Demised Premises or any other
property
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4.18.4 Not to allow any person to reside or sleep on the Demised Premises
4.18.5 Not to play or use any musical instrument loudspeaker tape recorder
gramophone wireless television set or other equipment which reproduces
music or speech in the Demised Premises so that it can be heard in any
adjoining unit or in the remainder of the Mews
4.18.6 Not to keep any live animal fish reptile or bird in the Demised
Premises
4.19 Restrictions and Regulation concerning use of Common Parts and
Internal Common Parts
4.19.1 Not to cause the Common Parts or the Internal Common Parts to become
untidy or in a dirty condition
4.19.2 Not to stand place deposit or expose outside any part of the Demised
Premises any goods materials articles or things whatsoever for display
or sale or for any other purpose nor cause any obstruction of the
Common Parts or the Internal Common Parts
4.19.3 To observe and perform such lawful regulations and directions as the
Landlord may from time to time make or give for the orderly and
convenient use and enjoyment and proper management of the Mews and in
particular but without prejudice to the generality of the foregoing
(i) to abide at all times by any regulations made by the
Landlord in respect of fire precautions relating to the
Demised Premises the building and the Mews and in respect of
means of escape from or through the Demised Premises and in
particular but without prejudice to the generality of the
foregoing to keep the staircases and emergency exits to the
building clear at all times
(ii) at all times to observe and perform all reasonable proper
and necessary restrictions and obligations from time to time
imposed by the Landlord in respect of the access road and to
keep the Landlord at all times fully and effectually
indemnified against all actions costs claims and demands for
which the Landlord may be liable arising from any act or
omission of the Tenant its servants agents or visitors in
respect of the access road or the use thereof
(iii) to comply at all times with any regulations or directions
from time to time made or given by the Landlord or the
relevant authority relating to the disposal of rubbish from
the Demised Premises and in particular (but without limiting
the generality of the foregoing) to clear rubbish at least
once a day from the Demised Premises and only to place
rubbish in such areas on the Mews securely
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fastened in suitable containers as may be designated for the
purpose leaving the said designated areas tidy at all times
4.19.4 Not to use the car parking space (if any) allocated by the Landlord
for the use of the Tenant otherwise than for the parking of a private
motor vehicle belonging to the Tenant or to the person for the time
being entitled to beneficial occupation of the Demised Premises its
employees or lawful visitors
4.19.5 Not to use any part of the underground car park or the access road for
the servicing or repair of any motor vehicle nor for the discharge of
fuel
4.19.6 Not to load or unload vehicles except in the part of the Mews
designated for such purpose by the landlord and in the course of such
loading or unloading:-
(i) to comply with all reasonable requirements and regulations
of the Landlord
(ii) not to cause any unnecessary obstruction nor allow any
vehicle to remain standing for any period longer than is
reasonably necessary for the delivering or taking away of
goods from the Demised Premises
4.19.7 Not to allow vehicles to obstruct access by other lessees of the
lettable premises to any part or parts of the lettable premises
4.19.8 At all times to act reasonably in relation to other users of the Mews
4.20 Use of Demised Premises
Not to use the Demised Premises or any part thereof otherwise than in
accordance with the provisions for use in item 1.10 of the Particulars
and not to use the same or any part thereof for any other purpose
without the previous written consent of the Landlord first having been
obtained such consent not to be unreasonably withheld
4.21 Not to invalidate insurance
4.21.1 Not to do anything which may prejudice any policy of insurance for the
time being in force in respect of any part of the Building or which
may result in such insurance becoming void or voidable or the rate of
premium under such insurances being increased (unless the Tenant pays
all additional premiums in respect thereof) and the Tenant will at all
times comply with all proper requirements of the insurers of the
Demised Premises whether the same relate to the Demised Premises or to
the use thereof or to any fixtures fittings equipment or chattel
whatsoever therein or thereon
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4.21.2 To repay to the Landlord on demand all sums paid by way of increased
premiums and all losses or damages suffered by the Landlord by reason
of any breach by the Tenant of clause 4.21.1
4.21.3 In the event of the Demised Premises or any thereof being destroyed or
damaged by any of the Insured Risks and the insurance money under any
insurance against the same effected thereon by the Landlord being
wholly or partly irrecoverable by reason solely or in part of a breach
by the Tenant of clause 4.21.1 then and in every such case to pay to
the Landlord forthwith (in addition to the Insurance Rent) the whole
or (as the case may require) a fair proportion of the monies so
rendered irrecoverable
4.21.4 In the event of the demised Premises or any part thereof being
destroyed or damaged by any of the Insured Risks to give written
notice thereof to the Landlord as soon as practicable but in any event
within two working days of such destruction or damage coming to the
notice of the Tenant
4.22 Fire requirements
At all times during the Term:-
4.22.1 to comply with all requirements from time to time of the appropriate
authority in relation to fire precautions affecting the Demised
Premises and
4.22.2 to provide install and maintain such suitable fire prevention and
extinguishing equipment to the standard required by the local
authority fire officer but not so as to oblige the Tenant to install
or pay for any water sprinkler or other similar system
4.23 Tenant's Insurances
4.23.1 To maintain in force throughout the Term adequate and sufficient
insurance in respect of the Demised Premises against liability to
third parties for injury to or death of any person or damage to any
property
4.23.2 To produce to the Landlord on request the policy relating to any
insurance specified in paragraph 4.23.1 or details thereof and
evidence of payment of the current premium and to discharge any
premium payable in respect thereof upon the same becoming due
4.23.3 To indemnify the Landlord in respect of any loss or damage which the
Tenant is obliged to insure against under this sub-clause
4.24 Notices
4.24.1 To supply the Landlord with a copy of any notice order or proposal for
a notice or order affecting the Landlord's interest in the Demised
Premises or the user thereof served on the Tenant by any competent
authority (or received by the Tenant from any sub-lessee) as soon as
reasonably practicable after it is
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received by the Tenant and without delay to take all reasonable or
necessary steps to comply with any such notice or order so far as such
compliance is within the Tenant's obligations hereunder
4.24.2 At the request and cost of the Landlord to make or join with the
Landlord in making such reasonable objections or representations
against or in respect of any such notice or order as the Landlord
shall reasonably require
4.25 As to the Planning Acts
In relation to the Planning Acts
4.25.1 not to do anything on or in connection with the Demised Premises the
doing of which shall be a contravention of the Planning Acts and to
indemnify the Landlord in respect thereof
4.25.2 to give notice forthwith to the Landlord of any notice order or
proposal for a notice or order served on the Tenant under the Planning
acts and if so required by the Landlord to produce the same and at the
request and cost of the Landlord to make or join in making such
reasonable objections or representations in respect of any such
proposal as the Landlord may reasonably require
4.25.3 to comply at the Tenant's own cost with any notice or order served on
the Tenant under the provisions of the Planning Acts and which relates
to the Tenant's use and occupation of the demised premises
4.25.4 not to make or permit to be made any application for planning
permission in respect of the Demised Premises or any part thereof
without the prior approval of the Landlord and not to implement any
planning permission or approval until the same has been submitted to
and approved by the Landlord provided that approvals to such
application and/or implementation shall not be unreasonably withheld
or delayed for alterations or other matters which are otherwise
authorised under this Lease
4.25.5 unless the Landlord shall otherwise direct the Tenant shall carry out
before the Termination Date any works stipulated to be carried out to
the Demised Premises subsequent to such date as a condition of any
planning permission which may have been implemented by the Tenant
during the Term
4.25.6 if the Tenant shall receive any compensation with respect to the
Tenant's interest hereunder because of any restrictions placed upon
the user of the Demised Premises under or by virtue of the Planning
Acts then if and when the Tenant's interest hereunder shall be
determined howsoever that event may occur except by effluxion of time
the Tenant shall forthwith make such provision as is just and
equitable for the Landlord to receive its due benefit from such
compensation
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4.25.7 not without the Landlord's previous consent in writing not to be
unreasonably withheld or delayed to enter into any agreement with any
competent authority regulating the development or use of the Demised
Premises
4.25.8 if and when called upon so to do to produce to the Landlord all such
plans documents and other evidence as the Landlord may reasonably
require in order to satisfy itself that the provisions of this clause
4.25 have been complied with in all respects
Provided always that notwithstanding any other provisions contained in
this Lease to the contrary the Landlord's consent shall not be
unreasonably withheld or delayed to any works required to be carried
out pursuant to this clause 4.25
4.26 To preserve easements
At all times to afford to the Landlord such reasonable facilities and
assistance at the cost of the Landlord as may be reasonably necessary
to enable the Landlord to prevent anyone acquiring any right of light
or other easement over the Demised Premises
4.27 Costs
To pay to the Landlord all proper costs charges and expenses
(including bailiff's commission and professional adviser's costs and
fees) incurred by the Landlord or any superior landlord
4.27.1 In or in bona fide contemplation of any proceedings under Sections 146
or 147 of the Law of Property Act 1925 including the preparation and
service of notices thereunder (notwithstanding forfeiture is avoided
otherwise than by relief granted by the Court)
4.27.2 In the preparation and service at any time during or within six months
after the Termination Date of a Schedule of Dilapidations accrued at
any time during the Term
4.27.3 In connection with any breach of covenant by or the recovery of
arrears of rent due from the Tenant hereunder
4.27.4 In respect of any application for consent required by this Lease
whether or not such consent be granted (except where such consent may
not under the terms hereof or by statute or statutory instrument be
unreasonably withheld but is so unreasonably withheld or is proffered
subject to unreasonable qualification or condition)
4.28 VAT
4.28.1 To pay to the Landlord Value Added Tax at the rate for the time being
in force chargeable in respect of any taxable supplies (within the
meaning of Valued Added Tax Act 1983 or any
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statutory provisions amending or replacing the same) made by the
Landlord to the Tenant under the terms of or in connection with this
Lease and in every case where the Tenant covenants to pay an amount of
money under this Lease such amount shall be regarded as being
exclusive of all Value Added Tax which may from time to time be
legally payable thereon
4.28.2 To the extent that any payments made by the Tenant to the Landlord
hereunder are recoverable in the same manner as if they were rent then
any Value Added Tax payable by the Tenant thereon shall also be
recoverable in the same manner as if it were rent
4.28.3 In every case where the Tenant has agreed to reimburse the Landlord in
respect of any taxable supplies made to the Landlord under the terms
of or in connection with this Lease (where such taxable supplies do
not in turn constitute or form part of taxable supplies made by the
Landlord to the Tenant to which clause 4.28.1 applies) then the Tenant
shall also reimburse any Value Added Tax paid by the Landlord on such
payment save to the extent that such Value Added Tax is recoverable by
the Landlord
4.29 New Guarantor
Within twenty working days of the death during the Term of any person
who has or shall have guaranteed to the Landlord the Tenant's
obligations contained in this Lease or of such person becoming
bankrupt or having a Receiving Order made against him or being a
Company passing a Resolution to wind up or entering into liquidation
or having a receiver or administrative receiver appointed then to give
notice thereof to the Landlord and if so required by the Landlord at
the expense of the Tenant within three months to procure some other
person sufficient in the reasonable opinion of the Landlord to execute
a guarantee in respect of the Tenant's obligations contained in this
Lease in the form set out in the Sixth Schedule
4.30 Indemnity
To be responsible for and to keep the Landlord fully indemnified
against all damage damages losses costs expenses actions demands
proceedings claims and liabilities made against or suffered or
incurred by the Landlord arising directly or indirectly out of:
4.30.1 any act omission or negligence of the Tenant or any persons at the
Demised Premises expressly or impliedly with the Tenant's authority or
4.30.2 any breach or non-observance by the Tenant of the covenants conditions
of this Lease
4.31 Observe Third Schedule matters
To observe and perform the provisions of the documents specified in
the Third Schedule so far as the same affect the Demised Premises and
still subsist and are capable of being enforced and
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to indemnify and keep the Landlord indemnified in respect of all
liability arising from any failure by the Tenant so to do
4.32 Interest during Breach of Covenant
In the event of:-
4.32.1 There being any breach by the Tenant of the covenants on the Tenant's
part herein contained and
4.32.2 The Landlord having notified the Tenant in writing that by reason
thereof the Landlord will not for the time being accept any sums
(including the Rent and/or the Insurance Rent and/or the Service
Charge) payable by the Tenant under the provisions of this Lease then
and in every such case to pay the Landlord on demand Interest on the
amounts due to the Landlord (credit being given for any sums paid by
the Tenant and accepted by the Landlord as mesne profits) from the
date of the notice served by the Landlord in respect of such breach or
from the date when the particular sum fell due (whichever is the
later) until whichever is the earlier of either:
(i) the date of the acceptance by the Landlord of the sum due
or;
(ii) the date that such breach has been remedied and the Tenant
has so notified the Landlord in writing
4.33 Security
If the Tenant shall at any time be in possession of keys to the gates
giving access to the Mews to take all steps necessary to preserve the
security of the Mews and to keep the Landlord fully and effectually
indemnified in respect of any loss arising from any breach of this
sub-clause
4.34 Information as to keyholders
To ensure that at all times the Landlord has written notice of the
name home address and home telephone number of at least two keyholders
of the Demised Premises
5. LANDLORD'S COVENANTS
THE LANDLORD COVENANTS WITH THE TENANT as follows:-
5.1 Quiet Enjoyment
That as long as the Tenant pays the Rent the Insurance Rent and the
Service Charge and complies with the terms of this Lease the Tenant
may enjoy the Demised Premises and the right of way hereby granted
peaceably during the Term without any interruption by the Landlord or
any person lawfully claiming through under or in trust for the
Landlord
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5.2 To insure
5.2.1 Unless such insurance shall be vitiated by any act omission or default
of the Tenant or of anyone on the Demised Premises or the Mews
expressly or by implication with the Tenant's authority at all times
through the Term to effect insurance of the Mews:
5.2.1.1 in such reputable insurance office or with such reputable underwriters
and through such agency as the Landlord may from time to time decide
5.2.1.2 in the name of the Landlord and such other person as the Landlord may
reasonably require
5.2.1.3 for the following sums:
- such sum as the Landlord shall from time to time be advised by the
Surveyor as being the full cost of rebuilding and reinstatement of the
mews including architects' surveyors' and other professional fees
payable upon any applications for planning permission or other permits
or consents that may be required in relation to the rebuilding or
reinstatement of the mews the cost of debris removal demolition site
clearance any works that may be required by statute and incidental
expenses and
- the loss of Rent and Service Charge payable under this Lease from
time to time (in the case of the Rent allowing for such increases as
are referred to in clause 2.17.3) for the Loss of Rent Period
5.2.1.4 against damage or destruction by the Insured Risks to the extent that
such insurance may ordinarily be arranged for properties such as the
Mews and subject to such excesses conditions or limitations as the
insurer may properly require
5.2.2 If and whenever so requested by the Tenant to supply the Tenant with
satisfactory evidence of the terms and subsistence in effect of the
insurance policy or policies to be maintained by the Landlord pursuant
to this clause 5.2 and evidence of payment of the current premium or
premiums therefore
5.2.3 The Landlord shall not be under any obligation to insure any fixtures
or fittings installed by the Tenant which have become part of the
Demised Premises or any alterations to the Demised Premises unless the
Tenant shall have given to the Landlord written notice of such
installation or the carrying out of the same and of the full cost of
reinstatement thereof and the Landlord has agreed with the Tenant at
its request to effect the insurance thereof
5.2.4 If the Demised Premises or any part thereof or the means of access
thereto shall be destroyed or damaged by any of the Insured Risks the
Landlord will (subject to payment by the Tenant of any monies rendered
irrecoverable pursuant to clause
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4.21.3 hereof) with all due diligence take such steps as may be
requisite and proper and use all reasonable endeavours to obtain any
necessary consents and approvals under any regulations or enactments
for the time being in force to enable the Landlord to rebuild and
reinstate the Demised Premises and as soon as such consents and
approvals shall have been obtained and subject to any circumstances
beyond the control the Landlord to pay out or procure such payment out
of all monies received in respect of such insurance (other than loss
of Rent and Service Charge) in rebuilding reinstating replacing and
making good the Demised Premises or the part or parts thereof or the
means of access thereto so destroyed or damaged
5.3 Services
to use all reasonable endeavours subject to payment at all times of
the rents payable hereunder and (without prejudice to the foregoing)
of the Tenant's proportion of the Service Charge and unless prevented
from so doing by causes beyond the Landlord's control to provide
manage and operate the services mentioned in paragraph 5 of the Fifth
Schedule hereto in accordance with the principles of good estate
management
6. PROVISOS
PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED that:
6.1 Right of Re-entry
The Landlord may at any time after the occurrence of any of the
following events re-enter the Demised Premises whereupon this demise
shall absolutely determine (but without prejudice to any right of
action of the Landlord in respect of any arrears of rent or any
antecedent breach of covenant):
6.1.1 If any rent remains unpaid 21 days after it is due (whether formally
demanded or not) or
6.1.2 if any covenant or stipulation in the Lease which is to be performed
or observed by the Tenant is not performed or observed or
6.1.3 if the Tenant or a Guarantor (or any one party included within the
definition of the Tenant or Guarantor) is a company and effects a
return or reduction of capital or
6.1.4 if the Tenant or Guarantor (or any one party included within the
definition of the Tenant or Guarantor) becomes Insolvent (as defined
in Clause 6.2)
6.1.5 if the Tenant or Guarantor ceases to exist
6.2 Insolvency
"Insolvent" means for the purposes of this part of the Lease:
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6.2.1 In relation to a company that:
6.2.1.1 it is deemed unable to pay its debts as defined in section 123 of the
Insolvency Act 1986 (referred to as "the Act" in the remainder of this
Clause) or
6.2.1.2 a proposal is made for a voluntary arrangement under Part 1 of the Act
or
6.2.1.3 a petition is presented for an administration order under Part II of
the Act or
6.2.1.4 a receiver or manager is appointed whether under Part III of the Act
(including an administrative receiver) or otherwise or
6.2.1.5 it goes into liquidation as defined in Section 247 (2) of the Act
(other than a voluntary winding up solely for the purpose of
amalgamation or reconstruction while solvent) or
6.2.1.6 a provisional liquidator is appointed under Section 135 of the Act or
6.2.1.7 a proposal is made for a scheme of arrangement under Section 425 of
the Companies Act 1985 and
5.2.2 in relation to an individual that:
6.2.2.1 an application is made for an interim order or a proposal is made for
a voluntary arrangement under Part VIII of the Act or
6.2.2.2 a bankruptcy petition is presented to the Court or his circumstances
are such that a bankruptcy petition could be presented under Part IX
of the Act or
6.2.2.3 he enters into a Deed of Arrangement or Composition with or for the
benefit of his creditors
6.3 Suspension of Rent in case of damage by Insured Risks
If the Demised Premises or any part thereof or the means of access
thereto are destroyed or damaged by any of the Insured Risks so as to
render the Demised Premises or any part thereof unfit for occupation
and use then (save to the extent that the insurance money if
irrecoverable by reason of any act or default of the Tenant or other
occupiers of the Demised Premises or their respective servants agents
or lawful visitors) the Rent and Service Charge or a fair proportion
thereof according to the nature and extent of the damage shall be
suspended until the Demised Premises shall have been reinstated so as
to be fit for occupation and use or until the expiration of the Loss
of Rent Period (whichever is the shorter period) and any dispute
concerning this sub-clause shall be referred to arbitration in the
manner specified in clause 7
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6.4 Determination on Destruction
If at the expiration of the Loss of Rent Period
6.4.1 the insurance of the Mews effected by the Landlord pursuant to clause
5.2 has not be vitiated or payment of the policy moneys refused in
whole or in part as a consequence of any act omission or default of
the Tenant or of anyone on the Demised Premises or the Mews expressly
or by implication with the Tenant's authority and the Tenant fails to
make up any deficiency pursuant to clause 4.21.3 and
6.4.2 the Landlord shall have been unable to obtain all necessary consents
and approvals for the rebuilding and/or reinstatement of the Mews and
6.4.3 this Lease has not been terminated by the doctrine or frustration
then either the Landlord or the Tenant shall be entitled by notice in
writing to the other to determine this Lease and upon the service of
such notice this Lease shall determine without prejudice to any rights
or remedies which may then have accrued to either party against the
other
6.5 Landlord to have Insurance Moneys on Frustration
If this Lease shall determine under the provisions of clause 6.4 or
has been terminated by the doctrine of frustration then and in either
case the insurance monies shall be paid to the Landlord for its own
use and benefit
6.6 Landlords right to alter Mews and Adjoining Property
The Landlord shall be entitled at any time during the Term to pull
down alter erect or rebuild extend enlarge or otherwise deal with or
permit or suffer to be pulled down altered erected or rebuilt extended
enlarged or otherwise dealt with the remainder of the Mews to any
extent and in any manner desired and to use any such buildings and
erections for any purpose desired provided that the access of light
and air to the Demised Premises or any part thereof or any easements
right or amenities of any kind for the time being appertaining to or
enjoyed with the Demised Premises or any part thereof shall not be
thereby materially obstructed or interfered with Provided that
notwithstanding anything herein contained the Landlord shall
6.6.1 exercise these rights provided no material interference is caused to
the Tenant's use and occupation of the Demised Premises and in such
manner as to cause as little interference inconvenience or damage as
reasonably possible to the Tenant its business and the Demised
Premises and fixtures and fittings therein and the means of access
thereto and shall make good any damage occasioned to the Demised
Premises and any fixtures and fittings therein and thereon as
expeditiously a reasonably possible
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6.6.2 only enter the Demised Premises if such works and other matters cannot
reasonably be effected without such entry and then only after giving
the Requisite Notice and
6.6.3 not endanger the structural stability of the Demised Premises
6.7 No liability in damages
Save to the extent (if any) that the Landlord is entitled to be
indemnified under any policy or policies of insurance effected by the
Landlord or the Landlord or its Agents is negligent or in default of
its obligations under the terms of this Lease the Landlord shall not
be responsible to the Tenant or the Tenant's servants agents or lawful
visitors or to any other person in the Demised Premises for any:-
6.7.1 accident happening or injury suffered on the Demised Premises or
6.7.2 damage to or loss of any goods or property sustained on the Demised
Premises or
6.7.3 accident or damage (except damage by the Insured Risks) to the Demised
Premises or
6.8 As to goods left on the Demised Premises
If at the end of the Term any goods or effects belonging to the Tenant
are left in the Demised Premises for more than 10 working days the
Landlord shall have power to sell the same as agent for and on behalf
of the Tenant and the Landlord shall pay or account to the Tenant on
demand for the proceeds of sale (but not any interest thereon) less
any costs of storage and sale reasonably incurred by the Landlord
6.9 Service of Notices
Save as herein expressly provided to the contrary Section 196 of the
Law of Property Act 1925 as amended by the Recorded Delivery Service
Act 1962 shall apply to all notices demands requests or other
communications given or made pursuant to this Lease save that any such
notice demand request or other communication to be given to or served
on any party hereunder which is for the time being a company or
corporation shall be given to or served on the company or corporation
at its registered office
6.10 Commission on Insurance
The Landlord may retain for its own benefit any commissions or
discounts received or obtained by it on or based on the gross premiums
and other costs which would otherwise be paid incurred or suffered by
the Landlord in insuring or procuring the insurance of the Mews in
accordance with the Landlords covenant in that behalf herein contained
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6.11 Exclusion of liability
6.11.1 In this Clause:-
6.11.1.1 "Landlord's Obligations" means all obligations of the Landlord under
any covenant or other term of this lease or any document expressed to
be supplemental to this lease and all implied obligations of the
Landlord under this lease or any such document
6.11.1.2 "Breach" means any breach by the Landlord of the Landlord's
Obligations or any of them
6.11.2 No personal liability shall attach to the Receivers in respect of any
Breach whenever occurring
6.11.3 The Tenant waives and releases the Receivers from any personal
liability under or in respect of his lease which might arise by virtue
of section 37(1) and (3) of the Insolvency Act 1986 or otherwise
7. ARBITRATION
Where in this Lease there is provision for reference to arbitration
then in the absence of any express contrary provision such reference
shall be made in accordance with the Arbitration Acts 1950 - 1979 to a
single arbitrator to be agreed upon by the parties or failing
agreement appointed by the President of The Royal Institution of
Chartered Surveyors (or if the President is not available or is unable
to make such appointment then by the Vice-President or next senior
officer of such Institution then available and able to make such
appointment) on the application of either the Landlord or the Tenant
8. JURISDICTION
Whatever the nationality residence or domicile of the parties hereto
the law of England shall be the proper law of this Lease and the
parties hereby submit to the non-exclusive jurisdiction of the English
Courts
9. GUARANTEE
The Guarantor covenants with the Landlord and (without the need for
any express assignment) with its successors in title in the terms
specified in the Sixth Schedule
10. BREAK RIGHT
The Tenant may determine the Term upon service upon the Landlord of
not less than six months prior written notice to that effect
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expiring on 24th March 1998 and upon payment on the sum of
(pound)12,300 (excluding VAT) which payment shall be made upon
service of the notice (time to be of the essence of this clause 10)
IN WITNESS whereof this Deed has been duly executed
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THE FIRST SCHEDULE
Rights Benefitting the Demised Premises
The Landlord grants to the Tenant and where necessary and appropriate its
sub-lessees permitted occupiers lawful visitors employees and agents (in common
with the Landlord and all others entitled) the following rights:-
1. The free and uninterrupted passage and running of water soil gas
electricity and other services through the Conduits which are now or
may hereafter during the Term be provided by the Landlord for the
benefit of the Mews as a whole in on over or under the Mews so far as
is necessary for the use of the Demised Premises for the use hereby
permitted
2. The right to use the Common Parts and the Internal Common Parts for
all proper purposes in connection with the use and enjoyment of the
Demised Premises
3. The right to display:
3.1 on the notice board at the entrance to the Mews and
3.2 on the exterior of the building (where appropriate) and
3.3 on the exterior of the internal wall adjacent to the Demised
Premises (where appropriate)
a name plate or sign in positions and of sizes to be specified and
supplied by the Landlord showing the Tenant's name and any other
details approved by the Landlord
4. The right of support shelter and protection from any part of the Mews
affording the same
5. The right to park five private motor vehicles in the underground car
park of the Mews in the spaces allocated from time to time by the
Landlord together with all necessary rights of access thereto (but
subject to the provisions of paragraph 5 of the Second Schedule)
6. The right in case of emergency only at all times of the day or night
for the Tenant its employees visitors licensees and customers to pass
over and through the areas shown hatched green on Plans No 1A and 1B
including the fire escape staircase therein
THE SECOND SCHEDULE
Rights Excepted and Reserved
EXCEPT AND RESERVED unto the Landlord and all other persons at any time
authorised by the Landlord or otherwise entitled thereto for the benefit only of
the remainder of the Mews and the Adjoining Property
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1. The free and uninterrupted passage and running of water soil gas
electricity and other services and facilities from and to any parts of
the Mews and the buildings which now are or may hereafter during the
Term be erected thereon through the Conduits which are now or may
hereafter during the Term be upon in over or under the Demised
Premises
2. The right to maintain in on under or over the Demised Premises at any
time during the Term any Conduits plant or machinery for the benefit
of any part of the Mews
3. The rights of light air support shelter protection and all other
easements and rights now or after the date of this Lease belonging to
or enjoyed by other parts of the Mews
4. (a) Full and free right for the Landlord to alter (by way of
improvement or otherwise) or carry out modifications or
extensions or additions to or at the Retained Premises or to
or at the Lettable Premises (other than the Demised
Premises) in such manner as the Landlord may think fit AND
notwithstanding that the access of light and air to the
Demised Premises may thereby be interfered with
(b) Full and free right for any part of the Mews to be erected
or constructed after the date hereof and during the Term so
that the same obtains subjacent and lateral support or
protection from the Demised Premises
BUT so that such rights or liberties shall not be exercised so to
materially prejudice the rights expressly granted to the Tenant in
this Lease or materially prejudice the use and enjoyment of the
Demised Premises and so that any such works to be carried out will be
carried out as efficiently and quickly as possible causing as little
disruption as possible to the Tenant's business and the Landlord will
make good any loss or damage caused to the Demised Premises by the
exercise of this right
5. The right to alter by construction or otherwise the Common Parts and
the access way to the car parking area (but so that the Mews is always
provided with Common Parts and a car park access way reasonably
equivalent to those at present available and serving the same)
6. The right to install retain and alter and maintain light fittings
signs traffic signs and public utility signs or notices on the
exterior of the Building in positions which do not interfere with the
Tenant's access to the Demised Premises or which obscure the windows
of the Demised Premises
7. The right to erect and retain scaffolding or other such apparatus on
any part of the Retained Premises for the purpose of inspecting
repairing maintaining or cleaning the Mews notwithstanding that such
scaffolding may temporarily restrict
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the access of light and air to the Demised Premises provided that no
material interference is caused to the Tenant's use and occupation of
the Demised Premises
8. The right at any time on Requisite Notice to enter and remain upon the
Demised Premises in order to
(a) inspect or view the condition and state of repair of the
Demised Premises and the remainder of the Estate
(b) inspect cleanse repair remove replace with others alter or
execute any works whatever to or in connection with the
Conduits easements or services referred to paragraphs 1 2
and 3 of this Schedule
(c) carry out work or do anything whatsoever comprised within
the Landlord's obligations in this Lease whether or not the
Tenant is liable to make a contribution
(d) exercise any of the rights granted to the Landlord by the
Lease
Provided that the rights specified in this paragraph shall be
exercisable only:-
(i) where such rights cannot reasonably be exercised without
entry on to the Demised Premises
(ii) if the Landlord shall cause as little inconvenience as
reasonably practicable and make good all damage caused to
the Demised Premises as soon as reasonably practicable
THE THIRD SCHEDULE
Matters to which the Demised Premises are subject
The covenants and other matters (other than financial charges) contained or
referred to in the registers of title numbers NGL181789 and NGL648550 so far as
the same still subsist and are capable of being enforced and affect the Demised
Premises
THE FOURTH SCHEDULE
Provisions for Rent Review
1. In this Schedule the following expressions shall have the following
meanings:
1.1 "Rent Review Date" means the date specified in item 1.8 of the
Particulars such date being hereinafter referred
to as the "Relevant
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Review Date"
1.2 "Open Market Rent" shall mean the yearly rent for which the Demised
Premises could reasonably be expected to be let in
the open market as a whole (but with the rights to
sublet as permitted by clause 4.12 hereof) with
vacant possession on the Relevant Review Date by a
willing landlord to a willing tenant without any
fine or premium for a term of years equivalent to
the then residue of the Term or a term of 10 years
but commencing on the Relevant Review Date with
provisions similar to those contained herein for
review of the Rent at the expiration of each
period of 5 years calculated from the Relevant
Review Date and otherwise upon the terms and
conditions of this Lease save as to the amount of
the Rent and the rent free period
On the following assumptions at that date:-
(a) that the Demised Premises shall be ready and available for
immediate beneficial occupation and use
(b) that all the Tenant's and the Landlord's covenants shall
have been complied with
(c) that no work has been carried out by the Tenant or any
sub-lessee or their respective predecessors in title which
has diminished the rental value of the Demised Premises
(d) that in case the Demised Premises or the Building or any
part have been destroyed or damaged they have been fully
restored
(e) that the Demised Premises may be used for any of the
purposes permitted by this Lease (as extended by any licence
granted pursuant thereto) and that planning law permits all
such purposes without restriction
But disregarding:-
(a) any effect on rent of the fact that the Tenant or any
permitted sub-lessee or their respective predecessors in
title may have been in occupation of the Demised Premises
(b) any goodwill attached to the Demised Premises by reason of
any trade or business carried on therein by the Tenant or
any permitted sub-lessee or any predecessor in title of
either of them
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(c) any effect on rent of any improvement to the Demised
Premises lawfully made by the Tenant or by any permitted
sub-lessee or any of their respective predecessors in title
during the Term or during any period of occupation prior
thereto arising out of any agreement to grant the Term with
the consent of the Landlord (if required under this Lease)
otherwise than in pursuance of an obligation to the Landlord
or its predecessors in title and save to the extent (if any)
that the Landlord or its predecessors in title contributed
to the cost thereof
(d) the value of any rent free period or concession or discount
as to the rent or any financial inducement or advantage
which the willing landlord and willing tenant might
reasonably agree as a term of the grant and acceptance of a
tenancy
1.3 "the Third Party" means a Chartered Surveyor (having at least ten
years established and recent experience in letting
and valuing premises of a kind and character
similar to those of the Demised Premises) agreed
between the parties or (in default of agreement
within one month of the Landlord's written
invitation to the Tenant to agree the nomination
of the Third Party) appointed by or on behalf of
the President for the time being the Royal
Institution of Chartered Surveyors; if the said
President shall for any reason not be available or
be unable to make such appointment at the time of
the requisition therefor then the appointment may
be made by or on behalf of the Vice President or
next senior officer of the said Institution then
available and able to make such appointment. The
person so appointing is herein called "the
President"
2. From the Relevant Rent Review Date the Rent shall be whichever is the
higher of:-
2.1 the yearly Rent payable immediately before that Rent Review Date and
2.2 the Open Market Rent of the Demised Premises at that Rent Review Date
("the New Rent")
3.1 If two months before the Relevant Review Date the Landlord and the
Tenant shall not have agreed on the New Rent payable from the Relevant
Review Date the Landlord may at any time thereafter before the New
Rent shall be agreed between the Landlord and the Tenant require the
Third Party to be appointed to determine the Open Market Rent and
shall state whether he is to be an
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arbitrator or an expert
3.2 If two months after the Relevant Review Date the Landlord and the
Tenant shall not have agreed on the New Rent payable from the Relevant
Review Date and the Landlord shall not have required the Third Party
to be appointed to determine the Open Market Rent then the Tenant may
require the Third Party to be appointed and the Landlord shall state
whether he is to be an expert or an arbitrator within one month of the
Tenant notifying the Landlord of its requirement to appoint the Third
Party
4. If the Landlord specifies that the Third Party shall act as an
arbitrator he shall act pursuant to the Arbitration Acts 1950 and 1979
5. If the Third Party shall act as an expert then he shall:-
5.1 give notice in writing of his appointment to the Landlord and the
Tenant and he shall invite each to submit a valuation accompanied if
desired by a statement of reasons
5.2 send a copy of each party's valuation and statement to the other party
and invite written observations thereon
5.3 consider any valuation statements and observations made but shall not
be in any way limited or fettered thereby and shall determine the Open
Market Rent in accordance with his own judgement
5.4 give his decision to the Landlord and the Tenant within two months of
his appointment or within such extended period as the Landlord and the
Tenant may expressly or by implication both agree
6. The determination of the Third Party (acting as an expert) shall be
final and binding (except on a point of law) on the parties and for
the purpose of obtaining his decision forthwith upon request the
parties shall jointly undertake to pay his fees and the costs of the
application such fees and costs to be in his award (but both parties
may make representations to him on costs)
7. If the Third Party (acting as an expert) shall fail to determine the
New Rent and give notice thereof within the time and in the manner
provided or if he shall relinquish his appointment or die or if it
shall become apparent that for any reason he will be unable to
complete his duties either the Landlord or the Tenant may apply to the
President for a substitute to be appointed in his place which
procedure may be repeated as many times as necessary
8. In the event that by the Relevant Review Date the New Rent shall not
have been agreed or determined (whether or not negotiations shall have
commenced) the Tenant shall continue to pay rent at the rate of the
current Rent on each day appointed by this Lease for payment of rent
until the New Rent shall have been agreed or
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determined in writing and within 5 working days thereafter the Tenant
shall pay to the Landlord an amount equal to the difference between
the New Rent and the rent actually paid for the period since the
Relevant Review Date together with interest on each installment of
such difference at the rate equal to Barclays Bank PLC's Base Rate
from time to time from the Relevant Review Date or in the case of
subsequent instalments of such difference the date upon which the same
would have been payable (if ascertained) down in each case to the date
of payment
9. As respects all periods of time referred to in this Fourth Schedule
time shall be deemed not to be of the essence
10. If on any Relevant Review Date there shall be in force any Act which
shall restrict interfere with of affect the Landlord's right to revise
the Rent in accordance with the terms hereof then the Landlord shall
be entitled once within 6 months following each removal of such
restriction or modification of such Act to serve notice requiring a
review of the Rent (an "Interim Notice") upon the Tenant and from and
after the date of service of such Interim Notice until the next Rent
Review Date the Rent shall be increased to whichever is the higher of
the Open Market Rent at the Date of service of the Interim Notice and
the Rent payable immediately prior thereto and the provisions of this
Schedule shall apply accordingly with the substitution of the said
date of service for the Relevant Review Date Provided That this clause
shall not allow a review of the Rent more than once during the Term
11. If the Landlord and the Tenant shall be able to agree the New Rent or
when the New Rent shall have been determined in accordance with the
provisions hereof as the case may be the Landlord and the Tenant shall
cause a Memorandum of the New Rent to be prepared in duplicate and
signed by or on behalf of the Landlord the Tenant and the Guarantor
respectively one whereof shall be attached to this Lease and the other
whereof shall be attached to the Counterpart hereof but non signature
of such Memorandum shall not affect the validity of or the Landlords
ability to recover the New Rent
FIFTH SCHEDULE
The Service Charge
1. In this Schedule
(a) "the Expenditure" means all expenses and outgoings incurred
by the Landlord in respect of the Items described in
paragraph 5 of this Schedule (so far as applicable) and
includes not only expenses disbursed but also a reasonable
sum by way of provision for future expenditure on such of
those items as call for intermittent expenditure
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(b) "the Tenant's Proportion" means the proportion properly
attributable to the Demised Premises as reasonably
determined from time to time by the Surveyor
(c) "the Landlord's Account Year" means the year ending on the
date specified in item 1.11 of the Particulars or such other
annual period as the Landlord may at its discretion from
time to time determine and notify in writing to the Tenant
2. The basic Service Charge shall be the yearly sum specified in item
1.11 of the Particulars or such other yearly sum as the Landlord's
Surveyor may from time to time at his discretion determine as being
fair and reasonable and notify in writing to the Tenant
3.1 On the usual quarter days (the Interim Payment Dates) (or in the event
of an alteration in the period of the Landlord's financial year on
such quarter day as appropriate) of every year during the said term
the Tenant shall pay to the Landlord such a sum ("the Advance
Payment") in advance and on account of the Service Charge as the
Landlord or the Surveyor shall from time to time specify at the
Landlord's or the Surveyor's discretion to be fair and reasonable
PROVIDED THAT subject and without prejudice to the foregoing
provisions the amount of the total of the Advance Payments for the
Landlord's financial year current at the date of the grant hereof
("Landlord's current financial year") shall be deemed to be the sum
set out in item 1.11 of the Particulars of which the Tenant shall pay
the amount therein specified being the due proportion calculated from
day to day in respect of the period from the date of occupation to the
following Interim Payment Date
3.2 As soon as practicable after the end of each Landlord's financial year
the Landlord shall furnish to the Tenant an account of the Service
Charge payable by the Tenant for that year due credit being given
therein for the total of the Advance Payments made by the Tenant in
respect of the said year and upon the furnishing of such account there
shall be paid by the Tenant to the Landlord the Service Charge or any
balance found payable or there shall be credited by the Landlord to
the Tenant any amount which may have been overpaid by the Tenant by
way of Advance Payment as the case may require PROVIDED ALWAYS THAT
the provisions of this sub-clause shall continue to apply
notwithstanding the expiration or sooner determination of the term
hereby granted but only in respect of the period down to such
expiration or sooner determination as aforesaid
4. The expenses and outgoings comprising the Expenditure are the
following costs properly incurred by the Landlord:-
Definitions
4.1 "Structure" means:-
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(a) the entirety of the roofs and foundation of all or any of
the buildings in the Mews
(b) the entirety of all floors and ceilings of the Building (but
excluding any such floor and ceiling finishes which are the
responsibility of any Tenant)
(c) the entirety of all external walls of the Building (but
excluding any such paint paper and other decorative finishes
applied to the internal faces of such walls which are the
responsibility of any Tenant)
(d) the entirety of the load bearing walls pillars and other
structures of the Building (but excluding any such paint
paper and other decorative finishes applied to the faces of
such walls pillars and other structures which are the
responsibility of any Tenant)
(e) all other parts of the structure of all or any of the
buildings in the Mews
4.2 "Plant" means all apparatus plant machinery equipment within any
buildings forming a part of the Mews from time to time including
(without prejudice to the generality of the above) standby generators
and boilers and items relating to mechanical ventilation heating
cooling public address and closed circuit television systems used in
common by the tenants of the mews but excluding lifts lift shafts
machinery or equipment relating thereto
5.1 The upkeep repair maintenance updating cleansing painting decoration
renewal lighting and heating (where appropriate) of the Retained
Premises and without prejudice to the generality of the foregoing this
shall include but not be limited to:
5.1.1 the Structure of all the buildings and Common Parts in the
Mews including any building provided for any porter
maintenance or security staff and the storage and
maintenance of all materials associated therewith including
the roofs foundations stairways ceilings floors and walls
(excluding the interior faces of any such which remain the
responsibility of the Tenant)
5.1.2 the timbers joists drains and all services and utilities
Plant and security devices party walls and fences
5.1.3 the exterior faces of any walls dividing the Demised
Premises from the common parts
5.1.4 the exterior face of any door facing into the common parts
5.1.5 the window frames and the exterior face of any window frames
or roof light and the glass contained therein
5.1.6 the landscaping maintenance and renewal of any landscaped
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common areas or balconies within the Mews including
providing and maintaining (at the Landlord's absolute
discretion) plants shrubs trees gardens or grassed areas and
floral decorations in the common parts and keeping the same
planted free from weeds and properly attended and the grass
cut
5.1.7 the Underground Car Park including (i) all roads paths and
staircases giving access to or egress from (ii) the security
barrier systems and (iii) all plant and machinery situate
therein or associated therewith
5.2 The provisions of dustbin areas and receptacles and security services
5.3 All costs and expenses whatsoever properly incurred by the Landlord in
and about the discharge of the obligations on the part of the Landlord
set out specifically in this Schedule
5.4 The cost of periodically inspecting examining maintaining overhauling
and where necessary replacing any and every part of the Building and
any Plant and the appurtenances thereof referred to in extenso in this
Schedule
5.5 The cost of supply of telephone services electricity gas oil or other
fuel and water for all purposes referred to this Schedule
5.6 The maintenance servicing and renewal of any fire alarms fire
prevention and fire fighting equipment and ancillary apparatus in the
Retained Parts
5.7 Any other reasonable and proper services relating to the Mews or any
part of it provided by the Landlord from time to time during the term
and not expressly mentioned
5.8 The cost of employing staff for the performance of the duties and
services referred to in this Schedule and all other incidental
expenditure in relation to such employment (including but without
limiting the generality of such provision) the payment of the
statutory and such other insurance health pension welfare and other
payments contributions and premiums that may be reasonably desirable
or necessary and the provision of uniforms working clothes tools
appliances telephone service cleaning sanitary and other materials
bins receptacles and other equipment for the performance of their
duties and the cost of providing necessary washing and toilet
requisites in any staff toilet accommodation
5.9 All charges assessments impositions and other outgoings payable by the
Landlord in respect of all the common parts
5.10 The cost of any interest and fees in respect of money borrowed to
finance the provisions of the Services
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5.11 Such provision (if any) for anticipated expenditure in respect of any
of the Services as the Landlord shall in the interests of good estate
management consider appropriate
5.12 The proper and reasonable fees and disbursements (and any value added
tax payable on them) of:
5.12.1 the Surveyor and any other individual firm or company
employed or retained by the Landlord for (or in connection
with) such surveying or accounting functions or the
management of the mews
5.12.2 the managing agents (whether or not the Surveyor) for or in
connection with
5.12.2.1 the management of the Mews
5.12.2.2 the collection of the Service Charge due to the
Landlord from the tenants of the Mews
5.12.2.3 the performance of the Services and other duties
in and about the Mews or any part of it relating
to (without prejudice to the generality of the
above) the general management administration
security maintenance protection and cleanliness of
the Mews
5.12.3 any individual firm or company valuing the Mews for the said
Landlord's insurance or for the purposes of assessing the
full cost of rebuilding and reinstatement
5.12.4 any individual firm or company providing caretaking or
security arrangements and services to the Mews
5.12.5 any other individual firm or company employed or retained by
the Landlord to perform (or in connection with) any of the
management services or any of the functions or duties
referred to in this paragraph
5.13 The cost of taking all steps deemed proper desirable or expedient by
the Landlord for complying with making representations against or
otherwise contesting the incidence of the provisions of any
legislation or orders or statutory requirements thereunder concerning
town planning public health highways streets drainage or other matters
relating or alleged to relate to the premises for which the Tenant is
not directly liable hereunder save in respect of costs incurred by the
Landlord in connection with an application for consent to demolish or
redevelop the Mews other than in accordance with the Landlord's
Obligations contained in Clause 5 of this Lease
6. 50% of the cost of maintaining cleaning planting and landscaping the
area shown hatched green on the Plans No 1A and 1B
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7. If during any Landlord's Account Year it shall reasonably appear to
the Landlord that by reason of unexpected expenses or liabilities its
previous estimate of the Service Charge is likely to be exceeded then
the Landlord may in its reasonable discretion serve on the Tenant a
statement of such expenses and liabilities and the proportion thereof
due as the Service Charge in consequence thereof and any such sums so
required shall be paid by the Tenant within fourteen days of the
demand therefor. Such demand and payment shall be taken into account
under Paragraph 3 of this Schedule
8. Each annual statement of Expenditure and of the Tenant's Proportion
shall be certified by the Surveyor and a duly certified copy of such
statement shall in the absence of manifest error or fraud be evidence
for the purposes of this Lease of the matters covered by such
statement but the Landlord shall upon request and payment of a
reasonable inspection fee permit the Tenant to inspect at any time up
to two months after delivery of a statement the vouchers and receipts
for items included in it
THE SIXTH SCHEDULE
Form of Guarantee required for clauses 4.12
and 4.29 [and clause 9]
The Guarantor covenants with the Landlord and (without the need for any express
assignment) with all its successors in title that:
1. To pay observe and perform
During the Term the Tenant shall punctually pay the rents and observe
and perform the covenants and other terms of this Lease and if at any
time during the Term the Tenant shall make any default in payment of
the rents or in observing or performing any of the covenants or other
terms of this Lease the Guarantor will pay the rents and observe or
perform the covenants or terms in respect of which the Tenant shall be
in default and make good to the Landlord on demand and indemnify the
Landlord against all losses damages costs and expenses arising or
incurred by the Landlord as a result of such non-payment
non-performance or non-observance notwithstanding: -
1.1 any time or indulgence granted by the Landlord to the Tenant or any
neglect or forbearance of the Landlord in enforcing the payment of the
rents or the observance or performance of the covenants or other terms
of this Lease or any refusal by the Landlord to accept rents tendered
by or on behalf of the Tenant at a time when the Landlord was entitled
(or would after the service of a notice under the Law of Property Act
1925 Section 146 have been entitled) to re-enter the Demised Premises
44
<PAGE>
1.2 that the terms of this Lease may have been varied by agreement between
the parties
1.3 that the Tenant shall have surrendered part of the Demised Premises in
which event the liability of the Guarantor under this Lease shall
continue in respect of the part of the Demised Premises not so
surrendered after making any necessary apportionments under the Law of
Property Act 1925 Section 140 and
1.4 any other act or thing by which but for this provision the Guarantor
would have been released
2. To take lease following disclaimer
If at any time during the Term the Tenant (being an individual) shall
become bankrupt or (being a company) shall enter into liquidation and
the trustee in bankruptcy or liquidator shall disclaim this Lease the
Guarantor shall if the Landlord shall by written notice within two
months after such disclaimer so require take from the Landlord a lease
of the Demised Premises for the then residue of the Term which would
have remained had there been no disclaimer at the Rent then being paid
under this Lease subject to the same covenants and terms as in this
Lease (except that the Guarantor shall not be required to procure that
any other person is made a party to that lease as guarantor) such new
lease to take effect from the date of such disclaimer and in such case
the Guarantor shall pay the costs of such new lease and execute and
deliver to the Landlord a counterpart of it
SIGNED as a Deed for and on behalf )
of ORLINWORTH PLC by TIMOTHY ) /s/ TIMOTHY WALKER-ARNOTT
WALKER-ARNOTT under the )
Legal Charge dated 30 June 1987 ) /s/ Trey A Colburn
and 15 November 1989 in favour of )
Gamlestaden Plc in the presence of:-
TREY A Colburn
12-20 Camomile Street
London EC3A 7PT
SIGNED as a Deed for and on behalf )
of ORLINWORTH PLC by IAIN ) /s/ IAIN RACKLEY
RACKLEY under the Legal Charge )
dated 30 June 1981 and 15 November ) /s/ Trey A Colburn
1989 in favour of Gamlestaden Plc )
in the presence of:-
TREY A Colburn
ABOVE
45
<PAGE>
VAE/ID.535
Unit 17, Berghem Mews, Blythe Road, London W14
ANNEXURE A
Roofs
1. Rebed loose and defective lead counterflashings.
2. Ensure valley gutters are clear of all debris and provide caps to outlets
to prevent blockages.
3. Refix loose bolts and plug old drill holes to aluminium profile claddings
to parapets.
4. Obtain Landlord's observations on possible damage to structural concrete
member where soil pipes pass through and remedy as necessary.
External Drainageware
5. Remove all debris from pvc gutter.
Walls
6. Reinstate missing or defective mastic seals between glazing frame and
brickwork paying particular attention to rear elevation.
7. Provide and install mastic joint to the vertical joint between new
brickwork and old flank wall of warehouse unit to front elevation.
Windows
8. Repair and replace where necessary defective, broken and failed glazing
units. In the event that the glazing units disintegrate to an unacceptable
level (in the reasonable opinion of the Tenant), the Landlord will replace
the same at no cost to the Tenant. The Tenant shall have no responsibility
whatsoever for the repair maintenance or replacement of the glazing units.
9. Ease and adjust ironmongery to doors and ensure all doors opening and
closing freely.
10. Replace any defective and rusting screws to door openings.
11 Ease and adjust windows where not opening and closing freely or catches
stuck, save that the windows in the central corridor at ground floor level
shall be fixed shut.
12. Reinstate new nylon bushes between catches and window frames where broken.
<PAGE>
External Areas
13. Carry out repairs to damaged creasing courses and brickwork to all brick
structures to the front of the subject premises (see attached photos).
14. Install weep holes to all raised planters.
15. Clean out moss, lichen and vegetable growth from all bedding joints to
brick and concrete payers.
16. Clear debris from old flank wall, confirm route of downpipes and ensure
that they are connected to main drains or adequate soakaway.
17. Make good/reinstate bolts to escape staircase/wallway.
The Services
18. Locate main stopcock for building.
19. Clean WCs.
20. Remedy any weeping of radiator joints and have system tested and balanced,
Finishes
21. Clear out all service voids.
22. Carry out patch repairs to wall tiling.
23. Carry out repairs to alleviate and redecorate damp affected areas on
internal surface of flank wall.
<PAGE>
[GRAPHIC]
Annexure A - Item 13
<PAGE>
[GRAPHIC]
Annexure B - Item 1
<PAGE>
[GRAPHIC]
Annexure B - Item 2
<PAGE>
[GRAPHIC]
Annexure B - Item 2
<PAGE>
[GRAPHIC]
Annexure B - Item 3
<PAGE>
[GRAPHIC]
Annexure B - Item 4
<PAGE>
Unit 17, Berghem Mews, Blythe Road, London W14
ANNEXURE B
1. There are localised areas of defective pointing and retained steel fixings
in parapets (see attached photos).
External Drainageware
2. Exposure of boxed in rainwater downpipes to offices on party wall to
remedy any blockages or leaks together with the cutting out or forming of
rodding access to the pipes or the boxing and consequential work (see
attached photos).
3. There are defective areas of brickwork, pointing and render on exposed
flank wall adjacent to Blythe Road (see attached photos).
Finishes
4. There are existing areas of cracking to internal face of flank wall to
Blythe road (see attached photos).
5. In the event that there is no insurance cover in place or the Landlord
cannot obtain insurance cover in relation to the risks of subsidence,
heave and landslip for the Mews, the Tenant shall not be liable for any
defects, repairs, renewals, maintenance or any other matters or costs
(whether by way of the Service Charge or otherwise) arising either
directly or indirectly from any such subsidence, heave or landslip
suffered in any part or parts of the Mews (including the Demised Premises)
<PAGE>
Exhibit 10.76
DATED 16th June 1995
(1) M. WEBBER and R.M. HARRIS
- and -
(2) TINSLEY ROBOR PLC
- --------------------------------------------------------------------------------
LEASE
of the Ground Floor Unit 8 Berghem Mews, Blythe Road, London W14
- --------------------------------------------------------------------------------
Clintons
55 Drury Lane
London
WC2B 5SQ
Tel: 0171-379-6080
Ref: LM/ht/webtin.lse
<PAGE>
INDEX
Clause Headings Page
1. PARTICULARS
2. DEFINITIONS AND INTERPRETATION
3. LEASE
3.1 Demise
3.2 Rents
4. THE TENANT'S COVENANTS
4.1 To Pay Rent and Service Charge
4.2 Outgoings
4.3 Statutory Services
4.4 Interest on Arrears
4.5 Fit out Repair Decoration and Maintenance
4.6 Maintenance
4.7 to Maintain Party Walls
4.8 To Repair on Notice
4.9 To comply with statutory requirements
4.10 To Permit Entry
4.11 To Permit Disposal Board
4.12 Dealings
4.13 Registration of Dealings
4.14 Alterations
4.15 Advertisements and Signs
4.16 Plant Machinery and Apparatus
4.17 Gas and Electrical Installations
4.18 General Restrictions concerning use of Demised Premises
4.19 Restrictions and Regulations concerning use of Common Parts
4.20 Use of Demised premises
4.21 Not to Invalidate Insurance
4.22 Fire Requirements
4.23 Tenant's Insurances
4.24 Notices
4.25 As to the Planning Acts
4.26 To Preserve Easements
4.27 Costs
4.28 VAT
4.29 New Guarantor
4.30 Indemnity
4.31 Observe Third Schedule Matters
4.32 Interest during Breach of Covenant
4.33 Security
4.34 Information as to Keyholders
<PAGE>
5. LANDLORD'S COVENANTS
5.1 Quiet Enjoyment
5.2 To Insure
5.3 To Provide Services
6 PROVISOS
6.1 Landlord's Right to Forfeit Lease
6.2 Insolvency
6.3 Suspension of Rent in case if damage by Insured Risks
6.4 Determination on Destruction
6.5 Landlord to have Insurance Moneys on Frustration
6.6 Landlord's right to alter the Estate and Adjoining Property
6.7 No liability in damages
6.8 As to goods left on the Demised Premises
6.9 Compensation under 1954 Act
6.10 Exclusion of planning warranty
6.11 Service of Notices
6.12 Commission on Insurance
6.13 Exclusion of liability
7. ARBITRATION
8. JURISDICTION
9. BREAK CLAUSE
10. CERTIFICATE
FIRST SCHEDULE
Rights Benefitting the Demised Premises
SECOND SCHEDULE
Rights Excepted and Reserved
THIRD SCHEDULE
Matters to which the Demised Premises are subject
FOURTH SCHEDULE
The Service Charge
FIFTH SCHEDULE
Form of Guarantee
SIXTH SCHEDULE
Provisions for Rent Review
<PAGE>
Unit No. 8
Plan No. 1
Ground Floor
[GRAPHIC]
<PAGE>
DATED 16th June 1995
1. PARTICULARS
1.1 The Landlord RONALD MICHAEL HARRIS and MALCOLM WEBBER
both of 8-10 Bulstrode Street, London,
W1M 6AH
1.2 The Tenant TINSLEY ROBOR PLC of Drayton House
Drayton, Chichester, West Sussex PO20 6EW
1.3 The Demised Premises Ground Floor offices at Unit 8 Berghem
Mews Blythe Road London W14 shown edged
Red on Plan No.1
1.4 Date of Commencement 25th March 1995
of Term
1.5 Term 10 years subject to earlier determination
as hereafter provided
1.6 Expiry Date of Term 24th March 2005
1.7 The Rent Until 15th December 1995 one peppercorn
(if demanded) and then for the remainder
of the first year of the Term
(pound)18,700.00 per annum, and
thereafter (pound)23,170.00 per annum
payable by equal quarterly payments in
advance on the usual quarter days the
first payment for the period from the
16th December 1995 to the 24th day of
December 1995 to be made on the 16th
December 1995
1.8 Review Dates The Rent is subject to review in
accordance with the provisions of the
Sixth Schedule on the 25th March 2000
1.9 The Insurance Rent Such sum as is referred to in clause 2.17
payable yearly in advance within 10
working days of demand therefor
1.10 The Permitted User A business use within Class B1 of the
Town and Country Planning (Use Classes)
Order 1987 (as originally enacted)
1
<PAGE>
1.11 The Service Charge (pound)4466.00 or such other amount as
shall be payable in accordance with the
provisions of the Fourth Schedule to this
Lease; the first payment for the period
from the date hereof to 24th June 1995 to
be made on the execution hereof. The
Landlord's Account Year ends on the 31st
March in each year
2. DEFINITIONS AND INTERPRETATION
In this Lease unless the context otherwise requires:
2.1 "this Lease" means this Lease and includes any
Schedule hereto any licence granted
pursuant to this Lease and any deed of
variation of the provisions hereof and
any deed or instrument supplemental
hereto
2.2 "the Particulars" means the Particulars set out in Clause 1
of this Lease and references to numbered
items of the Particulars are references
to the numbered sub-clauses of that
clause
2.3 "the Landlord" means the person named as the Landlord in
item 1.1 of the Particulars and includes
any other person for the time being
entitled to the immediate reversion on
this Lease
2.4 "the Tenant" means the person named as the Tenant in
item 1.2.1 of the Particulars and
includes the successors in title of the
Tenant to the Term
2.5 "the Guarantor" means the person (if any) named as the
Guarantor in item 1.2.2 of the
Particulars (if any) and shall include
any person who shall have executed a
guarantee pursuant to clause 4.12 or 4.29
2.6 "Plan No "1" "Plan No "2" means the plans annexed to this Lease and
numbered "1" and "2" respectively
2.7.1 "the Mews" means all the land and appurtenant rights
known as Berghem Mews Blythe Road London
W14 and the private roads or paths
leading thereto from Blythe Road and/or
Spring Vale Terrace as is edged green on
Plan No 2 (and which for the avoidance of
doubt includes the Underground Car Park
and the access thereto)
2
<PAGE>
which unless the context otherwise
requires includes:
2.7.1.1 the demised premises and the
building and all other
Buildings of whatever nature
in the Mews
2.7.1.2 the common parts
2.7.1.3 the roads within the Mews
2.7.1.4 the conduits on or serving the
Mews
2.7.1.5 the boundary walls and fences
2.7.1.6 all fixtures and fittings that
are affixed to the common
parts
2.7.2 "the Building" means the building of which the demised
premises forms part
2.8 "the Demised Premises" means that part of the Building described
in item 1.3 of the Particulars excluding
the foundations supporting walls joists
and slabs and the roof and other external
or structural parts thereof but including
(but not by way of limitation)
2.8.1 the entirety of the windows window-frames
roof-lights doors and door-frames (if
any) thereof (except for the external
decorative surfaces of any such
window-frames and of any door between
such premises and the internal common
parts of the Building and of the frame of
any such door) and all glass therein
2.8.2 the finishes (including plaster) on the
faces of any load-bearing or external
walls beams and columns within or
enclosing such premises (but not the
remainder of such walls beams or columns)
2.8.3 the inner surface of any non-load-bearing
walls separating such premises from other
internal parts of the Building (but not
the remaining half of such walls)
2.8.4 the whole of all internal
non-load-bearing walls within such
premises
2.8.5 the ceilings and ceiling finishes of such
premises (but not the structural beams
joists or slabs above the ceilings)
3
<PAGE>
2.8.6 the floors and floor finishes of such
premises (but not the structural beams or
joists or structural floor slabs
supporting the floors or on which floor
finishes have been laid)
2.8.7 all stairs situated entirely within such
premises and all other internal surfaces
and partitions therein
2.8.8 all water ventilation sanitary and
central-heating and air-conditioning
plant equipment and apparatus (if any)
exclusively serving such premises and
other Landlord's fixtures and fittings in
such premises from time to time
2.8.9 all Conduits exclusively serving the
Demised Premises whether or not within
the same
2.8.10 all additions alterations and
improvements thereto which may be
effected during the Term
2.9 "the Lettable Premises" means the units or parts thereof within
the Mews which are intended to be let or
are capable of being let or are let
(including the Demised Premises)
2.10 "the Retained Premises" means all and every part of the Mews
other than the Lettable Premises
2.11.1 "the Common Parts" means the access ways the access road
paths staircases roadways emergency exits
courtyards bin store area and other areas
within the Mews which do not form part of
the Lettable Premises and which are
intended for the passage of persons or
vehicles or for the common use and
enjoyment of the Landlord and the Tenants
or occupiers of the Lettable Premises
2.11.2 "the Internal Common Parts" means that part of the Common Parts
comprising the entrance hall staircases
landings and all other parts of the
Building (if any) available for use by
the Tenant and other occupiers of the
Building
2.12 "the Access Road" means the private road giving access to
Blythe Road
4
<PAGE>
2.13 "Conduits" means sewers drains channels watercourses
gutters grooves pipes ducts wires cables
and other apparatus associated therewith
and any other conducting medium for the
passage of soil water gas electricity
telephone telecommunication and other
services and supplies
2.14 "the Term" means not only the term specified in item
1.5 of the Particulars but also where
appropriate any extension or continuation
whether by statute or common law
2.15 "the Termination Date" means the date of expiration or sooner
determination of the Term
2.16 "the Rent" means the sums specified as the Rent in
item 1.7 of the Particulars or such other
sum as shall for the time being be the
Rent under the provisions of the Sixth
Schedule
2.17 "the Insurance Rent" means:
2.17.1 5.089% of the amount which the Landlord
properly expends for insuring the Estate
against the Insured Risks (or such other
fair and reasonable proportion which
shall be determined by the Surveyor by
reference to the lettable floor area of
the Demised Premises in comparison to the
lettable floor area of the Lettable
Premises) and on the basis that the
Landlord will be entitled to full
recovery of the total amount expended in
respect of such insurance of the Estate
from all the tenants of the Lettable
Premises only if all the Lettable
Premises are let or occupied)
2.17.2 the additional cost of insuring or
causing to be insured any part of the
Estate which is reasonably attributable
to the use or occupation or any activity
carried on upon the Demised Premises
2.17.3 the cost of insuring against the risk of
the loss for the Loss of Rent Period of
the Rent and the Service Charge (and such
loss of rent insurance shall allow for
and include provision for reasonable and
proper anticipated increases in Rent and
Service Charge from their respective
dates of review)
5
<PAGE>
2.18 "the Insured Risks" means the following risks to be included
in any policy of insurance effected under
the terms of the Lease fire lightning
explosion aircraft and other aerial
devices and articles dropped therefrom
earthquake riot riot fire civil commotion
malicious damage storm tempest flood
bursting or overflowing of water tanks
apparatus or pipes subsidence landslip
heave impact by road vehicles (so long as
such risks can be normally insured
against with United Kingdom insurance
offices of repute or at Lloyds of London)
and such other risks as the Landlord
reasonably deems necessary to insure
against which shall include if the
Landlord reasonably deems appropriate at
its discretion and without prejudice to
the generality of the foregoing any
liability of the Landlord arising out of
or in connection with any matter
involving or relating to the Estate
2.19 "the Service Charge" means the sum by way of additional rent
specified as the Service Charge in item
1.11 of the Particulars or such other sum
(if any) as shall for the time being be
the Service Charge under the provisions
of the Fourth Schedule
2.20 "Requisite Notice" means a notice in writing to the Tenant
two (2) working days before any entry is
made on the Demised Premises PROVIDED
THAT in the case of an emergency such
notice as may be possible shall be given
2.21 "Interest" means
2.21.1 interest at the rate of 4% above Barclays
Bank PLC's Base Rate for the time being
(which interest rate shall still apply
after and notwithstanding any judgment of
the Court) payable from the date when the
sum is due in respect of the Rent and in
the case of any other sum the date 14
days after demand for the sum upon which
interest is to be paid to the Landlord in
each case until the date of payment to
the Landlord
6
<PAGE>
2.21.2 In the event of the Base Rate of Barclays
Bank PLC (in this sub-clause called "Base
Rate") being abolished then any
references in this Lease to Base Rate
shall have effect as if there had been
substituted from time to time for Base
Rate the base or nearest equivalent rate
of such other UK clearing bank as shall
from time to time be notified by the
Landlord to the Tenant in writing
2.22 "Person" includes a company corporation or other
body legally capable of holding land
2.23 "the Planning Acts" means the Town and Country Planning Act
1990 and any future legislation of
similar nature
2.24 "Decorate" means in a good and workmanlike manner
and to the reasonable satisfaction of the
Surveyor to prepare and paint with two
coats at least of good quality paint and
to prepare make good clean treat and
restore with paper varnish stain polish
or other suitable good quality decorative
materials all parts of the Demised
Premises as are usually or ought properly
to be so dealt with
2.25 "the Landlord's Agents" means and includes the Landlords workmen
servants agents lawful visitors
mortgagees prospective purchasers and
lessees and all other persons authorised
by the Landlord whose authorisation is
evidenced in writing to the Tenant if the
Tenant reasonably requests
2.26 "the Surveyor" means any competent person or firm
experienced in the management of
commercial property appointed by the
Landlord (including an employee of the
Landlord or a Group Company of the
Landlord) to manage the Estate or to
perform any of the functions of the
Surveyor under this Lease whose
appointment is evidenced in writing to
the Tenant if the Tenant reasonably
requests
2.27 "the Loss of Rent Period" means the period of three years
calculated from the date upon which the
Demised Premises shall have been
destroyed or damaged by any of the
Insured Risks so as to render them
inaccessible or unfit for occupation and
use (including if applicable any period
subsequent to the Termination Date)
7
<PAGE>
2.28 "Working Day" means a day upon which Clearing Banks in
the City of London are open for normal
business
2.29 "the 1954 Act" means Part II of the Landlord and Tenant
Act 1954
2.30 "Group Company" means a company that is a member of the
same Group as the Landlord or the Tenant
(as the case may be) within the meaning
of Section 42 of the 1954 Act
2.31 Any reference to an Act of Parliament shall include any modification
extension or re-enactment thereof for the time being in force and shall
include all instruments notices order plans regulations consents
permissions and directions for the time being made issued or given
thereunder or drawing validity therefrom
2.32 The masculine includes the feminine and the singular the plural and
vice versa
2.33 Where the Landlord the Tenant or the Guarantor for the time being are
two or more persons obligations expressed or implied to be made by or
with such party are deemed to be made by or with such persons jointly
and severally
2.34 References to any right of the Landlord to have access to the Demised
Premises shall be construed as extending to any superior landlord and
any mortgagee of the Demised Premises and to all persons properly
authorised by the Landlord and any superior landlord or mortgagee
(including agents professional advisers contractors workmen and others)
whose authorisation is evidence in writing to the Tenant if the Tenant
reasonably requests
2.35 Any covenant by the Tenant not to do an act or thing shall be deemed to
include an obligation not knowingly to permit such act or thing to be
done by a third party
2.36 The terms "the parties" or "party" mean the Landlord and/or the Tenant
but except where there is an express indication to the contrary exclude
any Guarantor
2.37 References in this Lease to any clause sub-clause paragraph or Schedule
without further designation shall be construed as a reference to the
clause sub-clause paragraph or Schedule to this Lease so numbered or
lettered
2.38 Paragraph and schedule headings (if any) in and the front cover and
index to this Lease shall be deemed not to form part of this Lease and
shall not be taken into account in the construction or interpretation
thereof
8
<PAGE>
3. LEASE
3.1 Demise
THE LANDLORD LETS the Demised Premises to the Tenant TOGETHER WITH the
rights specified in the First Schedule BUT EXCEPT AND RESERVING the
rights specified in the Second Schedule from and including the Date of
Commencement of the Term for the Term SUBJECT TO and where applicable
with the benefit of the covenants and other matters specified in the
Third Schedule so far as they still subsist and are capable of being
enforced and relate to or affect the Demised Premises
3.2 Rents
THE TENANT PAYING yearly and proportionately for any fraction of a year
3.2.1 First the Rent the Insurance Rent and the Service Charge at the times
and in the manner specified in items 1.7, 1.9 and 1.11 of the
Particulars respectively and
3.2.2 Secondly Interest which becomes due pursuant to clause 4.4 and all
other sums whatsoever as shall become payable by the Tenant to the
Landlord under the provisions of this Lease
ALL which payments are hereby reserved as rent
4. THE TENANT'S COVENANTS
THE TENANT COVENANTS WITH THE LANDLORD as follows:
4.1 To pay Rent and Service Charge
4.1.1 To pay the Rent the Insurance Rent and the Service Charge at the times
and in the manner described in items 1.7, 1.9 and 1.11 of the
Particulars and without any deduction (except only such as a lessee may
by law be entitled to make notwithstanding any contract to the
contrary)
4.1.2 If so required by the Landlord in writing to make payment of the Rent
by banker's order to such bank in England as the Landlord shall from
time to time nominate
4.2 Outgoings
4.2.1 To pay all existing and future rates 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) except any
tax in respect of:
4.2.1.1 the rents payable under this Lease
9
<PAGE>
4.2.1.2 the grant of this Lease
4.2.1.3 any dealing disposal or deemed disposal by the Landlord or any superior
landlord with the reversion (whether immediate or not) to this Lease
4.3 Statutory services
To pay for all gas electricity and water consumed on the Demised
Premises including all meter rents in connection therewith and to
observe and perform all the terms and conditions of supply thereof and
all other regulations and requirements of the gas electricity and water
authorities and to keep the Landlord indemnified in respect thereof
4.4 Interest on Arrears
If the Rent shall not be paid on the date when it is due or if the
Insurance Rent the Service Charge or other sums payable by the Tenant
to the Landlord under this Lease shall be due but unpaid for 14 working
days to pay on demand to the Landlord (if the Landlord shall so
require) Interest Provided that this sub-clause shall not prejudice any
other right or remedy in respect of such money
4.5 Fit out Repair decoration and maintenance
4.5.1 Repair
At all times during the Term to repair and to keep the demised Premises
in good and substantial repair and condition
4.5.2 To decorate interior
4.5.2.1 To Decorate the interior of the Demised Premises no less often than
every fifth year of the Term
4.5.2.2 To Decorate the interior of the Demised Premises in the last six months
of the Term (howsoever determined) in tints colours and patterns
approved in writing by the Landlord (such approval not to be
unreasonably withheld)
4.5.3 Repair and replace Landlord's Fixtures and Fittings
To repair or replace forthwith by new articles of similar kind and
quality any fixtures fittings or equipment (other than Tenant's
fixtures and fittings) in the Demised Premises which shall become in
need of repair or replacement
4.5.4 To yield up
At the Termination Date to yield up the Demised Premises duly repaired
and decorated in accordance with the provisions of this clause 4.5 and
clear of any
furniture equipment goods and refuse to remove every moulding sign
writing or painting of the name or business of the Tenant or other
occupiers (if any) and to make good all damage caused by the removal
thereof and of the Tenant's
10
<PAGE>
fixtures fitting furniture and effects to the Demised Premises
PROVIDED THAT:
(a) all work referred to in this clause 4.5 shall be done with
good and suitable materials of their several kinds in a good
and workmanlike manner and to the reasonable satisfaction of
the Surveyor and in relation to external maintenance and
repair using such materials as may in the reasonable opinion
of the Surveyor be necessary or desirable in order to maintain
a high standard of maintenance and repair to the Estate as a
whole
(b) damage by any of the Insured Risks is excepted from the
Tenant's liability under this clause 4.5 save to the extent
that the whole or any part of the insurance money is
irrecoverable by reason of any act or default of the Tenant
its servants agents or lawful visitors and the Tenant fails to
make up the deficiency pursuant to clause 4.21.3 or by reason
of some limitation or condition properly imposed by the
insurers
(c) the Tenant shall pay the Landlord's reasonable and proper
legal and Surveyor's fees incurred as a result of any breach
of this clause 4.5
(d) the Tenant will also pay to the Landlord mesne profits at the
rate of the rent payable hereunder immediately prior to the
Termination Date during the period taken by the Tenant to
carry out such works or during the period reasonably required
for carrying out such works by the Landlord and in that case
the amount of such mesne profits shall be added to the cost of
carrying out such work as aforesaid
4.6 Maintenance
4.6.1 To keep the Conduits which solely serve the Demised Premises clear and
unobstructed
4.6.2 To keep clean both the interior and exterior faces of the windows and
any glass in the doors of the Demised Premises
4.7 To maintain party walls
To maintain at the equally shared expense of the Tenant and the tenants
of the adjoining Lettable Premises within the Building (or the Landlord
if such adjoining Lettable Premises are not let) the walls that divide
the Demised Premises from the adjoining Lettable Premises within the
Building (if any) (which walls shall be deemed to be party walls within
the meaning of Section 38 of the Law of Property Act 1925)
4.8 To repair on notice
4.8.1 To make good any defect in the repair or decoration of the Demised
Premises
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for which the Tenant is liable in accordance with the Tenant's
covenants contained in this Lease and of which the Landlord has given
notice to the Tenant in writing such making good to be commenced within
a period of one month from the date of the Landlord's notice (or sooner
if reasonably considered necessary by the Surveyor) and to be completed
as soon as reasonably possible
4.8.2 If the Tenant shall not comply with clause 4.8.1 hereof the Landlord
may (but shall not be obliged to) enter the Demised Premises and make
good such defects and the proper expense of doing so (including
Surveyor's or architect's fees) shall be repaid by the Tenant on demand
4.9 To comply with statutory requirements
4.9.1 To execute all works and to do all things on or in respect of the
Demised Premises which are required by the Offices Shops and Railway
Premises Act 1963 the Fire Precautions Act 1971 the Health and Safety
at Work Act 1974 or any other present or future Act of Parliament and
at all times to keep the Landlord indemnified against all costs claims
demands and liability in respect thereof
4.9.2 To comply with all requirements of any present or future Act of
Parliament as to the use of or otherwise concerning the Demised
Premises
4.9.3 Upon receipt of any notice order proposal requisition direction or
other thing from any competent authority affecting or likely to affect
the Landlord's interest in the Demised Premises or the use thereof at
the Tenant's own expense forthwith to deliver to the Landlord a copy of
such notice order requisition direction or other thing AND at the
request of the Landlord but at the cost of the Landlord to make or join
with the Landlord in making such reasonable representations in respect
thereof as the Landlord shall in its reasonable discretion deemed
expedient Provided always that notwithstanding any other provision
contained in this Lease to the contrary the Landlord's consent shall
not be unreasonably withheld or delayed to any works required to be
carried out pursuant to this clause 4.9
4.10 To permit entry
To permit the Landlord and such of the Landlord's Agents as shall be
proper for the purpose at all reasonable hours upon Requisite Notice
and to the extent that such matters cannot reasonably be effected
without such entry to enter and remain upon the Demised Premises with
all necessary appliances for the purpose of:
4.10.1 viewing and recording the condition of the Demised Premises and to take
schedules of dilapidations or of the Landlord's fixtures and fittings
4.10.2 repairing maintaining altering or cleaning the Retained Premises or the
Mews
4.10.3 complying with any of its obligations or exercising any of its rights
under this Lease or for any other reasonable purpose connected with the
Demised
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Premises
PROVIDED that the Landlord and the Landlord's Agents shall cause as
little damage or disturbance as is reasonably possible in exercising
such right and the Landlord shall as soon as is reasonably practicable
make good all damage to the Demised Premises and any fixtures and
fittings caused by such entry
4.11 To permit disposal board
4.11.1 During the last six months of the Term to allow a letting board or
notice to be displayed on the Demised Premises and during the Term to
allow a sale board or notice to be displayed on the Demised Premises
(but not so that any board or notice unnecessarily obstructs the light
or access to the Demised Premises) and to allow such of the Landlord's
Agents as shall be proper for the purpose to view the Demised Premises
at all reasonable times by prior appointment
4.11.2 During the Term at all convenient hours in the daytime to permit all
prospective purchasers of or dealers in the Landlord's reversionary
interest by order in writing of the Landlord or the Landlord's Agents
to view the Demised Premises without interruption subject to Requisite
Notice being given
4.12 Dealings
4.12.1 The Demised Premises shall not be held on trust for another and there
shall not save as hereinafter permitted be any assignment transfer
sub-letting parting with or sharing of possession or occupation of the
whole or any part of the Demised Premises (whether by the Tenant or any
person deriving title through or under the Tenant) PROVIDED THAT the
Tenant may share the occupation of the whole or any part of the Demised
Premises with a Group Company for so long as both companies shall
remain members of that group and subject to the sharing not creating
the relationship of landlord and tenant between the Tenant and that
Group Company and on condition that the Tenant shall notify the
Landlord and give details of the arrangement before it is put into
effect PROVIDED FURTHER THAT if all the following relevant conditions
of this clause 4.12 are complied with the following transactions will
be permitted with the previous consent in writing of the Landlord which
shall not be unreasonably withheld or delayed:
4.12.1.1 an assignment or underletting of the whole of the Demised Premises by
the Tenant on terms which comply with the conditions set out in clause
4.12.2
4.12.2 On a permitted assignment or underletting of the whole of the Demised
Premises the following conditions shall apply:
4.12.2.1 the intended assignee or underlessee shall covenant with the Landlord
during the residue of the Term or during the term of the underlease (as
the case may be) to observe and perform all the covenants on the part
of the Tenant and the conditions contained in this Lease other than
payment of the rents hereby reserved in the case of an underletting
4.12.2.2 if the intended assignee or underlessee shall be a limited liability
company then
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if the Landlord shall reasonably so require there shall be provided a
guarantor or guarantors sufficient in the opinion of the Landlord
(acting reasonably) for such company and
4.12.2.3 in the case of an underletting the underlease will prohibit absolutely
any further sub-underletting of the whole or part of the Demised
Premises
4.12.2.4 such guarantor or guarantors shall prior to such assignment (jointly
and severally if more than one) but with effect therefrom enter into
covenants with the Landlord in the form set out in the Fifth Schedule
4.12.2.5 in the case of an underletting the underlease will contain provisions
excluding sections 24 to 28 inclusive of the Landlord and Tenant Act
1954 in relation to the underlease and the appropriate court order will
be obtained before the same is granted
4.12.3 Upon every application for consent required by this clause 4.12 to
disclose to the Landlord such information as to the terms of the
proposed transaction as shall be reasonably required in order to
satisfy the Landlord that this clause 4.12 is being complied with
4.13 Registration of Dealings
Within twenty-one days after its date to provide the Landlord's
solicitors with a true copy of every assignment or charge evidencing a
devolution of this Lease the Demised Premises or any part thereof
paying a reasonable fee not being less than (pound)30 plus Value Added
Tax for each such registration
PROVIDED THAT registration of any such deed instrument or other
document shall be evidence of notification of such transaction to the
Landlord but shall not require the Landlord to consider the terms of
such transaction or the said deed instrument or other document and
shall not be evidence that it has done so
4.14 Alterations
4.14.1 Not to erect any new or additional buildings or other structures upon
the Demised Premises
4.14.2 Not to make any alterations or additions to the structure or exterior
of the Demised Premises and not to puncture cut or pierce the
structural walls or floor slabs bounding or within the Demised Premises
and not to knock through to or unite the Demised Premises with any
adjoining unit in the Mews Provided that if the Tenant is unable to
accommodate pipe or cable runs within the vertical duct provision of
the Demised Premises then the Tenant shall be entitled to create
(subject to the Tenant obtaining the prior written consent of the
Landlord which shall not be unreasonably withheld or delayed) pipe or
cable runs vertically between the floors notwithstanding that such
alterations or additions may be of a structural nature
4.14.3 Not to make any alterations or additions or to carry out any works in
or to the Demised Premises which in the reasonable opinion of the
Landlord may affect
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the efficient operation of the heating and ventilating system and
apparatus within the Demised Premises
4.14.4 Subject to the foregoing provisions of this clause not to make any
non-structural alterations or additions to the interior of the Demised
Premises or to alter or replace the entrance doors to the Demised
Premises or to affix any aerial or telecommunication dish to the
exterior of the Demised Premises except with the Landlord's written
consent (which shall not be unreasonably withheld or delayed) and (if
required by the Landlord) in accordance with drawings and
specifications previously submitted to and approved in writing by the
Landlord (such approval not to be unreasonably withheld or delayed)
4.14.5 The Tenant may carry out the erection alteration or removal of non
structural demountable partitioning without obtaining the consent of
the Landlord subject to
4.14.5.1 the submission of drawings to the Landlord prior to the commencement of
such work detailing the said alteration or removal and showing the
proposed layout after any such work is completed
4.14.5.2 the strict condition that such work will not and does not affect the
efficient or designed use operation and maintenance of the services in
or to the Demised Premises
4.15.5.3 an obligation to reinstate the Demised Premises at the Termination Date
to the state and condition in which the same were prior to such
erection alteration or removal (if so required by the Landlord)
4.14.5.4 the obtaining by the Tenant of all necessary consents whether statutory
or otherwise
4.14.5.5 all such works being carried out at the Tenants' sole risk
4.14.6 By the Termination Date if so required by the Landlord to reinstate the
Demised Premises to the same condition as they were in at the date of
the grant of this Lease such reinstatement to be carried out to the
reasonable satisfaction of the Landlord
4.15 Advertisements and Signs
4.15.1 Not to affix to or exhibit on the outside of the Demised Premises or to
or through any window of the Demised Premises any figure or letter or
any pole flag signboard advertisement inscription bill placard or sign
whatsoever
4.15.2 Within fourteen days of the occupation of the Demised Premises to
supply to the Landlord or the Surveyor full details of the Tenant's
name and business for the purpose of the preparation by the Landlord's
contractor of a sign or signs to the Landlord's specification to be
placed in a position designated by the Landlord and to reimburse to the
Landlord on demand all costs incidental to the making and installation
of the same
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4.16 Plant Machinery and apparatus
4.16.1 Not to install or use in or upon the Demised Premises any machinery or
apparatus which causes noise or vibration which can be heard or felt in
any adjoining unit or in the remainder of the Mews
4.16.2 Not to load or use the floors ceilings and structure of the Demised
Premises beyond its design capacity or in any manner which will cause
strain or damage thereto
4.16.3 To make good all damage caused to the Demised Premises by the
installation operation or removal of any plant machinery or apparatus
4.17 Gas and Electrical installations
4.1 7.1 Not to alter or extend the electrical or gas installations or
electrical wiring in the Demised Premises save in accordance with the
standards of the Institution of Electrical Engineers or the Institution
of Gas Engineers (as the case may be) and with the Landlord's written
consent such consent not be unreasonably withheld or delayed
4.17.2 Not to use any apparatus which overloads the electrical or gas
installations in the Demised Premises
4.18 General restrictions concerning the use of Demised Premises
4.18.1 Not to use any part of the Demised Premises for the repair of machines
or apparatus of any kind or for any noxious noisy or offensive trade or
business nor for any illegal or immoral act or purpose nor for any sale
by auction nor for gaming and not to commit any nuisance or do anything
which may be or become a nuisance annoyance or inconvenience or cause
damage or disturbance to the Landlord or the lessees or occupiers of
the remainder of the Mews
4.18.2 Not to allow empty containers or rubbish or refuse of any description
to accumulate upon the Demised Premises and provide facilities within
the bin store within the Mews for the keeping of refuse in proper
receptacles readily accessible for collection by the public cleansing
department of the local authority and as regulated by the department
4.18.3 Not to discharge into any Conduit any deleterious matter or any
substance which might damage or be or become a source of danger or
injury to the drainage system of the Demised Premises or any other
property
4.18.4 Not to allow any person to reside or sleep on the Demised Premises
4.18.5 Not to play or use any musical instrument loudspeaker tape recorder
gramophone wireless television set or other equipment which reproduces
music or speech in the Demised Premises so that it can be heard in any
adjoining unit or in the remainder of the Mews
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4.18.6 Not to keep any live animal fish reptile or bird in the Demised
Premises
4.19 Restrictions and Regulation concerning use of Common Parts and Internal
Common Parts
4.19.1 Not to cause the Common Parts or the Internal Common Parts to become
untidy or in a dirty condition
4.19.2 Not to stand place deposit or expose outside any part of the Demised
Premises any goods materials articles or things whatsoever for display
or sale or for any other purpose nor cause any obstruction of the
Common Parts or the Internal Common Parts
4.19.3 To observe and perform such lawful and reasonable regulations and
directions as the Landlord may from time to time make or give for the
orderly and convenient use and enjoyment and proper management of the
Mews and in particular but without prejudice to the generality of the
foregoing
(i) to abide at all times by any proper regulations made by the
Landlord in respect of fire precautions relating to the
Demised Premises the Building and the Mews and in respect of
means of escape from the Demised Premises and in particular
but without prejudice to the generality of the foregoing not
to obstruct the staircases and emergency exits to the Building
(ii) at all times to observe and perform all reasonable proper and
necessary restrictions and obligations from time to time
imposed by the Landlord in respect of the Access Road and to
keep the Landlord at all times fully and effectually
indemnified against all actions costs claims and demands for
which the Landlord may be liable arising from any act or
omission of the Tenant its servants agents or visitors in
respect of the Access Road or the use thereof
(iii) to comply at all times with any regulations or directions from
time to time made or given by the Landlord or the relevant
authority relating to the disposal of rubbish from the Demised
Premises and in particular (but without limiting the
generality of the foregoing) to clear rubbish at least once a
day from the Demised Premises and only to place rubbish in
such areas on the Mews securely fastened in suitable
containers as may be designated for the purpose leaving the
said designated areas tidy at all times
4.19.4 Not to use the car parking space (if any) allocated by the Landlord for
the use of the Tenant otherwise than for the parking of private motor
vehicles belonging to the Tenant or to the person for the time being
entitled to beneficial occupation of the Demised Premises its employees
or lawful visitors
4.19.5 Not to use any part of the underground car park or the Access Road for
the servicing or repair of any motor vehicle nor for the discharge of
fuel
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4.19.6 Not to load or unload vehicles except in the part of the Mews
designated for such purpose by the landlord and in the course of such
loading or unloading:
(i) to comply with all reasonable requirements and regulations of
the Landlord
(ii) not to cause any unnecessary obstruction nor allow any vehicle
to remain standing for any period longer than is reasonably
necessary for the delivering or taking away of goods from the
Demised Premises
4.19.7 Not to allow vehicles to obstruct access by other lessees of the
Lettable Premises to any part or parts of the Lettable Premises
4.19.8 At all times to act reasonably in relation to other users of the Mews
4.20 Use of Demised Premises
Not to use the Demised Premises or any part thereof otherwise than in
accordance with the provisions for use in item 1.10 of the Particulars
and not to use the same or any part thereof for any other purpose
without the previous written consent of the Landlord first having been
obtained such consent not to be unreasonably withheld or delayed
4.21 Not to invalidate insurance
4.21.1 Not to do anything which may prejudice any policy of insurance for the
time being in force in respect of any part of the Building or which may
result in such insurance becoming void or voidable or the rate of
premium under such insurances being increased (unless the Tenant pays
all additional premiums in respect thereof) and the Tenant will at all
times comply with all proper requirements of the insurers of the
Demised Premises whether the same relate to the Demised Premises or to
the use thereof or to any fixtures fittings equipment or chattel
whatsoever therein or thereon
4.21.2 To repay to the Landlord on demand all sums paid by way of increased
premiums and all losses or damages suffered by the Landlord by reason
of any breach by the Tenant of clause 4.21.1
4.21.3 In the event of the Demised Premises or any part thereof being
destroyed or damaged by any of the Insured Risks and the insurance
money under any insurance against the same effected thereon by the
Landlord being wholly or partly irrecoverable by reason solely or in
part of a breach by the Tenant of clause 4.21.1 then and in every such
case to pay to the Landlord forthwith (in addition to the Insurance
Rent) the whole or (as the case may require) a fair proportion of the
monies so rendered irrecoverable
4.21.4 In the event of the Demised Premises or any part thereof being
destroyed or damaged by any of the Insured Risks to give written notice
thereof to the Landlord as soon as practicable but in any event within
two working days of such destruction or damage coming to the notice of
the Tenant
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4.22 Fire requirements
At all times during the Term:
4.22.1 to comply with all requirements from time to time of the appropriate
authority in relation to fire precautions affecting the Demised
Premises and
4.22.2 to provide install and maintain such suitable fire prevention and
extinguishing equipment to the standard required by the local authority
fire officer
4.23 Tenant's Insurances
4.23.1 To maintain in force throughout the Term adequate and sufficient
insurance in respect of the Demised Premises against liability to third
parties for injury to or death of any person or damage to any property
4.23.2 To produce to the Landlord on request the policy relating to any
insurance specified in paragraph 4.23.1 or details thereof and evidence
of payment of the current premium and to discharge any premium payable
in respect thereof upon the same becoming due
4.23.3 To indemnify the Landlord in respect of any loss or damage which the
Tenant is obliged to insure against under this sub-clause
4.24 Notices
4.24.1 To supply the Landlord with a copy of any notice order or proposal for
a notice or order affecting the Landlord's interest in the Demised
Premises or the user thereof served on the Tenant by any competent
authority (or received by the Tenant from any sub-lessee) as soon as
reasonably practicable after it is received by the Tenant and without
delay to take all reasonable or necessary steps to comply with any such
notice or order so far as such compliance is within the Tenant's
obligations hereunder
4.24.2 At the request of the Landlord to make or join with the Landlord in
making such reasonable objections or representations against or in
respect of any such notice or order as the Landlord shall reasonably
require
4.25 As to the Planning Acts
In relation to the Planning Acts
4.25.1 not to do or omit anything on or in connection with the Demised
Premises the doing or omission of which shall be a contravention of the
Planning Acts and to indemnify the Landlord in respect thereof
4.25.2 to give notice forthwith to the Landlord of any notice order or
proposal for a notice or order served on the Tenant under the Planning
acts and if so required by the Landlord to produce the same and at the
request of the Landlord to make or join in making such reasonable
objections or representations in respect of any
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such proposal as the Landlord may reasonably require and to pay the
whole or such part of the cost thereof as shall be fair and reasonable
according to the circumstances of the case
4.25.3 to comply at the Tenant's own cost with any notice or order served on
the Tenant under the provisions of the Planning Acts
4.25.4 not to make or permit to be made any application for planning
permission in respect of the Demised Premises or any part thereof
without the prior approval of the Landlord and not to implement any
planning permission or approval until the same has been submitted to
and approved by the Landlord provided that approvals to such
application and/or implementation shall not be unreasonably withheld or
delayed for alterations or other matters which are otherwise authorised
under this Lease
4.25.5 unless the Landlord shall otherwise direct the Tenant shall carry out
before the Termination Date any works stipulated to be carried out to
the Demised Premises subsequent to such date as a condition of any
planning permission which may have been implemented by the Tenant
during the Term
4.25.6 if the Tenant shall receive any compensation with respect to the
Tenant's interest hereunder because of any restrictions placed upon the
user of the Demised Premises under or by virtue of the Planning Acts
then if and when the Tenant's interest hereunder shall be determined
howsoever that event may occur except by effluxion of time or exercise
by the Tenant of an option to determine the Term the Tenant shall
forthwith make such provision as is just and equitable for the Landlord
to receive its due benefit from such compensation
4.25.7 not without the Landlord's previous consent in writing to enter into
any agreement with any competent authority regulating the development
or use of the Demised Premises
4.25.8 if and when called upon so to do to produce to the Landlord all such
plans documents and other evidence as the Landlord may reasonably
require in order to satisfy itself that the provisions of this clause
4.25 have been complied with in all respects
Provided always that notwithstanding any other provisions contained in
this Lease to the contrary the Landlord's consent shall not be
unreasonably withheld or delayed to any works required to be carried
out pursuant to this clause 4.25
4.26 To preserve easements
To preserve as far as the Tenant is able all rights of light and other
easements enjoyed by the Demised Premises and at all times to afford to
the Landlord such reasonable facilities and assistance as may be
reasonably necessary to enable the Landlord to prevent anyone acquiring
any right of light or other easement over the Demised Premises
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4.27 Costs
To pay to the Landlord all reasonable and proper costs charges and
expenses (including bailiff's commission and professional adviser's
costs and fees) reasonably incurred by the Landlord or any superior
landlord
4.27.1 In or in bona fide contemplation of any proceedings under Sections 146
or 147 of the Law of Property Act 1925 including the preparation and
service of notices thereunder (notwithstanding forfeiture is avoided
otherwise than by relief granted by the Court)
4.27.2 In the preparation and service at any time during or within six months
after the Termination Date of a Schedule of Dilapidations accrued at
any time during the Term
4.27.3 In connection with any breach of covenant by or the recovery of arrears
of rent due from the Tenant hereunder
4.27.4 In respect of any application for consent required by this Lease
whether or not such consent be granted (except where such consent may
not under the terms hereof or by statute or statutory instrument be
unreasonably withheld or delayed but is so unreasonably withheld or
delayed or is proffered subject to unreasonable qualification or
condition)
4.28 VAT
Upon production of a formal and valid VAT invoice addressed to the
Tenant to pay to the Landlord Value Added Tax at the rate for the time
being in force chargeable in respect of any taxable supplies (within
the meaning of Value Added Tax Act 1983 or any statutory provisions
amending or replacing the same) made by the Landlord to the Tenant
under the terms of or in connection with this Lease and in every case
where the Tenant covenants to pay an amount of money under this Lease
such amount shall be regarded as being exclusive of all Value Added Tax
which may from time to time be legally payable thereon
4.28.2 To the extent that any payments made by the Tenant to the Landlord
hereunder are recoverable in the same manner as if they were rent then
any Value Added Tax payable by the Tenant thereon shall also be
recoverable in the same manner as if it were rent
4.28.3 In every case where the Tenant has agreed to reimburse the Landlord in
respect of any taxable supplies made to the Landlord under the terms of
or in connection with this Lease (where such taxable supplies do not in
turn constitute or form part of taxable supplies made by the Landlord
to the Tenant to which clause 4.28.1 applies) then the Tenant shall
also reimburse any Value Added Tax paid by the Landlord on such payment
save to the extent that such Value Added Tax is recoverable by the
Landlord
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4.29 New Guarantor
Within twenty working days of the death during the Term of any person
who has or shall have guaranteed to the Landlord the Tenant's
obligations contained in this Lease or of such person becoming bankrupt
or having a Receiving Order made against him or being a Company passing
a Resolution to wind up or entering into liquidation or having a
receiver or administrative receiver appointed then to give notice
thereof to the Landlord and if so required by the Landlord at the
expense of the Tenant within three months to procure some other person
sufficient in the reasonable opinion of the Landlord to execute a
guarantee in respect of the Tenant's obligations contained in this
Lease in the form set out in the Fifth Schedule
4.30 Indemnity
To be responsible for and to keep the Landlord fully indemnified
against all damage damages losses costs expenses actions demands
proceedings claims and liabilities made against or suffered or incurred
by the Landlord arising directly or indirectly out of:
4.30.1 the negligence of the Tenant or any persons at the Demised Premises
expressly or impliedly with the Tenant's authority or
4.30.2 any breach or non-observance by the Tenant of the covenants conditions
or other provisions of this Lease or any of the matters to which this
Lease is subject
4.31 Observe Third Schedule matters
To observe and perform the provisions of the documents specified in the
Third Schedule so far as the same affect the Demised Premises and still
subsist and are capable of being enforced and to indemnify and keep the
Landlord indemnified in respect of all liability arising from any
failure by the Tenant so to do so far as aforesaid
4.32 Interest during Breach of Covenant
In the event of:
4.32.1 There being any material breach by the Tenant of the covenants on the
Tenant's part herein contained and
4.32.2 The Landlord having notified the Tenant in writing that by reason
thereof the Landlord will not for the time being accept any sums
(including the Rent and/or the Insurance Rent and/or the Service
Charge) payable by the Tenant under the provisions of this Lease
then and in every such case to pay the Landlord on demand Interest on
the amounts due to the Landlord (credit being given for any sums paid
by the Tenant and accepted by the Landlord as mesne profits) from the
date of the notice served by the Landlord in respect of such breach or
from the date when
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the particular sum fell due (whichever is the later) until whichever is
the earlier of either:
(i) the date of the acceptance by the Landlord of the sum due or;
(ii) the date that such breach has been remedied and the Tenant has
so notified the Landlord in writing
4.33 Security
4.33.1 If the Tenant shall at any time be in possession of keys to the gates
giving access to the Mews to take all reasonable steps necessary to
preserve the security of the Mews
4.33.2 Not to leave the Demised Premises continuously unoccupied for more than
one month without notifying the Landlord and
4.33.2.2 providing such security arrangements as the insurers shall require in
order to protect the Demised Premises from vandalism theft damage or
unlawful occupation
4.34 Information as to keyholders
To ensure that at all times the Landlord has written notice of the name
home address and home telephone number of at least two keyholders of
the Demised Premises
5. LANDLORD'S COVENANTS
THE LANDLORD COVENANTS WITH THE TENANT as follows:
5.1 Quiet Enjoyment
That as long as the Tenant pays the Rent the Insurance Rent and the
Service Charge and complies with the terms of this Lease the Tenant may
enjoy the Demised Premises and the rights hereby granted peaceably
during the Term without any interruption by the Landlord or any person
lawfully claiming through under or in trust for the Landlord
5.2 To insure
5.2.1 Unless such insurance shall be vitiated by any act omission or default
of the Tenant or of anyone on the Demised Premises or the Mews
expressly or by implication with the Tenant's authority at all times
through the Term to effect insurance of the Mews:
5.2.1.1 in such reputable insurance office or with such reputable underwriters
and through such agency as the Landlord may from time to time decide
5.2.1.2 in the name of the Landlord and such other person as the Landlord may
reasonably require
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5.2.1.3 for the following sums:
- such sum as shall from time to time represent the full cost of
rebuilding and reinstatement of the Estate including architects'
surveyors' and other professional fees payable upon any applications
for planning permission or other permits or consents that may be
required in relation to the rebuilding or reinstatement of the Estate
the cost of debris removal demolition site clearance any works that may
be required by statute and incidental expenses and
- the loss of Rent and Service Charge payable under this Lease from
time to time (in the case of the Rent allowing for such increases as
are referred to in clause 2.17.3) for the Loss of Rent Period
5.2.1.4 Against damage or destruction by the Insured Risks to the extent that
such insurance may ordinarily be arranged for properties such as the
Mews and subject to such excesses conditions or limitations as the
insurer may properly require
5.2.2 If and whenever so requested by the Tenant to supply the Tenant with
satisfactory evidence of the terms and subsistence in effect of the
insurance policy or policies to be maintained by the Landlord pursuant
to this clause 5.2 and evidence of payment of the current premium or
premiums therefore
5.2.3 The Landlord shall not be under any obligation to insure any fixtures
or fittings installed by the Tenant which have become part of the
Demised Premises or any alterations to the Demised Premises unless the
Tenant shall have given to the Landlord written notice of such
installation or the carrying out of the same and of the full cost of
reinstatement thereof and the Landlord has agreed with the Tenant at
its request to effect the insurance thereof
5.2.4 If the Demised Premises or any part thereof shall be destroyed or
damaged by any of the Insured Risks the Landlord will (subject to
payment by the Tenant of any monies rendered irrecoverable pursuant to
clause 4.21.3 hereof) with all due diligence take such steps as may be
requisite and proper and use all reasonable endeavours to obtain any
necessary consents and approvals under any regulations or enactments
for the time being in force to enable the Landlord to rebuild and
reinstate the Demised Premises and as soon as such consents and
approvals shall have been obtained and subject to any circumstances
beyond the control the Landlord to pay out or procure such payment out
of all monies received in respect of such insurance (other than for
architects' surveyors' and other professional fees and loss of Rent and
Service Charge) in rebuilding reinstating replacing and making good the
Demised Premises or the part or parts thereof so destroyed or damaged
5.3 Services
to use all reasonable endeavours subject to payment at all times of the
rents payable hereunder and (without prejudice to the foregoing) of the
Tenant's proportion of the Service Charge and unless prevented from so
doing by causes beyond the Landlord's control to provide manage and
operate the services mentioned in paragraph 5 of the Fourth Schedule
hereto in accordance with the
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principles of good estate management
6. PROVISOS
PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED that:
6.1 Right of Re-entry
The Landlord may at any time after the occurrence of any of the
following events re-enter the Demised Premises whereupon this demise
shall absolutely determine (but without prejudice to any right of
action of the Landlord in respect of any arrears of rent or any
antecedent breach of covenant):
6.1.1 if any rent remains unpaid 21 days after it is due (whether formally
demanded or not) or
6.1.2 if any covenant or stipulation in the Lease which is to be performed or
observed by the Tenant is not performed or observed or
6.1.3 if the Tenant permits any execution or distress to be levied on any
goods in the Demised Premises or
6.1.4 if the Tenant or Guarantor (or any one party included within the
definition of the Tenant or Guarantor) becomes Insolvent (as defined in
Clause 6.2)
6.1.5 if the Tenant or Guarantor ceases to exist
6.2 Insolvency
"Insolvent" means for the purposes of this part of the Lease:
6.2.1 In relation to a company that:
6.2.1.1 it is deemed unable to pay its debts as defined in section 123 of the
Insolvency Act 1986 (referred to as "the Act" in the remainder of this
Clause) or
6.2.1.2 a voluntary arrangement is made under Part 1 of the Act or
6.2.1.3 an administration order is made under Part II of the Act or
6.2.1.4 a receiver or manager is appointed whether under Part Ill of the Act
(including an administrative receiver) or otherwise or
6.2.1.5 it goes into liquidation as defined in Section 247 (2) of the Act
(other than a voluntary winding up solely for the purpose of
amalgamation or reconstruction while solvent) or
6.2.1.6 a provisional liquidator is appointed under Section 135 of the Act or
6.2.1.7 a scheme of arrangement is made under Section 425 of the Companies Act
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1985 and
6.2.2 In relation to an individual that:
6.2.2.1 an interim order or a voluntary arrangement is made under Part VIII of
the Act or
6.2.2.2 a bankruptcy petition is presented to the Court or his circumstances
are such that a bankruptcy petition could be presented under Part IX of
the Act or
6.2.2.3 he enters into a Deed of Arrangement or Composition with or for the
benefit of his creditors
6.3 Suspension of Rent in case of damage by Insured Risks
If the Demised Premises or any part thereof are destroyed or damaged by
any of the Insured Risks so as to render the Demised Premises or any
part thereof unfit for occupation and use or inaccessible then (save to
the extent that the insurance money if irrecoverable by reason of any
act or default of the Tenant or other occupiers of the Demised Premises
or their respective servants agents or lawful visitors) the Rent the
Insurance Rent and the Service Charge or a fair proportion thereof
according to the nature and extent of the damage shall be suspended
until the Demised Premises shall have been reinstated so as to be fit
for occupation and use and accessible and any dispute concerning this
sub-clause shall be referred to arbitration in the manner specified in
clause 7
6.4 Determination on Destruction
If at the expiration of the Loss of Rent Period
6.4.1 the insurance of the Mews effected by the Landlord pursuant to clause
5.2 has not been vitiated or payment of the policy moneys refused in
whole or in part as a consequence of any act omission or default of the
Tenant or of anyone on the Demised Premises or the Mews expressly or by
implication with the Tenant's authority and the Tenant fails to make up
any deficiency pursuant to clause 4.21.3 and
6.4.2 the Landlord shall have been unable to obtain all necessary consents
and approvals for the rebuilding and/or reinstatement of the Mews and
6.4.3 this Lease has not been terminated by the doctrine or frustration
then either the Landlord or the Tenant shall be entitled by notice in
writing to the other to determine this Lease and upon the service of
such notice this Lease shall determine without prejudice to any rights
or remedies which may then have accrued to either party against the
other
6.5 Landlord to have Insurance Moneys on Frustration
If this Lease shall determine under the provisions of clause 6.3 or has
been
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terminated by the doctrine of frustration then and in either case the
insurance monies shall be paid to the Landlord for its own use and
benefit
6.6 Landlords right to alter Mews and Adjoining Property
The Landlord shall be entitled at any time during the Term to pull down
alter erect or rebuild extend enlarge or otherwise deal with or permit
or suffer to be pulled down altered erected or rebuilt extended
enlarged or otherwise dealt with the remainder of the Mews and the
Adjoining Property to any extent and in any manner desired and to use
any such buildings and erections or the Adjoining Property for any
purpose desired provided that the access of light and air to the
Demised Premises or any part thereof or any easements right or
amenities of any kind for the time being appertaining to or enjoyed
with the Demised Premises or any part thereof shall not be thereby
materially obstructed or interfered with Provided that notwithstanding
anything herein contained the Landlord shall
6.6.1 exercise these rights in such manner as to cause as little interference
inconvenience or damage as reasonably possible to the Tenant and the
Demised Premises and fixtures and fittings therein and the means of
access thereto and shall make good any damage occasioned to the Demised
Premises and any fixtures and fittings therein and thereon as
expeditiously a reasonably possible
6.6.2 only enter the Demised Premises if such works and other matters cannot
reasonably be effected without such entry and then only after giving
the Requisite Notice and
6.6.3 not endanger the structural stability of the Demised Premises
6.7 No liability in damages
Save to the extent (if any) that the Landlord is entitled to be
indemnified under any policy or policies of insurance effected by the
Landlord the Landlord shall not be responsible to the Tenant or the
Tenant's servants agents or lawful visitors or to any other person in
the Demised Premises for any:
6.7.1 accident happening or injury suffered on the Demised Premises or
6.7.2 damage to or loss of any goods or property sustained on the Demised
Premises or
6.7.3 accident or damage (except damage by the Insured Risks) to the Demised
Premises or
6.7.4 act or omission of any of the Landlord's Agents
6.8 As to goods left on the Demised Premises
If at the end of the Term any goods or effects belonging to the Tenant
are left
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in the Demised Premises for more than 10 working days the Landlord has
power to sell the same as agent for and on behalf of the Tenant and the
Landlord shall
pay or account to the Tenant on demand for the proceeds of sale (but
not any interest thereon) less any costs of storage and sale reasonably
incurred by the Landlord
6.9 Compensation under 1954 Act
Subject to the provisions of Section 38(2) of the Landlord and Tenant
Act 1954 neither the Tenant nor any assignee or undertenant shall be
entitled to any compensation under Section 37 of that Act upon quitting
the Demised Premises or any part of it
6.10 Exclusion of planning warranty
Nothing in this Lease shall imply or constitute a warranty by the
Landlord that the Demised Premises may be used for any specific purpose
under the Planning Acts
6.11 Service of Notices
Save as herein expressly provided to the contrary Section 196 of the
Law of Property Act 1925 as amended by the Recorded Delivery Service
Act 1962 shall apply to all notices demands requests or other
communications given or made pursuant to this Lease save that any such
notice demand request or other communication to be given to or served
on any party hereunder which is for the time being a company or
corporation shall be validly given if given to or served on the company
or corporation at its registered office If the Landlord Tenant or the
Guarantor shall comprise more than one person the service of any such
notice demand request or other communication on any one of such persons
shall constitute good service on all of them
6.12 Commission on Insurance
The Landlord may retain for its own benefit any commissions or
discounts received or obtained by it on or based on the gross premiums
and other costs which would otherwise be paid incurred or suffered by
the Landlord in insuring or procuring the insurance of the Mews in
accordance with the Landlords covenant in that behalf herein contained
6.13 Exclusion of liability
6.13.1 In this Clause :-
6.13.1.1 "Landlord's Obligations" means all obligations of the Landlord under
any covenant or other term of this lease or any document expressed to
be supplemental to this lease and all implied obligations of the
Landlord under this lease or any such document
6.13.1.2 "Breach" means any breach by the Landlord of the Landlord's Obligations
or any
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of them
6.13.2 No liability shall attach to the Landlord in respect of any Breach
occurring after they shall have parted with all interest in the Demised
Premises
7. ARBITRATION
Where in this Lease there is provision for reference to arbitration
then in the absence of any express contrary provision such reference
shall be made in accordance with the Arbitration Acts 1950 - 1979 to a
single arbitrator to be agreed upon by the parties or failing agreement
appointed by the President of The Royal Institution of Chartered
Surveyors (or if the President is not available or is unable to make
such appointment then by the Vice-President or next senior officer of
such Institution then available and able to make such appointment) on
the application of either the Landlord or the Tenant
8. JURISDICTION
Whatever the nationality residence or domicile of the parties hereto
the law of England shall be the proper law of this Lease and the
parties hereby submit to the non-exclusive jurisdiction of the English
Courts
9. BREAK CLAUSE
If the Tenant shall desire to determine the Term at the end of the
fifth year of the Term and shall give to the Landlord not less than six
months previous notice in writing of such desire to determine the Term
then upon the expiration of such notice the Term shall thereupon cease
and the Tenant shall deliver up vacant possession of the Demised
Premises but without prejudice to any claim by either party against the
other in respect of any antecedent claim or breach of any covenant or
provision herein contained
10. CERTIFICATE
It is certified that there is no agreement for the lease which this
Lease gives effect
IN WITNESS whereof this Deed has been duly executed
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THE FIRST SCHEDULE
Rights Benefitting the Demised Premises
The Landlord grants to the Tenant and where necessary and appropriate its
permitted occupiers lawful visitors employees and agents (in common with the
Landlord and all others entitled) the following rights:
1. The free and uninterrupted passage and running of water soil gas
electricity and other services through the Conduits which are now or
may hereafter during the Term be provided by the Landlord for the
benefit of the Mews as a whole in on over or under the Mews so far as
is necessary for the use of the Demised Premises for the use hereby
permitted
2. The right to use the Common Parts and the Internal Common Parts for all
proper purposes in connection with the use and enjoyment of the Demises
Premises
3. The right to display:
3.1 on the notice board at the entrance to the Mews and
3.2 on the exterior of the building (where appropriate) and
3.3 on the exterior of the internal wall adjacent to the Demised Premises
(where appropriate)
a name plate or sign in positions and of sizes to be specified and
supplied by the Landlord showing the Tenant's name and any other
details approved by the Landlord
4. The right of support shelter and protection from any part of the Mews
affording the same
5. The right to park two private motor vehicles in the underground car
park of the Mews in the space allocated from time to time by the
Landlord together with all necessary rights of access thereto (but
subject to the provisions of paragraph 5 of the Second Schedule)
THE SECOND SCHEDULE
Rights Excepted and Reserved
EXCEPT AND RESERVED unto the Landlord and all other persons at any time
authorised by the Landlord or otherwise entitled thereto for the benefit only of
the remainder of the Mews and the Adjoining Property
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1. The free and uninterrupted passage and running of water soil gas
electricity and other services from and to any parts of the Mews and
the buildings which now are or may hereafter during the Term be erected
thereon through the Conduits which are now or may hereafter during the
Term be upon in over or under the Demised Premises
2. The right to maintain in on under or over the Demised Premises at any
time during the Term any Conduits plant or machinery for the benefit of
any part of the Mews
3. The rights of light air support shelter protection and all other
easements and rights now or after the date of this Lease belonging to
or enjoyed by other parts of the Mews
4. (a) Full and free right for the Landlord to alter (by way of
improvement or otherwise) or carry out modifications or
extensions or additions to or at the Retained Premises or to
or at the Lettable Premises (other than the Demised Premises)
in such manner as the Landlord may think fit AND
notwithstanding that the access of light and air to the
Demised Premises may thereby be interfered with
(b) Full and free right for any part of the Mews to be erected or
constructed after the date hereof and during the Term so that
the same obtains subjacent and lateral support or protection
from the Demised Premises
BUT so that such rights or liberties shall not be exercised so to
materially prejudice the rights expressly granted to the Tenant in this
Lease or materially prejudice the use and enjoyment of the Demised
Premises and so that any such works to be carried out will be carried
out as efficiently and quickly as possible causing as little disruption
as possible to the Tenant's business and the Landlord will make good
any loss or damage caused to the Demised Premises by the exercise of
this right
5. The right to alter by construction or otherwise the Common Parts and
the access way to the car parking area (but so that the Mews is always
provided with Common Parts and a car park access way reasonably
equivalent to those at present available and serving the same and the
Demised Premises always have two parking spaces allocated to them at
any one time)
6. The right to install retain and alter and maintain light fittings signs
traffic signs and public utility signs or notices on the exterior of
the Building in positions which do not interfere with the Tenant's
access to the Demised Premises and do not obscure the windows of the
Demised Premises
7. The right to erect and retain scaffolding or other such apparatus on
any part of the Retained Premises for the purpose of inspecting
repairing maintaining or cleaning the Mews notwithstanding that such
scaffolding may temporarily restrict the access to or enjoyment and use
of the Demised Premises
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8. The right at any time on Requisite Notice to enter and remain upon the
Demised Premises in order to
(a) inspect or view the condition and state of repair of the
Demised Premises and the remainder of the Estate
(b) inspect cleanse repair remove replace with others alter or
execute any works whatever to or in connection with the
Conduits easements or services referred to paragraphs 1 2 and
3 of this Schedule
(c) carry out work or do anything whatsoever comprised within the
Landlord's obligations in this Lease whether or not the Tenant
is liable to make a contribution
(d) exercise any of the rights granted to the Landlord by the Lease
Provided that the rights specified in this paragraph shall be
exercisable only:
(i) where such rights cannot reasonably be exercised without entry
on to the Demised Premises
(ii) if the Landlord shall cause as little inconvenience as
reasonably practicable and make good all damage caused to the
Demised Premises as soon as reasonably practicable
THE THIRD SCHEDULE
Matters to which the Demised Premises are subject
1. The covenants and other matters (other than financial charges)
contained or referred to in the registers of title numbers NGL 181789
and NGL 648550 so far as the same still subsist and are capable of
being enforced
THE FOURTH SCHEDULE
The Service Charge
1. In this Schedule
(a) "the Expenditure" means all proper expenses and outgoings
reasonably and properly incurred by the Landlord in respect of
the Items described in paragraph 5 of this Schedule (so far as
applicable) and includes not only expenses disbursed but also
a reasonable sum by way of provision for future expenditure on
such of those items as call for intermittent expenditure
(whether such expenditure is likely to be incurred during or
after the Term)
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(b) "the Tenant's Proportion" means 5.089% of the Expenditure or
such other fair and reasonable proportion of the Expenditure
as may be determined by the Surveyor in the manner described
in clause 1.17 hereof
(c) "the Landlord's Account Year" means the year ending on the
date specified in item 1.11 of the Particulars or such other
annual period as the Landlord may at its discretion from time
to time determine and notify in writing to the Tenant
2.1 The amount of the Service Charge shall be ascertained and certified
annually by a certificate ("the Certificate") signed by the Surveyor so
soon after the end of the Landlord's financial year as may be
practicable and shall relate to such year in manner hereinafter
mentioned
2.2 A copy of the Certificate for each such financial year shall be
supplied by the Landlord without charge to the Tenant
2.3 The Certificate shall contain a fair summary of the Service Charge
during the Landlord's financial year to which it relates and the
Certificate (or copy thereof duly certified by the person by whom the
same was given) shall be conclusive evidence for the purposes hereof of
all matters of fact which it purports to certify save in cases of
manifest error
3.1 On the usual quarter days (the Interim Payment Dates) (or in the event
of an alteration in the period of the Landlord's financial year on such
quarter day as appropriate) of every year during the Term the Tenant
shall pay to the Landlord such a sum ("the Advance Payment") in advance
and on account of the Service Charge as the Surveyor shall from time to
time specify at the Surveyor's discretion to be fair and reasonable
PROVIDED THAT subject and without prejudice to the foregoing provisions
the Advance Payment for the Landlord's financial year current at the
date of the grant hereof ("Landlord's current financial year") shall be
the sum set out in item 1.11 of the Particulars of which the Tenant
shall pay the due proportion calculated from day to day in respect of
the period from the date of occupation to the following Interim Payment
Date
3.2 As soon as practicable after the end of each Landlord's financial year
the Landlord shall furnish to the Tenant an account of the Service
Charge payable by the Tenant for that year due credit being given
therein for the total of the Advance Payments made by the Tenant in
respect of the said year and upon the furnishing of such account there
shall be paid by the Tenant to the Landlord the Service Charge or any
balance found payable or there shall be credited by the Landlord to the
Tenant (or repaid by the Landlord to the Tenant in the event that the
Term has determined) any amount which may have been overpaid by the
Tenant by way of Advance Payments as the case may require PROVIDED
ALWAYS THAT the provisions of this sub-clause shall continue to apply
notwithstanding the expiration or sooner determination of the term
hereby granted but only in respect of the period down to such
expiration or sooner determination as aforesaid
4. The expenses and outgoings comprising the Expenditure are the following
costs
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properly incurred by the Landlord:
Definitions
4.1 "Structure" means:
(a) the entirety of the roofs and foundation of all or any of the
buildings in the Mews
(b) the entirety of all floors and ceilings of the Building (but
excluding any such floor and ceiling finishes which are the
responsibility of any tenant)
(c) the entirety of all external walls of the Building (but
excluding any such paint paper and other decorative finishes
applied to the internal faces of such walls which are the
responsibility of any Tenant)
(d) the entirety of the load bearing walls pillars and other
structures of the Building (but excluding any such paint paper
and other decorative finishes applied to the internal faces of
such walls pillars and other structures which are the
responsibility of any Tenant)
(e) all other parts of the structure of all or any of the
buildings in the Mews
4.2 "Plant" means all apparatus plant machinery equipment within any
buildings forming a part of the Mews from time to time including
(without prejudice to the generality of the above) lifts lift shafts
standby generators and boilers and items relating to mechanical
ventilation heating cooling public address and closed circuit
television systems.
5. The services to be provided by the Landlord are:
5.1 The upkeep repair re-building replacement maintenance updating
cleansing painting decoration renewal lighting and heating (where
appropriate) of the Retained Premises and without prejudice to the
generality of the foregoing this shall include but not be limited to:
5.1.1 the Structure of all the buildings and Common Parts in the Mews
including any building provided for any porter maintenance or security
staff and the storage and maintenance of all materials associated
therewith including the roofs foundations stairways ceilings floors and
walls (excluding the interior faces of any such which remain the
responsibility of the Tenant)
5.1.2 the timbers joists drains and all services and utilities Plant and
security devices party walls and fences
5.1.3 the exterior faces of any walls dividing the Demised Premises from the
common parts
5.1.4 the exterior face of any door facing into the common parts
5.1.5 the window frames and the exterior face of any window frames or roof
light
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and the glass contained therein
5.1.6 the landscaping maintenance and renewal of any landscaped common areas
or balconies within the Mews including providing and maintaining (at
the Landlord's absolute discretion) plants shrubs trees gardens or
grassed areas and floral decorations in the common parts and keeping
the same planted free from weeds and properly attended and the grass
cut
5.1.7 the Underground Car Park including (i) all roads paths and staircases
giving access to or egress from (ii) the security barrier systems and
(iii) all plant and machinery situate therein or associated therewith
5.2 The provisions of dustbin areas and receptacles and security services
5.3 All costs and expenses whatsoever properly incurred by the Landlord in
and about the discharge of the obligations on the part of the Landlord
set out specifically in this Schedule
5.4 The cost of periodically inspecting examining maintaining overhauling
and where necessary replacing any and every part of the Building and
any Plant and the appurtenances thereof referred to in extenso in this
Schedule
5.5 The cost of supply of telephone services electricity gas oil or other
fuel and water for all purposes referred to in this Schedule
5.6 The maintenance servicing and renewal of any fire alarms fire
prevention and fire fighting equipment and ancillary apparatus in the
Retained Parts
5.7 Any other services relating to the Mews or any part of it provided by
the Landlord from time to time during the Term and not expressly
mentioned
5.8 The cost of employing staff for the performance of the duties and
services referred to in this Schedule and all other incidental
expenditure in relation to such employment (including but without
limiting the generality of such provision) the payment of the statutory
and such other insurance health pension welfare and other payments
contributions and premiums that the Landlord may at the Landlord's
absolute discretion deem desirable or necessary and the provision of
uniforms working clothes tools appliances telephone service cleaning
sanitary and other materials bins receptacles and other equipment for
the performance of their duties and the cost of providing necessary
washing and toilet requisites in any staff toilet accommodation
5.9 All charges assessments impositions and other outgoings payable by the
Landlord in respect of all parts of the Mews not exclusively occupied
by the Landlord or any other tenant other than the Lettable Premises
5.10 The cost of any interest and fees in respect of money borrowed to
finance the provisions of the Services
5.11 Such reasonable provision (if any) for anticipated expenditure in
respect of any of the Services as the Landlord shall in the interests
of good estate
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management consider appropriate
5.12 The proper and reasonable fees and disbursements (and any value added
tax payable on them) of:
5.12.1 the Surveyor and any other individual firm or company reasonably and
properly employed or retained by the Landlord for (or in connection
with) such surveying or accounting functions or the management of the
estate
5.12.2 the managing agents (whether or not the Surveyor) for or in connection
with
5.12.2.1 the management of the Mews (excluding the fees and
disbursements referred to in clause 6.12.1 above where the
Surveyor and the Managing Agents are one and the same)
5.12.2.2 the collection of all sums due to the Landlord from the
tenants of the Mews
5.12.2.3 the performance of the Services and other duties in and
about the Mews or any part of it relating to (without
prejudice to the generality of the above) the general
management administration security maintenance protection and
cleanliness of the Mews
5.12.3 any individual firm or company valuing the Mews for insurance purposes
or for the purposes of assessing the full cost of rebuilding and
reinstatement
5.12.4 any individual firm or company providing caretaking or security
arrangements and services to the Mews
5.12.5 any other individual firm or company employed or retained by the
Landlord to perform (or in connection with) any of the management
services or any of the functions or duties referred to in this
paragraph
5.13 The cost of taking all steps deemed proper desirable or expedient by
the Landlord for complying with making representations against or
otherwise contesting the incidence of the provisions of any legislation
or orders or statutory requirements thereunder concerning town planning
public health highways streets drainage or other matters relating or
alleged to relate to the premises for which the Tenant is not directly
liable hereunder
5.14 The upkeep repair re-building insurance replacement maintenance
updating cleansing painting and renewal of the lifts and any associated
machinery or plant serving Units 7, 8, 13 and 14 of the Mews including
without prejudice to the generality of the foregoing the cost of:
5.14.1 insuring and keeping insured the lifts in respect of such fully
comprehensive insured risks as the Landlord in its absolute discretion
deems necessary in the full replacement value to include third party
and public liability insurance
5.14.2 periodically inspecting maintaining overhauling and where necessary
replacing any and every part of the lifts or any plant or machinery
which serves the lifts
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to include any maintenance contract and any statutory inspections and
any fees payable in respect thereof
5.14.3 the supply of electricity or any other fuel which serves the lifts
exclusively
5.14.4 the employment of any staff or outside contractor for the performance
of any duties or services associated exclusively with the lifts
5.14.5 such provision (if any) for anticipated expenditure in respect of the
lifts as the Landlord shall in the interests of good estate management
consider appropriate
6. If during any Landlord's Account Year it shall reasonably appear to the
Landlord that by reason of unexpected expenses or liabilities its
previous estimate of the Service Charge is likely to be exceeded then
the Landlord may in its reasonable discretion serve on the Tenant a
statement of such expenses and liabilities and the proportion thereof
due as the Service Charge in consequence thereof and any such sums so
required shall be paid by the Tenant within fourteen days of the demand
therefor. Such demand and payment shall be taken into account under
Paragraph 3 of this Schedule.
7. Each annual statement of Expenditure and of the Tenant's Proportion
shall be certified by the Surveyor and a duly certified copy of such
statement shall in the absence of manifest error or fraud be evidence
for the purposes of this Lease of the matters covered by such statement
but the Landlord shall upon request and payment of a reasonable
inspection fee permit the Tenant to inspect at any time up to six
months after delivery of a statement the vouchers and receipts for
items included in it
THE FIFTH SCHEDULE
Form of Guarantee required for clauses 4.12
and 4.29
The Guarantor covenants with the Landlord and (without the need for any express
assignment) with all its successors in title that:
1. To pay observe and perform
During the Term the Tenant shall punctually pay the rents and observe
and perform the covenants and other terms of this Lease and if at any
time during the Term the Tenant shall make any default in payment of
the rents or in observing or performing any of the covenants or other
terms of this Lease the Guarantor will pay the rents and observe or
perform the covenants or terms in respect of which the Tenant shall be
in default and make good to the Landlord on demand and indemnify the
Landlord against all losses damages costs and expenses arising or
incurred by the Landlord as a result of such non-payment
non-performance or non-observance notwithstanding:
37
<PAGE>
1.1 any time or indulgence granted by the Landlord to the Tenant or any
neglect or forbearance of the Landlord in enforcing the payment of the
rents or the observance or performance of the covenants or other terms
of this Lease or any refusal by the Landlord to accept rents tendered
by or on behalf of the Tenant at a time when the Landlord was entitled
(or would after the service of a notice under the Law of Property Act
1925 Section 146 have been entitled) to re-enter the Demised Premises
1.2 that the terms of this Lease may have been varied by agreement between
the parties
1.3 that the Tenant shall have surrendered part of the Demised Premises in
which event the liability of the Guarantor under this Lease shall
continue in respect of the part of the Demised Premises not so
surrendered after making any necessary apportionments under the Law of
Property Act 1925 Section 140 and
1.4 any other act or thing by which but for this provision the Guarantor
would have been released
2. To take lease following disclaimer
If at any time during the Term the Tenant (being an individual) shall
become bankrupt or (being a company) shall enter into liquidation and
the trustee in bankruptcy or liquidator shall disclaim this Lease the
Guarantor shall if the Landlord shall by written notice within two
months after such disclaimer so require take from the Landlord a lease
of the Demised Premises for the then residue of the Term which would
have remained had there been no disclaimer at the Rent then being paid
under this Lease subject to the same covenants and terms as in this
Lease (except that the Guarantor shall not be required to procure that
any other person is made a party to that lease as guarantor) such new
lease to take effect from the date of such disclaimer and in such case
the Guarantor shall pay the costs of such new lease and execute and
deliver to the Landlord a counterpart of it
3. To make payments following disclaimer
If this Lease shall be disclaimed and for any reason the Landlord does
not require the Guarantor to accept a new lease of the Demised Premises
in accordance with clause 2 hereof the Guarantor shall pay to the
Landlord on demand an amount equal to the difference between any money
received by the Landlord for the use or occupation of the Demised
Premises and the rents reserved by this Lease for the period commencing
with the date of such disclaimer and ending on whichever is the earlier
of the following dates:
3.1 the date 12 months after such disclaimer and
3.2 the date (if any) upon which the Demised Premises are relet and income
producing
such amount to be paid by way of equal instalments quarterly in advance
on the
38
<PAGE>
usual quarter days and in the case that the event in clause 3.2 occurs
first then payment of the final instalment to be adjusted accordingly
THE SIXTH SCHEDULE
Provisions for Rent Review
1. In this Schedule the following expressions shall have the following
meanings:
1.1 "Rent Review Date" means the date specified in item 1.8 of
the Particulars
1.2 "Open Market Rent" shall mean the yearly rent for which the
Demised Premises could reasonably be
expected to be let in the open market as
a whole with vacant possession on the
Rent Review Date by a willing landlord to
a willing tenant without any fine or
premium for a term of 10 years but
commencing on the Rent Review Date with
provisions identical (mutatis mutandis)
to those contained herein for review of
the Rent at the expiration of 5 years
calculated from the Rent Review Date and
otherwise upon the terms and conditions
of this Lease save as to the amount of
the Rent and the rent free period
On the following assumptions at that date:
(a) that the Demised Premises shall be ready and available for immediate
beneficial occupation and use
(b) that all the Tenant's covenants shall have been complied with
(c) that no work has been carried out by the Tenant or any sub-lessee or
their respective predecessors in title which has diminished the rental
value of the Demised Premises
(d) that in case the Demised Premises or the Building or any part have been
destroyed or damaged they have been fully restored
(e) that the Demised Premises may be used for any of the purposes permitted
by this Lease (as extended by any licence granted pursuant thereto) and
that planning law permits all such purposes without restriction
(f) that the willing tenant shall have been given prior to and that there
shall have expired immediately prior to the Rent Review Date such a
rent-free period (if any) for or towards the time taken for the purpose
of the carrying out of any tenant's fitting-out works and that the
willing tenant shall have been given such
39
<PAGE>
concessionary rent or any other inducement whether of a capital or
revenue nature which the willing landlord and willing tenant might
reasonably agree as a term of the grant and acceptance of a tenancy for
towards or in respect of the cost of fitting out the Demised Premises
(g) that any rent free period which might be negotiated in the open market
between a willing landlord and a willing tenant has expired
But disregarding:
(a) any effect on rent of the fact that the Tenant or any
permitted sub-lessee or their respective predecessors in title
may have been in occupation of the Demised Premises
(b) any goodwill attached to the Demised Premises by reason of any
trade or business carried on therein by the Tenant or any
permitted sub-lessee or any predecessor in title of either of
them
(c) any effect on rent of any improvement to the Demised Premises
lawfully made by the Tenant or by any permitted sub-lessee or
any of their respective predecessors in title during the Term
or during any period of occupation prior thereto arising out
of any agreement to grant the Term with the consent of the
Landlord (if required under this Lease) otherwise than in
pursuance of an obligation to the Landlord or its predecessors
in title and save to the extent (if any) that the Landlord or
its predecessors in title contributed to the cost thereof
1.3 "the Third Party" means a Chartered Surveyor (having at
least ten years established and recent
experience in letting and valuing
premises of a kind and character similar
to those of the Demised Premises) agreed
between the parties or (in default of
agreement within one month of the
Landlord's written invitation to the
Tenant to agree the nomination of the
Third Party) appointed by or on behalf of
the President for the time being the
Royal Institution of Chartered Surveyors;
if the said President shall for any
reason not be available or be unable to
make such appointment at the time of the
requisition therefor then the appointment
may be made by or on behalf of the Vice
President or next senior officer of the
said Institution then available and able
to make such appointment. The person so
appointing is herein called "the
President"
2. From and after each Rent Review Date the Rent shall be whichever is the
higher of:
2.1 the yearly Rent payable immediately before that Rent Review Date and
40
<PAGE>
2.2 the Open Market Rent of the Demised Premises at that Rent Review Date
("the New Rent")
3.1 If two months before the Rent Review Date the Landlord and the Tenant
shall not have agreed on the New Rent payable from the Rent Review Date
either the Landlord or the Tenant may at any time thereafter before the
New Rent shall be agreed between the Landlord and the Tenant require
the Third Party to be appointed to determine the Open Market Rent
3.2 The Third Party shall act as an arbitrator unless the Landlord and the
Tenant shall otherwise agree in writing
4. If the Third Party shall act as an arbitrator he shall act pursuant to
the Arbitration Acts 1950 and 1979
5. If the Third Party shall act as an expert then he shall:
5.1 give notice in writing of his appointment to the Landlord and the
Tenant and he shall invite each to submit a valuation accompanied if
desired by a statement of reasons
5.2 send a copy of each party's valuation and statement to the other party
and invite written observations thereon
5.3 consider any valuation statements and observations made but shall not
be in any way limited or fettered thereby and shall determine the Open
Market Rent in accordance with his own judgement
5.4 give his decision to the Landlord and the Tenant within two months of
his appointment or within such extended period as the Landlord and the
Tenant may expressly or by implication both agree
6. The determination of the Third Party (acting as an expert) shall be
final and binding (except on a point of law) on the parties and for the
purpose of obtaining his decision forthwith upon request the parties
shall jointly undertake to pay his fees and the costs of the
application such fees and costs to be in his award (but both parties
may make representations to him on costs)
7. If the Third Party (acting as an expert) shall fail to determine the
New Rent and give notice thereof within the time and in the manner
provided or if he shall relinquish his appointment or die or if it
shall become apparent that for any reason he will be unable to complete
his duties either the Landlord or the Tenant may apply to the President
for a substitute to be appointed in his place which procedure may be
repeated as many times as necessary
8. In the event that by the Rent Review Date the New Rent shall not have
been agreed or determined (whether or not negotiations shall have
commenced) the Tenant shall continue to pay rent at the rate of the
current Rent on each day appointed by this Lease for payment of rent
until the New Rent shall have been agreed or determined in writing and
within 5 working days thereafter the Tenant shall pay
41
<PAGE>
to the Landlord an amount equal to the difference between the New Rent
and the rent actually paid for the period since the Rent Review Date
together with interest on each instalment of such difference at the
rate equal to Barclays Bank PLC's Base Rate from time to time from the
Rent Review Date or in the case of subsequent instalments of such
difference the date upon which the same would have been payable (if
ascertained) down in each case to the date of payment
9. As respects all periods of time referred to in this Sixth Schedule time
shall be deemed not to be of the essence
10. If on any Rent Review Date there shall be in force any Act which shall
restrict interfere with or affect the Landlord's right to revise the
Rent in accordance with the terms hereof then the Landlord shall be
entitled once within 6 months following each removal of such
restriction or modification of such Act to serve notice requiring a
review of the Rent (an "Interim Notice") upon the Tenant and from and
after the date of service of such Interim Notice until the next Rent
Review Date the Rent shall be increased to whichever is the higher of
the Open Market Rent at the Date of service of the Interim Notice and
the Rent payable immediately prior thereto and the provisions of this
Schedule shall apply accordingly with the substitution of the said date
of service for the Rent Review Date
11. If the Landlord and the Tenant shall be able to agree the New Rent or
when the New Rent shall have been determined in accordance with the
provisions hereof as the case may be the Landlord and the Tenant shall
cause a Memorandum of the New Rent to be prepared in duplicate and
signed by or on behalf of the Landlord the Tenant and the Guarantor
respectively one whereof shall be attached to this Lease and the other
whereof shall be attached to the Counterpart hereof but non signature
of such Memorandum shall not affect the validity of or the Landlords
ability to recover the New Rent
42
<PAGE>
SIGNED AS A DEED AND DELIVERED ) MW
by MALCOLM WEBBER ) /s/ M. Heller
in the presence of: )
WITNESS SIGNATURE /s/ G Beales
NAME G Beales
ADDRESS 5 Nevill Way
Loughton, Essex
OCCUPATION Secretary
SIGNED AS A DEED AND DELIVERED ) RH
by RONALD MICHAEL HARRIS ) /s/ [ILLEGIBLE]
in the presence of: )
WITNESS SIGNATURE /s/ G Beales
NAME G Beales
ADDRESS 5 Nevill Way
Loughton, Essex
OCCUPATION Secretary
<PAGE>
EXHIBIT 10.77
DATED 16th June 1995
- --------------------------------------------------------------------------------
(1) M. WEBBER and R.M. HARRIS
- and -
(2) TINSLEY ROBOR PLC
- --------------------------------------------------------------------------------
LEASE
of the First and Second Floors Unit 14 Berghem Mews, Blythe Road, London W14
- --------------------------------------------------------------------------------
Clintons
55 Drury Lane
London
WC2B 5SQ
Tel: 0171-379-6080
Ref: LM/ht/webtinl.lse
<PAGE>
INDEX
Clause Headings Page
1. PARTICULARS
2. DEFINITIONS AND INTERPRETATION
3. LEASE
3.1 Demise
3.2 Rents
4. THE TENANT'S COVENANTS
4.1 To Pay Rent and Service Charge
4.2 Outgoings
4.3 Statutory Services
4.4 Interest on Arrears
4.5 Fit out Repair Decoration and Maintenance
4.6 Maintenance
4.7 to Maintain Party Walls
4.8 To Repair on Notice
4.9 To comply with statutory requirements
4.10 To Permit Entry
4.11 To Permit Disposal Board
4.12 Dealings
4.13 Registration of Dealings
4.14 Alterations
4.15 Advertisements and Signs
4.16 Plant Machinery and Apparatus
4.17 Gas and Electrical Installations
4.18 General Restrictions concerning use of Demised Premises
4.19 Restrictions and Regulations concerning use of Common Parts
4.20 Use of Demised premises
4.21 Not to Invalidate Insurance
4.22 Fire Requirements
4.23 Tenant's Insurances
4.24 Notices
4.25 As to the Planning Acts
4.26 To Preserve Easements
4.27 Costs
4.28 VAT
4.29 New Guarantor
4.30 Indemnity
4.31 Observe Third Schedule Matters
4.32 Interest during Breach of Covenant
4.33 Security
4.34 Information as to Keyholders
<PAGE>
5. LANDLORD'S COVENANTS
5.1 Quiet Enjoyment
5.2 To Insure
5.3 To Provide Services
6 PROVISOS
6.1 Landlord's Right to Forfeit Lease
6.2 Insolvency
6.3 Suspension of Rent in case if damage by Insured Risks
6.4 Determination on Destruction
6.5 Landlord to have Insurance Moneys on Frustration
6.6 Landlord's right to alter the Estate and Adjoining Property
6.7 No liability in damages
6.8 As to goods left on the Demised Premises
6.9 Compensation under 1954 Act
6.10 Exclusion of planning warranty
6.11 Service of Notices
6.12 Commission on Insurance
6.13 Exclusion of liability
7. ARBITRATION
8. JURISDICTION
9. BREAK CLAUSE
10. CERTIFICATE
FIRST SCHEDULE
Rights Benefitting the Demised Premises
SECOND SCHEDULE
Rights Excepted and Reserved
THIRD SCHEDULE
Matters to which the Demised Premises are subject
FOURTH SCHEDULE
The Service Charge
FIFTH SCHEDULE
Form of Guarantee
SIXTH SCHEDULE
Provisions for Rent Review
<PAGE>
Unit No. 14
PLAN NO. 1
Second Floor
[GRAPHIC]
First Floor
[GRAPHIC]
<PAGE>
DATED 16th June 1995
1. PARTICULARS
1.1 The Landlord RONALD MICHAEL HARRIS and MALCOLM WEBBER
both of 8-10 Bulstrode Street London, W1M
6AH
1.2 The Tenant TINSLEY ROBOR PLC of Drayton House,
Drayton, Chichester, West Sussex P020 6EW .
1.3 The Demised Premises First and Second Floor offices at Unit 14
Berghem Mews Blythe Road London W14 shown
edged red on Plan No.1
1.4 Date of Commencement 25th March 1995
of Term
1.5 Term 10 years subject to earlier determination as
hereafter provided
1.6 Expiry Date of Term 24th March 2005
1.7 The Rent Until 15th December 1995 one peppercorn (if
demanded) and then for the remainder of the
first year of the Term (pound)34,850.00 per
annum, and thereafter (pound)43,170.00 per
annum payable by equal quarterly payments in
advance on the usual quarter days the first
payment for the period from the 16th
December 1995 to the 24th day of December
1995 to be made on the 16th December 1995
1.8 Review Dates The Rent is subject to review in accordance
with the provisions of the Sixth Schedule on
the 25th March 2000
1.9 The Insurance Rent Such sum as is referred to in clause 2.17
payable yearly in advance within 10 working
days of demand therefor
1.10 The Permitted User A business use within Class B1 of the Town
and Country Planning (Use Classes) Order
1987 (as originally enacted)
1
<PAGE>
1.11 The Service Charge (pound)8,322.00 or such other amount as
shall be payable in accordance with the
provisions of the Fourth Schedule to this
Lease; the first payment for the period from
the date hereof to 24th June 1995 to be made
on the execution hereof. The Landlord's
Account Year ends on the 31st March in each
year
2. DEFINITIONS AND INTERPRETATION
In this Lease unless the context otherwise requires:
2.1 "this Lease" means this Lease and includes any Schedule
hereto any licence granted pursuant to this
Lease and any deed of variation of the
provisions hereof and any deed or instrument
supplemental hereto
2.2 "the Particulars" means the Particulars set out in Clause 1 of
this Lease and references to numbered items
of the Particulars are references to the
numbered sub-clauses of that clause
2.3 "the Landlord" means the person named as the Landlord in
item 1.1 of the Particulars and includes any
other person for the time being entitled to
the immediate reversion on this Lease
2.4 "the Tenant" means the person named as the Tenant in item
1.2.1 of the Particulars and includes the
successors in title of the Tenant to the
Term
2.5 "the Guarantor" means the person (if any) named as the
Guarantor in item 1.2.2 of the Particulars
(if any) and shall include any person who
shall have executed a guarantee pursuant to
clause 4.12 or 4.29
2.6 "Plan No "1" "Plan No "2" means the plans annexed to this Lease and
numbered "1" and "2" respectively
2.7.1 "the Mews" means all the land and appurtenant rights
known as Berghem Mews Blythe Road London W14
and the private roads or paths leading
thereto from Blythe Road and/or Spring Vale
Terrace as is edged green on Plan No 2 (and
which for the avoidance of doubt includes
the Underground Car Park and the access
thereto)
2
<PAGE>
which unless the context otherwise requires
includes:
2.7.1.1 the demised premises and the
building and all other Buildings of
whatever nature in the Mews
2.7.1.2 the common parts
2.7.1.3 the roads within the Mews
2.7.1.4 the conduits on or serving the Mews
2.7.1.5 the boundary walls and fences
2.7.1.6 all fixtures and fittings that are
affixed to the common parts
2.7.2 "the Building" means the building of which the demised
premises forms part
2.8 "the Demised Premises" means that part of the Building described in
item 1.3 of the Particulars excluding the
foundations supporting walls joists and
slabs and the roof and other external or
structural parts thereof but including (but
not by way of limitation)
2.8.1 the entirety of the windows window-frames
roof-lights doors and door-frames (if any)
thereof (except for the external decorative
surfaces of any such window-frames and of
any door between such premises and the
internal common parts of the Building and of
the frame of any such door) and all glass
therein
2.8.2 the finishes (including plaster) on the
faces of any load-bearing or external walls
beams and columns within or enclosing such
premises (but not the remainder of such
walls beams or columns)
2.8.3 the inner surface of any non-load-bearing
walls separating such premises from other
internal parts of the Building (but not the
remaining half of such walls)
2.8.4 the whole of all internal non-load-bearing
walls within such premises
2.8.5 the ceilings and ceiling finishes of such
premises (but not the structural beams
joists or slabs above the ceilings)
3
<PAGE>
2.8.6 the floors and floor finishes of such
premises (but not the structural beams or
joists or structural floor slabs supporting
the floors or on which floor finishes have
been laid)
2.8.7 all stairs situated entirely within such
premises and all other internal surfaces and
partitions therein
2.8.8 all water ventilation sanitary and
central-heating and air-conditioning plant
equipment and apparatus (if any) exclusively
serving such premises and other Landlord's
fixtures and fittings in such premises from
time to time
2.8.9 all Conduits exclusively serving the Demised
Premises whether or not within the same
2.8.10 all additions alterations and improvements
thereto which may be effected during the
Term
2.9 "the Lettable Premises" means the units or parts thereof within the
Mews which are intended to be let or are
capable of being let or are let (including
the Demised Premises)
2.10 "the Retained Premises" means all and every part of the Mews other
than the Lettable Premises
2.11.1 "the Common Parts" means the access ways the access road paths
staircases roadways emergency exits
courtyards bin store area and other areas
within the Mews which do not form part of
the Lettable Premises and which are intended
for the passage of persons or vehicles or
for the common use and enjoyment of the
Landlord and the Tenants or occupiers of the
Lettable Premises
2.11.2 "the Internal Common Parts" means that part of the Common Parts
comprising the entrance hall staircases
landings and all other parts of the Building
(if any) available for use by the Tenant and
other occupiers of the Building
2.12 "the Access Road" means the private road giving access to
Blythe Road
4
<PAGE>
2.13 "Conduits" means sewers drains channels watercourses
gutters grooves pipes ducts wires cables and
other apparatus associated therewith and any
other conducting medium for the passage of
soil water gas electricity telephone
telecommunication and other services and
supplies
2.14 "the Term" means not only the term specified in item
1.5 of the Particulars but also where
appropriate any extension or continuation
whether by statute or common law
2.15 "the Termination Date" means the date of expiration or sooner
determination of the Term
2.16 "the Rent" means the sums specified as the Rent in item
1.7 of the Particulars or such other sum as
shall for the time being be the Rent under
the provisions of the Sixth Schedule
2.17 "the Insurance Rent" means:
2.17.1 5.089% of the amount which the Landlord
properly expends for insuring the Estate
against the Insured Risks (or such other
fair and reasonable proportion which
shall be determined by the Surveyor by
reference to the lettable floor area of the
Demised Premises in comparison to the
lettable floor area of the Lettable
Premises) and on the basis that the Landlord
will be entitled to full recovery of the
total amount expended in respect of such
insurance of the Estate from all the tenants
of the Lettable Premises only if all the
Lettable Premises are let or occupied)
2.17.2 the additional cost of insuring or causing
to be insured any part of the Estate which
is reasonably attributable to the use or
occupation or any activity carried on upon
the Demised Premises
2.17.3 the cost of insuring against the risk of the
loss for the Loss of Rent Period of the Rent
and the Service Charge (and such loss of
rent insurance shall allow for and include
provision for reasonable and proper
anticipated increases in Rent and Service
Charge from their respective dates of
review)
5
<PAGE>
2.18 "the Insured Risks" means the following risks to be included in
any policy of insurance effected under the
terms of the Lease fire lightning explosion
aircraft and other aerial devices and
articles dropped therefrom earthquake riot
riot fire civil commotion malicious damage
storm tempest flood bursting or overflowing
of water tanks apparatus or pipes subsidence
landslip heave impact by road vehicles (so
long as such risks can be normally insured
against with United Kingdom insurance
offices of repute or at Lloyds of London)
and such other risks as the Landlord
reasonably deems necessary to insure against
which shall include if the Landlord
reasonably deems appropriate at its
discretion and without prejudice to the
generality of the foregoing any liability of
the Landlord arising out of or in connection
with any matter involving or relating to the
Estate
2.19 "the Service Charge" means the sum by way of additional rent
specified as the Service Charge in item 1.11
of the Particulars or such other sum (if
any) as shall for the time being be the
Service Charge under the provisions of the
Fourth Schedule
2.20 "Requisite Notice" means a notice in writing to the Tenant two
(2) working days before any entry is made on
the Demised Premises PROVIDED THAT in the
case of an emergency such notice as may be
possible shall be given
2.21 "Interest" means
2.21.1 interest at the rate of 4% above Barclays
Bank PLC's Base Rate for the time being
(which interest rate shall still apply after
and notwithstanding any judgment of the
Court) payable from the date when the sum is
due in respect of the Rent and in the case
of any other sum the date 14 days after
demand for the sum upon which interest is to
be paid to the Landlord in each case until
the date of payment to the Landlord
6
<PAGE>
2.21.2 In the event of the Base Rate of Barclays
Bank PLC (in this sub-clause called 'Base
Rate') being abolished then any references
in this Lease to Base Rate shall have effect
as if there had been substituted from time
to time for Base Rate the base or nearest
equivalent rate of such other UK clearing
bank as shall from time to time be notified
by the Landlord to the Tenant in writing
2.22 "Person" includes a company corporation or other body
legally capable of holding land
2.23 "the Planning Acts" means the Town and Country Planning Act 1990
and any future legislation of similar nature
2.24 "Decorate" means in a good and workmanlike manner and
to the reasonable satisfaction of the
Surveyor to prepare and paint with two coats
at least of good quality paint and to
prepare make good clean treat and restore
with paper varnish stain polish or other
suitable good quality decorative materials
all parts of the Demised Premises as are
usually or ought properly to be so dealt
with
2.25 "the Landlord's Agents" means and includes the Landlords workmen
servants agents lawful visitors mortgagees
prospective purchasers and lessees and all
other persons authorised by the Landlord
whose authorisation is evidenced in writing
to the Tenant if the Tenant reasonably
requests
2.26 "the Surveyor" means any competent person or firm
experienced in the management of commercial
property appointed by the Landlord
(including an employee of the Landlord or a
Group Company of the Landlord) to manage the
Estate or to perform any of the functions of
the Surveyor under this Lease whose
appointment is evidenced in writing to the
Tenant if the Tenant reasonably requests
2.27 "the Loss of Rent Period" means the period of three years calculated .
from the date upon which the Demised
Premises shall have been destroyed or
damaged by any of the Insured Risks so as to
render them inaccessible or unfit for
occupation and use (including if applicable
any period subsequent to the Termination
Date)
7
<PAGE>
2.28 "Working Day" means a day upon which
Clearing Banks in the City of London are
open for normal business
2.29 "the 1954 Act" means Part II of the Landlord and Tenant Act
1954
2.30 "Group Company" means a company that is a member of the
same Group as the Landlord or the Tenant (as
the case may be) within the meaning of
Section 42 of the 1954 Act
2.31 Any reference to an Act of Parliament shall include any modification
extension or re-enactment thereof for the time being in force and shall
include all instruments notices order plans regulations consents
permissions and directions for the time being made issued or given
thereunder or drawing validity therefrom
2.32 The masculine includes the feminine and the singular the plural and
vice versa
2.33 Where the Landlord the Tenant or the Guarantor for the time being are
two or more persons obligations expressed or implied to be made by or
with such party are deemed to be made by or with such persons jointly
and severally
2.34 References to any right of the Landlord to have access to the Demised
Premises shall be construed as extending to any superior landlord and
any mortgagee of the Demised Premises and to all persons properly
authorised by the Landlord and any superior landlord or mortgagee
(including agents professional advisers contractors workmen and others)
whose authorisation is evidence in writing to the Tenant if the Tenant
reasonably requests
2.35 Any covenant by the Tenant not to do an act or thing shall be deemed to
include an obligation not knowingly to permit such act or thing to be
done by a third party
2.36 The terms "the parties" or "party" mean the Landlord and/or the Tenant
but except where there is an express indication to the contrary exclude
any Guarantor
2.37 References in this Lease to any clause sub-clause paragraph or Schedule
without further designation shall be construed as a reference to the
clause sub-clause paragraph or Schedule to this Lease so numbered or
lettered
2.38 Paragraph and schedule headings (if any) in and the front cover and
Index to this Lease shall be deemed not to form part of this Lease and
shall not be taken into account in the construction or interpretation
thereof
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3. LEASE
3.1 Demise
THE LANDLORD LETS the Demised Premises to the Tenant TOGETHER WITH
the rights specified in the First Schedule BUT EXCEPT AND RESERVING
the rights specified in the Second Schedule from and including the
Date of Commencement of the Term for the Term SUBJECT TO and where
applicable with the benefit of the covenants and other matters
specified in the Third Schedule so far as they still subsist and are
capable of being enforced and relate to or affect the Demised
Premises
3.2 Rents
THE TENANT PAYING yearly and proportionately for any fraction of a
year
3.2.1 First the Rent the Insurance Rent and the Service Charge at the
times and in the manner specified in items 1.7, 1.9 and 1.11 of the
Particulars respectively and
3.2.2 Secondly Interest which becomes due pursuant to clause 4.4 and all
other sums whatsoever as shall become payable by the Tenant to the
Landlord under the provisions of this Lease
ALL which payments are hereby reserved as rent
4. THE TENANT'S COVENANTS
THE TENANT COVENANTS WITH THE LANDLORD as follows:
4.1 To pay Rent and Service Charge
4.1.1 To pay the Rent the Insurance Rent and the Service Charge at the
times and in the manner described in items 1.7, 1.9 and 1.11 of the
Particulars and without any deduction (except only such as a lessee
may by law be entitled to make notwithstanding any contract to the
contrary)
4.1.2 If so required by the Landlord in writing to make payment of the
Rent by banker's order to such bank in England as the Landlord shall
from time to time nominate
4.2 Outgoings
4.2.1 To pay all existing and future rates 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)
except any tax in respect of:
4.2.1.1 the rents payable under this Lease
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4.2.1.2 the grant of this Lease
4.2.1.3 any dealing disposal or deemed disposal by the Landlord or any
superior landlord with the reversion (whether immediate or not) to
this Lease
4.3 Statutory services
To pay for all gas electricity and water consumed on the Demised
Premises including all meter rents in connection therewith and to
observe and perform all the terms and conditions of supply thereof
and all other regulations and requirements of the gas electricity
and water authorities and to keep the Landlord indemnified in
respect thereof
4.4 Interest on Arrears
If the Rent shall not be paid on the date when it is due or if the
Insurance Rent the Service Charge or other sums payable by the
Tenant to the Landlord under this Lease shall be due but unpaid for
14 working days to pay on demand to the Landlord (if the Landlord
shall so require) Interest Provided that this sub-clause shall not
prejudice any other right or remedy in respect of such money
4.5 Fit out Repair decoration and maintenance
4.5.1 Repair
At all times during the Term to repair and to keep the demised
Premises in good and substantial repair and condition
4.5.2 To decorate interior
4.5.2.1 To Decorate the interior of the Demised Premises no less often than
every fifth year of the Term
4.5.2.2 To Decorate the interior of the Demised Premises in the last six
months of the Term (howsoever determined) in tints colours and
patterns approved in writing by the Landlord (such approval not to
be unreasonably withheld)
4.5.3 Repair and replace Landlord's Fixtures and Fittings
To repair or replace forthwith by new articles of similar kind and
quality any fixtures fittings or equipment (other than Tenant's
fixtures and fittings) in the Demised Premises which shall become in
need of repair or replacement
4.5.4 To yield up
At the Termination Date to yield up the Demised Premises duly
repaired and decorated in accordance with the provisions of this
clause 4.5 and clear of any furniture equipment goods and refuse to
remove every moulding sign writing or painting of the name or
business of the Tenant or other occupiers (if any) and to make good
all damage caused by the removal thereof and of the Tenant's
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fixtures fitting furniture and effects to the Demised Premises
PROVIDED THAT:
(a) all work referred to in this clause 4.5 shall be done with
good and suitable materials of their several kinds in a good
and workmanlike manner and to the reasonable satisfaction of
the Surveyor and in relation to external maintenance and
repair using such materials as may in the reasonable opinion
of the Surveyor be necessary or desirable in order to maintain
a high standard of maintenance and repair to the Estate as a
whole
(b) damage by any of the Insured Risks is excepted from the
Tenant's liability under this clause 4.5 save to the extent
that the whole or any part of the insurance money is
irrecoverable by reason of any act or default of the Tenant
its servants agents or lawful visitors and the Tenant fails to
make up the deficiency pursuant to clause 4.21.3 or by reason
of some limitation or condition properly imposed by the
insurers
(c) the Tenant shall pay the Landlord's reasonable and proper
legal and Surveyor's fees incurred as a result of any breach
of this clause 4.5
(d) the Tenant will also pay to the Landlord mesne profits at the
rate of the rent payable hereunder immediately prior to the
Termination Date during the period taken by the Tenant to
carry out such works or during the period reasonably required
for carrying out such works by the Landlord and in that case
the amount of such mesne profits shall be added to the cost of
carrying out such work as aforesaid
4.6 Maintenance
4.6.1 To keep the Conduits which solely serve the Demised Premises clear
and unobstructed
4.6.2 To keep clean both the interior and exterior faces of the windows
and any glass in the doors of the Demised Premises
4.7 To maintain party walls
To maintain at the equally shared expense of the Tenant and the
tenants of the adjoining Lettable Premises within the Building (or
the Landlord if such adjoining Lettable Premises are not let) the
walls that divide the Demised Premises from the adjoining Lettable
Premises within the Building (if any) (which walls shall be deemed
to be party walls within the meaning of Section 38 of the Law of
Property Act 1925)
4.8 To repair on notice
4.8.1 To make good any defect in the repair or decoration of the Demised
Premises
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for which the Tenant is liable in accordance with the Tenant's
covenants contained in this Lease and of which the Landlord has
given notice to the Tenant in writing such making good to be
commenced within a period of one month from the date of the
Landlord's notice (or sooner if reasonably considered necessary by
the Surveyor) and to be completed as soon as reasonably possible
4.8.2 If the Tenant shall not comply with clause 4.8.1 hereof the Landlord
may (but shall not be obliged to) enter the Demised Premises and
make good such defects and the proper expense of doing so (including
Surveyor's or architect's fees) shall be repaid by the Tenant on
demand
4.9 To comply with statutory requirements
4.9.1 To execute all works and to do all things on or in respect of the
Demised Premises which are required by the Offices Shops and Railway
Premises Act 1963 the Fire Precautions Act 1971 the Health and
Safety at Work Act 1974 or any other present or future Act of
Parliament and at all times to keep the Landlord indemnified against
all costs claims demands and liability in respect thereof
4.9.2 To comply with all requirements of any present or future Act of
Parliament as to the use of or otherwise concerning the Demised
Premises
4.9.3 Upon receipt of any notice order proposal requisition direction or
other thing from any competent authority affecting or likely to
affect the Landlord's interest in the Demised Premises or the use
thereof at the Tenant's own expense forthwith to deliver to the
Landlord a copy of such notice order requisition direction or other
thing AND at the request of the Landlord but at the cost of the
Landlord to make or join with the Landlord in making such reasonable
representations in respect thereof as the Landlord shall in its
reasonable discretion deemed expedient Provided always that
notwithstanding any other provision contained in this Lease to the
contrary the Landlord's consent shall not be unreasonably withheld
or delayed to any works required to be carried out pursuant to this
clause 4.9
4.10 To permit entry
To permit the Landlord and such of the Landlord's Agents as shall be
proper for the purpose at all reasonable hours upon Requisite Notice
and to the extent that such matters cannot reasonably be effected
without such entry to enter and remain upon the Demised Premises
with all necessary appliances for the purpose of:
4.1 0.1 viewing and recording the condition of the Demised Premises and to
take schedules of dilapidations or of the Landlord's fixtures and
fittings
4.10.2 repairing maintaining altering or cleaning the Retained Premises or
the Mews
4.10.3 complying with any of its obligations or exercising any of its
rights under this Lease or for any other reasonable purpose
connected with the Demised
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Premises
PROVIDED that the Landlord and the Landlord's Agents shall cause as
little damage or disturbance as is reasonably possible in exercising
such right and the Landlord shall as soon as is reasonably
practicable make good all damage to the Demised Premises and any
fixtures and fittings caused by such entry
4.11 To permit disposal board
4.11.1 During the last six months of the Term to allow a letting board or
notice to be displayed on the Demised Premises and during the Term
to allow a sale board or notice to be displayed on the Demised
Premises (but not so that any board or notice unnecessarily
obstructs the light or access to the Demised Premises) and to allow
such of the Landlord's Agents as shall be proper for the purpose to
view the Demised Premises at all reasonable times by prior
appointment
4.11.2 During the Term at all convenient hours in the daytime to permit all
prospective purchasers of or dealers in the Landlord's reversionary
interest by order in writing of the Landlord or the Landlord's
Agents to view the Demised Premises without interruption subject to
Requisite Notice being given
4.12 Dealings
4.12.1 The Demised Premises shall not be held on trust for another and
there shall not save as hereinafter permitted be any assignment
transfer sub-letting parting with or sharing of possession or
occupation of the whole or any part of the Demised Premises (whether
by the Tenant or any person deriving title through or under the
Tenant) PROVIDED THAT the Tenant may share the occupation of the
whole or any part of the Demised Premises with a Group Company for
so long as both companies shall remain members of that group and
subject to the sharing not creating the relationship of landlord and
tenant between the Tenant and that Group Company and on condition
that the Tenant shall notify the Landlord and give details of the
arrangement before it is put into effect PROVIDED FURTHER THAT if
all the following relevant conditions of this clause 4.12 are
complied with the following transactions will be permitted with the
previous consent in writing of the Landlord which shall not be
unreasonably withheld or delayed:
4.12.1.1 an assignment or underletting of the whole of the Demised Premises
by the Tenant on terms which comply with the conditions set out in
clause 4.12.2
4.12.2 On a permitted assignment or underletting of the whole of the
Demised Premises the following conditions shall apply:
4.12.2.1 the intended assignee or underlessee shall covenant with the
Landlord during the residue of the Term or during the term of the
underlease (as the case may be) to observe and perform all the
covenants on the part of the Tenant and the conditions contained in
this Lease other than payment of the rents hereby reserved in the
case of an underletting
4.12.2.2 if the intended assignee or underlessee shall be a limited liability
company then
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if the Landlord shall reasonably so require there shall be provided
a guarantor or guarantors sufficient in the opinion of the Landlord
(acting reasonably) for such company and
4.12.2.3 in the case of an underletting the underlease will prohibit
absolutely any further sub-underletting of the whole or part of the
Demised Premises
4.12.2.4 such guarantor or guarantors shall prior to such assignment (jointly
and severally if more than one) but with effect therefrom enter into
covenants with the Landlord in the form set out in the Fifth
Schedule
4.12.2.5 in the case of an underletting the underlease will contain
provisions excluding sections 24 to 28 inclusive of the Landlord and
Tenant Act 1954 in relation to the underlease and the appropriate
court order will be obtained before the same is granted
4.12.3 Upon every application for consent required by this clause 4.12 to
disclose to the Landlord such information as to the terms of the
proposed transaction as shall be reasonably required in order to
satisfy the Landlord that this clause 4.12 is being complied with
4.13 Registration of Dealings
Within twenty-one days after its date to provide the Landlord's
solicitors with a true copy of every assignment or charge evidencing
a devolution of this Lease the Demised Premises or any part thereof
paying a reasonable fee not being less than (pound)30 plus Value
Added Tax for each such registration
PROVIDED THAT registration of any such deed instrument or other
document shall be evidence of notification of such transaction to
the Landlord but shall not require the Landlord to consider the
terms of such transaction or the said deed instrument or other
document and shall not be evidence that it has done so
4.14 Alterations
4.14.1 Not to erect any new or additional buildings or other structures
upon the Demised Premises
4.14.2 Not to make any alterations or additions to the structure or
exterior of the Demised Premises and not to puncture cut or pierce
the structural walls or floor slabs bounding or within the Demised
Premises and not to knock through to or unite the Demised Premises
with any adjoining unit in the Mews Provided that if the Tenant is
unable to accommodate pipe or cable runs within the vertical duct
provision of the Demised Premises then the Tenant shall be entitled
to create (subject to the Tenant obtaining the prior written consent
of the Landlord which shall not be unreasonably withheld or delayed)
pipe or cable runs vertically between the floors notwithstanding
that such alterations or additions may be of a structural nature
4.14.3 Not to make any alterations or additions or to carry out any works
in or to the Demised Premises which in the reasonable opinion of the
Landlord may affect
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the efficient operation of the heating and ventilating system and
apparatus within the Demised Premises
4.14.4 Subject to the foregoing provisions of this clause not to make any
non-structural alterations or additions to the interior of the
Demised Premises or to alter or replace the entrance doors to the
Demised Premises or to affix any aerial or telecommunication dish to
the exterior of the Demised Premises except with the Landlord's
written consent (which shall not be unreasonably withheld or
delayed) and (if required by the Landlord) in accordance with
drawings and specifications previously submitted to and approved in
writing by the Landlord (such approval not to be unreasonably
withheld or delayed)
4.14.5 The Tenant may carry out the erection alteration or removal of non
structural demountable partitioning without obtaining the consent of
the Landlord subject to
4.14.5.1 the submission of drawings to the Landlord prior to the commencement
of such work detailing the said alteration or removal and showing
the proposed layout after any such work is completed
4.14.5.2 the strict condition that such work will not and does not affect the
efficient or designed use operation and maintenance of the services
in or to the Demised Premises
4.15.5.3 an obligation to reinstate the Demised Premises at the Termination
Date to the state and condition in which the same were prior to such
erection alteration or removal (if so required by the Landlord)
4.14.5.4 the obtaining by the Tenant of all necessary consents whether
statutory or otherwise
4.14.5.5 all such works being carried out at the Tenants' sole risk
4.14.6 By the Termination Date if so required by the Landlord to reinstate
the Demised Premises to the same condition as they were in at the
date of the grant of this Lease such reinstatement to be carried out
to the reasonable satisfaction of the Landlord
4.15 Advertisements and Signs
4.1 5.1 Not to affix to or exhibit on the outside of the Demised Premises or
to or through any window of the Demised Premises any figure or
letter or any pole flag signboard advertisement inscription bill
placard or sign whatsoever
4.15.2 Within fourteen days of the occupation of the Demised Premises to
supply to the Landlord or the Surveyor full details of the Tenant's
name and business for the purpose of the preparation by the
Landlord's contractor of a sign or signs to the Landlord's
specification to be placed in a position designated by the Landlord
and to reimburse to the Landlord on demand all costs incidental to
the making and installation of the same
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4.16 Plant Machinery and apparatus
4.16.1 Not to install or use in or upon the Demised Premises any
machinery or apparatus which causes noise or vibration which can be
heard or felt in any adjoining unit or in the remainder of the Mews
4.16.2 Not to load or use the floors ceilings and structure of the Demised
Premises beyond its design capacity or in any manner which will
cause strain or damage thereto
4.16.3 To make good all damage caused to the Demised Premises by the
installation operation or removal of any plant machinery or
apparatus
4.17 Gas and Electrical installations
4.17.1 Not to alter or extend the electrical or gas installations or
electrical wiring in the Demised Premises save in accordance with
the standards of the Institution of Electrical Engineers or the
Institution of Gas Engineers (as the case may be) and with the
Landlord's written consent such consent not be unreasonably withheld
or delayed
4.17.2 Not to use any apparatus which overloads the electrical or gas
installations in the Demised Premises
4.18 General restrictions concerning the use of Demised Premises
4.18.1 Not to use any part of the Demised Premises for the repair of
machines or apparatus of any kind or for any noxious noisy or
offensive trade or business nor for any illegal or immoral act or
purpose nor for any sale by auction nor for gaming and not to commit
any nuisance or do anything which may be or become a nuisance
annoyance or inconvenience or cause damage or disturbance to the
Landlord or the lessees or occupiers of the remainder of the Mews
4.18.2 Not to allow empty containers or rubbish or refuse of any
description to accumulate upon the Demised Premises and provide
facilities within the bin store within the Mews for the keeping of
refuse in proper receptacles readily accessible for collection by
the public cleansing department of the local authority and as
regulated by the department
4.18.3 Not to discharge into any Conduit any deleterious matter or any
substance which might damage or be or become a source of danger or
injury to the drainage system of the Demised Premises or any other
property
4.18.4 Not to allow any person to reside or sleep on the Demised Premises
4.18.5 Not to play or use any musical instrument loudspeaker tape recorder
gramophone wireless television set or other equipment which
reproduces music or speech in the Demised Premises so that it can be
heard in any adjoining unit or in the remainder of the Mews
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4.18.6 Not to keep any live animal fish reptile or bird in the Demised
Premises
4.19 Restrictions and Regulation concerning use of Common Parts and
Internal Common Parts
4.19.1 Not to cause the Common Parts or the Internal Common Parts to become
untidy or in a dirty condition
4.19.2 Not to stand place deposit or expose outside any part of the Demised
Premises any goods materials articles or things whatsoever for
display or sale or for any other purpose nor cause any obstruction
of the Common Parts or the Internal Common Parts
4.19.3 To observe and perform such lawful and reasonable regulations and
directions as the Landlord may from time to time make or give for
the orderly and convenient use and enjoyment and proper management
of the Mews and in particular but without prejudice to the
generality of the foregoing
(i) to abide at all times by any proper regulations made by the
Landlord in respect of fire precautions relating to the
Demised Premises the Building and the Mews and in respect of
means of escape from the Demised Premises and in particular
but without prejudice to the generality of the foregoing not
to obstruct the staircases and emergency exits to the Building
(ii) at all times to observe and perform all reasonable proper and
necessary restrictions and obligations from time to time
imposed by the Landlord in respect of the Access Road and to
keep the Landlord at all times fully and effectually
indemnified against all actions costs claims and demands for
which the Landlord may be liable arising from any act or
omission of the Tenant its servants agents or visitors in
respect of the Access Road or the use thereof
(iii) to comply at all times with any regulations or directions from
time to time made or given by the Landlord or the relevant
authority relating to the disposal of rubbish from the Demised
Premises and in particular (but without limiting the
generality of the foregoing) to clear rubbish at least once a
day from the Demised Premises and only to place rubbish in
such areas on the Mews securely fastened in suitable
containers as may be designated for the purpose leaving the
said designated areas tidy at all times
4.19.4 Not to use the car parking space (if any) allocated by the Landlord
for the use of the Tenant otherwise than for the parking of private
motor vehicles belonging to the Tenant or to the person for the time
being entitled to beneficial occupation of the Demised Premises its
employees or lawful visitors
4.19.5 Not to use any part of the underground car park or the Access Road
for the servicing or repair of any motor vehicle nor for the
discharge of fuel
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4.19.6 Not to load or unload vehicles except in the part of the Mews
designated for such purpose by the landlord and in the course of
such loading or unloading:
(i) to comply with all reasonable requirements and regulations of
the Landlord
(ii) not to cause any unnecessary obstruction nor allow any vehicle
to remain standing for any period longer than is reasonably
necessary for the delivering or taking away of goods from the
Demised Premises
4.19.7 Not to allow vehicles to obstruct access by other lessees of the
Lettable Premises to any part or parts of the Lettable Premises
4.19.8 At all times to act reasonably in relation to other users of the
Mews
4.20 Use of Demised Premises
Not to use the Demised Premises or any part thereof otherwise than
in accordance with the provisions for use in item 1.10 of the
Particulars and not to use the same or any part thereof for any
other purpose without the previous written consent of the Landlord
first having been obtained such consent not to be unreasonably
withheld or delayed
4.21 Not to invalidate insurance
4.21.1 Not to do anything which may prejudice any policy of insurance for
the time being in force in respect of any part of the Building or
which may result in such insurance becoming void or voidable or the
rate of premium under such insurances being increased (unless the
Tenant pays all additional premiums in respect thereof) and the
Tenant will at all times comply with all proper requirements of the
insurers of the Demised Premises whether the same relate to the
Demised Premises or to the use thereof or to any fixtures fittings
equipment or chattel whatsoever therein or thereon
4.21.2 To repay to the Landlord on demand all sums paid by way of increased
premiums and all losses or damages suffered by the Landlord by
reason of any breach by the Tenant of clause 4.21.1
4.21.3 In the event of the Demised Premises or any part thereof being
destroyed or damaged by any of the Insured Risks and the insurance
money under any insurance against the same effected thereon by the
Landlord being wholly or partly irrecoverable by reason solely or in
part of a breach by the Tenant of clause 4.21.1 then and in every
such case to pay to the Landlord forthwith (in addition to the
Insurance Rent) the whole or (as the case may require) a fair
proportion of the monies so rendered irrecoverable
4.21.4 In the event of the Demised Premises or any part thereof being
destroyed or damaged by any of the Insured Risks to give written
notice thereof to the Landlord as soon as practicable but in any
event within two working days of such destruction or damage coming
to the notice of the Tenant
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4.22 Fire requirements
At all times during the Term:
4.22.1 to comply with all requirements from time to time of the appropriate
authority in relation to fire precautions affecting the Demised
Premises and
4.22.2 to provide install and maintain such suitable fire prevention and
extinguishing equipment to the standard required by the local
authority fire officer
4.23 Tenant's Insurances
4.23.1 To maintain in force throughout the Term adequate and sufficient
insurance in respect of the Demised Premises against liability to
third parties for injury to or death of any person or damage to any
property
4.23.2 To produce to the Landlord on request the policy relating to any
insurance specified in paragraph 4.23.1 or details thereof and
evidence of payment of the current premium and to discharge any
premium payable in respect thereof upon the same becoming due
4.23.3 To indemnify the Landlord in respect of any loss or damage which the
Tenant is obliged to insure against under this sub-clause
4.24 Notices
4.24.1 To supply the Landlord with a copy of any notice order or proposal
for a notice or order affecting the Landlord's interest in the
Demised Premises or the user thereof served on the Tenant by any
competent authority (or received by the Tenant from any sub-lessee)
as soon as reasonably practicable after it is received by the Tenant
and without delay to take all reasonable or necessary steps to
comply with any such notice or order so far as such compliance is
within the Tenant's obligations hereunder
4.24.2 At the request of the Landlord to make or join with the Landlord in
making such reasonable objections or representations against or in
respect of any such notice or order as the Landlord shall reasonably
require
4.25 As to the Planning Acts
In relation to the Planning Acts
4.25.1 not to do or omit anything on or in connection with the Demised
Premises the doing or omission of which shall be a contravention of
the Planning Acts and to indemnify the Landlord in respect thereof
4.25.2 to give notice forthwith to the Landlord of any notice order or
proposal for a notice or order served on the Tenant under the
Planning acts and if so required by the Landlord to produce the same
and at the request of the Landlord to make or join in making such
reasonable objections or representations in respect of any
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such proposal as the Landlord may reasonably require and to pay the
whole or such part of the cost thereof as shall be fair and
reasonable according to the circumstances of the case
4.25.3 to comply at the Tenant's own cost with any notice or order served
on the Tenant under the provisions of the Planning Acts
4.25.4 not to make or permit to be made any application for planning
permission in respect of the Demised Premises or any part thereof
without the prior approval of the Landlord and not to implement any
planning permission or approval until the same has been submitted to
and approved by the Landlord provided that approvals to such
application and/or implementation shall not be unreasonably withheld
or delayed for alterations or other matters which are otherwise
authorised under this Lease
4.25.5 unless the Landlord shall otherwise direct the Tenant shall carry
out before the Termination Date any works stipulated to be carried
out to the Demised Premises subsequent to such date as a condition
of any planning permission which may have been implemented by the
Tenant during the Term
4.25.6 if the Tenant shall receive any compensation with respect to the
Tenant's interest hereunder because of any restrictions placed upon
the user of the Demised Premises under or by virtue of the Planning
Acts then if and when the Tenant's interest hereunder shall be
determined howsoever that event may occur except by effluxion of
time or exercise by the Tenant of an option to determine the Term
the Tenant shall forthwith make such provision as is just and
equitable for the Landlord to receive its due benefit from such
compensation
4.25.7 not without the Landlord's previous consent in writing to enter into
any agreement with any competent authority regulating the
development or use of the Demised Premises
4.25.8 if and when called upon so to do to produce to the Landlord all such
plans documents and other evidence as the Landlord may reasonably
require in order to satisfy itself that the provisions of this
clause 4.25 have been complied with in all respects
Provided always that notwithstanding any other provisions contained
in this Lease to the contrary the Landlord's consent shall not be
unreasonably withheld or delayed to any works required to be carried
out pursuant to this clause 4.25
4.26 To preserve easements
To preserve as far as the Tenant is able all rights of light and
other easements enjoyed by the Demised Premises and at all times to
afford to the Landlord such reasonable facilities and assistance as
may be reasonably necessary to enable the Landlord to prevent anyone
acquiring any right of light or other easement over the Demised
Premises
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4.27 Costs
To pay to the Landlord all reasonable and proper costs charges and
expenses (including bailiff's commission and professional adviser's
costs and fees) reasonably incurred by the Landlord or any superior
landlord
4.27.1 In or in bona fide contemplation of any proceedings under Sections
146 or 147 of the Law of Property Act 1925 including the preparation
and service of notices thereunder (notwithstanding forfeiture is
avoided otherwise than by relief granted by the Court)
4.27.2 In the preparation and service at any time during or within six
months after the Termination Date of a Schedule of Dilapidations
accrued at any time during the Term
4.27.3 In connection with any breach of covenant by or the recovery of
arrears of rent due from the Tenant hereunder
4.27.4 In respect of any application for consent required by this Lease
whether or not such consent be granted (except where such consent
may not under the terms hereof or by statute or statutory instrument
be unreasonably withheld or delayed but is so unreasonably withheld
or delayed or is proffered subject to unreasonable qualification or
condition)
4.28 VAT
Upon production of a formal and valid VAT invoice addressed to the
Tenant to pay to the Landlord Value Added Tax at the rate for the
time being in force chargeable in respect of any taxable supplies
(within the meaning of Value Added Tax Act 1983 or any statutory
provisions amending or replacing the same) made by the Landlord to
the Tenant under the terms of or in connection with this Lease and
in every case where the Tenant covenants to pay an amount of money
under this Lease such amount shall be regarded as being exclusive of
all Value Added Tax which may from time to time be legally payable
thereon
4.28.2 To the extent that any payments made by the Tenant to the Landlord
hereunder are recoverable in the same manner as if they were rent
then any Value Added Tax payable by the Tenant thereon shall also be
recoverable in the same manner as if it were rent
4.28.3 In every case where the Tenant has agreed to reimburse the Landlord
in respect of any taxable supplies made to the Landlord under the
terms of or in connection with this Lease (where such taxable
supplies do not in turn constitute or form part of taxable supplies
made by the Landlord to the Tenant to which clause 4.28.1 applies)
then the Tenant shall also reimburse any Value Added Tax paid by the
Landlord on such payment save to the extent that such Value Added
Tax is recoverable by the Landlord
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4.29 New Guarantor
Within twenty working days of the death during the Term of any
person who has or shall have guaranteed to the Landlord the Tenant's
obligations contained in this Lease or of such person becoming
bankrupt or having a Receiving Order made against him or being a
Company passing a Resolution to wind up or entering into liquidation
or having a receiver or administrative receiver appointed then to
give notice thereof to the Landlord and if so required by the
Landlord at the expense of the Tenant within three months to procure
some other person sufficient in the reasonable opinion of the
Landlord to execute a guarantee in respect of the Tenant s
obligations contained in this Lease in the form set out in the Fifth
Schedule
4.30 Indemnity
To be responsible for and to keep the Landlord fully indemnified
against all damage damages losses costs expenses actions demands
proceedings claims and liabilities made against or suffered or
incurred by the Landlord arising directly or indirectly out of:
4.30.1 the negligence of the Tenant or any persons at the Demised Premises
expressly or impliedly with the Tenant's authority or
4.30.2 any breach or non-observance by the Tenant of the covenants
conditions or other provisions of this Lease or any of the matters
to which this Lease is subject
4.31 Observe Third Schedule matters
To observe and perform the provisions of the documents specified in
the Third Schedule so far as the same affect the Demised Premises
and still subsist and are capable of being enforced and to indemnify
and keep the Landlord indemnified in respect of all liability
arising from any failure by the Tenant so to do so far as aforesaid
4.32 Interest during Breach of Covenant
In the event of:
4.32.1 There being any material breach by the Tenant of the covenants on
the Tenant's part herein contained and
4.32.2 The Landlord having notified the Tenant in writing that by reason
thereof the Landlord will not for the time being accept any sums
(including the Rent and/or the Insurance Rent and/or the Service
Charge) payable by the Tenant under the provisions of this Lease
then and in every such case to pay the Landlord on demand Interest
on the amounts due to the Landlord (credit being given for any sums
paid by the Tenant and accepted by the Landlord as mesne profits)
from the date of the notice served by the Landlord in respect of
such breach or from the date when
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the particular sum fell due (whichever is the later) until whichever
is the earlier of either:
(i) the date of the acceptance by the Landlord of the sum due or;
(ii) the date that such breach has been remedied and the Tenant has
so notified the Landlord in writing
4.33 Security
4.33.1 If the Tenant shall at any time be in possession of keys to the
gates giving access to the Mews to take all reasonable steps
necessary to preserve the security of the Mews
4.33.2 Not to leave the Demised Premises continuously unoccupied for more
than one month without notifying the Landlord and
4.33.2.2 providing such security arrangements as the insurers shall require
in order to protect the Demised Premises from vandalism theft damage
or unlawful occupation
4.34 Information as to keyholders
To ensure that at all times the Landlord has written notice of the
name home address and home telephone number of at least two
keyholders of the Demised Premises
5. LANDLORD'S COVENANTS
THE LANDLORD COVENANTS WITH THE TENANT as follows:
5.1 Quiet Enjoyment
That as long as the Tenant pays the Rent the Insurance Rent and the
Service Charge and complies with the terms of this Lease the Tenant
may enjoy the Demised Premises and the rights hereby granted
peaceably during the Term without any interruption by the Landlord
or any person lawfully claiming through under or in trust for the
Landlord
5.2 To insure
5.2.1 Unless such insurance shall be vitiated by any act omission or
default of the Tenant or of anyone on the Demised Premises or the
Mews expressly or by implication with the Tenant's authority at all
times through the Term to effect insurance of the Mews:
5.2.1.1 in such reputable insurance office or with such reputable
underwriters and through such agency as the Landlord may from time
to time decide
5.2.1.2 in the name of the Landlord and such other person as the Landlord
may reasonably require
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5.2.1.3 for the following sums:
- such sum as shall from time to time represent the full cost of
rebuilding and reinstatement of the Estate including architects'
surveyors' and other professional fees payable upon any applications
for planning permission or other permits or consents that may be
required in relation to the rebuilding or reinstatement of the
Estate the cost of debris removal demolition site clearance any
works that may be required by statute and incidental expenses and
- the loss of Rent and Service Charge payable under this Lease from
time to time (in the case of the Rent allowing for such increases as
are referred to in clause 2.17.3) for the Loss of Rent Period
5.2.1.4 Against damage or destruction by the Insured Risks to the extent
that such insurance may ordinarily be arranged for properties such
as the Mews and subject to such excesses conditions or limitations
as the insurer may properly require
5.2.2 If and whenever so requested by the Tenant to supply the Tenant with
satisfactory evidence of the terms and subsistence in effect of the
insurance policy or policies to be maintained by the Landlord
pursuant to this clause 5.2 and evidence of payment of the current
premium or premiums therefore
5.2.3 The Landlord shall not be under any obligation to insure any
fixtures or fittings installed by the Tenant which have become part
of the Demised Premises or any alterations to the Demised Premises
unless the Tenant shall have given to the Landlord written notice of
such installation or the carrying out of the same and of the full
cost of reinstatement thereof and the Landlord has agreed with the
Tenant at its request to effect the insurance thereof
5.2.4 If the Demised Premises or any part thereof shall be destroyed or
damaged by any of the Insured Risks the Landlord will (subject to
payment by the Tenant of any monies rendered irrecoverable pursuant
to clause 4.21.3 hereof) with all due diligence take such steps as
may be requisite and proper and use all reasonable endeavours to
obtain any necessary consents and approvals under any regulations or
enactments for the time being in force to enable the Landlord to
rebuild and reinstate the Demised Premises and as soon as such
consents and approvals shall have been obtained and subject to any
circumstances beyond the control the Landlord to pay out or procure
such payment out of all monies received in respect of such insurance
(other than for architects' surveyors' and other professional fees
and loss of Rent and Service Charge) in rebuilding reinstating
replacing and making good the Demised Premises or the part or parts
thereof so destroyed or damaged
5.3 Services
to use all reasonable endeavours subject to payment at all times of
the rents payable hereunder and (without prejudice to the foregoing)
of the Tenant's proportion of the Service Charge and unless
prevented from so doing by causes beyond the Landlord's control to
provide manage and operate the services mentioned in paragraph 5 of
the Fourth Schedule hereto in accordance with the
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principles of good estate management
6. PROVISOS
PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED that:
6.1 Right of Re-entry
The Landlord may at any time after the occurrence of any of the
following events re-enter the Demised Premises whereupon this demise
shall absolutely determine (but without prejudice to any right of
action of the Landlord in respect of any arrears of rent or any
antecedent breach of covenant):
6.1.1 if any rent remains unpaid 21 days after it is due (whether formally
demanded or not) or
6.1.2 if any covenant or stipulation in the Lease which is to be performed
or observed by the Tenant is not performed or observed or
6.1.3 if the Tenant permits any execution or distress to be levied on any
goods in the Demised Premises or
6.1.4 if the Tenant or Guarantor (or any one party included within the
definition of the Tenant or Guarantor) becomes Insolvent (as defined
in Clause 6.2)
6.1.5 if the Tenant or Guarantor ceases to exist
6.2 Insolvency
"Insolvent" means for the purposes of this part of the Lease:
6.2.1 In relation to a company that:
6.2.1.1 it is deemed unable to pay its debts as defined in section 123 of
the Insolvency Act 1986 (referred to as 'the Act' in the remainder
of this Clause) or
6.2.1.2 a voluntary arrangement is made under Part 1 of the Act or
6.2.1.3 an administration order is made under Part II of the Act or
6.2.1.4 a receiver or manager is appointed whether under Part III of the Act
(including an administrative receiver) or otherwise or
6.2.1.5 it goes into liquidation as defined in Section 247 (2) of the Act
(other than a voluntary winding up solely for the purpose of
amalgamation or reconstruction while solvent) or
6.2.1.6 a provisional liquidator is appointed under Section 135 of the Act
or
6.2.1.7 a scheme of arrangement is made under Section 425 of the Companies
Act
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1985 and
6.2.2 In relation to an individual that:
6.2.2.1 an interim order or a voluntary arrangement is made under Part VIII
of the Act or
6.2.2.2 a bankruptcy petition is presented to the Court or his circumstances
are such that a bankruptcy petition could be presented under Part IX
of the Act or
6.2.2.3 he enters into a Deed of Arrangement or Composition with or for the
benefit of his creditors
6.3 Suspension of Rent in case of damage by Insured Risks
If the Demised Premises or any part thereof are destroyed or damaged
by any of the Insured Risks so as to render the Demised Premises or
any part thereof unfit for occupation and use or inaccessible then
(save to the extent that the insurance money if irrecoverable by
reason of any act or default of the Tenant or other occupiers of the
Demised Premises or their respective servants agents or lawful
visitors) the Rent the Insurance Rent and the Service Charge or a
fair proportion thereof according to the nature and extent of the
damage shall be suspended until the Demised Premises shall have been
reinstated so as to be fit for occupation and use and accessible and
any dispute concerning this sub-clause shall be referred to
arbitration in the manner specified in clause 7
6.4 Determination on Destruction
If at the expiration of the Loss of Rent Period:
6.4.1 the insurance of the Mews effected by the Landlord pursuant to
clause 5.2 has not been vitiated or payment of the policy moneys
refused in whole or in part as a consequence of any act omission or
default of the Tenant or of anyone on the Demised Premises or the
Mews expressly or by implication with the Tenant's authority and the
Tenant fails to make up any deficiency pursuant to clause 4.21.3 and
6.4.2 the Landlord shall have been unable to obtain all necessary consents
and approvals for the rebuilding and/or reinstatement of the Mews
and
6.4.3 this Lease has not been terminated by the doctrine or frustration
then either the Landlord or the Tenant shall be entitled by notice
in writing to the other to determine this Lease and upon the service
of such notice this Lease shall determine without prejudice to any
rights or remedies which may then have accrued to either party
against the other
6.5 Landlord to have Insurance Moneys on Frustration
If this Lease shall determine under the provisions of clause 6.3 or
has been
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terminated by the doctrine of frustration then and in either case
the insurance monies shall be paid to the Landlord for its own use
and benefit
6.6 Landlords right to alter Mews and Adjoining Property
The Landlord shall be entitled at any time during the Term to pull
down alter erect or rebuild extend enlarge or otherwise deal with or
permit or suffer to be pulled down altered erected or rebuilt
extended enlarged or otherwise dealt with the remainder of the Mews
and the Adjoining Property to any extent and in any manner desired
and to use any such buildings and erections or the Adjoining
Property for any purpose desired provided that the access of light
and air to the Demised Premises or any part thereof or any easements
right or amenities of any kind for the time being appertaining to or
enjoyed with the Demised Premises or any part thereof shall not be
thereby materially obstructed or interfered with Provided that
notwithstanding anything herein contained the Landlord shall
6.6.1 exercise these rights in such manner as to cause as little
interference inconvenience or damage as reasonably possible to the
Tenant and the Demised Premises and fixtures and fittings therein
and the means of access thereto and shall make good any damage
occasioned to the Demised Premises and any fixtures and fittings
therein and thereon as expeditiously a reasonably possible
6.6.2 only enter the Demised Premises if such works and other matters
cannot reasonably be effected without such entry and then only after
giving the Requisite Notice and
6.6.3 not endanger the structural stability of the Demised Premises
6.7 No liability in damages
Save to the extent (if any) that the Landlord is entitled to be
indemnified under any policy or policies of insurance effected by
the Landlord the Landlord shall not be responsible to the Tenant or
the Tenant's servants agents or lawful visitors or to any other
person in the Demised Premises for any:
6.7.1 accident happening or injury suffered on the Demised Premises or
6.7.2 damage to or loss of any goods or property sustained on the Demised
Premises or
6.7.3 accident or damage (except damage by the Insured Risks) to the
Demised Premises or
6.7.4 act or omission of any of the Landlord's Agents
6.8 As to goods left on the Demised Premises
If at the end of the Term any goods or effects belonging to the
Tenant are left
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in the Demised Premises for more than 10 working days the Landlord
has power to sell the same as agent for and on behalf of the Tenant
and the Landlord shall
pay or account to the Tenant on demand for the proceeds of sale (but
not any interest thereon) less any costs of storage and sale
reasonably incurred by the Landlord
6.9 Compensation under 1954 Act
Subject to the provisions of Section 38(2) of the Landlord and
Tenant Act 1954 neither the Tenant nor any assignee or undertenant
shall be entitled to any compensation under Section 37 of that Act
upon quitting the Demised Premises or any part of it
6.10 Exclusion of planning warranty
Nothing in this Lease shall imply or constitute a warranty by the
Landlord that the Demised Premises may be used for any specific
purpose under the Planning Acts
6.11 Service of Notices
Save as herein expressly provided to the contrary Section 196 of the
Law of Property Act 1925 as amended by the Recorded Delivery Service
Act 1962 shall apply to all notices demands requests or other
communications given or made pursuant to this Lease save that any
such notice demand request or other communication to be given to or
served on any party hereunder which is for the time being a company
or corporation shall be validly given if given to or served on the
company or corporation at its registered office If the Landlord
Tenant or the Guarantor shall comprise more than one person the
service of any such notice demand request or other communication on
any one of such persons shall constitute good service on all of them
6.12 Commission on Insurance
The Landlord may retain for its own benefit any commissions or
discounts received or obtained by it on or based on the gross
premiums and other costs which would otherwise be paid incurred or
suffered by the Landlord in insuring or procuring the insurance of
the Mews in accordance with the Landlords covenant in that behalf
herein contained
6.13 Exclusion of liability
6.13.1 In this Clause :-
6.13.1.1 "Landlord's Obligations" means all obligations of the Landlord under
any covenant or other term of this lease or any document expressed
to be supplemental to this lease and all implied obligations of the
Landlord under this lease or any such document
6.13.1.2 "Breach" means any breach by the Landlord of the Landlord's
Obligations or any
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of them
6.13.2 No liability shall attach to the Landlord in respect of any Breach
occurring after they shall have parted with all interest in the
Demised Premises
7. ARBITRATION
Where in this Lease there is provision for reference to arbitration
then in the absence of any express contrary provision such reference
shall be made in accordance with the Arbitration Acts 1950 - 1979 to
a single arbitrator to be agreed upon by the parties or failing
agreement appointed by the President of The Royal Institution of
Chartered Surveyors (or if the President is not available or is
unable to make such appointment then by the Vice-President or next
senior officer of such Institution then available and able to make
such appointment) on the application of either the Landlord or the
Tenant
8. JURISDICTION
Whatever the nationality residence or domicile of the parties hereto
the law of England shall be the proper law of this Lease and the
parties hereby submit to the non-exclusive jurisdiction of the
English Courts
9. BREAKCLAUSE
If the Tenant shall desire to determine the Term at the end of the
fifth year of the Term and shall give to the Landlord not less than
six months previous notice in writing of such desire to determine
the Term then upon the expiration of such notice the Term shall
thereupon cease and the Tenant shall deliver up vacant possession of
the Demised Premises but without prejudice to any claim by either
party against the other in respect of any antecedent claim or breach
of any covenant or provision herein contained
10. CERTIFICATE
It is certified that there is no agreement for the lease to which
this Lease gives effect
IN WITNESS whereof this Deed has been duly executed
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THE FIRST SCHEDULE
Rights Benefitting the Demised Premises
The Landlord grants to the Tenant and where necessary and appropriate its
permitted occupiers lawful visitors employees and agents (in common with the
Landlord and all others entitled) the following rights:
1. The free and uninterrupted passage and running of water soil gas
electricity and other services through the Conduits which are now or
may hereafter during the Term be provided by the Landlord for the
benefit of the Mews as a whole in on over or under the Mews so far
as is necessary for the use of the Demised Premises for the use
hereby permitted
2. The right to use the Common Parts and the Internal Common Parts for
all proper purposes in connection with the use and enjoyment of the
Demises Premises
3. The right to display:
3.1 on the notice board at the entrance to the Mews and
3.2 on the exterior of the building (where appropriate) and
3.3 on the exterior of the internal wall adjacent to the Demised
Premises (where appropriate)
a name plate or sign in positions and of sizes to be specified and
supplied by the Landlord showing the Tenant's name and any other
details approved by the Landlord
4. The right of support shelter and protection from any part of the
Mews affording the same
5. The right to park two private motor vehicles in the underground car
park of the Mews in the space allocated from time to time by the
Landlord together with all necessary rights of access thereto (but
subject to the provisions of paragraph 5 of the Second Schedule)
THE SECOND SCHEDULE
Rights Excepted and Reserved
EXCEPT AND RESERVED unto the Landlord and all other persons at any time
authorised by the Landlord or otherwise entitled thereto for the benefit only of
the remainder of the Mews and the Adjoining Property
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1. The free and uninterrupted passage and running of water soil gas
electricity and other services from and to any parts of the Mews and
the buildings which now are or may hereafter during the Term be
erected thereon through the Conduits which are now or may hereafter
during the Term be upon in over or under the Demised Premises
2. The right to maintain in on under or over the Demised Premises at
any time during the Term any Conduits plant or machinery for the
benefit of any part of the Mews
3. The rights of light air support shelter protection and all other
easements and rights now or after the date of this Lease belonging
to or enjoyed by other parts of the Mews
4. (a) Full and free right for the Landlord to alter (by way of
improvement or otherwise) or carry out modifications or
extensions or additions to or at the Retained Premises or to
or at the Lettable Premises (other than the Demised Premises)
in such manner as the Landlord may think fit AND
notwithstanding that the access of light and air to the
Demised Premises may thereby be interfered with
(b) Full and free right for any part of the Mews to be erected or
constructed after the date hereof and during the Term so that
the same obtains subjacent and lateral support or protection
from the Demised Premises
BUT so that such rights or liberties shall not be exercised so to
materially prejudice the rights expressly granted to the Tenant in
this Lease or materially prejudice the use and enjoyment of the
Demised Premises and so that any such works to be carried out will
be carried out as efficiently and quickly as possible causing as
little disruption as possible to the Tenant's business and the
Landlord will make good any loss or damage caused to the Demised
Premises by the exercise of this right
5. The right to alter by construction or otherwise the Common Parts and
the access way to the car parking area (but so that the Mews is
always provided with Common Parts and a car park access way
reasonably equivalent to those at present available and serving the
same and the Demised Premises always have two parking spaces
allocated to them at any one time)
6. The right to install retain and alter and maintain light fittings
signs traffic signs and public utility signs or notices on the
exterior of the Building in positions which do not interfere with
the Tenant's access to the Demised Premises and do not obscure the
windows of the Demised Premises
7. The right to erect and retain scaffolding or other such apparatus on
any part of the Retained Premises for the purpose of inspecting
repairing maintaining or cleaning the Mews notwithstanding that such
scaffolding may temporarily restrict the access to or enjoyment and
use of the Demised Premises
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8. The right at any time on Requisite Notice to enter and remain upon
the Demised Premises in order to
(a) inspect or view the condition and state of repair of the
Demised Premises and the remainder of the Estate
(b) inspect cleanse repair remove replace with others alter or
execute any works whatever to or in connection with the
Conduits easements or services referred to paragraphs 1 2 and
3 of this Schedule
(c) carry out work or do anything whatsoever comprised within the
Landlord's obligations in this Lease whether or not the Tenant
is liable to make a contribution
(d) exercise any of the rights granted to the Landlord by the
Lease
Provided that the rights specified in this paragraph shall be
exercisable only:
(i) where such rights cannot reasonably be exercised without entry
on to the Demised Premises
(ii) if the Landlord shall cause as little inconvenience as
reasonably practicable and make good all damage caused to the
Demised Premises as soon as reasonably practicable
THE THIRD SCHEDULE
Matters to which the Demised Premises are subject
1. The covenants and other matters (other than financial charges)
contained or referred to in the registers of title numbers NGL
181789 and NGL 648550 so far as the same still subsist and are
capable of being enforced
THE FOURTH SCHEDULE
The Service Charge
1. In this Schedule
(a) "the Expenditure" means all proper expenses and outgoings
reasonably and properly incurred by the Landlord in respect of
the Items described in paragraph 5 of this Schedule (so far as
applicable) and includes not only expenses disbursed but also
a reasonable sum by way of provision for future expenditure on
such of those items as call for intermittent expenditure
(whether such expenditure is likely to be incurred during or
after the Term)
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(b) "the Tenant's Proportion" means 9.482% of the Expenditure or
such other fair and reasonable proportion of the Expenditure
as may be determined by the Surveyor in the manner described
in clause 1.17 hereof
(c) "the Landlord's Account Year" means the year ending on the
date specified in item 1.11 of the Particulars or such other
annual period as the Landlord may at its discretion from time
to time determine and notify in writing to the Tenant
2.1 The amount of the Service Charge shall be ascertained and certified
annually by a certificate ("the Certificate") signed by the Surveyor
so soon after the end of the Landlord's financial year as may be
practicable and shall relate to such year in manner hereinafter
mentioned
2.2 A copy of the Certificate for each such financial year shall be
supplied by the Landlord without charge to the Tenant
2.3 The Certificate shall contain a fair summary of the Service Charge
during the Landlord's financial year to which it relates and the
Certificate (or copy thereof duly certified by the person by whom
the same was given) shall be conclusive evidence for the purposes
hereof of all matters of fact which it purports to certify save in
cases of manifest error
3.1 On the usual quarter days (the Interim Payment Dates) (or in the
event of an alteration in the period of the Landlord's financial
year on such quarter day as appropriate) of every year during the
Term the Tenant shall pay to the Landlord such a sum ("the Advance
Payment") in advance and on account of the Service Charge as the
Surveyor shall from time to time specify at the Surveyor's
discretion to be fair and reasonable PROVIDED THAT subject and
without prejudice to the foregoing provisions the Advance Payment
for the Landlord's financial year current at the date of the grant
hereof ("Landlord's current financial year") shall be the sum set
out in item 1.11 of the Particulars of which the Tenant shall pay
the due proportion calculated from day to day in respect of the
period from the date of occupation to the following Interim Payment
Date
3.2 As soon as practicable after the end of each Landlord's financial
year the Landlord shall furnish to the Tenant an account of the
Service Charge payable by the Tenant for that year due credit being
given therein for the total of the Advance Payments made by the
Tenant in respect of the said year and upon the furnishing of such
account there shall be paid by the Tenant to the Landlord the
Service Charge or any balance found payable or there shall be
credited by the Landlord to the Tenant (or repaid by the Landlord to
the Tenant in the event that the Term has determined) any amount
which may have been overpaid by the Tenant by way of Advance
Payments as the case may require PROVIDED ALWAYS THAT the provisions
of this sub-clause shall continue to apply notwithstanding the
expiration or sooner determination of the term hereby granted but
only in respect of the period down to such expiration or sooner
determination as aforesaid
4. The expenses and outgoings comprising the Expenditure are the
following costs
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properly incurred by the Landlord:
Definitions
4.1 "Structure" means:
(a) the entirety of the roofs and foundation of all or any of the
buildings in the Mews
(b) the entirety of all floors and ceilings of the Building (but
excluding any such floor and ceiling finishes which are the
responsibility of any tenant)
(c) the entirety of all external walls of the Building (but
excluding any such paint paper and other decorative finishes
applied to the internal faces of such walls which are the
responsibility of any Tenant)
(d) the entirety of the load bearing walls pillars and other
structures of the Building (but excluding any such paint paper
and other decorative finishes applied to the internal faces of
such walls pillars and other structures which are the
responsibility of any Tenant)
(e) all other parts of the structure of all or any of the
buildings in the Mews
4.2 "Plant" means all apparatus plant machinery equipment within any
buildings forming a part of the Mews from time to time including
(without prejudice to the generality of the above) lifts lift shafts
standby generators and boilers and items relating to mechanical
ventilation heating cooling public address and closed circuit
television systems.
5. The services to be provided by the Landlord are:
5.1 The upkeep repair re-building replacement maintenance updating
cleansing painting decoration renewal lighting and heating (where
appropriate) of the Retained Premises and without prejudice to the
generality of the foregoing this shall include but not be limited
to:
5.1.1 the Structure of all the buildings and Common Parts in the Mews
including any building provided for any porter maintenance or
security staff and the storage and maintenance of all materials
associated therewith including the roofs foundations stairways
ceilings floors and walls (excluding the interior faces of any such
which remain the responsibility of the Tenant)
5.1.2 the timbers joists drains and all services and utilities Plant and
security devices party walls and fences
5.1.3 the exterior faces of any walls dividing the Demised Premises from
the common parts
5.1.4 the exterior face of any door facing into the common parts
5.1.5 the window frames and the exterior face of any window frames or roof
light
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and the glass contained therein
5.1.6 the landscaping maintenance and renewal of any landscaped common
areas or balconies within the Mews including providing and
maintaining (at the Landlord's absolute discretion) plants shrubs
trees gardens or grassed areas and floral decorations in the common
parts and keeping the same planted free from weeds and properly
attended and the grass cut
5.1.7 the Underground Car Park including (i) all roads paths and
staircases giving access to or egress from (ii) the security barrier
systems and (iii) all plant and machinery situate therein or
associated therewith .
5.2 The provisions of dustbin areas and receptacles and security
services
5.3 All costs and expenses whatsoever properly incurred by the Landlord
in and about the discharge of the obligations on the part of the
Landlord set out specifically in this Schedule
5.4 The cost of periodically inspecting examining maintaining
overhauling and where necessary replacing any and every part of the
Building and any Plant and the appurtenances thereof referred to in
extenso in this Schedule
5.5 The cost of supply of telephone services electricity gas oil or
other fuel and water for all purposes referred to in this Schedule
5.6 The maintenance servicing and renewal of any fire alarms fire
prevention and fire fighting equipment and ancillary apparatus in
the Retained Parts
5.7 Any other services relating to the Mews or any part of it provided
by the Landlord from time to time during the Term and not expressly
mentioned
5.8 The cost of employing staff for the performance of the duties and
services referred to in this Schedule and all other incidental
expenditure in relation to such employment (including but without
limiting the generality of such provision) the payment of the
statutory and such other insurance health pension welfare and other
payments contributions and premiums that the Landlord may at the
Landlord's absolute discretion deem desirable or necessary and the
provision of uniforms working clothes tools appliances telephone
service cleaning sanitary and other materials bins receptacles and
other equipment for the performance of their duties and the cost of
providing necessary washing and toilet requisites in any staff
toilet accommodation
5.9 All charges assessments impositions and other outgoings payable by
the Landlord in respect of all parts of the Mews not exclusively
occupied by the Landlord or any other tenant other than the Lettable
Premises
5.10 The cost of any interest and fees in respect of money borrowed to
finance the provisions of the Services
5.11 Such reasonable provision (if any) for anticipated expenditure in
respect of any of the Services as the Landlord shall in the
interests of good estate
35
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management consider appropriate
5.12 The proper and reasonable fees and disbursements (and any value
added tax payable on them) of:
5.12.1 the Surveyor and any other individual firm or company reasonably and
properly employed or retained by the Landlord for (or in connection
with) such surveying or accounting functions or the management of
the estate
5.12.2 the managing agents (whether or not the Surveyor) for or in
connection with
5.12.2.1 the management of the Mews (excluding the fees and
disbursements referred to in clause 6.12.1 above where
the Surveyor and the Managing Agents are one and the
same)
5.12.2.2 the collection of all sums due to the Landlord from the
tenants of the Mews
5.12.2.3 the performance of the Services and other duties in and
about the Mews or any part of it relating to (without
prejudice to the generality of the above) the general
management administration security maintenance
protection and cleanliness of the Mews
5.12.3 any individual firm or company valuing the Mews for insurance
purposes or for the purposes of assessing the full cost of
rebuilding and reinstatement
5.12.4 any individual firm or company providing caretaking or security
arrangements and services to the Mews
5.12.5 any other individual firm or company employed or retained by the
Landlord to perform (or in connection with) any of the management
services or any of the functions or duties referred to in this
paragraph
5.13 The cost of taking all steps deemed proper desirable or expedient by
the Landlord for complying with making representations against or
otherwise contesting the incidence of the provisions of any
legislation or orders or statutory requirements thereunder
concerning town planning public health highways streets drainage or
other matters relating or alleged to relate to the premises for
which the Tenant is not directly liable hereunder
5.14 The upkeep repair re-building insurance replacement maintenance
updating cleansing painting and renewal of the lifts and any
associated machinery or plant serving Units 7, 8, 13 and 14 of the
Mews including without prejudice to the generality of the foregoing
the cost of:
5.14.1 insuring and keeping insured the lifts in respect of such fully
comprehensive insured risks as the Landlord in its absolute
discretion deems necessary in the full replacement value to include
third party and public liability insurance
5.14.2 periodically inspecting maintaining overhauling and where necessary
replacing any and every part of the lifts or any plant or machinery
which serves the lifts
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to include any maintenance contract and any statutory inspections
and any fees payable in respect thereof
5.14.3 the supply of electricity or any other fuel which serves the lifts
exclusively
5.14.4 the employment of any staff or outside contractor for the
performance of any duties or services associated exclusively with
the lifts
5.14.5 such provision (if any) for anticipated expenditure in respect of
the lifts as the Landlord shall in the interests of good estate
management consider appropriate
6. If during any Landlord's Account Year it shall reasonably appear to
the Landlord that by reason of unexpected expenses or liabilities
its previous estimate of the Service Charge is likely to be exceeded
then the Landlord may in its reasonable discretion serve on the
Tenant a statement of such expenses and liabilities and the
proportion thereof due as the Service Charge in consequence thereof
and any such sums so required shall be paid by the Tenant within
fourteen days of the demand therefor. Such demand and payment shall
be taken into account under Paragraph 3 of this Schedule.
7. Each annual statement of Expenditure and of the Tenant's Proportion
shall be certified by the Surveyor and a duly certified copy of such
statement shall in the absence of manifest error or fraud be
evidence for the purposes of this Lease of the matters covered by
such statement but the Landlord shall upon request and payment of a
reasonable inspection fee permit the Tenant to inspect at any time
up to six months after delivery of a statement the vouchers and
receipts for items included in it
THE FIFTH SCHEDULE
Form of Guarantee required for clauses 4.12
and 4.29
The Guarantor covenants with the Landlord and (without the need for any express
assignment) with all its successors in title that:
1. To pay observe and perform
During the Term the Tenant shall punctually pay the rents and
observe and perform the covenants and other terms of this Lease and
if at any time during the Term the Tenant shall make any default in
payment of the rents or in observing or performing any of the
covenants or other terms of this Lease the Guarantor will pay the
rents and observe or perform the covenants or terms in respect of
which the Tenant shall be in default and make good to the Landlord
on demand and indemnify the Landlord against all losses damages
costs and expenses arising or incurred by the Landlord as a result
of such non-payment non-performance or non-observance
notwithstanding:
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1.1 any time or indulgence granted by the Landlord to the Tenant or any
neglect or forbearance of the Landlord in enforcing the payment of
the rents or the observance or performance of the covenants or other
terms of this Lease or any refusal by the Landlord to accept rents
tendered by or on behalf of the Tenant at a time when the Landlord
was entitled (or would after the service of a notice under the Law
of Property Act 1925 Section 146 have been entitled) to re-enter the
Demised Premises
1.2 that the terms of this Lease may have been varied by agreement
between the parties
1.3 that the Tenant shall have surrendered part of the Demised Premises
in which event the liability of the Guarantor under this Lease shall
continue in respect of the part of the Demised Premises not so
surrendered after making any necessary apportionments under the Law
of Property Act 1925 Section 140 and
1.4 any other act or thing by which but for this provision the Guarantor
would have been released
2. To take lease following disclaimer
If at any time during the Term the Tenant (being an individual)
shall become bankrupt or (being a company) shall enter into
liquidation and the trustee in bankruptcy or liquidator shall
disclaim this Lease the Guarantor shall if the Landlord shall by
written notice within two months after such disclaimer so require
take from the Landlord a lease of the Demised Premises for the then
residue of the Term which would have remained had there been no
disclaimer at the Rent then being paid under this Lease subject to
the same covenants and terms as in this Lease (except that the
Guarantor shall not be required to procure that any other person is
made a party to that lease as guarantor) such new lease to take
effect from the date of such disclaimer and in such case the
Guarantor shall pay the costs of such new lease and execute and
deliver to the Landlord a counterpart of it
3. To make payments following disclaimer
If this Lease shall be disclaimed and for any reason the Landlord
does not require the Guarantor to accept a new lease of the Demised
Premises in accordance with clause 2 hereof the Guarantor shall pay
to the Landlord on demand an amount equal to the difference between
any money received by the Landlord for the use or occupation of the
Demised Premises and the rents reserved by this Lease for the period
commencing with the date of such disclaimer and ending on whichever
is the earlier of the following dates:
3.1 the date 12 months after such disclaimer and
3.2 the date (if any) upon which the Demised Premises are relet and
income producing
such amount to be paid by way of equal instalments quarterly in
advance on the
38
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usual quarter days and in the case that the event in clause 3.2
occurs first then payment of the final instalment to be adjusted
accordingly
THE SIXTH SCHEDULE
Provisions for Rent Review
1. In this Schedule the following expressions shall have the following
meanings:
1.1 "Rent Review Date" means the date specified in item 1.8 of the
Particulars
1.2 "Open Market Rent" shall mean the yearly rent for which the
Demised Premises could reasonably be
expected to be let in the open market as a
whole with vacant possession on the Rent
Review Date by a willing landlord to a
willing tenant without any fine or premium
for a term of 10 years but commencing on the
Rent Review Date with provisions identical
(mutatis mutandis) to those contained herein
for review of the Rent at the expiration of
5 years calculated from the Rent Review Date
and otherwise upon the terms and conditions
of this Lease save as to the amount of the
Rent and the rent free period
On the following assumptions at that date:
(a) that the Demised Premises shall be ready and available for immediate
beneficial occupation and use
(b) that all the Tenant's covenants shall have been complied with
(c) that no work has been carried out by the Tenant or any sub-lessee or
their respective predecessors in title which has diminished the
rental value of the Demised Premises
(d) that in case the Demised Premises or the Building or any part have
been destroyed or damaged they have been fully restored
(e) that the Demised Premises may be used for any of the purposes
permitted by this Lease (as extended by any licence granted pursuant
thereto) and that planning law permits all such purposes without
restriction
(f) that the willing tenant shall have been given prior to and that
there shall have expired immediately prior to the Rent Review Date
such a rent-free period (if any) for or towards the time taken for
the purpose of the carrying out of any tenant's fitting-out works
and that the willing tenant shall have been given such
39
<PAGE>
concessionary rent or any other inducement whether of a capital or
revenue nature which the willing landlord and willing tenant might
reasonably agree as a term of the grant and acceptance of a tenancy
for towards or in respect of the cost of fitting out the Demised
Premises
(g) that any rent free period which might be negotiated in the open
market between a willing landlord and a willing tenant has expired
But disregarding:
(a) any effect on rent of the fact that the Tenant or any
permitted sub-lessee or their respective predecessors in title
may have been in occupation of the Demised Premises
(b) any goodwill attached to the Demised Premises by reason of any
trade or business carried on therein by the Tenant or any
permitted sub-lessee or any predecessor in title of either of
them
(c) any effect on rent of any improvement to the Demised Premises
lawfully made by the Tenant or by any permitted sub-lessee or
any of their respective predecessors in title during the Term
or during any period of occupation prior thereto arising out
of any agreement to grant the Term with the consent of the
Landlord (if required under this Lease) otherwise than in
pursuance of an obligation to the Landlord or its predecessors
in title and save to the extent (if any) that the Landlord or
its predecessors in title contributed to the cost thereof
1.3 "the Third Party" means a Chartered Surveyor (having at least
ten years established and recent experience
in letting and valuing premises of a kind
and character similar to those of the
Demised Premises) agreed between the parties
or (in default of agreement within one month
of the Landlord's written invitation to the
Tenant to agree the nomination of the Third
Party) appointed by or on behalf of the
President for the time being the Royal
Institution of Chartered Surveyors; if the
said President shall for any reason not be
available or be unable to make such
appointment at the time of the requisition
therefor then the appointment may be made by
or on behalf of the Vice President or next
senior officer of the said Institution then
available and able to make such appointment.
The person so appointing is herein called
"the President"
2. From and after each Rent Review Date the Rent shall be whichever is
the higher of:
2.1 the yearly Rent payable immediately before that Rent Review Date and
40
<PAGE>
2.2 the Open Market Rent of the Demised Premises at that Rent Review
Date ("the New Rent")
3.1 If two months before the Rent Review Date the Landlord and the
Tenant shall not have agreed on the New Rent payable from the Rent
Review Date either the Landlord or the Tenant may at any time
thereafter before the New Rent shall be agreed between the Landlord
and the Tenant require the Third Party to be appointed to determine
the Open Market Rent
3.2 The Third Party shall act as an arbitrator unless the Landlord and
the Tenant shall otherwise agree in writing
4. If the Third Party shall act as an arbitrator he shall act pursuant
to the Arbitration Acts 1950 and 1979
5. If the Third Party shall act as an expert then he shall:
5.1 give notice in writing of his appointment to the Landlord and the
Tenant and he shall invite each to submit a valuation accompanied if
desired by a statement of reasons
5.2 send a copy of each party's valuation and statement to the other
party and invite written observations thereon
5.3 consider any valuation statements and observations made but shall
not be in any way limited or fettered thereby and shall determine
the Open Market Rent in accordance with his own judgement
5.4 give his decision to the Landlord and the Tenant within two months
of his appointment or within such extended period as the Landlord
and the Tenant may expressly or by implication both agree
6. The determination of the Third Party (acting as an expert) shall be
final and binding (except on a point of law) on the parties and for
the purpose of obtaining his decision forthwith upon request the
parties shall jointly undertake to pay his fees and the costs of the
application such fees and costs to be in his award (but both parties
may make representations to him on costs)
7. If the Third Party (acting as an expert) shall fail to determine the
New Rent and give notice thereof within the time and in the manner
provided or if he shall relinquish his appointment or die or if it
shall become apparent that for any reason he will be unable to
complete his duties either the Landlord or the Tenant may apply to
the President for a substitute to be appointed in his place which
procedure may be repeated as many times as necessary
8. In the event that by the Rent Review Date the New Rent shall not
have been agreed or determined (whether or not negotiations shall
have commenced)the Tenant shall continue to pay rent at the rate of
the current Rent on each day appointed by this Lease for payment of
rent until the New Rent shall have been agreed or determined in
writing and within 5 working days thereafter the Tenant shall pay
41
<PAGE>
to the Landlord an amount equal to the difference between the New
Rent and the rent actually paid for the period since the Rent Review
Date together with interest on each instalment of such difference at
the rate equal to Barclays Bank PLC's Base Rate from time to time
from the Rent Review Date or in the case of subsequent instalments
of such difference the date upon which the same would have been
payable (if ascertained) down in each case to the date of payment
9. As respects all periods of time referred to in this Sixth Schedule
time shall be deemed not to be of the essence
10. If on any Rent Review Date there shall be in force any Act which
shall restrict interfere with or affect the Landlord's right to
revise the Rent in accordance with the terms hereof then the
Landlord shall be entitled once within 6 months following each
removal of such restriction or modification of such Act to serve
notice requiring a review of the Rent (an "Interim Notice") upon the
Tenant and from and after the date of service of such Interim Notice
until the next Rent Review Date the Rent shall be increased to
whichever is the higher of the Open Market Rent at the Date of
service of the Interim Notice and the Rent payable immediately prior
thereto and the provisions of this Schedule shall apply accordingly
with the substitution of the said date of service for the Rent
Review Date
11. If the Landlord and the Tenant shall be able to agree the New Rent
or when the New Rent shall have been determined in accordance with
the provisions hereof as the case may be the Landlord and the Tenant
shall cause a Memorandum of the New Rent to be prepared in duplicate
and signed by or on behalf of the Landlord the Tenant and the
Guarantor respectively one whereof shall be attached to this Lease
and the other whereof shall be attached to the Counterpart hereof
but non signature of such Memorandum shall not affect the validity
of or the Landlords ability to recover the New Rent
42
<PAGE>
SIGNED AS A DEED AND DELIVERED )
by MALCOLM WEBBER ) /s/ M. Webber
in the presence of: )
WITNESS SIGNATURE /s/ [ILLEGIBLE]
NAME
5 Nevill Way
ADDRESS Loughton, Essex
OCCUPATION Secretary
SIGNED AS A DEED AND DELIVERED )
by RONALD MICHAEL HARRIS ) /s/ Ronald Michael Harris
in the presence of: )
WITNESS SIGNATURE /s/ [ILLEGIBLE]
NAME [ILLEGIBLE]
5 Nevill Way
ADDRESS Loughton, Essex
OCCUPATION Secretary
43
<PAGE>
Exhibit 10.78
Dated 13th August 1998
(1) COURTAULDS CIF NOMINEES LIMITED
(2) TINSLEY ROBOR PLC
------------------------------------
LEASE
of
Unit 12/13 Lineside Industrial Estate
Littlehampton
Sussex
------------------------------------
Cameron McKenna
Mitre House
160 Aldersgate Street
London EC1A 4DD
T +44(0)171 367 3000
F +44(0)171 367 2000
<PAGE>
Table of Contents
1. Definitions ................................................... 1
2. Demise ........................................................ 2
3. Covenants by the Tenant ....................................... 3
To pay rent ................................................. 3
To pay rates ................................................ 3
To pay gas etc charges ...................................... 3
To pay Value Added Tax and interest ......................... 3
To pay fees ................................................. 4
To pay share of common expenses ............................. 4
To repair ................................................... 4
To decorate interior ........................................ 5
To decorate exterior ........................................ 5
To yield up ................................................. 5
Not to alter ................................................ 5
Not to overload ............................................. 6
To permit Landlord to enter ................................. 6
To give and transmit notices ................................ 6
To comply with statutory requirements etc ................... 7
To indemnify ................................................ 7
Prohibited assignment and underletting ...................... 8
Authorised assignment ....................................... 8
Authorised guarantee agreement .............................. 9
Authorised Underletting ..................................... 9
Registration ................................................ 10
Sale or re-letting notices .................................. 10
Permitted user .............................................. 11
Insurer's requirements ...................................... 11
Nuisance .................................................... 11
Loss of easements ........................................... 11
To observe regulations ...................................... 11
4. Covenants by the Landlord ..................................... 11
Quiet enjoyment ............................................. 12
Insurance ................................................... 12
5. Provisos ...................................................... 12
Interest on arrears of rent ................................. 12
For re-entry ................................................ 13
Suspension of rent .......................................... 13
Frustration of rebuilding ................................... 13
Easements, notices etc ...................................... 13
No warranty by Landlord ..................................... 14
<PAGE>
Rent demands ................................................ 14
6. Rent Review ................................................... 14
7. There is no Agreement for Lease to which this Lease gives
effect ...................................................... 17
Schedule 1 ....................................................... 18
Part 1 The Demised Premises ................................. 18
Part 2 Easements and other rights included in the demise .... 18
Part 3 Exceptions and reservations out of the demise ........ 19
Schedule 2 Services and expenses for which the Tenant is to pay
a proportionate part ........................................ 20
Schedule 3 Regulations applicable to the Demised Premises ........ 21
Schedule 4 Form of authorised guarantee agreement ................ 23
<PAGE>
[GRAPHIC]
THIS LEASE made the 13th August 1998
BETWEEN:
[GRAPHIC]
(1) COURTAULDS CIF NOMINEES LIMITED having its registered office at 50 George
Street London W1A 2BT (the "Landlord") and
(2) TINSLEY ROBOR PLC having its registered office at Drayton House
Drayton Chichester West Sussex P020 6EW (the "Tenant")
WITNESSETH as follows:-
1. Definitions
In this deed where the context so admits:-
"Associate": means (where the Tenant is a company) any subsidiary company,
holding company or associated company of the tenant (the expressions
"subsidiary company" and "holding company" having the meanings
respectively assigned to them by section 736 of the Companies Act 1985 and
the expression "associated company" having the meaning assigned to it by
section 416 of the Income and Corporate Taxes Act 1988)
"The Demised Premises"; the property described in Part 1 of Schedule 1
and all additions and improvements from time to time made thereto and the
Landlord's fixtures and fittings therein and "the Estate" means the land
and premises shown edged green on the plan attached hereto
A reference to any Act of Parliament or statutory instrument includes any
Act or instrument for the time being in force amending or replacing the
same and any instrument regulation or bye-law for the time being in force
under any such Act
"The Planning Acts": the Town and Country Planning Act 1990 the Planning
(Listed Buildings and Conservation Areas) Act 1990 the Planning (Hazardous
Substances) Act 1990 the Planning (Consequential Provisions) Act 1990 and
the Planning and Compensation Act 1991
The expressions "the Landlord" and "the Tenant" include their respective
successors in title
Where there are two or more persons included in the expressions "the
Landlord" or "the Tenant" covenants expressed to be made by the Landlord
or the Tenant shall be deemed to be made by such persons jointly and
severally
"the Service Area": the part of the Demised Premises hatched in black on
the plan attached hereto
[GRAPHIC]
-1-
<PAGE>
"The Term": the term of years granted by clause 2 hereof
"The Prescribed Rate": a rate of interest of four per centum per annum
above the base rate from time to time of Barclays Bank Plc or such other
clearing bank as the Landlord from time to time may specify or (in the
event of base rates being no longer published or used) such other
comparable rate of interest as the Landlord and the Tenant may from time
to time agree in writing (such agreement in neither case to be
unreasonably withheld or delayed)
References to the President and Vice-President of the Royal Institution of
Chartered Surveyors include references to the equivalent officers of any
institution association or other body of which (by reason of amalgamation
or otherwise and whether or not retaining a separate identity) the Royal
Institution of Chartered Surveyors may become a constituent part
"Quarter Days": the twenty-fifth day of March the twenty-fourth day of
June the twenty-ninth day of September and the twenty-fifth day of
December in each year and "Quarter Day" means any one of the Quarter Days
"the Act of 1927": the Landlord and Tenant Act 1927
"the Act of 1995": means the Landlord and Tenant (Covenants) Act 1995
2. Demise
In consideration of the rents hereinafter reserved and of the covenants by
the Tenant hereinafter contained the Landlord HEREBY DEMISES unto the
Tenant the Demised Premises TOGETHER WITH (but to the exclusion of all
other liberties privileges easements rights or advantages whatsoever) the
rights specified in Part 2 of Schedule 1 hereto but EXCEPT AND RESERVING
to the Landlord and the Landlord's tenants and licensees and all other
persons entitled thereto the rights specified in Part 3 of Schedule 1
hereto and SUBJECT TO all rights granted to other tenants on the Estate
over or in respect of the Demised Premises TO HOLD the same unto the
Tenant from the First day of August One thousand nine hundred and
ninety-eight for the term of TEN YEARS YIELDING AND PAYING therefor
FIRST:-
2.1 From and including the Twenty-fifth day of December 1998 the annual rent
of NINETY-TWO THOUSAND FIVE HUNDRED POUNDS ((pound)92,500.00) (but subject
to review as hereinafter provided)
such rent to be paid by equal quarterly payments in advance on the Quarter
Days without any deduction whatsoever and proportionately for any fraction
of a year the first payment (or a duly apportioned part of it) to be made
on the date hereof SECONDLY in respect of the Demised Premises by way of
further or additional rent on demand a sum or sums of money equal to the
amount or amounts from time to time paid by the Landlord for the insurance
of the Demised Premises in accordance with the covenant in that behalf
hereinafter contained AND THIRDLY on demand all sums payable under clause
3.5 hereof
-2-
<PAGE>
[GRAPHIC]
LINESIDE INDUSTRIAL ESTATE
Littlehampton
[LOGO] Hillier
Parker
COMPUTER AIDED DESIGN
<PAGE>
3. Covenants by the Tenant
The Tenant hereby covenants with the Landlord as follows:-
To pay rent
3.1 To pay the rents hereinbefore reserved on the days and in the manner
aforesaid without any deduction set-off or counterclaim
To pay rates
3.2 To pay (or indemnify the Landlord against) all existing and future rates
taxes duties charges assessments impositions and outgoings whatsoever
(whether imposed by statute or otherwise and whether of a national or
local character and whether of the nature of capital or revenue and even
though of a wholly novel character) now or at any time during the Term
payable in respect of the Demised Premises or any part thereof or by the
owner or occupier thereof AND (without prejudice to the foregoing) to keep
the Demised Premises in rateable occupation (and in use for the purpose
for which they are then constructed or adapted) during the last three
months of the Term howsoever determined
To pay gas etc charges
3.3 To pay all charges for gas electricity and water consumed on the Demised
Premises and all charges for the hire of meters in respect thereof and to
observe all regulations of the gas electricity and water authorities and
to keep the Landlord indemnified against the non-payment breach
non-observance or non-performance thereof
To pay Value Added Tax and interest
3.4 Where by virtue of any of the provisions of this lease the Tenant is
required to pay repay or reimburse to the Landlord or any person or
persons any rent premium cost fee charge insurance premium expense or
other sum or amount whatsoever in respect of the supply of any goods
and/or services by the Landlord or any other person or persons in addition
to pay or (as the case may be) keep the Landlord indemnified against:-
3.4.1 The amount of any Value Added Tax which may be chargeable in
respect of such supplies
3.4.2 A sum or sums equal to the amount of Value Added Tax charged
(for whatsoever reason and whether directly or indirectly) to
the Landlord or such other person or persons in connection with
such supply save when the whole of that Value Added Tax shall be
recoverable by the Landlord from HM Customs and Excise
3.4.3 To pay to the Landlord all interest which may become due by
virtue of any of the provisions of this lease
-3-
<PAGE>
To pay fees
3.5 To pay to the Landlord a fair and reasonable contribution towards the cost
and expense of repairing lighting cleansing and maintaining and (where
fair and reasonable having regard to the unexpired residue of the Term)
constructing rebuilding and renewing all things the use of which is common
to or capable of being used in common with the Demised Premises and other
premises A list of the items for which a charge shall be levied appears in
Schedule 2 hereto (but such list shall not delimit what items may from
time to time be included therein) such contribution to be assessed by the
Landlord's surveyors whose decision shall be final and binding on the
parties hereto and shall in default of payment on demand be recoverable as
rent in arrear
3.6 To pay to the Landlord all costs fees charges and expenses (including
legal costs bailiff's fees and surveyors' fees) reasonably and properly
incurred by the Landlord (i) attendant upon or incidental to every
application made by the Tenant for a consent or licence required or made
necessary by the provisions of this lease whether the same be granted or
refused or proffered subject to any lawful qualification or condition or
whether the application be withdrawn (ii) incidental to the preparation
and service of a notice under Section 146 of the Law of Property Act 1925
or incurred by or in contemplation of proceedings under Sections 146 or
147 of that Act notwithstanding that in any such case forfeiture is
avoided otherwise than by relief granted by the Court (iii) in connection
with the recovery of arrears of rent due from the Tenant hereunder and
(iv) in relation to any steps taken in contemplation of or in connection
with the preparation and service of a schedule of dilapidations during or
after the expiration or sooner determination of the Term
To pay share of common expenses
3.7 To pay a fair proportion (to be conclusively determined by the Landlord's
surveyor) of any expenses incurred in constructing repairing rebuilding
and cleansing all party walls fences sewers drains channels sanitary
apparatus pipes wires passageways stairways entrance ways roads pavements
and other things the use of which is common to the Demised Premises and to
other premises
To repair
3.8 At all times during the Term to keep the Demised Premises in the same
state of repair and condition as evidenced by the Schedule of Condition
attached to the lease (except only damage by risks against which the
Landlord has insured save where the insurance monies are irrecoverable in
consequence of any act or default of the Tenant) as it is in on the date
hereof AND without prejudice to the generality of the foregoing (a) to
clean all windows (both inside and outside) and other plate glass in the
Demised Premises at least once in every month (b) to clean and repoint the
external stone and brickwork of the Demised Premises when necessary during
the Term and also in the last year thereof (howsoever determined) (c) to
keep such parts of the Demised Premises as shall not from time to time be
built upon in a clean and tidy condition and free from rubbish and weeds
and deposits of materials or refuse and to cultivate and maintain all
landscaped areas and (d) to cause all electrical hydraulic and other
mechanical installations and equipment whatsoever within the Demised
Premises or under the control of the Tenant and serving the same to be
properly and regularly
-4-
<PAGE>
serviced and maintained and when necessary repaired or replaced by
qualified persons who and at intervals which are approved by the
manufacturers of such installations and equipment and by the insurers of
the Demised Premises
To decorate interior
3.9 In every fifth year of the Term and also in the last year thereof
(howsoever determined) to paint in a proper and workmanlike manner all the
inside wood iron and other parts heretofore or usually painted of the
Demised Premises with two coats of good quality paint and also at the
times aforesaid to wash stop whiten distemper grain varnish colour paper
and otherwise decorate in a proper and workmanlike manner all internal
parts of the Demised Premises that have been or ought properly to be so
treated and so that in the last year of the Term the tints colours and
patterns of all such painting and other works of internal decoration shall
be approved in writing by the Landlord
To decorate exterior
3.10 In every third year of the Term and in the last year thereof (howsoever
determined) to paint in a proper and workmanlike manner all the external
parts of the Demised Premises heretofore or usually painted with three
coats of good quality paint the tints or colours on each occasion to be
approved in writing by the Landlord AND FURTHER at proper intervals to
apply such (if any) other treatments as may be appropriate to the
remainder of the external parts of the Demised Premises
To yield up
3.11 To yield up the Demised Premises with the fixtures and fittings and
additions thereto (tenant's or trade fixtures or fittings only excepted)
at the expiration or sooner determination of the Term in good and
substantial repair and condition and decorated in accordance with the
several covenants herein contained and to make good any damage caused to
the Demised Premises by the removal of any tenant's or trade fixtures or
fittings
Not to alter
3.12 Not without the prior written consent of the Landlord (such consent not to
be unreasonably withheld or delayed) and then only in accordance with
plans previously approved by the Landlord and under the supervision and to
the satisfaction of the Landlord's surveyor) (i) to make any structural or
non-structural alterations or additions to the Demised Premises or any
part thereof or (ii) to affix or display or suffer to be affixed or
displayed on any part of the Demised Premises any placard plate sign bill
board writing or advertisement or (iii) to erect any partition pipe wire
aerial mast or other apparatus whatsoever in or upon the Demised Premises
or any part thereof provided that no alterations whatsoever shall be made
to the Service Area without the Landlord's prior written consent and for
the avoidance of any doubt the Landlord shall in its absolute discretion
be entitled as a condition of granting consent to impose any conditions it
requires to preserve the rights of other tenants on the Estate over the
Service Area
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Not to overload
3.13 Not to overload the floors of or any of the services in or to the Demised
Premises
To permit Landlord to enter
3.14 To permit the Landlord and the Landlord's servants agents and all other
persons authorised by the Landlord with or without workmen and others at
all reasonable times during the Term (upon giving to the Tenant not less
than forty-eight hours' previous notice except in the case of emergency)
to enter the Demised Premises for the purpose of:-
3.14.1 Examining the state of repair and condition thereof and of
taking a schedule of the Landlord's fixtures and fittings
therein and thereupon the Landlord may (i) serve upon the Tenant
notice in writing specifying any repairs or decorations
necessary to be done in order to comply with the Tenant's
obligations hereunder and (ii) require the Tenant forthwith to
execute the same AND if the Tenant shall make default in
complying with such notice or in the performance of any of the
Tenant's covenants herein contained it shall be lawful for the
Landlord (but without prejudice to the right of re-entry
hereinafter contained) to enter upon the Demised Premises and
execute such repairs or decorations in accordance with the
covenants and provisions hereof or to take any other action
which in the opinion of the Landlord may be desirable for the
purpose of securing the doing or omission respectively of all
matters hereby covenanted by the Tenant to be done or omitted or
of discharging the Landlord's duty of care under the Defective
Premises Act 1972 and the cost of such repairs decorations or
other action (including surveyors' fees) shall be a debt payable
by the Tenant to the Landlord on demand
3.14.2 Repairing altering redecorating cleansing or examining any
adjoining or neighbouring premises now or at any time hereafter
belonging to the Landlord all damage to the Demised Premises
thereby occasioned being made good by the Landlord
To give and transmit notices
3.15 To give notice forthwith to the Landlord of any want of repair or defect
in the Demised Premises or any part thereof by reason of which the
Landlord might incur liability by statute or otherwise to any other person
3.16 Forthwith to deliver to the Landlord a copy of any notice or requirement
served upon the Tenant (or on any sub-tenant) and of any order or proposed
order affecting the Demised Premises and to take all reasonable steps to
comply with such notice and also at the request and cost of the Landlord
to make or join with the Landlord in making such objections
representations or appeals in respect thereof as the Landlord may require
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To comply with statutory requirements etc
3.17 At all times during the Term to execute all such works and do all such
things as under or by virtue of any Act or Acts of Parliament now or
hereafter to be passed and orders bye-laws rules and regulations made
thereunder (including without prejudice to the generality of the foregoing
the Factories Act 1961 the Offices Shops and Railway Premises Act 1963 the
Fire Precautions Act 1971 (and any requirements of a fire certificate
issued pursuant thereto whether issued to the Landlord or the Tenant) and
the Health and Safety at Work Act 1974) are or shall be directed or
necessary to be executed or done upon or in respect of the Demised
Premises or any part thereof or in respect of the user thereof by the
owner lessee tenant or occupier thereof
3.18 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 the doing or
omission of which may under any such Act of Parliament cause the Landlord
to incur or have imposed or become liable to pay any penalty damages
compensation costs charges expenses or other impositions whatsoever
3.19 Not without the prior written consent of the Landlord (such consent not to
be unreasonably withheld or delayed) to make any application for planning
permission in respect of the Demised Premises or any part thereof and at
all times during the Term to comply in all respects with the provisions
and requirements of the Planning Acts
3.20 Unless the Landlord otherwise directs in writing where planning permission
is granted after the date hereof pursuant to an application made by or on
behalf of the Tenant the Tenant will carry out before the expiration or
sooner determination of the Term any works stipulated to be carried out to
the Demised Premises by a date subsequent to such expiration or sooner
determination as a condition of any planning permission which may be
granted and implemented during the Term
To indemnify
3.21 During the Term and any subsequent period during which the Tenant may
remain in possession of the Demised Premises to be responsible for and to
indemnify the Landlord against all claims demands actions proceedings
liabilities costs charges and expenses in respect of or incurred in
connection with:-
3.21.1 any damage or injury occasioned to:-
(a) the Demised Premises or
(b) any adjacent or neighbouring premises or
(c) any person or any other property moveable or immovable
by any act default or negligence of the Tenant or of the servants agents
licensees or invitees of the Tenant or by any breach of the covenants on
the part of the Tenant herein contained
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3.21.2 all such works things acts and omissions as are specified in
sub-clauses 3.17 and 3.18
3.21.3 any obligation to abate a nuisance or to remedy any other matter
in connection with the Demised Premises in obedience to a notice
served by a local authority or
3.21.4 any contravention of the Planning Acts
Prohibited assignment and underletting
3.22 Not to (a) assign or part with possession of part only of the Demised
Premises nor (b) subject to sub-clause 3.22 and sub-clause 3.27 underlet
or share the possession or occupation of the whole or any part or parts of
the Demised Premises nor (c) part with possession of the whole of the
Demised Premises except by way of an assignment or underlease of the whole
as hereinafter authorised provided that notwithstanding the provisions of
this sub-clause the Tenant may share or part with possession or occupation
of the whole or any part of the Demised Premises with or to any Associate
provided that the Tenant shall first inform the Landlord of the name and
any change of occupier from time to time of the Demised Premises so that
no relationship of landlord and tenant is thereby created and transferred
Authorised assignment
3.23 Not to assign the whole of the Demised Premises without the prior written
consent of the Landlord (such consent not to be unreasonably withheld)
3.24 On any permitted assignment to procure that the assignee enters into
direct covenants with the Landlord to perform and observe all the Tenant's
covenants and conditions herein contained
3.25 To procure that any surety to an assignee reasonably required by the
Landlord on a permitted assignment shall covenant with the Landlord as
surety (and jointly and severally if more than one) that the assignee will
pay the rents hereby reserved and perform and observe the covenants on the
Tenant's part herein contained and to indemnify and save harmless the
Landlord against all losses damages costs and expenses arising by reason
of any default by the assignee and such covenant shall further provide
that any neglect or forbearance of the Landlord shall not release or
exonerate the surety and shall further provide for the surety to accept a
new lease of the Demised Premises upon disclaimer of these presents by the
assignee or on its behalf or on forfeiture of these presents if so
required by the Landlord within three months of such disclaimer or
forfeiture such new lease to be for the residue then unexpired of the Term
and at the rents payable and subject to the same tenant's covenants and to
the same provisos conditions and provisions for review of rent as those in
force immediately before such disclaimer or forfeiture and to be granted
at the cost of the surety in exchange for a counterpart duly executed by
the surety
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Authorised guarantee agreement
3.26 Not to assign the whole of the Demised Premises without complying with the
following condition which is specified for the purposes of sub-section
(1A) of section 19 of the Act of 1927 (as amended by the Act of 1995):-
3.26.1 That the Tenant enters into an authorised guarantee agreement (as
defined in section 16 of the Act of 1995) in the form set out in
Schedule 4 subject to such amendments as may be required to keep
the agreement within the definition
3.26.2 That the Tenant's solicitors undertake to pay all reasonable costs
disbursements and expenses incurred by the Landlord in connection
with the proposed assignment
Authorised Underletting
3.27 Not to underlet the whole of the Demised Premises or the whole of Unit 12
or the whole of Unit 13 without the prior written consent of the Landlord
(such consent not to be unreasonably withheld) nor without procuring
that:-
3.27.1 Each underlease shall be granted subject to the covenants on the
part of the Tenant (other than the covenant to pay the rents
hereby reserved) and the conditions and provisions contained in
this Lease (so far as the same are applicable to the premises
thereby underlet) and shall contain the following covenants by the
undertenant:-
(a) an unqualified covenant not to assign or charge any part or
parts of the premises thereby underlet
(b) an unqualified covenant not to sub-underlet the whole or any
part or parts of the premises thereby underlet nor (save by
way of an assignment of the whole thereof) part with
possession or share the occupation of the whole or any part
or parts of the premises thereby underlet
(c) a covenant not to assign or charge the whole of the premises
thereby underlet without obtaining the prior written consent
of the Landlord (such consent not to be unreasonably
withheld)
Provided that nothing in this Lease shall prevent the Tenant
(subject to the conditions contained in sub-clause 3.27.1(a) (b)
and (c) and then only with the prior written consent of the
Landlord (not to be unreasonably withheld or delayed) from
underletting the whole of Unit 12 and/or the whole of Unit 13 of
the Demised Premises
3.27.2 Prior to the grant of any underlease the undertenant shall have
executed a deed containing a direct covenant with the Landlord to
perform and observe all the covenants on the part of the Tenant
(other than the covenant to pay the
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rents hereby reserved) and all other conditions and provisions
contained in this Lease so far as the same are applicable to the
premises thereby underlet
3.27.3 Each underlease shall be at a rent which is not less than the
higher of the open market rental value (without taking or giving a
fine or premium or other valuable consideration) reasonably
obtainable for the premises thereby underlet at the time such
underlease is granted or the rent payable from time to time under
this Lease
3.27.4 In no such underlease shall the rent be commuted or be payable
more than one quarter in advance and in each such underlease rent
shall be subject to review provisions which shall correspond as to
their terms and dates to the provisions of this Lease
3.28 The Tenant will not without the prior written consent of the Landlord such
consent not to be unreasonably withheld or delayed vary or waive the terms
nor accept any surrender of any underlease and will at all times
diligently and at its own expense take all steps necessary to enforce such
terms
3.29 The Tenant shall serve all requisite notices to bring into effect and
otherwise operate and enforce all provisions for the review of the rent
payable under any underlease with due regard to the interest of the
Landlord under this Lease or any part or parts thereof
Registration
3.30 Within twenty-eight days next after any transfer assignment mortgage
charge or devolution of the Demised Premises to give written notice
thereof to the Landlord and to leave with the Landlord a true and complete
copy of the instrument effecting or evidencing such transmission or
devolution of any estate or interest in the Demised Premises and to pay a
fee of twenty pounds for the registration of each such notice
3.31 From time to time on demand during the Term to furnish the Landlord with
full particulars of any derivative interests of or in the Demised Premises
howsoever remote or inferior
Sale or re-letting notices
3.32 To permit the Landlord and the Landlord's agents at any time during the
Term to enter upon the Demised Premises and to affix upon any suitable
part thereof (but not so as materially to obstruct or interfere with the
access of light and air to or the user of the Demised Premises) notice
boards or bills for selling the same and during the last six months of the
Term howsoever determined for re-letting the same and that the Tenant will
not remove or obscure such notice boards or bills and will (as well before
as during the said last six months of the Term) permit all persons
authorised in writing by the Landlord or the Landlord's agents and after
making a prior appointment to view the Demised Premises at reasonable
hours in the daytime
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Permitted user
3.33 Not to use Units 12 and/or 13 or any part thereof or suffer the same to be
used otherwise than for any use within Classes B1, B2 or B8 of the
Schedule to the Town and Country Planning (Use Classes) Order 1987 and not
to use the Service Area other than for parking and off-loading of vehicles
(but subject to the regulations set out in Schedule 3 and the other
provisions of this Lease)
Insurer's requirements
3.34 To comply with all requirements of the Landlord's insurers in respect of
the Demised Premises and not to do or permit to be done in or upon the
Demised Premises or any part thereof anything which may increase the
premium upon any policy for the insurance of the Demised Premises (or any
other premises) or which shall invalidate or preclude the renewal of any
such policy of insurance or which may be prejudicial in any way to any
claim which may fall to be made thereunder
Nuisance
3.35 Not to do or permit or suffer to be done upon the Demised Premises
anything which in the opinion of the Landlord may be or become a nuisance
promptly to abate any nuisance which may arise (whether or not through the
act of any person) and not at any time to use the Demised Premises or any
part thereof or allow the same to be used for any illegal or immoral
purpose and not to hold any sale by auction upon the Demised Premises
Loss of easements
3.36 Not knowingly to obstruct or suffer to be obstructed any of the windows or
light or any other easement belonging to the Demised Premises or any
buildings comprised in the Demised Premises nor to permit any new window
light passage drain or other encroachment or easement to be made into
against upon or over the Demised Premises or any part thereof AND in case
any encroachment or easement whatsoever shall be attempted to be made or
acquired by any person or persons whomsoever to give notice thereof in
writing to the Landlord immediately the same shall come to the notice of
the Tenant and to do all such things as may be proper for preventing any
new encroachment or easement being made or acquired
To observe regulations
3.37 To observe and perform the regulations contained or referred to in
Schedule 3 or any regulations promulgated by the Landlord from time to
time for the better management and regulation of the Estate
4. Covenants by the Landlord
The Landlord hereby covenants with the Tenant as follows:-
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For re-entry
5.2 If the rents hereby reserved or any part thereof shall be in arrear or
unpaid for fourteen days after the same shall become due (whether legally
demanded or not) or if the Tenant shall at any time fail or neglect to
perform or observe any of the covenants conditions or agreements herein
contained and on the Tenant's part to be performed or observed or if the
Tenant (being a limited company) shall enter into liquidation whether
compulsory or voluntary (except for the purpose of amalgamation or
reconstruction) or being an individual or individuals shall bankrupt or
have any receiving order made against him her or them or in either of such
cases shall enter into or make any composition or arrangements with its
his her or their creditors then and in any such case it shall be lawful
for the Landlord or any person or persons duly authorised by the Landlord
in that behalf into or upon the Demised Premises or any part thereof in
the name of the whole to re-enter and the Demised Premises peaceably to
hold and enjoy thenceforth as if these presents had not been made but
without prejudice to any right of action or remedy of the Landlord in
respect of any antecedent breach of any of the covenants by the Tenant
herein contained
Suspension of rent
5.3 If at any time or times during the Term the Demised Premises or any part
or parts thereof shall be destroyed or so damaged by any of the Insured
Risks as to be unfit for occupation or use by the Tenant and the policy
effected by the Landlord shall not have been vitiated or payment of the
policy monies refused in whole or in part by reason of any act or default
of the Tenant the rent first hereinbefore reserved or such part or parts
thereof as is commensurate with the part or parts of the Demised Premises
so rendered unfit for occupation or use shall cease to be payable from the
happening thereof until the same has or have been fully reinstated and
rendered fit for occupation and use or for a period of three years from
the date of such destruction or damage whichever shall be the shorter
Frustration of rebuilding
5.4 If any competent final authority shall lawfully refuse permission for or
otherwise lawfully prevent rebuilding or reinstatement of the Demised
Premises or the same proves impossible or impracticable or is otherwise
frustrated for any reason whatsoever then either the Landlord or the
Tenant may within one year (time to be of the essence of the contract) of
such final refusal of permission prevention or frustration give to the
other a written notice of termination under this sub-clause and on the
expiration of six months from the giving of the notice of termination this
lease shall determine and any insurance monies shall belong to the
Landlord and the Landlord will keep the Tenant fully informed of all
matters within its knowledge relevant to the frustration of any rebuilding
of the Demised Premises
Easements, notices etc.
5.5 The Tenant shall not by virtue of this demise be deemed to have acquired
or be entitled to nor shall it during the Term acquire or become entitled
by any means whatever in respect of the Demised Premises to any easement
from or over or affecting any other
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land or premises now or at any time hereafter belonging to the Landlord
and not comprised in this demise
5.6 Notwithstanding any rights hereby granted to the Tenant and the covenants
by the Tenant contained in this lease the Landlord may at any time
hereafter erect any new buildings of any height on any land not included
in this demise now or at any time hereafter belonging to the Landlord or
raise to any height or alter any existing building on any such land
whether or not such new building or such alterations may obstruct or
affect the passage of light and air or the access to the Demised Premises
or any new building replacing the Demised Premises in whole or in part
PROVIDED THAT there shall remain reasonable light air and access to the
Demised Premises or (in relation to access) that the Landlord shall
provide reasonable alternative access thereto
5.7 Section 196 of the Law of Property Act 1925 (as amended by the Recorded
Delivery Service Act 1962) shall apply to any notice or document to be
served or given hereunder as if the same were a notice authorised by that
Act
5.8 The clause headings hereto and the heading of any Schedule hereto shall
not affect the construction of this lease
5.9 Subject to the provisions of sub-section (2) of Section 38 of the Landlord
and Tenant Act 1954 neither the Tenant nor any assignee or underlessee of
the Term or of the Demised Premises shall be entitled on quitting the
Demised Premises to any compensation under Section 37 of such Act
No warranty by Landlord
5.10 The Landlord gives no warranty express or implied that the use of the
Demised Premises or any part thereof for any specific purpose is
authorised under the Planning Acts or otherwise or that the Demised
Premises or any part thereof are suitable for the purpose of the Tenant or
for any purpose
Rent demands
5.11 If the Landlord shall refrain from demanding or accepting rent or other
sums due under this lease or from implementing the provisions for the
review of the rent hereby reserved then interest shall be payable by the
Tenant at the Prescribed Rate upon such rent or monies for the period
during which the Landlord shall so refrain if the reason for the Landlord
so refraining is that there are reasonable grounds for believing that the
Tenant is in breach of any of the provisions of this lease
6. Rent Review
6.1 PROVIDED FURTHER AND IT IS HEREBY AGREED that at any time after the date
which is twelve calendar months before the expiry of the fifth anniversary
of the date of the commencement of the Term (hereinafter referred to as
"the Review Date") the Landlord may serve on the Tenant a notice in
writing (hereinafter called "the Rent Notice") requiring an increase of
the rent first hereinbefore reserved with
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effect from and including the Review Date to an amount equal to the
Reviewed Rent (as hereinafter defined) and so that if the Landlord has not
served the Rent Notice before the date which is six months before the
Relevant Review Date the Tenant may also at any time thereafter serve on
the Landlord a notice in writing (hereinafter also called "the Rent
Notice") requiring the Reviewed Rent to be ascertained in accordance with
the provisions hereof
6.2 Upon service of the Rent Notice the following provisions shall have
effect:-
6.2.1 The Landlord and the Tenant (or their respective surveyors) shall
consult together and use their best endeavours to reach agreement
as to the amount of the Reviewed Rent
6.2.2 If the Landlord and the Tenant (or their surveyors) shall fail
so to consult or to agree upon the Reviewed Rent within four
calendar months of the date of service of the Rent Notice (or
within such extended period as the Landlord and the Tenant
mutually agree in writing) the determination of the Reviewed
Rent may at the instance of either party be referred to a duly
qualified independent surveyor to act as an arbitrator and in
default of agreement between the Landlord and the Tenant upon
the arbitrator to be appointed either the Landlord or the Tenant
may request the President or any Vice-President for the time
being of the Royal Institution of Chartered Surveyors to appoint
such a surveyor to act as an arbitrator (and from time to time
if necessary to appoint a successor or successors) and such
reference shall be conducted subject to and in accordance with
the Arbitration Act 1996
6.3 The Reviewed Rent shall be whichever is the greater of:-
6.3.1 the rent payable hereunder immediately prior to the Relevant
Review Date or
6.3.2 the yearly rack rent at which the Demised Premises might
reasonably be expected to be let at the Review Date in the open
market by a willing landlord to willing tenant without a fine or
premium with vacant possession for a term equal to ten years and
on the same terms in all other respects as this lease
ASSUMING:-
6.3.3 (during a period of occupation which expired on the Relevant
Review Date) that the Demised Premises have been fully fitted
out and equipped so as to be ready for immediate use and
occupation by such willing tenant
6.3.4 that all the Tenant's obligations herein have been complied with
6.3.5 that any destruction of or damage to the Demised Premises has
been made good before the Review Date
6.3.6 that any additions or alterations carried out on or to the
Demised Premises during the Term which have diminished the
rental value of the Demised Premises have been removed or
reinstated
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but DISREGARDING:-
6.3.7 any effect on rent of the fact that the Tenant or the Tenant's
predecessors in title have been in occupation of the Demised
Premises
6.3.8 any goodwill attached to the Demised Premises by reason of the
carrying on thereat of the business of the Tenant or the Tenant's
predecessors in title
6.3.9 any increase in rental value of the Demised Premises
attributable to the existence at the Relevant Review Date of any
improvement to the Demised Premises or any part thereof carried
out with consent where required otherwise than pursuant to an
obligation to the Landlord or its predecessors in title by the
Tenant or the Tenant's predecessors in title during the Term or
during any period of occupation prior thereto arising out of any
agreement to grant such term provided that any increase in
rental value attributable to the works set out in the licence
for alterations of the date hereof entered into between the
Landlord and the Tenant shall not be disregarded if Tinsley
Robor plc at the Review Date has underlet the Demised Premises
or has assigned its interest in the Demised Premises
6.3.10 so far as may be permitted by law any statutory prohibition or
restriction relating to the assessment and recovery of rent
6.4 Forthwith after the Reviewed Rent has from time to time been ascertained
in accordance with the foregoing provisions a memorandum specifying the
Reviewed Rent shall be endorsed on this lease and its counterpart or (if
the Landlord shall so require) shall be recorded in writing by separate
instrument and shall in either case be signed by or on behalf of the
Landlord and the Tenant and shall at all times thereafter be conclusive
evidence of the amount of the rent then payable
6.5 The Tenant shall as from and including the Review Date pay the Reviewed
Rent at the time and in manner aforesaid which Reviewed Rent shall remain
payable until the termination or expiration of the Term.
6.6 If the Reviewed Rent shall for any reason not have been ascertained prior
to the Review Date the Tenant shall continue to pay rent at the rate
payable immediately prior to the Review Date until the Reviewed Rent shall
have been ascertained and upon the first Quarter Day after the Reviewed
Rent has been ascertained there shall become payable (in addition to one
quarter's rent at the rate of the Reviewed Rent) (i) such sum ("the
Addition") as with the rent already paid for the period from and after the
Relevant Review Date down to such Quarter Day will equal the total amount
of the Reviewed Rent payable for that period and (ii) (unless the delay in
ascertaining the Reviewed Rent is attributable to the default of the
Landlord after service of a Rent Notice by the Landlord or the Tenant)
interest at the Base Rate of Barclays Bank PLC from time to time from the
Relevant Review Date to such Quarter Day calculated on a day to day basis
and compounded quarterly on the Quarter Days on so much of the Addition as
would from time to time have become payable if the Reviewed Rent had been
ascertained prior to the Relevant Review Date
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7. There is no Agreement for Lease to which this Lease gives effect
IN WITNESS whereof the parties hereto have executed this document as a deed the
day and year first before written
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Schedule 1
Part 1
The Demised Premises
ALL THAT the premises known as Unit 12/13 Lineside Industrial Estate
Littlehampton in the County of Sussex shown for the purpose of identification
only edged red on the plan annexed hereto
Part 2
Easements and other rights included in the demise
1. The right at all times during the Term for the Tenant and its workmen
servants invitees and other persons having lawful occasion to use the same
in connection with the use and enjoyment of the Demised Premises for the
purposes hereby authorised in common with the Landlord its lessees tenants
or occupiers of the other part or parts of the Estate and all other
persons having a like right:-
1.1 For all necessary purposes to pass and repass over and along the roads and
footpaths now or at any time hereafter during the Term constructed on the
Estate
1.2 To use those car parks (if any) on the Estate which may from time to time
be allotted by the Landlord for use in common by all the lessees and
occupiers of the Estate until the said roads and footpaths and the said
car parks or any of them shall be respectively adopted by the highway
authority and shall become maintainable at the public expense
2. The right of support so far as may be necessary to the Demised Premises as
such right may be at present enjoyed from the adjoining premises belonging
to the Landlord
3. The free passage and running of gas electricity water and soil from and to
the Demised Premises but in common with all other persons now or hereafter
entitled to the like right through and along the sewers drains pipes wires
and cables now existing in through and over any of the adjoining and
adjacent premises belonging to the Landlord or any part thereof and the
right to make connections thereto subject to the permission of the
appropriate authorities (if required) being first had and obtained
4. The right for the Tenant or occupier of the Demised Premises or its agent
or agents with or without workmen or others at all reasonable times during
the Term at convenient hours during the daytime and upon reasonable notice
being given to enter into or upon any adjoining or adjacent premises
belonging
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to the Landlord for the purpose of inspecting maintaining repairing or
renewing the said sewers pipes wires and cables the Tenant making good all
damage done thereby
Part 3
Exceptions and reservations out of the demise
1. Unto the Landlord the right to erect or to consent hereafter to any person
erecting a new building or to alter any building for the time being on any
land adjoining neighbouring or opposite to the Demised Premises
notwithstanding that such alteration or erection may diminish the access
of light and air enjoyed by the Demised Premises and the right to deal
with any property adjoining opposite or near to the said building as it
may think fit
2. Unto the Landlord its servants agents and licensees at all reasonable
times so far as may be necessary or desirable with or without workmen the
right on giving reasonable notice (except in emergency) to the Tenant to
enter and remain upon the Demised Premises with all necessary tools
appliances and materials (making good all damage occasioned thereby to the
Demised Premises) for the purpose of repairing altering or rebuilding any
adjoining or contiguous premises belonging to the Landlord and to cleanse
empty and repair any of the sewers drains and gutters belonging to the
same
3. Unto the Landlord and other the owners and occupiers of the adjoining or
neighbouring property the right of passage and running of water and soil
gas and electricity or other services or supplies from and to such
adjoining or neighbouring property through such of the sewers drains
conduits gutters watercourses pipes cables wires and mains serving such
adjoining and neighbouring property which now are or may before the
expiration of twenty-one years after the death of the last survivor of the
descendants now living of His Late Majesty King George VI hereafter be in
on or under the Demised Premises and the right to enter upon the Demised
Premises for the purpose of inspecting repairing renewing relaying
cleansing maintaining and connecting up to any such existing or future
sewers drains conduits gutters watercourses pipes cables wires and mains
-19-
<PAGE>
Schedule 2
Services and expenses for which the Tenant is to pay a proportionate
part
1. Repairing resurfacing cleaning lighting maintaining renewing and replacing
and the supervision of:-
1.1 The roads now or at any time hereafter during the Term constructed on the
Estate including any drains sewers wires pipes cables gutters inspection
chambers or any apparatus appliance or fitting in connection therewith
over in or under the said roads until the same shall be taken over by the
local or highway authority
1.2 Those car parks situated on the Estate (if any) which may from time to
time be allocated by the Landlord for use in common by all lessees and
occupiers of the Estate and the landscaped areas until the same shall be
taken over by the local or highway authority
1.3 The Estate boundary walls fences and hedges (if any) including any gates
therein (save walls of buildings)
1.4 The water electricity and gas mains (if any) serving the Estate
1.5 The Landlord's signs on the Estate (including any Estate directory boards
or notices)
2. The general and water rates (if any) payable by the Landlord in respect of
the car parks and landscaped areas referred to in paragraph 1.2 of this
Schedule and the signs referred to in paragraph 1.5 of this Schedule and
any other common parts
3. The cost and expense incurred by the Landlord in providing repairing
cleaning lighting and maintaining an Estate supervisor's office (if any)
(including rent salaries of all personnel employed therein stationery
office equipment telephone charges rates water rates electricity and gas
charges and other like outgoings charged in respect thereof)
4. Maintaining security of the Estate outside normal working hours and at
weekends subject to the Tenant's prior approval as to the cost thereof
-20-
<PAGE>
Schedule 3
Regulations applicable to the Demised Premises
1. No permanent open storage of raw materials shall be permitted on the
Demised Premises without the consent of the Landlord first being obtained
in writing
2. No rubbish or waste materials paper wood and other combustible matter
shall be burnt on the Demised Premises except within boilers or
incinerators specifically provided for the purpose
3. No smoke or fumes or noxious smells shall be emitted from the Demised
Premises so as to cause in the opinion of the Landlord or its surveyor
annoyance or interference with the proper enjoyment of adjoining premises
of the Landlord or its tenants or of the residences adjoining or near the
Estate
4. The Tenant must not use industrial machinery engines and equipment so as
to cause excessive noise vibration or dust nuisance Any excess which in
the opinion of the Landlord's surveyor is causing annoyance to adjoining
tenants of the Landlord or to the residential occupiers in the vicinity
shall be abated immediately upon notice
5. No mechanically operated vehicles cycles hand trucks or trailers shall be
parked or left unattended outside areas properly reserved for such parking
or in such manner as to obstruct roadways into or on the Demised Premises
and so as to prevent ingress and egress of fire fighting equipment found
within the curtilage of a building or buildings erected thereon
6. The Tenant must secure all buildings comprised in the Demised Premises by
locking all windows and doors therein outside normal working hours and
must if reasonably required by the Landlord provide night watching
facilities for the purpose of ensuring proper security and to reduce the
risk of the spread of fire
7. The Tenant must provide facilities within the curtilage of the Demised
Premises for the keeping of refuse in proper receptacles readily
accessible for collection by the public cleansing department of the local
authority and as regulated by that department
8. The Tenant must not off-load vehicles except within the curtilage of the
Demised Premises
9. The Tenant must not store inflammable or combustible or radioactive
materials explosive substances or liquids except in proper containers or
receptacles in accordance with regulations enforced by a competent
authority
-21-
<PAGE>
Schedule 4
Form of authorised guarantee agreement
1. The Tenant will procure the punctual payment of the rents and the
observance and performance of all the obligations of the Assignee as
lessee under these Presents until the Assignee assigns or otherwise
transfers its interest in the Lease other than by an "excluded assignment"
within section 11 of the Act of 1995 and in the case of any default the
Tenant will on demand pay such rents and observe and perform such
obligations as if the Tenant instead of the Assignee were liable therefor
as a principal obligor and not merely as a surety
2. Subject to clause I of Schedule 4 the Tenant agrees with the Landlord as a
primary obligation to keep the Landlord indemnified on demand against all
losses damages costs and expenses incurred by the Landlord as a result of
any failure by the Assignee to pay the rents and/or observe and perform
such obligations or as a result of any obligation of the Assignee as
lessee under these Presents being or becoming unenforceable
3. If this lease is disclaimed by or on behalf of the Assignee the Tenant
will (if so required by the Landlord by written notice to the Tenant
within six months after such disclaimer) take from the Landlord and
execute and deliver to the Landlord a counterpart of a new lease of the
Demised Premises for the residue of the Term unexpired at the date of such
disclaimer at the same rents as are reserved form time to time by and
subject to the same covenants and provisions as are contained in these
Presents (mutatis mutandis) and the Tenant will on demand pay the
Landlord's legal costs in connection with such lease
4. The obligations of the Tenant under these Presents shall be in addition to
any other right or remedy of the Landlord and shall not be discharged
diminished or in any way affected by:-
4.1 any time or indulgence granted by the Landlord to the Assignee or any
neglect or forbearance of the Landlord in obtaining payment of the rents
or enforcing the obligations of the Assignee as lessee under these
Presents
4.2 any refusal by the Landlord to accept rents tendered at a time when the
Landlord was entitled (or would after service of the appropriate statutory
notice have been entitled) to re-enter the Demised Premises
4.3 any surrender by the Assignee of part of the Demised Premises in which
event the liability of the Tenant shall continue in respect of the part of
the Demised Premises not so surrendered after making any necessary
apportionments under section 140 of the Law of Property Act 1925
-23-
<PAGE>
4.4 any variation of these Presents (subject to section 18 of the Act of 1995)
or other act omission matter or thing (other than a release by deed given
by the Landlord) by which but for this provision the obligations of the
Tenant under these Presents would have been so discharged diminished or
affected
THE COMMON SEAL of )
COURTAULDS CIF NOMINEES )
LIMITED was affixed hereto in the )
presence of:- )
/s/ [Illegible]
Authorised Signatory
/s/ [Illegible]
Authorised Signatory
-24-
<PAGE>
SCHEDULE OF CONDITION ON UNITS 12 AND 13 ARNDALE ROAD
LITTLEHAMPTON TAKEN ON 7th July 1998
N B FOR THE PURPOSE OF THIS SCHEDULE THE FRONT ELEVATION IS ASSUMED
TO FACE DUE EAST
KEY: Cracks:
Hairline - 0.1mm - 0.9mm
Very slight - 0.9mm - 1.5mm
Slight - 1.5mm - 2mm
Moderate - 2mm - 5mm
Severe - 5mm
Very severe - 10mm +
1
<PAGE>
EXHIBIT 10.79
================================================================================
DATED 4th May 1995
- --------------------------------------------------------------------------------
LEASE
of Unit 1
Birch Phase
Kembrey Park Swindon Wiltshire
Sun Alliance and London Assurance
Company Limited (1)
Tinsley Robor plc (2)
TOWNSENDS
===================================Solictors====================================
42 Cricklade Street, Swindon, Wiltshire SN1 3HD
Telephone (01793) 410800 o Fax (01793) 616294
<PAGE>
CONTENTS
Clause Clause Heading Page
- ------ -------------- ----
Number
- ------
1. INTERPRETATION 1
2. THE DEMISE 4
3. THE TENANT'S COVENANTS 7
3.1 Rent 7
3.2 Rent to be paid in full 7
3.3 VAT 7
3.4 Outgoings 8
3.5 Interest 8
3.6 Water, gas and electricity 8
3.7 Repair 9
3.8 Redecoration 9
3.9 Notice to repair 10
3.10 Alterations 10
3.11 Obstructions 11
3.12 Alienation 11
3.13 Access 14
3.14 Use 14
3.15 Nuisance 14
3.16 Compliance with statutes 15
3.17 Easements 16
3.18 Safe use of the Demised
Premises 16
3.19 Signs 17
3.20 Regulations 17
3.21 Notices received 17
3.22 Landlord's costs 17
3.23 Planning applications 18
3.24 Indemnity in respect of
Outgoings 18
3.25 Reletting or sale 18
3.26 Handing back of Demised Premises 19
3.27 Restrictions on pollution 19
4. THE LANDLORD'S COVENANTS 20
4.1 Quiet enjoyment 20
4.2 Services 20
4.3 The Substation Lease 20
5. INSURANCE 21
5.1 The Landlord's obligations 21
5.2 The Tenant's obligations 22
5.3 Suspension of Rent 23
5.4 Alternative arrangements for
repayment of insurance premium 24
6. FURTHER PROVISIONS 24
6.1 Forfeiture 24
<PAGE>
6.2 Alterations to other property 25
6.3 Electromagnetic and light
based transmissions 25
6.4 Limitation of Landlord's
liability 25
6.5 Planning restrictions 26
6.6 Service of notices 26
6.7 VAT 26
6.8 Option to determine 27
FIRST
SCHEDULE The Demised Premises 27
Part 1 Items excluded from the
Demised Premises 27
Part 2 Items included in the
Demised Premises 27
SECOND
SCHEDULE The Service Charge 28
Part 1 Payment of the Service Charge 28
Part 2 The Services 30
A The whole of Kembrey Park 30
B The Birch Phase 31
Part 3 Calculation of the Tenant's
proportion 32
THIRD
SCHEDULE Car Parking Arrangements 33
FOURTH
SCHEDULE Rent Review 33
<PAGE>
T H I S L E A S E is made the 4th day of May thousand nine hundred and
ninety-five BETWEEN
SUN ALLIANCE AND LONDON ASSURANCE COMPANY LIMITED whose Registered Office
is at 1 Bartholomew Lane London EC2N 2AB ("the Landlord") (1) and
TINSLEY ROBOR plc whose registered office is at Drayton House Chichester West
Sussex P020 6EW ("the Tenant") (2)
THIS DEED WITNESSES THAT:-
1. INTERPRETATION
IN this lease:
1.1 EXCEPT where this lease expressly says [ILLEGIBLE] reference to an Act of
Parliament (or a section of an Act of Parliament) refers to that Act (or
section) as applies at the date of this lease and any later amendment or
reenactment of it and to any instruments rules regulations or orders made
under such Act or section_____
1.2 A RIGHT given to the Landlord to enter the Demised Premises extends to
anyone the Landlord authorises to enter, and includes the right to bring
workmen and appliances onto the Demised Premises for the stated
purpose____
1.3 AUTHORITY given to a person to enter the Demised Premises after giving
notice extends, if the circumstances justify it, to entry after giving
less notice than specified or without giving any notice____
1.4 WHERE the Tenant agrees not to do or not to omit anything that also means
that the Tenant will not allow anyone else to do or omit that thing____
1.5 THE expression "the Landlord" includes where the context admits the person
who for the time being owns the interest in the Demised Premises which
gives the right to possession of it when this lease ends____
1.6 THE expression "the Tenant" includes where the context admits the person
who for the time being is entitled to the Demised Premises as Tenant under
this lease____
1.7 IF under this lease there is more than one tenant or landlord any
reference to "the Tenant" or "the Landlord" will be deemed to refer to
each tenant or landlord and any obligation on the part of the Tenant or
the Landlord (as the case may be) can be enforced against all of the
tenants or all of the landlords (as the case may be) jointly and against
each individually and any notice to be served on the Tenant or the
Landlord will be validly served if served on any one or more of (as the
case may be) the tenants or the landlords____
1
<PAGE>
1.8 WORDS importing the singular are to be considered where appropriate as
including the plural and vice versa_____
1.9 WORDS importing the masculine are to be considered where appropriate as
including the feminine and neuter and vice versa_____
1.10 UNLESS the context requires the expressions to be interpreted differently,
references in this lease to a "clause" "sub-clause" "schedule" or
"paragraph" are references to the appropriately numbered clause,
sub-clause, schedule or paragraph of this lease____
1.11 THE contents section and headings set out in this lease are included for
ease of reference only, and should not be taken to affect the meaning of
the provisions to which they refer____
1.12 THE Schedules are incorporated in this lease and the Landlord and the
Tenant agree to be bound by their provisions____
1.13 UNLESS the context requires the expressions to be interpreted differently,
the following terms have the following meanings in this lease:-
"the Additional Rents" means the sums reserved as such by
sub-clause 2.4
"the Birch Phase" means that part of Kembrey Park from time
to time designated by the Landlord as
such
"the Buildings" means the buildings from time to time
built on and forming the Birch Phase
"the Demised Premises" means the warehouse and industrial
premises with ancillary office
accommodation which form part of the
Buildings and are known as Units 1 and 2
Birch Phase Kembrey Park Swindon, and
which are shown for identification only
edged red on the Plan and exclude the
items described in Part 1 of the First
Schedule but include the items described
in Part 2 of the First Schedule
"the Early Termination means 30th April 2005
Date"
"Impositions" means rates, taxes, assessments, duties,
impositions, and outgoings whether
parliamentary, parochial, local or of any
other description and whether
2
<PAGE>
[GRAPHIC]
<PAGE>
or not of a capital or non-recurring
nature
"Kembrey Park" means the Landlord's property known as
Kembrey Park or any property or items
maintained in conjunction with Kembrey
Park as that development may from time to
time be modified extended added to or
reduced in size
"the Plan" means the plan attached to this Lease
"the Planning Acts" means (subject to sub-clause 1.1) the
Town and Country Planning Act 1990, the
Planning (Listed Buildings and
Conservation Areas) Act 1990, the
Planning (Hazardous Substances) Act 1990,
the Planning (Consequential Provisions)
Act 1990 and the Planning and
Compensation Act 1991
"the Rent" means the following yearly rents:
(A) Until the first Review Date: SIXTY
FIVE THOUSAND NINE HUNDRED POUNDS
((pound)65,900) per annum
(B) during each successive Review Period:
a yearly rent equal to the rent
previously payable under this lease
immediately prior to the relevant
Review Date (any suspension or
reduction of rent under sub-clause
5.3 being assumed for these purposes
not to have effect) or such revised
rent as may be determined in
accordance with the provisions of the
Fourth Schedule whichever is the
higher
"the Rent Commencement means 1st November 1995
Date"
"Review Date" means the 1st day of May in the year 2000
(which is the first Review Date) and in
every fifth year thereafter
"Review Period" means the period starting on any Review
Date up to and including the day before
the next Review Date or starting with the
last Review Date up to the end of the
Term
"Service Charge" means the Interim Service Charge
Installments and the Negative Balance as
3
<PAGE>
defined in Part 1 of the Second Schedule
"Service Media" means ducts, sewers, drains,
watercourses, gutters, downspouts,
gaspipes and meters, electric wires and
meters, optical fibres, pipes and all
other conducting media
"the Sub-Station Lease" means a lease of the electricity
substation site shown coloured green on
the Plan dated 12 April 1995 and made
between the Landlord (1) and Southern
Electric plc (2) for a term of 50 years
from 12 April 1995 at a peppercorn rent
"the Term" means the term of Fifteen years
commencing on the Term Commencement Date
together with any lawful period of
holding over or extension under statute
or common law
"the Term Commencement means 1st May 1995
Date"
"VAT" means Value Added Tax and any similar tax
from time to time replacing or
supplementing it____
1.14 Unless the context requires the expressions to be interpreted differently,
the terms relating to the Service Charge defined in the Second Schedule
and any other terms defined elsewhere in this lease, have the meanings set
out in their respective definitions when they are used in this lease____
2. THE DEMISE
IN consideration of the rents and covenants on the part of the Tenant and the
conditions reserved and contained in this lease THE LANDLORD DEMISES to the
Tenant the Demised Premises____
2.1 TOGETHER WITH the following rights in common with the Landlord and its
other tenants and occupiers at Kembrey Park and all others authorised by
the Landlord____
2.1.1 the right to park 29 cars in accordance with the conditions
contained in the Third Schedule____
2.1.2 the right for the Tenant and those authorised by it to pass at all
times and for all purposes connected with the use from time to time
authorised of the Demised Premises_____
2.1.2.1 with or without vehicles over such of the existing estate
roads as the Landlord (acting reasonably) may from time to
time specify and
4
<PAGE>
2.1.2.2 on foot only over such of the existing estate footpaths as
the Landlord (acting reasonably) may from time to time
specify____
or (in each case) such substituted roads and footpaths
giving adequate access to the Demised Premises as the
Landlord may from time to time reasonably direct____
2.1.3 the free and uninterrupted passage and running of gas water soil and
electricity and other things to and from the Demised Premises-
through such Service Media as are intended to serve the Demised
Premises and which are now or may subsequently during the Term be
placed in under or about other parts of Kembrey Park and adjoining
or neighbouring property belonging to the Landlord or in respect of
which it is entitled to grant this right PROVIDED that:
2.1.3.1 the Landlord may at its discretion reroute any such Service
Media (but not so as permanently to curtail the supply or
passage of any service to the Demised Premises) and
2.1.3.2 neither this sub-clause nor any other provision of this
lease shall be interpreted as granting to the Tenant a right
to pass or receive electromagnetic or laser or intensified
light transmissions or signals across any property outside
the Demised Premises____
2.1.4 the right as often as necessary on reasonable written notice to
enter the units adjoining the Demised Premises and adjoining
property belonging to the Landlord for the purpose of inspecting
cleaning emptying repairing and renewing any of the Service Media
mentioned in sub-clause 2.1.3 or for the purpose of carrying out any
of the Tenant's obligations under this lease the Tenant remedying
any damage caused by such entry and exercising the right so as to
cause as little inconvenience to the Landlord and adjoining or
neighbouring tenants or occupiers as reasonably possible____
2.1.5 the right of support for the Demised Premises from the property
adjoining the Demised Premises____
2.1.6 the right to use any refuse collection or similar service provided
by the Landlord for the benefit of the Birch Phase____
2.2 EXCEPT AND RESERVED to the Landlord and the tenants and other occupiers of
the Landlord's adjoining or neighbouring property and others entitled to
such rights____
2.2.1 the free and uninterrupted passage and running of gas water soil and
electricity and other things
5
<PAGE>
to and from other parts of Kembrey Park and any adjoining or
neighbouring property through the Service Media which are now or may
subsequently during the Term be placed in under or about the Demised
Premises____
2.2.2 the right for the Landlord and the tenants and occupiers of any
adjoining or neighbouring property as often as necessary on
reasonable notice to enter the Demised Premises for the purpose of
2.2.2.1 inspecting cleaning emptying repairing renewing installing
or adding to any of the Service Media mentioned in subclause
2.2.1;
2.2.2.2 executing any works necessary in order to comply with the
requirements of any local or other Authority;
2.2.2.3 inspecting painting cleaning or repairing or altering or
carrying out other works on Kembrey Park or any part or
parts of Kembrey Park or any adjoining or neighbouring
property and/or any building thereon (or in the case of
a tenant of an adjoining unit for the purpose of
performing any of his obligations under his lease of
that Unit) the Landlord tenant or person so entering
remedying any damage caused by such entry and exercising
this right so as to cause as little inconvenience to the
Tenant as is reasonably practicable, or
2.2.2.4 exercising or carrying out its rights and obligations under
this lease____
2.2.3 the right to carry out the works for which the rights of entry set
out in sub-clause 2.2.2 are granted____
2.2.4 the right of support from the Demised Premises for the property
adjoining the Demised Premises____
2.2.5 all or any rights of light or other easements or quasi-easements (if
any) enjoyed by the Demised Premises over any other land or premises
or enjoyed by any other land or premises over the Demised
Premises____
2.2.6 the right to rebuild and make any additions or alterations in
adjoining or neighbouring property or buildings whether belonging to
the Landlord or not____
2.2.7 the right if any of the risks insured against by the Landlord occur
for the Landlord to enter onto the Demised premises for the purpose
of inspecting and reinstating them and to remove from the Demised
Premises any property belonging to or under the control of the
Tenant so as to facilitate the carrying out of the reinstatement
6
<PAGE>
PROVIDED THAT such property shall be made available for collection
by the Tenant at any reasonable time by prior arrangement and shall
be returned by the Landlord once reinstatement is completed (or
earlier if the Landlord so requires) _____
2.3 AND SUBJECT to all rights and easements (if any) belonging to or enjoyed
by any adjoining or neighbouring property____
2.4 TO HOLD the Demised Premises (except and reserved and subject as mentioned
above) to the Tenant for the Term the Tenant YIELDING AND PAYING therefor
to the Landlord during the Term the Rent such Rent to be paid by four
quarterly payments in advance on the usual Quarter Days for payment of
rent in every year the first payment of one quarter's rent or a
proportionate part to be made on the Rent Commencement Date in respect of
the period from the Rent Commencement Date up to and including the day
prior to the next following Quarter Day AND ALSO YIELDING AND PAYING from
and including the Term Commencement Date by way of additional rents to the
Landlord:
2.4.1 the Service Charge___
2.4.2 the sums from time to time payable in accordance with the Tenant's
covenants in sub-clause 3.3___
2.4.3 the sums from time to time payable in accordance with the Tenant's
covenants in sub-clause 3.4___
2.4.4 the sums from time to time payable in accordance with the tenant's
covenants in sub-clause 5.2___
2.4.5 all other sums which may from time to time be due from the Tenant to
the Landlord under this lease____
3. THE TENANT'S COVENANTS
THE TENANT hereby COVENANTS with the Landlord as follows:
3.1 Rent
The Tenant will pay to the Landlord the Rent and Additional Rents on the
days and times and in the manner set out in this lease for payment of
those sums____
3.2 Rent to be paid in full
The Tenant will not reduce any payment of Rent or Additional Rent or
Service Charge by making any deduction from such payments or by setting
any sum off against it____
3.3 VAT
3.3.1 the Tenant will pay to the Landlord on demand any VAT (however it
arises) which may be chargeable
3.3.1.1 in respect of any payment (including the Rent) or
3.3.1.2 otherwise on any supply of goods or services by the Landlord
to the Tenant under the terms of or in relation to this
lease subject to receiving from the Landlord a proper
7
<PAGE>
VAT invoice in respect thereof addressed to the Tenant
3.3.2 in every case where the Tenant has agreed to reimburse the Landlord
in respect of any payment by the Landlord under the terms of or in
connection with this lease the Tenant will also reimburse any VAT
paid by the Landlord on such payment. The obligation in this
sub-clause 3.3.2 applies only to the extent that the Landlord is not
able to recover such VAT as an input credit in its VAT
computations____
3.4 Outgoings
The Tenant will bear pay and discharge
3.4.1 all existing and future Impositions assessed charged or imposed on
the Demised Premises or on the owner or occupier in respect of the
Demised Premises and
3.4.2 save to the extent that such items form part of the Service Charge a
fair proportion (to be determined by the Landlord) of all existing
and future Impositions assessed charged or imposed on the Demised
Premises together with other property or on the owner or occupier of
the Demised Premises together with the owner or occupier of other
property in respect of the Demised Premises and that other property
except for Impositions payable by the Landlord (other than VAT) occasioned
by receipt of the rents under this lease or by any dealing with its
reversionary interest____
3.5 Interest
The Tenant will pay interest for each day late at an annual rate
equivalent to 4% over Lloyds Bank plc Base Rate or its equivalent for the
time being upon the Rent or other monies from time to time falling due by
the Tenant to the Landlord under this lease or arising out of or connected
with or referable to this lease (but not on interest payable under this
sub-clause) where such sums have been outstanding for more than seven days
after they have fallen due and whether (in the case of the Rent and the
Interim Service Charge Instalments and the VAT on the Rent and on the
Interim Service Charge Instalments) they have been formally demanded or
not such interest to be payable in respect of the period from the date on
which the Rent or other monies fall due to the date of payment and to be
payable at the rate mentioned above after as well as before any judgment
relating to the Rent or such other monies and to apply at that rate to any
costs fees or similar expenses properly incurred by the Landlord in
obtaining or enforcing any such judgment BUT so that the provisions of
this sub-clause 3.5 shall not restrict or cancel any other right which the
Landlord may have under this lease____
3.6 Water, gas and electricity
The Tenant will pay for all water electricity or gas
8
<PAGE>
consumed on the Demised Premises and will pay all standing or other
related charges and will observe and perform all regulations made by the
relevant authorities in respect of such services and will indemnify and
keep indemnified the Landlord at all times in respect of the non-payment
non-observance or non-performance of the water electricity or gas charges
or all or any of those regulations in respect of the Demised Premises
during the Term____
3.7 Repair
The Tenant will
3.7.1 not do or permit to be done during the Term any damage or waste to
the Demised Premises or any of the fixtures and fittings in the
Demised Premises____
3.7.2 maintain and keep the Demised Premises in good and substantial
repair and condition____
3.7.3 make good all damage to the Demised Premises (but excluding damage
by fire and other insured risks except when the insurance monies are
rendered wholly or partly irrecoverable wholly or partly because of
the act neglect or default of the Tenant any subtenant or other
authorised occupier of all or part of the Demised Premises or its or
their respective servants agents or invitees) ____
3.7.4 not damage the fireproof paint coating used in the Buildings and the
Tenant will, in the event of such paint coating being damaged,
immediately replace the damaged area with a suitable coating in
accordance with the manufacturers's instructions and the directions
of the Landlord____
3.7.5 notify the Landlord of any requirement of which the Tenant has
become aware for the Landlord to carry out works as provided for in
sub-clause 4.2____
3.8 Redecoration
Without restricting or cancelling any other obligation of the Tenant under
this lease, the Tenant will
3.8.1 during every third year of the Term and during the last two months
(however the Term may come to an end) of the Term in a good and
workmanlike manner to the satisfaction in all respects of the
Landlord redecorate the whole of the interior of the Demised
Premises which has previously been or would usually be decorated
with appropriate treatment using only good quality materials____
3.8.2 during the last two months (however the Term may come to an end) of
the Term recarpet that part of the Demised Premises which was
carpeted at the beginning of the Term, with a carpet of no lesser
quality than the original, of a design and colour to be approved by
the Landlord____
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3.9 Notice to repair
The Tenant will
3.9.1 allow the Landlord at all reasonable times having given at least 48
hours written notice to the Tenant to enter the Demised Premises for
the purpose of examining the state and condition and use made of the
Demised Premises and of the fixtures and fittings in the Demised
Premises and of taking inventories of such fixtures and fittings and
drawing plans of the Demised Premises and giving and leaving upon
the Demised Premises for the Tenant notice in writing of any wants
of repair defects and misuse which have been discovered and for
which the Tenant may be liable under the covenants contained in this
lease and
3.9.2 if the Tenant fails to comply with such a notice as is mentioned in
sub-clause 3.9.1 within such time as may be reasonable in the
circumstances or in particular (and without restricting the rest of
this sub-clause 3.9.2) fails at any time to perform any of the
covenants set out in this lease relating to repair redecoration or
the carrying out of any works which ought to be carried out on the
Demised Premises by the Tenant permit the Landlord (but without
restricting or cancelling the right of re-entry contained later in
this lease) to enter upon the Demised Premises and repair redecorate
or carry out such works at the expense of the Tenant and the Tenant
will pay to the Landlord upon receiving a written demand the cost of
any such repair decorations or other works carried out by the
Landlord as mentioned above BUT so that such sums will bear interest
as mentioned in sub-clause 3.5 with such interest running from the
date on which the Landlord incurs the relevant expense____
3.10 Alterations
The Tenant will
3.10.1 not make any addition or alteration whatsoever to the Demised
Premises or any part of the Buildings not included in the Demised
Premises or to the Landlord's fixtures and fittings or arrangement
of the gas, heating, lighting, sanitary or other installations of
the Demised Premises or in any way cut, alter, injure or disfigure
any of the doors, ceilings, windows or walls of the Demised
Premises____
EXCEPT THAT the Tenant may
A. with the prior written approval of the Landlord (such approval
not to be unreasonably withheld or delayed) carry out internal
works which do not and are not likely to affect the structure
of the Buildings and
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B. without the need to obtain any consent from the Landlord and
so long as it first notifies the Landlord of such proposed
installation, removal or relocation instal remove or relocate
internal demountable partitioning____
3.10.2 not put up any aerial, mast, transmitter or any other item of
equipment on the outside of the Demised Premises____
3.10.3 on receiving a written request from the Landlord immediately pull
down and remove any erection, alteration or addition erected or
made in breach of sub-clause 3.10.1 or 3.10.2 and make good any
damage caused thereby BUT so that this sub-clause 3.10.3 shall not
in any way restrict or cancel any other remedy which the Landlord
may have____
3.10.4 not apply any substances (except for cleaning fluids approved by
the Landlord) or coating to the inside or outside of the windows of
the Demised Premises____
3.10.5 not without the Landlord's written consent (such consent not to be
unreasonably withheld or delayed) place any blind shutter or
curtain behind the windows____
3.11 Obstructions
The Tenant will not obstruct or interfere with the free use by the
Landlord and anyone else having the right to use them of the estate roads
and footpaths and other areas of Kembrey Park which are used in common and
the Tenant will not obstruct any part of the Demised Premises or exit
which the local Fire Officer requires to be used as a means of escape in
the event of fire or other emergency____
3.12 Alienation
3.12.1 The Tenant will not part with or share possession or occupation of,
or grant to anyone else any right over or interest in, the whole
(as opposed to part) of the Demised Premises except by an
assignment or underletting where the conditions of sub-clause
3.12.3 have been fulfilled____
3.12.2 The Tenant will not in any circumstances assign or underlet or part
with or share possession or occupation of, or grant to anyone else
any right over or interest in, any part or parts (as opposed to
the whole) of the Demised Premises____
3.12.3 The Tenant will not assign or underlet the whole of the Demised
Premises unless:
3.12.3.1 the Tenant first obtains the Landlord's written approval
(such consent not to be unreasonably withheld or delayed)
to the proposed assignment or underletting and the
identity of the proposed assignee or undertenant;
3.12.3.2 the proposed assignee or undertenant is a respectable and
responsible person;
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3.12.3.3 before the assignment or underletting is completed the
Tenant and the assignee or undertenant first execute a
counterpart licence in such form as the Landlord
reasonably requires permitting the assignment or
underletting and such licence is to include a direct
covenant by the assignee or undertenant with the Landlord
to observe and perform the covenants by the Tenant and the
conditions and provisions contained in this lease but so
that in the case of an undertenant the direct covenant
with the Landlord shall be limited to the duration of such
undertenant's lease and shall not include the covenant to
pay the rents reserved by this lease;
3.12.3.4 if the Landlord shall reasonably require there shall first
be obtained from one or more respectable and responsible
individuals or companies a direct joint and several
covenant in such form as the Landlord may reasonably
require with the Landlord (in the case of an assignment)
to pay the yearly rents and additional rents reserved by
this lease and (in the case of an assignment or
underletting) to make good any damage sustained by the
Landlord by reason of the proposed assignee's or
undertenant's failure to observe and perform any of the
other covenants by the Tenant or conditions or provisions
contained in this lease, and
3.12.3.5 in the case of an underletting
(a) the underlease is in terms similar (insofar as is
consistent with the term of the underlease) to this lease
except that the undertenant shall not be permitted to
underlet or part with or share possession or occupation of
the whole or any part of the premises underlet to it save
by way of assignment of the whole of the underlet premises
and subject to first obtaining the prior written consent
of both the Tenant and the Landlord for such an assignment
(such consent not to be unreasonbly withheld or delayed);
(b) the Tenant and the undertenant agree in the underlease
that the provisions of sections 24 to 28 inclusive of the
Landlord and Tenant Act 1954 are not to apply in relation
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to the tenancy to be created by the underlease and before
entering into that agreement the Tenant and the
undertenant obtain an order from a competent court
authorising them to do so;
(c) the rent under the underlease is not less than the
full market rent for the Demised Premises and the Tenant
may not charge any form of premium for granting the
underlease
(d) the underlease shall be capable of determination by
the Tenant (with no residual right on the part of the
undertenant in relation to the whole or any part of the
Demised Premises) if this lease is determined in
accordance with sub-clause 6.8
(e) the Tenant covenants with the Landlord that the Tenant
will not vary the underlease without first obtaining the
Landlord's written approval such consent not to be
unreasonably withheld or delayed____
3.12.4 If the Tenant determines this lease in accordance with sub-clause
6.8 the Tenant will ensure that every underlease of the Demised
Premises has also validly been determined by the Early Termination
Date and that no new underlease is created in its place____
3.12.5 For the purposes of this sub-clause 3.12 the word "underletting"
includes the creation of any derivative term and "underlease" and
"undertenant" have corresponding meanings and the word "assignment"
includes any assignment of the Term or any derivative term or any
estate or interest in the Demised Premises and "assign" has a
corresponding meaning____
3.12.6 The Tenant will within twenty-eight days of every assignment
underlease or other transfer of the Demised Premises or any part of
the Demised Premises or other devolution of the interest of the
Tenant in the Demised Premises or of any derivative interest give
notice of that to the Landlord and at the same time will produce a
copy certified by a solicitor of the relevant assignment underlease
or other transfer or document effecting or evidencing such
devolution for registration with the Landlord and pay to it a
reasonable fee being not less than twenty-five pounds and VAT on
such fee for every such registration_____
3.12.7 Nothing contained in this sub clause 3.12 shall prevent the Tenant
from sharing occupation of the whole or any part or parts of the
Demised Premises with any one company ("the Group
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Company") which is for the time being a subsidiary of the Tenant or
the holding company of the Tenant or which is another subsidiary of
the holding company of the Tenant (in each case within the meaning
of Section 736 of the Companies Act 1985) subject to the following
conditions:-
3.12.7.1 no relationship of landlord and tenant shall be created or
be deemed to exist between the Tenant and the Group
Company____
3.12.7.2 the Group Company shall not be given exclusive occupation
of the whole or any part of the Demised Premises____
3.12.7.3 the right of any company to occupy the Demised Premises or
any part thereof shall determine upon such company ceasing
to be a Group Company or not later than the determination
(for any reason whatsoever) of the Term____
3.12.7.4 no transfer or creation of a legal estate shall take place
in connection with such sharing of occupation
3.12.7.5 the Tenant shall give to the Landlord written notice of
the name and principal office of the Group Company prior
to its occupation_____
3.12.7.6 the Tenant shall indemnify the Landlord against any
damages, claims, costs and expenses arising directly or
indirectly from such occupation by the Group Company____
3.13 Access
The Tenant will permit the Landlord and the other persons mentioned in
sub-clause 2.2.2 to exercise the rights excepted and reserved by that
sub-clause____
3.14 Use
The Tenant will not use or occupy the Demised Premises or any part of the
Demised Premises otherwise than for the uses specified in paragraphs B1
and B8 of the Schedule to the Town and Country Planning (Use Classes)
Order 1987 as that order applies at the date of this lease____
3.15 Nuisance
The Tenant will
3.15.1 not do anything which is, or omit to do anything and thereby cause,
a nuisance to the Landlord or any of the tenants of the Landlord or
the occupiers of any adjoining or neighbouring property or which is
or may be detrimental to the Demised Premises or the amenities of
the neighbourhood____
3.15.2 (without restricting sub-clause 3.15.1 or any other provision of
this lease) not
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3.15.2.1 use the Demised' Premises for any immoral or disreputable
purpose;
3.15.2.2 hold any auction on the Demised Premises;
3.15.2.3 use all or any part of the Demised Premises for the repair
maintenance, breaking or storage of motor vehicles;
3.15.2.4 use all or any part of the Demised Premises for the
display of items for sale, or
3.15.2.5 allow or cause any noise at or near the Demised Premises
which annoys any neighbouring owner or occupier or exceeds
any noise level limits from time to time in force (whether
in relation to health and safety, as a condition of any
planning permission, or otherwise)____
3.15.3 from time to time pay all costs charges and expenses which may
properly be incurred by the Landlord in abating any nuisance upon
the Demised Premises caused by any act or omission of the Tenant or
in executing all such works as may be necessary for abating any
such nuisance in obedience to any notice requiring the nuisance to
be stopped____
3.16 Compliance with statutes
The Tenant will
3.16.1 at all times during the Term conform in all respects with the
provisions of any instruments and regulations under any general or
local Act of Parliament and any instrument, rule, regulation or
order made under any such Act and with the Bye-Laws and regulations
of any local or other authority or supply company (whether already
or hereafter to be enacted or made) which may be applicable to the
Demised Premises or any part thereof and in particular will not do
or omit any act matter or thing in on or respecting the Demised
Premises which may be required to be omitted or done (as the case
may be) by the Planning Acts, the Factories Acts 1961, the Offices
Shops and Railway Premises Act 1963, the Fire Precautions Act 1971,
the Health and Safety at Work Act 1974 or the Environmental
Protection Act 1990____
3.16.2 at all times hereafter indemnify and keep indemnified the Landlord
against all proceedings costs expenses claims and demands in
respect of any contravention by the Tenant or other occupier of the
Demised Premises of any of the provisions of the said Acts,
Bye-Laws, instruments, rules, regulations and orders or in respect
of the Demised Premises____
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3.17 Easements
The Tenant will
3.17.1 not stop up darken or obscure any window glass door or light nor
give permission for any new window light opening doorway path
passage drain or other encroachment to be made nor permit any
easement to be acquired over or against the Demised Premises and
3.17.2 if any encroachment or easement shall be made or threatened to be
made or if any window or opening shall be made or opened or
threatened to be made or opened in any neighbouring building
(whether erected before or after the date this lease) or relating
to any neighbouring land which if not obstructed may by lapse of
time confer on the owner of any neighbouring property a right of
such access of light forthwith give written notice to that effect
to the Landlord and permit the Landlord and its agents to enter on
the Demised Premises and inspect the Demised Premises and will at
the joint cost of the Landlord and the Tenant do all things which
the Landlord may consider proper for preventing the making of such
encroachment or the acquisition of such right or easement_____
3.18 Safe use of the Demised Premises
The Tenant will ensure that
3.18.1 nothing of an explosive or highly inflammable nature shall be
brought into or stored in the Demised Premises or Kembrey Park
unless
3.18.1.1 such substances are kept in a proper container intended
for that purpose
3.18.1.2 the other provisions of this lease (including but in no
way limited to sub-clauses 3.15, 3.16 and 3.20) are
complied with and
3.18.1.3 the Landlord has first given its written consent (such
consent not to be unreasonably withheld or delayed)____
3.18.2 no engine machinery safe or other heavy article which in the
reasonable opinion of the Landlord is likely to affect the
stability of the structure of the Buildings or any adjoining or
neighbouring property or building shall be brought into or stored
in the Demised Premises____
3.18.3 no petrol driven vehicle shall be taken or driven into the Demised
Premises except:
3.18.3.1 for loading and unloading
3.18.3.2 whilst there are representatives of the Tenant at the
Demised Premises____
3.18.4 no goods or signs are stored or placed in the adjacent roads,
paths, loading areas or car parking areas____
3.18.5 the Demised Premises are equipped with good and
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sufficient fire fighting equipment of a type to comply with the
requirements of the local Fire Officer and will ensure that such
equipment is maintained in good working order____
3.18.6 no process is carried out or equipment kept or used on the Demised
Premises which may damage the Demised Premises, the Buildings, or
any other property or may interfere with processes carried out or
equipment used elsewhere in Kembrey Park or on any other property,
or which may interfere with the transmission of electromagnetic
waves or intensified light beams across Kembrey Park____
3.19 Signs
The Tenant will not exhibit either on the external walls or in or on the
windows or on the doors of the Demised Premises or so as to be visible
from outside the Demised Premises any notice sign or announcement____
3.20 Regulations
The Tenant will perform and observe or cause to be performed and observed
by anyone whom the Landlord reasonably regards as being under the Tenant's
control such rules and regulations as the Landlord may from time to time
make for the management of Kembrey Park and the orderly and proper use of
the roads footpaths and common areas of Kembrey Park____
3.21 Notices received
The Tenant will
3.21.1 notify the Landlord within seven days (or sooner if necessary) of
receiving them of all notices orders and proposals (including
rating proposals) served under any Statute order regulation
instrument or bye-law on the Tenant or the Demised Premises____
3.21.2 if required by the Landlord produce such notices orders and
proposals to the Landlord or its agents____
3.21.3 not agree or consent to any such proposals without the Landlord's
prior written approval____
3.21.4 if required by the Landlord at the joint expense of the Landlord
and the Tenant join with the Landlord in objecting to or appealing
against any such notices orders and proposals____
3.22 Landlord's costs
The Tenant will pay to the Landlord all costs charges and expenses
(including legal costs and fees payable to a Surveyor) which may properly
be incurred by the Landlord
3.22.1 in or in contemplation of any proceedings under Sections 146 and
147 of the Law of Property Act 1925 notwithstanding that forfeiture
is avoided otherwise than by relief granted by the Court____
3.22.2 in so far as such costs, charges and expenses are reasonable in
considering and (if appropriate)
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granting any request by the Tenant for the Landlord's permission
where required by this lease____
3.22.3 in or relating to the preparation, service and negotiation of any
schedule of dilapidations which have occurred during the Term
(whether the preparation, service and negotiation takes place
before or after the end of the Term) _____
3.22.4 in enforcing against the Tenant the provisions of this lease____
3.23 Planning applications
The Tenant will not apply for any planning permission or enter into any
agreement under the Planning Acts relating (in either case) to the Demised
Premises or to their use or alteration without the Landlord's written
consent____
3.24 Indemnity in respect of Outgoings
The Tenant will
3.24.1 indemnify the Landlord against any Imposition which either during
the Term or at any time after the determination of the Term becomes
payable by the Landlord in respect of the Demised Premises or any
other property whatsoever by reason of any act or omission of the
Tenant including any application for or obtaining of planning
permission in respect of the Demised Premises or any adjoining
property any alteration repair or reinstatement and any development
or disposal (by way of assignment sub-letting or otherwise
howsoever) of the Demised Premises or any part of the Demised
Premises____
3.24.2 be bound by the provisions of this sub-clause 3.24:
3.24.2.1 whether or not the act or omission of the Tenant was
authorised by this lease or by the Landlord and whether or
not the act or omission is in breach of any of the
covenants on the part of the Tenant contained in this
lease, and
3.24.2.2 whether or not the Term has already come to an end____
AND the parties agree that no one part of this sub-clause 3.24
shall be considered as restricting or cancelling any other part of
the sub-clause_____
3.25 Reletting or sale
The Tenant will permit the Landlord or its agents at any time within the
six months before the Term is due or expected to come to an end in the
case of a reletting or at any time in the case of a disposal of a
reversionary interest in the Demised Premises to enter on the Demised
Premises and to affix on any suitable part or parts of the Demised
Premises a notice board or notice boards for reletting or otherwise
disposing of the Demised Premises
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and will allow the Landlord to show the Demised Premises to anyone who
wishes to view them and has the permission of the Landlord to do so BUT so
that this shall be done in such a way as shall not unreasonably interfere
with the Tenant's course of business____
3.26 Handing back of the Demised Premises
The Tenant will at the time at which the Term expires or otherwise ends
3.26.1 peaceably and quietly leave surrender and yield up to the Landlord
the Demised Premises together with the Landlord's fixtures and
fittings which at any time shall be erected on or used on or
fastened to the Demised Premises, and all improvements and
additions to the Demised Premises and those fixtures and fittings,
repaired redecorated and treated in accordance with the Tenant's
obligations under this lease____
3.26.2 unless requested in writing by the Landlord not to do so remove all
tenants fixtures and fittings (including all tenant's partitioning
and cabling) installed by the Tenant or any previous tenant or
other occupier during the Term or by the Tenant during the term
granted by any previous lease of the Demised Premises and to make
good to the Landlord's satisfaction any damage caused to the
Demised Premises by such removal or by the original
installation____
3.27 Restrictions on pollution
Without restricting or cancelling any of its other obligations under this
lease, the Tenant will
3.27.1 not permit the discharge release or escape of any fuel gas toxic
substance or pollutant from the Demised Premises other than in
accordance with all statutory requirements____
3.27.2 not create any environmental hazard or detriment by the storage
escape or release of any gas substance or liquid in such quantity
(whether that quantity by itself or cumulatively with other
deposits of the same or different gases substances or liquids) as
to subject persons or animals or vegetation to a material risk of
death injury or impairment of health and/or as to threaten the
pollution (whether on the surface or underground) of any water
supply____
3.27.3 upon the Determination of the Term to make good the Demised
Premises and the surrounding area so as to remove all toxic harmful
and polluting substances which have been deposited or released
during the Term (or during any previous period of occupation by
Tinsley Robor plc) by the Tenant or other authorised occupier of
all or part of the Demised Premises or by anyone for whom the
Landlord reasonably regards the Tenant or
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authorised occupier as being responsible. The obligation in this
sub-clause 3.27.3 includes (but is not limited to) an obligation to
remove all polluted and or toxic earth, topsoil, substances, gases
and liquids and to dispose of those items in a recommended and
statutorily approved and safe manner and (where appropriate) to
replace them with non-toxic materials so as to yield up the Demised
Premises in a non-polluted and toxic-free state of repair and
condition____
4. THE LANDLORD'S COVENANTS
THE LANDLORD hereby COVENANTS with the Tenant as follows:
4.1 Quiet enjoyment
So long as the Tenant pays the Rent and Additional Rents and performs and
observes the covenants on the Tenant's part contained in this lease, the
Tenant shall during the Term quietly enjoy the Demised Premises without
interruption by the Landlord or any person lawfully claiming under or in
trust for it____
4.2 Services
The Landlord will use all reasonable endeavours to provide the services
set out in Part 2 of the Second Schedule in accordance with and subject to
such conditions and provisions relating to those services as are contained
in the Second Schedule and elsewhere in this lease, but shall be under no
liability to the Tenant for failure to provide those services due to
circumstances beyond the reasonable control of the Landlord____
4.3 The Substation Lease
Neither the Landlord nor its successors in title shall without the prior
written consent of the then Tenant accept a surrender or take any steps to
forfeit or otherwise determine the Substation Lease whilst this lease (or
any statutory continuation of it) remains in place provided that:
4.3.1 the Tenant shall not unreasonably withhold or delay the giving of
such consent;
4.3.2 such consent shall not be necessary where, before or at the same
time as the Substation Lease is determined, an alternative
substation lease is entered into for a substation capable of
providing an equivalent or greater supply to the Demised Premises,
and
4.3.3 if the Landlord wishes to determine the Substation Lease because of
some breach of covenant by the tenant of that lease the Tenant
indemnifies the Landlord against any loss or damage which the
Landlord suffers by reason of being precluded from determining the
Substation Lease____
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5. INSURANCE
5.1 The Landlord's obligations
The Landlord covenants with the Tenant that the Landlord will:
5.1.1 subject to the usual excesses and conditions keep the Buildings and
the Landlord's fixtures and fittings in the Demised Premises insured
with an insurer of repute in their full reinstatement value
(including loss of Rent and Service Charge for three years (or such
longer period as the Landlord shall consider appropriate) and
architects and surveyors fees payable on rebuilding and any
resulting VAT) against loss or damage by fire and (subject to
insurance against such risks being readily available on the United
Kingdom insurance market) aircraft, explosion, earthquake, riot,
malicious damage, storm, flood, escape of water or oil, impact,
theft, sprinkler leakage, subsidence and accidental damage and such
other risks as the Landlord may require and will pay all premiums
necessary for that purpose
5.1.2 if the Buildings are damaged or destroyed by a risk against which
the Landlord is obliged under this lease to insure them and subject
to obtaining all necessary consents to cause all insurance monies
received (except those for loss of Rent and Service Charge) to be
applied in making good the damage for which the monies have been
received or (as the case may be) in rebuilding the Buildings (but
not so as to provide accommodation identical in layout if it would
not be reasonably practicable to do so) PROVIDED THAT the Landlord
shall not be obliged to lay out such monies if and to the extent
that:-
5.1.2.1 such making good or rebuilding is rendered impracticable by
causes beyond the Landlord's control in which case the whole
of such monies shall belong to the Landlord absolutely upon
service by the Landlord upon the Tenant of a notice stating
that this is the case and thereupon this lease shall
immediately determine (though without restricting or
cancelling the rights of the Landlord and the Tenant against
the other in respect of any previous breach of the
provisions of this lease), or
5.1.2.2 payment of any insurance monies shall be properly refused
by reason of any act or default of the Tenant (unless the
Tenant pays to the Landlord an amount equal to the amount
payment of which shall have been refused) or the Tenant has
failed to make the payments referred to in sub-clause 5.2.1
and
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5.2.2___
5.1.3 at the reasonable request and at the expense of the Tenant provide
particulars of the policy and a schedule of the risks covered
together with adequate evidence that the policy is in force____
5.1.4 notify the Tenant from time to time of any material change in the
risks insured against under sub-clause 5.1.1____
5.2 The Tenant's obligations
The Tenant covenants with the Landlord that the Tenant will:
5.2.1 pay to the Landlord from time to time within seven days of receiving
a request for it a sum equivalent to the insurance premiums paid by
the Landlord in accordance with sub-clause 5.1.1 or (if the premiums
relate also to other property) a sum equivalent to a fair proportion
as determined by the Landlord's Surveyor of the amount of such
premiums____
5.2.2 pay to the Landlord from time to time within seven days of receiving
a request for it a sum equal to the sum or sums which the Landlord
shall from time to time pay by way of premium for effecting or
maintaining insurance indemnifying the Landlord against any
liability for damages and any claims costs and expenses arising from
any accidental injury to or disease suffered by any person or any
accidental damage to property caused by the state or condition of
the Buildings or any equipment within the Buildings or any part of
the Buildings and in particular but without restricting the meaning
of the rest of this sub-clause 5.2.2 any liability on the part of
the Landlord under the Defective Premises Act 1972 or (if the
premiums relate also to premises other than the Demised Premises) a
sum equivalent to a fair proportion as determined by the Landlord's
Surveyor of the amount of such premiums____
5.2.3 pay to the Landlord from time to time within seven days of receiving
a written request for it a sum equal to any excess or insured's
contribution in relation to a claim made or to be made by the
Landlord under any policy or policies of insurance mentioned in
sub-clause 5.1.1 or 5.2.2____
5.2.4 (without restricting or cancelling any other obligation on the
Tenant under this lease and so that sub-clauses 5.2.4.1 and 5.2.4.2
shall be construed independently)____
5.2.4.1 not do anything whereby any policy of insurance taken out by
the Landlord on including or in any way relating to the
Demised Premises or the Buildings or any neighbouring
property of the Landlord may become void or voidable or
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(unless the payment of the increased premium is with the
prior agreement of the Landlord undertaken by the Tenant)
whereby the rate of premium may be increased____
5.2.4.2 in the event of any additional or increased premium becoming
payable in respect of the Demised Premises or all or any
part of the Buildings or any neighbouring property of the
Landlord by reason of the trade or business carried on in or
upon the Demised Premises or anything done or kept on the
Demised Premises being deemed a hazardous or special risk by
the Landlord's insurers pay within seven days of demand such
additional premium or increased premium in full to the
Landlord or to its insurers as the Landlord may direct____
5.3 Suspension of Rent
5.3.1 If the Buildings or any part of the Buildings shall be so destroyed
or damaged by fire or any other risk against which the Landlord is
by this lease obliged to insure as to render the Demised Premises
unfit for occupation and use or inaccessible then (unless
A. the insurance of the Buildings by the Landlord shall have been
vitiated or payment of the policy monies wholly or partly
refused wholly or partly by reason of any act neglect or
default of the Tenant any subtenant or other authorised
occupier of all or part of the Demised Premises or its or
their respective servants agents or invitees and
B. the Tenant has not paid to the Landlord an amount equal to the
amount payment of which shall have been refused)
5.3.1.1 the Rent or a fair and just proportion of it (according to
the nature and extent of the damage sustained) shall be
suspended from the date of such destruction or damage until
the Demised Premises shall have been rebuilt or reinstated
and rendered fit for occupation and use and accessible (or
until the expiration of the period of three years from the
date on which such destruction or damage occurred if that is
earlier), and
5.3.1.2 if by the expiry of the period of three years less one month
from the date of such destruction or damage the Demised
Premises shall not have been rebuilt or
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<PAGE>
reinstated and rendered fit for occupation and use and
accessible the Tenant may serve on the Landlord one month's
notice in writing of its intention to determine this
lease____
5.3.2 the Tenant may not serve such a notice as is mentioned in sub-clause
5.3.1.2 after the Demised Premises have been rebuilt or reinstated
and rendered fit for occupation and use____
5.3.3 on the expiry of such notice as is mentioned in sub-clause 5.3.1.2
this lease shall determine (though without restricting or cancelling
the rights of the Landlord and the Tenant against the other in
respect of any previous breach of the provisions of this lease) ____
5.3.4 if the Landlord insures against loss of Rent for a period longer
than three years then the references to a three year period in
sub-clauses 5.3.1.1 and 5.3.1.2 shall be treated as references to
such longer period_____
5.3.5 in the event of any dispute as to the amount or period of such
abatement as is mentioned in sub-clause 5.3.1.1 or as to whether the
Demised Premises have been rebuilt reinstated or rendered fit for
occupation and use and accessible the dispute shall be referred to
arbitration in accordance with the provisions of the Arbitration
Acts 1950 and 1979 and if the parties cannot agree on the identity
of the arbitrator he shall be nominated on the application of either
party to the President of the Royal Institution of Chartered
Surveyors or his deputy____
5.4 Alternative Arrangements for repayment of insurance premium The Landlord
may, during such periods as it elects, recover all or part of the sums
mentioned in sub-clauses 5.2.1 and 5.2.2 by including the relevant
premiums in the amount of the Service Charge so that the arrangements for
payment by the Tenant shall be as for the rest of the Service Charge____
6. FURTHER PROVISIONS
THE parties also agree:-
6.1 Forfeiture
Whenever:
6.1.1 the Rent or the Additional Rents or any part of them are in arrears
for 14 days or more after having become due (whether demanded
formally or not);
6.1.2 the Tenant has not complied with any obligation on its part
contained in this lease;
6.1.3 when the Tenant is one or more individuals: that individual is, or
one or more of those individuals is or are, adjudicated bankrupt or
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<PAGE>
has a receiving order made against him or an interim receiver is
appointed of the property of the Tenant or one or more of the
tenants;
6.1.4 when the Tenant is one or more companies; it or one of them goes
into compulsory or voluntary liquidation (unless that is solely for
the purpose of amalgation or reconstruction when solvent), an
administrative receiver or receiver of it (or one of them) is
appointed, or an administration order is made in respect of it (or
one of them), or
6.1.5 the Tenant (or if the Tenant is more than one person one or more of
the tenants) shall enter into any arrangement with its creditors or
shall suffer any distress or execution to be levied on his goods or
the Demised Premises or shall grant a bill of sale on any goods or
fittings at the Demised Premises____
then the Landlord may forfeit this lease by entering (itself or through
agents) any part of the Demised Premises in the name of the whole of the
Demised Premises____
BUT such forfeiture does not cancel reduce or restrict any right of action
or remedy of the Landlord in respect of any breach prior to such
forfeiture by the Tenant of its obligations under this lease or the amount
of damages which the Landlord may claim____
6.2 Alterations to other property
The Landlord and others may carry out works and erections upon and to that
part of the Buildings not comprised in the Demised Premises and upon and
to adjoining or neighbouring property notwithstanding that the amenities
and access of light and air to the Demised Premises may be diminished or
otherwise affected____
6.3 Electromagnetic and light based transmissions
The Landlord and others authorised by it may transmit electromagnetic
waves and laser or intensified light beams across all of Kembrey Park
including (unless this disrupts any process being carried out or equipment
operated on the Demised Premises) the Demised Premises____
6.4 Limitation of Landlord's liability
6.4.1 Except as expressly provided by clause 4 hereof and/or in so far as
the matters and things mentioned in this sub-clause 6.4 are included
in the insurance referred to in sub-clauses 5.1.1 and 5.2.2 the
Landlord shall not be liable to the Tenant or to any other person
for any accidental loss or damage which may at any time during the
Term be occasioned or suffered by the Tenant or any other person or
to the Demised Premises or to any goods or property of the Tenant or
any other person by reason of any breakdown, bursting, stoppage,
leakage, breakage, defect or damage of or in any pipes, taps, mains,
cisterns, wires,
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<PAGE>
apparatus or machinery in or in connection with or used for the
purposes of the Demised Premises or any adjoining or neighbouring
property nor for the absence or lack of light in or to the Demised
Premises and the Landlord shall not be liable to any other person
not a party to this lease to perform any of the covenants herein
contained in this lease whether express or implied in so far as such
covenants impose obligations going beyond the common duty of care
imposed by the Common Law or the Occupiers Liability Act 1957____
6.4.2 The Landlord shall not be responsible for or incur any liability in
respect of any communication from or to, or property of, the Tenant
which may be left with or entrusted to servants employed by the
Landlord____
6.5 Planning restrictions
Nothing contained in this lease
6.5.1 shall render the Landlord or the Tenant liable in respect of any of
the covenants conditions and provisions contained in this lease if
and so far only as the performance or observance of them or any one
or more of them shall after the date of this lease become a
contravention of or otherwise impossible or illegal under or by
virtue of the Planning Acts but subject as mentioned above in this
sub-clause 6.5.1 the Term and the rents payable to the Landlord
shall not determine solely because of any changes or modifications
or restrictions of user of the Demised Premises or obligations made
or imposed after the date of this lease under or by virtue of the
Planning Acts or any revocation or withdrawal or the alteration of
any conditions attached to or the imposition of further conditions
in respect of any permission for development already granted in
respect of the Demised Premises under the Planning Acts____
6.5.2 shall be deemed to constitute any warranty by the Landlord that the
Demised Premises or any part of the Demised Premises are presently
or will in the future be authorised under the Planning Acts for use
for any specific purpose____
6.6 Service of notices
Subject to sub-clause 1.7 Section 196 of the Law of Property Act 1925 as
amended shall apply to all notices served under this lease____
6.7 VAT
Unless the contrary is expressly stated sums and payments expressed or
referred to in this lease are exclusive of VAT which (if chargeable) shall
be paid in addition by the party paying such sums or making such
payment____
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6.8 Option to determine
6.8.1 If the Tenant
6.8.1.1 wishes to determine the Term on the Early Termination Date;
6.8.1.2 gives to the Landlord prior written notice of not less than
twelve months and one day to that effect;
6.8.1.3 shall up to the Early Termination Date have paid the rents
hereby reserved and there shall not be subsisting either at
the time the notice is served or at the Early Termination
Date any material breach by the Tenant of the covenants and
obligations on the part of the Tenant contained in this
lease, and
6.8.1.4 gives vacant possession of the Demised Premises to the
Landlord
then at 11.59 pm on the Early Termination Date this lease and
everything contained in it shall cease and be void____
6.8.2 The determination of the Term in accordance with sub-clause 6.8.1
shall not cancel or restrict the rights and remedies of either party
against the other in respect of any antecedent claim or breach of
covenant____
6.8.3 For the purposes of this sub-clause 6.8 time shall be of the
essence____
IN WITNESS whereof this deed has been executed by the parties and has been
delivered on the date written at the start of the document____
FIRST SCHEDULE
"The Demised Premises"
Part 1
Items excluded from the Demised Premises
1. The structural frame and columns, the cladding and the cladding frame, the
external windows, the external window frames, the external doors and
external door frames of the Buildings____
2. The concrete screeds, slabs, beams and decks being the floors of the
Buildings____
3. The foundations supporting the Buildings____
4. The beams and roof deck and all other elements of the roof of the
Buildings____
5. Insulation materials within the walls or roof of the Buildings____
6. Any airspace above the roof of the Buildings or ground below the
Buildings____
Part 2
Items included in the Demised Premises
1. The plaster finishes other wall and floor coverings and paintwork inside
the Demised Premises____
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<PAGE>
2. The internal block walls in the Demised Premises
3. The ceiling tiles and lighting units inside the Demised Premises____
4. Any Service Media that exclusively serve the Demised Premises____
5. All additions and improvements to the Demised Premises____
6. All the Landlord's fixtures and fittings and any other fixtures (including
the carpets) which are in or attached to or which may in the future be in
or attached to the Demised Premises except for those which are instal1ed
by the Tenant and can be removed without defacing the Demised Premises____
THE SECOND SCHEDULE
The Service Charge
Part 1
Payment of the Service Charge
1. "The Capped Service Charge Contribution" means
A. During the first year of the Term: (pound)10,419.25
B. During each of the second, third, fourth and fifth years of the Term
a sum calculated as follows:
The last published Index prior to the start of
the relevant year of the Term
(pound)10,419.25 x ______________________________________
The last published Index prior to the start of
the Term____
"The Expenditure" means the amount which the Landlord spends in providing
the services set out in Part 2 of this Schedule____
"The Final Service Charge" means
A. during each of the first five years of the Term: the lesser of:
(a) the Tenant's proportion of the Expenditure and
(b) the Capped Service Charge Contribution
B. during each year after the end of the fifth year of the Term: the
Tenant's proportion of the Expenditure
the Tenant's proportion in each case to be calculated as set out in Part 3
of this Schedule____
"Index" means the "all items" index figure of the Index of Retail Prices
published by the Department of Employment or any successor Ministry or
Department____
"The Interim Service Charge Instalment" means a payment to be made by the
Tenant on such dates as the Landlord may require (though not more
frequently than every month) on account of the Final Service Charge, the
amount of the Interim Service Charge Instalment being such sum as will, if
the Interim Service Charge Instalments are made on the stipulated days
result in the Tenant having paid to the Landlord at the end of the
relevant Service Charge Year such sum as the Landlord anticipates will be
the Final Service Charge____
"The Service Charge Year" means each successive period beginning on 1st
April and ending on 31st March in each year or such other period as the
Landlord may from time to
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<PAGE>
time notify in writing to the Tenant____
2. The Landlord must
2.A keep an account of the Expenditure____
2.B prepare and deliver to the Tenant within 9 calendar months after the
end of each Service Charge year a statement ("the Service Charge
Statement") for each Service Charge Year which
2.B.a states the Expenditure for the relevant Service Charge Year
with sufficient particulars to show the amount spent on each
major category of expenditure;
2.B.b states the amount of the Final Service Charge;
2.B.c states the total of the Interim Service Charge Instalment paid
by the Tenant, and
2.B.d states the amount by which the Final Service Charge exceeds
("Negative Balance") or falls short of ("Positive Balance"),
the total of the Interim Service Charge Instalments
2.B.e states the Tenant's proportion applied to each major category
of expenditure____
PROVIDED THAT any failure by the Landlord to produce such statement within
the 9 month period mentioned shall not cancel or restrict the Tenant's
obligation to pay the Service Charge, any Interim Service Charge
Instalment or any Negative Balance
3. The Tenant must pay the Interim Service Charge Instalment on the dates
stipulated by the Landlord____
4.A If a Service Charge Statement shows a Negative Balance then the Tenant
must pay that sum to the Landlord within fourteen days of receiving the
Service Charge Statement____
4.B If a Service Charge Statement shows a Positive Balance then the Landlord
must either credit the amount of such balance towards the sum which has
fallen or will fall due from the Tenant in respect of the Interim Service
Charge Instalments for the following Service Charge Year or (where a
Positive Balance is calculated after the end of the Term) within fourteen
days of producing the Service Charge Statement pay to the Tenant the
amount of the Positive Balance____
5. Every Service Charge Statement is conclusive as to the information set out
in it____
6A. If the basis for the calculation of the Index is changed and any method of
reconciliation between the new and old figures is officially published,
that method is to be used for the purpose of comparisons under this part
of this Schedule
6B. If
(a) the basis for the calculation of the Index is changed and no method
of reconciliation between the new and old figures is officially
published or
(b) the Index ceases to be published
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<PAGE>
then the Capped Service Charge Contribution shall be adjusted each year
(until and including the fifth year of the Term) by reference to such
other index of costs or prices as the Landlord may from time to time
reasonably specify____
7. The Tenant may, if it pays the Landlord's reasonable costs of such
exercise, on reasonable prior notice to the Landlord inspect such of the
books, records, invoices and accounts relating to the Service Charge and
the preparation of the Service Charge Statement as it may reasonably
request____
Part 2
The Services
A. The whole of Kembrey Park
1. Except for such parts of Kembrey Park for which any tenant is responsible and
for parts which are available for letting:
(a) Periodically inspecting, examining, maintaining, repairing, amending,
lighting, cleansing, painting, decorating, overhauling and where necessary
replacing any and every common part of Kembrey Park including the estate
buildings, courtyards, parking spaces, access roads, ramps, pavements,
ways, fences, sewers, drains, pipes, watercourses, cables, plant,
machinery, apparatus, fixtures and fittings and appurtenances there____
(b) Tending and keeping tidy and planting with such flora as the Landlord
shall reasonably deem to be appropriate the areas of land within Kembrey
Park____
(c) The supply and maintenance of such fire fighting and alarm equipment on
Kembrey Park as may be provided by the Landlord or as may be required to
be supplied and maintained by the Landlord's insurers, by statute, or by
the Fire Authority for the district____
(d) The payment of all insurance premiums, rates, charges, assessments,
impositions and other outgoings payable by the Landlord in respect of all
common parts of Kembrey Park and the estate buildings there____
2. The control and eradication of any pests in or about Kembrey Park including
the Demised Premises____
3. The provision of such medical and security services as the Landlord may
reasonably deem necessary____
4. The employment of such staff as the Landlord may reasonably deem necessary
for the performance of the duties and services in and about Kembrey Park and all
incidental expenditure in relation to such employment (including but without
limiting the generality of such provision the payment of the statutory and such
other insurance, health, pension, welfare and other payments, contributions,
taxes and premiums) and the cost of entering into any contracts for the carrying
out of all or any of the said duties and services that the Landlord may
reasonably deem desirable or necessary and the provision of estate buildings,
medicines, medical equipment, uniforms, working clothes, tools,
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<PAGE>
appliances, cleaning and other materials, bins, receptacles, fixtures and
fittings and other equipment for the proper performance of their duties and for
the general management security maintenance and cleanliness of Kembrey Park and
all parts thereof____
5. Making repairing maintaining rebuilding and cleansing all ways roads
pavements sewers drains pipes watercourses party walls party structures party
fences walls or other conveniences which may belong to or be used for Kembrey
Park in common with other premises near or adjoining thereto____
6 Taking all steps reasonably deemed desirable or expedient by the Landlord for
complying with, making representations against or otherwise contesting, the
incidence of the provisions of any legislation or orders or statutory
requirements thereunder concerning town planning, public health, highways,
streets, drainage or other matters relating to or alleged to relate to Kembrey
Park for which the Tenant is not directly liable____
7. Complying with any statutory requirement in respect of Kembrey Park made for
the benefit or protection of the occupiers____
8. Disposing or arranging the disposal of waste from all or part of Kembrey
Park____
9. Where the Landlord has been advised by its environmental engineers to carry
out such work or to take such measures, any reasonable work done or measures
reasonably taken to counteract prevent or reduce the likelihood of the spread or
presence of any virus bacteria or other dangerous substance within or around the
Kembrey Park____
10. All reasonable fees properly incurred by the Landlord or its managing agents
(if any) in connection with general management or maintenance of Kembrey Park
and so that the Landlord may if it so elects (such election to be notified to
the Tenant in writing) for such period as it does not employ and charge for
managing agents charge a management fee to be fixed by the Landlord but not to
exceed 10% of the total of the items (excluding this paragraph 10) set out in
this part of this schedule_____
11. Such additional services as the Landlord may now or at any time in the
future reasonably decide to be in the interests of good estate management and
for the benefit of the tenants at Kembrey Park generally____
12. Reasonable provision for anticipated expenditure in respect of the foregoing
as the Landlord or its agents may in its or their reasonable discretion
determine____
B. The Birch Phase
1. The keeping in good and substantial repair and condition (including external
decoration) and (where the Landlord considers appropriate) renewal of the whole
or any part of so much of the Buildings as is not comprised in the Demised
Premises and as would not form part of the demise of any other unit within the
Birch Phase were all such units let on terms similar to this lease including
reasonable provision for anticipated expenditure in respect of such work as the
Landlord or its agents may in its
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<PAGE>
or their reasonable discretion determine____
2. The regular inspection maintenance repair and (where the Landlord considers
appropriate) replacement or renewal of the heating (including the plumbing for
the heating), ventilation and electrical systems and the fire fighting equipment
and fire and intruder alarm equipment at the Buildings where these have been
installed by the Landlord____
3. The external and internal cleaning of all windows and external cladding to
the Buildings____
4. Disposing or arranging the disposal of waste from all or any part of the
Birch Phase____
5. Taking out such insurance or maintenance contracts as the Landlord reasonably
considers appropriate relating to any such items or services as are mentioned in
this Part 2B of the Second Schedule
6. All reasonable fees properly incurred by the Landlord or its managing agents
(if any) in connection with the general management of the Birch Phase and so
that the Landlord may if it so elects (such election to be notified to the
Tenant in writing) for such period as it does not employ and charge for managing
agents charge a management fee to be fixed by the Landlord but not to exceed 10%
of the total of the items (excluding this paragraph 5) set out in Part 2 of this
schedule____
7. Such other services as the Landlord in its reasonable discretion shall deem
desirable or necessary to enable it to carry out or maintain the said services
and for the general conduct and good management of the Birch Phase___
8. Reasonable provision for anticipated expenditure in respect of the foregoing
as the Landlord or its agents may in its or their reasonable discretion
determine____
Part 3
Calculation of the Tenant's proportion
The Tenant's proportion of the cost of providing the services set out in Part 2
of this schedule shall be determined by the Landlord or its agents and unless
(in each case) the Landlord or its agents consider that particular circumstances
make some other basis of calculation appropriate:
1. The Tenant's proportion in respect of the services set out in Part 2A of this
Schedule shall be a just proportion based on the ratio which the gross internal
area of the Demised Premises bears to the gross internal area of all units
(including the Demised Premises) let or available for letting at Kembrey Park
but excluding from the calculation of the latter figure any unlet new building
completed during the relevant Service Charge Year____
2. The Tenant's proportion in respect of the services set out in Part 2B of this
Schedule shall be a just proportion based on the ratio which the gross internal
area of the Demised Premises bears to the gross internal area of all units
(including the Demised Premises) in the Birch Phase let or available for letting
in respect of which the relevant service or services are
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provided____
THE THIRD SCHEDULE
Car Parking Arrangements
1. The Tenant will park its motor cars in the part or parts of the car park area
as the Landlord shall at its sole discretion from time to time allocate to the
use of the Tenant, which allocation may be changed by the Landlord upon one
month's previous notice in writing as frequently as it may deem fit and nothing
in this lease shall be construed as conferring upon the Tenant any exclusive
right to the enjoyment of any particular position in the car park area provided
that fifteen of the parking spaces allocated to the Tenant will always be within
the Birch Phase and the rest will be within reasonably convenient walking
distance of the Demised Premises____
2. The Tenant shall at all times diligently perform and observe any reasonable
rules and regulations which may from time to time be circulated or displayed by
the Landlord in relation to the car park area____
3. The Landlord shall be under no liability for the entry of unauthorised
persons to the car park area or any loss or damage occasioned to motor cars or
their contents or to the Tenant____
4. The Tenant will reimburse the Landlord a due proportion attributable to the
said part from time to time allocated to the Tenant of any Impositions
(whensoever assessed charged or imposed upon the Landlord) payable by the
Landlord in respect of the car park area, (save to the extent that such
Impositions are recovered through the Service Charge) such reimbursement to be
made on demand____
THE FOURTH SCHEDULE
Rent Review
1. The revised Rent for any Review Period may be agreed at any time between the
Landlord and the Tenant or (in the absence of agreement) determined not earlier
than the relevant Review Date by an independent valuer (acting as an expert and
not as an arbitrator) such valuer to be nominated in the absence of agreement by
or on behalf of the President for the time being of the Royal Institution of
Chartered Surveyors on the application of the Landlord or the Tenant made not
earlier than six months before the relevant Review Date but not later than the
end of the relevant Review Period and so that in the case of such valuation the
revised Rent to be determined by the valuer shall be such as he shall decide is
the yearly rent at which the Demised Premises might reasonably be expected to be
let at the relevant Review Date____
(A) On the following assumptions at that date:
(i) that the Demised Premises:
(a) are available to let on the open market without a fine or
premium with vacant possession by a willing landlord to a
willing tenant for a term
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<PAGE>
of 10 years or the residue then unexpired of the term of this
lease (whichever be the longer) ____
(b) are to be let as a whole subject to the terms of this lease
(other than the amount of the Rent hereby reserved but
including the provisions for review of that rent on a basis
and of a frequency as set out in this lease) ____
(c) are fit and available for immediate occupation_____
(d) may be used for any of the purposes permitted by this lease as
varied or extended by any licence granted pursuant thereto____
(ii) that the covenants contained in this lease on the part of the Tenant
have been fully performed and observed____
(iii) that no work has been carried out to the Demised Premises which has
diminished the rental value and that in case the Demised Premises
have been destroyed or damaged they have been fully restored____
(iv) that the rent will become payable after the expiry of a rent-free
period of such length as would be negotiated in the open market
between a willing landlord and a willing tenant____
(v) that the hypothetical tenant is and tenants in the market generally
are registered for VAT and will be able to set off in full by way
of input tax any VAT payable in respect of the Rent or other sums
due under the provisions of this lease against the output tax
payable by him or them____
(B) But disregarding:
(i) any effect on rent of the fact that the Tenant its sub-tenants or
their respective predecessors in title have been in occupation of
the Demised Premises_____
(ii) any goodwill attached to the Demised Premises by reason of the
carrying on thereat of the business of the Tenant its sub-tenants or
their predecessors in title in their respective businesses and
(iii) any increase in rental value of the Demised Premises attributable to
the existence at the relevant Review Date of
(a) any improvement to the Demised Premises or any part thereof
carried out with consent where required and otherwise than in
pursuance of an obligation to the Landlord or its predecessors
in title by the Tenant its sub-tenants or their respective
predecessors in title during the Term or during any period of
occupation prior thereto arising out of an agreement to grant
such term or
(b) the Additional Works as defined in an agreement for lease
dated 20 February 1995 between the Landlord (1) and the Tenant
(2)
2. (A) the fees and expenses of the valuer referred to in paragraph 1
including the cost of his nomination shall be
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borne as the valuer directs and the Landlord and the Tenant shall otherwise bear
their own costs____
(B) the valuer shall afford the Landlord and the Tenant an opportunity to
make representations to him and
(C) if the valuer nominated in accordance with paragraph 1 shall die delay
or become unwilling unfit or incapable of acting or if for any other reason the
President for the time being of the Royal Institution of Chartered Surveyors or
the person acting on his behalf shall in his absolute discretion think fit he
may on the application of either the Landlord or the Tenant by writing discharge
the valuer and appoint another in his place____
3. When the amount of any Rent to be ascertained as provided above shall have
been ascertained memoranda recording that shall immediately be signed by or on
behalf of the Landlord and the Tenant and annexed to this lease and its
counterpart and the Landlord and the Tenant shall bear their own costs in
respect of those memoranda____
4. (A) If the revised Rent payable on and from any Review Date has not been
agreed by that Review Date the Rent shall continue to be payable at the rate
previously payable and immediately upon the revised Rent being ascertained the
Tenant shall pay to the Landlord any shortfall between the Rent and the revised
Rent payable from and including the Review Date up to and including the day
prior to the quarter day following the ascertainment of the revised Rent
together with interest on any shortfall at the Base Rate from time to time of
Lloyds Bank Plc such interest to be calculated on a day-to-day basis from the
date on which such shortfall (or each part of such shortfall) would have been
payable if the revised Rent had been ascertained prior to the relevant Review
Date to the date of ascertainment and thereafter in accordance with sub-clause
3.4 and the interest so payable shall be recoverable in the same manner as Rent
in arrear____
(B) for the purpose of this paragraph 4 the revised Rent shall be deemed
to have been ascertained on the date when the same has been agreed between the
Landlord and the Tenant or as the case may be the date of the determination by
the valuer____
5. If either the Landlord or the Tenant shall fail to pay the relevant
proportion of the fees and expenses of the valuer under the provisions of
paragraph 2 within twenty-one days of the same being demanded by the valuer the
other shall be entitled to pay the same and the amount so paid shall be repaid
by the party chargeable on demand____
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[SEAL] (THE COMMON SEAL of SUN ALLIANCE
(AND LONDON ASSURANCE COMPANY
(LIMITED was hereunto affixed in
(the presence of: -
/s/ K C [ILLEGIBLE]
Authorised Signatory
/s/ [ILLEGIBLE]
Authorised Signatory
(THE COMMON SEAL of TINSLEY ROBOR
(plc was hereunto affixed in the
(presence of:-
Director
Secretary
36
<PAGE>
EXHIBIT 10.80
================================================================================
DATED 4th May 1995
LEASE
of Unit 2
Birch Phase
Kembrey Park Swindon Wiltshire
Sun Alliance and London Assurance
Company Limited (1)
Tinsley Robor plc (2)
TOWNSENDS
===================================Solicitors===================================
42 Cricklade Street, Swindon, Wiltshire SN1 3HD
Telephone (01793) 410800 - Fax (01793) 616294
<PAGE>
CONTENTS
Clause Clause Heading Page
- ------ -------------- ----
Number
- ------
1. INTERPRETATION 1
2. THE DEMISE 4
3. THE TENANT'S COVENANTS 7
3.1 Rent 7
3.2 Rent to be paid in full 7
3.3 VAT 7
3.4 Outgoings 8
3.5 Interest 8
3.6 Water, gas and electricity 9
3.7 Repair 9
3.8 Redecoration 9
3.9 Notice to repair 10
3.10 Alterations 10
3.11 Obstructions 11
3.12 Alienation 11
3.13 Access 14
3.14 Use 14
3.15 Nuisance 14
3.16 Compliance with statutes 15
3.17 Easements 16
3.18 Safe use of the Demised
Premises 16
3.19 Signs 17
3.20 Regulations 17
3.21 Notices received 17
3.22 Landlord's costs 17
3.23 Planning applications 18
3.24 Indemnity in respect of
Outgoings 18
3.25 Reletting or sale 18
3.26 Handing back of Demised Premises 19
3.27 Restrictions on pollution 19
4. THE LANDLORD'S COVENANTS 20
4.1 Quiet enjoyment 20
4.2 Services 20
4.3 The Substation Lease 20
5. INSURANCE 21
5.1 The Landlord's obligations 21
5.2 The Tenant's obligations 22
5.3 Suspension of Rent 23
5.4 Alternative arrangements for
repayment of insurance premium 24
6. FURTHER PROVISIONS 24
6.1 Forfeiture 24
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6.2 Alterations to other property 25
6.3 Electromagnetic and light
based transmissions 25
6.4 Limitation of Landlord's
liability 25
6.5 Planning restrictions 26
6.6 Service of notices 26
6.7 VAT 26
6.8 Option to determine 27
FIRST
SCHEDULE The Demised Premises 27
Part 1 Items excluded from the
Demised Premises 27
Part 2 Items included in the
Demised Premises 27
SECOND
SCHEDULE The Service Charge 28
Part 1 Payment of the Service Charge 28
Part 2 The Services 30
A The whole of Kembrey Park 30
B The Birch Phase 31
Part 3 Calculation of the Tenant's
proportion 32
THIRD
SCHEDULE Car Parking Arrangements 33
FOURTH
SCHEDULE Rent Review 33
<PAGE>
T H I S L E A S E is made the 4th day of May One thousand nine hundred and
ninety-five BETWEEN
SUN ALLIANCE AND LONDON ASSURANCE COMPANY LIMITED whose Registered Office is at
1 Bartholomew Lane London EC2N 2AB ("the Landlord") (1) and
TINSLEY ROBOR plc whose registered office is at Drayton House Drayton Chichester
West Sussex PO20 6EW ("the Tenant") (2)
THIS DEED WITNESSES THAT:-
1. INTERPRETATION IN this lease:
1.1 EXCEPT where this lease expressly says otherwise a reference to an Act of
Parliament (or a section of an Act of Parliament) refers to that Act (or
section) as it applies at the date of this lease and any later amendment
or reenactment of it and to any instruments rules regulations or orders
made under such Act or section____
1.2 A RIGHT given to the Landlord to enter the Demised Premises extends to
anyone the Landlord authorises to enter, and includes the right to bring
workmen and appliances onto the Demised Premises for the stated
purpose_____
1.3 AUTHORITY given to a person to enter the Demised Premises after giving
notice extends, if the circumstances justify it, to entry after giving
less notice than specified or without giving any notice____
1.4 WHERE the Tenant agrees not to do or not to omit anything that also means
that the Tenant will not allow anyone else to do or omit that thing____
1.5 THE expression "the Landlord" includes where the context admits the person
who for the time being owns the interest in the Demised Premises which
gives the right to possession of it when this lease ends____
1.6 THE expression "the Tenant" includes where the context admits the person
who for the time being is entitled to the Demised Premises as Tenant under
this lease____
1.7 IF under this lease there is more than one tenant or landlord any
reference to "the Tenant" or "the Landlord" will be deemed to refer to
each tenant or landlord and any obligation on the part of the Tenant or
the Landlord (as the case may be) can be enforced against all of the
tenants or all of the landlords (as the case may be) jointly and against
each individually and any notice to be served on the Tenant or the
Landlord will be validly served if served on any one or more of (as the
case may be) the tenants or the landlords____
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1.8 WORDS importing the singular are to be considered where appropriate as
including the plural and vice versa
1.9 WORDS importing the masculine are to be considered where appropriate as
including the feminine and neuter and vice versa_____
1.10 UNLESS the context requires the expressions to be interpreted differently,
references in this lease to a "clause" "sub-clause" "schedule" or
"paragraph" are references to the appropriately numbered clause,
sub-clause, schedule or paragraph of this lease____
1.11 THE contents section and headings set out in this lease are included for
ease of reference only, and should not be taken to affect the meaning of
the provisions to which they refer_____
1.12 THE Schedules are incorporated in this lease and the Landlord and the
Tenant agree to be bound by their provisions____
1.13 UNLESS the context requires the expressions to be interpreted differently,
the following terms have the following meanings in this lease:-
"the Additional Rents" means the sums reserved as such by sub-clause 2.4
"the Birch Phase" means that part of Kembrey Park from time to time
designated by the Landlord as such
"the Buildings" means the buildings from time to time built on and
forming the Birch Phase
"the Demised Premises" means the warehouse and industrial premises with
ancillary office accommodation which form part of
the Buildings and are known as Units 1 and 2 Birch
Phase Kembrey Park Swindon, and which are shown for
identification only edged red on the Plan and
exclude the items described in Part 1 of the First
Schedule but include the items described in Part 2
of the First Schedule
"the Early Termination means 30th April 2005
Date"
"Impositions" means rates, taxes, assessments, duties,
impositions, and outgoings whether parliamentary,
parochial, local or of any other description and
whether
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[GRAPHIC]
<PAGE>
or not of a capital or non-recurring nature
"Kembrey Park" means the Landlord's property known as Kembrey
Park or any property or items maintained in
conjunction with Kembrey Park as that development
may from time to time be modified extended added to
or reduced in size
"the Plan" means the plan attached to this Lease
"the Planning Acts" means (subject to sub-clause 1.1) the Town and
Country Planning Act 1990, the Planning (Listed
Buildings and Conservation Areas) Act 1990, the
Planning (Hazardous Substances) Act 1990, the
Planning (Consequential Provisions) Act 1990 and the
Planning and Compensation Act 1991
"the Rent" means the following yearly rents:
(A) Until the first Review Date:
FORTY FOUR THOUSAND FIVE HUNDRED AND TWENTY
FIVE POUNDS, ((pound)44,525) per annum
(B) during each successive Review Period: a yearly
rent equal to the rent previously payable under
this lease immediately prior to the relevant
Review Date (any suspension or reduction of
rent under sub-clause 5.3 being assumed for
these purposes not to have effect) or such
revised rent as may be determined in accordance
with the provisions of the Fourth Schedule
whichever is the higher
"the Rent Commencement means 1st November 1995
Date"
"Review Date" means the 1st day of May in the year 2000 (which is
the first Review Date) and in every fifth year
thereafter
"Review Period" means the period starting on any Review Date up to
and including the day before the next Review Date or
starting with the last Review Date up to the end of
the Term
"Service Charge" means the Interim Service Charge
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Instalments and the Negative Balance as defined in
Part 1 of the Second Schedule
"Service Media" means ducts, sewers, drains, watercourses, gutters,
downspouts, gaspipes and meters, electric wires and
meters, optical fibres, pipes and all other
conducting media
"the Sub-Station Lease" means a lease of the electricity substation site
shown coloured green on the Plan dated 12 April 1995
and made between the Landlord (1) and Southern
Electric plc (2) for a term of 50 years from 12
April 1995 at a peppercorn rent
"the Term" means the term of Fifteen years commencing on the
Term Commencement Date together with any lawful
period of holding over or extension under statute or
common law
"the Term Commencement means 1st May 1995
Date"
"VAT" means Value Added Tax and any similar tax from time
to time replacing or supplementing it____
1.14 Unless the context requires the expressions to be interpreted differently,
the terms relating to the Service Charge defined in the Second Schedule
and any other terms defined elsewhere in this lease, have the meanings set
out in their respective definitions when they are used in this lease____
2. THE DEMISE
IN consideration of the rents and covenants on the part of the Tenant and the
conditions reserved and contained in this lease THE LANDLORD DEMISES to the
Tenant the Demised Premises
2.1 TOGETHER WITH the following rights in common with the Landlord and its
other tenants and occupiers at Kembrey Park and all others authorised by
the Landlord____
2.1.1 the right to park 19 cars in accordance with the conditions
contained in the Third Schedule____
2.1.2 the right for the Tenant and those authorised by it to pass at all
times and for all purposes connected with the use from time to time
authorised of the Demised Premises___
2.1.2.1 with or without vehicles over such of the existing estate
roads as the Landlord (acting reasonably) may from
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time to time specify and
2.1.2.2 on foot only over such of the existing estate footpaths as
the Landlord (acting reasonably) may from time to time
specify____
or (in each case) such substituted roads and footpaths giving
adequate access to the Demised Premises as the Landlord may from
time to time reasonably direct____
2.1.3 the free and uninterrupted passage and running of gas water soil and
electricity and other things to and from the Demised Premises
through such Service Media as are intended to serve the Demised
Premises and which are now or may subsequently during the Term be
placed in under or about other parts of Kembrey Park and adjoining
or neighbouring property belonging to the Landlord or in respect of
which it is entitled to grant this right PROVIDED that:
2.1.3.1 the Landlord may at its discretion reroute any such Service
Media (but not so as permanently to curtail the supply or
passage of any service to the Demised Premises) and
2.1.3.2 neither this sub-clause nor any other provision of this
lease shall be interpreted as granting to the Tenant a right
to pass or receive electromagnetic or laser or intensified
light transmissions or signals across any property outside
the Demised Premises____
2.1.4 the right as often as necessary on reasonable written notice to
enter the units adjoining the Demised Premises and adjoining
property belonging to the Landlord for the purpose of inspecting
cleaning emptying repairing and renewing any of the Service Media
mentioned in sub-clause 2.1.3 or for the purpose of carrying out any
of the Tenant's obligations under this lease the Tenant remedying
any damage caused by such entry and exercising the right so as to
cause as little inconvenience to the Landlord and adjoining or
neighbouring tenants or occupiers as reasonably possible____
2.1.5 the right of support for the Demised Premises from the property
adjoining the Demised Premises____
2.1.6 the right to use any refuse collection or similar service provided
by the Landlord for the benefit of the Birch Phase
2.2 EXCEPT AND RESERVED to the Landlord and the tenants and other occupiers of
the Landlord's adjoining or neighbouring property and others entitled to
such rights____
2.2.1 the free and uninterrupted passage and running of
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gas water soil and electricity and other things to and from other
parts of Kembrey Park and any adjoining or neighbouring property
through the Service Media which are now or may subsequently during
the Term be placed in under or about the Demised Premises_____
2.2.2 the right for the Landlord and the tenants and occupiers of any
adjoining or neighbouring property as often as necessary on
reasonable notice to enter the Demised Premises for the purpose of
2.2.2.1 inspecting cleaning emptying repairing renewing installing
or adding to any of the Service Media mentioned in
sub-clause 2.2.1;
2.2.2.2 executing any works necessary in order to comply with the
requirements of any local or other Authority;
2.2.2.3 inspecting painting cleaning or repairing or altering or
carrying out other works on Kembrey Park or any part or
parts of Kembrey Park or any adjoining or neighbouring
property and/or any building thereon (or in the case of a
tenant of an adjoining unit for the purpose of performing
any of his obligations under his lease of that Unit) the
Landlord tenant or person so entering remedying any damage
caused by such entry and exercising this right so as to
cause as little inconvenience to the Tenant as is reasonably
practicable, or
2.2.2.4 exercising or carrying out its rights and obligations under
this lease____
2.2.3 the right to carry out the works for which the rights of entry set
out in sub-clause 2.2.2 are granted____
2.2.4 the right of support from the Demised Premises for the property
adjoining the Demised Premises____
2.2.5 all or any rights of light or other easements or quasi-easements (if
any) enjoyed by the Demised Premises over any other land or premises
or enjoyed by any other land or premises over the Demised
Premises____
2.2.6 the right to rebuild and make any additions or alterations in
adjoining or neighbouring property or buildings whether belonging to
the Landlord or not____
2.2.7 the right if any of the risks insured against by the Landlord occur
for the Landlord to enter onto the Demised Premises for the purpose
of inspecting and reinstating them and to remove from the Demised
Premises any property belonging to or under the control of the
Tenant so as to
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<PAGE>
facilitate the carrying out of the reinstatement PROVIDED THAT such
property shall be made available for collection by the Tenant at any
reasonable time by prior arrangement and shall be returned by the
Landlord once reinstatement is completed (or earlier if the Landlord
so requires) ____
2.3 AND SUBJECT to all rights and easements (if any) belonging to or enjoyed
by any adjoining or neighbouring property____
2.4 TO HOLD the Demised Premises (except and reserved and subject as mentioned
above) to the Tenant for the Term the Tenant YIELDING AND PAYING therefor
to the Landlord during the Term the Rent such Rent to be paid by four
quarterly payments in advance on the usual Quarter Days for payment of
rent in every year the first payment of one quarter's rent or a
proportionate part to be made on the Rent Commencement Date in respect of
the period from the Rent Commencement Date up to and including the day
prior to the next following Quarter Day AND ALSO YIELDING AND PAYING from
and including the Term Commencement Date by way of additional rents to the
Landlord:
2.4.1 the Service Charge____
2.4.2 the sums from time to time payable in accordance with the Tenant's
covenants in sub-clause 3.3
2.4.3 the sums from time to time payable in accordance with the Tenant's
covenants in sub-clause 3.4
2.4.4 the sums from time to time payable in accordance with the tenant's
covenants in sub-clause 5.2
2.4.5 all other sums which may from time to time be due from the Tenant to
the Landlord under this lease_____
3. THE TENANT'S COVENANTS
THE TENANT hereby COVENANTS with the Landlord as follows:
3.1 Rent
The Tenant will pay to the Landlord the Rent and Additional Rents on the
days and times and in the manner set out in this lease for payment of
those sums____
3.2 Rent to be paid in full
The Tenant will not reduce any payment of Rent or Additional Rent or
Service Charge by making any deduction from such payments or by setting
any sum off against it____
3.3 VAT
3.3.1 the Tenant will pay to the Landlord on demand any VAT (however it
arises) which may be chargeable
3.3.1.1 in respect of any payment (including the Rent) or
3.3.1.2 otherwise on any supply of goods or services by the Landlord
to the Tenant
under the terms of or in relation to this lease
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subject to receiving from the Landlord a proper VAT invoice in
respect thereof addressed to the Tenant
3.3.2 in every case where the Tenant has agreed to reimburse the Landlord
in respect of any payment by the Landlord under the terms of or in
connection with this lease the Tenant will also reimburse any VAT
paid by the Landlord on such payment. The obligation in this
sub-clause 3.3.2 applies only to the extent that the Landlord is not
able to recover such VAT as an input credit in its VAT
computations____
3.4 Outgoings
The Tenant will bear pay and discharge
3.4.1 all existing and future Impositions assessed charged or imposed on
the Demised Premises or on the owner or occupier in respect of the
Demised Premises and
3.4.2 save to the extent that such items form part of the Service Charge a
fair proportion (to be determined by the Landlord) of all existing
and future Impositions assessed charged or imposed on the Demised
Premises together with other property or on the owner or occupier of
the Demised Premises together with the owner or occupier of other
property in respect of the Demised Premises and that other property
except for Impositions payable by the Landlord (other than VAT) occasioned
by receipt of the rents under this lease or by any dealing with its
reversionary interest____
3.5 Interest
The Tenant will pay interest for each day late at an annual rate
equivalent to 4% over Lloyds Bank plc Base Rate or its equivalent for the
time being upon the Rent or other monies from time to time falling due by
the Tenant to the Landlord under this lease or arising out of or connected
with or referable to this lease (but not on interest payable under this
sub-clause) where such sums have been outstanding for more than seven days
after they have fallen due and whether (in the case of the Rent and the
Interim Service Charge Instalments and the VAT on the Rent and on the
Interim Service Charge Instalments) they have been formally demanded or
not such interest to be payable in respect of the period from the date on
which the Rent or other monies fall due to the date of payment and to be
payable at the rate mentioned above after as well as before any judgment
relating to the Rent or such other monies and to apply at that rate to any
costs fees or similar expenses properly incurred by the Landlord in
obtaining or enforcing any such judgment BUT so that the provisions of
this sub-clause 3.5 shall not restrict or cancel any other right which the
Landlord may have under this lease____
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3.6 Water, gas and electricity
The Tenant will pay for all water electricity or gas consumed on the
Demised Premises and will pay all standing or other related charges and
will observe and perform all regulations made by the relevant authorities
in respect of such services and will indemnify and keep indemnified the
Landlord at all times in respect of the non-payment non-observance or
non-performance of the water electricity or gas charges or all or any of
those regulations in respect of the Demised Premises during the Term____ -
3.7 Repair
The Tenant will
3.7.1 not do or permit to be done during the Term any damage or waste to
the Demised Premises or any of the fixtures and fittings in the
Demised Premises____
3.7.2 maintain and keep the Demised Premises in good and substantial
repair and condition____
3.7.3 make good all damage to the Demised Premises (but excluding damage
by fire and other insured risks except when the insurance monies are
rendered wholly or partly irrecoverable wholly or partly because of
the act neglect or default of the Tenant any subtenant or other
authorised occupier of all or part of the Demised Premises or its or
their respective servants agents or invitees) ____
3.7.4 not damage the fireproof paint coating used in the Buildings and the
Tenant will, in the event of such paint coating being damaged,
immediately replace the damaged area with a suitable coating in
accordance with the manufacturer's instructions and the directions
of the Landlord____
3.7.5 notify the Landlord of any requirement of which the Tenant has
become aware for the Landlord to carry out works as provided for in
sub-clause 4.2____
3.8 Redecoration
Without restricting or cancelling any other obligation of the Tenant under
this lease, the Tenant will
3.8.1 during every third year of the Term and during the last two months
(however the Term may come to an end) of the Term in a good and
workmanlike manner to the satisfaction in all respects of the
Landlord redecorate the whole of the interior of the Demised
Premises which has previously been or would usually be decorated
with appropriate treatment using only good quality materials____
3.8.2 during the last two months (however the Term may come to an end) of
the Term recarpet that part of the Demised Premises which was
carpeted at the beginning of the Term, with a carpet of no lesser
quality than the original, of a design and colour to be approved by
the Landlord____
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3.9 Notice to repair
The Tenant will
3.9.1 allow the Landlord at all reasonable times having given at least 48
hours written notice to the Tenant to enter the Demised Premises for
the purpose of examining the state and condition and use made of the
Demised Premises and of the fixtures and fittings in the Demised
Premises and of taking inventories of such fixtures and fittings and
drawing plans of the Demised Premises and giving and leaving upon
the Demised Premises for the Tenant notice in writing of any wants
of repair defects and misuse which have been discovered and for
which the Tenant may be liable under the covenants contained in this
lease and
3.9.2 if the Tenant fails to comply with such a notice as is mentioned in
sub-clause 3.9.1 within such time as may be reasonable in the
circumstances or in particular (and without restricting the rest of
this sub-clause 3.9.2) fails at any time to perform any of the
covenants set out in this lease relating to repair redecoration or
the carrying out of any works which ought to be carried out on the
Demised Premises by the Tenant permit the Landlord (but without
restricting or cancelling the right of re-entry contained later in
this lease) to enter upon the Demised Premises and repair redecorate
or carry out such works at the expense of the Tenant and the Tenant
will pay to the Landlord upon receiving a written demand the cost of
any such repair decorations or other works carried out by the
Landlord as mentioned above BUT so that such sums will bear interest
as mentioned in sub-clause 3.5 with such interest running from the
date on which the Landlord incurs the relevant expense____
3.10 Alterations
The Tenant will
3.10.1 not make any addition or alteration whatsoever to the Demised
Premises or any part of the Buildings not included in the Demised
Premises or to the Landlord's fixtures and fittings or arrangement
of the gas, heating, lighting, sanitary or other installations of
the Demised Premises or in any way cut, alter, injure or disfigure
any of the doors, ceilings, windows or walls of the Demised
Premises____
EXCEPT THAT the Tenant may
A. with the prior written approval of the Landlord (such
approval not to be unreasonably withheld or delayed)
carry out internal works which do not and are not likely to
affect the structure of the Buildings and
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B. without the need to obtain any consent from the Landlord and
so long as it first notifies the Landlord of such proposed
installation, removal or relocation instal remove or relocate
internal demountable partitioning____
3.10.2 not put up any aerial, mast, transmitter or any other item of
equipment on the outside of the Demised Premises____
3.10.3 on receiving a written request from the Landlord immediately pull
down and remove any erection, alteration or addition erected or
made in breach of sub-clause 3.10.1 or 3.10.2 and make good any
damage caused thereby BUT so that this sub-clause 3.10.3 shall not
in any way restrict or cancel any other remedy which the Landlord
may have____
3.10.4 not apply any substances (except for cleaning fluids approved by
the Landlord) or coating to the inside or outside of the windows of
the Demised Premises____
3.10.5 not without the Landlord's written consent (such consent not to be
unreasonably withheld or delayed) place any blind shutter or
curtain behind the windows____
3.11 Obstructions
The Tenant will not obstruct or interfere with the free use by the
Landlord and anyone else having the right to use them of the estate roads
and footpaths and other areas of Kembrey Park which are used in common and
the Tenant will not obstruct any part of the Demised Premises or exit
which the local Fire Officer requires to be used as a means of escape in
the event of fire or other emergency____
3.12 Alienation
3.12.1 The Tenant will not part with or share possession or occupation of,
or grant to anyone else any right over or interest in, the whole
(as opposed to part) of the Demised Premises except by an
assignment or underletting where the conditions of sub-clause
3.12.3 have been fulfilled____
3.12.2 The Tenant will not in any circumstances assign or underlet or part
with or share possession or occupation of, or grant to anyone else
any right over or interest in, any part or parts (as opposed to the
whole) of the Demised Premises____
3.12.3 The Tenant will not assign or underlet the whole of the Demised
Premises unless:
3.12.3.1 the Tenant first obtains the Landlord's written approval
(such consent not to be unreasonably withheld or delayed)
to the proposed assignment or underletting and the
identity of the proposed assignee or undertenant;
3.12.3.2 the proposed assignee or undertenant is a respectable and
responsible person;
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3.12.3.3 before the assignment or underletting is completed the
Tenant and the assignee or undertenant first execute a
counterpart licence in such form as the Landlord
reasonably requires permitting the assignment or
underletting and such licence is to include a direct
covenant by the assignee or undertenant with the Landlord
to observe and perform the covenants by the Tenant and the
conditions and provisions contained in this lease but so
that in the case of an undertenant the direct covenant
with the Landlord shall be limited to the duration of such
undertenant's lease and shall not include the covenant to
pay the rents reserved by this lease;
3.12.3.4 if the Landlord shall reasonably require there shall first
be obtained from one or more respectable and responsible
individuals or companies a direct joint and several
covenant in such form as the Landlord may reasonably
require with the Landlord (in the case of an assignment)
to pay the yearly rents and additional rents reserved by
this lease and (in the case of an assignment or
underletting) to make good any damage sustained by the
Landlord by reason of the proposed assignee's or
undertenant's failure to observe and perform any of the
other covenants by the Tenant or conditions or provisions
contained in this lease, and
3.12.3.5 in the case of an underletting (a) the underlease is in
terms similar (insofar as is consistent with the term of
the underlease) to this lease except that the undertenant
shall not be permitted to underlet or part with or share
possession or occupation of the whole or any part of the
premises underlet to it save by way of assignment of the
whole of the underlet premises and subject to first
obtaining the prior written consent of both the Tenant and
the Landlord for such an assignment (such consent not to
be unreasonbly withheld or delayed); (b) the Tenant and
the undertenant agree in the underlease that the
provisions of sections 24 to 28 inclusive of the Landlord
and Tenant Act 1954 are not to apply in relation
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to the tenancy to be created by the underlease and before
entering into that agreement the Tenant and the
undertenant obtain an order from a competent court
authorising them to do so;
(c) the rent under the underlease is not less than the
full market rent for the Demised Premises and the Tenant
may not charge any form of premium for granting the
underlease
(d) the underlease shall be capable of determination by
the Tenant (with no residual right on the part of the
undertenant in relation to the whole or any part of the
Demised Premises) if this lease is determined in
accordance with sub-clause 6.8
(e) the Tenant covenants with the Landlord that the Tenant
will not vary the underlease without first obtaining the
Landlord's written approval such consent not to be
unreasonably withheld or delayed____
3.12.4 If the Tenant determines this lease in accordance with sub-clause
6.8 the Tenant will ensure that every underlease of the Demised
Premises has also validly been determined by the Early Termination
Date and that no new underlease is created in its place____
3.12.5 For the purposes of this sub-clause 3.12 the word "underletting"
includes the creation of any derivative term and "underlease" and
"undertenant" have corresponding meanings and the word "assignment"
includes any assignment of the Term or any derivative term or any
estate or interest in the Demised Premises and "assign" has a
corresponding meaning_____
3.12.6 The Tenant will within twenty-eight days of every assignment
underlease or other transfer of the Demised Premises or any part of
the Demised Premises or other devolution of the interest of the
Tenant in the Demised Premises or of any derivative interest give
notice of that to the Landlord and at the same time will produce a
copy certified by a solicitor of the relevant assignment underlease
or other transfer or document effecting or evidencing such
devolution for registration with the Landlord and pay to it a
reasonable fee being not less than twenty-five pounds and VAT on
such fee for every such registration_____
3.12.7 Nothing contained in this sub clause 3.12 shall prevent the Tenant
from sharing occupation of the whole or any part or parts of the
Demised Premises with any one company ("the Group
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Company") which is for the time being a subsidiary of the Tenant or
the holding company of the Tenant or which is another subsidiary of
the holding company of the Tenant (in each case within the meaning
of Section 736 of the Companies Act 1985) subject to the following
conditions:-
3.12.7.1 no relationship of landlord and tenant shall be created or
be deemed to exist between the Tenant and the Group
Company____
3.12.7.2 the Group Company shall not be given exclusive occupation
of the whole or any part of the Demised Premises____
3.12.7.3 the right of any company to occupy the Demised Premises or
any part thereof shall determine upon such company ceasing
to be a Group Company or not later than the determination
(for any reason whatsoever) of the Term____
3.12.7.4 no transfer or creation of a legal estate shall take place
in connection with such sharing of occupation___
3.12.7.5 the Tenant shall give to the Landlord written notice of
the name and principal office of the Group Company prior
to its occupation____
3.12.7.6 the Tenant shall indemnify the Landlord against any
damages, claims, costs and expenses arising directly or
indirectly from such occupation by the Group Company____
3.13 Access
The Tenant will permit the Landlord and the other persons mentioned in
sub-clause 2.2.2 to exercise the rights excepted and reserved by that
sub-clause____
3.14 Use
The Tenant will not use or occupy the Demised Premises or any part of the
Demised Premises otherwise than for the uses specified in paragraphs B1
and B8 of the Schedule to the Town and Country Planning (Use Classes)
Order 1987 as that order applies at the date of this lease____
3.15 Nuisance
The Tenant will
3.15.1 not do anything which is, or omit to do anything and thereby cause,
a nuisance to the Landlord or any of the tenants of the Landlord or
the occupiers of any adjoining or neighbouring property or which is
or may be detrimental to the Demised Premises or the amenities of
the neighbourhood____
3.15.2 (without restricting sub-clause 3.15.1 or any other provision of
this lease) not
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3.15.2.1 use the Demised Premises for any immoral or disreputable
purpose;
3.15.2.2 hold any auction on the Demised Premises;
3.15.2.3 use all or any part of the Demised Premises for the
repair, maintenance, breaking or storage of motor
vehicles;
3.15.2.4 use all or any part of the Demised Premises for the
display of items for sale, or
3.15.2.5 allow or cause any noise at or near the Demised Premises
which annoys any neighbouring owner or occupier or exceeds
any noise level limits from time to time in force (whether
in relation to health and safety, as a condition of any
planning permission, or otherwise) ____
3.15.3 from time to time pay all costs charges and expenses which may
properly be incurred by the Landlord in abating any nuisance upon
the Demised Premises caused by any act or omission of the Tenant or
in executing all such works as may be necessary for abating any
such nuisance in obedience to any notice requiring the nuisance to
be stopped____
3.16 Compliance with statutes
The Tenant will
3.16.1 at all times during the Term conform in all respects with the
provisions of any instruments and regulations under any general or
local Act of Parliament and any instrument, rule, regulation or
order made under any such Act and with the Bye-Laws and regulations
of any local or other authority or supply company (whether already
or hereafter to be enacted or made) which may be applicable to the
Demised Premises or any part thereof and in particular will not do
or omit any act matter or thing in on or respecting the Demised
Premises which may be required to be omitted or done (as the case
may be) by the Planning Acts, the Factories Acts 1961, the Offices
Shops and Railway Premises Act 1963, the Fire Precautions Act 1971,
the Health and Safety at Work Act 1974 or the Environmental
Protection Act 1990____
3.16.2 at all times hereafter indemnify and keep indemnified the Landlord
against all proceedings costs expenses claims and demands in
respect of any contravention by the Tenant or other occupier of the
Demised Premises of any of the provisions of the said Acts,
Bye-Laws, instruments, rules, regulations and orders or in respect
of the Demised Premises____
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3.17 Easements
The Tenant will
3.17.1 not stop up darken or obscure any window glass door or light nor
give permission for any new window light opening doorway path
passage drain or other encroachment to be made nor permit any
easement to be acquired over or against the Demised Premises and
3.17.2 if any encroachment or easement shall be made or threatened to be
made or if any window or opening shall be made or opened or
threatened to be made or opened in any neighbouring building
(whether erected before or after the date this lease) or relating
to any neighbouring land which if not obstructed may by lapse of
time confer on the owner of any neighbouring property a right of
such access of light forthwith give written notice to that effect
to the Landlord and permit the Landlord and its agents to enter on
the Demised Premises and inspect the Demised Premises and will at
the joint cost of the Landlord and the Tenant do all things which
the Landlord may consider proper for preventing the making of such
encroachment or the acquisition of such right or easement____
3.18 Safe use of the Demised Premises
The Tenant will ensure that
3.18.1 nothing of an explosive or highly inflammable nature shall be
brought into or stored in the Demised Premises or Kembrey Park
unless
3.18.1.1 such substances are kept in a proper container
intended for that purpose
3.18.1.2 the other provisions of this lease (including but in no
way limited to sub-clauses 3.15, 3.16 and 3.20) are
complied with and
3.18.1.3 the Landlord has first given its written consent (such
consent not to be unreasonably withheld or delayed)____
3.18.2 no engine machinery safe or other heavy article which in the
reasonable opinion of the Landlord is likely to affect the
stability of the structure of the Buildings or any adjoining or
neighbouring property or building shall be brought into or stored
in the Demised Premises____
3.18.3 no petrol driven vehicle shall be taken or driven into the Demised
Premises except:
3.18.3.1 for loading and unloading
3.18.3.2 whilst there are representatives of the Tenant at the
Demised Premises____
3.18.4 no goods or signs are stored or placed in the adjacent roads,
paths, loading areas or car parking areas____
3.18.5 the Demised Premises are equipped with good and
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sufficient fire fighting equipment of a type to comply with the
requirements of the local Fire Officer and will ensure that such
equipment is maintained in good working order____
3.18.6 no process is carried out or equipment kept or used on the Demised
Premises which may damage the Demised Premises, the Buildings, or
any other property or may interfere with processes carried out or
equipment used elsewhere in Kembrey Park or on any other property,
or which may interfere with the transmission of electromagnetic
waves or intensified light beams across Kembrey Park____
3.19 Signs
The Tenant will not exhibit either on the external walls or in or on the
windows or on the doors of the Demised Premises or so as to be visible
from outside the Demised Premises any notice sign or announcement____
3.20 Regulations
The Tenant will perform and observe or cause to be performed and observed
by anyone whom the Landlord reasonably regards as being under the Tenant's
control such rules and regulations as the Landlord may from time to time
make for the management of Kembrey Park and the orderly and proper use of
the roads footpaths and common areas of Kembrey Park____
3.21 Notices received
The Tenant will
3.21.1 notify the Landlord within seven days (or sooner if necessary) of
receiving them of all notices orders and proposals (including
rating proposals) served under any Statute order regulation
instrument or bye-law on the Tenant or the Demised Premises____
3.21.2 if required by the Landlord produce such notices orders and
proposals to the Landlord or its agents____
3.21.3 not agree or consent to any such proposals without the Landlord's
prior written approval____
3.21.4 if required by the Landlord at the joint expense of the Landlord
and the Tenant join with the Landlord in objecting to or appealing
against any such notices orders and proposals____
3.22 Landlord's costs
The Tenant will pay to the Landlord all costs charges and expenses
(including legal costs and fees payable to a Surveyor) which may properly
be incurred by the Landlord
3.22.1 in or in contemplation of any proceedings under Sections 146 and
147 of the Law of Property Act 1925 notwithstanding that forfeiture
is avoided otherwise than by relief granted by the Court____
3.22.2 in so far as such costs, charges and expenses are reasonable in
considering and (if appropriate)
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granting any request by the Tenant for the Landlord's permission
where required by this lease____
3.22.3 in or relating to the preparation, service and negotiation of any
schedule of dilapidations which have occurred during the Term
(whether the preparation, service and negotiation takes place
before or after the end of the Term) ____
3.22.4 in enforcing against the Tenant the provisions of this lease____
3.23 Planning applications
The Tenant will not apply for any planning permission or enter into any
agreement under the Planning Acts relating (in either case) to the Demised
Premises or to their use or alteration without the Landlord's written
consent____
3.24 Indemnity in respect of Outgoings
The Tenant will
3.24.1 indemnify the Landlord against any Imposition which either during
the Term or at any time after the determination of the Term becomes
payable by the Landlord in respect of the Demised Premises or any
other property whatsoever by reason of any act or omission of the
Tenant including any application for or obtaining of planning
permission in respect of the Demised Premises or any adjoining
property any alteration repair or reinstatement and any development
or disposal (by way of assignment sub-letting or otherwise
howsoever) of the Demised Premises or any part of the Demised
Premises____
3.24.2 be bound by the provisions of this sub-clause 3.24:
3.24.2.1 whether or not the act or omission of the Tenant was
authorised by this lease or by the Landlord and whether or
not the act or omission is in breach of any of the
covenants on the part of the Tenant contained in this
lease, and
3.24.2.2 whether or not the Term has already come to an end____
AND the parties agree that no one part of this sub-clause 3.24
shall be considered as restricting or cancelling any other part of
the sub-clause____
3.25 Reletting or sale
The Tenant will permit the Landlord or its agents at any time within the
six months before the Term is due or expected to come to an end in the
case of a reletting or at any time in the case of a disposal of a
reversionary interest in the Demised Premises to enter on the Demised
Premises and to affix on any suitable part or parts of the Demised
Premises a notice board or notice boards for reletting or otherwise
disposing of the Demised Premises
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and will allow the Landlord to show the Demised Premises to anyone who
wishes to view them and has the permission of the Landlord to do so BUT so
that this shall be done in such a way as shall not unreasonably interfere
with the Tenant's course of business____
3.26 Handing back of the Demised Premises
The Tenant will at the time at which the Term expires or otherwise ends
3.26.1 peaceably and quietly leave surrender and yield up to the Landlord
the Demised Premises together with the Landlord's fixtures and
fittings which at any time shall be erected on or used on or
fastened to the Demised Premises, and all improvements and
additions to the Demised Premises and those fixtures and fittings,
repaired redecorated and treated in accordance with the Tenant's
obligations under this lease____
3.26.2 unless requested in writing by the Landlord not to do so remove all
tenants fixtures and fittings (including all tenant's partitioning
and cabling) installed by the Tenant or any previous tenant or
other occupier during the Term or by the Tenant during the term
granted by any previous lease of the Demised Premises and to make
good to the Landlord's satisfaction any damage caused to the
Demised Premises by such removal or by the original
installation____
3.27 Restrictions on pollution
Without restricting or cancelling any of its other obligations under this
lease, the Tenant will
3.27.1 not permit the discharge release or escape of any fuel gas toxic
substance or pollutant from the Demised Premises other than in
accordance with all statutory requirements____
3.27.2 not create any environmental hazard or detriment by the storage
escape or release of any gas substance or liquid in such quantity
(whether that quantity by itself or cumulatively with other
deposits of the same or different gases substances or liquids) as
to subject persons or animals or vegetation to a material risk of
death injury or impairment of health and/or as to threaten the
pollution (whether on the surface or underground) of any water
supply____
3.27.3 upon the Determination of the Term to make good the Demised
Premises and the surrounding area so as to remove all toxic harmful
and polluting substances which have been deposited or released
during the Term (or during any previous period of occupation by
Tinsley Robor plc) by the Tenant or other authorised occupier of
all or part of the Demised Premises or by anyone for whom the
Landlord reasonably regards the Tenant or
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authorised occupier as being responsible. The obligation in this
sub-clause 3.27.3 includes (but is not limited to) an obligation to
remove all polluted and or toxic earth, topsoil, substances, gases
and liquids and to dispose of those items in a recommended and
statutorily approved and safe manner and (where appropriate) to
replace them with non-toxic materials so as to yield up the Demised
Premises in a non-polluted and toxic-free state of repair and
condition____
4. THE LANDLORD'S COVENANTS
THE LANDLORD hereby COVENANTS with the Tenant as follows:
4.1 Quiet enjoyment
So long as the Tenant pays the Rent and Additional Rents and performs and
observes the covenants on the Tenant's part contained in this lease, the
Tenant shall during the Term quietly enjoy the Demised Premises without
interruption by the Landlord or any person lawfully claiming under or in
trust for it_____
4.2 Services
The Landlord will use all reasonable endeavours to provide the services
set out in Part 2 of the Second Schedule in accordance with and subject to
such conditions and provisions relating to those services as are contained
in the Second Schedule and elsewhere in this lease, but shall be under no
liability to the Tenant for failure to provide those services due to
circumstances beyond the reasonable control of the Landlord____
4.3 The Substation Lease
Neither the Landlord nor its successors in title shall without the prior
written consent of the then Tenant accept a surrender or take any steps to
forfeit or otherwise determine the Substation Lease whilst this lease (or
any statutory continuation of it) remains in place provided that:
4.3.1 the Tenant shall not unreasonably withhold or delay the giving of
such consent;
4.3.2 such consent shall not be necessary where, before or at the same
time as the Substation Lease is determined, an alternative
substation lease is entered into for a substation capable of
providing an equivalent or greater supply to the Demised Premises,
and
4.3.3 if the Landlord wishes to determine the Substation Lease because of
some breach of covenant by the tenant of that lease the Tenant
indemnifies the Landlord against any loss or damage which the
Landlord suffers by reason of being precluded from determining the
Substation Lease____
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5. INSURANCE
5.1 The Landlord's obligations
The Landlord covenants with the Tenant that the Landlord will:
5.1.1 subject to the usual excesses and conditions keep the Buildings and
the Landlord's fixtures and fittings in the Demised Premises insured
with an insurer of repute in their full reinstatement value
(including loss of Rent and Service Charge for three years (or such
longer period as the Landlord shall consider appropriate) and
architects and surveyors fees payable on rebuilding and any
resulting VAT) against loss or damage by fire and (subject to
insurance against such risks being readily available on the United
Kingdom insurance market) aircraft, explosion, earthquake, riot,
malicious damage, storm, flood, escape of water or oil, impact,
theft, sprinkler leakage, subsidence and accidental damage and such
other risks as the Landlord may require and will pay all premiums
necessary for that purpose
5.1.2 if the Buildings are damaged or destroyed by a risk against which
the Landlord is obliged under this lease to insure them and subject
to obtaining all necessary consents to cause all insurance monies
received (except those for loss of Rent and Service Charge) to be
applied in making good the damage for which the monies have been
received or (as the case may be) in rebuilding the Buildings (but
not so as to provide accommodation identical in layout if it would
not be reasonably practicable to do so) PROVIDED THAT the Landlord
shall not be obliged to lay out such monies if and to the extent
that:-
5.1.2.1 such making good or rebuilding is rendered impracticable by
causes beyond the Landlord's control in which case the whole
of such monies shall belong to the Landlord absolutely upon
service by the Landlord upon the Tenant of a notice stating
that this is the case and thereupon this lease shall
immediately determine (though without restricting or
cancelling the rights of the Landlord and the Tenant against
the other in respect of any previous breach of the
provisions of this lease), or
5.1.2.2 payment of any insurance monies shall be properly refused by
reason of any act or default of the Tenant (unless the
Tenant pays to the Landlord an amount equal to the amount
payment of which shall have been refused) or the Tenant has
failed to make the payments referred to in sub-clause 5.2.1
and
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5.2.2____
5.1.3 at the reasonable request and at the expense of the Tenant provide
particulars of the policy and a schedule of the risks covered
together with adequate evidence that the policy is in force____
5.1.4 notify the Tenant from time to time of any material change in the
risks insured against under sub-clause 5.1.1____
5.2 The Tenant's obligations
The Tenant covenants with the Landlord that the Tenant will:
5.2.1 pay to the Landlord from time to time within seven days of receiving
a request for it a sum equivalent to the insurance premiums paid by
the Landlord in accordance with sub-clause 5.1.1 or (if the premiums
relate also to other property) a sum equivalent to a fair proportion
as determined by the Landlord's Surveyor of the amount of such
premiums____
5.2.2 pay to the Landlord from time to time within seven days of receiving
a request for it a sum equal to the sum or sums which the Landlord
shall from time to time pay by way of premium for effecting or
maintaining insurance indemnifying the Landlord against any
liability for damages and any claims costs and expenses arising from
any accidental injury to or disease suffered by any person or any
accidental damage to property caused by the state or condition of
the Buildings or any equipment within the Buildings or any part of
the Buildings and in particular but without restricting the meaning
of the rest of this sub-clause 5.2.2 any liability on the part of
the Landlord under the Defective Premises Act 1972 or (if the
premiums relate also to premises other than the Demised Premises) a
sum equivalent to a fair proportion as determined by the Landlord's
Surveyor of the amount of such premiums____
5.2.3 pay to the Landlord from time to time within seven days of receiving
a written request for it a sum equal to any excess or insured's
contribution in relation to a claim made or to be made by the
Landlord under any policy or policies of insurance mentioned in
sub-clause 5.1.1 or 5.2.2____
5.2.4 (without restricting or cancelling any other obligation on the
Tenant under this lease and so that sub-clauses 5.2.4.1 and
5.2.4.2 shall be construed independently)____
5.2.4.1 not do anything whereby any policy of insurance taken out by
the Landlord on including or in any way relating to the
Demised Premises or the Buildings or any neighbouring
property of the Landlord may become void or voidable or
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(unless the payment of the increased premium is with the
prior agreement of the Landlord undertaken by the Tenant)
whereby the rate of premium may be increased____
5.2.4.2 in the event of any additional or increased premium becoming
payable in respect of the Demised Premises or all or any
part of the Buildings or any neighbouring property of the
Landlord by reason of the trade or business carried on in or
upon the Demised Premises or anything done or kept on the
Demised Premises being deemed a hazardous or special risk by
the Landlord's insurers pay within seven days of demand such
additional premium or increased premium in full to the
Landlord or to its insurers as the Landlord may direct____
5.3 Suspension of Rent
5.3.1 If the Buildings or any part of the Buildings shall be so destroyed
or damaged by fire or any other risk against which the Landlord is
by this lease obliged to insure as to render the Demised Premises
unfit for occupation and use or inaccessible then (unless
A. the insurance of the Buildings by the Landlord shall have been
vitiated or payment of the policy monies wholly or partly
refused wholly or partly by reason of any act neglect or
default of the Tenant any subtenant or other authorised
occupier of all or part of the Demised Premises or its or
their respective servants agents or invitees and
B. the Tenant has not paid to the Landlord an amount equal to the
amount payment of which shall have been refused)
5.3.1.1 the Rent or a fair and just proportion of it
(according to the nature and extent of the damage
sustained) shall be suspended from the date of such
destruction or damage until the Demised Premises shall
have been rebuilt or reinstated and rendered fit for
occupation and use and accessible (or until the
expiration of the period of three years from the date
on which such destruction or damage occurred if that
is earlier), and
5.3.1.2 if by the expiry of the period of three years less one
month from the date of such destruction or damage the
Demised Premises shall not have been rebuilt or
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reinstated and rendered fit for occupation and use and
accessible the Tenant may serve on the Landlord one
month's notice in writing of its intention to
determine this lease____
5.3.2 the Tenant may not serve such a notice as is mentioned in sub-clause
5.3.1.2 after the Demised Premises have been rebuilt or reinstated
and rendered fit for occupation and use____
5.3.3 on the expiry of such notice as is mentioned in sub-clause 5.3.1.2
this lease shall determine (though without restricting or cancelling
the rights of the Landlord and the Tenant against the other in
respect of any previous breach of the provisions of this lease) ____
5.3.4 if the Landlord insures against loss of Rent for a period longer
than three years then the references to a three year period in
sub-clauses 5.3.1.1 and 5.3.1.2 shall be treated as references to
such longer period____
5.3.5 in the event of any dispute as to the amount or period of such
abatement as is mentioned in sub-clause 5.3.1.1 or as to whether the
Demised Premises have been rebuilt, reinstated or rendered fit for
occupation and use and accessible the dispute shall be referred to
arbitration in accordance with the provisions of the Arbitration
Acts 1950 and 1979 and if the parties cannot agree on the identity
of the arbitrator he shall be nominated on the application of either
party to the President of the Royal Institution of Chartered
Surveyors or his deputy____
5.4 Alternative Arrangements for repayment of insurance premium
The Landlord may, during such periods as it elects, recover all or part of
the sums mentioned in sub-clauses 5.2.1 and 5.2.2 by including the
relevant premiums in the amount of the Service Charge so that the
arrangements for payment by the Tenant shall be as for the rest of the
Service Charge____
6. FURTHER PROVISIONS
THE parties also agree:-
6.1 Forfeiture
Whenever:
6.1.1 the Rent or the Additional Rents or any part of them are in arrears
for 14 days or more after having become due (whether demanded
formally or not);
6.1.2 the Tenant has not complied with any obligation on its part
contained in this lease;
6.1.3 when the Tenant is one or more individuals: that individual is, or
one or more of those individuals is or are, adjudicated bankrupt or
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has a receiving order made against him or an interim receiver is
appointed of the property of the Tenant or one or more of the
tenants;
6.1.4 when the Tenant is one or more companies; it or one of them goes
into compulsory or voluntary liquidation (unless that is solely for
the purpose of amalgation or reconstruction when solvent), an
administrative receiver or receiver of it (or one of them) is
appointed, or an administration order is made in respect of it (or
one of them), or
6.1.5 the Tenant (or if the Tenant is more than one person one or more of
the tenants) shall enter into any arrangement with its creditors or
shall suffer any distress or execution to be levied on his goods or
the Demised Premises or shall grant a bill of sale on any goods or
fittings at the Demised Premises____
then the Landlord may forfeit this lease by entering (itself or through
agents) any part of the Demised Premises in the name of the whole of the
Demised Premises____
BUT such forfeiture does not cancel, reduce or restrict any right of
action or remedy of the Landlord in respect of any breach prior to such
forfeiture by the Tenant of its obligations under this lease or the amount
of damages which the Landlord may claim____
6.2 Alterations to other property
The Landlord and others may carry out works and erections upon and to that
part of the Buildings not comprised in the Demised Premises and upon and
to adjoining or neighbouring property notwithstanding that the amenities
and access of light and air to the Demised Premises may be diminished or
otherwise affected____
6.3 Electromagnetic and light based transmissions
The Landlord and others authorised by it may transmit electromagnetic
waves and laser or intensified light beams across all of Kembrey Park
including (unless this disrupts any process being carried out or equipment
operated on the Demised Premises) the Demised Premises____
6.4 Limitation of Landlord's liability
6.4.1 Except as expressly provided by clause 4 hereof and/or in so far as
the matters and things mentioned in this sub-clause 6.4 are included
in the insurance referred to in sub-clauses 5.1.1 and 5.2.2 the
Landlord shall not be liable to the Tenant or to any other person
for any accidental loss or damage which may at any time during the
Term be occasioned or suffered by the Tenant or any other person or
to the Demised Premises or to any goods or property of the Tenant or
any other person by reason of any breakdown, bursting, stoppage,
leakage, breakage, defect or damage of or in any pipes, taps, mains,
cisterns, wires,
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apparatus or machinery in or in connection with or used for the
purposes of the Demised Premises or any adjoining or neighbouring
property nor for the absence or lack of light in or to the Demised
Premises and the Landlord shall not be liable to any other person
not a party to this lease to perform any of the covenants herein
contained in this lease whether express or implied in so far as such
covenants impose obligations going beyond the common duty of care
imposed by the Common Law or the Occupiers Liability Act 1957
6.4.2 The Landlord shall not be responsible for or incur any liability in
respect of any communication from or to, or property of, the Tenant
which may be left with or entrusted to servants employed by the
Landlord___
6.5 Planning restrictions
Nothing contained in this lease
6.5.1 shall render the Landlord or the Tenant liable in respect of any of
the covenants conditions and provisions contained in this lease if
and so far only as the performance or observance of them or any one
or more of them shall after the date of this lease become a
contravention of or otherwise impossible or illegal under or by
virtue of the Planning Acts but subject as mentioned above in this
sub-clause 6.5.1 the Term and the rents payable to the Landlord
shall not determine solely because of any changes or modifications
or restrictions of user of the Demised Premises or obligations made
or imposed after the date of this lease under or by virtue of the
Planning Acts or any revocation or withdrawal or the alteration of
any conditions attached to or the imposition of further conditions
in respect of any permission for development already granted in
respect of the Demised Premises under the Planning Acts____
6.5.2 shall be deemed to constitute any warranty by the Landlord that the
Demised Premises or any part of the Demised Premises are presently
or will in the future be authorised under the Planning Acts for use
for any specific purpose____
6.6 Service of notices
Subject to sub-clause 1.7 Section 196 of the Law of Property Act 1925 as
amended shall apply to all notices served under this lease____
6.7 VAT
Unless the contrary is expressly stated sums and payments expressed or
referred to in this lease are exclusive of VAT which (if chargeable) shall
be paid in addition by the party paying such sums or making such
payment____
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6.8 Option to determine
6.8.1 If the Tenant
6.8.1.1 wishes to determine the Term on the Early Termination Date;
6.8.1.2 gives to the Landlord prior written notice of not less than
twelve months and one day to that effect;
6.8.1.3 shall up to the Early Termination Date have paid the rents
hereby reserved and there shall not be subsisting either at
the time the notice is served or at the Early Termination
Date any material breach by the Tenant of the covenants and
obligations on the part of the Tenant contained in this
lease, and
6.8.1.4 gives vacant possession of the Demised Premises to the
Landlord
then at 11.59 pm on the Early Termination Date this lease and
everything contained in it shall cease and be void____
6.8.2 The determination of the Term in accordance with sub-clause 6.8.1
shall not cancel or restrict the rights and remedies of either party
against the other in respect of any antecedent claim or breach of
covenant_____
6.8.3 For the purposes of this sub-clause 6.8 time shall be of the
essence____
IN WITNESS whereof this deed has been executed by the parties and has been
delivered on the date written at the start of the document____
FIRST SCHEDULE
"The Demised Premises"
Part 1
Items excluded from the Demised Premises
1. The structural frame and columns, the cladding and the cladding frame, the
external windows, the external window frames, the external doors and
external door frames of the Buildings____
2. The concrete screeds, slabs, beams and decks being the floors of the
Buildings
3. The foundations supporting the Buildings____
4. The beams and roof deck and all other elements of the roof of the
Buildings____
5. Insulation materials within the walls or roof of the Buildings____
6. Any airspace above the roof of the Buildings or ground below the
Buildings____
Part 2
Items included in the Demised Premises
1. The plaster finishes other wall and floor coverings and paintwork inside
the Demised Premises____
27
<PAGE>
2. The internal block walls in the Demised Premises
3. The ceiling tiles and lighting units inside the Demised Premises____
4. Any Service Media that exclusively serve the Demised Premises____
5. All additions and improvements to the Demised Premises____
6. All the Landlord's fixtures and fittings and any other fixtures (including
the carpets) which are in or attached to or which may in the future be in
or attached to the Demised Premises except for those which are installed
by the Tenant and can be removed without defacing the Demised Premises____
THE SECOND SCHEDULE
The Service Charge
Part 1
Payment of the Service Charge
1. "The Capped Service Charge Contribution" means
A. During the first year of the Term: (pound)6,730.80
B. During each of the second, third, fourth and fifth years of the Term
a sum calculated as follows:
The last published Index prior to the start of the
relevant year of the Term
(pound)6,730.80 x __________________________________________________
The last published Index prior to the start of the
Term____
"The Expenditure" means the amount which the Landlord spends in providing
the services set out in Part 2 of this Schedule____
"The Final Service Charge" means
A. during each of the first five years of the Term:
the lesser of:
(a) the Tenant's proportion of the Expenditure and
(b) the Capped Service Charge Contribution
B. during each year after the end of the fifth year of the Term: the
Tenant's proportion of the Expenditure
the Tenant's proportion in each case to be calculated as set out in Part 3
of this Schedule____
"Index" means the "all items" index figure of the Index of Retail Prices
published by the Department of Employment or any successor Ministry or
Department____
"The Interim Service Charge Instalment" means a payment to be made by the
Tenant on such dates as the Landlord may require (though not more
frequently than every month) on account of the Final Service Charge, the
amount of the Interim Service Charge Instalment being such sum as will, if
the Interim Service Charge Instalments are made on the stipulated days
result in the Tenant having paid to the Landlord at the end of the
relevant Service Charge Year such sum as the Landlord anticipates will be
the Final Service Charge____
"The Service Charge Year" means each successive period beginning on 1st
April and ending on 31st March in each year or such other period as the
Landlord may from time to
28
<PAGE>
time notify in writing to the Tenant____
2. The Landlord must
2.A keep an account of the Expenditure____
2.B prepare and deliver to the Tenant within 9 calendar months after the
end of each Service Charge year a statement ("the Service Charge
Statement") for each Service Charge Year which
2.B.a states the Expenditure for the relevant Service Charge Year
with sufficient particulars to show the amount spent on each
major category of expenditure;
2.B.b states the amount of the Final Service Charge;
2.B.c states the total of the Interim Service Charge Instalment paid
by the Tenant, and
2.B.d states the amount by which the Final Service Charge exceeds
("Negative Balance") or falls short of ("Positive Balance"),
the total of the Interim Service Charge Instalments
2.B.e states the Tenant's proportion applied to each major category
of expenditure____
PROVIDED THAT any failure by the Landlord to produce such statement
within the 9 month period mentioned shall not cancel or restrict the
Tenant's obligation to pay the Service Charge, any Interim Service
Charge Instalment or any Negative Balance
3. The Tenant must pay the Interim Service Charge Instalment on the dates
stipulated by the Landlord____
4.A If a Service Charge Statement shows a Negative Balance then the Tenant
must pay that sum to the Landlord within fourteen days of receiving the
Service Charge Statement____
4.B If a Service Charge Statement shows a Positive Balance then the Landlord
must either credit the amount of such balance towards the sum which has
fallen or will fall due from the Tenant in respect of the Interim Service
Charge Instalments for the following Service Charge Year or (where a
Positive Balance is calculated after the end of the Term) within fourteen
days of producing the Service Charge Statement pay to the Tenant the
amount of the Positive Balance____
5. Every Service Charge Statement is conclusive as to the information set out
in it____
6A. If the basis for the calculation of the Index is changed and any method of
reconciliation between the new and old figures is officially published,
that method is to be used for the purpose of comparisons under this part
of this Schedule
6B. If
(a) the basis for the calculation of the Index is changed and no method
of reconciliation between the new and old figures is officially
published or
(b) the Index ceases to be published
29
<PAGE>
then the Capped Service Charge Contribution shall be adjusted each year
(until and including the fifth year of the Term) by reference to such
other index of costs or prices as the Landlord may from time to time
reasonably specify____
7. The Tenant may, if it pays the Landlord's reasonable costs of such
exercise, on reasonable prior notice to the Landlord inspect such of the
books, records, invoices and accounts relating to the Service Charge and
the preparation of the Service Charge Statement as it may reasonably
request____
Part 2
The Services
A. The whole of Kembrey Park
1. Except for such parts of Kembrey Park for which any tenant is responsible and
for parts which are available for letting:
(a) Periodically inspecting, examining, maintaining, repairing, amending,
lighting, cleansing, painting, decorating, overhauling and where necessary
replacing any and every common part of Kembrey Park including the estate
buildings, courtyards, parking spaces, access roads, ramps, pavements,
ways, fences, sewers, drains, pipes, watercourses, cables, plant,
machinery, apparatus, fixtures and fittings and appurtenances there_____
(b) Tending and keeping tidy and planting with such flora as the Landlord
shall reasonably deem to be appropriate the areas of land within Kembrey
Park____
(c) The supply and maintenance of such fire fighting and alarm equipment on
Kembrey Park as may be provided by the Landlord or as may be required to
be supplied and maintained by the Landlord's insurers, by statute, or by
the Fire Authority for the district____
(d) The payment of all insurance premiums, rates, charges, assessments,
impositions and other outgoings payable by the Landlord in respect of all
common parts of Kembrey Park and the estate buildings there____
2. The control and eradication of any pests in or about Kembrey Park including
the Demised Premises____
3. The provision of such medical and security services as the Landlord may
reasonably deem necessary____
4. The employment of such staff as the Landlord may reasonably deem necessary
for the performance of the duties and services in and about Kembrey Park and all
incidental expenditure in relation to such employment (including but without
limiting the generality of such provision the payment of the statutory and such
other insurance, health, pension, welfare and other payments, contributions,
taxes and premiums) and the cost of entering into any contracts for the carrying
out of all or any of the said duties and services that the Landlord may
reasonably deem desirable or necessary and the provision of estate buildings,
medicines, medical equipment, uniforms, working clothes, tools,
30
<PAGE>
appliances, cleaning and other materials, bins, receptacles, fixtures and
fittings and other equipment for the proper performance of their duties and for
the general management security maintenance and cleanliness of Kembrey Park and
all parts thereof____
5. Making repairing maintaining rebuilding and cleansing all ways roads
pavements sewers drains pipes watercourses party walls party structures party
fences walls or other conveniences which may belong to or be used for Kembrey
Park in common with other premises near or adjoining thereto____
6. Taking all steps reasonably deemed desirable or expedient by the Landlord for
complying with, making representations against or otherwise contesting, the
incidence of the provisions of any legislation or orders or statutory
requirements thereunder concerning town planning, public health, highways,
streets, drainage or other matters relating to or alleged to relate to Kembrey
Park for which the Tenant is not directly liable____
7. Complying with any statutory requirement in respect of Kembrey Park made for
the benefit or protection of the occupiers_____
8. Disposing or arranging the disposal of waste from all or part of Kembrey
Park____
9. Where the Landlord has been advised by its environmental engineers to carry
out such work or to take such measures, any reasonable work done or measures
reasonably taken to counteract prevent or reduce the likelihood of the spread or
presence of any virus bacteria or other dangerous substance within or around the
Kembrey Park____
10. All reasonable fees properly incurred by the Landlord or its managing agents
(if any) in connection with general management or maintenance of Kembrey Park
and so that the Landlord may if it so elects (such election to be notified to
the Tenant in writing) for such period as it does not employ and charge for
managing agents charge a management fee to be fixed by the Landlord but not to
exceed 10% of the total of the items (excluding this paragraph 10) set out in
this part of this schedule____
11. Such additional services as the Landlord may now or at any time in the
future reasonably decide to be in the interests of good estate management and
for the benefit of the tenants at Kembrey Park generally____
12. Reasonable provision for anticipated expenditure in respect of the foregoing
as the Landlord or its agents may in its or their reasonable discretion
determine____
B. The Birch Phase
1. The keeping in good and substantial repair and condition (including external
decoration) and (where the Landlord considers appropriate) renewal of the whole
or any part of so much of the Buildings as is not comprised in the Demised
Premises and as would not form part of the demise of any other unit within the
Birch Phase were all such units let on terms similar to this lease including
reasonable provision for anticipated expenditure in respect of such work as the
Landlord or its agents may in its
31
<PAGE>
or their reasonable discretion determine____
2. The regular inspection maintenance repair and (where the Landlord considers
appropriate) replacement or renewal of the heating (including the plumbing for
the heating), ventilation and electrical systems and the fire fighting equipment
and fire and intruder alarm equipment at the Buildings where these have been
installed by the Landlord____
3. The external and internal cleaning of all windows and external cladding to
the Buildings____
4. Disposing or arranging the disposal of waste from all or any part of the
Birch Phase____
5. Taking out such insurance or maintenance contracts as the Landlord reasonably
considers appropriate relating to any such items or services as are mentioned in
this Part 2B of the Second Schedule
6. All reasonable fees properly incurred by the Landlord or its managing agents
(if any) in connection with the general management of the Birch Phase and so
that the Landlord may if it so elects (such election to be notified to the
Tenant in writing) for such period as it does not employ and charge for managing
agents charge a management fee to be fixed by the Landlord but not to exceed 10%
of the total of the items (excluding this paragraph 5) set out in Part 2 of this
schedule____
7. Such other services as the Landlord in its reasonable discretion shall deem
desirable or necessary to enable it to carry out or maintain the said services
and for the general conduct and good management of the Birch Phase___
8. Reasonable provision for anticipated expenditure in respect of the foregoing
as the Landlord or its agents may in its or their reasonable discretion
determine_____
Part 3
Calculation of the Tenant's proportion
The Tenant's proportion of the cost of providing the services set out in Part 2
of this schedule shall be determined by the Landlord or its agents and unless
(in each case) the Landlord or its agents consider that particular circumstances
make some other basis of calculation appropriate:
1. The Tenant's proportion in respect of the services set out in Part 2A of this
Schedule shall be a just proportion based on the ratio which the gross internal
area of the Demised Premises bears to the gross internal area of all units
(including the Demised Premises) let or available for letting at Kembrey Park
but excluding from the calculation of the latter figure any unlet new building
completed during the relevant Service Charge Year____
2. The Tenant's proportion in respect of the services set out in Part 2B of this
Schedule shall be a just proportion based on the ratio which the gross internal
area of the Demised Premises bears to the gross internal area of all units
(including the Demised Premises) in the Birch Phase let or available for letting
in respect of which the relevant service or services are
32
<PAGE>
provided____
THE THIRD SCHEDULE
Car Parking Arrangements
1. The Tenant will park its motor cars in the part or parts of the car park area
as the Landlord shall at its sole discretion from time to time allocate to the
use of the Tenant, which allocation may be changed by the Landlord upon one
month's previous notice in writing as frequently as it may deem fit and nothing
in this lease shall be construed as conferring upon the Tenant any exclusive
right to the enjoyment of any particular position in the car park area provided
that nine of the parking spaces allocated to the Tenant will always be within
the Birch Phase and the rest will be within reasonably convenient walking
distance of the Demised Premises____
2. The Tenant shall at all times diligently perform and observe any reasonable
rules and regulations which may from time to time be circulated or displayed by
the Landlord in relation to the car park area____
3. The Landlord shall be under no liability for the entry of unauthorised
persons to the car park area or any loss or damage occasioned to motor cars or
their contents or to the Tenant____
4. The Tenant will reimburse the Landlord a due proportion attributable to the
said part from time to time allocated to the Tenant of any Impositions
(whensoever assessed charged or imposed upon the Landlord) payable by the
Landlord in respect of the car park area, (save to the extent that such
Impositions are recovered through the Service Charge) such reimbursement to be
made on demand____
THE FOURTH SCHEDULE
Rent Review
1. The revised Rent for any Review Period may be agreed at any time between the
Landlord and the Tenant or (in the absence of agreement) determined not earlier
than the relevant Review Date by an independent valuer (acting as an expert and
not as an arbitrator) such valuer to be nominated in the absence of agreement by
or on behalf of the President for the time being of the Royal Institution of
Chartered Surveyors on the application of the Landlord or the Tenant made not
earlier than six months before the relevant Review Date but not later than the
end of the relevant Review Period and so that in the case of such valuation the
revised Rent to be determined by the valuer shall be such as he shall decide is
the yearly rent at which the Demised Premises might reasonably be expected to be
let at the relevant Review Date____
(A) On the following assumptions at that date:
(i) that the Demised Premises:
(a) are available to let on the open market without a fine or
premium with vacant possession by a willing landlord to a
willing tenant for a term
33
<PAGE>
of 10 years or the residue then unexpired of the term of this
lease (whichever be the longer) ____
(b) are to be let as a whole subject to the terms of this lease
(other than the amount of the Rent hereby reserved but
including the provisions for review of that rent on a basis
and of a frequency as set out in this lease) ____
(c) are fit and available for immediate occupation_____
(d) may be used for any of the purposes permitted by this lease as
varied or extended by any licence granted pursuant thereto____
(ii) that the covenants contained in this lease on the part of the Tenant
have been fully performed and observed____
(iii) that no work has been carried out to the Demised Premises which has
diminished the rental value and that in case the Demised Premises
have been destroyed or damaged they have been fully restored____
(iv) that the rent will become payable after the expiry of a rent-free
period of such length as would be negotiated in the open market
between a willing landlord and a willing tenant____
(v) that the hypothetical tenant is and tenants in the market generally
are registered for VAT and will be able to set off in full by way of
input tax any VAT payable in respect of the Rent or other sums due
under the provisions of this lease against the output tax payable by
him or them____
(B) But disregarding:
(i) any effect on rent of the fact that the Tenant its sub-tenants or
their respective predecessors in title have been in occupation of
the Demised Premises____
(ii) any goodwill attached to the Demised Premises by reason of the
carrying on thereat of the business of the Tenant its sub-tenants or
their predecessors in title in their respective businesses and
(iii) any increase in rental value of the Demised Premises attributable to
the existence at the relevant Review Date of
(a) any improvement to the Demised Premises or any part thereof
carried out with consent where required and otherwise than in
pursuance of an obligation to the Landlord or its predecessors
in title by the Tenant its sub-tenants or their respective
predecessors in title during the Term or during any period of
occupation prior thereto arising out of an agreement to grant
such term or
(b) the Additional Works as defined in an agreement for lease
dated 20 February 1995 between the Landlord (1) and the Tenant
(2)
2. (A) the fees and expenses of the valuer referred to in paragraph 1
including the cost of his nomination shall be
34
<PAGE>
borne as the valuer directs and the Landlord and the Tenant shall otherwise bear
their own costs____
(B) the valuer shall afford the Landlord and the Tenant an opportunity to
make representations to him and
(C) if the valuer nominated in accordance with paragraph 1 shall die delay
or become unwilling unfit or incapable of acting or if for any other reason the
President for the time being of the Royal Institution of Chartered Surveyors or
the person acting on his behalf shall in his absolute discretion think fit he
may on the application of either the Landlord or the Tenant by writing discharge
the valuer and appoint another in his place____
3. When the amount of any Rent to be ascertained as provided above shall have
been ascertained memoranda recording that shall immediately be signed by or on
behalf of the Landlord and the Tenant and annexed to this lease and its
counterpart and the Landlord and the Tenant shall bear their own costs in
respect of those memoranda____
4. (A) If the revised Rent payable on and from any Review Date has not been
agreed by that Review Date the Rent shall continue to be payable at the rate
previously payable and immediately upon the revised Rent being ascertained the
Tenant shall pay to the Landlord any shortfall between the Rent and the revised
Rent payable from and including the Review Date up to and including the day
prior to the quarter day following the ascertainment of the revised Rent
together with interest on any shortfall at the Base Rate from time to time of
Lloyds Bank Plc such interest to be calculated on a day-to-day basis from the
date on which such shortfall (or each part of such shortfall) would have been
payable if the revised Rent had been ascertained prior to the relevant Review
Date to the date of ascertainment and thereafter in accordance with sub-clause
3.4 and the interest so payable shall be recoverable in the same manner as Rent
in arrear____
(B) for the purpose of this paragraph 4 the revised Rent shall be deemed
to have been ascertained on the date when the same has been agreed between the
Landlord and the Tenant or as the case may be the date of the determination by
the valuer____
5. If either the Landlord or the Tenant shall fail to pay the relevant
proportion of the fees and expenses of the valuer under the provisions of
paragraph 2 within twenty-one days of the same being demanded by the valuer the
other shall be entitled to pay the same and the amount so paid shall be repaid
by the party chargeable on demand____
35
<PAGE>
[GRAPHIC] (THE COMMON SEAL of SUN ALLIANCE
(AND LONDON ASSURANCE COMPANY LIMITED
(was hereunto affixed in the presence
(of:-
/s/ [illegible]
Authorised Signatory
/s/ [illegible]
Authorised Signatory
(THE COMMON SEAL of TINSLEY ROBOR plc
(was hereunto affixed in the
(presence of:-
Director
Secretary
36
<PAGE>
EXHIBIT 10.81
===============================================================================
DATED 12th June 1996
DEED OF VARIATION
relating to
Unit 2 Birch Kembrey Park
Swindon Wiltshire
[Lease dated 4th May 1995]
Sun Alliance and London Assurance
Company Limited (1)
Tinsley Robor plc (2)
TOWNSENDS
===================================Solicitors==================================
42 Cricklade Street, Swindon, Wiltshire SN1 3HD
Telephone (01793) 410800 o Fax (01793) 616294
<PAGE>
THIS DEED is made the 12th day of June 1996
BETWEEN
SUN ALLIANCE AND LONDON ASSURANCE COMPANY LIMITED whose registered office is at
1 Bartholomew Lane, London, EC2N 2AB ("the Landlord)" (1) and TINSLEY ROBOR PLC
whose registered office is at Drayton House, Drayton, Chichester, West Sussex,
P020 6EW ("the Tenant") (2)
THIS DEED WITNESSES that:
1. INTERPRETATION
In this deed:
1.1 The following expressions have the following meanings unless the context
requires them to be interpreted differently:
"the Lease" means a Lease dated 4th May 1995 of the Property
between the Landlord (1) and the Tenant (2)
"the Property" means Unit 2, Birch Phase, Kembrey Park, Swindon,
Wiltshire which is shown for identification only
edged red on the plan attached to the Lease and
described in more detail in the Lease
"the Term" means the term granted by the Lease
1.2 The expression "the Landlord" includes where the context admits the person
who for the time being owns the interest in the Property which gives the
right to possession of it when the Lease ends
1
<PAGE>
1.3 The expression "the Tenant" includes where the context admits the person
who for the time being is entitled to the Property as tenant under the
Lease
1.4 Words importing the singular are to be considered where appropriate as
including the plural and vice versa
1.5 Words importing the masculine are to be considered where appropriate as
including the feminine and neuter and vice versa
1.6 Unless the context requires the expressions to be interpreted differently,
references in this deed to a "clause" "sub-clause" "schedule" or
"paragraph" are references to the appropriately numbered clause,
sub-clause, schedule or paragraph of this deed
1.7 The headings are included for ease of reference. They shall not be treated
as affecting the meaning of the provisions to which they relate
1.8 If from time to time there is more than one person comprised in the Tenant
or the Landlord then:
1.8.1 any reference to "the Tenant" or "the Landlord" will be deemed to
refer to each tenant or landlord;
1.8.2 any obligation on the part of the Tenant or the Landlord (as the
case may be) can be enforced against all of the tenants or all of
the landlords (as the case may be) jointly and against each
individually, and
1.8.3 any notice to be served on the Tenant or the Landlord will be
validly served if served on any one or more of (as the case may be)
the tenants or the landlords
2. RECITALS
2.1 This deed is supplemental to the Lease
2
<PAGE>
2.2 The right to possession of the Property when the Term ends remains vested
in the Landlord
2.3 The Tenant remains entitled to the Property as tenant under the Lease
2.4 The Landlord and the Tenant have agreed to vary the Lease as set out below
3. VARIATION OF LEASE
With effect from the date of this deed the Lease is varied as follows:
A. In clause 2.1.1 of the Lease, line 1, "19 cars" shall be treated as
deleted and replaced by "16 cars"
B. In the Third Schedule to the Lease, paragraph 1, line 8, "nine"
shall be treated as deleted and replaced by "six"
C. In the Fourth Schedule to the Lease, paragraph 1(A)(i),
sub-paragraph (b) shall be treated as deleted and replaced by the
following sub-paragraph (b):
"(b) are to be let as a whole subject to the terms of this lease
other than
(aa) the amount of the Rent hereby reserved (but including the
provisions for review of that rent on a basis and of a
frequency as set out in this lease)
(bb) the number of cars referred to in sub-clause 2.1.1 of this
lease which shall be taken to be 19, not 16 and
(cc) the number of parking spaces referred to in paragraph 1 of
the Third Schedule to this lease which shall be taken to
be 9, not 6 ____"
3
<PAGE>
4. FURTHER PROVISIONS
4.1 The Landlord and the Tenant will each perform and observe the covenants,
conditions and stipulations on their respective parts contained in the
Lease as varied by this deed
4.2 The conditions for re-entry contained in the Lease shall be exercisable on
any breach by the Tenant of the covenants, conditions and stipulations
contained in the Lease as varied by this deed
4.3 This deed is not intended to and does not effect any surrender of the
Lease or the grant of any new lease and the covenants, conditions and
stipulations contained in the Lease shall continue in full force and
effect save to the extent that they are varied by this deed
4.4 The Tenant and the Landlord will immediately endorse a memorandum of this
deed on the Lease and its counterpart respectively and will supply to the
other party a certified copy of such endorsement within 14 days of the
date of this deed
4.5 The Tenant agrees to pay to the Landlord on demand the legal costs
(including VAT and disbursements) incurred by the Landlord in connection
with the preparation, negotiation and completion of this deed
IN WITNESS whereof this deed has been duly delivered the day and year first
before written
[SEAL] ( THE COMMON SEAL of SUN ALLIANCE
( AND LONDON ASSURANCE COMPANY
( LIMITED was hereunto affixed
( in the presence of:
Authorised Signatory [ILLEGIBLE]
Authorised Signatory [ILLEGIBLE]
4
<PAGE>
THE COMMON SEAL of TINSLEY ROBOR )
PLC was hereunto affixed in the )
presence of: )
Director
Secretary
5
<PAGE>
EXHIBIT 10.82
- --------------------------------------------------------------------------------
DATED 12th June 1996
SUPPLEMENTAL LEASE
AND LICENCE FOR ALTERATIONS
to
Units 1 and 2 Birch Kembrey Park
Swindon Wiltshire
[Leases dated 4th May 1995]
Sun Alliance and London Assurance Company Limited (1)
Tinsley Robor plc (2)
TOWNSENDS
===================================Solicitors==================================
42 Cricklade Street, Swindon, Wiltshire SN1 3HD
Telephone (01793) 410800 o Fax (01793) 616294
<PAGE>
THIS DEED is made the 12th day of June 1996
BETWEEN
SUN ALLIANCE AND LONDON ASSURANCE COMPANY LIMITED whose registered
office is at 1 Bartholomew Lane, London, EC2N 2AB ("the Landlord") (1) and
TINSLEY ROBOR plc whose registered office is at Drayton House, Drayton,
Chichester, West Sussex, P020 6EW ("the Tenant") (2)
THIS DEED WITNESSES that:
1. INTERPRETATION
In this deed
1.1 The following expressions have the following meanings unless the
context requires them to be interpreted differently:
"the Additional Property" means the land adjoining Unit 2 and shown
for identification only edged red on the Plan
"the Additional Rents" means all sums (other than the Rent) which may
from time to time be due from the Tenant to the
Landlord under this deed
"the Alterations" means the works briefly described in the Second
Schedule and described in more detail in the
Approved Specifications
"the Approved means the documents and drawings listed in the
Specifications" Third Schedule and attached to this deed
"the Buildings" has the meaning given to it in the Unit 2 Lease
1
<PAGE>
"the Consents" means all planning permissions, building
regulations consents and any other consents or
approvals which are necessary in order lawfully
to carry out and retain the Alterations
"the Insurers" means the insurers of the Property
"the Original Leases" means the Unit l Lease and the Unit 2 Lease
together
"the Plan" means the plan attached to this deed
"the Rent" means the yearly rent of one peppercorn
"the Term" means the term of FIFTEEN years commencing on
1st May 1995 together with any lawful period of
holding over under statute or common law
"Unit 1" means Unit 1, Birch Phase, Kembrey Park,
Swindon, Wiltshire as described in more detail
in the Unit 1 Lease
"Unit 2" means Unit 2, Birch Phase, Kembrey Park,
Swindon, Wiltshire as described in more detail
in the Unit 2 Lease
"the Unit 1 Lease" means a lease dated 4th May 1995 of Unit 1
between the Landlord (1) and the Tenant (2)
"the Unit 2 Lease" means a lease dated 4th May 1995 of Unit 2
between the Landlord (1) and the Tenant (2)
"the Units" means Unit 1 and Unit 2 together
2
<PAGE>
WALNUT PHASE III
[GRAPHIC]
<PAGE>
1.2 The expression "the Landlord" includes where the context admits any person
who for the time being owns the interest in either of the Units or the
Additional Property which gives the right to possession of it or them at
the end of the Unit 1 Lease, the Unit 2 Lease or the Term (as the case may
be) in each case whether it runs its full course or is brought to an end
early
1.3 The expression "the Tenant" includes where the context admits any person
who for the time being is entitled to the Additional Property as tenant
under this deed or to either of the Units under either of the Original
Leases
1.4 Words importing the singular are to be considered where appropriate as
including the plural and vice versa
1.5 Words importing the masculine are to be considered where appropriate as
including the feminine and neuter and vice versa
1.6 Unless the context requires the expressions to be interpreted differently,
references to a "clause", "sub-clause", "schedule" or "paragraph" are
references to the appropriately numbered clause, sub-clause, schedule or
paragraph of this deed
1.7 The headings are included for ease of reference only. They shall not be
taken to affect the meaning of the provisions to which they relate
1.8 The schedules are incorporated in this deed and the Landlord and the
Tenant agree to be bound by their provisions
1.9 If from time to time there is more than one person comprised in the Tenant
or the Landlord then:
1.9.1 any reference to "the Tenant" or "the Landlord" will be deemed to
refer to each tenant or landlord;
1.9.2 any obligation on the part of the Tenant or the Landlord (as the
case may be) can be enforced against all of the tenants or all of
the landlords (as the case
3
<PAGE>
may be) jointly and against each individually, and
1.9.3 any notice to be served on the Tenant or the Landlord will be
validly served if served on any one or more of (as the case may
be) the tenants or the landlords
1.10 As provided in sub-clause 1.1 the Term is computed from 1st May 1995.
Thus references to the first year of the Term are to the year starting
on 1st May 1995 and ending on 30th April 1996. References to the
commencement of the Term or to subsequent years of the Term are to be
interpreted accordingly
2. RECITALS
2.1 This deed is supplemental to the Leases
2.2 The right to possession of each of the Units when the Original Leases
end remains vested in the Landlord
2.3 The right to each of the Units under the Original Leases remain vested
in the Tenant
2.4 The Tenant has requested the Landlord to grant a lease to it of the
Additional Property on the terms set out below
2.5 Each of the Original Leases requires the Tenant to obtain the
Landlord's written consent to any alterations to the Units
2.6 The Tenant wishes to carry out the Alterations
3. DEMISE
3.1 The Landlord demises to the Tenant the Additional Property
4
<PAGE>
3.2 to hold the Additional Property to the Tenant
3.3 together with rights equivalent (except as modified in the First
Schedule) to those granted by the Unit 2 Lease but
3.4 excepting and reserving to the Landlord matters equivalent (except as
modified in the First Schedule) to those excepted and reserved by the
Unit 2 Lease
3.5 and subject to all rights and easements (if any) belonging to or
enjoyed by any adjoining or neighbouring property
3.6 for the Term
3.7 the Tenant yielding and paying to the Landlord the Rent and the
Additional Rents
3.8 the Rent is payable without any deduction or set off (legal or
equitable) by annual payments in advance on the first day of each year
of the Term
3.9 the Additional Rents are payable on demand without any deduction or set
off
4. SAME TERMS
4.1 As to the Additional Property the demise under this deed is made upon
the same terms and subject to the same covenants, provisos, conditions
and other matters as are contained in the Unit 2 Lease except
4.1.1 as to
4.1.1.1 the property demised
4.1.1.2 the Rent, and
4.1.1.3 the term of years granted;
4.1.2 as provided for in clauses 6 and 7, and
4.1.3 as modified in the First Schedule
5
<PAGE>
4.2 This deed shall accordingly be construed and take effect as if the
terms, covenants, provisos and conditions of the Unit 2 Lease were
(except as mentioned in sub-clauses 4.1.1 to 4.1.3) repeated in this
deed in full
5. COVENANTS
5.1 The Tenant covenants with the Landlord to observe and perform all the
covenants and conditions on its part contained in the Unit 2 Lease as
modified as mentioned in clause 4
5.2 The Landlord covenants with the Tenant to observe and perform all the
covenants and conditions on its part contained in the Unit 2 Lease as
modified as mentioned in clause 4
6. LICENCE
In consideration of the covenants by the Tenant contained in this deed the
Landlord grants licence to the Tenant to carry out the Alterations
7. TENANT'S FURTHER COVENANTS
The Tenant further covenants with the Landlord that the Tenant will:
7.1
7.1.1 before starting the Alterations at the Tenant's own expense apply
for and obtain the Consents
7.1.2 supply copies of the Consents to the Landlord within seven days
after the Tenant receives them
6
<PAGE>
7.2 If the Tenant starts the Alterations carry them out:
7.2.1 in a proper and workmanlike manner;
7.2.2 using suitable materials of good quality;
7.2.3 within six months of the date of this deed;
7.2.4 to the reasonable satisfaction of the Landlord's surveyor
architect and engineer;
7.2.5 strictly in accordance with the Approved Specifications (subject
only to such modifications as the Landlord may first have approved
in writing);
7.2.6 in compliance with all appropriate Acts of Parliament bye-laws and
regulations of all statutory authorities and the Consents, and
7.2.7 in accordance with the requirements of the Insurers
7.3 Provide the Landlord free of charge with such further drawings, samples
of materials, specifications, particulars or other information in
connection with the Alterations as the Landlord may reasonably ask for;
7.4 Cause as little damage as possible to the Additional Property, the
Units and the Buildings and immediately after the completion of the
Alterations make good any damage caused to the satisfaction in all
respects of the Landlord's surveyor architect and engineer;
7.5 Allow the Landlord or anyone on his behalf to inspect the Alterations
at intervals whilst they are in progress and on completion of the
Alterations;
7.6 Maintain and decorate the whole of the Alterations in accordance with
the covenants contained in the Original Leases and this deed;
7.7 At the Tenant's own expense carry out such further work to the
Additional Property, the Units and the Buildings as may as a result of
the Alterations be necessary to comply with any requirements or
regulations of:
7.7.1 the Fire Officer;
7.7.2 the Local Authority;
7.7.3 any other competent authority, or
7
<PAGE>
7.7.4 the Insurers
such work to be carried out to the satisfaction of that authority and
of the Landlord's surveyor architect and engineer;
7.8 Carry out all electrical work in accordance with the current
regulations for the electrical equipment of buildings as issued by the
Institute of Electrical Engineers and in compliance with the
requirements of the appropriate electricity supply company;
7.9 Ensure that:
7.9.1 all builders' materials and equipment are kept within the
boundaries of the Additional Property or the Units and are removed
from the Additional Property and the Units within fourteen days
after the completion of the Alterations, and
7.9.2 no rubbish or materials of any kind whatsoever are left in the
roadways or on the pavements leading to the Additional Property or
to the Units;
7.10 Indemnify and keep indemnified the Landlord against:
7.10.1 any damage to:
the Buildings;
any neighbouring buildings,
or any person or property;
7.10.2 all claims, actions, costs and proceedings whatsoever and howsoever
arising as a result of the Alterations or the failure to comply
with the terms of this deed, and
7.10.3 any liability for any tax whether levied on or payable by the
Landlord or the Tenant because of the Alterations;
7.11 Pay the Landlord's reasonable and proper legal and other professional
costs, disbursements and Value Added Tax at the appropriate rate
incidental to and in connection with the preparation negotiation and
completion of this deed and the Counterpart of it;
7.12 Pay the reasonable and proper fees of the Landlord's surveyor,
architect and engineer
8
<PAGE>
and any other professional adviser together with any Value Added Tax on
those fees for inspecting and approving the Alterations as they proceed
and on completion and for inspecting and approving the works of
reinstatement to be carried out in accordance with sub-clause 7.14;
7.13 Take all reasonable steps to reduce to the minimum any noise, nuisance,
annoyance or inconvenience to the immediately surrounding occupiers
whilst the Alterations are in progress;
7.14
7.14.1 At the Tenant's own expense reinstate the Additional Property and
the Units during the period of three months immediately before
whichever happens first of the following:
7.14.1.1 the expiry or sooner determination of the Term, and
7.14.1.2 Unit 1 and Unit 2 ceasing to be occupied by the
same person or body
7.14.2 Such reinstatement shall be to the condition the Additional
Property and the Units were in before the Alterations were carried
out including the removal of any plant or related equipment;
7.14.3 Carry out such works of reinstatement including making good any
damage caused at that time to the satisfaction of the Landlord's
surveyor architect and engineer.
8. FURTHER PROVISIONS
8.1 Except as varied by this deed the Original Leases shall continue in
full force and effect and nothing contained in this deed shall be
treated as a waiver by the Landlord of any of the covenants, conditions
or provisions of either of the Original Leases.
8.2 The provisions set out in the Original Leases as to forfeiture shall
apply to any breach of the Tenant's covenants set out in this deed as
well as to a breach of those set out in
9
<PAGE>
either of the Original Leases themselves.
8.3 If a substantial start has not been made on the Alterations within six
months from the date of this deed then the licence contained in clause 6
shall cease to have effect.
8.4 Except where the context requires it to be interpreted differently the
expression "the Demised Premises" where used in either of the Original
Leases shall mean the Demised Premises as modified by the Alterations.
8.5 The Tenant acknowledges that no responsibility is assumed by, or to be
imputed to, the Landlord for any consequence of the carrying out of the
Alterations.
8.6 This licence and any approval, consent, instruction, certification or
supervision of works granted, given or carried out by or on behalf of the
Landlord under this licence:
8.6.1 are granted, given or carried out without any liability on the part
of the Landlord or its surveyors, agents, consultants or employees;
8.6.2 imply no responsibility on the part of the Landlord, its surveyors,
agents, consultants or employees for any of the Alterations or
their design, execution or existence;
8.6.3 do not imply, warrant or constitute any representation that it is
lawful to execute the Alterations, and
8.6.4 do not limit or discharge any of the obligations of the Tenant
under this licence.
8.7 The alterations and additions comprised in the Alterations are not
improvements for the purposes of the Landlord and Tenant Act 1927 Part 1
and are carried out by the Tenant to suit its own personal requirements.
Neither the Tenant nor any other person shall be entitled to compensation
in respect of such alterations and additions at the expiry or sooner
determination of the Term or at any other time.
8.8 The alterations and additions comprised in the Alterations shall be
disregarded for the purposes of rent review in accordance with sub-clause
1.1 of and the Fourth Schedule to each of the Original Leases
10
<PAGE>
8.9 The Landlord is not responsible for insuring any part of the Alterations
9. STAMP DUTY CERTIFICATE
The parties to this lease certify that there is no agreement for lease to
which this deed gives effect
IN WITNESS whereof this deed has been duly delivered the day and year first
before written
THE FIRST SCHEDULE
Modifications to the Unit 2 Lease for the purposes of this demise
For the purposes of this deed only:
A. References in the Unit 2 Lease to "the Demised Premises" shall be treated
for the purposes of this lease as references to the Additional Property
B. The following sub-clauses of the Unit 2 Lease shall not be treated as
applying to this deed:
2.1.1
2.1.6
2.4
3.8
3.18.2, .3 and .4
4.2
4.3
5.1
5.2.1
5.3 and
Schedules 1 to 4 inclusive
C. Sub-clause 3.10 of the Unit 2 Lease shall be treated as having been
deleted and replaced by the following sub-clause:
11
<PAGE>
3.10 Alterations
The Tenant will
3.10.1 not make any addition or alteration whatsoever to the
Demised Premises
3.10.2 not erect any structure on the Demised Premises
3.10.3 not without the prior consent of the Landlord which shall
not be unreasonably withheld or delayed instal any
equipment on the Demised Premises
3.10.4 on receiving a written request from the Landlord
immediately pull down and remove any erection, alteration
or addition erected or made in breach of sub-clauses 3.10.1
to 3.10.3 and make good any damage caused thereby BUT so
that this sub-clause 3.10.4 shall not in any way restrict
or cancel any other remedy which the Landlord may have____
D. Sub-clause 3.12 of the Unit 2 Lease shall be treated as having been
deleted and replaced by the following sub-clause:
3.12 Alienation:
3.12.1 The Tenant will not assign or underlet, or part with or
share possession or occupation of, or grant to anyone else
any right over or interest in, any part or parts (as
opposed to the whole) of the Additional Property
3.12.2 The Tenant will not assign, underlet, or part with or share
possession or occupation of, or grant to anyone else any
right over or interest in, the whole of the Additional
Property except by an assignment or underletting which
takes place in conjunction with and to the same person as a
permitted assignment or underletting of Unit 2 in
accordance with the Unit 2 Lease
E. Sub-clause 3.14 of the Unit 2 Lease shall be treated as having been
deleted and replaced by the following sub-clause:
3.14 Use
The Tenant will not use the Additional Property other than as the
site for a closed collecting container for waste paper trimmings as
indicated on drawing Q948-1 attached to this deed and to be used
solely in connection with the waste
12
<PAGE>
paper collection and compacting equipment within the Units
THE SECOND SCHEDULE
"the Alterations"
1. Installation of a waste extraction system
2. Installation of a heat extraction system
THE THIRD SCHEDULE
"the Approved Specifications"
Letter from Tinsley Robor to Sun Alliance dated 22 March 1995
Letter from Impact to James Upton (undated)
Note from Tony Parnell to Tony Ryan dated 21 April 1995
Note from Tony Ryan of Mercury to Mark Whitehead (undated)
Letter from Sun Alliance to James Upton dated 21 April 1995
Letter from James Upton to Sun Alliance dated 26 July 1995
Drawing no. Q948/1 prepared by Impact
Memo from Hennion to Sun Alliance dated 26 June 1995 with 3 attached sketches
THE COMMON SEAL of SUN ALLIANCE )
AND LONDON ASSURANCE COMPANY )
LIMITED was hereunto affixed in the )
presence of:- )
Authorised Signatory [ILLEGIBLE]
Authorised Signatory [ILLEGIBLE]
[GRAPHIC]
13
<PAGE>
( THE COMMON SEAL of TINSLEY ROBOR
( PLC was hereunto affixed in the
( presence of:-
Director
Secretary
14
<PAGE>
EXHIBIT 10.83
FIRST AMENDMENT TO
EMPLOYMENT, NON-COMPETITION
AND STOCK REPURCHASE AGREEMENT
This First Amendment to Employment, Non-Competition and Stock Repurchase
Agreement (this "Amendment Agreement") is dated as of January 8, 1999, is made
-------------------
by and between IMPAC Group, Inc., a Delaware corporation, with its principal
executive offices at 1950 North Ruby Street, Melrose Park, Illinois 60160-1178
(the "Company"), and David C. Underwood (the "Employee"), an individual residing
------- --------
at 2620 Lincoln Street, Evanston, Illinois 60201, and amends that certain
Employment, Non-Competition and Stock Repurchase Agreement, dated as of March
12, 1998, by and between the Company and the Employee (the "Employment
----------
Agreement").
- ---------
WHEREAS, this Amendment Agreement is being entered into in connection with
(a) the Securities Purchase Agreement of even date herewith, by and among the
Company and the Purchasers, as defined therein, and (b) the Company's Fourth
Amended and Restated Certificate of Incorporation of even date herewith (the
"Charter Amendment");
- -------- ---------
WHEREAS, pursuant to the Charter Amendment, certain additional restrictions
are being placed on the Company's ability to make payments in cash of the
repurchase price for Shares (as defined in the Employment Agreement) being
repurchased by the Company under the terms of the Employment Agreement; and
WHEREAS, in consideration for, among other things, the Employee's
confirmation of his acceptance of the Charter Amendment as a "Subordinating
Agreement", as defined in the Employment Agreement, the Company has agreed to
make certain amendments to the Employment Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Employee agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein
have the respective meanings ascribed to them in the Employment Agreement.
<PAGE>
-2-
2. Amendments. Upon the date of the effectiveness of the Charter
Amendment, the Employment Agreement shall be amended as follows:
2.1. Section 1 (Definitions) shall be amended by adding the following new
definitions in the appropriate alphabetical order:
""Severance Release" means a release of any claims of the Employee against
-----------------
the Company and its stockholders, directors, officers, employees, agents or
other affiliates arising out of his employment relationship (other than claims
to any compensation or benefits payable under or to be provided pursuant to
Section 5 hereof, or any rights of the Employee under Sections 6 or 7 hereof)
duly executed by the Employee and reasonably satisfactory in form and substance
to the Company.
"Subordinating Agreement" has the meaning specified in Section 7.1(a)(y)
------------- ---------
hereof."
2.2. Section 1 (Definitions) shall be further amended by deleting
therefrom the definitions of "Severance Extension Notice" and "Severance
Notice".
2.3. Sections 5(a) and 5(b) shall be amended by deleting such Sections in
their entirety, and substituting therefor the following new Sections 5(a) and
5(b):
"(a) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) (other than a Termination upon Retirement) during the
Designated Term, then the Company shall, upon its receipt of a Severance
Release, continue to pay and provide to the Employee (A) the compensation
payable to him pursuant to Section 3(a) hereof, and (B) the benefits provided to
him pursuant to Section 3(c) hereof (the compensation and benefits described in
clauses (A) and (B), together, such Employee's "Base Severance Compensation"),
---------------------------
and, unless such Termination of Employment was a Termination for Under-
Performance, (C) any bonus accrued or earned by the Employee pursuant to the
Bonus Plan and attributable to the Employee's performance for the portion of the
year prior to his Termination of Employment, on a one-time only basis payable at
the time of payment of bonuses to other executive employees under the Bonus
Plan, and (D) for each year, 50% of an amount equal to the compensation payable
to the Employee pursuant to Section 3(a), multiplied by a fraction, the
numerator of which equals the aggregate bonus actually payable with respect to
the preceding year to the Company's other executive employees in the
<PAGE>
-3-
same bonus pay-out range as the Employee was in prior to his Termination of
Employment, and the denominator of which equals the aggregate salary of such
other executive employees for such preceding year (the compensation described in
clauses (C) and (D) together, such Employee's "Variable Severance Compensation")
-------- --------- ------------
for a period (the "Initial Severance Period") equal to the longer of (i) the
------- --------- ------
remainder of the Designated Term, and (ii) (x) if such Termination of Employment
was a Termination for Under-Performance, the one-year period following the date
of such Termination of Employment, or (y) if such Termination of Employment was
not a Termination for Under-Performance, the eighteen-month period following the
date of such Termination of Employment. In the Company's sole discretion, the
Company may elect by written notice to the Employee given no later than thirty
(30) days prior to the end of the Initial Severance Period, to continue to pay
and provide to the Employee his Base Severance Compensation for an additional
period (the "Additional Severance Period") of up to one year following the end
---------- --------- ------
of the Initial Severance Period, provided that such Additional Severance Period
shall in no event extend beyond the second anniversary of the Employee's
Termination of Employment. Upon payment in full of the Employee's Base Severance
Compensation and, if and when applicable, his Variable Severance Compensation,
as described in this Section 5(a), the Company's obligations to pay and provide
the Employee with any other compensation otherwise payable to him pursuant to
Section 3 hereof, and all other rights of the Employee under Sections 2, 3 and 5
hereof, shall cease as of the date of such payment in full.
(b) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) (other than a Termination upon Retirement) at any time
after the end of the Designated Term, then the Company shall, upon its receipt
of a Severance Release, continue to pay and provide to the Employee his Base
Severance Compensation and, unless such Termination of Employee was a
Termination for Under-Performance, his Variable Severance Compensation for a
period (the "Initial Post-Term Severance Period") equal to (i) one year
------- --------- --------- ------
following the date of such Termination of Employment, if such Termination of
Employment was a Termination for Under-Performance, or (ii) eighteen months
following the date of such Termination of Employment, if such Termination of
Employment was not a Termination for Under-Performance. The Company may elect,
in its sole discretion, by written notice to the Employee given no later than
ninety (90) days prior to the end of the Initial Post-Term Severance Period, to
extend the period during which the Employee's Base Severance Compensation shall
be payable and provided to the Employee for an additional period (also referred
to herein as an "Additional Severance Period") of up to one year from the end of
---------- --------- ------
the Initial Post-Term Severance
<PAGE>
-4-
Period, provided that such Additional Severance Period shall in no event extend
beyond the second anniversary of the Employee's Termination of Employment. Upon
payment in full of the Employee's Base Severance Compensation, and, if and when
applicable, his Variable Severance Compensation as described in this Section
5(b), the Company's obligations to pay and provide the Employee with any of the
compensation payable to him pursuant to Section 3 hereof, and all other rights
of the Employee under Sections 2, 3 and 5 hereof, shall cease as of the date of
such payment in full."
2.4. The first sentence of Section 7.1(a)(y) shall be amended by deleting
such sentence in its entirety, and substituting therefor the following:
"if the Company is prohibited by the terms of the Company's Charter, as in
effect from time to time, or any of the Company's or any of its
Subsidiaries' agreements with its or their lenders (including, without
limitation, the Company's senior credit agreement with Bank of America
National Trust & Savings Association, as Agent, and the Indenture with
respect to the Company's Senior Subordinated Notes) (with the Charter and
any such agreement each being referred to herein as a "Subordinating
-------------
Agreement") from making any payments of any portion of the repurchase price
---------
for any of the Shares in cash, the Company shall be entitled to complete
the repurchase of such Shares as to which payment of the repurchase price
in cash is not so prohibited by delivering to the Employee a check for the
repurchase price thereof."
2.5. Section 8(b) (Non-Competition) shall be amended by inserting the
words "or the Initial Post-Term Severance Period, as applicable" between the
words "Severance Period" and the words ", the Additional Severance Period" on
the eleventh line of such Section.
3. Miscellaneous.
(a) No Other Amendment. Except as otherwise expressly provided by this
Amendment Agreement, all of the terms, conditions and provisions of the
Employment Agreement shall continue in full force and effect. This Amendment
Agreement and the Employment Agreement shall be read and construed as one
instrument.
(b) Counterparts. This Amendment Agreement may be executed by the parties
in separate counterparts, each of which when so executed and delivered shall be
an original, but all of which together shall constitute one and the same
agreement. In pleading or proving this Amendment
<PAGE>
-5-
Agreement, it shall not be necessary to produce or account for more than one
such counterpart.
(c) Captions. The captions of sections or subsections of this Amendment
Agreement are for reference only and shall not affect the interpretation or
construction of this Amendment Agreement.
(d) Construction. The language used in this Amendment Agreement is the
language chosen by the parties to express their mutual intent, and no rule of
strict construction shall be applied against either party.
(e) Governing Law. This Amendment Agreement shall to the maximum lawful
extent be governed by and interpreted and construed in accordance with the
internal laws of the State of Illinois, as applied to contracts under seal made,
and entirely to be performed, within Illinois, and without reference to
principles of conflicts or choice of law.
<PAGE>
-6-
IN WITNESS WHEREOF, each of the Company and the Employee has executed and
delivered this First Amendment to Employment, Non-Competition and Stock
Repurchase Agreement as an agreement under seal as of the date first above
written.
COMPANY: IMPAC GROUP, INC.
By /s/ Richard Block
-------------------------------
Name: Richard Block
Title: President
EMPLOYEE: /s/ David C. Underwood
-------------------------------
Name: David C. Underwood
<PAGE>
EXHIBIT 10.84
FIRST AMENDMENT TO
EMPLOYMENT, NON-COMPETITION
AND STOCK REPURCHASE AGREEMENT
This First Amendment to Employment, Non-Competition and Stock Repurchase
Agreement (this "Amendment Agreement") is dated as of January 8, 1999, is made
-------------------
by and between IMPAC Group, Inc., a Delaware corporation, with its principal
executive offices at 1950 North Ruby Street, Melrose Park, Illinois 60160-1178
(the "Company"), and Dean Henkel (the "Employee"), an individual residing at
------- --------
__________________________________________________________________, and amends
that certain Employment, Non-Competition and Stock Repurchase Agreement, dated
as of March 12, 1998, by and between the Company and the Employee (the
"Employment Agreement").
- ----------- ---------
WHEREAS, this Amendment Agreement is being entered into in connection with
(a) the Securities Purchase Agreement of even date herewith, by and among the
Company and the Purchasers, as defined therein, and (b) the Company's Fourth
Amended and Restated Certificate of Incorporation of even date herewith (the
"Charter Amendment");
- -------- ---------
WHEREAS, pursuant to the Charter Amendment, certain additional restrictions
are being placed on the Company's ability to make payments in cash of the
repurchase price for Shares (as defined in the Employment Agreement) being
repurchased by the Company under the terms of the Employment Agreement; and
WHEREAS, in consideration for, among other things, the Employee's
confirmation of his acceptance of the Charter Amendment as a "Subordinating
Agreement", as defined in the Employment Agreement, the Company has agreed to
make certain amendments to the Employment Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Employee agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein
have the respective meanings ascribed to them in the Employment Agreement.
<PAGE>
-2-
2. Amendments. Upon the date of the effectiveness of the Charter
Amendment, the Employment Agreement shall be amended as follows:
2.1. Section 1 (Definitions) shall be amended by adding the following new
definitions in the appropriate alphabetical order:
""Severance Release" means a release of any claims of the Employee against
-----------------
the Company and its stockholders, directors, officers, employees, agents or
other affiliates arising out of his employment relationship (other than claims
to any compensation or benefits payable under or to be provided pursuant to
Section 5 hereof, or any rights of the Employee under Sections 6 or 7 hereof)
duly executed by the Employee and reasonably satisfactory in form and substance
to the Company.
"Subordinating Agreement" has the meaning specified in Section 7.1(a)(y)
------------- ---------
hereof."
2.2. Section 1 (Definitions) shall be further amended by deleting
therefrom the definitions of "Severance Extension Notice" and "Severance
Notice".
2.3. Sections 5(a) and 5(b) shall be amended by deleting such Sections in
their entirety, and substituting therefor the following new Sections 5(a) and
5(b):
"(a) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) (other than a Termination upon Retirement) during the
Designated Term, then the Company shall, upon its receipt of a Severance
Release, continue to pay and provide to the Employee (A) the compensation
payable to him pursuant to Section 3(a) hereof, and (B) the benefits provided to
him pursuant to Section 3(c) hereof (the compensation and benefits described in
clauses (A) and (B), together, such Employee's "Base Severance Compensation"),
---------------------------
and, unless such Termination of Employment was a Termination for Under-
Performance, (C) any bonus accrued or earned by the Employee pursuant to the
Bonus Plan and attributable to the Employee's performance for the portion of the
year prior to his Termination of Employment, on a one-time only basis payable at
the time of payment of bonuses to other executive employees under the Bonus
Plan, and (D) for each year, 50% of an amount equal to the compensation payable
to the Employee pursuant to Section 3(a), multiplied by a fraction, the
numerator of which equals the aggregate bonus actually payable with respect to
the preceding year to the Company's other executive employees in the
<PAGE>
-3-
same bonus pay-out range as the Employee was in prior to his Termination of
Employment, and the denominator of which equals the aggregate salary of such
other executive employees for such preceding year (the compensation described in
clauses (C) and (D) together, such Employee's "Variable Severance
------------------
Compensation") for a period (the "Initial Severance Period") equal to the
- ------------ ------- --------- ------
longer of (i) the remainder of the Designated Term, and (ii) (x) if such
Termination of Employment was a Termination for Under-Performance, the one-year
period following the date of such Termination of Employment, or (y) if such
Termination of Employment was not a Termination for Under-Performance, the
eighteen-month period following the date of such Termination of Employment. In
the Company's sole discretion, the Company may elect by written notice to the
Employee given no later than thirty (30) days prior to the end of the Initial
Severance Period, to continue to pay and provide to the Employee his Base
Severance Compensation for an additional period (the "Additional Severance
---------- ---------
Period") of up to one year following the end of the Initial Severance Period,
- ------
provided that such Additional Severance Period shall in no event extend beyond
the second anniversary of the Employee's Termination of Employment. Upon payment
in full of the Employee's Base Severance Compensation and, if and when
applicable, his Variable Severance Compensation, as described in this Section
5(a), the Company's obligations to pay and provide the Employee with any other
compensation otherwise payable to him pursuant to Section 3 hereof, and all
other rights of the Employee under Sections 2, 3 and 5 hereof, shall cease as of
the date of such payment in full.
(b) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) (other than a Termination upon Retirement) at any time
after the end of the Designated Term, then the Company shall, upon its receipt
of a Severance Release, continue to pay and provide to the Employee his Base
Severance Compensation and, unless such Termination of Employee was a
Termination for Under-Performance, his Variable Severance Compensation for a
period (the "Initial Post-Term Severance Period") equal to (i) one year
------- --------- --------- ------
following the date of such Termination of Employment, if such Termination of
Employment was a Termination for Under-Performance, or (ii) eighteen months
following the date of such Termination of Employment, if such Termination of
Employment was not a Termination for Under-Performance. The Company may elect,
in its sole discretion, by written notice to the Employee given no later than
ninety (90) days prior to the end of the Initial Post-Term Severance Period, to
extend the period during which the Employee's Base Severance Compensation shall
be payable and provided to the Employee for an additional period (also referred
to herein as an "Additional Severance Period") of up to one year from the end of
---------- --------- ------
the Initial Post-Term Severance
<PAGE>
-4-
Period, provided that such Additional Severance Period shall in no event extend
beyond the second anniversary of the Employee's Termination of Employment. Upon
payment in full of the Employee's Base Severance Compensation, and, if and when
applicable, his Variable Severance Compensation as described in this Section
5(b), the Company's obligations to pay and provide the Employee with any of the
compensation payable to him pursuant to Section 3 hereof, and all other rights
of the Employee under Sections 2, 3 and 5 hereof, shall cease as of the date of
such payment in full."
2.4. The first sentence of Section 7.1(a)(y) shall be amended by deleting
such sentence in its entirety, and substituting therefor the following:
"if the Company is prohibited by the terms of the Company's Charter, as in
effect from time to time, or any of the Company's or any of its
Subsidiaries' agreements with its or their lenders (including, without
limitation, the Company's senior credit agreement with Bank of America
National Trust & Savings Association, as Agent, and the Indenture with
respect to the Company's Senior Subordinated Notes) (with the Charter and
any such agreement each being referred to herein as a "Subordinating
-------------
Agreement") from making any payments of any portion of the repurchase price
---------
for any of the Shares in cash, the Company shall be entitled to complete
the repurchase of such Shares as to which payment of the repurchase price
in cash is not so prohibited by delivering to the Employee a check for the
repurchase price thereof."
2.5. Section 8(b) (Non-Competition) shall be amended by inserting the
words "or the Initial Post-Term Severance Period, as applicable" between the
words "Severance Period" and the words ", the Additional Severance Period" on
the eleventh line of such Section.
3. Miscellaneous.
(a) No Other Amendment. Except as otherwise expressly provided by this
Amendment Agreement, all of the terms, conditions and provisions of the
Employment Agreement shall continue in full force and effect. This Amendment
Agreement and the Employment Agreement shall be read and construed as one
instrument.
(b) Counterparts. This Amendment Agreement may be executed by the parties
in separate counterparts, each of which when so executed and delivered shall be
an original, but all of which together shall constitute one and the same
agreement. In pleading or proving this Amendment
<PAGE>
-5-
Agreement, it shall not be necessary to produce or account for more than one
such counterpart.
(c) Captions. The captions of sections or subsections of this Amendment
Agreement are for reference only and shall not affect the interpretation or
construction of this Amendment Agreement.
(d) Construction. The language used in this Amendment Agreement is the
language chosen by the parties to express their mutual intent, and no rule of
strict construction shall be applied against either party.
(e) Governing Law. This Amendment Agreement shall to the maximum lawful
extent be governed by and interpreted and construed in accordance with the
internal laws of the State of Illinois, as applied to contracts under seal made,
and entirely to be performed, within Illinois, and without reference to
principles of conflicts or choice of law.
<PAGE>
-6-
IN WITNESS WHEREOF, each of the Company and the Employee has executed and
delivered this First Amendment to Employment, Non-Competition and Stock
Repurchase Agreement as an agreement under seal as of the date first above
written.
COMPANY: IMPAC GROUP, INC.
By /s/ Richard Block
-------------------------------
Name: Richard Block
Title: President
EMPLOYEE: /s/ Dean Henkel
---------------------------------
Name: Dean Henkel
<PAGE>
EXHIBIT 10.85
IMPAC GROUP, INC.
1950 North Ruby Street
Melrose Park, IL 60160-1178
January 7, 1999
Richard H. Block
David C. Underwood
James H. Oppenheimer
Richard L. Oppenheimer
Dean J. Henkel
H. Scott Herrin
Melvin B. Herrin
Jacqueline Barry
Mary Francis Griffin
Dennis McGuin
John McInerny
Robert Eliason
Craig Wilson
Steven Frazier
Richard Mazurek
Ladies and Gentlemen:
You are all parties to Employment, Non-Competition and Stock Repurchase
Agreements or Agreements Relating to Employment and Stock Ownership (the
"Agreements") with IMPAC Group, Inc., a Delaware corporation (the "Company").
- ----------- -------
The Company is in the process of issuing $20,000,000 aggregate liquidation
preference of Redeemable Preferred Stock, par value $.001 per share (the
"Preferred Stock"). In connection with the issuance and sale of the Preferred
- ----------------
Stock, the Company intends to amend and restate its certificate of incorporation
to read substantially in the form of the Fourth Amended and Restated Certificate
of Incorporation attached to this letter as Annex A(the "Amended and Restated
------- --------------------
Charter").
- -------
The prospective purchasers of the Preferred Stock have requested that the
Company's contingent obligation to repurchase your shares of Common Stock of the
Company, and if applicable, any options to purchase Common Stock (the
"Repurchase Obligation"), be made subject to satisfaction of a financial test
- ----------------------
and certain other conditions. This proposed financial test, which is based on
satisfaction of a specified
<PAGE>
ratio of "Debt to Consolidated EBITDA", certain minimum EBITDA levels and
certain other conditions, is set forth in Section 5.2(f) and Section 5.2(g) of
the Charter.
This letter will confirm your agreement to treat the Charter as a
"Subordinating Agreement" for purposes of your Agreement, and accordingly that
the Company's Repurchase Obligation will be subject to satisfaction of the
applicable provisions of the Charter.
[remainder of this page left intentionally blank]
<PAGE>
Promptly after the issuance and sale of the Preferred Stock the Company and
each of you will enter into written amendments to your Agreements to reflect the
terms of this letter agreement.
Please sign where indicated below to confirm your agreement.
Very truly yours,
IMPAC GROUP, INC.
By: /s/ David C. Underwood
------------------------------
Name: David C. Underwood
Title: Chief Financial Officer
Accepted and Agreed:
/s/ Richard H. Block /s/ David C. Underwood
- ------------------------------------- --------------------------------------
Richard H. Block David C. Underwood
/s/ James H. Oppenheimer /s/ Richard L. Oppenheimer
- ------------------------------------- --------------------------------------
James H. Oppenheimer Richard L. Oppenheimer
/s/ Dean J. Henkel /s/ H. Scott Herrin
- ------------------------------------- --------------------------------------
Dean J. Henkel H. Scott Herrin
/s/ Melvin B. Herrin /s/ Jacqueline Barry
- ------------------------------------- --------------------------------------
Melvin B. Herrin Jacqueline Barry
/s/ Mary Francis Griffin /s/ Dennis McGuin
- ------------------------------------- --------------------------------------
Mary Francis Griffin Dennis McGuin
/s/ Robert Eliason
- ------------------------------------- --------------------------------------
John McInerney Robert Eliason
<PAGE>
/s/ Craig Wilson /s/ Steven Frazier
- ------------------------------------- --------------------------------------
Craig Wilson Steven Frazier
/s/ Richard Mazurek
- -------------------------------------
Richard Mazurek
Annex A Draft of the Fourth Amended and Restated Certificate of
- ------- Incorporation.
<PAGE>
EXHIBIT 10.86
FIRST AMENDMENT TO
EMPLOYMENT, NON-COMPETITION
AND STOCK REPURCHASE AGREEMENT
This First Amendment to Employment, Non-Competition and Stock Repurchase
Agreement (this "Amendment Agreement") is dated as of January 8, 1999, is made
-------------------
by and between IMPAC Group, Inc., a Delaware corporation, with its principal
executive offices at 1950 North Ruby Street, Melrose Park, Illinois 60160-1178
(the "Company"), and Richard Oppenheimer (the "Employee"), an individual
------- --------
residing at _______________________________________________________________, and
amends that certain Employment, Non-Competition and Stock Repurchase Agreement,
dated as of March 12, 1998, by and between the Company and the Employee (the
"Employment Agreement").
- ----------- ---------
WHEREAS, this Amendment Agreement is being entered into in connection with
(a) the Securities Purchase Agreement of even date herewith, by and among the
Company and the Purchasers, as defined therein, and (b) the Company's Fourth
Amended and Restated Certificate of Incorporation of even date herewith (the
"Charter Amendment");
- -------- ---------
WHEREAS, pursuant to the Charter Amendment, certain additional restrictions
are being placed on the Company's ability to make payments in cash of the
repurchase price for Shares (as defined in the Employment Agreement) being
repurchased by the Company under the terms of the Employment Agreement; and
WHEREAS, in consideration for, among other things, the Employee's
confirmation of his acceptance of the Charter Amendment as a "Subordinating
Agreement", as defined in the Employment Agreement, the Company has agreed to
make certain amendments to the Employment Agreement;
NOW, THEREFORE, in consideration of the foregoing premises, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Employee agree as follows:
1. Definitions. Capitalized terms used and not otherwise defined herein
have the respective meanings ascribed to them in the Employment Agreement.
<PAGE>
-2-
2. Amendments. Upon the date of the effectiveness of the Charter
Amendment, the Employment Agreement shall be amended as follows:
2.1. Section 1 (Definitions) shall be amended by adding the following new
definitions in the appropriate alphabetical order:
""Severance Release" means a release of any claims of the Employee against
-----------------
the Company and its stockholders, directors, officers, employees, agents or
other affiliates arising out of his employment relationship (other than claims
to any compensation or benefits payable under or to be provided pursuant to
Section 5 hereof, or any rights of the Employee under Sections 6 or 7 hereof)
duly executed by the Employee and reasonably satisfactory in form and substance
to the Company.
"Subordinating Agreement" has the meaning specified in Section 7.1(a)(y)
------------- ---------
hereof."
2.2. Section 1 (Definitions) shall be further amended by deleting
therefrom the definitions of "Severance Extension Notice" and "Severance
Notice".
2.3. Sections 5(a) and 5(b) shall be amended by deleting such Sections in
their entirety, and substituting therefor the following new Sections 5(a) and
5(b):
"(a) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) (other than a Termination upon Retirement) during the
Designated Term, then the Company shall, upon its receipt of a Severance
Release, continue to pay and provide to the Employee (A) the compensation
payable to him pursuant to Section 3(a) hereof, and (B) the benefits provided to
him pursuant to Section 3(c) hereof (the compensation and benefits described in
clauses (A) and (B), together, such Employee's "Base Severance Compensation"),
---------------------------
and, unless such Termination of Employment was a Termination for Under-
Performance, (C) any bonus accrued or earned by the Employee pursuant to the
Bonus Plan and attributable to the Employee's performance for the portion of the
year prior to his Termination of Employment, on a one-time only basis payable at
the time of payment of bonuses to other executive employees under the Bonus
Plan, and (D) for each year, 50% of an amount equal to the compensation payable
to the Employee pursuant to Section 3(a), multiplied by a fraction, the
numerator of which equals the aggregate bonus actually payable with respect to
the preceding year to the Company's other executive employees in the
<PAGE>
-3-
same bonus pay-out range as the Employee was in prior to his Termination of
Employment, and the denominator of which equals the aggregate salary of such
other executive employees for such preceding year (the compensation described in
clauses (C) and (D) together, such Employee's "Variable Severance Compensation")
-------- --------- ------------
for a period (the "Initial Severance Period") equal to the longer of (i) the
------- --------- ------
remainder of the Designated Term, and (ii) (x) if such Termination of Employment
was a Termination for Under-Performance, the one-year period following the date
of such Termination of Employment, or (y) if such Termination of Employment was
not a Termination for Under-Performance, the eighteen-month period following the
date of such Termination of Employment. In the Company's sole discretion, the
Company may elect by written notice to the Employee given no later than thirty
(30) days prior to the end of the Initial Severance Period, to continue to pay
and provide to the Employee his Base Severance Compensation for an additional
period (the "Additional Severance Period") of up to one year following the end
---------- --------- ------
of the Initial Severance Period, provided that such Additional Severance Period
shall in no event extend beyond the second anniversary of the Employee's
Termination of Employment. Upon payment in full of the Employee's Base Severance
Compensation and, if and when applicable, his Variable Severance Compensation,
as described in this Section 5(a), the Company's obligations to pay and provide
the Employee with any other compensation otherwise payable to him pursuant to
Section 3 hereof, and all other rights of the Employee under Sections 2, 3 and 5
hereof, shall cease as of the date of such payment in full.
(b) If the Employee's employment with the Company terminates pursuant
to either Section 4(c) (by the Company without Cause) or Section 4(d) (by the
Employee for Good Reason) (other than a Termination upon Retirement) at any time
after the end of the Designated Term, then the Company shall, upon its receipt
of a Severance Release, continue to pay and provide to the Employee his Base
Severance Compensation and, unless such Termination of Employee was a
Termination for Under-Performance, his Variable Severance Compensation for a
period (the "Initial Post-Term Severance Period") equal to (i) one year
------- --------- --------- ------
following the date of such Termination of Employment, if such Termination of
Employment was a Termination for Under-Performance, or (ii) eighteen months
following the date of such Termination of Employment, if such Termination of
Employment was not a Termination for Under-Performance. The Company may elect,
in its sole discretion, by written notice to the Employee given no later than
ninety (90) days prior to the end of the Initial Post-Term Severance Period, to
extend the period during which the Employee's Base Severance Compensation shall
be payable and provided to the Employee for an additional period (also referred
to herein as an "Additional Severance Period") of up to one year from the end of
---------- --------- ------
the Initial Post-Term Severance
<PAGE>
-4-
Period, provided that such Additional Severance Period shall in no event extend
beyond the second anniversary of the Employee's Termination of Employment. Upon
payment in full of the Employee's Base Severance Compensation, and, if and when
applicable, his Variable Severance Compensation as described in this Section
5(b), the Company's obligations to pay and provide the Employee with any of the
compensation payable to him pursuant to Section 3 hereof, and all other rights
of the Employee under Sections 2, 3 and 5 hereof, shall cease as of the date of
such payment in full."
2.4. The first sentence of Section 7.1(a)(y) shall be amended by deleting
such sentence in its entirety, and substituting therefor the following:
"if the Company is prohibited by the terms of the Company's Charter, as in
effect from time to time, or any of the Company's or any of its
Subsidiaries' agreements with its or their lenders (including, without
limitation, the Company's senior credit agreement with Bank of America
National Trust & Savings Association, as Agent, and the Indenture with
respect to the Company's Senior Subordinated Notes) (with the Charter and
any such agreement each being referred to herein as a "Subordinating
-------------
Agreement") from making any payments of any portion of the repurchase price
---------
for any of the Shares in cash, the Company shall be entitled to complete
the repurchase of such Shares as to which payment of the repurchase price
in cash is not so prohibited by delivering to the Employee a check for the
repurchase price thereof."
2.5. Section 8(b) (Non-Competition) shall be amended by inserting the
words "or the Initial Post-Term Severance Period, as applicable" between the
words "Severance Period" and the words ", the Additional Severance Period" on
the eleventh line of such Section.
3. Miscellaneous.
(a) No Other Amendment. Except as otherwise expressly provided by this
Amendment Agreement, all of the terms, conditions and provisions of the
Employment Agreement shall continue in full force and effect. This Amendment
Agreement and the Employment Agreement shall be read and construed as one
instrument.
(b) Counterparts. This Amendment Agreement may be executed by the parties
in separate counterparts, each of which when so executed and delivered shall be
an original, but all of which together shall constitute one and the same
agreement. In pleading or proving this Amendment
<PAGE>
-5-
Agreement, it shall not be necessary to produce or account for more than one
such counterpart.
(c) Captions. The captions of sections or subsections of this Amendment
Agreement are for reference only and shall not affect the interpretation or
construction of this Amendment Agreement.
(d) Construction. The language used in this Amendment Agreement is the
language chosen by the parties to express their mutual intent, and no rule of
strict construction shall be applied against either party.
(e) Governing Law. This Amendment Agreement shall to the maximum lawful
extent be governed by and interpreted and construed in accordance with the
internal laws of the State of Illinois, as applied to contracts under seal made,
and entirely to be performed, within Illinois, and without reference to
principles of conflicts or choice of law.
<PAGE>
-6-
IN WITNESS WHEREOF, each of the Company and the Employee has executed and
delivered this First Amendment to Employment, Non-Competition and Stock
Repurchase Agreement as an agreement under seal as of the date first above
written.
COMPANY: IMPAC GROUP, INC.
By /s/ Richard Block
------------------------------
Name: Richard Block
Title: President
EMPLOYEE: /s/ Richard Oppenheimer
------------------------------
Name: Richard Oppenheimer
<PAGE>
EXHIBIT 10.87
DATED 20 JUNE 1996
----------------------------------------------
TINSLEY ROBOR plc
-and-
L NEWBON
1404K/JWD
-------------------------------------
S E R V I C E A G R E E M E N T
for the engagement of an executive
-------------------------------------
LAYTONS
Carmelite
50 Victoria Embankment
Blackfriars
London
EC4Y 0LS
<PAGE>
STATEMENT OF MAIN TERMS AND CONDITIONS OF EMPLOYMENT
----------------------------------------------------
- --------------------------------------------------------------------------------
Name of Employer : TINSLEY ROBOR plc
- --------------------------------------------------------------------------------
Name of Employee : LEE NEWBON
- --------------------------------------------------------------------------------
Date employment began (if there has : 1st January 1978
been continuous employment with a
previous employer, the date when the
previous employment began)
- --------------------------------------------------------------------------------
Job title : See clause 2.5
- --------------------------------------------------------------------------------
Job description : See clause 2.5
- --------------------------------------------------------------------------------
Location/Place of Work : See clause 2.5
- --------------------------------------------------------------------------------
Remuneration : See clause 4
- --------------------------------------------------------------------------------
Normal working hours : 9:00am to 5:00pm and such
additional hours as are
necessary for the proper
performance of his duties
- --------------------------------------------------------------------------------
Holidays and holiday pay : See clause 8
- --------------------------------------------------------------------------------
Provisions for sickness or injury : See clause 9
- --------------------------------------------------------------------------------
Details of any pension scheme : See clause 7
(other than the statutory scheme) and
whether a certificate of contracting
out is in force
- --------------------------------------------------------------------------------
Collective Agreements : See clause 2.7
- --------------------------------------------------------------------------------
Overseas Employment : See clause 2.5
- --------------------------------------------------------------------------------
Notice of termination required from:
(a) the Employer : See clause 2.1
(b) the Employee : See clause 2.1
- --------------------------------------------------------------------------------
Details of disciplinary and grievance
procedures : See clause 14
- --------------------------------------------------------------------------------
<PAGE>
T H I S A G R E E M E N T is made the 20 day of June 1996
B E T W E E N:
(1) TINSLEY ROBOR plc (Registered Number 948696) having its registered
office at Drayton House Drayton Chichester West Sussex PO20 6EW ("the
Company"); and
(2) LEE NEWBON of "Son Bou" Angmering Lane Willowhayne East Preston
Sussex ("the Executive")
W H E R E B Y IT IS A G R E E D as follows:
1. PRELIMINARY
- -----------------
1.1 Definitions: In this Agreement including the Schedules hereto:
-----------
"the Board" - means the Board of Directors of the Company
as from time to time constituted or any duly
appointed committee thereof;
"Chairman" - means the person who is Chairman of the Board
at the relevant time;
"the Companies" - means the Company and every company which is
at any time its holding company or subsidiary
and any other company which is a subsidiary
of its holding company or its ultimate or
intermediate holding company (the terms
"holding company" and "subsidiary" shall have
the meanings defined by Section 736 Companies
Act 1985);
"directly or indirectly" - means directly or indirectly and whether
alone or jointly with or as proprietor,
shareholder, participator, officer, manager,
employee, consultant, or agent to of for or
on behalf of any person, firm, or company or
otherwise whether for the Executive's private
gain or otherwise;
"the Initial Term" - means two years commencing on 24th June 1996;
"Key Employee" - means an employee or officer of any of the
Companies who in the year preceding
Termination received an annual salary at a
rate exceeding $20,000 or such other figure
which in its absolute discretion the Board
having regard to all the circumstances, deems
appropriate and any change to this figure
shall have effect only if notified in writing
to the Executive prior to Termination;
<PAGE>
(2)
"Termination" - means termination of the office or
employment of the Executive
1.2 Clause headings shall be ignored in interpretation
---------------
1.3 Group Benefits: The undertakings of the Executive in this Agreement
--------------
are for the benefit of each of the Companies to which his duties relate and for
this purpose the Company contracts on behalf of each of such Companies
1.4 References herein to clauses, sub-clauses, paragraphs, schedules and
----------
annexes are references to clauses, sub-clauses, paragraphs, schedules and
annexes of or to this Agreement unless stated otherwise
2. EMPLOYMENT
- ----------------
2.1 Employment: The Company shall employ the Executive and the Executive
----------
shall serve the Company upon and subject to the provisions of this Agreement
until terminated;
(a) by the Executive serving on the Company at any time not less than
twenty-four months' notice;
(b) by the Company either complying with sub-clause 2.2 or serving on the
Executive not less than twenty-four months' notice; or
(c) pursuant to sub-clauses 9.4 or 11.1
2.2 Compensation: If the Executive's employment is terminated by the
------------
Company by less than twenty-four months' notice other than pursuant to
sub-clauses 9.4 or 11.1;
(a) in full and final settlement of all claims which the Executive may have
under this Agreement or its termination and conditional upon his not
making any claim against the Company whatsoever and subject to the
remaining paragraphs of this sub-clause the Company shall pay to the
Executive a sum calculated as follows:
[2 x TAR x (730 - N)] - A
-------
730
in which
TAR = the Executive's total annual remuneration at the rate
payable at the date of Termination
N = the number of days' between the date on which the notice
of Termination was given and the date upon which it
expired, being days in respect of which the Company pays
to the Executive his remuneration hereunder
A = the total of any amount which the Company is ordered to
pay to the Executive by any court or tribunal by reason
of Termination or any event leading to or connected with
Termination plus a sum equal to the total on a full
indemnity basis of all expenses incurred by the Company
in relation to the Executive's claim for such payment;
<PAGE>
(3)
(b) for this purpose "total annual remuneration" shall:
(i) include the annual salary payable to the Executive under
sub-clause 4.1 hereof;
(ii) include the annual leasing cost (excluding petrol and oil) to the
Company of providing the Executive with a car of a similar type
and value to his Company Car just prior to Termination unless the
Company continues to provide the Executive with this Company Car
for a two year period or part thereof in which event the monies
payable to the Executive under this sub-clause shall be reduced
pro rata;
(iii) exclude the annual pension contributions payable by the Company
the Executive being entitled to retain membership of the Company's
pension scheme for two years following termination;
(iv) include the annual cost to the Executive of replacing equivalent
life assurance and medical insurance to that provided under sub-
clauses 7.1 and 7.3 respectively unless the Company continues
such assurance or insurance for a two year period from Termination
or part thereof in which event the monies payable to the Executive
under this sub-clause shall be reduced pro rata;
(v) exclude any entitlement the Executive would have had save for
Termination to participate in the Company's Executive Share Option
Scheme 1988 or Senior Executive Incentive Scheme 1994 or any other
scheme providing additional benefit to the Executive in force at
Termination unless otherwise agreed in writing between the Company
and the Executive;
(vi) exclude any cash bonus, profit sharing or any other incentive;
(vii) exclude any other form of remuneration or benefit which is not
expressly to be included under sub-clause 2.2(b);
(viii) be calculated by reference to rates of remuneration and benefits
hereunder at the date of Termination;
(c) all payments under this sub-clause 2.2 shall be made after deduction of
any tax or other deduction or withholding which the Company is obliged to
make under the PAYE regulations or other regulations or law in force at
the date of payment;
(d) such payment shall satisfy the Company's obligation to give notice of
termination of any particular duration and the Company shall not be in
breach of its obligations hereunder nor be deemed to have repudiated its
obligations hereunder if it gives less than the period of notice referred
to in sub-clause 2.1
(e) such sum shall be payable by the Company twenty-eight days after
Termination
<PAGE>
(4)
(f) the Company shall be entitled to cease payment of any outstanding
instalments forthwith should the Executive fail to observe the conditions
under sub-clauses 3.2 and 3.3 and clause 10 hereof
2.3 Directorship: The Executive:
------------
(a) shall hold office as a director of the Company:
(b) shall hold office as a director of such other of the Companies as the
Board may from time to time request (but he shall have no right to hold
office as a director of any of the Companies except the Company and shall
resign from any such office without claim for compensation upon the
request of the Board):
(c) upon Termination shall resign from office as a director of the Company and
of any of the Companies in which he holds that office:
(d) irrevocably authorises the Company and any person nominated by the Board
to sign on his behalf any resignation which he is required to give under
this sub-clause:
PROVIDED THAT such resignation(s) shall be without prejudice to any claims the
Executive may have against the Company arising out of this Agreement or its
Termination.
2.4 Directorship of a Public Company: The Company, being a public limited
--------------------------------
company whose shares are quoted on The Stock Exchange, shall not be liable for a
breach of its obligations in sub-clause 2.3 if the members of the Company in
general meeting vote that the Executive be removed from office as a Director of
the Company or if upon retiring by rotation pursuant to the Articles of
Association of the Company he is not re-elected.
2.5 Duties: Subject to the directions of the Board, the Executive (alone or
------
jointly with such other or others as the Board may from time to time appoint):
(a) shall carry out such managerial and related duties and exercise such
powers in connection with the business of any of the Companies as may from
time to time be assigned to him by the Board in and from such parts of the
United Kingdom as the Board may from time to time specify and shall travel as
his duties may reasonably demand but shall not be obliged to reside or spend
more than twenty-eight consecutive days outside the United Kingdom:
(b) shall hold office as Chief Executive of the Company or in such other
position as the Board may from time to time reasonably request.
2.6 Secondment: The Company may second the Executive to the employment of any
----------
of the Companies and any remuneration or other benefits received by the
Executive in respect or by reason of the secondment (other than from the
Company) shall be the property of the Company and
<PAGE>
(5)
the Executive shall account to the Company accordingly
2.7 Collective Agreements: There are no collective agreements in force in
---------------------
respect of the Executives employment
2.8 Suspension: The Company shall not be required to give the Executive any
----------
powers or duties or to provide any work for the Executive, and may during the
course of this Agreement which shall include any period of notice the Executive
is required to work suspend him from the performance of his duties or exclude
him from any premises of any of the Companies PROVIDED THAT
(a) it gives the reason for so doing:
(b) such suspension is no longer than six months; and
(c) the Executive's remuneration and other benefits will not be affected by
reason only of such suspension or exclusion
3. UNDERTAKINGS BY THE EXECUTIVE
- ---------------------------------
3.1 Employment Obligations: The Executive shall:
----------------------
(a) use every effort to promote and improve the business of the Companies to
which his duties relate giving them the full benefit of his abilities,
knowledge and expertise;
(b) unless prevented by ill health or accident, diligently and faithfully
devote to the performance of his duties the whole of his time,
commitment, attention and skill during such reasonable hours as may be
necessary for the proper performance of his duties or as may from time to
time be reasonably directed by the Board;
(c) not directly or indirectly be in any manner engaged, concerned or
interested in any other trade, business, profession or occupation
whatsoever except:
(i) as holder for investment only of securities of any company dealt in
on a recognised stock exchange which comprise less than five percent
of the total securities of the relevant class: or
(ii) with the written consent of the Board and subject to any terms and
conditions which the Board imposes
(d) promptly and faithfully comply with all reasonable instructions given by
or under the authority of the Board;
(e) keep the Board promptly and fully informed (in writing if so required) of
his conduct of the business and give to the Board such information
relating to the affairs of the Companies to which his duties relate as it
may from time to time request;
(f) observe the provisions of any code in relation to dealings in securities
and such other codes, guidance or statements which have been or are
adopted by the Board or which directors of the Company are required to
observe by law or by any recognised stock exchange or other regulatory
body or authority;
<PAGE>
(6)
(g) not offer or ask for or accept receive or give directions for the
disposal of any commission benefit or gift whatsoever in respect of any
transaction venture or affair in which any of the Companies may be
engaged or is or seeks to be interested nor permit his spouse or any
such dependant so to do but notwithstanding this prohibition all such
commissions benefits gifts actually received shall be the property of
the Company:
3.2 Confidentiality: The Executive undertakes with the Company and (as
---------------
separate obligations) with each of the other Companies to which his duties
relate that (both during the continuance of this Agreement and after
Termination without limit of time) he will:
(a) not disclose or permit the disclosure to any person (except to officials
of the Companies authorized to receive it or with the prior written
consent of the Board) any secret or confidential information of any of
the Companies or of any business contracts of any of the Companies
including without limitation information relating to their operations,
finances, business plans, products, processes, know-how, customers and
suppliers:
(b) do everything reasonably within his power to keep such information
secret and confidential and to avoid disclosure to persons not entitled
to receive it:
(c) not use any such information for his own benefit or for the benefit of
any person or persons or in a manner which would or might be detrimental
to any of the Companies:
(d) sign such confidentiality undertakings in favour of any of the Companies
or any other person as the Board may reasonably request and observe all
such undertakings and all other restrictions and obligations upon any of
the Companies known to him for the time being in relation to any
confidential material received from any third party
PROVIDED THAT these clauses shall not apply to any information which comes into
the public domain through no breach of obligation by the Executive or which the
Executive is ordered to disclose by a court of competent jurisdiction
3.3 Post-Employment Obligations: Following Termination the Executive will
---------------------------
not (directly or indirectly whether for his own gain or for the benefit of any
third party without the prior written consent of the Board):
(a) represent himself, or permit himself to be represented, as being
connected with or successor to any of the Companies or their respective
businesses or as acting on behalf of any of the Companies or in any way
seek to utilise the goodwill of any of the Companies:
(b) carry on, cause or permit to be carried on any business using any name,
style, logo or image which is or has been or is about to be
<PAGE>
(7)
used by any of the Companies or which in the opinion of the Board is
calculated to cause confusion with such a name, style, logo or image or to
imply a connection with any of the Companies:
(c) for twelve months employ, engage in office or be in partnership or in a
similar business relationship with any person who at the time or within
the six months preceding Termination was a Key Employee of any of the
Companies and with whom he was concerned during the year prior to
Termination;
(d) for twelve months use his knowledge of the business requirements of, or
exert any influence over or canvass or by any other means seek or solicit
business or orders from, any person firm or corporation who is or at any
time during the year prior to Termination has been a client or customer of
any of the Companies and with which he was concerned during the year prior
to Termination or prospective client or customer of any of such Companies
and with whom he dealt during the year prior to Termination with a view to
obtaining orders for any goods or services of a type supplied or rendered
by any of such Companies and with which the Executive was concerned and for
the purpose of this Clause 3.3(e) a prospective client or customer shall
mean a person or an entity which had at the date of Termination entered
into discussions with any of the Companies and such discussions had not
definitively ceased:
(e) for twelve months arrange to supply goods or to render services of a type
supplied or rendered by any of the Companies for the provision of printed
packaging for the music, computer games and multimedia industries and with
which he was concerned during the year prior to Termination
PROVIDED THAT each of the restrictions in this sub-clause is entirely separate
and distinct and may be severed accordingly and the Executive acknowledges that
the restrictions are both necessary in the legitimate interests of the Companies
business and do not bear undue hardship upon him AND FURTHER the Executive
acknowledges the right of the Company in its discretion to impose any separate
lesser restrictions which will be in addition to and not in substitution for
those contained in this sub-clause.
4. REMUNERATION
- -----------------
4.1 Salary: The Company shall pay to the Executive an annual salary of ONE
HUNDRED AND SEVENTEEN THOUSAND AND SEVENTY FIVE POUNDS ((Pounds)117,075)
accruing from day to day which shall be paid by equal monthly installments in
accordance with the normal practice of the Company from time to time and shall
be inclusive of any fees to which the Executive may be entitled as a director or
holder of any other office of or in any of the Companies
<PAGE>
(8)
4.2 Review: The salary payable to the Executive hereunder shall be fairly
------
reviewed on 1st April each year in the light of all relevant circumstances and
any new salary agreed on review shall be payable from the effective date of such
review as if provided for herein
5. COMPANY CAR
- -----------------
5.1 Provision: The Company shall provide the Executive with a car of a
---------
type, status, quality and age which it considers appropriate for him up to a
value determined form time to time by the Board and will discharge all
reasonable petrol, oil, insurance, maintenance and running costs (save parking)
incurred by him in or about the performance of his duties and privately (save on
overseas holiday)
5.2 Care: The Executive shall treat the car in a proper and reasonable
----
manner and keep it clean and in good repair and shall comply with the detailed
instructions given by the Company from time to time in respect of company cars
and shall return it in good condition to the Company upon request. The Executive
shall defray the costs and expenses involved in connection with any parking fine
or offence incurred by the Executive or any person permitted by him to drive the
car and shall indemnify the Company against the same
6. EXPENSES
- --------------
6.1 Reimbursement: The Company shall reimburse the Executive (in accordance
-------------
with the relevant rules published by the Company from time to time) all
travelling, hotel and other out of pocket expenses properly and necessarily
incurred exclusively for and in the course of performing his duties on the
production to the Company of such vouchers receipts or other evidence of actual
payment of the expenses as the Company may reasonably require
6.2 Credit Card: The Executive shall comply with any conditions for the
-----------
time being laid down by the Company as to its use
7. PENSION AND INSURANCE BENEFITS
- ------------------------------------
7.1 Pension and Life Assurance: The Executive shall be entitled to
--------------------------
participate in the Company's pension and life assurance arrangements subject to
the terms of the relevant deeds and rules from time to time details of which are
obtainable from the Company
7.2 Contracting-out Certificate: A contracting out certificate issued under
---------------------------
the Social Security Pensions Act 1975 is in force
7.3 Medical Insurance: The Executive shall be entitled to participate for
-----------------
the benefit of himself and his wife and children under age 21 in the Company's
private medical insurance scheme (or such other scheme as may be appropriate
from time to time) at a level consistent with the Executive's standing and
position in the Company
<PAGE>
(9)
7.4 Permanent Sickness: The Executive shall be entitled to participate in the
------------------
Company's permanent sickness insurance scheme (or such other scheme as may be
appropriate from time to time) details of which are obtainable from the Company.
8. HOLIDAYS
- ------------
8.1 Entitlement: The Company's holiday year is the calendar year and the
-----------
Executive may (and if directed by the Board shall) take a holiday or holidays
totalling twenty-five working days in each holiday year (in addition to public
holidays) to be taken at such times convenient to the Companies as may be agreed
between him and the Board and in accordance with any regulations as to holidays
from time to time made by the Board.
8.2 Accrual: Holiday entitlement will accrue from day to day during each
-------
holiday year and the entitlement to accrued holiday pay upon Termination will be
in proportion to the period of employment during the holiday year. Upon
Termination the Executive shall account to the Company for holiday taken in
excess of his accrued entitlement and if the Executive fails to do so the
Company is hereby authorised to deduct the same from his final salary payment
or any other monies due from the Company to the Executive upon Termination.
8.3 No Carry-forward: The Executive may not without the consent of the Board
----------------
carry forward any unused holiday entitlement to any subsequent year such unused
holiday will be forfeited without pay.
9. SICKNESS
- ------------
9.1 Certification: If during the continuance of this Agreement the Executive
-------------
shall become incapable through illness or accident of attending to his duties
hereunder he shall forthwith provide the Company with a certificate of his
disabilities in such form as the Board requires signed by himself and if such
incapacity continues for a period of more than seven days including weekends
shall provide the Company at its request from time to time with further
certificates signed by the registered medical practitioner treating the
Executive.
9.2 Full Sick Pay: During the period or periods of absence through such
-------------
incapacity aggregating not more than six months in any period of twelve months
the Company shall pay to the Executive his full salary due hereunder (less any
statutory sick pay and other National Insurance benefits to which the Executive
may be entitled).
9.3 Discretionary Sick Pay: Thereafter and during the continuance of this
----------------------
Agreement the Company shall pay to the Executive such proportion of his salary
otherwise payable hereunder as the Board shall in its discretion consider
appropriate.
<PAGE>
(10)
9.4 Termination: If the Executive has been absent through any incapacity
-----------
referred to in sub-clause 9.1 for a period or periods aggregating more than six
months in any one period of twelve months the Company may determine this
Agreement by giving to the Executive not less than one month's notice to expire
at any time
9.5 Third Party Action: If the absence of the Executive is due to injuries,
------------------
actionable negligence or nuisance caused by or in breach of any statutory duty
by any third party all payments made to him by the Company under this clause
shall to the extent that compensation is recoverable from that third party (or
would be recoverable but for this clause) constitute loans by the Company to the
Executive which shall be repaid by the Executive when and to the extent that the
Company requests such repayment
9.6 Medical Examinations: The Executive shall submit himself for medical
--------------------
examination by doctors or specialists nominated by (and at the expense of) the
Company as from time to time reasonably requested by the Board and shall
instruct and authorise full disclosure to the Company of the results of any such
examination and this sub-clause shall constitute any necessary statutory notice
and consent for such disclosure to and use by the Company. The Company shall
keep all information received by it under this sub-clause in confidence for
proper purposes of personnel management. The Company shall be entitled to
terminate this Agreement by giving not less than one month's notice to expire at
any time in the event of an adverse medical report which in the opinion of the
Board reveals a condition which will prevent the Executive properly attending to
his duties hereunder
10. INTELLECTUAL PROPERTY
- ---------------------------
10.1 Duties: The Executive acknowledges that by reason of his position he
------
has a special obligation to further the interests of the Companies in respect of
the creation by him, whether alone or jointly, of any product, processs,
formula, design, drawing, slogan, writing, computer program, know-how, or
similar knowledge of any kind which relate to the businesses of any of the
Companies ("Intellectual Property")
10.2 Company Property Rights: All Intellectual Property shall be
-----------------------
immediately communicated by him to the Company in writing or other appropriate
medium of record (if recordable) together with all information concerning the
same which the Board may request and shall be the absolute property of the
Company together with all legal rights therein including copyright, design
right, registered design, patent and the like ("Intellectual Property Rights")
AND THE EXECUTIVE HEREBY ASSIGNS to the Company all (if any) interest which he
may from time to time have in any such Intellectual Property Rights
<PAGE>
(11)
10.3 Appointment of Attorney: The Executive HEREBY IRREVOCABLY APPOINTS the
-----------------------
Company to act for him and in his name in the preparation and execution of all
and any necessary documents and to pursue any application for any Intellectual
Property Rights including power for the Company and persons nominated by it to
designate any other person to act as attorney in such respects. Notwithstanding
such power of attorney the Executive shall at the expense of the Company do and
execute all documents and do all other things as the Board may consider
necessary or desirable in connection with securing Intellectual Property Rights
or vesting them or more securely vesting them in the Company
10.4 Exploitation: All decisions as to the protection by registration and the
------------
exploitation of Intellectual Property shall be in the sole discretion of the
Company
10.5 Waiver: The Executive waives all of his Moral Rights as defined in the
------
Copyright, Designs and Patents Act 1988 in respect of any acts of the Company
or any acts of third parties done with the Company's authority in relation to
all copyright material generated by him
10.6 Post Termination: Rights and obligations under this clause in respect
----------------
of Intellectual Property and Intellectual Property Rights shall continue in
force after Termination of this Agreement and shall be binding upon the
Executive's representatives
11. PREMATURE TERMINATION
- ---------------------------
11.1 Causes: Without restricting or precluding any other right or remedy, the
------
Company may by written notice to the Executive served within twenty-eight days
of the Board becoming aware of such matter terminate this Agreement immediately
or on such notice as the Board may decide if the Executive:
(a) refuses or without reasonable cause fails or wilfully neglects to attend
properly to his duties hereunder or (except as a result of illness or
accident) is or becomes incapable of performing his duties hereunder and
such incapacity continues after seven days' notice given to him by the
Board requiring him to remedy the same; or
(b) fails to obey any lawful direction of the Board or any person in a
position of authority over him within the Companies; or
(c) commits any serious or persistent breach of any of his obligations to the
Companies (whether hereunder or otherwise) or makes or is found to have
made any serious misrepresentation to the Company; or
(d) is guilty of gross misconduct or mismanagement or neglect in the
performance of any duty owed by him to any of the Companies; or
(e) becomes bankrupt or applies for any receiving order or has a receiving
order made against him or makes any composition with his creditors; or
<PAGE>
(12)
(f) becomes of unsound mind or if an order shall be made in respect of him
or his property under any statute relating to mental health; or
(g) commits or gives to the Board reasonable grounds for believing that he
has committed any material act of dishonesty; or
(h) is charged with a criminal offence or acts in such a manner which in the
opinion of the Board may bring the Executive, the Executive's office or
the Company into disrepute; or
(i) becomes in any way disqualified from holding office as a director of any
company or otherwise from performing any of his duties hereunder or
otherwise unable in accordance with law or any relevant professional
code to perform any of the same
11.2 Appeal: If the Company serves a notice upon the Executive under this
------
clause or imposes any other disciplinary action against him the Executive may
appeal to the Chairman of the Board for the time being whose determination of
the matter (subject to the jurisdiction of public courts and tribunals) shall be
conclusive. The terms and effect of the notice or other action will not be
affected by such appeal unless and until the Chairman of the Board determines
otherwise. If the Chairman rescinds the notice of termination the Executive's
employment and this Agreement shall continue as if no such notice or other
action had been served or taken
12. RETURN OF COMPANY PROPERTY
- --------------------------------
12. Upon Termination the Executive shall return to the Company at such
premises as the Board may direct any car, computer equipment provided to him,
all software, documents, correspondence, client lists, chattels and other
property of or provided on behalf of or relating to any of the Companies or
their clients/customers which he made or received during or by reason of his
employment with any of the Companies or which may be in his possession or under
his control (including all copies and notes of any of the same)
13. RECONSTRUCTION
- --------------------
13. If the Company is liquidated for the purposes of amalgamation or
reconstruction or if some other company acquires or unconditionally agrees to
acquire the whole or substantially the whole of the undertaking and assets of
the Company or of the issued shares in the capital of the Company the Company
may terminate this Agreement upon offering the Executive employment with the
acquiring company on terms not less favourable than the terms of this Agreement
and in such event the Executive shall have no claim against the Company in
respect of the termination and shall accept such offer of new employment
<PAGE>
(13)
14. DISCIPLINARY AND GRIEVANCE PROCEDURE
- -----------------------------------------
14. There are no specific disciplinary rules applicable to this appointment
and all disciplinary matters will be decided and implemented by the Board. Any
grievance of the Executive in respect of his employment will be directed in
writing with all relevant details to the Chairman of the Board who shall
promptly investigate and determine the same in such manner as he and the Board
consider appropriate
15. GENERAL
- -----------
15.1 Notices: Any notice hereunder shall be in writing and shall be properly
-------
served on the Executive if served upon him personally or if left at or sent by
recorded delivery service post addressed to him at his address stated above or
to any other address known to the Company as then being his residence and on the
Company if sent by recorded delivery service post to its registered office
15.2 Previous Agreements: This Agreement operates as from the Commencement
-------------------
Date in substitution for and to the exclusion of any terms of service or office
previously in force between any of the Companies and the Executive
15.3 Waiver: No time or other indulgence allowed by either party to the
------
other shall prejudice or waive any rights or remedies
15.4 Variations: Any variation of or addition to this Agreement shall be in
----------
writing signed by the parties (and in the case of the Company by the Chairman of
the Board)
15.5 Severance: If any provision of this Agreement is held by any court or
---------
other competent authority to be void or unenforceable in whole or in part this
Agreement shall continue to be valid as to the other provisions thereof and the
remainder of the affected provision
IN WITNESS whereof the parties have executed this Agreement as a Deed the date
first before written
EXECUTED as a DEED by
for and on behalf of
TINSLEY ROBOR plc
acting by
and
SIGNED and DELIVERED as
a DEED by the said
LEE NEWBON in the presence of:
WITNESS
Signature: /s/Illegible ^^
Name: Illegible ^^
Address: Illegible ^^
Occupation: STOCKBROKER
<PAGE>
CU Individual Pension Arrangement -- Declaration of Trust
(For a Limited Company wishing to appoint individual trustees)
- -------------------------------------------------------------------------------
Scheme Name Executive Pension Plan for Tinsley Robor
Director/Employee Name Mr. Lee Newbon
-----------------------------------------------------
Principal Employer Tinsley Robor plc
-----------------------------------------------------
Registered Office Drayton House, Drayton, Chichester
-----------------------------------------------------
West Sussex PO20 6EW
-----------------------------------------------------
Names and Addresses Lee Newbon, "Son Bou"
of Trustees 41 Angmering Lane,
-----------------------------------------------------
Willowhayne, East Preston, West Sussex BN162SY
-----------------------------------------------------
Anthony John Smith, Old Mill House
-----------------------------------------------------
Speltham Hill, Hambeldon, Waterlooville Hanes P074SE
-----------------------------------------------------
Date of Declaration 29/6/98
-----------------------------------------------------
Scheme Commencement Date 29/6/98
-----------------------------------------------------
- --------------------------------------------------------------------------------
This Trust Deed is made on the Date of Declaration shown above by the Principal
Employer named above of the one part and the trustee or trustees named above
(hereinafter called "the Trustees") of the other part
Whereas
1. The Principal Employer has determined to establish the retirement benefits
scheme named above (hereinafter called "the Scheme") for providing relevant
benefits as defined in Section 612(1) of the Income and Corporation Taxes Act
1988 for the Director/Employee named above (hereinafter called "the Member")
2. The Principal Employer has requested the Trustees to act as trustees of the
Scheme and as Administrator of the Scheme for the purposes of Chapter I Part
XIV of the Income and Corporation Taxes Act 1988 and the Trustees have
consented so to act
Now This Deed Witnesseth and it is hereby agreed and declared as follows
1. The Principal Employer hereby establishes as from the date shown above as the
Scheme Commencement Date under irrevocable trusts the Scheme to be defined in
and to be administered in accordance with the rules attached to this Deed
(hereinafter referred to as "the Rules")
2. The Trustees shall secure the benefits of the Scheme by a policy or policies
(hereinafter called "the Policy") with Commercial Union Life Assurance
Company Limited or any other Associated or Subsidiary Companies of Commercial
Union Assurance Company plc or with any other Authorised Assurance Company as
defined in the Rules and maintained by contributions made in the manner
provided for in the Rules and applied by the Trustees as premiums under the
Policy which Policy is to be held on trust by the Trustees immediately on its
being effected for the purposes of the Scheme
3. The Trustees declare that they will hold on trust in accordance with the
Rules any other policy transferred to the Scheme in respect of the Member
4. Where the Member is also an employee or director of any Associated Company
(as defined in the Rules and hereinafter referred to as the "Associated
Company") the Associated Company if so desirous may be admitted to the Scheme
for the provision of relevant benefits as aforesaid for the Member with the
consent of the Principal Employer and the approval of the Board of Inland
Revenue by passing a resolution or completing a Declaration under hand by
which such Associated Company agrees to observe and comply with such of the
provisions of the Rules as are to be observed and complied with by an
Associated Company admitted to the Scheme
Where any Associated Company or Companies are so admitted the premium
necessary for effecting and maintaining the Policy shall be apportioned
between the Principal Employer and such Associated Company or Companies
severally in the proportions which are properly applicable to them
5. The Principal Employer shall have the power to appoint and remove
a) trustees by deed and in exercise of such power hereby appoints the
Trustees to be the first trustees of the Scheme
b) an Administrator who shall have the management of the Scheme and in
exercise of such power hereby appoints the Trustees to be the first
Administrator of the Scheme
6. Subject to the requirements of Sections 67 and 68 of the Pensions Act 1995
(and any regulations made thereunder) the trusts set out in this declaration
and the Rules may with the prior consent of the Principal Employer and the
Board of Inland Revenue be amended at any time with or without retrospective
effect by deed executed by the Trustees
7. In addition to all the indemnities conferred on the Trustees by law, the
Principal Employer and any Associated Companies shall indemnify and keep
indemnified every trustee and his estate (and if any trustee is a body
corporate, its directors and their successors in office and its officials and
their successors in office) from and against all claims, demands, costs,
charges and expenses which he may incur or for which he may become
responsible under the Scheme or arising out of the exercise of any power,
authority or discretion vested in the Trustees by the Rules (whether
committed by the Trustees or by any person or persons body corporate or
institution appointed or employed by the Trustees to carry out any of the
provisions of the Rules) other than in respect of any such claims, demands,
costs, charges and expenses which arise as a result of a fraudulent or
negligent act or breach of trust committed by, or with the knowledge of, the
trustee
<PAGE>
The Principal Employer shall decide the proportions in which the Principal
Employer and the respective Associated Companies shall bear the cost of any
indemnity
8. In no event shall the Trustees or any of them (including a body corporate)
or the Principal Employer or any Associated Companies be responsible
personally or incur any liability to the Member or to any beneficiary or
any person claiming under or in respect of the Member or beneficiary for
the payment of any pensions or other benefits provided by the Scheme and
(without prejudice to the liability of the Principal Employer and any
Associated Companies in respect of the contributions and other payments to
be made by them pursuant to the Rules) the assets of which the Scheme for
the time being consists in respect of the Member shall be the only source
to which the Member or persons who acquire rights under the Scheme in
respect of the Member or persons claiming under or in trust in respect of
the Member or any such persons may look for payment of pensions and other
benefits provided by the Scheme
9. Any reference in this Deed to any enactment shall include any statutory
modification or re-enactment thereof for the time being in force
10. The trusts hereby declared shall be subject to the law of England
11. The Scheme shall be terminated and the trusts hereinbefore declared shall
be determined in the events provided for in the Rules
In Witness Whereof this document has been executed as a Deed by the Principal
Employer and the Trustees on the Date of Declaration shown above
THE COMMON SEAL of the Principal Employer
was hereunto affixed in the presence of
- ------------------------------------------
Director
- ------------------------------------------
Secretary
OR
Signed and Delivered as a Deed by the Principal Employer
acting by Lee Newbon /s/ Lee Newbon
------------------- ----------------------
Director Signature
and by Anthony John Smith /s/ Anthony John Smith
------------------- ----------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Signed and Delivered as a Deed Signed and Delivered as a Deed
by the Said by the said
) )
Lee Newbon ) /s/ Lee Newbon )
- ---------------------- ---------------------- ----------------------------- ----------------------------
Name Signature Name Signature
in the presence of in the presence of
) )
S.P. Robberts ) /s/ S.P. Robberts )
- ---------------------- ---------------------- ----------------------------- ----------------------------
Name Signature Name Signature
Gransden,
---------------------- ----------------------
Address Address
Spring Lane
---------------------- ----------------------
Swanmore
---------------------- ----------------------
[illegible]
Signed and Delivered as a Deed Signed and Delivered as a Deed
by the Said by the said
) )
Anthony John Smith ) /s/ Anthony John Smith )
- ---------------------- ---------------------- ----------------------------- ----------------------------
Name Signature Name Signature
in the presence of in the presence of
) )
S.P. Robberts ) /s/ S.P. Robberts )
- ---------------------- ---------------------- ----------------------------- ----------------------------
Name Signature Name Signature
Gransden,
---------------------- ----------------------
Address Address
Spring Lane
---------------------- ----------------------
Swanmore
---------------------- ----------------------
</TABLE>
<PAGE>
EXHIBIT 10.89
Support Agreement
between
Impac Group Inc., a Delware corporation
AGI Incorporated, an Illinois corporation
Klearfold Inc., a Pennsylvanian corporation
IMPAC Europe Limited
Levelprompt Limited
and
The Companies party hereto
1
<PAGE>
THIS AGREEMENT is made the 15 day of December 1998
- --------------
BETWEEN:
- -------
1. IMPAC Group Inc., a Delaware corporation (hereinafter called "IMPAC");
2. AGI Incorporated, an Illinois corporation (hereinafter called "AGI");
3. Klearfold, Inc., a Pennsylvanian corporation (hereinafter called
"Klearfold");
4. IMPAC Europe Limited a company registered in England under number 3487779
whose registered office is at Drayton House, Drayton, Chichester West
Sussex, PO20 6EW (hereinafter called "IMPAC Europe");
5. Levelprompt Limited a company registered in England under number 3577919
whose registered office is at 14 Dominion Street, London EC2M 2RL
(hereinafter called "Levelprompt"); and
6. The companies brief particulars of which are set out in the Schedule and
the registered office of each of which is at Drayton House aforesaid
(hereinafter called the "Original Companies" and each an "Original
Company").
WHEREAS the Lenders have made available to IMPAC, AGI and Klearfold a
multicurrency revolving credit facility with a letter of credit and guaranty
subfacility and a Sterling swing line subfacility, and two term loan facilities
and to the L/C Borrowers a letter of credit facility upon the terms and subject
to the conditions set forth in the Credit Agreement.
AND WHEREAS the Original Companies, IMPAC Europe and Levelprompt have agreed to
guarantee the obligations of the Credit Parties under the Credit Agreement and
to grant security for such guarantee on all the assets of each such person.
AND WHEREAS the Original Companies have agreed to support (a) IMPAC in
performing its obligations under the Credit Agreement in the manner hereinafter
appearing, (b) IMPAC Europe in meeting its financial obligations to IMPAC and
Levelprompt, and (c) Levelprompt in meeting its financial obligations to IMPAC
in each case incurred for the purpose of the purchase of shares in Tinsley Robor
Limited.
AND WHEREAS to enable each Original Company, IMPAC Europe and Levelprompt to
give such financial assistance IMPAC, AGI, IMPAC Europe, Levelprompt and
Klearfold and the Original Companies have agreed to enter into this Agreement.
NOW THIS DEED WITNESSETH and IT IS HEREBY AGREED as follows:-
1.1 To the extent that:
2
<PAGE>
(A) any Company, for whatever reason, has difficulty in meeting its
financial obligations arising in the ordinary course of business, or
(B) IMPAC, AGI or Klearfold has difficulty in meeting its obligations
under the Credit Agreement or
(C) IMPAC Europe or Levelprompt have difficulty in meeting their
respective financial obligations to, in the case of IMPAC Europe,
IMPAC and Levelprompt and, in the case of Levelprompt, IMPAC in each
case incurred in connection with (a) the subscription for shares in
IMPAC Europe and Levelprompt by IMPAC and the provision of loans to
IMPAC Europe and Levelprompt pursuant to a subscription agreement
dated 7 July 1998 between IMPAC, IMPAC Europe and Levelprompt (the
"Subscription Agreement") and (b) the purchase of shares in Tinsley
Robor Limited,
then and in each such case, IMPAC, AGI, Klearfold and the other Companies
shall lend monies to that Company, or to IMPAC, to IMPAC Europe or to
Levelprompt (as the case may be) so as to enable it to meet its said
financial obligations Provided no Default or Event of Default shall then
exist and be continuing or would result after giving effect thereto
(including, without limitation, under the Senior Subordinated Indenture).
1.2 Any Company wishing to receive a loan under this Agreement shall give not
less than three business days' notice and such notice shall specify the
amount and purpose of the requested loan and the date upon which the loan
is requested to be made and shall certify that the loan requested is in
addition to any loan requested from any other of the parties hereto.
1.3 Each loan made shall be used solely for the borrower's working capital
requirements arising in the ordinary course of its business or, in the case
of intercompany loans made to IMPAC, to enable it to meet its obligations
under the Credit Agreement or, in the case of intercompany loans made to
IMPAC Europe or Levelprompt, in meeting their respective financial
obligations to, in the case of IMPAC Europe, IMPAC and Levelprompt or, in
the case of Levelprompt, IMPAC in each case incurred for the purposes
referred to in clause 1.1(C).
2.1 Subject to the provisions of Clause 2.3 below, each intercompany loan shall
be repaid in full on the Maturity Date or, if earlier upon demand, and,
unless otherwise agreed between the lender and the borrower, shall be lent
on arms length commercial terms Provided that no Company shall be obliged
to comply with any such demand if repayment would give rise to a Default or
Event of Default. Each company which advances an intercompany loan shall be
reimbursed for its reasonable costs and expenses in advancing such loan.
3
<PAGE>
2.2 Any party to this Agreement may repay at any time all or part of any
loan made to it hereunder.
2.3 All payments on intercompany loans hereunder shall be subordinated in
right of payment (a) to the final payment in full in cash of the
Obligations (as defined in the Credit Agreement) at all times after
the occurence of an Event of Default, and (b) in the case of all
intercompany loans hereunder as to which IMPAC is the obligor, to the
prior payment in full in cash of all Obligations (as defined in the
Senior Subordinated Note Indenture) with respect to the Senior
Subordinated Notes.
3. A Company will cease to be entitled to the benefit of, or required to
meet its obligations as a lender under, this Agreement upon ceasing to
be a Subsidiary of IMPAC, including without limitation as a result of
any foreclosure against the stock of such Company by the Agent. Any
Company which ceases to be a Subsidiary of IMPAC shall immediately
prepay in full any intercompany loans advanced to it which then remain
outstanding together with any accrued but unpaid interest thereon.
4. In this Agreement:
(A) words and expressions defined in the Credit Agreement shall have
the same meanings when used in this Agreement unless expressly
otherwise defined in this Agreement or the contrary intention
appears;
(B) "Companies" means the Original Companies and Printing Resources
Limited after it has become a Company in accordance with
Clause 5;
(C) "Credit Agreement" means the amended and restated multicurrency
credit agreement dated as of March 12, 1998 and as amended and
restated as of 7 July, 1998 between IMPAC, AGI, Klearfold, the
Lenders, BankAmerica Robertson Stephens as arranger and others
as further amended, supplemented, restated or otherwise modified
from time to time in accordance with its terms; and
(D) "Maturity Date" means the latest maturity date of any Loan
under the Credit Agreement; and
(E) "Printing Resources" means Printing Resources Limited a company
registered in the Republic of Ireland under number 100620.
5.1 Printing Resources may become a Company by executing a deed of accession
substantially in the form set out in the Second Schedule hereto (a "Deed
of Accession").
5.2 Tinsley Robor Limited shall procure that Printing Resources shall
execute and deliver to each of the other parties hereto a Deed of
Accession as soon as practicable and in
4
<PAGE>
any event by 31 January 1999.
5.3 Upon execution of a Deed of Accession, Printing Resources shall become a
Company and shall assume all the rights, benefits and obligations of a
Company as if it had been an Original Company on and with effect from the
date of execution of the Deed of Accession.
5.4 Upon receipt of the Deed of Accession Tinsley Robor Limited shall
acknowledge the same for itself and on behalf of each of the other parties
hereto.
6. Each of the parties hereto represents to the others that its execution and
delivery of and performance under this Agreement are within its corporate
power and authority, have been duly authorised by all necessary corporate
proceedings, and do not conflict with and will not result in any material
breach of any provision of any other agreement or instrument to which it is
party, including, to the extent applicable, the Credit Agreement and the
Senior Subordinated Indenture.
7. This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts each of which, when
executed and delivered, shall constitute an original, but all the
counterparts shall together constitute but one and the same instrument.
8. This Agreement shall be governed by and construed in accordance with the
Laws of England.
9. All the parties irrevocably agree that the courts of England are to have
exclusive jurisdiction to settle any disputes which may arise out of or in
connection with this Agreement and that accordingly any suit, action or
proceeding (together in this Clause referred to a "Proceedings") arising
out of or in connection with this Agreement shall be brought in such
courts.
Each party to this Agreement consents generally in respect of any
Proceedings arising out of or in connection with this Agreement to the
giving of any relief or the issue of any process in connection with such
Proceedings including, without limitation, the making, enforcement or
execution against any property or assets whatsoever of any order or
judgment which may be made or given in such Proceedings.
IMPAC, AGI and Klearfold each agree that the process by which any
Proceedings in England are begun may be served on it by being delivered to
Tinsley Robor Limited, Drayton House, Drayton, Chicester West Sussex, PO2O
6EW or other its principal place of business for the time being.
IN WITNESS whereof the parties hereto have executed this Agreement as a Deed and
it is delivered the day and year first above written.
5
<PAGE>
FIRST SCHEDULE
The Companies
-------------
NAME COMPANY NUMBER
- ---- --------------
Tinsley Robor Limited 00948696
Sonicon Limited 01430722
Tinsley Robor Labels Limited 03117491
(formerly known as Arun
Labels Limited)
James Upton Limited 01117887
Tinsley Robor Sales Limited 01113287
Tinsley Robor Audio And 00785427
Computer Services Limited
Tophurst Properties Limited 01016278
Tinsley-Robor (Overseas) 00904654
Limited
6
<PAGE>
SECOND SCHEDULE
Form of Deed of Accession
-------------------------
To: IMPAC, AGI, Klearfold, IMPAC Europe, Levelprompt and the Companies
From: Printing Resources Limited
Dated:
Dear Sirs,
1. We refer to an agreement (the "Support Agreement") dated [ ],
1998 and made between IMPAC, AGI, Klearfold, IMPAC Europe, Levelprompt
and the Original Companies.
2. Terms defined in the Support Agreement shall bear the same meaning
herein.
3. We wish to become a Company in accordance with Clause 5 of the Support
Agreement.
4. We are duly organised under the laws of the Republic of Ireland and we
confirm that we have received a true and up-to-date copy of the Support
Agreement.
5. We undertake to perform all the obligations expressed to be undertaken
under the Support Agreement by a Company and we agree to be bound by the
Support Agreement in all respects as if we had been an Original Company.
6. We make the representations set out in Clause 6 of the Support
Agreement.
7. Our administrative details are as follows:
Address:
Fax No:
8. This Deed shall be governed by English law.
9. We irrevocably agree that the courts of England are to have exclusive
jurisdiction to settle any disputes which may arise out of or in
connection with this Deed or the Support Agreement and that accordingly
any suit, action or proceeding ("Proceedings") arising out of or in
connection with this Deed or the Support Agreement shall be brought in
such courts.
7
<PAGE>
We consent generally in respect of any Proceedings arising out of or in
connection with this Deed to the giving of any relief or the issue of any
process in connection with such Proceedings including, without limitation, the
making, enforcement or execution against any property or assets whatsoever of
any order or judgment which may be made or given in such Proceedings.
We agree that the process by which any Proceedings in England are begun may be
served on it by being delivered to Tinsley Robor Limited, Drayton House,
Drayton, Chichester, West Sussex PO20 6EW or other its principal place of
business for the time being.
IT WITNESS whereof we have executed this Memorandum as a Deed and it is
delivered the day and year first above written.
EXECUTED as a Deed on behalf of
Printing Resources Limited by:
Director
Director/Secretary
- ---------------------------------
ACKNOWLEDGED by
Tinsley Robor Limited for and
on behalf of itself and on behalf
of each of the other parties to
the Support Agreement
8
<PAGE>
EXECUTED as a DEED on behalf )
of IMPAC GROUP INC by: )
RICHARD BLOCK its ) /s/ Richard Block
attorney duly authorised in that )
behalf in the presence of: )
WITNESS: /s/ Mark Norris
Name: Mark Norris
Address: 21 WILSON STREET
LONDON EC2M 2TX
Occupation: SOLICITOR
EXECUTED as a DEED on behalf )
of AGI INCORPORATED by: )
RICHARD BLOCK its ) /s/ Richard Block
attorney duly authorised in that )
behalf in the presence of: )
WITNESS: /s/ Mark Norris
Name: Mark Norris
Address: 21 WILSON STREET
LONDON EC2M 2TX
Occupation: SOLICITOR
EXECUTED as a DEED on behalf of )
KLEARFOLD, INC. by: )
RICHARD BLOCK its ) /s/ Richard Block
attorney duly authorised in that )
behalf in the presence of: )
WITNESS: /s/ Mark Norris
Name: Mark Norris
Address: 21 WILSON STREET
LONDON EC2M 2TX
Occupation: SOLICITOR
9
<PAGE>
EXECUTED as a DEED on behalf )
of LEVELPROMPT LIMITED by: )
Director /s/ ^ ^
Director/Secretary /s/ ^ ^
EXECUTED as a DEED on behalf )
of TINSLEY ROBOR LIMITED by: )
Director /s/ ^ ^
Director/Secretary /s/ ^ ^
EXECUTED as a DEED on behalf )
of SONICON LIMITED by: )
Director /s/ ^ ^
Director/Secretary /s/ ^ ^
EXECUTED as a DEED on behalf )
of TINSLEY ROBOR LABELS )
LIMITED by: )
Director /s/ ^ ^
Director/Secretary /s/ ^ ^
10
<PAGE>
EXECUTED as a DEED on behalf )
of JAMES UPTON LIMITED by: )
Director /s/ ^^?? Signature Unintelligible
Director/Secretary /s/ ^^?? Signature Unintelligible
EXECUTED as a DEED on behalf )
of TINSLEY ROBOR SALES )
LIMITED by: )
Director /s/ ^^?? Signature Unintelligible
Director/Secretary /s/ ^^?? Signature Unintelligible
EXECUTED as a DEED on behalf )
of TINSLEY ROBOR AUDIO AND )
COMPUTER SERVICES LIMITED )
by: )
Director /s/ ^^?? Signature Unintelligible
Director/Secretary /s/ ^^?? Signature Unintelligible
EXECUTED as a DEED on behalf )
of TOPHURST PROPERTIES )
LIMITED by )
Director /s/ ^^?? Signature Unintelligible
Director/Secretary /s/ ^^?? Signature Unintelligible
11
<PAGE>
EXECUTED as a DEED on behalf )
of TINSLEY-ROBOR (OVERSEAS))
LIMITED by )
Director /s/ D. Williams
Director/Secretary /s/ ^^^^^^
12
<PAGE>
EXHIBIT 10.90
AMENDED AND RESTATED REVOLVING LOAN
------- --- -------- --------- ----
$53,000,000 Dated: July 7, 1998
FOR VALUE RECEIVED, IMPAC GROUP, INC. (the "Company") HEREBY PROMISES
TO PAY to the order of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
(the "Lender") the principal sum of FIFTY-THREE MILLION United States Dollars
($53,000,000) or, if less, the aggregate unpaid principal amount of the
Revolving Loans made by the Lender to the Company pursuant to Section 2.01(c) of
--------------
the Credit Agreement (as hereinafter defined), on or before the Revolving Loan
Termination Date; together, in each case, with interest on any and all principal
amounts remaining unpaid hereunder from time to time. Interest upon the unpaid
principal amount hereof shall accrue at the rates, shall be calculated in the
manner and shall be payable on the dates set forth in the Credit Agreement.
After maturity, whether by acceleration or otherwise, accrued interest shall be
payable upon demand. Both principal and interest shall be payable in accordance
with the Credit Agreement to Bank of America National Trust & Savings
Association, as Agent (the "Agent"), on behalf of the Lender, at its main office
in Chicago, Illinois in immediately available funds. The Revolving Loans made by
the Lender to the Company pursuant to the Credit Agreement and all payments on
account of principal hereof shall be recorded by the Lender and, prior to any
transfer thereof, endorsed on Schedule A attached hereto which is part of this
----------
Note or otherwise in accordance with its usual practices; provided, however,
--------- -------
that the failure to so record shall not affect the Company's obligations under
this Amended and Restated Note.
This Note is the Note relating to Revolving Loans made by the Lender
and referred to in, and is entitled to the benefits of, the Amended and Restated
Multicurrency Credit Agreement, dated as of March 12, 1998 and as amended and
restated as of July 7, 1998, by and among the Company, AGI Incorporated,
Klearfold, Inc., the financial institutions signatory thereto (including the
Lender) and the Agent (as amended, modified or supplemented from time to time,
the "Credit Agreement") and the other Loan Documents. Capitalized terms used but
not otherwise defined herein shall have the respective meanings ascribed thereto
in the Credit Agreement. The Credit Agreement, among other things, contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
The Company hereby waives presentment, demand, protest or notice of
any kind in connection with this Amended and Restated Note.
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
This Note is delivered to the Lender on the date hereof and is issued
in replacement of and substitution for, and not in payment of, that certain
Revolving Loan Note dated March 12, 1998 made by the Company in favor of the
Lender and all outstanding obligations evidenced by such prior Revolving Loan
Note, including, without limitation, all accrued and unpaid interest, shall
hereafter be evidenced by the new Amended and Restated Note; provided, however,
that this clause shall not be effective until the occurrence of the Initial
Funding Date.
IMPAC GROUP, INC.
By: /s/ David C. Underwood
----------------------------------
Name: David C. Underwood
------------------------------
Title: Chief Financial Officer
-----------------------------
<PAGE>
Schedule A
-------- -
Promissory Note - Amended and Restated Revolving Loan
dated July 7, 1998
payable to the order of
Bank of America National Trust & Savings Association
- -------------------------------------------------------------------------------
PRINCIPAL PAYMENTS
- -------------------------------------------------------------------------------
Amount of Unpaid
Principal Amount of Principal Notation
Date Borrowed Principal Repaid Balance Made By
- -------------------------------------------------------------------------------
<PAGE>
Exhibit 10.91
AMENDED AMD RESTATED L/C LOAN
------- --- -------- --- ----
$8,921,019 Dated: July 7, 1998
FOR VALUE RECEIVED, AGI INCORPORATED (the "Company") HEREBY PROMISES
TO PAY to the order of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
(the "Lender") the principal sum of EIGHT MILLION NINE HUNDRED TWENTY-ONE
THOUSAND NINETEEN United States Dollars ($8,921,019) or, if less, the aggregate
unpaid principal amount of the L/C Loans made by the Lender to the Company
pursuant to Section 2.01(d) of the Credit Agreement (as hereinafter defined), on
--------------
or before the Termination Date; together, in each case, with interest on any and
all principal amounts remaining unpaid hereunder from time to time. Interest
upon the unpaid principal amount hereof shall accrue at the rates, shall be
calculated in the manner and shall be payable on the dates set forth in the
Credit Agreement. After maturity, whether by acceleration or otherwise, accrued
interest shall be payable upon demand. Both principal and interest shall be
payable in accordance with the Credit Agreement to Bank of America National
Trust & Savings Association, as Agent (the "Agent"), on behalf of the Lender, at
its main office in Chicago, Illinois in immediately available funds. The L/C
Loans made by the Lender to the Company pursuant to the Credit Agreement and all
payments on account of principal hereof shall be recorded by the Lender and,
prior to any transfer thereof, endorsed on Schedule A attached hereto which is
----------
part of this Note or otherwise in accordance with its usual practices; provided,
--------
however, that the failure to so record shall not affect the Company's
obligations under this Note.
This Note is a Note relating to the L/C Loan made by the Lender and
referred to in, and is entitled to the benefits of, the Amended and Restated
Credit Agreement, dated as of March 12, 1998 and as amended and restated as of
July 7, 1998, by and among the Company, AGI Incorporated, IMPAC Group, Inc., the
financial institutions signatory thereto (including the Lender) and the Agent
(as amended, modified or supplemented from time to time, the "Credit Agreement")
and the other Loan Documents. Capitalized terms used but not otherwise defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement. The Credit Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
The Company hereby waives presentment, demand, protest or notice of
any kind in connection with this Amended and Restated Note.
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
This Note is delivered to the Lenders on the date hereof and is issued
in replacement of and substitution for, and not in payment of, that certain L/C
Loan Note dated March 12, 1998 made by the Company in favor of the Lender and
all outstanding Obligations evidenced by such prior L/C Loan Note, including,
without limitation, all accrued and unpaid interest, shall hereafter be
evidenced by the new Amended and Restated Note provided, however, that this
clause shall not be effective until the occurrence of the Initial Funding Date.
AGI INCORPORATED
By: /s/ David C. Underwood
--------------------------
Name: David C. Underwood
Title: Chief Financial Officer
<PAGE>
Schedule A
----------
Promissory Note - Amended and Restated L/C Loan
dated July 7, 1998
payable to the order of
Bank of America National Trust & Savings Association
PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
Amount of Unpaid
Principal Amount of Principal Notation
Date Borrowed Principal Repaid Balance Made By
---- -------- ---------------- ------- -------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
Exhibit 10.92
AMENDED AND RESTATED L/C LOAN
-----------------------------
$4,428,440 Dated: July 7, 1998
FOR VALUE RECEIVED, KLEARFOLD, INC. (the "Company") HEREBY PROMISES TO
PAY to the order of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the
"Lender") the principal sum of FOUR MILLION FOUR HUNDRED TWENTY-EIGHT THOUSAND
FOUR HUNDRED FORTY United States Dollars ($4,428,440) or, if less, the aggregate
unpaid principal amount of the L/C Loans made by the Lender to the Company
pursuant to Section 2.01(d) of the Credit Agreement (as hereinafter defined), on
------- ------
or before the Termination Date; together, in each case, with interest on any and
all principal amounts remaining unpaid hereunder from time to time. Interest
upon the unpaid principal amount hereof shall accrue at the rates, shall be
calculated in the manner and shall be payable on the dates set forth in the
Credit Agreement. After maturity, whether by acceleration or otherwise, accrued
interest shall be payable upon demand. Both principal and interest shall be
payable in accordance with the Credit Agreement to Bank of America National
Trust & Savings Association, as Agent (the "Agent"), on behalf of the Lender, at
its main office in Chicago, Illinois in immediately available funds. The L/C
Loans made by the Lender to the Company pursuant to the Credit Agreement and all
payments on account of principal hereof shall be recorded by the Lender and,
prior to any transfer thereof, endorsed on Schedule A attached hereto which is
-------- -
part of this Note or otherwise in accordance with its usual practices; provided,
however, that the failure to so record shall not affect the Company's
obligations under this Note.
This Note is a Note relating to the L/C Loan made by the Lender and
referred to in, and is entitled to the benefits of, the Amended and Restated
Credit Agreement, dated as of March 12, 1998 and as amended and restated as of
July 7, 1998, by and among the Company, Klearfold, Inc., IMPAC Group, Inc., the
financial institutions signatory thereto (including the Lender) and the Agent
(as amended, modified or supplemented from time to time, the "Credit Agreement")
and the other Loan Documents. Capitalized terms used but not otherwise defined
herein shall have the respective meanings ascribed thereto in the Credit
Agreement. The Credit Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the happening of certain stated events
and also for prepayments on account of principal hereof prior to the maturity
hereof upon the terms and conditions therein specified.
The Company hereby waives presentment, demand, protest or notice of
any kind in connection with this Amended and Restated Note.
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
This Note is delivered to the Lenders on the date hereof and is issued
in replacement of and substitution for, and not in payment of, that certain L/C
Loan Note dated March 12, 1998 made by the Company in favor of the Lender and
all outstanding Obligations evidenced by such prior L/C Loan Note, including,
without limitation, all accrued and unpaid interest, shall hereafter be
evidenced by the new Amended and Restated Note provided, however, that this
clause shall not be effective until the occurrence of the Initial Funding Date.
KLEARFOLD, INC.
By: /s/ David C. Underwood
--------------------------
Name: David C. Underwood
Title: Chief Financial Officer
<PAGE>
Schedule A
----------
Promissory Note - Amended and Restated L/C Loan
dated July 7, 1998
payable to the order of
Bank of America National Trust & Savings Association
PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
Amount of Unpaid
Principal Amount of Principal Notation
Date Borrowed Principal Repaid Balance Made By
---- -------- ---------------- ------- -------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
Exhibit 10.93
PROMISSORY NOTE - TERM LOAN A
-----------------------------
$37,000,000 Dated: July 7, 1998
FOR VALUE RECEIVED, IMPAC GROUP, INC. (the "Company") HEREBY PROMISES
TO PAY to the order of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
(the "Lender") the principal sum of THIRTY SEVEN MILLION United States Dollars
($37,000,000) (as such principal amount may be increased as a result of
reallocation of such principal amount pursuant to Section 2.01(b)) of the Credit
Agreement (as hereinafter defined)) in installments at the times and in the
amounts set forth in the Credit Agreement in repayment of the Term Loan A made
by the Lender to the Company. Interest upon the unpaid principal amount hereof
shall accrue at the rates, shall be calculated in the manner and shall be
payable on the dates set forth in the Credit Agreement. After maturity, whether
by acceleration or otherwise, accrued interest shall be payable upon demand.
Both principal and interest shall be payable in accordance with the Credit
Agreement to Bank of America National Trust and Savings Association, as Agent
(the "Agent"), on behalf of the Lender, at its main office in Chicago, Illinois
in immediately available funds. The Term Loan A made by the Lender to the
Company pursuant to the Credit Agreement and all payments on account of
principal hereof shall be recorded by the Lender and, prior to any transfer
thereof, endorsed on Schedule A attached hereto which is part of this Note or
----------
otherwise in accordance with its usual practices; provided, however, that the
-------- -------
failure to so record shall not affect the Company's obligations under this Note.
This Note is a Note referred to in, and is entitled to the benefits
of, the Amended and Restated Multicurrency Credit Agreement, dated as of March
12, 1998 and as amended and restated as of July 7,1998 among the Company, AGI
("AGI"), Klearfold, Inc. ("Klearfold" and together with AGI, each a "L/C
Borrower" and collectively the "L/C Borrowers"), the several financial
institutions signatory thereto (including the Lender) and Bank of America, as
Agent and Swing Line Lender (as amended, modified or supplemented from time to
time, the "Credit Agreement"), and the other Loan Documents. Capitalized terms
used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement. The Credit Agreement, among other
things, contains provisions for acceleration of the maturity hereof upon the
happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
The Company hereby waives presentment; demand, protest or notice of
any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
IMPAC GROUP, INC.
By: /s/ David C. Underwood
--------------------------
Name: David C. Underwood
Title: Chief Financial Officer
<PAGE>
Schedule A
----------
Promissory Note - Term Loan A
dated July 7, 1998
payable to the order of
Bank of America National Trust & Savings Association
PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
Amount of Unpaid
Principal Amount of Principal Notation
Date Borrowed Principal Repaid Balance Made By
---- -------- ---------------- ------- -------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
Exhibit 10.94
PROMISSORY NOTE - TERM LOAN B
-----------------------------
$70,000,000 Dated: July 7, 1998
FOR VALUE RECEIVED, IMPAC GROUP, INC. (the "Company") HEREBY PROMISES
TO PAY to the order of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
(the "Lender") the principal sum of SEVENTY MILLION United States Dollars
($70,000,000) in installments at the times and in the amounts set forth in the
Credit Agreement (as hereinafter defined) in repayment of the Term Loan B made
by the Lender to the Company. Interest upon the unpaid principal amount hereof
shall accrue at the rates, shall be calculated in the manner and shall be
payable on the dates set forth in the Credit Agreement. After maturity, whether
by acceleration or otherwise, accrued interest shall be payable upon demand.
Both principal and interest shall be payable in accordance with the Credit
Agreement to Bank of America National Trust and Savings Association ("Bank of
America"), as Agent (the "Agent"), on behalf of the Lender, at its main office
in Chicago, Illinois in immediately available funds. The Term Loan B made by the
Lender to the Company pursuant to the Credit Agreement and all payments on
account of principal hereof shall be recorded by the Lender and, prior to any
transfer thereof, endorsed on Schedule A attached hereto which is part of this
----------
Note or otherwise in accordance with its usual practices; provided, however,
--------
that the failure to so record shall not affect the Company's obligations under
this Note.
This Note is a Note referred to in, and is entitled to the benefits
of, the Amended and Restated Multicurrency Credit Agreement, dated as of
March 12, 1998 and as amended and restated as of July 7, 1998 among the Company,
AGI Incorporated ("AGI"), Klearfold, Inc. ("Klearfold", and together with AGI,
each a "L/C Borrower" and collectively, the "L/C Borrowers"), the several
financial institutions signatory thereto (including the Lender) and Bank of
America, as Agent and Swing Line Lender (as amended, modified or supplemented
from time to time, the "Credit Agreement"), and the other Loan Documents.
Capitalized terms used but not otherwise defined herein shall have the
respective meanings ascribed thereto in the Credit Agreement. The Credit
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the maturity hereof upon the
terms and conditions therein specified.
The Company hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
IMPAC GROUP, INC.
By: /s/ David C. Underwood
--------------------------
Name: David C. Underwood
Title: Chief Financial Officer
<PAGE>
Schedule A
----------
Promissory Note - Term Loan B
dated July 7, 1998
payable to the order of
Bank of America National Trust & Savings Association
PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
Amount of Unpaid
Principal Amount of Principal Notation
Date Borrowed Principal Repaid Balance Made By
---- -------- ---------------- ------- -------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
Exhibit 10.95
SWING LINE NOTE
---------------
$20,000,000 July 7, 1998
FOR VALUE RECEIVED, the undersigned, IMPAC GROUP, INC. (the
"Company"), hereby promises to pay to the order of BANK OF AMERICA NATIONAL
-------
TRUST AND SAVINGS ASSOCIATION ("Bank of America"), as Swing Line Lender (the
"Swing Line Lender") the principal sum of TWENTY MILLION United States Dollars
----- ---- ------
($20,000,000) or, if less, the aggregate unpaid principal amount of all Loans
made by the Swing Line Lender to the Company pursuant to the Amended and
Restated Multicurrency Credit Agreement, dated as of March 12, 1998 and as
amended and restated as of July 7, 1998 (such Credit Agreement, as it may be
amended, restated, supplemented or otherwise modified from time to time, being
hereinafter called the "Credit Agreement"), among the Company, AGI ("AGI"),
------ --------- ---
Klearfold, Inc., ("Klearfold", and together with AGI, each a "L/C Borrower" and
---------
collectively, the "L/C Borrowers"), the several financial institutions from time
--- ---------
to time party thereto (the "Lenders") and Bank of America, as Agent and Swing
Line Lender, on the dates and in the amounts provided in the Credit Agreement.
The Company further promises to pay interest on the unpaid principal amount of
the Swing Line Loans evidenced hereby from time to time at the rates, on the
dates, and otherwise as provided in the Credit Agreement.
The date, amount and interest rate of each Swing Line Loan made by the
Swing Line Lender to the Company, and each payment made on account of the
principal thereof, shall be recorded by the Swing Line Lender on its books and,
prior to any transfer of this Swing Line Note, endorsed by the Swing Line Lender
on the schedule attached hereto or any continuation thereof, provided that the
failure of the Swing Line Lender to make any such recordation or endorsement
shall not affect the obligations of the Company to make a payment when due of
any amount owing under the Credit Agreement or hereunder in respect of the Swing
Line Loans made by the Swing Line Lender.
This Note is the Line Note referred to in, and is entitled to the
benefits of, the Credit Agreement and the other Loan Documents. Capitalized
terms used but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Credit Agreement. Credit Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.
Terms defined in the Credit Agreement are used herein with their defined
meanings therein unless otherwise defined herein.
The Company hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS, WITHOUT REGARD TO CONFLICT OF LAWS PROVISIONS, OF THE STATE OF
ILLINOIS BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.
IMPAC GROUP, INC.
By: /s/ David C. Underwood
--------------------------
Name: David C. Underwood
Title: Chief Financial Officer
<PAGE>
Schedule A
----------
Promissory Note - Swing Line Loan
dated July 7, 1998
payable to the order of
Bank of America National Trust & Savings Association
PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
Amount of Unpaid
Principal Amount of Principal Notation
Date Borrowed Principal Repaid Balance Made By
---- -------- ---------------- ------- -------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE>
Exhibit 10.96
GLOBAL AMENDMENT NO. 1 TO COLLATERAL DOCUMENTS
----------------------------------------------
This Global Amendment (this "Amendment") is entered into as of July 6,
1998, among IMPAC GROUP, INC., a Delaware corporation (the Company"), AGI
-------
INCORPORATED, an Illinois corporation ("AGI"), KLEARFOLD, INC., a Pennsylvania
---
corporation ("Klearfold", and together with AGI, each a "L/C Borrower" and
--------- ------------
collectively, the "L/C Borrowers"), KF-Delaware, Inc., a Delaware Corporation
-------------
("KFD"), KF-International, Inc., a United States Virgin Island corporation
---
("KFI" and together with KFD, each a "Subsidiary Guarantor" and collectively,
--- --------------------
the "Subsidiary Guarantors"), and Bank of America National Trust & Savings
---------------------
Association, as agent for the Lenders (the "Agent"). Unless otherwise specified
-----
herein, capitalized terms used in this Amendment shall have the meanings
ascribed to them by the Existing Credit Agreement (as defined below).
RECITALS
--------
WHEREAS, the Company, the L/C Borrowers (the Company and the L/C
Borrowers each a "Credit Party" and collectively the "Credit Parties"), the
------------ --------------
financial institutions from time to time party thereto and the Agent are party
to that certain Credit Agreement, dated as of March 12, 1998 (as amended through
the date hereof, the "Existing Credit Agreement");
-------------------------
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, AGI, Klearfold and the Agent entered into a Pledge Agreement -
L/C Borrowers dated as of March 12, 1998 (the "Pledge Agreement L/C Borrowers");
------------------------------
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, AGI, Klearfold and the Agent entered into a Security
Agreement - L/C Borrowers dated as of March 12, 1998 (the "Security Agreement
------------------
L/C Borrowers");
- -------------
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, AGI and Klearfold issued a Guaranty - L C Borrowers dated, as
of March 12, 1998 (the "Guaranty L/C Borrowers");
----------------------
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, KFD, KFI and the Agent entered into a Pledge Agreement -
Subsidiary Guarantors, dated as of March 12, 1998 (the "Pledge Agreement
----------------
Subsidiary Guarantors");
- ---------------------
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, KFD, KFI and the Agent entered into a Security Agreement -
Subsidiary' Guarantors, dated as of March 12, 1998 (the "Security Agreement -
--------------------
Subsidiary Guarantors");
- ---------------------
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, KFI and KFI issued a Guaranty - Subsidiary Guarantors, dated
as of March 12, 1998 (the "Guaranty - Subsidiary Guarantors");
--------------------------------
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, IMPAC Group, Inc. and the Agent have entered into a Pledge
Agreement - Company, dated as of March 12, 1998 (the "Pledge Agreement -
----------------
Company");
- -------
1
<PAGE>
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, IMPAC Group, Inc. and the Agent entered into a Security
Agreement - Company, dated as of March 12, 1998 ("the Security Agreement -
-------------------------
Company"); and together with Pledge Agreement - L/C Borrowers, Security
- ---------
Agreement - L/C Borrowers, Pledge Agreement - Subsidiary Guarantors, Security
Agreement - Subsidiary Guarantors, Guaranty - Subsidiary Guarantors, Pledge
Agreement - Company, Security Agreement - Company, and Guaranty - Company, each
a "Security Document" and collectively, the "Security Documents";
----------------- ------------------
WHEREAS, in connection with the execution and delivery of the
Existing Credit Agreement, IMPAC Group, Inc. issued a Guaranty - Company, dated
as of March 12, 1998 (the "Guaranty - Company"); together with the Guaranty -
L/C Borrowers and Guaranty - Subsidiary Guarantors (the "Guaranties");
WHEREAS, the Pledge Agreement - L/C Borrowers, Security Agreement -
L/C Borrowers, Pledge Agreement - Subsidiary Guarantors, Security Agreement -
Subsidiary Guarantors, Pledge Agreement - Company, and Security Agreement -
Company, are referred to herein each a "Collateral Document" and collectively,
-------------------
the "Collateral Documents";
---------------------
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, the Credit Parties, the Agent and the Lenders desire to enter
into an Amended and Restated MultiCurrency Credit Agreement dated as of the date
hereof (the "Amended Credit Agreement"), amending and restating the Existing
Credit Agreement upon the occurrence of the Initial Funding Date (as defined in
the Amended Credit Agreement); and
WHEREAS, as a condition to the Announcement Date under, and as defined
in, the Amended Credit Agreement, the Credit Parties and the Subsidiary,
Guaranties are required to enter into this Amendment;
NOW THEREFORE, in consideration of the benefits accruing to each
Credit Party and each Subsidiary Guarantor, the receipt and sufficiency of which
are hereby acknowledged, each Credit Party, each Subsidiary Guarantor and the
Agent, for the benefit of itself and the Lenders, hereby agree as follows:
1. Amendment to Security Documents. (a) Upon the "Effective Date" (as
-------------------------------
defined below), the first clause in the definition of Secured Obligation in each
Security Document shall be amended to read: "(i) all Obligations as defined in
the Credit Agreement, dated as of March 12, 1998, among the Company, AGI,
Klearfold, the Lenders and the Agent, to the extent the same survives after the
Initial Funding Date (as defined in the Amended Credit Agreement) pursuant to
Section 11.21 of the Amended Credit Agreement, and the Amended and Restated
MultiCurrency Credit Agreement, dated as of March 12, 1998 and as amended and
restated as of July 6, 1998 among the Company, AGI, Klearfold, the Agent and
the Lenders party thereto;" (b) Upon the Effective Date, the following text
shall be added at the end of Section 2 of each Collateral Agreement:
"Notwithstanding anything to the contrary contained herein, the foregoing
assignment, pledge and grant of security interest shall not extend to any
payment obligations owing to the Company from a Subsidiary of the Company which
has not guaranteed the obligations under the Senior Subordinated Note
Indenture."
2. Amendment to Guaranties. Upon the Effective Date, the "Credit
-----------------------
Agreement" referred to in each Guaranty shall be the Existing Credit Agreement,
to the extent the same survives after the Initial Funding Date (as defined in
the Amended Credit Agreement) pursuant to Section 11.21 of the Amended Credit
Agreement, and the Amended Credit Agreement.
2
<PAGE>
3. Representations and Warranties. Each Credit Party and each Subsidiary
------------------------------
Guarantor hereby represents and warrants as to itself that:
(a) The execution, delivery and performance by each such Person of
this Amendment have been duly authorized by all necessary corporate action
and that this Amendment constitutes the legal, valid and binding obligation
of such Person enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability;
(b) Each of the representations and warranties contained in the
Collateral Documents is true and correct in all material respects on and as
of the date hereof as if made on the date hereof (except to the extent such
representations and warranties expressly refer to an earlier date, in
which case they are true and correct as of such earlier date); and
(c) After giving effect to this Amendment and the Amendment No. 1 and
Consent to Credit Agreement of even date herewith among the Credit Parties,
the Lenders and Agent, no Default or Event of Default has occurred and is
continuing.
4. Effective Date. This Amendment shall become effective as of the date
--------------
first written above upon the date of the execution and delivery hereof by the
Credit Parties, the Subsidiary Guarantors and the Agent; provided however;
-------- -------
notwithstanding anything herein to the contrary, in the event that the Offer is
not consummated pursuant to the terms of the Amended Credit Agreement, then this
Amendment shall be terminated and be of no further force and effect.
5 Reference to and Effect Upon the Collateral Documents.
-----------------------------------------------------
(a) Except as specifically amended above, each of the Collateral
Documents and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(b) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of the Agent or any
Lender under any Collateral Document or any other Loan Document, nor
constitute a waiver of any provision of any Collateral Document or any
other Loan Document, except as specifically set forth herein. Upon the
effectiveness of this Amendment, each reference in any Collateral Document
to "this Agreement", "hereunder", "hereof", "herein" or words of similar
import shall mean and be a reference to such Collateral Document as amended
hereby.
6. Costs and Expenses. Each Credit Party hereby affirms its obligation
------------------
under Section 11.04 of the Existing Credit Agreement to reimburse the Agent for
-------------
all reasonable out-of-pocket costs and expenses incurred by the Agent in
connection with the preparation and execution of this Amendment, including but
not limited to the attorneys' fees and time charges of attorneys for the Agent
with respect thereto.
7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
-------------
ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS; PROVIDED THAT THE AGENT AND
--------
THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
3
<PAGE>
8. Headings. Section headings in this Amendment are included herein for
--------
convenience of reference only and shall not constitute a part of this Amendment
for any other purposes.
9. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which when so executed shall be deemed an original but all
such counterparts shall constitute one and the same instrument.
[Signature Pages follow]
4
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
IMPAC GROUP, INC.
By: /s/ David C. Underwood
--------------------------
Name: David C. Underwood
Title: Chief Financial Officer
AGI INCORPORATED
By: /s/ David C. Underwood
--------------------------
Name: David C. Underwood
Title: Chief Financial Officer
KLEARFOLD, INC.
By: /s/ David C. Underwood
--------------------------
Name: David C. Underwood
Title: Chief Financial Officer
KF-INTERNATIONAL, INC.
By: /s/ David C. Underwood
--------------------------
Name: David C. Underwood
Title: Chief Financial Officer
KF-DELAWARE, INC.
By: /s/ David C. Underwood
--------------------------
Name: David C. Underwood
Title: Chief Financial Officer
5
<PAGE>
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By: /s/ David A. Johanson
--------------------------
Name: David A. Johanson
Title: Vice President
6
<PAGE>
Exhibit 10.97
GLOBAL AMENDMENT NO. 1 TO SECURITY DOCUMENTS
--------------------------------------------
This Global Amendment (this "Amendment") is entered into as of
September 11, 1998 among IMPAC GROUP, INC., a Delaware corporation (the
"Company"), AGI INCORPORATED, an Illinois corporation ("AGI"), KLEARFOLD, INC.,
------- ---
a Pennsylvania corporation ("Klearfold", and together with AGI each a "L/C
--------- ---
Borrower" and collectively, the "L/C Borrowers"), KF-Delaware, Inc., a Delaware
- -------- -------------
Corporation ("KFD"), KF-International, Inc., a United States Virgin Island
---
corporation ("KFI" and together with KFD each a "Subsidiary Guarantor" and
--- ---------- ---------
collectively, the "Subsidiary Guarantors"), and Bank of America National Trust &
-----------------------
Savings Association, as agent for the Lenders (the "Agent"). Unless otherwise
-----
specified herein, capitalized terms used in this Amendment shall have the
meanings ascribed to them by the Existing Credit Agreement (as defined below).
RECITALS
--------
WHEREAS, the Company, the L/C Borrowers (the Company and the L/C
Borrowers each a "Credit Party" and collectively the "Credit Parties"), the
------ ----- ----------------
financial institutions from time to time party thereto and the Agent are party
to that certain Credit Agreement dated as of March 12, 1998 (as amended through
the date hereof, the "Existing Credit Agreement");
-------------------------
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, AGI, Klearfold and the Agent entered into a Pledge Agreement -
L/C Borrowers dated as of March 12, 1998 (the "Pledge Agreement-L/C Borrowers");
--------------------------------
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, AGI, Klearfold and the Agent entered into a Security Agreement
- - L/C Borrowers dated as of March 12, 1998 (the "Security Agreement-L/C
----------------------
Borrowers");
- ---------
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, KFD, KFI and the Agent entered into a Pledge Agreement -
Subsidiary Guarantors dated as of March 12, 1998 (the "Pledge Agreement-
----------------
Subsidiary Guarantors"),
- ---------------------
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, KFD, KFI and the Agent entered into a Security' Agreement -
Subsidiary Guarantors dated as of March 12, 1998 (the "Security Agreement -
--------------------
Subsidiary Guarantors");
- ---------------------
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, IMPAC Group, Inc. and the Agent have entered into a Security
Agreement - Company, dated as of March 12. 1998 (the "Security Agreement -
--------------------
Company");
- -------
WHEREAS, in connection with the execution and delivery of the
Existing Credit Agreement, IMPAC Group, Inc. and the Agent entered
into a Pledge Agreement - Company, dated as of March 12, 1998
("the Pledge Agreement - Company"); and together with the Pledge Agreement - L/C
------------------------------
Borrowers, Pledge Agreement - Subsidiary Guarantors each a "Pledge Agreement"
----------------
and collectively, the "Pledge Agreements" and each Pledge Agreement together
-----------------
with the Security Agreement - L/C Borrowers, Security Agreement -
<PAGE>
Subsidiary Guarantors and Security Agreement - Company, each a "Security
--------
Document" and collectively, the "Security Documents";
- -------- ------------------
WHEREAS, on July 7, 1998, the Credit Parties, the Agent and the
Lenders entered into an Amended and Restated MultiCurrency Credit Agreement
dated as of July 7, 1998 (the "Amended Credit Agreement"), amending and
restating the Existing Credit Agreement upon the occurrence of the Initial
Funding Date (as defined in the Amended Credit Agreement); and
WHEREAS, in connection with the execution and delivery of the Amended
Credit Agreement, the Credit Parties and the Agent entered into that certain
Global Amendment No. 1 to Collateral Documents (the "Global Amendment") dated as
-----------------
of July 6, 1998;
WHEREAS, as a condition to the Initial Funding Date under, and as
defined in, the Amended Credit Agreement, the Credit Parties and the Subsidiary
Guaranties are required to enter into this Amendment, which supersedes and
replaces the Global Amendment as such applies to the Security Documents;
NOW THEREFORE, in consideration of the benefits accruing to each
Credit Party and each Subsidiary Guarantor, the receipt and sufficiency of which
are hereby acknowledged, each Credit Party, each Subsidiary Guarantor and the
Agent, for the benefit of itself and the Lenders, hereby agree as follows:
1. Amendment to Security Documents. Upon the "Effective Date" (as defined
-------------------------------
below) Recital A of each of the Security Documents will be replaced in its
entirety to read as follows:
"Pursuant to the Credit Agreement, dated as of March 12, 1998, among
the Company, AGI, Klearfold, the Lenders and the Agent, as amended and
restated by that certain Amended and Restated MultiCurrency Credit
Agreement dated as of July 7, 1998 (as amended by that certain First
Amendment dated September 11, 1998 and as hereafter amended, modified
or restated, the "Credit Agreement"), among the Company, AGI
------ ---------
Klearfold, the Agent and the Lenders party thereto, the Lenders have
agreed to extend certain credit to the Company, AGI and Klearfold;"
2. Amendment to Pledge Agreements. Upon the "Effective Date" (as defined
------------------------------
below) each of the Pledge Agreements will be further amended as follows:
(i) The definition of "Pledged Shares" in each Pledge Agreement shall be
amended in its entirety to read as follows:
"Pledged Shares" means, collectively, (i) with respect to a Domestic
--------------
Subsidiary, all of the issued and outstanding shares of capital stock
at any time owned by the Pledge of such Domestic Subsidiary, (ii) with
respect to a Foreign Subsidiary (other than an Included Foreign
Subsidiary), all of the issued and outstanding shares of capital stock
at any time owned by the Pledge of such Foreign Subsidiary; provided
--------
that the Pledge shall not be required to pledge hereunder (and the
term "Pledged Shares" shall not include) more than 65% of the total
--------------
combined voting power of all classes of capital stock of such Foreign
Subsidiary entitled to vote (the "Excluded Shares") until such time as
---------------
the Pledge is required to deliver such Excluded Shares to the Agent
pursuant to Section 7.15 of the Credit Agreement, (iii) all of the
------------
issued and outstanding shares of capital stock at any time owned
-2-
<PAGE>
by the pledge of any Included Foreign Subsidiary, which such shares
shall be delivered pursuant to that certain Mortgage of Shares dated
as of July 7, 1998, among IMPAC Group, Inc. and Bank of America
National Trust and Savings Association, and (iv) each additional share
of capital stock delivered, or to be delivered, to the Agent pursuant
to Section 2(ii) hereof; provided however, notwithstanding anything in
------------ ----------------
this definition to the contrary, the capital stock of Included Foreign
Subsidiaries shall not be deemed Excluded Shares.
(ii) The definition "Included Foreign Subsidiary" shall be added to each
Pledge Agreement to read as follows:
"Included Foreign Subsidiary" means each of IMPAC Europe Public
---------------------------
Limited Company, Levelprompt Limited, Tinsley Robor PLC, Van de Steeg
Packaging B.V., James Upton Holding B.V., James Upton B.V., James
Upton-Swindon, Limited, James Upton Limited, Printing Resources
Limited and Sonicon Limited., Tinsley Robor Audio and Computer
Servicer Limited, Pinepoint Limited and James Upton GmbH.
3. Representations and Warranties. Each Credit Party and each Subsidiary
------------------------------
Guarantor hereby represents and warrants as to itself that:
(a) The execution, delivery and performance by each such Person of
this Amendment have been duly authorized by all necessary corporate action
and that this Amendment constitutes the legal, valid and binding obligation
of such Person, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability;
(b) Each of the representations and warranties contained in the
Security Documents is true and correct in all material respects on and as
of the date hereof as if made on the date hereof (except to the extent such
representations and warranties expressly refer to an earlier date, in which
case they are true and correct as of such earlier date); and
(c) After giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing.
4. Effective Date. This Amendment shall become effective as of the date
--------------
first written above upon the date of the execution and delivery hereof by the
Credit Parties, the Subsidiary Guarantors and the Agent; provided however;
----------------
notwithstanding anything herein to the contrary, in the event that the Offer is
not consummated pursuant to the terms of the Amended Credit Agreement then this
Amendment shall be terminated and be of no further force and effect.
5. Reference to and Effect Upon the Security Documents.
---------------------------------------------------
(a) Except as specifically amended above, each of the Security
Documents and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(b) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of the Agent or any
Lender under any Security Document or
-3-
<PAGE>
any other Loan Document, nor constitute a waiver of any provision of any
Security Document or any other Loan Document, except as specifically set
forth herein. Upon the effectiveness of this Amendment, each reference in
any Security Document to "this Agreement", "hereunder", "hereof", "herein"
or words of similar import shall mean and be a reference to such Security
Document as amended hereby.
6. Costs and Expenses. Each Credit Party hereby affirms its obligation
------------------
under Section 11.04 of the Existing Credit Agreement to reimburse the Agent for
-------------
all reasonable out-of-pocket costs and expenses incurred by the Agent in
connection with the preparation and execution of this Amendment, including but
not limited to the attorneys' fees and time charges of attorneys for the Agent
with respect thereto.
7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS; PROVIDED
--------
THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
8. Headings. Section headings in this Amendment are included herein for
--------
convenience of reference only and shall not constitute a part of this Amendment
for any other purposes.
9. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which when so executed shall be deemed an original but all
such counterparts shall constitute one and the same instrument.
[Signature Pages Follow]
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
IMPAC GROUP, INC.
By: /s/ David C. Underwood
--------------------------
Name: David C. Underwood
Title: Chief Financial Officer
AGI INCORPORATED
By: /s/ David C. Underwood
--------------------------
Name: David C. Underwood
Title: Chief Financial Officer
KLEARFOLD, INC.
By: /s/ David C. Underwood
--------------------------
Name: David C. Underwood
Title: Chief Financial Officer
KF-INTERNATIONAL, INC.
By: /s/ David C. Underwood
--------------------------
Name: David C. Underwood
Title: Chief Financial Officer
KF-DELAWARE, INC.
By: /s/ David C. Underwood
--------------------------
Name: David C. Underwood
Title: Chief Financial Officer
-5-
<PAGE>
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
KLEARFOLD, INC.
By: /s/ David A. Johnson
--------------------------
Name: David A. Johnson
Title: Vice President
-6-
<PAGE>
EXHIBIT 10.98
GLOBAL AMENDMENT NO.1 TO GUARANTIES
------ --------- ------- ----------
This Global Amendment (this "Amendment") is entered into as of
September 11, 1998 among IMPAC GROUP, INC., a Delaware corporation (the
"Company"), AGI INCORPORATED, an Illinois corporation ("AGI"), KLEARFOLD, INC.,
- --------
a Pennsylvania corporation ("Klearfold", and together with AGI, each a "L/C
--------- ---
Borrower" and collectively, the "L/C Borrowers"), KF-Delaware, Inc., a Delaware
- -------- -------------
Corporation ("KFD"), KF-International, Inc., a United States Virgin Island
---
corporation ("KFI" and together with KFD, each a "Subsidiary Guarantor" and
--- ---------- ---------
collectively, the "Subsidiary Guarantors"), and Bank of America National Trust &
---------------------
Savings Association, as agent for the Lenders (the "Agent"). Unless otherwise
-----
specified herein, capitalized terms used in this Amendment shall have the
meanings ascribed to them by the Existing Credit Agreement (as defined below).
RECITALS
--------
WHEREAS, the Company, the L/C Borrowers (the Company and the L/C
Borrowers each a "Credit Party" and collectively the "Credit Parties"), the
------------ --------------
financial institutions from time to time party thereto and the Agent are party
to that certain Credit Agreement, dated as of March 12, 1998 (as amended through
the date hereof, the "Existing Credit Agreement");
-------------------------
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, AGI and Klearfold issued a Guaranty - L/C Borrowers dated, as
of March 12, 1998 (the "Guaranty L/C Borrowers");
----------------------
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, KFI and KFI issued a Guaranty - Subsidiary Guarantors, dated
as of March 12, 1998 (the "Guaranty Subsidiary Guarantors");
------------------------------- -
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, IMPAC Group, Inc. issued a Guaranty - Company, dated as of
March 12, 1998 (the "Guaranty - Company"); together with the Guaranty - L/C
------------------
Borrowers and Guaranty - Subsidiary Guarantors (the "Guaranties");
----------
WHEREAS, the Company, the L/C Borrowers (the Company and the L/C
Borrowers each a "Credit Party" and collectively the "Credit Parties"), the
------------ ----------------
financial institutions from time to time party thereto and the Agent are party
to that certain Credit Agreement, dated as of March 12, 1998 (as amended through
the date hereof, the "Existing Credit Agreement");
-------------------------
WHEREAS, on July 7, 1998, the Credit Parties, the Agent and the
Lenders entered into an Amended and Restated MultiCurrency Credit Agreement
dated as of March 12, 1998 and amended and restated as of July 7, 1998 (the
"Amended Credit Agreement"), amending and restating the Existing Credit
------------------------
Agreement upon the occurrence of the Initial Funding Date (as defined in the
Amended Credit Agreement); and
<PAGE>
WHEREAS, in connection with the execution and delivery of the Amended
Credit Agreement, the Credit Parties and the Agent entered into that certain
Global Amendment No. 1 to Collateral Documents (the "Global Amendment") dated as
----------------
of July 6, 1998;
WHEREAS, as a condition to the Initial Funding Date under, and as
defined in, the Amended Credit Agreement, the Credit Parties and the Subsidiary
Guarantors are required to enter into this Amendment, which supersedes and
replaces the Global Amendment as it previously applied to the Guaranties;
NOW THEREFORE, in consideration of the benefits accruing to each
Credit Party and each Subsidiary Guarantor, the receipt and sufficiency of which
are hereby acknowledged, each Credit Party, each Subsidiary Guarantor and the
Agent, for the benefit of itself and the Lenders, hereby agree as follows:
1. Amendment to Guaranties. Upon the "Effective Date" (as defined below):
--------- -------------
(i) The definition of "Credit Agreement" as it appears in the first paragraph of
each of the Guaranties shall be amended to mean "the Amended and Restated
MultiCurrency Credit Agreement dated as of March 12, 1998 and amended and
restated as of July 7, 1998, among the Company, AGI, Klearfold, the Lenders and
the Agent, as amended by that certain First Amendment, and as such agreement may
thereafter be amended, modified and restated".
2. Representations and Warranties. Each Credit Party and each Subsidiary
------------------------------
Guarantor hereby represents and warrants as to itself that:
(a) The execution, delivery and performance by each such Person of
this Amendment have been duly authorized by all necessary corporate action
and that this Amendment constitutes the legal, valid and binding obligation
of such Person, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability;
(b) Each of the representations and warranties contained in the
Guaranties is true and correct in all material respects on and as of the
date hereof as if made on the date hereof (except to the extent such
representations and warranties expressly refer to an earlier date, in which
case they are true and correct as of such earlier date); and
(c) After giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing.
3. Effective Date. This Amendment shall become effective as of the date
--------------
first written above upon the date of the execution and delivery hereof by the
Credit Parties, the Subsidiary Guarantors and the Agent; provided however;
----------------
notwithstanding anything herein to the contrary, in the event that the Offer is
not consummated pursuant to the terms of the Amended Credit Agreement, then this
Amendment shall be terminated and be of no further force and effect.
4. Reference to and Effect Upon the Guaranties.
-------------------------------------------
(a) Except as specifically amended above, each of the Guaranties and
the other Loan Documents shall remain in full force and effect and are
hereby ratified and confirmed.
-2-
<PAGE>
(b) The execution, delivery and effectiveness of this Amendment shall
not operate as a waiver of any right, power or remedy of the Agent or any
Lender under any Security Document or any other Loan Document, nor
constitute a waiver of any provision of any Security Document or any other
Loan Document, except as specifically set forth herein. Upon the
effectiveness of this Amendment, each reference in any Security Document to
"this Agreement", "hereunder", "hereof", "herein" or words of similar
import shall mean and be a reference to such Security Document as amended
hereby.
5. Costs and Expenses. Each Credit Party hereby affirms its obligation
------------------
under Section 11.04 of the Existing Credit Agreement to reimburse the Agent for
-------------
all reasonable out-of-pocket costs and expenses incurred by the Agent in
connection with the preparation and execution of this Amendment, including but
not limited to the attorneys' fees and time charges of attorneys for the Agent
with respect thereto.
6. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS; PROVIDED
--------
THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
7. Headings. Section headings in this Amendment are included herein for
--------
convenience of reference only and shall not constitute a part of this Amendment
for any other purposes.
8. Counterparts. This Amendment may be executed in any number of
------------
counterparts, each of which when so executed shall be deemed an original but all
such counterparts shall constitute one and the same instrument.
9. Reaffirmation. Each Credit Party and each Subsidiary Guarantor
-------------
acknowledges receipt of the Amended Credit Agreement and all other documents and
agreements in connection therewith, and hereby agrees to any and all changes,
modifications, extensions, credit increases and other amendments in the Amended
Credit Agreement and to any obligations or liabilities being guaranteed.
[Signature Pages Follow]
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
IMPAC GROUP, INC.
By: /s/ David C. Underwood
---------------------------
Title: Chief Financial Officer
------------------------
AGI INCORPORATED
By: /s/ David C. Underwood
---------------------------
Title: Chief Financial Officer
------------------------
KLEARFOLD, INC.
By: /s/ David C. Underwood
---------------------------
Title: Chief Financial Officer
------------------------
KF-INTERNATIONAL, INC.
By: /s/ David C. Underwood
---------------------------
Title: Chief Financial Officer
------------------------
KF-DELAWARE, INC.
By: /s/ David C. Underwood
---------------------------
Title: Chief Financial Officer
------------------------
<PAGE>
BANK OF AMERICA NATIONAL TRUST
& SAVINGS ASSOCIATION, as Agent
By: /s/ David A. Johanson
---------------------------
Title: Vice President
------------------------
<PAGE>
EXHIBIT 10.99
AMENDMENT NO.1 TO AGI PLEDGE AND SECURITY AGREEMENT
---------------------------------------------------
This Amendment (this "Amendment") is entered into as of September 11,
---------
1998 among is made among AGI INCORPORATED, an Illinois corporation (the
"Pledgor"), BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION, as agent on
behalf of certain lenders as set forth below (the "Agent"), BANK ONE TRUST
COMPANY, NA, as trustee (the "Trustee") and as Tender Agent (the "Tender Agent")
under a Trust Indenture dated as of January 1, 1995 (the "Indenture") between
The City of Jacksonville, Illinois (the "Issuer") and the Trustee and WILLIAM
BLAIR & COMPANY, as remarketing agent (the "Remarketing Agent") under the
Remarketing Agreement dated as of January 1, 1995 (the "Remarketing Agreement")
between the Pledgor and the Remarketing Agent. Unless otherwise specified
herein, capitalized terms used in this Amendment shall have the meanings
ascribed to them by the Existing Credit Agreement (as defined below).
RECITALS
--------
WHEREAS, the Pledgor, IMPAC Group, Inc. ("IMPAC"), Klearfold, Inc.
("Klearfold"), (the Pledgor IMPAC and Klearfold each a "Credit Party" and
------------
collectively the "Credit Parties"), the financial institutions from time to time
--------------
party thereto and the Agent are party to that certain Credit Agreement, dated as
of March 12, 1998 (as amended through the date hereof, the "Existing Credit
---------------
Agreement");
- ---------
WHEREAS, in connection with the execution and delivery of the Existing
Credit Agreement, AGI, the Agent, the Tender Agent and the Remarketing Agent
entered into a Pledge and Security Agreement dated as of March 12, 1998 (the
"Pledge Agreement");
----------------
WHEREAS, on July 7, 1998, the Credit Parties, the Agent and the
Lenders entered into an Amended and Restated MultiCurrency Credit Agreement
dated as of July 7, 1998 (the "Amended Credit Agreement"), amending and
restating the Existing Credit Agreement upon the occurrence of the Initial
Funding Date (as defined in the Amended Credit Agreement); and
WHEREAS, as a condition to the Initial Funding Date under, and as
defined in, the Amended Credit Agreement, AGI is required to enter into this
Amendment:
NOW THEREFORE, in consideration of the benefits accruing to each
Credit Party, the receipt and sufficiency of which are hereby acknowledged, AGI,
the Tender Agent, the Remarketing Agent and the Agent, for the benefit of itself
and the Lenders, hereby agree as follows:
1. Amendment to Pledge Agreement. Upon the "Effective Date" (as defined
-----------------------------
below) the third WHEREAS clause on the first page of the Pledge Agreement will
be amended to read as follows:
"WHEREAS, BofA is assigning without recourse, liability or
representation or warranty of any kind, all of its right title and interest in
and to the Reimbursement Agreement and the Mortgage to the Agent, and the Agent
(on behalf of the Lenders) will assume, as of the date hereof, the obligations
of BofA under the Reimbursement Agreement and the Mortgage arising after the
date hereof, under that certain Amended and Restated MultiCurrency Credit
Agreement dated as of May 12, 1998 and as amended and restated as of July 7,
1998 (as amended by that certain First Amendment and as hereafter amended,
modified
<PAGE>
or restated, the "Credit Agreement") by and among the Pledgor, IMPAC Group,
------ ---------
Inc., a Delaware corporation, Klearfold, Inc., a Pennsylvania corporation, the
Agent, BofA, as letter of credit issuing bank and the other financial
institutions party thereto from time to time (the "Lenders"), that provides for
a revolving credit facility and a letter of credit facility by which the Letter
of Credit will become an obligation under the Credit Agreement;"
2. Representations and Warranties. The Pledgor hereby represents and
------------------------------
warrants as to itself that: (a) the execution, delivery and performance by the
Pledgor of this Amendment have been duly authorized by all necessary corporate
action and that this Amendment constitutes the legal, valid and binding
obligation of the Pledgor, enforceable against the Pledgor in accordance with
their respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors'
rights generally or by equitable principles relating to enforceability; (b) each
of the representations and warranties contained in the Pledge Agreement is true
and correct in all material respects on and as of the date hereof as if made on
the date hereof (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they are true and correct as
of such earlier date); and (c) after giving effect to this Amendment, no Default
or Event of Default has occurred and is continuing.
3. Effective Date. This Amendment shall become effective as of the date
--------------
first written above upon the date of the execution and delivery hereof by the
Pledgor, the Tender Agent, the Remarketing Agent and the Agent; provided
--------
however; notwithstanding anything herein to the contrary, in the event that the
- -------
Offer is not consummated pursuant to the terms of the Amended Credit Agreement,
then this Amendment shall be terminated and be of no further force and effect.
Except as specifically amended above, each of the Pledge Agreement and the other
Loan Documents shall remain in full force and effect and are hereby ratified and
confirmed. The execution, delivery and effectiveness of this Amendment shall not
operate as a waiver of any right, power or remedy of the Agent or any Lender
under the Pledge Agreement or any other Loan Document, nor constitute a waiver
of any provision of the Pledge Agreement or any other Loan Document, except as
specifically set forth herein. Upon the effectiveness of this Amendment, each
reference in the Pledge Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of similar import shall mean and be a reference to such
Security Document as amended hereby.
4. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS; PROVIDED
--------
THAT THE AGENT AND THE LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER
FEDERAL LAW.
[Signature Pages Follow]
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
Notice Addresses: AGI INCORPORATED
AGI Incorporated
1950 North Ruby Street By /s/ David C. Underwood
Melrose Park, Illinois 60160 -----------------------------
Name: David C. Underwood
--------------------------
Title: Chief Financial Officer
-------------------------
Bank of America National Trust BANK OF AMERICA NATIONAL TRUST
& Savings Association & SAVINGS ASSOCIATION, as Agent
231 South LaSalle Street
Chicago, Illinois 60697
By
-----------------------------
Name:
--------------------------
Title:
-------------------------
Bank One Trust Company, NA BANK ONE TRUST COMPANY, NA
as Trustee and as Tender Agent
By
-----------------------------
Name:
--------------------------
Title:
-------------------------
William Blair & Company WILLIAM BLAIR & COMPANY,
222 West Adams Street as Remarketing Agent
Chicago, Illinois 60606
By
-----------------------------
Name:
--------------------------
Title:
-------------------------
S-1
[TO AGI PLEDGE AMENDMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
Notice Addresses: AGI INCORPORATED
AGI Incorporated By
1950 North Ruby Street -----------------------------
Melrose Park, Illinois 60160 Name:
--------------------------
Title:
-------------------------
Bank of America National Trust BANK OF AMERICA NATIONAL TRUST
& Savings Association & SAVINGS ASSOCIATION, as Agent
231 South LaSalle Street
Chicago, Illinois 60697 By /s/ David A. Johanson
-----------------------------
Name: David A. Johanson
--------------------------
Title: Vice President
-------------------------
Bank One Trust Company, NA BANK ONE TRUST COMPANY,
as Trustee and as Tender Agent
By
-----------------------------
Name:
--------------------------
Title:
-------------------------
William Blair & Company WILLIAM BLAIR & COMPANY, NA
222 West Adams Street as Remarketing Agent
Chicago, Illinois 60606
By
-----------------------------
Name:
--------------------------
Title:
-------------------------
S-1
[TO AGI PLEDGE AMENDMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.
Notice Addresses: AGI INCORPORATED
AGI Incorporated By
1950 North Ruby Street -----------------------------
Melrose Park, Illinois 60160 Name:
--------------------------
Title:
-------------------------
Bank of America National Trust BANK OF AMERICA NATIONAL TRUST
& Savings Association & SAVINGS ASSOCIATION, as Agent
231 South LaSalle Street
Chicago, Illinois 60697
By
-----------------------------
Name:
--------------------------
Title:
-------------------------
Bank One Trust Company, NA BANK ONE TRUST COMPANY, NA
as Trustee and as Tender Agent
By /s/ George J. Laubner
-----------------------------
Name: George J. Laubner
--------------------------
Title: Vice President
-------------------------
William Blair & Company WILLIAM BLAIR & COMPANY,
222 West Adams Street as Remarketing Agent
Chicago, Illinois 60606
By
-----------------------------
Name:
--------------------------
Title:
-------------------------
S-1
[TO AGI PLEDGE AMENDMENT]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed and delivered by their proper and duly authorized officers
as of the day and year first above written.
Notice Addresses: AGI INCORPORATED
AGI Incorporated By
1950 North Ruby Street -----------------------------
Melrose Park, Illinois 60160 Name:
--------------------------
Title:
-------------------------
Bank of America National Trust BANK OF AMERICA NATIONAL TRUST
& Savings Association & SAVINGS ASSOCIATION, as Agent
231 South LaSalle Street
Chicago, Illinois 60697
By
-----------------------------
Name:
--------------------------
Title:
-------------------------
Bank One Trust Company, NA BANK ONE TRUST COMPANY, NA
as Trustee and as Tender Agent
By
-----------------------------
Name:
--------------------------
Title:
-------------------------
William Blair & Company WILLIAM BLAIR & COMPANY,
222 West Adams Street as Remarketing Agent
Chicago, Illinois 60606
By /s/ Kenton Brown
-----------------------------
Name: Kenton Brown
--------------------------
Title: Principal
-------------------------
S-1
[TO AGI PLEDGE AMENDMENT]
<PAGE>
EXHIBIT 10.100
IMPAC GROUP INC.
1950 North Ruby Street
Melrose Park, Illinois 60160-1178
January 11, 1999
To Heritage Fund II Investment
Corporation
c/o Heritage Partners, Inc.
30 Rowes Wharf
Suite 300
Boston, MA 02110
Ladies and Gentlemen:
Reference is hereby made to the letter agreement dated September 10, 1998
among the stockholders of IMPAC Group, Inc., a Delaware corporation (the
"Company"), and the Company (the "September 10th Letter").
-----------------------
Pursuant to the terms of September 10th Letter, Heritage Fund II
Investment Corporation (referred to herein as the "Stockholder") hereby agrees
-----------
to sell to the Company shares of the Company's Common Stock, par value $0.001
per share (the "Common Stock", with the shares of Common Stock to be sold
------------
referred to as the "Shares"), for a purchase price of $625.04 per share (the
------
"Purchase Price") and an aggregate repurchase price as set forth in Annex A. The
-------------- -------
parties acknowledge that the Purchase Price per share has been increased from
the price contemplated by the September 10th Letter to reflect that the timing
of the "Equity Recapitalization" referred to in the September 10th Letter has
been significantly delayed from the parties' expectations in September. The
number of Shares to be sold and the aggregate Purchase Price to be paid by the
Company for such Shares is set forth in Annex A.
-------
Immediately after the closing under the Securities Purchase Agreement,
dated as of the date hereof (the "Securities Purchase Agreement"), between the
-----------------------------
Company and the investors named therein, providing for the issuance and sale by
the Company of a new series of preferred stock and warrants for an aggregate
purchase price of $20,000,000, each Stockholder shall deliver the certificate(s)
representing the Shares to be purchased by the Company (properly endorsed or
accompanied by duly executed stock powers or assignments), against payment
therefor as provided herein by wire transfer to an account
<PAGE>
-2-
designated by the Stockholder on Annex A. The Company hereby agrees that it will
-------
pay the aggregate Purchase Price out of the net proceeds received by it pursuant
to the Securities Purchase Agreement.
The Stockholder hereby represents and warrants that it has all right, title
and interest in the shares of Common Stock to be sold to the Company pursuant to
this letter agreement, and upon delivery to the Company of certificates
representing the Shares to be sold as provided in the preceding paragraph and
payment of the aggregate Purchase Price, the Company will acquire the Shares,
free from all liens, restrictions, claims and encumbrances.
This letter agreement shall to the maximum lawful extent be governed by
and interpreted and construed in accordance with the internal laws of the State
of Delaware, as applied to contracts under seal made, and entirely to be
performed, within Delaware, and without reference to principles of conflicts or
choice of law.
Please sign where indicated below to confirm your agreement with the
foregoing.
Very truly yours,
IMPAC GROUP, INC.
By: /s/ David C. Underwood
------------------------------
Name: David C. Underwood
Title: Chief Financial Officer
Agreement Confirmed:
HERITAGE FUND II INVESTMENT
CORPORATION
By: /s/ Michael F. Gilligan
------------------------------
Name: Michael F. Gilligan
Title:
<PAGE>
ANNEX A
-------
Pursuant to this letter agreement the Stockholder will sell and the Company
will purchse shares of Common Stock as follows:
Shares of Aggregate
Common Stock Purchase Price
------------ --------------
Heritage Fund II Investment
Corporation 30,087.37 $18,806,000
The aggregate Purchase Price should be sent by wire transfer as follows:
Bank Name: BankBoston
Bank Address: 100 Federal Street
Boston, MA 02110
Routing Number: 011 000 390
Account Name: Heritage Fund II, L.P.
Account Number: 503-27931
<PAGE>
Exhibit 10.101
Instrument
dated 10 September 1998
by
IMPAC Europe Public Limited Company
as Issuer
and
Bank of America National Trust & Savings
Association (acting through its London branch)
as Guarantor
constituting a maximum principal amount of (pound)8,534,991
Guaranteed Unsecured Floating Rate Loan Notes 1999/2003
SIMMONS & SIMMONS
21 Wilson Street London EC2M 2TX
Tel 0171-628 2020 528 9292 Fax 0171-628 2070 DX Box No 12
<PAGE>
CONTENTS
1. Definitions and interpretation ........................... 1
2. Issue .................................................... 4
3. Repayment ................................................ 4
4. Certificates ............................................. 4
5. Benefit of terms ......................................... 5
6. Registration ............................................. 5
7. Appointment of registrar ................................. 6
8. Guarantee ................................................ 6
9. Substitution and Exchange ................................ 9
10. Copy of instrument ....................................... 11
11. Rights of the Company .................................... 11
12. Overseas registration .................................... 12
13. Modification of this Instrument and/or the Conditions .... 12
14. Counterparts ............................................. 12
15. Waiver and Exercise of Rights ............................ 12
16. Governing law and jurisdiction ........................... 12
SCHEDULE 1: FORM OF CERTIFICATE FOR THE NOTES ................ 14
1. Status ................................................... 16
2. Interest ................................................. 16
3. Repayment ................................................ 17
4. Purchase ................................................. 19
i
<PAGE>
5. Cancellation ............................................. 20
6. Guarantee ................................................ 20
7. No set-off ............................................... 20
8. Modification ............................................. 20
9. Further issues of Notes .................................. 21
10. Delivery up of certificates .............................. 21
11. Manner of payment ........................................ 22
12. Notices .................................................. 23
1. Repayment ................................................ 24
2. Method of repayment ...................................... 24
3. Balance certificate ...................................... 24
SCHEDULE 2: REGISTRATION AND TRANSFER ........................ 26
1. Registered holder ........................................ 26
2. Entitlement .............................................. 26
3. Method of transfer ....................................... 26
4. Documents required for transfer .......................... 26
5. Charges .................................................. 27
6. Suspension ............................................... 27
7. Transfer of title ........................................ 27
8. Death or bankruptcy ...................................... 27
9. Replacement certificates ................................. 28
10. Overseas Registration .................................... 28
SCHEDULE 3: MEETINGS OF NOTEHOLDERS .......................... 29
1. Right to call ............................................ 29
ii
<PAGE>
2. Notice period ............................................ 29
3. Quorum ................................................... 29
4. Chairman ................................................. 30
5. Right to adjourn ......................................... 30
6. Voting ................................................... 30
7. Casting vote ............................................. 31
8. Poll ..................................................... 31
9. Continuance .............................................. 31
10. Entitlement to vote ...................................... 31
11. Seniority ................................................ 31
12. Proxies .................................................. 31
13. Status of proxy .......................................... 32
14. Appointment of proxies ................................... 32
15. Method of appointment .................................... 32
16. Voting powers of proxies ................................. 32
17. Appointment of representative ............................ 32
18. Additional powers ........................................ 33
19. Extraordinary resolutions ................................ 33
20. Resolutions in writing ................................... 34
21. Meaning of Extraordinary resolution ...................... 34
22. Minutes .................................................. 34
23. Governing Law ............................................ 34
SCHEDULE 4: FORM OF DEMAND ................................... 35
iii
<PAGE>
THIS INSTRUMENT is dated the 10th day of September 1998 and made
BY:
(1) IMPAC Europe Public Limited Company a company registered in England under
number 3487779 whose registered office is at 14 Dominion Street, London
EC2M 2RJ (the "Company")
AND
(2) Bank of America National Trust & Savings Association acting through its
branch in London at Bank of America House, 1 Alie Street, London E1 8DE
(the "Guarantor").
WHEREAS:
(A) In accordance with the Company's Memorandum and Articles of Associations
the Company by resolution of a duly authorised committee of its board of
Directors passed on 26 August 1998 has authorised the creation and issue
of up to a maximum principal amount of (pound)8,534,991 Guaranteed
Unsecured Floating Rate Loan Notes 1999/2003 to be constituted in the
manner hereinafter appearing for the purposes of implementing the offer
made on 22 July 1998 by the Company for the acquisition by the Company of
the whole of the issued and to be issued ordinary share capital of Tinsley
Robor plc.
(B) The Guarantor has agreed in the manner set out in this Instrument to
guarantee the obligations of the Company in respect of the Notes (as
defined below).
NOW THIS INSTRUMENT WITNESSETH AND THE COMPANY AND THE GUARANTOR HEREBY AGREE
AND DECLARE as follows:
1. Definitions and interpretation
1.1 Definitions
In these presents where the context admits:
"Business Day" means a day (other than a Saturday or Sunday) on which
banks generally are open for ordinary banking business in London;
"Canada" means Canada, its territories, provinces and all areas subject to
its jurisdiction and any political sub-division thereof;
"Conditions" means the conditions endorsed or to be endorsed on the
certificates for the Notes in the form or substantially in the form set
out in Schedule 1 as the same may from time to time be modified in
accordance with the provisions of this
1
<PAGE>
Instrument and references to a particular numbered Condition shall be
construed accordingly;
"Directors" means the board of Directors for the time being of the Company
or a duly authorised committee of the board;
"IMPAC" means IMPAC Group, Inc., a corporation incorporated in Delaware,
United States of America;
"IMPAC Group" means IMPAC and its subsidiaries and subsidiary undertakings
from time to time;
"Noteholders" means the several persons for the time being entered in the
Register as holders of the Notes;
"Notes" means the Guaranteed Loan Notes 1999/2003 hereby constituted or,
as the case may be, the principal amount thereof for the time being issued
and outstanding;
"Offer" means the offer made on 22 July 1998 by the Company for the
acquisition by the Company of the whole of the issued and to be issued
ordinary share capital of Tinsley Robor plc, as revised, varied, extended
or renewed and including any acquisition of such shares under sections 428
to 430F of the Companies Act 1985;
"Register" means the register of Noteholders kept by or on behalf of the
Company;
"Registered Office" means the registered office of the Company from time
to time or such other principal place of business of the Company in
England as may from time to time be determined by the Directors and
notified to the Noteholders and the Guarantor;
"Registrar" means the Company at its registered office for the time being
or such person as may for the time being be appointed to be the registrar
of the Company;
"Repayment" includes redemption and vice versa and the words "repay"
"redeem" "repayable" "redeemable" "repaid" and "redeemed" shall be
construed accordingly;
"Transfer Office" means the Registered Office or such other place within
England as may from time to time be determined by the Directors and
notified to the Noteholders and the Guarantor; and
"United States" means the United States of America, its territories and
possessions, any State of the United States of America and the district of
Columbia and any area subject to its jurisdictions and any political
sub-division thereof.
2
<PAGE>
1.2 Construction of Certain References
In this Instrument where the context admits:
(A) words and phrases the definitions of which are contained or referred
to in Part XXVI of the Companies Act 1985 shall be construed as
having the meanings thereby attributed to them;
(B) references to statutory provisions shall be construed as references
to those provisions as amended or re-enacted or as their application
is modified by other provisions from time to time and shall include
references to any provisions of which they are re-enactments
(whether with or without modification);
(C) references to Clauses and Schedules are references to Clauses hereof
and Schedules hereto, references to sub-Clauses or paragraphs are,
unless otherwise stated, references to sub-Clauses of the Clause or
paragraphs of the Schedule in which the reference appears;
(D) references to "this Instrument" include the Schedules and any deed
between the Company and the Guarantor expressed to be supplemental
hereto as from time to time amended or supplemented; and
(E) words denoting the singular shall include the plural and vice versa;
words denoting persons shall include corporations; and words
denoting the masculine shall include the feminine.
1.3 Headings
The headings and sub-headings are inserted for convenience only and shall
not affect the construction of this Instrument.
1.4 Conditions and Schedules
The Conditions to be endorsed on the certificates for the Notes in the
form or substantially in the form set out in Schedule 1 and the provisions
contained in Schedule 2 and Schedule 3 shall be deemed to be incorporated
in this Instrument and shall be binding on the Company and the Noteholders
and all persons claiming through or under them respectively.
3
<PAGE>
2. Issue
2.1 Issue
The aggregate nominal amount of the Notes is limited to (pound)8,534,991.
The Notes shall be issued in registered form credited as fully paid and in
amounts and integral multiples of (pound)1.00. The Notes will not be
listed on any stock exchange.
2.2 Status
The Notes shall rank pari passu and rateably inter se without any
preference or priority one to another as unsecured debt obligations of the
Company with the Company's other unsecured obligations apart from those
obligations which are preferred by insolvency laws or laws relating to
creditors' rights generally.
2.3 Further issues of Notes
Subject to the terms of the Offer and the limit in Clause 2.1 of this
Instrument, the Company shall be at liberty (and without the consent of
any then existing Noteholders or the Guarantor) to create and issue Notes
by way of consideration under the Offer.
3. Repayment
On 30 June 2003 (or, if such day is not a Business Day, on the immediately
preceding Business Day) or on such earlier date as the Notes or any part thereof
become repayable under the provisions of this Instrument or the Conditions, the
Company will, subject as provided in the Conditions, pay to each Noteholder the
amount due to be repaid on his Notes in accordance with Condition 3 together
with interest accrued up to, but excluding, the date of repayment (subject to
any requirement to deduct any applicable tax therefrom) and will, from the first
date of issue of any of the Notes to the date of such repayment, pay to each
Noteholder interest on his Notes (subject to any requirement to deduct any
applicable tax therefrom) for the periods and at the rate determined by the
Company pursuant to Condition 2 and on the dates specified in Condition 2 and
otherwise in accordance with the Conditions.
4. Certificates
4.1 Issue of Certificates
Every Noteholder shall be entitled without charge to one certificate for
the Notes held by him save that joint holders of Notes shall be entitled
to one certificate only in respect of the Notes held by them jointly
(provided always that the Company shall not be bound to register more than
four persons as the joint holders of any Notes) and such certificate shall
be delivered to that one of the joint holders who is first named on the
Register in respect of the joint holding or to such other person
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as the joint holders may in writing direct. Where some only of the Notes
comprised in a certificate are transferred or repaid, the old certificate
shall be cancelled and a new certificate for the balance of the Notes not
transferred or repayable on that occasion shall be issued to the
Noteholder concerned in lieu without charge.
4.2 Form of Certificates
Every certificate for Notes shall be in the form or substantially in the
form set out in Schedule 1 and shall have endorsed thereon Conditions in
the form or substantially in the form also set out in that Schedule. Every
certificate shall be issued under the Common or Securities Seal of the
Company which shall be affixed in accordance with the Articles of
Association for the time being of the Company.
5. Benefit of terms
The Company hereby covenants with the Noteholders and each of them duly to
perform and observe the obligations on its part contained in this Instrument,
including the provisions of the certificates for the Notes and the Conditions
endorsed thereon, and the Notes shall be held subject to and with the benefit of
such provisions, all of which shall be binding upon the Company, and all persons
claiming through or under it, and shall enure for the benefit of all
Noteholders, each of whom shall be entitled to sue for the performance and
observance of such provisions so far as his Notes are concerned.
6. Registration
6.1 Obligation to maintain Register
The Registrar shall keep an accurate register of the Notes at the Transfer
Office and there shall be entered in the Register:
(A) the names and addresses of the holders for the time being of the
Notes and, in the case of the joint holders, the names of each joint
holder and the address of the first named holder;
(B) the amount of the Notes held by each registered holder and, in the
case of joint holders, the amount of the Notes held by the joint
holders taken together;
(C) the date upon which the name of each such registered holder
(including, in the case of joint holders, each joint holder) is
entered in respect of the Notes standing in his name (or their
names); and
(D) the serial number of each certificate for the Notes issued.
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6.2 Changes of name or address
Any change of name or address on the part of any Noteholder shall
forthwith be notified to the Registrar at the Transfer Office and
thereupon the Register shall be altered accordingly.
6.3 Inspection of Register
Any Noteholder and any person authorised by any Noteholder shall be at
liberty at all reasonable times during office hours to inspect the
Register and, at their own expense, to take copies of or extracts from the
same or any part thereof, except during such period or periods, not
exceeding 30 days in total in any year, as the Register is closed by the
Company.
7. Appointment of registrar
The Company may at any time appoint any bank, financial institution or company
offering registrar services acting through an office in England or Wales to act
as the Registrar or as paying agent in respect of the Notes on the terms of an
agreement setting out such Registrar's or paying agent's duties and
responsibilities. The Company shall notify the Noteholders and the Guarantor of
any such appointment. Each Noteholder and the Guarantor shall be entitled to
receive a copy of such agreement without charge on application to the Company.
No such appointment or the terms of any such agreement shall relieve the Company
of any obligation under this Instrument or the Notes.
8. Guarantee
8.1 Guarantor's Obligation
Subject to Clause 8.2, the Guarantor hereby irrevocably and
unconditionally guarantees to the Noteholders and each of them as primary
obligor the due and punctual payment by the Company of every sum due of
principal and interest from the Company in respect of the Notes. As
between the Guarantor and each of the Noteholders, the Guarantor shall be
liable as if it were the principal debtor and if any obligation of the
Company which is hereby guaranteed is void, voidable or unenforceable for
any reason the Guarantor's obligations together with such rights (if any)
as the Guarantor may have to be reimbursed by the Company shall not be
affected. In this Clause 8, "the Company" shall include every debtor
substituted for the Company pursuant to and in accordance with Clause 9.1
and every New Issuer which has issued New Loan Notes in exchange for the
Notes pursuant to and in accordance with Clause 9.1 and references to the
Notes include any New Loan Notes issued by a New Issuer pursuant to and in
accordance with Clause 9.1 (and references to Noteholders shall be
construed accordingly).
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8.2 Maximum Amount Recoverable
In respect of principal due from the Company with respect to the Notes,
the maximum aggregate amount payable by the Guarantor under this
Instrument at any time shall be the aggregate principal amount of the
Notes issued less (a) the aggregate principal amount of the Notes redeemed
and repaid by the Company; and less (b) the aggregate amount paid by the
Guarantor under this Instrument in respect of principal at such time.
In respect of each (pound)1.00 of principal guaranteed under this
Instrument by the Guarantor, the maximum amount of interest recoverable
from the Guarantor at any time and from time to time shall not exceed an
amount calculated in accordance with the following formula:
A = B/C
where
A = the maximum amount of interest recoverable from the Guarantor in
respect of such (pound)1 of principal at such time;
B = (pound)375,000 less an amount equal to the aggregate of all
amounts (if any) paid by the Guarantor under this Instrument in
respect of interest prior to such time; and
C = the aggregate principal amount of Notes which have been issued and
not redeemed or repaid by the Company as most recently certified by
the Company to the Guarantor pursuant to this Clause 8.2.
The Company undertakes to notify the Guarantor of any redemption of Notes
by the Company within ten Business Days thereafter and, at the same time
(and at such other time or times as the Guarantor may request), to certify
to the Guarantor the aggregate principal amount of Notes which have been
issued and have not been redeemed by the Company at such time.
8.3 Demand
Demands made to the Guarantor under this Instrument shall:
(A) be made within six months after the failure by the Company to pay
any principal moneys or interest payable on the Notes within 30 days
of the due date for payment in respect of which such demand is being
made, provided that no such demand shall be made on the Guarantor
after 31 January, 2004 and any demand made after that date shall be
invalid;
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(B) be in or substantially in the form set out in Schedule 4 to this
Instrument addressed to Bank of America, National Trust & Savings
Association, 1 Alie Street, London El 8DE (marked for the attention
of "Trade Finance Department, Ref: 6008GT 003823 /98") and, in the
case of a demand for payment of principal of any Note, be
accompanied by the certificate(s) relating to the relevant Note(s)
in respect of which such demand is made (or, in the case of any lost
or destroyed certificate, by an appropriate indemnity in favour of
the Guarantor from the Noteholder in a form satisfactory to the
Guarantor (acting reasonably));
(C) be signed by or on behalf of the relevant Noteholder (or, in the
case of joint holders, by the first-named such holder);
(D) state:
(1) the full name and address (as appears in the Register) of such
Noteholder and the amount of principal which is claimed and,
in the case of a claim for interest, state the principal
amount on which interest is claimed and the date(s) in respect
of which interest is being claimed;
(2) in the case of a demand for redemption of principal payable in
respect of the Notes, that none of the Notes in respect of
which such demand is made has been cancelled or repurchased by
the Company; and
(3) that the sum demanded is due and payable by the Company, and
the Company has failed to pay the sum demanded.
8.4 Reliance
The Guarantor may rely on any demand or other document or information
believed by it to be genuine and correct and to have been signed or
communicated by the person by whom it purports to be signed or
communicated and the Guarantor shall not be liable for the consequences of
such reliance and shall not investigate or have any obligation to verify
or establish that the facts or matters stated therein are true and
correct.
8.5 Receipt
The Guarantor shall only be liable under this Instrument following the
actual receipt by it of a demand made in accordance with Clause 8.3.
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8.6 Giving of time etc.
The guarantee in this Instrument is to be a continuing guarantee and shall
remain in force (subject to the expiry provisions of Clause 8.3) until all
amounts payable by the Company in respect of the Loan Notes shall have
been paid in full. The Guarantor's obligations under this Clause 8 shall
not be discharged or affected in any way by any of the following: (1) any
time or indulgence granted to the Company, (2) any amendment to any of the
provisions of this Instrument or any of the Notes made, in each case, in
accordance with its terms or any variation, compromise or release of the
Company's obligations or liabilities under this Instrument or any of the
Notes as may from time to time be agreed between the Company and the
Noteholders or any of them, (3) the making or absence of any demand on the
Company for payment, (4) the enforcement or absence of enforcement of, or
the unenforceability of, this Instrument or the Notes or any of them, (5)
the liquidation, winding-up, amalgamation, reconstruction, reorganization
or dissolution of the Company, (6) the appointment of a receiver,
administrative receiver, administrator, liquidator or similar officer or
agent or by any circumstances affecting the obligations of the Company to
meet its liabilities or (7) any alteration of the Company's Memorandum or
Articles of Association.
8.7 No proceedings necessary against the Company
The guarantee may be enforced by any Noteholder without first taking steps
or proceedings against the Company.
8.8 Payments by the Guarantor
All sums payable by the Guarantor under this guarantee shall be paid in
sterling to the Noteholders in the manner set out in Condition 11. All
such payments shall be made free and clear of, and without any deduction
or withholding for, or on account of, tax unless the Guarantor is required
to make such withholding or deduction by law and shall also be made in
full and free and clear of, and without any deduction for or on account
of, any set-off or counterclaim.
8.9 Notification of the Rate of Interest
The Company shall, from time to time, notify the Guarantor of the rate of
interest on the Notes as determined by the Company pursuant to Condition
2.
9. Substitution and Exchange
9.1 Rights to Substitute and Exchange
The Company (or, where a substitution or exchange has taken place under
this Clause 9.1, the substitute or exchanged company) shall be entitled,
with the consent of the Guarantor but without the consent of the
Noteholders, to substitute any
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other member of the IMPAC Group as the principal debtor under this
Instrument and the Notes in place of the Company (or of any previously
substituted or exchanged company under this Clause 9.1). In addition, the
Company (or where a substitution or exchange has taken place under this
Clause 9.1, the substituted or exchanged company) shall be entitled with
the consent of the Guarantor to require all or any of the Noteholders to
exchange their Notes for loan notes ("New Loan Notes") issued on the same
terms, mutatis mutandis as the Notes (or any loan notes previously issued
in exchange therefor) by any other member of the IMPAC Group (the "New
Issuer"). The Company (or any substitute or exchanged company) may only
exercise the right of substitution or exchange in this Clause 9.1 if the
Company has received a written opinion in terms satisfactory to it from a
leading taxation Queen's Counsel of at least 10 years standing selected by
the Company to the effect that the proposed substitution or exchange will
not adversely affect the UK tax position of the Noteholders as a class and
in particular will not constitute or cause a disposal of the Notes for the
purposes of United Kingdom taxation (the "Opinion") and has given to the
Noteholders not less than 21 days notice of its intention to effect the
substitution or exchange accompanied by a copy of the Opinion and of the
instructions in respect of which it was given.
9.2 Method and Effect of Substitution
(A) The Company, any substitute company and any New Issuer (as the case
may be) shall be entitled to exercise its rights of substitution
referred to in Clause 9.1 by means of an instrument (the
"Substitution Instrument") pursuant to which the substitute company
shall agree to be bound by the terms of this Instrument as fully as
if the substitute company had been named in this Instrument and on
the Notes as the principal debtor in place of the Company (or of any
previous substitute company or New Issuer). The Substitute
Instrument shall be executed as a deed by the Company (or any
previously substituted company, as the case may be), the substitute
company and the Guarantor in such form as they agree. The
Substitution Instrument shall not be executed until 21 days have
elapsed from the giving of the notice referred to in Clause 9.1. A
copy of the Substitution Instrument shall be made available for
inspection by the Noteholders.
(B) Not later than 14 days after the execution of the Substitution
Instrument, notice of the substitution will be given to the
Noteholders. Such notice shall also give details of the place in
England and Wales where copies of the Substitution Instrument, the
Opinion and the relevant instructions to counsel may be inspected.
The non-receipt of any notice (whether pursuant to this Clause 9.2
(B) or Clause 9,1) by, or the accidental omission to give notice to,
any Noteholder shall not invalidate any substitution pursuant to
this Clause 9.
(C) Upon the execution of the Substitution Instrument, the substituted
company will be deemed to be named in this Instrument and on the
Notes
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as the principal debtor in place of the Company (or of any
previously substituted company or New Issuer) as provided in the
Substitution Instrument and references to the Company in this
Instrument and on the Notes shall, if such substitution occurs and
where the context so permits, be deemed to be references to such
substitute company. The existing certificates held by the
Noteholders in respect of the Notes (including the Conditions
endorsed thereon) shall not be cancelled, but shall remain valid in
relation to the new substitute company as aforesaid.
(D) Upon the execution of the Substitution Instrument and compliance
with the other provisions of Clause 9.1, all of the rights and
obligations of the Company (or any previously substituted company or
New Issuer) under this Instrument and the Notes shall cease and be
terminated, and shall be assumed by the new substitute company.
9.3 Method and Effect of Exchange
(A) The Company, any substitute company and any New Issuer (as the case
may be) shall be entitled to exercise its rights of exchange
referred to in Clause 9.1 by means of an instrument (the "Exchange
Instrument") which shall be executed as a deed by the Company, the
New Issuer and the Guarantor in such form as they agree. The
Exchange Instrument shall not be executed until 21 days have elapsed
from the giving of the notice referred to in Clause 9.1. A copy of
the Exchange Instrument and the Opinion shall be made available for
inspection by the Noteholders.
(B) Not later than 14 days after execution of the Exchange Instrument,
the Company (or any previous substitute company or New Issuer, as
the case may be) shall serve notice of such exchange on the
Noteholders. Such notice shall also give details of the place in
England and Wales where copies of the Exchange Instrument, the
Opinion and the relevant instructions to counsel may be inspected.
The non-receipt of notice (whether pursuant to this Clause 9.3 (B)
or Clause 9.1) by, or the accidental omission to give notice
(whether pursuant to this Clause 9.3 (B) or Clause 9.1) to, any
Noteholder shall not invalidate any exchange pursuant to this Clause
9.
(C) The notice shall also state that the Noteholders shall not be
entitled to receive any New Loan Notes until they have delivered the
certificate evidencing the Notes to be exchanged to an address
specified in the notice. Within 14 days of receipt of such
certificates, or other evidence of title or indemnity, satisfactory
to the New Issuer, the New Issuer shall send the New Loan Notes to
the Noteholder's address stated on the Register, or to such other
address in the United Kingdom as is notified to the New Issuer by
the Noteholder.
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(D) Upon the execution of the Exchange Instrument and the issue of the
New Loan Notes all of the rights and obligations of the Company (or
any previous New Issuer) under this Instrument and the Notes shall
cease and be terminated and shall be assumed by the New Issuer.
10. Copy of instrument
Each Noteholder shall be entitled to receive a copy of this Instrument without
charge on application to the Company.
11. Rights of the Company
Without prejudice to all other powers of the Company, or any of the provisions
of the Articles of Association of the Company, nothing contained in this
Instrument shall prevent the Company or any member of the IMPAC Group from:
(A) exercising its borrowing powers in such manner as is permitted by its
Articles of Association or by resolution of its shareholders; or
(B) charging or otherwise encumbering or permitting or procuring any of its
subsidiaries to charge or otherwise encumber, whether by means of a
debenture, mortgage or otherwise, or disposing of, all or any part of its
assets, business or undertaking; or
(C) making any change in the nature of its business or that of its
subsidiaries.
12. Overseas registration
The Notes issued pursuant to this Instrument have not been and will not be
registered under the United States Securities Act of 1933, as amended (the
"Securities Act"), or under any relevant securities laws of any state or
district of the United States, Canada, Australia, Japan or any other country.
Accordingly, unless an exemption under such act or laws is available, the Notes
may not be offered, sold, resold or delivered, directly or indirectly, by any
person in or into the United States, Canada, Australia or Japan or to any U.S.
person (as defined in Regulation S under the Securities Act).
13. Modification of this Instrument, the Notes and/or the Conditions
This Instrument, the Notes and/or the Conditions may be amended by a
supplemental instrument executed by the Company and the Guarantor with the
sanction of an Extraordinary Resolution of the Noteholders.
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14. Counterparts
This Instrument, may be entered into in two Counterparts, one executed by the
Company and one by the Guarantor each of which, when executed and delivered,
shall be an original but both Counterparts together shall constitute one and the
same Instrument.
15. Waiver and Exercise of Rights
15.1 The failure by any Noteholder to enforce at any time or for any period any
one or more of the provisions of this Instrument and/or the Conditions
shall not be a waiver of them or of the right at any time subsequently to
enforce all the terms of this Instrument and the Conditions in accordance
with their terms.
15.2 All rights in this Instrument or by the Conditions shall be cumulative and
no exercise by a Noteholder of any right shall restrict or prejudice the
exercise of any other right and no exercise of any remedy shall preclude
the exercise of any other remedy.
16. Governing law and jurisdiction
16.1 Governing law
This Instrument and the Notes shall be governed by, and construed in
accordance with, English law.
16.2 Jurisdiction
The English Courts shall have exclusive jurisdiction to determine any
matter or settle any disputes arising out of or relating to this
Instrument. In relation to any legal action or proceedings to enforce the
terms of Clause 8 or arising out of or in connection with Clause 8
("Proceedings"), the Guarantor irrevocably submits to the exclusive
jurisdiction of the English courts and waives any objection to Proceedings
in such courts on the grounds of venue or on the grounds that Proceedings
have been brought in an inappropriate forum. This Clause 16.2 operates for
the benefit of the Noteholders who shall retain the right to take
Proceedings in any other court having jurisdiction.
16.3 Waiver of Immunity
To the extent that the Guarantor may be entitled in any jurisdiction to
claim for itself or its assets immunity from any suit, execution,
attachment (whether provisional or final, in aid of execution, before
judgment or otherwise) or other legal process or to the extent that in any
jurisdiction such immunity (whether or not claimed) may be attributed to
it or its assets, it irrevocably agrees not to claim and irrevocably
waives such immunity to the fullest extent permitted by the laws of such
jurisdiction.
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IN WITNESS WHEREOF this Instrument has been duly executed by the Company and the
Guarantor as a deed on the date and year first above written.
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SCHEDULE 1: FORM OF CERTIFICATE FOR THE NOTES
Certificate No. _____________ Amount of Notes (pound)______________
IMPAC EUROPE PUBLIC LIMITED COMPANY
(incorporated in England and Wales under
the Companies Act 1985 under number 3487779)
_______________________
UNSECURED GUARANTEED FLOATING RATE LOAN NOTES 1999/2003
Issued pursuant to the Memorandum and Articles of Association of IMPAC Europe
Public Limited Company (the "Company") and created by resolution of a duly
authorised committee of the Board of Directors of the Company passed on
[ ] 1998.
THIS IS TO CERTIFY THAT ________________________________________________________
________________________________________________________________________________
of _____________________________________________________________________________
is/are the registered holder(s) of the above amount of Unsecured Guaranteed
Floating Rate Loan Notes 1999/2003 of the Company (the "Notes") which are
constituted by an Instrument (the "Instrument") dated 10 September 1998 and made
by the Company and Bank of America National Trust and Savings Association (the
"Guarantor") and are issued with the benefit of and subject to the provisions
contained in the Instrument and the Conditions endorsed hereon. Unless the
context otherwise requires, words and expressions defined in the Instrument
shall bear the same meanings where used in such Conditions.
Interest (less any applicable tax) is payable on the Notes represented by this
certificate as specified in the Conditions endorsed hereon. The Notes are
subject to redemption in accordance with Condition 3.
Payments of principal and interest under the Notes are guaranteed by the
Guarantor on and subject to the terms and conditions set out in the Instrument
and the Conditions.
The Notes and the Instrument are governed by and shall be construed in
accordance with English law.
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IN WITNESS whereof IMPAC Europe Public Limited Company has executed this Note on
[ ] September 1998.
SIGNED by ) .........................
and by ) Director
and thereby executed by )
IMPAC EUROPE PUBLIC )
LIMITED COMPANY )
as its Deed ) .........................
Director/Secretary
Date:
NOTES:
1. Subject as described in note 2 below, the Notes are registerable and
transferable in amounts and multiples of (pound)1.00. No transfer of the
whole or any part of the Notes represented by this certificate will be
registered without the production of this certificate or such evidence and
indemnity therefor as specified in the Conditions endorsed hereon.
2. These Notes have not been and will not be registered under the United
States Securities Act of 1933, as amended (the "Securities Act"), or under
any relevant securities laws of any state or district of the United
States, Canada, Australia, Japan or any other country. Accordingly, unless
an exemption under such act or laws is available, the Notes may not be
offered, sold, resold or delivered, directly or indirectly, by any person
in or into the United States, Canada, Australia or Japan or to any U.S.
person (as defined in Regulation S under the Securities Act).
3. Each Noteholder is entitled to receive a copy of the Instrument without
charge, on application to the Company.
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THE CONDITIONS
1. Status
The Notes are issued in registered form in amounts and integral multiples of
(pound)1.00 and constitute unsecured obligations of the Company guaranteed by
Bank of America National Trust and Savings Association on and subject to the
terms and conditions contained in the Instrument. The Instrument pursuant to
which the Notes are issued does not contain any restrictions on borrowing,
disposing or charging of assets by the Company or any member of the IMPAC Group.
2. Interest
2.1 Interest Periods
Interest on the Notes will be payable (subject to any requirement to
deduct any applicable tax therefrom) twice yearly in arrears on 30 June
and 31 December or, if any such day is not a Business Day, on the
immediately preceding Business Day (each an "Interest Payment Date") in
each year in respect of the Interest Periods (as defined below) running to
(but excluding) those dates at the rate specified in Condition 2.2, except
that the first payment of interest on the Notes, which will be made on 31
December 1998, will be in respect of the period from and including the
first date of issue of any of the Notes up to (but excluding) 31 December
1998. The period from and including the first date of issue of any of the
Notes up to (but excluding) 31 December 1998 and the period from (and
including) 31 December 1998 or any subsequent Interest Payment Date up to
(but excluding) the next following interest payment date is herein called
an "Interest Period".
Interest shall be payable in each case only to persons who are registered
as Noteholders at the close of business on the relevant record date. The
"record date" shall mean the 30th day before the relevant Interest Payment
Date.
2.2 Interest Rate
The rate of interest on the Notes for each Interest Period will be the
rate per annum calculated by the Company to be one per cent. below the
average (rounded down where necessary to the nearest whole multiple of
one-sixteenth of one per cent.) of the respective rates per annum at which
any two London clearing banks selected by the Company are prepared to
offer six month sterling deposits of an amount equal to the amount of
Notes then outstanding (or as near thereto as practicable) to leading
banks in the London Inter-bank Market for sterling at or about 11.00 a.m.
(London time) on each of the last three Business Days immediately
preceding the commencement of the relevant Interest Period.
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If the rate of interest cannot be established in accordance with the
previous paragraph of this Condition 2.2 for any relevant Interest Period,
then the rate of interest on the Notes for such Interest Period shall be
such rate per annum as the Company shall determine on the basis of any two
rates quoted to the Company for six month deposits of an amount equal to
the outstanding principal amount of the Notes then outstanding in such
other inter-bank market or markets as the Company may select, to be one
per cent. below the average (rounded down, where necessary, to the nearest
whole multiple of one sixteenth of one per cent) of the rates so quoted
and, if a rate of interest cannot be established in accordance with the
foregoing provisions of this paragraph for such Interest Period, then the
rate of interest on the Notes for such Interest Period shall be the same
as that applicable to the Notes during the previous Interest Period unless
in any such case any one clearing bank as is referred to in the previous
paragraph of this Condition 2.2 shall have been prepared to offer a rate
as aforesaid in which case the rate of interest in respect of the relevant
Interest Period will be calculated as if such rate were the average
referred to in the previous paragraph.
2.3 Accrual
Interest shall accrue from day to day and shall be calculated on the basis
of a 365 day year (or, in the case of a leap year, a 366 day year) and the
actual number of days elapsed in the relevant Interest Period.
2.4 Certification
The certificate of the Company as to the rate of interest applicable in
any Interest Period shall, save in the case of manifest error, be
conclusive and binding on the Noteholders.
3. Repayment
3.1 Redemption date
Unless previously repaid or purchased and cancelled, the Notes will be
repaid by the Company in full at par on 30 June 2003 (or, if such date is
not a Business Day, on the immediately preceding Business Day) together
with accrued interest up to but excluding the date of repayment (subject
to any requirement to deduct any applicable tax therefrom).
3.2 Redemption at Option of Noteholder
(A) A Noteholder may require the whole or any part (being a nominal
amount of (pound)100 or an integral multiple thereof) of the
principal amount of any Notes held by him to be repaid at par,
together with accrued interest (subject to any requirement to deduct
any applicable tax therefrom) up to, but excluding, the date of
payment, on the last day of each calendar
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quarter (being 31 March, 30 June, 30 September and 31 December or if
any such day is not a Business Day on the immediately preceding
Business Day) (each a "Quarter Date") falling on or after 30 June
1999 but prior to 30 June 2003 (any such date being a "Repayment
Date") by giving to the Company not less than 30 days' notice in
writing to expire on or before the relevant Quarter Date. No such
notice may be given in respect of Notes which are the subject of a
notice of redemption already given by the Company pursuant to
Condition 3.3.
(B) Such right shall be exercisable by the Noteholder concerned by
completing and signing a Notice of Repayment in the form printed on
the certificate comprising or including the Notes to be repaid (or
in such other form as the Directors may approve) and depositing the
same at the Company's registered office or, if different, the
Transfer Office not less than 30 days before the relevant Repayment
Date accompanied by such evidence (if any) as the Directors may
reasonably require to prove the title of the person requiring
repayment where such person is not the registered Noteholder. A
notice given to the Company in accordance with this Condition shall,
except with the consent of the Company, be irrevocable.
(C) Against such delivery, the Company shall on the relevant Repayment
Date pay to the Noteholder concerned the principal amount of his
Notes or, as the case may be, the part thereof to be repaid,
together with interest accrued up to (but excluding) the date of
repayment (subject to any requirement to deduct any applicable tax
therefrom) and in the case of partial redemption shall issue and
deliver to the Noteholders a certificate for the balance of the
Notes which remain unredeemed.
3.3 Redemption at Option of Company
(A) If, at any time the nominal amount of all of the Notes outstanding
is less than (pound)250,000, the Company has the right on giving to
the holders of outstanding Notes not less than 30 days' notice in
writing (such notice not to take effect prior to 30 June 1999) to
redeem all (but not some only) of the outstanding Notes by payment
of the nominal amount thereof together with accrued interest
(subject to any requirement to deduct any applicable tax therefrom)
up to (but excluding) the date of repayment.
(B) If at any time any payment of interest in respect of the Notes would
fail to be treated as a distribution by the Company for United
Kingdom corporation tax purposes, the Company has the right on
giving not less than 30 days' notice in writing to the Noteholders
to redeem all (but not some only) of the Notes at par together with
accrued interest (subject to any requirement to deduct any
applicable tax therefrom) up to (but excluding) the date of
repayment.
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(C) Notwithstanding the provisions of Condition 3.3(A) above, the
Company has the right on the death or bankruptcy of a Noteholder by
giving not less than 30 days' notice expiring on any Business Day
after the first anniversary of the date of death or making of the
bankruptcy order to the personal representatives or trustee
(respectively) of such Noteholder, or (in the case of bankruptcy
only) the Noteholder himself, to redeem all (but not some only) of
the outstanding Notes held by such Noteholder (whether alone or
jointly with any other persons) by payment of the nominal amount
thereof together with accrued interest (subject to any requirement
to deduct any applicable tax therefrom) up to (but excluding) the
date of repayment.
3.4 Events of Default
Notwithstanding any other provision of the Instrument, but subject to
these Conditions, each Noteholder shall be entitled to require, upon
written notice by such Noteholder to the Company, all or any part (being
(pound)1 nominal amount or any multiple thereof) of the Notes registered
in the name of that Noteholder (so far as not previously redeemed or
repaid and unless otherwise agreed by that Noteholder) to be immediately
repaid at par together with accrued interest up to but excluding the date
of payment (less any applicable tax required to be deducted therefrom) if:
(A) any principal or interest on any of the Notes held by that
Noteholder shall fail to be paid in full within 30 days after the
due date for payment thereof; or
(B) an order is made by a competent court or an effective resolution is
passed for the winding-up or dissolution of the Company (other than
for the purposes of a solvent reconstruction or a solvent
amalgamation or a members' voluntary winding-up on terms previously
approved by an Extraordinary Resolution of Noteholders); or
(C) an encumbrancer takes possession or a trustee, receiver,
administrator, administrative receiver or similar officer is
appointed or an administration order is made in respect of the
Company or in respect of all or substantially all of the undertaking
of the Company and such person has not been paid out or discharged,
or the order stayed, within 30 days.
The Company shall notify the Noteholders forthwith upon it becoming aware
of the occurrence of any of the events specified in this Condition 3.
4. Purchase
The Company may at any time by agreement with the relevant Noteholders purchase
any Notes at any price by tender, private treaty or otherwise.
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5. Cancellation
Any Notes repaid under Condition 3 or purchased under Condition 4 will be
cancelled and will not be available for re-issue.
6. Guarantee
6.1 Any payment made by the Guarantor under Clause 8 of the Instrument to any
Noteholder or other person deriving title therefrom shall pro tanto
discharge the obligations of the Company to make payment of such amount
under these Conditions and/or the Notes and/or the Instrument.
6.2 Under Clause 8 of the Instrument, the Guarantor guarantees, irrevocably
and subject to the terms and conditions of the Instrument, to each of the
Noteholders that, if the Company does not pay any amount payable by it
under the Notes by the time and on the date specified in these Conditions
for such payment (whether on the normal due date, on acceleration or
otherwise), the Guarantor will pay that sum to the relevant Noteholder
within five Business Days of demand being made therefor in writing by the
relevant Noteholder or person claiming thereunder Provided that the amount
payable hereunder in respect of each (pound)1.00 Note shall not at any
time and from time to time exceed
(A) in the case of principal, (pound)1.00; and
(B) in the case of interest, an amount calculated in accordance with the
following formula:
A = B/C
where
A = the maximum amount of interest recoverable from the Guarantor in
respect of such (pound)1 of principal at such time;
B = (pound)375,000 less an amount equal to the aggregate of all
amounts (if any) paid by the Guarantor under the Instrument in
respect of interest prior to such time; and
C = the aggregate principal amount of Notes which have been issued and
not redeemed or repaid by the Company as most recently certified by
the Company to the Guarantor pursuant to Clause 8.2 of the
Instrument.
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6.3 Demands given to the Guarantor under the Instrument must be made in
accordance with Clause 8 thereof, in writing and addressed and delivered
to the Guarantor at its London branch at 1 Alie Street, London El 8DE
marked for the attention of Trade Finance Department, Ref: 6008GT 003823
/98 and must specify the full name and registered address of the
Noteholder, the amount payable but unpaid by the Company (if known) and
the date on which such amount fell due.
7. No set-off
All payments to be made under the Instrument and these Conditions shall be made
without set-off or counterclaim and without any withholding or deduction for or
on account of tax other than as required by law from time to time.
8. Modification
The provisions of the Instrument and the rights of the Noteholders are subject
to modification, abrogation or compromise in any respect with the sanction of an
Extraordinary Resolution (as defined in Schedule 3 to the Instrument) of the
Noteholders and the consent of the Company and the Guarantor.
9. Further issues of Notes
9.1 Subject to the terms of the Offer and the limit in Clause 2.1 of the
Instrument, the Company shall be at liberty (and without the consent of
any then existing Noteholders or the Guarantor) to create and issue Notes
by way of consideration under the Offer.
10. Delivery up of certificates
10.1 Personal Representatives and Trustees in Bankruptcy
References to a "Noteholder" in this Condition 9 shall, where the
situation relates to a redemption pursuant to Condition 3.3 (C), be deemed
to be references to either the Noteholder or the personal representatives
or trustee in bankruptcy of such Noteholder, as the Company may in its
reasonable discretion determine.
10.2 Delivery up of Certificates
On the date and at the place fixed for redemption, each Noteholder whose
Notes are to be redeemed may be required to deliver to the Company the
certificate or certificates therefor. Upon such delivery (if required) and
against an appropriate discharge by the Noteholder for the repayment money
(if required) the Company shall pay to the Noteholder the amount payable
to him in respect of such repayment and such repayment may be made through
a bank if the Company shall think fit.
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10.3 Deposit of Redemption Monies
If the Company shall require a Noteholder, any of whose Notes are liable
to be repaid under these Conditions or the Instrument, to deliver to the
Company the certificate or certificates therefor and such Noteholder shall
fail or refuse to deliver up the certificate or certificates therefor or
to provide an indemnity in a form acceptable to the Directors on the date
and at the place fixed for the repayment thereof or if a Noteholder shall
fail or refuse to accept payment of the redemption moneys payable in
respect thereof, the moneys payable to such Noteholder may be set aside by
the Company and paid into a separate bank account and held by the Company
in trust for such Noteholder (on terms that if the failure or refusal
which resulted in the payment being made into the bank account is remedied
then payment of such moneys shall be made to the Noteholder on demand) and
such setting aside and payment shall be deemed for all the purposes of
these Conditions to be a payment to such Noteholder and the Company shall
(without prejudice to the terms of such trust as aforesaid) thereby be
discharged from all obligations in connection with such Notes. If the
Company shall place the moneys so set aside on deposit at a bank (being an
authorised institution under the Banking Act 1987) the Company shall not
thereby be responsible for the safe custody of such moneys or for interest
thereon except such interest (if any) as the said moneys may earn whilst
on deposit less any expenses incurred by the Company in connection
therewith. Any such amount so paid or deposited which remains unclaimed
after a period of six years in the case of interest, and 12 years in the
case of principal from the date on which the relevant payment first became
due shall revert to the Company and the relevant Noteholders shall cease
to be entitled thereto, notwithstanding that, in the intervening period,
the obligation to pay the same may have been accounted for in the books,
accounts and other records of the Company.
11. Manner of payment
11.1 Interest and Principal
The interest payable in respect of any Notes (less any tax required to be
deducted therefrom) and a payment of principal owing on the Notes or any
part thereof shall be paid by cheque or warrant or in such other manner as
may be agreed by the Company and the relevant Noteholder (and, in the case
of payments to be made by the Guarantor, agreed by the Guarantor):
(A) made payable to and sent to the registered holder thereof at his
registered address; or
(B) in the case of joint registered holders made payable to and sent to
that one of the joint registered holders who is first named on the
Register in respect of such Notes at his registered address; or
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(C) made payable to such person or persons and sent to such address as
the registered holder or all the joint registered holders may in
writing, received by the Company or, in the case of payments to be
made by the Guarantor, the Guarantor at least 15 Business Days prior
to the date of payment, to the Company or, as the case may be, the
Guarantor direct.
11.2 Death or bankruptcy
On a redemption of Notes by the Company pursuant to Condition 3.3
following the death or bankruptcy of a Noteholder the Company may, in its
absolute discretion, pay any amount which would otherwise under this
Condition 11 be payable to such Noteholder to his personal representatives
or his trustee (as the case may be) on such person producing such proof of
appointment as the Directors may reasonably require.
11.3 Post
Every such cheque or warrant shall be sent through the post in a pre-paid
cover at the risk of the person entitled to the moneys represented thereby
and payment of any such cheque or warrant by the banker upon whom it is
drawn shall be a satisfaction of the moneys represented thereby.
11.4 Unpaid Interest
No unpaid interest shall bear interest against the Company or the
Guarantor.
12. Notices
12.1 Post
Any notice or other document (including a certificate for Notes) may be
served on or delivered to any Noteholder by the Company either personally
or by sending it through the post in a pre-paid cover addressed to such
Noteholder at his registered address or (if he has no registered address
within the United Kingdom) to the address, if any, within the United
Kingdom supplied by him to the Company as his address for the service of
notices, or by delivering it to such address, addressed as aforesaid. Any
notice or document served on or delivered to that one of the joint holders
of any Notes whose name stands first in the Register in respect of such
Notes shall be sufficient notice to or service on all the joint holders in
their capacity as such. For such purpose a joint holder having no
registered address in the United Kingdom and not having supplied an
address within the United Kingdom for the service of notices shall be
disregarded.
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12.2 Death or bankruptcy
Notice may be given to the persons entitled to any Notes in consequence of
the death or bankruptcy of any Noteholder by sending the same by post in a
pre-paid cover addressed to them by name or by the title of the personal
representatives or trustees of such holder at the address (if any) in the
United Kingdom supplied for the purpose by such persons or (until such
address is supplied) by giving notice in the manner in which it would have
been given if the death or bankruptcy had not occurred.
12.3 Delivery
Where a notice or other document is served or delivered by post, service
or delivery shall be deemed to be effected at the expiration of 24 hours
(or, where second-class mail is employed, 48 hours) after the time when
the cover containing the same is posted and in proving such service or
delivery it shall be sufficient to prove that such cover was properly
addressed, stamped and posted.
12.4 United Kingdom
A Noteholder who, having no registered address within the United Kingdom,
has not supplied to the Company an address within the United Kingdom for
the service of notices shall not be entitled to receive notices from the
Company.
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NOTICE OF REPAYMENT
To: The Company
1. Repayment
I/We, being the registered holder(s) of the Notes represented by this
certificate, hereby give notice that I/we require repayment of
*all/(pound)[ ] of the Notes in accordance with Condition 3 endorsed
hereon. (* Delete or Complete as appropriate. Repayment of part only must be in
principal amounts or multiples of (pound)100. if no indication is given of the
amount of the Notes to be repaid, all of such Notes will be repaid.)
2. Method of repayment
I/We authorise and request you:
(A) to make the cheque or warrant payable to the person whose name is
set out in the box below or, if none is set out, to me/the
first-named of us; and
(B) to send it by post in a pre-paid cover at my/our risk to the person
whose name and address is set out in the box below or, if none is
set out, to the registered address of the sole or first-named
holder.
3. Balance certificate
I/We hereby authorise the despatch of a certificate for the balance (if any) of
the Notes represented by this certificate which is not repaid by post in a
pre-paid cover at my/our risk to the person whose name and address is set out in
the box below or, if none is set out, to the sole or first-named holder at
his/her registered address.
Signature(s) of Noteholder(s) [ ]
[ ]
[ ]
[ ]
In the case of joint holders ALL must sign. A body corporate should execute
under its common seal or under the hand of some officer or attorney duly
authorised in that behalf.
Dated [ ] , [ ].
----------------
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Please insert in BLOCK CAPITALS in the box below the name of the person to whom
you wish the cheque or warrant to be made payable (if not to you) and/or the
address within the United Kingdom of the person to whom you wish the cheque or
warrant and any balance certificate to be sent if it is different from that of
the sole or first-named holder of the relevant Notes. If the box is left blank,
the cheque or warrant will be made payable to the sole holder of the relevant
Notes or the first-named holder of the relevant Notes on the Register in respect
of joint holders and it and any balance certificate will be sent to the
registered address of the such sole holder or first-named holder.
- -----------------------------------
Name:..............................
Address:...........................
...................................
...................................
- -----------------------------------
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SCHEDULE 2: REGISTRATION AND TRANSFER
1. Registered holder
Except as required by law, the Company will recognise the registered holder of
any Notes as the absolute owner thereof and shall not be bound to take notice of
or see to the execution of any trust whether express implied or constructive to
which any Notes may be subject and the receipt of the registered holder of any
Notes or, if two or more persons are registered as joint holders of any Notes or
are entitled jointly to any Notes in consequence of the death or bankruptcy of
the holder, the receipt of any of them for the principal, interest or other
moneys payable on or in respect of such Notes or payment of a cheque or warrant
sent by post pursuant to the Conditions contained in Schedule 1 shall be a good
discharge to the Company and notwithstanding any notice either may have (whether
express or otherwise) of the right, title, interest or claim of any other person
to or in such Notes, interest or moneys. No notice of any trust express, implied
or constructive shall (except as aforesaid) be entered in the Register in
respect of any Notes.
2. Entitlement
Every Noteholder will be recognised by the Company as entitled to his Notes free
from any equity set-off or cross-claim on the part of the Company against the
original or any intermediate holder of the Notes.
3. Method of transfer
Subject to Clause 11, the Notes are transferable in whole or in part in nominal
amounts or multiples of (pound)1.00 by instrument in writing in the usual or
common form (or in any other form which the Directors may approve). Every
instrument of transfer must be signed by or on behalf of the transferor but need
not be signed by or on behalf of the transferee. The transferor shall be deemed
to remain the holder of the Notes concerned until the name of the transferee is
entered in the Register in respect thereof. The Company shall not be obliged to
give effect to any such instrument which purports to transfer any Notes in
respect of which notice of repayment shall have been given or any other security
in addition to the Notes or which is not in compliance with applicable law.
4. Documents required for transfer
Every instrument of transfer must be delivered for registration to the Transfer
Office accompanied by the certificate for the Notes to be transferred and such
other evidence as the Directors may require to prove the title of the transferor
or his right to transfer the Notes and, if the instrument of transfer is
executed by some other person on his behalf, the authority of that person so to
do and, if so required by the Directors, evidence that the transferee is not a
U.S. Person (as defined in Clause 11 below). All instruments of transfer which
are registered may be retained by the Company for so long as it thinks fit
together with the cancelled certificates for the Notes. if the transfer of any
Notes is of part only of
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the Notes represented by any certificate the Company shall issue and deliver to
the transferring Noteholder a certificate for the balance which is not
transferred.
5. Charges
The Company may, at its reasonable discretion, levy reasonable charges for the
registration of any transfer or for the registration of any probate, letters of
administration, certificate of marriage or death, power of attorney or other
document relating to or affecting the title to any Notes or otherwise for making
any entry in the Register affecting the title to any Notes.
6. Suspension
The registration of transfers may be suspended at such times and for such
periods as the Directors may from time to time determine provided that such
registration shall not be suspended for more than 30 days in any one year.
7. Transfer of title
In the case of the death of a Noteholder, the survivors or survivor, where the
deceased was a joint holder, and the executors or administrators of the
deceased, where he was a sole or only surviving holder, shall be the only
persons recognised by the Company as having any title to such Notes.
8. Death or bankruptcy
8.1 Any person becoming entitled to Notes in consequence of the death or
bankruptcy of a Noteholder may, upon supplying to the Company such
evidence as the Directors may reasonably require to show his title to the
Notes elect to be registered himself as the holder of such Notes or,
subject to the preceding paragraphs as to transfer, to transfer such
Notes.
8.2 The Company shall be at liberty to withhold payment of all moneys payable
in respect of Notes to which this paragraph applies until such person
shall be registered or shall have duly transferred the same as aforesaid.
8.3 The Directors shall also have power by notice in writing to require any
such person as aforesaid to elect to transfer the Notes in question or to
be registered as the holder thereof and, in the event of his failing so to
elect within 60 days of being required so to do, he shall be deemed to
have elected to be registered as the holder of the Notes and may be
registered accordingly.
8.4 The provisions of this Clause 8 shall not affect the ability of the
Company to exercise its right of redemption on the death or bankruptcy of
a Noteholder under Condition 3.3(C).
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9. Replacement certificates
if any certificate for Notes shall be damaged or defaced then upon delivery up
thereof to the Directors they shall cancel the same and shall issue a new
certificate in lieu thereof and if any certificate for the Notes shall be lost,
stolen or destroyed then upon proof thereof to the satisfaction of the Directors
and compliance with such Conditions as to evidence and indemnity and the payment
of out-of-pocket expenses of the Company in connection therewith as the
Directors may think fit a new certificate in lieu thereof will be issued. An
entry as to the issue of the new certificate and indemnity (if any) shall be
made in the Register.
10. Overseas Registration
The Notes issued pursuant to this Instrument have not been and will not be
registered under the United States Securities Act of 1933, as amended (the
"Securities Act"), or under any relevant securities laws of any state or
district of the United States, Canada, Australia, Japan or any other country.
Accordingly, unless an exemption under such act or laws is available, the Notes
may not be offered, sold, re-sold or delivered, directly or indirectly, by any
person in or into the United States, Canada, Australia or Japan or to any U.S.
person (as defined in Regulation S under the Securities Act).
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SCHEDULE 3: MEETINGS OF NOTEHOLDERS
1. Right to call
The Company may, and shall at the request in writing of persons holding not less
than 15 per cent. in nominal amount of the Notes, convene a meeting of
Noteholders. Any such meeting shall be held at such place in England as the
Directors shall determine.
2. Notice period
At least 14 days' notice or, in the case of a meeting at which it is proposed to
pass an Extraordinary Resolution, at least 21 days' notice (exclusive in each
case of the day on which the notice is served or deemed to be served and of the
day on which the meeting is to be held) of every meeting shall be given in the
manner provided in the Conditions to all Noteholders other than such as are not
under the provisions of the Conditions entitled to receive such notices. The
notice shall specify the place day and hour of meeting and the general nature of
the business to be transacted thereat but (except in the case of an
Extraordinary Resolution) it shall not be necessary to specify in the notice the
terms of any resolution to be proposed. The accidental omission to give notice
to or the non-receipt of notice by any Noteholder entitled thereto shall not
invalidate the proceedings at any meeting.
3. Quorum
At any meeting other than a meeting at which it is proposed to pass an
Extraordinary Resolution two Noteholders present in person or by proxy and
holding or representing not less than one-tenth in nominal amount of the Notes
for the time being outstanding shall be a quorum. The quorum at any meeting at
which it is proposed to pass an Extraordinary Resolution shall be two
Noteholders present in person or by proxy and holding or representing not less
than one third in nominal amount of the Notes for the time being outstanding. No
business (other than the choosing of a Chairman) shall be transacted at any
meeting unless the requisite quorum is present at the time when the meeting
proceeds to business.
if within 15 minutes from the time appointed for the meeting (or such longer
period as the Chairman of the meeting may think fit to allow) a quorum is not
present the meeting, if convened on the requisition of Noteholders, shall be
dissolved. In any other case it shall stand adjourned to such other day and such
time (being not less than 14 days nor more than 42 days thereafter) and place as
may be appointed by the Chairman. At such adjourned meeting, the Noteholders
present in person or by proxy, whatever the number of persons or the nominal
value of the Notes held by them, shall form a quorum and shall have power to
pass any Extraordinary Resolution or other resolution and to decide upon all
matters which could properly have been disposed of at the meeting from which the
adjournment took place.
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At least seven days' notice (exclusive as aforesaid) of any such adjourned
meeting of Noteholders at which an Extraordinary Resolution is to be proposed
shall be given in the same manner mutatis mutandis as for the original meeting
and such notice shall state that the Noteholders present in person or by proxy
at the adjourned meeting will form a quorum.
4. Chairman
Some person (who may but need not be a Noteholder) nominated in writing by the
Company shall preside as Chairman at every meeting and, if no such person is
nominated or if at any meeting the person nominated shall not be present within
15 minutes after the time appointed for holding the meeting and the Company
makes no further nomination, the Noteholders present shall choose one of their
number to be Chairman. Any Director and the secretary, solicitors, auditors and
financial advisers of the Company and any other person authorised in that behalf
by the Company may attend and speak at any meeting.
5. Right to adjourn
The Chairman of any meeting at which a quorum is present may with the consent of
the meeting and shall if so directed by the meeting adjourn the meeting from
time to time (or sine die) and from place to place but no business shall be
transacted at any adjourned meeting except business which might lawfully have
been transacted at the meeting from which the adjournment took place. Where a
meeting is adjourned sine die, the time and place for the adjourned meeting
shall be fixed by the Directors. When in accordance with this Clause a meeting
is adjourned for 30 days or more or sine die, not less than seven days' notice
(exclusive as aforesaid) of the adjourned meeting shall be given in the same
manner mutatis mutandis as for the original meeting. Save as aforesaid and as
provided in Clause 3 of this Schedule it shall not be necessary to give any
notice of an adjournment or of the business to be transacted at an adjourned
meeting.
6. Voting
At any meeting a resolution put to the vote of the meeting shall be decided on a
show of hands, unless a poll is (before or on the declaration of the result of
the show of hands) demanded by the Chairman or by one or more Noteholders
present in person or by proxy and holding or representing not less than
one-twentieth in nominal amount of the Notes for the time being outstanding
other than Notes in respect whereof notice requiring repayment shall have been
given. Unless a poll is so demanded a declaration by the Chairman that a
resolution has been carried or carried unanimously or by a particular majority
or lost shall be conclusive evidence of that fact without proof of the number or
proportion of the votes recorded in favour of or against such resolution. If a
poll is duly demanded it shall be taken in such manner (including the use of
ballot or voting papers or tickets) as the Chairman may direct and the result of
such poll shall be deemed to be the resolution of the meeting at which the poll
was demanded.
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7. Casting vote
In the case of an equality of votes, whether on a show of hands or on a poll,
the Chairman of the meeting at which the show of hands takes place or at which
the poll is demanded shall be entitled to a casting vote in addition to the vote
or votes (if any) to which he may be entitled as a Noteholder or as a proxy for
a Noteholder.
8. Poll
A poll demanded on the election of a Chairman or on a question of adjournment
shall be taken forthwith. A poll demanded on any other question shall be taken
either immediately or at such time (not being more than thirty days from the
date of the meeting) and place as the Chairman may direct. No notice need be
given of a poll not taken immediately.
9. Continuance
The demand for a poll shall not prevent the continuance of a meeting for the
transaction of any business other than the question on which the poll has been
demanded. The demand for a poll may be withdrawn.
10. Entitlement to vote
On a show of hands every Noteholder who is present in person shall have one
vote. On a poll votes may be given personally or by proxy and every Noteholder
who is present in person or by proxy shall have one vote for every (pound)1.00
in nominal amount of the Notes of which he is the holder. A person entitled to
more than one vote need not use all his votes or cast all the votes he uses in
the same way.
11. Seniority
In the case of joint registered holders of Notes the vote of the senior who
tenders a vote whether in person or by proxy shall be accepted to the exclusion
of the votes of the other joint holders and for this purpose seniority shall be
determined by the order in which the names stand in the Register in respect of
the Notes.
12. Proxies
Every instrument appointing a proxy shall be in writing under the hand of the
appointor or of his attorney or, if such appointor is a corporation, under its
common seal or under the hand of some duly authorised officer or attorney of the
corporation. In the case of an instrument of proxy purporting to be signed on
behalf of a corporation by an officer thereof it shall be assumed unless the
contrary appears that such officer was duly authorised to sign such instrument
of proxy on behalf of the corporation without further evidence of the fact.
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13. Status of proxy
A person appointed to act as a proxy need not be a Noteholder.
14. Appointment of proxies
The instrument appointing a proxy and the letter of power of attorney or other
authority (if any) under which it is signed or a duly certified copy thereof
shall be deposited at such place as may be specified for that purpose in or by
way of note to or in any document accompanying the notice convening the meeting
(or, if no place is specified, at the Transfer Office) at least 48 hours before
the time appointed for holding the meeting or adjourned meeting or (in the case
of a poll taken otherwise than at or on the same day as the meeting or adjourned
meeting) for the taking of the poll at which the person named in the instrument
proposes to vote and in default the instrument of proxy shall not be treated as
valid. No instrument appointing a proxy shall be valid after the expiration of
12 months from the date named in it as the date of its execution.
15. Method of appointment
Every instrument appointing a proxy may be in any usual or common form or in any
other form which the Directors may approve. An instrument appointing a proxy
shall be deemed to include the right to demand or join in demanding a poll. A
proxy whether in the usual or common form or not shall unless the contrary is
stated thereon be valid as well for any adjournment of the meeting as for the
meeting to which it relates and need not be witnessed.
16. Voting powers of proxies
A vote given in accordance with the terms of an instrument of proxy shall be
valid notwithstanding the previous death or insanity of the principal or
revocation of the proxy or of the authority under which the proxy was executed
provided that no intimation in writing of such death, insanity or revocation
shall have been received by the Company at the Transfer Office more than 48
hours before the commencement of the meeting or adjourned meeting or, in the
case or a poll taken otherwise than at or on the same day as the meeting or
adjourned meeting, the time appointed for the taking of the poll at which the
proxy is used.
17. Appointment of representative
Any company or corporation which is a Noteholder may by resolution of its
directors or other governing body authorise any person to act as its
representative at any meeting of the Noteholders and such representative shall
be entitled to exercise the same powers on behalf of the company or corporation
as the company or corporation could exercise if it were a individual Noteholder
and such company or corporation shall for the purpose of these provisions be
deemed to be present in person at any such meeting if a person so authorised is
present thereat.
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18. Additional powers
A meeting of Noteholders shall in addition to all other powers have the
following powers exercisable by Extraordinary Resolution:
18.1 power to sanction any scheme of arrangement or any scheme for the
reconstruction of the Company or for the amalgamation of the Company with
any other company;
18.2 power to sanction the exchange of the Notes for, or the conversion of the
Notes into, shares, stock, debentures, debenture stock or other
obligations or securities of the Company, or any other company formed or
to be formed;
18.3 power to sanction the release of the Company from the payment of all or
any part of the principal moneys and interest owing upon the Notes, and
other moneys payable pursuant to this Instrument;
18.4 power to sanction any modification, abrogation or compromise of, or
arrangement in respect of, the rights of the Noteholders against the
Company whether such rights shall arise under these presents or the
certificates for the Notes or otherwise;
18.5 power to assent to any modification or abrogation of the Conditions to
which the Notes are subject and/or of the provisions contained in these
presents and to authorise the execution of any supplemental deed embodying
any such modification or abrogation;
18.6 power to give any sanction, approval, authority, direction or request
which under any of the provisions of these presents is required to be
given by Extraordinary Resolution; and
18.7 power to appoint any persons (whether Noteholders or not) as a committee
to represent the interests of the Noteholders and to confer upon such
committee any powers or discretions which the Noteholders could themselves
exercise
PROVIDED THAT no modification of the said Conditions or provisions shall take
effect unless and until the Company and the Guarantor shall have consented and
agreed thereto.
19. Extraordinary resolutions
An Extraordinary Resolution passed at a meeting of the Noteholders duly convened
and held in accordance with these presents shall be binding upon all the
Noteholders whether or not present at the meeting and each of the Noteholders
shall be bound to give effect thereto accordingly.
35
<PAGE>
20. Resolutions in writing
A resolution in writing signed by Noteholders who for the time being are
entitled to receive notice of meetings in accordance with the provisions herein
contained and hold not less than 75 per cent. in nominal amount of the Notes
shall for all purposes be as valid and effectual as an Extraordinary Resolution
passed at a meeting duly convened and held in accordance with the provisions
herein contained and may consist of several documents in the like form each
signed by or on behalf of one or more of the Noteholders. In the case of a
corporation the resolution may be signed on its behalf by a Director or the
secretary thereof or by its duly authorised representative or duly appointed
attorney.
21. Meaning of Extraordinary resolution
The expression "Extraordinary Resolution" means a resolution passed at a meeting
of the Noteholders duly convened and held in accordance with the provisions
herein contained and carried by a majority consisting of not less than 75 per
cent. of the persons voting thereat upon a show of hands or, if a poll is duly
demanded, by not less than 75 per cent. of the votes given on such a poll,
whether such votes are cast in person, by authorised representative, or by
proxy.
22. Minutes
Minutes of all resolutions and proceedings at every meeting shall be made and
duly entered in books to be from time to time provided by the Company. Any such
minute as aforesaid, if purporting to be signed by the Chairman of the meeting
at which such resolutions were passed or proceedings had or by the Chairman of
the next succeeding meeting of Noteholders, shall be conclusive evidence of the
matters therein stated and, until the contrary is proved, every such meeting in
respect of the proceedings of which minutes have been made and signed shall be
deemed to have been duly held and convened and all resolutions passed or
proceedings had thereat to have been duly passed and had.
23. Governing Law
The Notes and the Instrument shall be governed by and construed in accordance
with English law.
36
<PAGE>
SCHEDULE 4
FORM OF DEMAND
To: Bank of America National Trust & Savings Association London Branch
1 Alie Street
London El 8DE
Attention : Trade Finance Department
Ref: 6008GT 003823 /98
1. This demand is sent pursuant to the terms of a deed poll (the "Loan Note
Instrument") entered into on 10 September, 1998 by IMPAC Europe Public
Limited Company (the "Company") and Bank of America National Trust &
Savings Association acting through its London Branch (the "Guarantor").
Terms defined in the Loan Note Instrument shall bear the same meanings
when used in this demand.
2. I/We am/are the registered holder of Notes issued under the terms of the
Loan Note Instrument in an aggregate principal amount of (pound)[amount in
figures].
Name [ ]
Registered address [ ]
[3. I/We enclose the Certificate(s) relating to the Notes(s) in respect of
which the demand is made or an appropriate indemnity in favour of the
Guarantor (as previously agreed by the Guarantor pursuant to Clause 8.3
(B) of the Loan Note Instrument.] To be included in the case of a demand
for redemption of principal.
4. I/We claim the following sums:
(i) the amount of principal of (pound)[amount in figures] and/or
37
<PAGE>
(ii) the amount of interest on the principal amount of
(pound)[amount in figures] in respect of interest accruing in
respect of Interest Periods ending on the dates:
Date Amount of Interest
---- ------------------
5. I/We confirm that to the best of my/our knowledge having made full and
proper enquiries:
(I) that, in the case of a demand for redemption of principal
payable in respect of the Notes, none of the Notes in respect
of which such claim is made has been cancelled, redeemed or
repurchased by the Company;
(ii) the sum demanded is due and payable by the Company and all
conditions and demands necessary in connection with them under
the Loan Note Instrument have been fulfilled and made and any
grace period relating to them has elapsed;
(iii) the Company has failed to pay the sum demanded in this notice
and such sum remains unpaid as at the date of this demand; and
(iv) that this demand is made within six months of the failure by
the Company to pay the sum demanded in this notice within 30
days of the due date for payment of such sum.
6. Payments under this demand should be made by way of cheque or warrant made
payable to the person or persons specified below and sent by post in a
pre-paid cover at my/our risk to the address specified below or, if no
person or persons' address is specified below, to the [first named]
registered holder of the Notes referred to above at his/her its address
specified on the Register:
........................
........................
........................
........................
7. Please acknowledge receipt of this demand and the enclosed
Certificate(s)/appropriate indemnity.
38
<PAGE>
Signed............................
By or on behalf of the
Registered Holder[s]
Above Signature confirmed to be Above Signature confirmed to be
the signature of the signature of
Mr/Mrs [name of registered holder] Mr/Mrs [name of registered holder]
by................................
Noteholder's Bankers/Solicitors
Bank/Firm [ ]
Officer/Partner [ ]
Date [ ]
39
<PAGE>
/s/ [ILLEGIBLE]
SIGNED by LN ) .........................
and by AW ) Director
and thereby executed by )
IMPAC EUROPE PUBLIC )
LIMITED COMPANY ) /s/ [ILLEGIBLE]
as its Deed ) .........................
Director Secretary
executed as a Deed by )
BANK OF AMERICA )
NATIONAL TRUST & ) /s/ [ILLEGIBLE]
SAVINGS ASSOCIATION ) .........................
acting by Vice President
and by /s/ [ILLEGIBLE]
.........................
Vice President
40
<PAGE>
EXHIBIT 10.102
SUBSCRIPTION
AGREEMENT
Dated 07 July 1998 WE HEREBY CERTIFY THIS
TO BE A TRUE COPY
between Simmons X Simmons
SIMMONS & SIMMONS
IMPAC Europe PLC 21 WILSON STREET
as the Company LONDON EC2M 2TX
and
IMPAC Group, Inc.
as a Subscriber
and
Levelprompt Limited
and
BT Wolfensohn
as financial adviser to Bidco PLC
relating to
the subscription for shares in IMPAC Europe PLC
SIMMONS & SIMMONS
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
1. Interpretation ............................................... 2
2. Completion of the Bidco Holdings Subscription ................ 4
3. Completion of the Bidco Subscription ......................... 4
4. Loan Arrangements ............................................ 5
5. Market Purchases by Bidco .................................... 5
6. Heritage Equity Commitment ................................... 6
7. Cash Confirmation ............................................ 7
8. Lapse ........................................................ 7
9. Counterparts ................................................. 7
10. Governing Law ................................................ 7
</TABLE>
<PAGE>
THIS AGREEMENT is dated 7 July 1998 and made
BETWEEN:
(1) IMPAC Europe PLC ("Bidco") a public limited company registered in England
and Wales under number 3487779 whose registered office is at 14 Dominion
Street, London EC2M 2RJ;
(2) IMPAC Group, Inc ("IMPAC"), a Delaware corporation whose principal office
is at 1950 North Ruby Street, Melrose Park, IL 60160, USA;
(3) Levelprompt Limited ("Bidco Holdings") a company registered in England and
Wales under number 3577919 whose registered office is at 14 Dominion Street,
London EC2M 2RJ; and
(4) BT Wolfensohn ("BT Wolfensohn"), a division of Bankers Trust International
plc, whose registered office is at 1 Appold Street, London EC2A 2HE.
WHEREAS:
(A) Bidco, particulars of which are set out in Schedule 1(A), has at the date of
this Agreement an authorized share capital of (pound)80,000,000 divided into
80,000,000 Ordinary Shares of (pound)1 each. Bidco has an issued share
capital of (pound)50,000 divided into 50,000 Ordinary Shares of (pound)1
each of which 49,500 such shares are held by IMPAC and 500 shares are held
by Bidco Holdings.
(B) Bidco Holdings, particulars of which are set out in Schedule 1(B), has at
the date of this Agreement an authorized share capital of (pound)1,000
divided into (pound)1,000 Ordinary Shares of (pound)1 each. Bidco Holdings
has an issued share capital of (pound)2 divided into 2 shares of (pound)1
each both of which are held by IMPAC.
(C) Bidco intends on the date of this Agreement to instruct BT Wolfensohn to
release a press announcement including details of an offer proposed to be
made on behalf of Bidco for the entire issued share capital of Wrapper
following satisfaction of the Pre-Condition as herein defined.
(D) Subject to the Offer being made and becoming unconditional in all respects
and upon the terms of this Agreement:
(1) IMPAC agrees to subscribe for further ordinary shares in Bidco Holdings;
(2) IMPAC and Bidco Holdings agree to subscribe for further ordinary shares
in Bidco; and
(3) IMPAC and Bidco Holdings agree to lend certain amounts to Bidco which
may be drawn down on demand:
<PAGE>
for the purpose of putting Bidco in funds to satisfy the cash
consideration becoming payable by it pursuant to the Offer and to make
market purchases of Wrapper shares during the offer period.
IT IS HEREBY AGREED as follows:-
1. Interpretation
1.1 The following provisions shall have effect for the interpretation of this
Agreement:
"Bidco Completion" means completion of the subscription and
allotment pursuant to Clause 3;
"Bidco Holdings Completion" means completion of the subscription and
allotment pursuant to Clause 2;
"Bidco Holdings Loan Schedule" means Schedule 2A which sets out the terms
of the loan by IMPAC to Bidco Holdings;
"Bidco Loan Schedule" means Schedule 2B which sets out the terms
of the loans by IMPAC and by Bidco Holdings
to Bidco;
"Cash Purchase Shares" means ordinary shares of Wrapper purchased
or agreed to be purchased by IMPAC and/or
Heritage on or after the date hereof and
prior to Bidco Completion;
"Consideration Posting Date" means the date upon which the first posting
is required to be made under the City Code
on Takeovers and Mergers of the
consideration under the Offer to Target
shareholders accepting the Offer.
"Credit Agreement" means the Amended and Restated
Multicurrency Credit Agreement dated as of
March 12 1998 and as amended and restated on
6 July 1999 by and between IMPAC, Bank of
America and others;
"Equity Commitment Letter" means the letter dated 07 July 1998 from
Heritage Fund I L.P., and Heritage Fund II
L.P. to IMPAC Group, Inc. and BT
Wolfensohn relating to the equity
commitment of Heritage Fund I L.P. and
Heritage Fund II L.P. in IMPAC Group, Inc.
<PAGE>
"Offer" means the Offer proposed to be made after
satisfaction of the Pre-Condition by BT
Wolfensohn on behalf of Bidco for the
entire issued share capital of Target,
substantially on the terms set out in the
Press Announcement;
"Offer Document" means the document to be posted to
shareholders of Target containing the Offer;
"Ordinary Shares" means the ordinary shares of (pound)1 each
in the capital of Bidco or Bidco Holdings,
as the case may be, to have the rights and
to be subject to the restrictions set out in
the respective Articles of Association;
"Pre-Condition" means the pre-condition to BT Wolfensohn on
behalf of Bidco making the Offer that IMPAC
obtains the consent of the holders of the
IMPAC Senior Subordinated Notes to the Offer
and to the financing of the Offer;
"Press Announcement" means the press announcement in the form of
the draft in the agreed form marked "A"
proposed to be released by BT Wolfensohn on
the date of this Agreement setting out the
terms and conditions of the Offer and
describing the Pre-Condition;
"Receiving Agent" means the person to be appointed as Bidco's
receiving agents in connection with the
Offer;
"Subscribers" means IMPAC and Bidco Holdings Limited;
"Target" or "Wrapper" means Wrapper (Company Number 948696).
1.2 References to the Offer becoming "unconditional in all respects" shall be
construed with reference to the terms and conditions contained in the Offer
Document.
1.3 References to Clauses, Sub-Clauses, Recitals, Schedules and the parties are
references to clauses, sub-clauses and recitals of, and schedules and the
parties to, this Agreement.
1.4 The Recitals and Schedules form part of the operative provisions of this
Agreement and references to this Agreement shall, unless the context
otherwise requires, include references to the Recitals and Schedules.
<PAGE>
2. Completion of the Bidco Holdings Subscription
2.1 The Bidco Holdings Completion pursuant to this Agreement shall take place
two business days prior to the Consideration Posting Date (immediately
prior to the Bidco Completion as contemplated by Clause 3) and at the Bidco
Holdings Completion all but not some only of the following shall take
place:
2.1.1 IMPAC shall subscribe in cash for 417,500 Ordinary Shares of Bidco
Holdings at par, payment for which shall be made to the Receiving
Agent in accordance with Sub-Clause 3.1.4 and in satisfaction of
Bidco Holdings' obligation to make payment to Bidco under that
clause and such payment shall discharge any obligation of IMPAC to
make payment under this clause 2.1.1 for the Ordinary Shares of
Bidco Holdings; and
2.1.2 Bidco Holdings shall allot and issue 417,500 Ordinary Shares of
Bidco Holdings to IMPAC and shall enter IMPAC's name in the register
of members of Bidco Holdings as the registered holder of such number
of Ordinary Shares of Bidco Holdings and shall deliver to IMPAC a
share certificate duly executed in respect of such shares.
3. Completion of the Bidco Subscription
3.1 The Bidco Completion pursuant to this Agreement shall take place two
business days prior to the Consideration Posting Date (immediately after
the Bidco Holdings Completion) and at the Bidco Completion all but not some
only of the following shall take place:-
3.1.1 IMPAC shall subscribe in cash the sum of (pound)41,332,500 (less any
amount required to be deducted therefrom pursuant to sub-clause 3.2)
for such number of Ordinary Shares of Bidco at par as shall equal
the amount (after any such deduction) subscribed, payment for which
subscription shall be made in accordance with Sub-Clause 3.1.4;
3.1.2 Bidco Holdings shall subscribe in cash for such number of Ordinary
Shares of Bidco at par as amounts to a total subscription price of
(pound)417,500 payment for which shall be made in accordance with
Sub-Clause 3.1.4;
3.1.3 Bidco shall allot and issue the respective numbers of Ordinary
Shares of Bidco to each of the Subscribers and shall enter the name
of each of the Subscribers in the register of members of Bidco as
the registered holder of the respective numbers of Ordinary Shares
of Bidco allotted to each of them and shall issue and deliver to
each Subscriber a share certificate duly executed by Bidco for the
Ordinary Shares of Bidco subscribed by each of them;
<PAGE>
3.1.4 the Subscribers shall pay to the Receiving Agent the respective
subscription monies referred to in Sub-Clauses 3.1.1 and 3.1.2 and
the payment of such monies to the Receiving Agent shall discharge
any obligations of the Subscribers to make payment under clauses
3.1.1 and 3.1.2 for the Ordinary Shares of Bidco; and
3.1.5 IMPAC shall subscribe for such number of Ordinary Shares of Bidco at
par as amounts to a total subscription price equal to the aggregate
purchase price net of costs and VAT of the Cash Purchase Shares, the
consideration for which shall be the transfer by IMPAC to Bidco of
the Cash Purchase Shares, such allotment being conditional upon
compliance by Bidco with the provisions of Section 103 of the
Companies Act 1985 (which Bidco shall be obliged to ensure) in
respect of such allotment.
3.2 The amount which IMPAC shall be obliged to subscribe under Sub-Clause 3.1.1
shall be reduced by 218p multiplied by the number of Cash Purchase Shares.
3.3 To the extent that the amounts to be subscribed by IMPAC under this clause
3 exceed the amounts provided to IMPAC pursuant to the Equity Commitment
Letter such subscription shall be delayed until IMPAC has received funds
pursuant to the Credit Agreement.
4. Loan Arrangements
4.1 The parties agree that subject to the Offer becoming unconditional in all
respects:
4.1.1 IMPAC shall make a loan available to Bidco Holdings on the terms
contained in the Bidco Holdings Loan Schedule;
4.1.2 IMPAC shall make a loan available to Bidco in the amounts and on the
terms contained in the Bidco Loan Schedule;
4.1.3 Bidco Holdings shall make a loan available to Bidco on the terms
contained in the Bidco Loan Schedule; and
4.1.4 Bidco undertakes to make such drawdowns under the loans specified in
Sub-Clause 4.1.2 and 4.1.3 as are necessary to satisfy its
obligations under the City Code on Takeovers and Mergers and
Sections 428-430F of the Companies Act 1985 ("Squeeze Out") and
under the Squeeze Out to pay consideration to shareholders of
Wrapper under the Offer.
5. Market Purchases by Bidco
5.1 If IMPAC and Bidco agree that Bidco should make market purchases of Wrapper
Shares during the offer period, then the parties agree that except as
otherwise agreed by IMPAC and Bidco:
<PAGE>
(A) the amount to be applied by Bidco in making such market purchases
shall be funded by IMPAC and Bidco Holdings in the proportion of
99:1; and
(B) the amount to be funded by each of IMPAC and Bidco Holdings shall be
provided as to 50 per cent of such amount by a loan of monies on the
terms of the Bidco Loan Schedule and as to 50 per cent by
subscription of Ordinary Shares of Bidco at par in cash;
5.2 To the extent that Bidco Holdings is required to make a subscription or
loan under clause 5.1, IMPAC shall make a prior loan of monies (under the
terms of the Bidco Holdings Loan Schedule) to and subscription in Bidco
Holdings and the obligation of IMPAC under clauses 2.1.1 and 4.1.1 shall be
reduced by equivalent and respective amounts.
5.3 To the extent that IMPAC shall make a subscription or loan under clause 5.1
its obligations to make a subscription and loan under clauses 3.1.1 and
4.1.2 shall be reduced by equivalent and respective amounts.
5.4 To the extent that Bidco Holdings shall make a subscription or loan under
clause 5.1 its obligations to make a subscription and loan under clauses
3.1.2 and 4.1.2 shall be reduced by equivalent and respective amounts.
6. Heritage Equity Commitment
6.1 If Heritage is obliged to purchase and/or subscribe additional stock in US$
pursuant to the terms of the Equity Commitment Letter, IMPAC shall procure
that Bidco shall have sufficient funds in sterling to pay all accepting
Target shareholders under the Offer and fund the obligations of Bidco under
the Squeeze Out and the parties agree that such $ funds shall be swapped
into sterling and that:
6.1.1 the additional sterling amounts to be provided to Bidco shall be
funded by IMPAC and Bidco Holdings in the proportion of 99:1; and
6.1.2 the amount to be funded by each of IMPAC and Bidco Holdings shall be
provided as to 50% of such amount by a loan of monies on the terms
of the Bidco Loan Schedule and as to 50% by subscription of
Ordinary Shares of Bidco at par in cash.
6.2 For the avoidance of doubt the obligations on Bidco Holdings and IMPAC to
make the subscriptions or loans referred to under Clause 6.1 shall not
reduce any obligation or liability on IMPAC or Bidco Holdings under
Clauses 2, 3 or 4 of this agreement to loan monies or make subscriptions
referred to in such Clauses. The obligation is on IMPAC to make or procure
such subscriptions or loans.
<PAGE>
7. Cash Confirmation
Each of IMPAC and Bidco Holdings acknowledges that BT Wolfensohn will place
reliance on its undertakings in Clauses 2, 3, 4, 5 and 6 of this Agreement for
the purposes of the cash confirmation to be given by it under Rule 24.7 of the
City Code on Takeovers and Mergers.
8. Lapse
This Agreement will lapse and determine at the time that the "Aggregate
Commitment" as defined in the Credit Agreement is reduced to zero in accordance
with Section 2.07(a) thereof.
9. Counterparts
This Agreement may be executed in any number of counterparts with the same
effect as if the signatures to each such counterpart were upon the same
instrument.
10. Governing Law
This Agreement shall be governed by and construed in accordance with English law
and the parties hereby submit to the non-exclusive jurisdiction of the High
Court in London for the purpose of hearing and determining any dispute arising
out of this Agreement and for the purpose of enforcement of any judgment against
their respective assets.
ACCORDINGLY each of the parties has executed this Agreement on the date set out
at the top of page 1.
SIGNED by Richard Block ) /s/ Richard Block
for and on behalf of )
IMPAC GROUP, INC. )
SIGNED by Mark E. Sullivan ) /s/ Mark E. Sullivan
for and on behalf of )
IMPAC EUROPE PLC )
SIGNED by Mark E. Sullivan ) /s/ Mark E. Sullivan
for and on behalf of )
LEVELPROMPT LIMITED )
<PAGE>
SIGNED by A. B. GRABOWSKI ) /s/ A. B. GRABOWSKI
for and on behalf of )
BT WOLFENSOHN )
<PAGE>
SCHEDULE:1(A)
Particulars of Bidco
Name: IMPAC Europe Public Limited Company
Registered office: 14 Dominion Street, London, EC2M 2RJ
Directors: Mark Sullivan, David Underwood,
Michael Gilligan, Richard Block
Secretary: David Underwood
Registered Number: 3487779
Accounting Reference Date: 31st December
Date of Incorporation: 2 January 1998
Authorised Share Capital: (pound)80,000,000
Issued Share Capital: (pound)50,000
SCHEDULE:1(B)
Particulars of Bidco Holdings
Name: Levelprompt Limited
Registered office: 14 Dominion Street, London, EC2M 2RJ
Directors: Mark Sullivan, David Underwood,
Michael Gilligan, Richard Block
Secretary: David Underwood
Registered Number: 3577919
Accounting Reference Date: 31st December
Date of Incorporation: 9 June 1998
Authorised Share Capital: (pound)1,000
Issued Share Capital: (pound)2
<PAGE>
SCHEDULE :2(A)
Bidco Holdings Loan Schedule
1. IMPAC shall make available a loan in the sum of (pound)418,000 to Bidco
Holdings on which Bidco may draw down in whole or in part on demand (the
"Bidco Holdings Loan").
2. Bidco Holdings will pay interest on the Bidco Holdings Loan at such rate or
rates of interest as IMPAC may from time to time specify to Bidco Holdings
as representing the cost to IMPAC of funding the Bidco Holdings Loan using
the proceeds of drawings under the Credit Agreement. Such interest shall be
payable on such dates as IMPAC may from time to time specify.
3. The sums drawn down under the Bidco Holdings Loan shall become repayable on
demand by IMPAC and, in the event if not demanded before such date, on the
date which is 5 years after the date of this Agreement.
<PAGE>
SCHEDULE: 2(B)
Bidco Loan Schedule
1. IMPAC and Bidco Holdings shall make available in the proportion of 99:1 a
loan in the sum of (pounds)41,800,000 on which Bidco may draw down in whole
or in part on demand (the "Bidco Loan").
2. Bidco will pay interest on the Bidco Loan at such rate or rates of interest
as IMPAC may from time to time specify to Bidco as representing the cost to
IMPAC of funding the Bidco Loan using the proceeds of drawings under the
Credit Agreement. Such interest shall be payable on such dates as IMPAC may
from time to time specify.
3. The sums drawn down under the Bidco Loan shall become repayable on demand
by IMPAC and, in the event if not demanded before such date, on the date
which is 5 years after the date of this Agreement.
<PAGE>
EXHIBIT 21.1
List of Subsidiaries
of IMPAC Group, Inc.
Jurisdiction of
Name Organization
- ---- ---------------
AGI Incorporated Illinois
Klearfold, Inc. Pennsylvania
KF-Delaware, Inc. Delaware
KF-International, Inc. U.S. Virgin Islands
IMPAC Europe Limited England and Wales
Levelprompt Limited England and Wales
Tinsley Robor Limited England and Wales
Tinsley Robor Audio and Computer
Sales England and Wales
TR ESOP Trutee Limited England and Wales
James Upton Limited England and Wales
Tinsley Robor Labels Limited England and Wales
Tinsley Robor Sales Limited England and Wales
Sonicon Limited England and Wales
Tophurst Properties Limited England and Wales
Pinepoint Limited England and Wales
Printing Resources Limited Ireland
Van de Steeg Packaging B.V. The Netherlands
James Upton Holding B.V. The Netherlands
James Upton B.V. The Netherlands
James Upton GmbH Austria
Music Print B.V. The Netherlands
Tinsley Robor (Overseas Limited) England and Wales
Admat Labels Limited England and Wales
S. Tinsley & Company Limited England and Wales
TRG Graphics Limited England and Wales
Arun Labels Limited England and Wales
R&B Litho Reproduction Limited England and Wales
Icon Communications Limited England and Wales
TR Displayprint Limited England and Wales
Pinepoint Colour Response Limited England and Wales
Tinsley Robor Packaging Limited England and Wales
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 4,239
<SECURITIES> 0
<RECEIVABLES> 50,156
<ALLOWANCES> 1,517
<INVENTORY> 23,982
<CURRENT-ASSETS> 81,670
<PP&E> 196,839
<DEPRECIATION> 89,170
<TOTAL-ASSETS> 366,335
<CURRENT-LIABILITIES> 54,380
<BONDS> 240,559
0
0
<COMMON> 0
<OTHER-SE> 65,583
<TOTAL-LIABILITY-AND-EQUITY> 366,335
<SALES> 184,298
<TOTAL-REVENUES> 184,298
<CGS> 134,643
<TOTAL-COSTS> 134,643
<OTHER-EXPENSES> 31,762
<LOSS-PROVISION> 999
<INTEREST-EXPENSE> 14,607
<INCOME-PRETAX> 3,922
<INCOME-TAX> 1,879
<INCOME-CONTINUING> 2,043
<DISCONTINUED> 0
<EXTRAORDINARY> (552)
<CHANGES> 0
<NET-INCOME> 1,491
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
